Many Japanese companies have a pessimistic view towards the Chinese economy and are concerned about the impact of the Chinese Communist regime on the supply chain, prompting them to accelerate their shift towards the American market.
Companies such as robot manufacturer Fanuc, beverage company Asahi, chip maker Renesas Electronics, and automobile manufacturer Honda, among others, have expressed their intention to expand in the United States or have already announced investment plans in recent months.
While maintaining economic ties with China through extensive trade and manufacturing operations, Japan, like other members of the Group of Seven (G7), is actively working to mitigate risks associated with China.
Last week, Japanese Prime Minister Fumio Kishida’s visit to the United States highlighted the trend of countries managing risks associated with China. During his visit to North Carolina, Kishida emphasized the cooperation between the U.S. and Japan in the supply chain while touring the Toyota Motor electric vehicle battery plant under construction.
Japanese executives and analysts say that over the years, Japanese companies have viewed China as a market full of opportunities, but now their perspective has become more cautious. A survey conducted in January this year revealed that nearly half of Japanese companies operating in China did not invest in China last year or have reduced their investments.
Part of the reason is the economic security risks, as last year, Chinese authorities arrested a male employee of the Japanese pharmaceutical company Astellas Pharma on charges of espionage. Many companies also hold a pessimistic view towards Chinese demand and economic slowdown.
Kunihiko Miyake, Research Director at the Canon Institute for Global Studies (CIGS) in Japan, said, “The illusion about the Chinese economy and market is shattering.”
“I believe Japan and the United States are beginning to discover each other’s advantages,” Miyake said, adding that he has consistently advised companies to bring back the most advanced technology from China to Japan.
A survey conducted by the Japan External Trade Organization (JETRO) in November last year showed that the proportion of Japanese companies planning to expand in China dropped below 30% for the first time, ranking only higher than Hong Kong and Russia. Meanwhile, the proportion of companies aiming to expand in North America exceeded 50%.
For Japanese automakers, the importance of the U.S. market is growing as sales in China weaken. In the Chinese market, Japanese cars are gradually being replaced by cheaper Chinese cars.
Christopher Richter, an analyst at CLSA, stated that Japanese automakers are facing difficulties in China as sales have significantly declined, underscoring the importance of the American market.
He further noted that historically, the United States has been the most profitable market for Japanese automakers, even surpassing their domestic market.
Toyota announced at the end of last year that it would increase its investment in the electric vehicle battery plant in North Carolina by $8 billion, bringing the total investment to $13.9 billion. The plant is expected to start production in 2025 and will be Toyota’s first car battery plant globally.
Honda announced this month that it will invest at least $700 million to retool its factory in Ohio to establish it as a hub for electric vehicles in the state.
An executive from a Japanese car manufacturer expressed surprise at the vitality of the U.S. economy. He mentioned that this, along with the challenges facing the Chinese economy, led him to believe that the American market offers better development opportunities.
(Reference: Reuters)
Responsibility editor: Li Lin#