(Yicai) Nov. 14 -- Panasonic has relocated some production to China from Southeast Asia to take advantage of China being in the world’s biggest free trade area, lower tariffs, and a favorable supply chain and workforce of engineers, according to an executive vice president at the Japanese electronics giant.

Panasonic has moved the manufacture of vacuum insulation panels to its Chongqing plant from Thailand and that of refrigerator compressors to its Wuxi factory from Malaysia and Singapore, Tetsuro Homma told Yicai at the recently concluded China International Import Expo.

Homma, who is also the Osaka-based firm’s regional head for China and Northeast Asia, noted that the effects of the Regional Comprehensive Economic Partnership are now taking hold, with tariffs between China and many Asian countries already lower.

The RCEP, which came into force at the start of 2022, has 15 member countries in the Asia-Pacific area and aims to reduce trade barriers and promote economic integration, simplifying and lowering costs for regional manufacturing and exports. It is the world's largest FTA by gross domestic product.

Panasonic is reorganizing its production layout and is considering selling home appliances developed by the Chinese team to the Asia-Pacific market, Homma said. The decision to shift some output to China from Malaysia, Thailand, and Singapore was also the result of two critical factors: the country’s supply chain advantages and its strong engineering workforce, he added.

The move reflects a wider trend among multinational corporations leveraging China’s cost-effectiveness and technical strengths in the manufacturing sector. Firms such as Apple supplier Foxconn moved production out of China to Southeast Asia not long ago, but have now returned for a number of reasons such as overall costs, local policies, and the supply chain, according to Wang Juan, a senior analyst at data analysis platform ChinaOL.

Pansaonic’s new Chongqing factory was completed in April and has twice the capacity of the old plant, a staffer said. The plan is for it to become the company’s largest base for the research, development, and production of vacuum insulation panels, supplying the Chinese and global markets.

Wuxi will host Panasonic’s biggest refrigerator R&D and manufacturing base, where annual production of refrigerators now stands at 1.1 million units and high-end refrigerator compressors at 3 million units, Homma said.

Panasonic has also merged its high-end compressor production and R&D center in Singapore with that in Wuxi. Aside from labor costs, this shift underscores China’s emerging global leadership in home appliance R&D, Wang said.

The RCEP comprises six members of the Association of South-East Asian Nations, namely Brunei, Cambodia, Laos, Singapore, Thailand, and Vietnam, and four non-ASEAN countries: China, Japan, New Zealand, and Australia.

Editor: Kim Taylor