Japan's Masterstroke! To bring back its companies from China

Tokyo, July 20: In a bid to secure supply chains and reduce manufacturing dependency on China, Japan government is going to give subsidies to its companies to move factories out of China and establish them back at home or in other Southeast Asian countries.

 

 

As of now, fifty-seven is set to be incentivised with a total of $536 million (57.4 billion Yen) as a subsidy for moving their factories from China to Japan. These companies including privately-held facemask-maker Iris Ohyama Inc. and Sharp Corp. On the other hand, an additional 30 companies will receive funds by the Japanese Government to shift their factories out of China to Southeast Asian nations like Vietnam, Myanmar, and Thailand other Southeast Asian nations.

 

Japnese government has earmarked 243.5 billion Yen for the program which is precisely aimed at reducing the dependence on Chinese supply chains. In the report, it was mentioned that the firms will source the raw material for their products from local vendors instead of getting them from suppliers from China and other countries.

 

China is Japan’s biggest trading partner under normal circumstances and Japanese companies have massive investments there. However Coronavirus pandemic and China’s aggressive attitude in the South China Sea have soured ties between the two countries. It has forced Japan to take strong steps against China. Japan is not the only country to take such a decision.

 

India is also cutting ties with Chinese companies under the Prime Minister Modi's initiative Aatma Nirbhar Bharat campaign. It has ended contracts with several Chinese companies after the India-China border tensions. The government banned 59 Chinese apps, including TikTok, UC Browser, Shein, and more.