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Thread: Japanese investors pick Asean over China

  1. #1
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    Default Japanese investors pick Asean over China

    Japanese investors pick Asean over China
    Amid a maritime territorial row between China and Japan, Japanese firms may continue to favour Asean
    Ho Ai Li
    The Straits Times
    Publication Date : 24-10-2012
    In two years, a town designed by Japan rail and property developer Tokyu will take shape in Binh Duong, north of Ho Chi Minh City in Vietnam.

    In Thailand, more Japanese restaurant chains like Yoshinoya have sprung up in the last year or so, while in Singapore, Kinokuniya is opening its fourth bookstore.

    Japan has invested more in Southeast Asia than in China over the last two years and this looks set to continue as Sino-Japanese ties hit the rocks over a territorial spat in the East China Sea.

    Last year, Japan's investments in Malaysia, Indonesia, Thailand and the Philippines alone reached US$13 billion, pipping for the first time its investments in China.

    And in the second quarter this year, Japan invested 380 billion yen (US$4.7 billion) in Asean, more than the 300 billion yen that went to China.

    "Many Japanese companies couldn't deal with the big rise in wages there," said Naoko Fuji kawa, investment manager at the Asean-Japan Centre in Tokyo, referring to China.

    A rapid rise in the middle classes has also made Asean "one of the most tempting markets in the world today", she added.

    Observers say the shift reflects Japan's "China plus one" strategy, which sees it spreading out risks by betting on another emerging economy.

    Some Japanese investors are also moving manufacturing to Asean to cash in on the China- Asean free trade area, which allows them to export goods made in Asean to China with little or no tariffs.

    Overall, there has been a greater outflow of Japanese investments after last year's massive earthquake on March 11, which destroyed infrastructure and cut energy production in Japan.

    Coupled with the strong yen, this has led to a doubling in Japan's outward foreign direct investment to US$115.7 billion last year, compared with 2010.

    The United States received the largest amount of Japanese investment last year, with US$14.7 billion, according to the Japan External Trade Organisation.

    Many Asean countries are also actively wooing the Japanese to get a bigger slice of the pie.

    "The Philippines has been offering tax incentives, while many new plants have gone up in Indonesia and Thailand," said Alaistair Chan, an economist at Moody's Analytics.

    Japanese carmakers, which have seen sales in China plunge after the dispute over the island chain - which Japan calls Senkaku and China calls Diaoyu - are gearing up for expansion in the likes of Thailand and Indonesia.

    Suzuki Motor, for instance, started its first factory in Thailand this year, with a capacity to make 50,000 units a year.

    Japan's biggest automaker Toyota, which the Nikkei business daily reports is cutting its target of producing 10 million vehicles this year after slashing output in China, made big investments in Indonesia last year and this year.

    Their rivals, as well as suppliers, soon followed.

    It is not just factories. Japanese department stores and restaurants are also shifting their focus from China to Asean countries.

    Takashimaya plans to invest up to 35 billion yen in the region by 2016, twice as much as that for China; convenience chain Family Mart is slowing down expansion in China to go into Indonesia, where it aims to open 500 stores in five years, reported Nikkei.

    Japanese restaurants, many of which had to close for business during the worst of the anti-Japanese protests in China last month, are looking to focus more on Asean. "In Thailand and other South-east Asian countries, people are pro-Japan, so it's easy to do business," a restaurant spokesman told the Yomiuri newspaper.

    With tensions between China and Japan unlikely to abate soon, Japanese businesses may continue to favour Asean.

    The Asean-Japan Centre, for instance, has received more queries of late from those keen to do business in Asean, said Fujikawa.

    "The recent situation with China has made Japanese companies more interested," she added.

  2. #2
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    Default More Japanese firms relocating to Singapore

    Tuesday, Aug. 14, 2012





    More Japanese firms relocating to Singapore


    By SITI RAHIL

    Kyodo

    SINGAPORE A growing number of Japanese companies have moved some of their headquarters or key functions to Singapore, viewing the city-state as a strategic location where they can oversee a new wave of investment in Southeast Asia.



    Panasonic Corp. and Mitsui Chemicals Inc. recently moved some key functions from Japan to Singapore, while Hoya Surgical Optics Inc. not only established its headquarters in Singapore, but had Chief Executive Officer Hiroshi Suzuki transfer in to oversee the company's global operations.

