1,400 Japanese enterprises consider expanding production in Vietnam

More than 40% of the 3,500 Japanese businesses surveyed by Jetro are considering expanding their operations in Vietnam in the next three years.

The Japan Trade Promotion Organization (Jetro) has just announced the results of a survey conducted at the end of last year, based on the responses of 3,500 Japanese businesses that are very interested in doing business abroad.

The results show that 41% of these, or about 1,400 Japanese enterprises, are considering expanding their operations in Vietnam in the next three years, an increase of 5.5 percentage points over the previous year.

Meanwhile, more than 36% of enterprises chose Thailand (up 1.5 percentage points) and 48% of enterprises said they would promote production and business in China (down 7 percentage points).

Nhà máy sản xuất điều hòa của thương hiệu Nhật Bản tại Việt Nam. Ảnh: Daikin.
Air conditioner factory of Japanese brand in Vietnam.

Since 2018, the increased confrontation between the US and China has boosted investment by Japanese companies in Southeast Asian countries, the report said. More and more Japanese companies are downsizing their operations in China and expanding into Southeast Asia. The gap between Japanese investment in ASEAN countries and China increased from more than 10 billion yen in 2017 to 20.4 billion yen in 2019.

However, due to the impact of the Covid-19 pandemic, the investment activities of Japanese companies in Southeast Asia were also strongly affected. About 80% of Japanese enterprises doing business abroad forecast a decrease in revenue this year, while sharply reducing investment capital in the Asian market. Japanese investment in Southeast Asia alone fell 35% in the first five months of this year.

Recently, Japan is also implementing a project to diversify the ASEAN supply chain to avoid concentrating production activities in a certain country. Accordingly, the production activities of a number of Japanese enterprises, which are concentrated in China, will be partially shifted to ASEAN countries to avoid supply chain disruptions due to unpredictable fluctuations such as Covid-19.

The Japanese government will select a number of businesses to support their costs in expanding production and business activities to ASEAN countries, including Vietnam. In the first phase, 15 out of 30 Japanese enterprises received financial support and chose to expand production in Vietnam.

Source: vnexpress.

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