Sun, Oct 28, 2012 - Page 14 News List

Japan Inc mulls shift away from China to SE Asia

By James Topham and Izumi Nakagawa  /  Reuters, TOKYO

Interest in the “China plus one” strategy starting picking up after the outbreak of the SARS disease that sharply affected China for several weeks in 2002.

The territorial dispute between Japan and China then added a new flashpoint. When workers returned to plants run by Canon Inc and Casio Computer Co last month after the factories were shuttered because of the anti-Japanese protests, they also demanded higher wages, company representatives said.

“Labor costs [in Myanmar] are one-fifth of what China is,” Ejiri said, adding that Myanmar also has no export duties for clothing, unlike China.

Last year, Japanese direct investment in the Southeast Asian region surpassed China by a margin of almost 50 percent, according to data from the Japanese Ministry of Finance.

Yet, experts and company executives say it will take years before Southeast Asia can compete with China on factors that are harder to measure than payrolls, like a large pool of skilled talent.

Ejiri, whose Myanmar plant is operating at 60 percent of capacity, agreed. He said he expects it will take a decade for Southeast Asia to match China for efficiency.

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