(Yicai Global) May 18 -- Shifting the industrial chain to Japan or a third country after Covid-19 is unlikely as the Chinese market is the most important for Japanese firms in the country, though the government in Tokyo does want some industries back, the head of the Japan External Trade Organization Shanghai recently told Yicai Global, citing these firms.

Most of the country’s companies in China are actually considering expanding investment, rather than moving the industrial chain back, said JETRO President Michiaki Oguri. For example, cosmetics giant Shiseido set up a research and development institute in Shanghai’s southern Fengxian district -- the eastern megacity’s dedicated ‘Beauty Valley’ -- during the pestilence.

Sweetened probiotic milk beverage producer Yakult similarly chose to expand its plant in the neighboring city of Wuxi. An even more remarkable investment expansion dynamic will be visible among Japan’s car firms after the coronavirus, especially with Toyota Motor, which has invested quite a bit in the Chinese market and had much cooperation with it since last year.

Shinzo Abe’s government specially set aside USD2.2 billion to encourage Japanese firms to diversify manufacturing and production in the country's biggest- ever stimulus package worth almost USD1 trillion to cope with the pandemic’s impact on the supply chain.

The policy did not specify a country or state an intention to transfer the industrial chain, Oguri said, but the national government does hope some main sectors related to the nation's life, among them the face mask, medical equipment and car industries, can move back as supplies from China proved insufficient, the Japanese government found during the pandemic, he stressed.

Starting Over

JETRO's Shanghai office surveys Japanese firms in east-central China each month, canvassing the 710 of these based in Shanghai and the adjacent provinces of Jiangsu, Zhejiang and Anhui.

Almost all these firms have resumed work and production, last month’s most recent survey found. Japan's big three car firms resumed operations more quickly in the entire Chinese market than their US and European peers, he noted, adding they have basically pulled through the crisis.

Shanghai’s government ushered in policies on Feb. 7 to effectively ease the difficulties the epidemic has inflicted on companies. Chinese authorities very quickly brought in corresponding policies during the epidemic, many conducive to overseas-funded companies' resumption of work and business, he stated.

Oguri communicated with Shanghai’s commerce commission a great deal during the epidemic and he feels the Chinese government has treated domestic and foreign firms equally, which gave him the profound realization that the business environment in Shanghai and even China as a whole is very good indeed.

Editor: Ben Armour