Sat, Oct 06, 2018 - Page 9 News List

Japanese wave goodbye to UK as
‘gateway to Europe’ after Brexit

Japan is one of the UK’s biggest investors, but many companies are thinking about moving or have already moved operations away from the country as a no-deal Brexit looms

By Suzi Ring, Lisa Du and Alex Morales  /  Bloomberg

Illustration: Tania Chou

After a February meeting between British Prime Minister Theresa May and 19 Japanese business chiefs, Japanese Ambassador to Britain Koji Tsuruoka warned what might happen if Brexit took an unfavorable turn for foreign investors.

“No private company can continue operations” in the UK if it becomes unprofitable, Tsuruoka told reporters on the steps of May’s Downing Street residence, after she pledged to pursue frictionless trade with the EU. “It is as simple as that.”

Eight months later, as the risk of a no-deal Brexit looms larger and nearer, Japanese companies are not waiting to find out whether May can deliver.

Instead, a growing number of them are heeding Tsuruoka’s warning, shifting operations out of the UK or threatening to scale back if the nation crashes out of the EU without a deal.

Toyota Motor Corp on Saturday last week said that it might have to temporarily halt output at its plant in Derby, England, in the event of a “hard” Brexit.

Electronics maker Panasonic Corp has moved its European headquarters from near London to Amsterdam, while the Japanese retailer of Muji products is mulling a relocation to Germany.

Other companies, such as robot maker Yaskawa Electric Corp, are choosing continental sites for new operations to stay close to European customers if Brexit creates trade hurdles.

“A lot of Japanese companies, manufacturing companies in particular, have invested in this country as a gateway to Europe,” Shinichi Iida, minister for public diplomacy and media for the Japanese embassy in London, said in an interview. “A no-deal Brexit in March next year will be nothing short of a cliff edge.”

The stakes are high for both nations because of their close economic ties. The UK is Japan’s second-biggest investment destination after the US, with US$153 billion committed as of last year, according to the Japan External Trade Organization (JETRO).

Japan is the biggest investor in Britain aside from the US and a handful of European neighbors. About 1,000 Japanese companies operate in the UK employing about 160,000 workers.

Many of these firms came to the UK in the 1980s as then-British prime minister Margaret Thatcher promoted the nation as a point of access to Europe.

That history has not been forgotten. A 15-page letter issued by Tokyo to the UK in September 2016, three months after the referendum, said that Tokyo trusts that the UK “will give due consideration to the context in which Japanese businesses have invested in” Britain.

Japanese business officials’ blunt talk is unusual for a corporate culture in which confrontation is frowned upon and contrasts with many UK firms’ reluctance to speak out about Brexit.

A survey in December last year by JETRO found that 47 percent of Japanese-affiliated companies in Europe thought leaving the EU would have a negative impact on them. Their main concerns were a UK economic slump and exporting from the UK to the bloc.

Now some of them are sizing up new sites in Europe. Japanese banks such as Nomura Holdings Inc, Daiwa Securities Group Inc and Sumitomo Mitsui Financial Group have opened Europe hubs in Germany. Mitsubishi UFJ Financial Group Inc has chosen the Netherlands as a base for its investment banking business in Europe, while Mizuho Financial Group Inc is bolstering its operations in both countries.

“There’s a lot of choices,” said Hiroaki Nakanishi, chairman of Japanese business lobby Keidanren and manufacturer Hitachi Ltd, told a news conference last week, where he warned of the “very serious impact” from a no-deal Brexit.

This story has been viewed 3395 times.

Comments will be moderated. Keep comments relevant to the article. Remarks containing abusive and obscene language, personal attacks of any kind or promotion will be removed and the user banned. Final decision will be at the discretion of the Taipei Times.

TOP top