    With the rise of Asia, companies have "increasingly relocated their senior decision makers to Singapore, to enable nimble decision making from the heart of Asia," Singapore's Economic Development Board said in an email.

    "We have seen more companies undertaking their strategic functions out of Singapore, such as headquarters, strategic business development, research and development, supply chain control and talent development," the board said.

    According to a survey by the Japan External Trade Organization released earlier this year, 36 percent of the 213 Japanese companies in Singapore that responded to its survey said they are involved in regional headquarters functions, while another 27 percent said they were considering moving more of their headquarters functions to Singapore.

    Observers say the trend accelerated after the devastating earthquake and tsunami that hit Japan in March last year and awakened Japanese companies to the need to diversify their operations to reduce future risks.

    Toru Yoshikawa, associate professor of strategic management at Singapore Management University, says the trend reflects that Japanese companies are now turning their attention to the fast-growing markets of Southeast Asia now that China's red-hot economy has begun to lose steam.

    "While the growth of the Chinese market is slowing, on the contrary some Asian countries such as Indonesia or Myanmar are growing, and Singapore is an ideal hub to enter these neighboring markets," Yoshikawa said.

    JETRO President Hidehiro Yokoo said at a forum in Singapore recently that Japanese foreign direct investment in Southeast Asia has exceeded Japanese investment in China in recent years.

    "We can see the new trend of Japanese FDI to ASEAN," he said, citing increased Japanese corporate interest in countries in regional emerging countries, more investment into the service industry, such as restaurants and retailing, and also into higher value-added manufacturing industries and growing interest from small and midsize enterprises to look for opportunities outside Japan.

    Yoshikawa said Singapore offers some advantages that may be lacking back home.

    "Japanese companies want to globalize their operations by hiring staff with diverse cultural backgrounds, and while Japan may have highly competent engineers and managers, they don't have much experience operating in multicultural environments, so Singapore is an ideal location because they can hire English-speaking staff," Yoshikawa said.

    The advantages often cited in Singapore are its strategic geographical location, an efficient infrastructure such as Internet connectivity, and one of the world's busiest seaports.

    Another factor is the government's probusiness policies, such as competitive taxes.

    Singapore has been slashing its corporate tax rate in recent years and at 17 percent has one of the lowest in Asia. Japan's corporate tax rate is 30 percent.

    It also has a flexible immigration policy that makes it easier for companies to recruit staff from all over the world, while a bilingual education policy has ensured a workforce that can speak not only English but also Chinese and other local languages.

    Japan's small and midsize enterprises are also moving their headquarters from Japan to Singapore.

    Shunsuke Sato, the chief executive officer of Satisfaction Guaranteed, a company that markets quality Japanese fashion brands online, decided to move SG's headquarters from Japan to Singapore in November last year because he finds the business environment here more vibrant and conducive for smaller companies like his.

    Singapore is a more attractive base to reach out to the company's fans, which the company says are mostly in Asia.

    Sato said he chose Singapore because he prefers to hire workers of different nationalities who will have a more in-depth knowledge of local markets.

    There are also more business opportunities here because firms are less constrained by Japanese-style seniority-based decision making and more open to offering partnerships or collaboration with smaller firms.

    Panasonic has been relocating its global procurement and logistics headquarters from its head office in Osaka to Singapore this year, the first time the company has shifted headquarters functions outside of Japan.

    Masaaki Hieda, managing director of Panasonic System Communication Asia Pacific Singapore, which was established in Singapore in January this year, said that while key its operations were largely confined to Japan, Panasonic plans to do more test marketing and develop new models in Singapore.

    He said that he has been impressed by the faster decision making and the vibrant business atmosphere in Singapore.

    In May this year, Panasonic reported its largest-ever group net loss of 772.17 billion for the year to March. This condition could prompt the company accelerate its shift of focus to Asia.

  3. #3
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    been happening for awhile now. China coastal city is now getting too expensive and with the bad blood between China and Japan from the past, it is inevitable that Japanese companies will start looking into SE-Asia.

    Indo and Philipppines are looking good and the next one will be Myanmar.

    Good for Singapore

  4. #4
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    Chinese never like Japanese.

  5. #5
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    Quote Originally Posted by hyenergix
    Chinese never like Japanese.
    is that so..?

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