Japanese manufacturers linked to China suffer disruption

Japanese manufacturers linked to China suffer disruption

07 Feb 2020

Export and import activities of Japanese manufacturing companies that are linked to China have been disrupted due to the limited production as a result of the novel coronavirus outbreak in Wuhan, Hubei Province.

Japan External Trade Organisation Malaysia MD Mai Onozawa said according to the ongoing survey by Japanese Chamber of Trade and Industry Malaysia (JACTIM), Japanese companies have been restructuring their production plans to accommodate the shrinking activities in China.

“Currently, we are collecting responses from 60 JACTIM members on the virus outbreak in China and 46% of them foresee some changes in their operations.

“Most Japanese manufacturers in Malaysia are involved in export or import activities with China. Some companies purchase parts and materials from China and some are selling their products there.

“Due to the shrinking manufacturing activities in China, Japanese firms that are exporting to China have to change their production plans according to China’s demand, while those who import have to stop,” she said at a media briefing in Kuala Lumpur yesterday.

Onozawa said tighter regulations at the customs checkpoints put in place recently to prevent the virus from spreading have contributed to the disruption of the supply chain.

“Procedures at the customs have been increased, which translates into tighter procedures for the logistics as well, and Japanese companies in Malaysia are pessimistic on this because most of them are involved in the export and import market,” she said.

The flu-like virus, which has claimed at least 560 lives, is expected to impede global export activities,
particularly the Phase 1 trade deal between the US and China signed in January.

Commenting on the business sentiment in Malaysia, JACTIM VP Daiji Kojima said the country continues to be an attractive investment destination for Japanese firms.

“The business environment in Malaysia has been convenient as it is a developing country and the operating cost is considered to be in the medium range.

“Geographically, the location is practical for businesses to grow. However, the incentives in Malaysia are not attractive compared to other Asean countries as most of them are trying to reduce corporate tax. In Malaysia, it is a bit higher,” he said.

Source: The Malaysian Reserve