Japanese companies relocating from China to India

Published: September 5, 2020

The Japanese government has said that it will provide subsidies to Japanese companies that shift their manufacturing setup from China to India, Bangladesh and ASEAN Countries. This decision has been taken as world’s supply chain was disrupted after the outbreak of COVID-19 which originated in China. The countries have now started mulling on options to either exit from China and reduce their dependence on it with respect to trade or other procurements. Japan too aims to decentralise its supply chain by reducing its dependence on a particular country for medical and well as electronic components supply. The Japanese government has allocated 23.5 billion yen in the 2020 supplemental budget for the subsidy to encourage companies to disperse their manufacturing sites across the ASEAN region.

Why China is being Criticised?

  • COVID-19 pandemic originated there.
  • It imposed draconian national security law in Hong Kong, in turn threatening the autonomy of the trade city.
  • The ASEAN countries, Australia, India, Japan and the US have moved against China for its aggression in the South China Sea.

Earlier, Bangladesh has been added to the list of countries which will qualify for subsidy for the Japanese companies which shift their production base out of China. To diversify its supply chain, Japan has decided that Japanese manufacturers will now be eligible for subsidies if they shift production out of China to India or Bangladesh. The program falls under the broader effort of Supply Chain Resilience Initiative (SCRI) initiated by Japan in the backdrop of the recent disruption in medical supplies and electrical components after the COVID 19 pandemic hit the world.

About ASEAN countries

The Association of Southeast Asian Nations is a regional grouping that promotes economic, political, and security cooperation. It has ten members: Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam.

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