Transformation of Japanese companies’ investments in Asia

From the perspective of reducing the impact on the supply chain based on economic security

Abstract

FY2022 can be said to be the first year of economic security, with the Economic Security Promotion Act being enacted. Since the second fiscal year on economic security, the US-China confrontation has become more acute, with sensitive areas expanding to areas that do not conflict with Made in China 2025, and non-sensitive areas expanding to areas that do not conflict with business and human rights. Japanese companies are required to have even greater risk management capabilities related to Asian supply chains. In this environment, the Global South, such as ASEAN and India, is attracting attention as a new destination for derisking China. Furthermore, developed countries such as the United States are also attracting attention. This is because developed countries, inspired by China, are becoming more proactive in attracting companies through financial support through large-scale subsidies. If the US-China confrontation is likely to be prolonged, it would be a good idea to expand production capacity by temporarily increasing capital investment costs by investing in the Global South or developed countries. In addition, returning to Japan is also an option, but in that case, it is desirable to have products for the Japanese domestic market, and if it is a global product, it is necessary to be careful, but in doing so, it is important to promote economic security. It will be a tailwind.