Business More German firms moving from China to Japan

A recent survey conducted by the German Chamber of Commerce and Industry in Japan and accounting giant KPMG in Germany, with 164 firms responding to the survey released on 27 March, has shown more German companies see Japan as a stable choice for production in Asia amid geopolitical tension and uncertainties over trade restrictions involving China.

Japan's appeal as a business destination is underscored by its reliable legal framework, compatible values, and economic stability—notably, 94% of German companies participating in the survey value Japan's financial strength. Additionally, 92% of German companies generated profits in Japan in 2023, with 21% achieving pre-tax profit margins of more than 10%. The top reasons for engagement in Japan include revenue potential, trend scouting, and competitive analysis.

As geopolitical and economic challenges persist, Japan remains a haven for businesses seeking stability. Its reputation for reliability, strong business relationships, and social stability remains intact. 26% of German companies now designate Japan as their regional Asian base, placing it second only to Singapore. This trend reflects a strategic goal of increased diversification and a shift away from China due to various challenges. The changing landscape prompts German companies to reevaluate their focus, considering cheap labour costs and the growing political and geopolitical issues. Concerns about exporting from China to the United States add to these companies' decision-making complexity.

Other concerns include industrial espionage and friction with Chinese authorities that could, in extreme cases, lead to a company being blacklisted. A German business executive for a company with operations in both Japan and China said firms need to have "countermeasures" prepared if they are blacklisted by the authorities or are threatened with blacklisting. The executive declined to be named. Schulz agrees that there are sound reasons for companies transferring "sensitive functions" to Japan, although there are plenty of "pull functions" in Japan's favour.

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More than 90% of firms taking part in the survey said stability — economic stability, the stability of business relationships and safety and social stability — were their prime motivations for being in Japan.

thomas said:

More than 90% of firms taking part in the survey said stability — economic stability, the stability of business relationships and safety and social stability — were their prime motivations for being in Japan.

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That's tatemae. The real reason is all the hostess clubs and strong patriarchy still in place.

Sounds like some fresh opportunities are coming your way, @thomas !!