A recent survey on supply chains found that more than 50% of Japanese manufacturers intend to reduce reliance on Chinese dealers amid the heightened U.S.-China trade war.
Nikkei Asia reported that 53% of Japanese firms responded that they want to cut the procurement ratio from China in their international production. Among them, 60% were machinery companies, 57% were automotive and chemical, and 55% were electronics.
The outlet did the survey in mid-November, with participation from 79 out of the top 100 manufacturers in Japan.
The survey data shows that 78% of the respondents saw a growing risk in purchasing components and raw materials from China compared to the last six months.
In addition, 34% of survey participants currently reduce procurement from Chinese suppliers by “5% to almost 20%,” while 22% purchase “less than 5%” than they did before.
Regarding the reasons to reduce reliance on China, 80% of the surveyed firms cited Taiwan concerns, while 67% cited a stringent “zero-COVID” policy.
Of those that plan to reduce Chinese dependence, roughly 86% think of Japan as an alternative, followed by Thailand (76%) and other Southeast Asian nations.
For example, Panasonic has shifted some of its manufacturing of vacuum cleaners and other products in China back to Japan. DMG Mori has also transferred its purchase of casting components for equipment tools to Japan.
Since 2020, office equipment manufacturer Oki has switched its production of ATMs and printers from China to other countries, such as Vietnam. Even though the firm still needs to obtain some parts from China, it plans to procure all parts outside China in the future.
Data from the United Nations Conference on Trade and Development shows that the world’s total imports from China last year reached $3.3 trillion.
For Japan, Chinese products make up 26% of the country’s total imports. Japan’s Cabinet Office disclosed that among 1,133 imported products, including PC parts and textiles, more than 50% come from China.
Additionally, Nikkei’s survey results show 38% of Japanese manufacturers said that China supplies over 80% of their required parts and materials, including vehicles and food ingredients.
However, 43% of the respondents still decided to proceed with “selecting alternative suppliers,” and 32% wanted to “design changes to alternative parts” for sustainable procurement.
Xin Tang Ren reported that He Xianhan, president of Tokyo-based chip equipment supplier Ferrotec, said that Japanese firms have turned down requests from Chinese chipmakers to supply the products that the U.S. would no longer provide.
The chief of Ferrotec, which makes 80% of its products in China, told Financial Times that the Hangzhou-based firm is currently expediting plans to expand production outside China in response to requests from U.S. clients, including Lam Research and Applied Materials.