Japan Offers Huge Subsidies to Companies Moving Out of China

Tokyo, Japan - As part of a new program to reduce dependence on China for manufacturing, Japan Government has now planned to pay $536 million to companies to shift their factories out of China and move them back home or in other Southeast Asian countries.

According to a Bloomberg report, 57 companies including facemask-maker Iris Ohyama Inc and Sharp Corp would be receiving 57.4 billion yen or $536 million in subsidies from the government. Another 30 firms have been identified under the program to move factories to Vietnam, Myanmar, Thailand and other Southeast Asian countries, stated the Ministry of Economy, Trade and Industry. It has not disclosed information on the compensation to be offered to these companies.

Japan’s decision mirrors a Taiwanese policy in 2019, which was also aimed at bringing investment back home from China. With worsening US-China relations, there have been similar plans being chalked out in the US and elsewhere to reduce dependency on China. Post-India-China border tensions, the Indian government also banned 59 Chinese apps including TikTok, UC Browser, Shein and more. The government has also rescinded several contracts with Chinese firms over security concerns.

China has been Japan's biggest trading partner with Japanese companies having massive investments in China. The outbreak of Covid-19 has severed their economic ties and deteriorated China’s image in Japan. Japanese Prime Minister Shinzo Abe has been trying to improve relations with China after anti-Japan riots in 2012, but the fallout from the pandemic and the continuing territorial dispute over islands and gas fields in the East China Sea has changed the course of their relationship.

Image Source: Magic Wand Media

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