Japanese companies are increasingly manufacturing outside of China in a bid to reduce dependency on the industrial powerhouse in favor of other Asian nations with India and Vietnam in favor.
Many Japanese companies with a footprint in Vietnam and India have plans to grow in-country operations in the next year, according to results of a December survey by Tokyo-based human resources firm Pasona Group.
Among the 818 Japanese businesses polled across 11 countries, an average of 39% said they would be expanding their enterprise in the foreign country in question while 67% said they intended to keep their current level of operations moving forward.
Roughly 20% of the world's manufacturing is done in China, compared with 18% in the U.S. and 3% in India, data gathered by research group Brookings shows.
To reduce reliance on China, many international businesses are taking a "China Plus One" approach in which they invest in growing their operations in an additional country, predominantly India or Vietnam according to the survey.
"We expect greater manufacturing investment to come," Rajiv Kumar, Indian economist and vice-chairman of the government think tank NITI Aayog, said on Monday in an interview with local news outlet Zee Business.
"The [2020-2021 budget] policy has been prepared for China Plus One, under which anyone shifting to India from China will get a good place to work."
Nearly a third of Japanese companies in Thailand plan on downsizing their operations in the next three months. This falls slightly to 28% and 22% for businesses with interests in Malaysia and Hong Kong, respectively.
While the pandemic has hampered many international business ventures and expansion plans, it may prove a boon to companies' overseas offices. The survey found that 20% of Japanese groups plan on growing their regional headquarters in part thanks to travel difficulties that prevent interaction with head offices in Japan.
Taken between Dec 7 to 12, the 11 countries referenced in the Pasona survey are the United States, Canada, Taiwan, Hong Kong, South Korea, Thailand, Vietnam, Indonesia, India, Malaysia and Singapore.