What's new

Japan adds India and Bangladesh to 'China exit' subsidy destinations

Black_cats

SENIOR MEMBER
Dec 31, 2010
6,144
-5
8,878
Japan adds India and Bangladesh to 'China exit' subsidy destinations

Industry ministry launches second round of program to diversify supply chains


Workers assemble air conditioners for Japan's Daikin Industries at a plant in Neemrana, India. © Reuters

TAKAKO GAKUTO, Nikkei staff writerSeptember 4, 2020 00:10 JST

TOKYO -- Japanese manufacturers will now be eligible for subsidies if they shift production out of China to India or Bangladesh, in an expansion of a government program aimed at diversifying the country's supply chains.

The government's supplementary budget for fiscal 2020 earmarked 23.5 billion yen ($221 million) for companies that move production to Southeast Asian nations. When the Ministry of Economy, Trade and Industry opened up a second round of applications on Thursday, it added "projects that contribute to the resilience of the Japan-ASEAN supply chain" to the list of qualifying moves, eyeing relocations to countries such as India and Bangladesh.

Manufacturers can receive subsidies for feasibility studies and pilot programs. The total amount granted is expected to run into the tens of millions of dollars.

The program aims to reduce Japan's reliance on a handful of links in its supply chains, particularly China, and ensure a steady flow of such products as medical supplies and electrical components in an emergency. This issue came to the forefront with China's shutdown in the early days of the pandemic.

The first round of subsidies announced in Julygranted more than 10 billion yen to 30 companies relocating manufacturing to Southeast Asia, such as Hoya, which is moving production of electronic components to Vietnam and Laos. Another 57 are receiving support for shifting production facilities to Japan.

 

mb444

SENIOR MEMBER
Apr 18, 2012
3,226
0
5,074
Country
United Kingdom
Location
United Kingdom
Good stuff....hope something materialises out of this initiative
 

Bilal9

ELITE MEMBER
Feb 4, 2014
14,000
2
22,091
Country
Bangladesh
Location
United States
India and Bangladesh will both receive relocation subsidies, but for different reasons.

Bangladesh will attract businesses in Japan who need to use lower export labor wages (half that of India and Vietnam, one third that of China). This will be products that have a much more labor intensive value addition regime and products which are more in the mass market price-sensitive (Walmart or Target type scenario rather than High Street or Macy's situation) and not maybe as time-sensitive to manufacture.

India will attract Japanese manufacturers who want to produce FOR LOCAL INDIAN MARKET which is substantial. Like that Daikin Aircon factory. India is not meant to become an export powerhouse anytime soon (or to replace China as one). Despite the trade war between US and China. That honor will go to Vietnam and hopefully places like Bangladesh.

To be honest - Japanese businesses don't really need a subsidy to make business sense out of manufacturing in Bangladesh, just like Chinese businesses.

There are lots of Chinese businesses that already relocated to Bangladesh...
 
Last edited:

Users Who Are Viewing This Thread (Total: 1, Members: 0, Guests: 1)

Top