According to the “Japan Economic News” report on the 14th, due to the impact of the COVID-19 epidemic, about 10% of Japanese companies investing and operating in southern China, such as Guangdong Province, China, are studying to shift their operations from China to overseas. In China, many companies are gradually returning to normal operations, but the excessive concentration of supply chains seems to be a business risk for Japanese companies. However, as the epidemic situation improves, companies have become more calm about transferring production capacity.
Removal willingness is decreasing
“Japan Economic News” reported that a few days ago, the Japanese Trade Promotion Agency Guangzhou Office conducted a questionnaire survey on Japanese companies in South China and received responses from 361 companies. Among them, in response to the question of whether to transfer business in China to overseas due to the expansion of the COVID-19 epidemic, 2.9% of the respondents responded to “use this epidemic as an opportunity for research transfer” and 5.4% of the respondents said that “the original Research transfer, but accelerated due to the epidemic, “these two totaled 8.3%. From the point of view of the target country of transfer business, Japan is the first choice, followed by Vietnam.
It is worth noting that the results of this survey are significantly reduced compared to the previous companies that wished to relocate during the survey. At the end of February, the Japan Trade Promotion Agency also conducted the same survey. At that time, as many as 15% of Japanese companies in China who considered transferring were far higher than this latest survey. In response, the head of the Japan Trade Promotion Agency Guangzhou Office, Kiyomizumi, told “Japan Economic News” that this indicates that the current COVID-19 virus infection situation is becoming quieter, and the company has become calmer.
Many companies strengthen production in China
Japan’s Mitsubishi UFJ Morgan Stanley Securities chief economist Li Zhixiong wrote on the “WEDGE” website on the 15th that China’s Spring Festival vacation in February was extended due to the epidemic, making it impossible for workers engaged in manufacturing to resume work. As a result, some materials and components required by Japan cannot be imported from China, and some local factories have to stop production and shutdown.
“Japan Economic News” reported that China’s southern China region has gathered a lot of manufacturing companies, known as world factories. At present, the companies have basically resumed work, but the Japanese government decided to reconstruct international products in view of the supply disruption caused by the epidemic. Supply chain and provide subsidies for the return of Japanese companies abroad.
However, the report also emphasized that in fact, the resumption of Japanese companies in China is making progress. Among the Japanese companies surveyed this time, 98.0% of the companies indicated that production and operations have been resumed, and those with an operating rate of 100% after resumption accounted for 41.4% of the total, and those with an operating rate of 80% -100% accounted for 42.3 %.
Japan’s “WEDGE” website said that despite the problems of rising labor prices in China in recent years, the quality of Chinese workers is also gradually improving, and the per capita production capacity is also increasing. Instead, there are many Japanese companies that are strengthening Chinese production. Therefore, the return subsidy provided by the Japanese government for overseas Japanese companies is only one of the factors that encourages companies to consider returning. For companies that need high added value, they will continue to choose to stay in China.
China still has ideal investment opportunities
Huo Jianguo, vice chairman of the China World Trade Organization Research Association, told the Global Times on the 15th that the international production chain in Japan’s domestic production was not smooth due to the epidemic. It may be to stimulate the domestic economy affected by the epidemic, so it intends to recall the foreign industrial chain. However, from the perspective of China’s attraction of foreign investment in recent years, large-scale or high-tech industries have not been affected and are still flowing into China. Japan’s withdrawal of production capacity, such as household appliances, has been basically unable to compete with Chinese companies.
Zong Changqing, director of the Department of Foreign Investment of the Ministry of Commerce, previously stated that China’s important position in the global supply chain and industrial chain will not change due to the impact of the epidemic, and there has been no large-scale transfer of the supply chain and industrial chain to foreign countries due to the impact of the epidemic. phenomenon. Generally speaking, the investment and management decisions of multinational investors are long-term, comprehensive and strategic, and the impact of short-term epidemic situation is limited, but it does not rule out making some emergency and tactical adjustments.
Since the beginning of this year, although the total amount of foreign investment attracted by China has declined year-on-year due to the epidemic, the use of foreign capital by high-tech service industries has increased substantially. The Ministry of Commerce announced on the 15th that the national absorption of foreign capital in the first quarter showed that from January to March 2020, affected by the COVID-19 epidemic, the actual use of foreign capital in the country was 216.19 billion yuan, down 10.8% year-on-year (equivalent to 31.2 billion U.S. dollars, down 12.8 %; Excluding banks, securities, and insurance). From January to March, the actual use of foreign capital in the high-tech service industry increased by 15.5% year-on-year, accounting for 29.9% of the service industry. Among them, information services, e-commerce services, and professional technical services increased by 28.5%, 62.4%, and 95% respectively.
China’s ability to respond to the epidemic, and the first to resume production, also brought confidence to international capital. Su Shimin, global chairman and chief executive officer of the US Blackstone Group, said on the 14th that the US and China experienced the same situation and the market experienced a downturn. “I think China will recover faster than other countries, so from a global perspective, I think China has more ideal investment opportunities.”