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Japan firms turn to booming Southeast Asia, hedging China risks

By Political Atheist on November 6, 2012 • ( 1 )

Almost a quarter of Japanese manufacturers are re-thinking their China investment plans.

Japanese firms, encouraged to expand abroad by a strong yen, are increasingly using Southeast Asia as an alternative manufacturing base to balance their China risks.

Japanese government and business leaders have also been among the fastest to tap the potential of Myanmar’s dramatic opening, pouring in billions of dollars.

It’s not just about cheap wages. The SEA-region of 600 million people also offers a growing source of demand for Japanese cars, electronics and services as robust growth expands the middle class.

Malaysia and the Philippines, where wages are higher than Vietnam or Cambodia, have also seen rising Japanese interest.

Infrastructure investment in railways and roads is booming and ASEAN is working towards establishing a European Union style single market by the end of 2015, making it easier for multinationals to link up their cross-border operations.

Japanese companies increasingly see Thailand, Cambodia and Vietnam as a single production corridor, he said, comparing the Mekong region to the main industrial cities in his home country.

Minebea, for example, trucks components from Thailand to be assembled at the Phnom Penh economic zone before transporting them back to Thailand for higher-end work.

The company, which makes tiny motors used in electronic gadgets, recently bought up a second factory lot to expand its capacity in Cambodia, and expects to have 8,000 workers by the end of next year.

Source: Reuters “Hedging China risks, Japan firms turn to booming Southeast Asia”