Half of Japanese firms in Vietnam plan to expand in-country operations

• Half of Japanese firms in Vietnam and India plan to boost operations a sign of a shift toward reducing reliance on China as a production base in what is known as a “China plus one” strategy.

• Hong Kong stood lowest at only 13% in the wake of deterioration in the trade environment following China’s dismissal of pro-democracy lawmakers and crackdowns on democracy activists.

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Over half of Japanese businesses in Vietnam and India have plans to expand their in-country operations, a recent survey showed, a sign of a shift toward reducing reliance on China as a production base in what is known as a “China plus one” strategy, Japan Times reported.

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In the online survey conducted by the firm Pasona Group Inc. last December, 57% of Japanese companies in Vietnam and 55% in India said they will expand operations in the host countries, compared with the average of 39% among all 11 countries and regions polled.

In contrast, Hong Kong stood lowest at only 13% in the wake of deterioration in the trade environment following China’s dismissal of pro-democracy lawmakers and crackdowns on democracy activists in the former British colony, according to the survey.

Of the 818 companies polled, 67% said they plan to keep their current level of operations in the 11 economies.

The survey said 20% responded they plan to add and strengthen the operations at their regional headquarters, partly due to difficulties in making business trips to and from head offices in Japan amid the coronavirus pandemic.

With Southeast Asian countries hit hard by the pandemic, 30% of Japanese companies in Thailand, 28% in Malaysia and 22% in Hong Kong said they have downsized staffing or plan to do so within the next three months.

The average across all respondents stood at 16%.

The growing trend of remote work brought on by the pandemic coupled with high real estate prices has also encouraged firms to downsize offices, with at least 15% in Hong Kong, Singapore and Indonesia saying they have or plan to do so.

Out of the respondents in the 11 economies, 74% cited lack of communication between employees as an issue of concern regarding remote working, followed by 59% who cited performance evaluations of staff.

The economies covered by the Dec. 7-12 survey are the United States, Canada, Hong Kong, Taiwan, South Korea, Thailand, Vietnam, Malaysia, Singapore, Indonesia and India, according to the Japan Times.

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Source: Vietnam Insider