Posted on 07/03/2005 7:03:14 AM PDT by TigerLikesRooster
Japanese companies should rely less on China, because of its political and microeconomic risks, and increase production in countries of the Association of South East Asian Nations, the trade ministry said in its annual white paper yesterday.
"We believe there are many risks that may prevent foreign and Japanese firms from keeping their operations [in China]. We want to be whistle-blowers about these risks," said Susumu Okamoto, a deputy director in the trade policy bureau at the Ministry of Economy, Trade and Industry.
Last year China surpassed the US to become Japan's biggest trading partner for the first time since records began. Some Japanese government officials have emphasised the importance of building ties with Asian neighbours as a bulwark against China's growing influence.
The Meti report also comes amid heightened political tensions between the two countries following April's demonstrations in China when Japanese commercial and diplomatic interests were attacked.
The white paper warned of China's "underdeveloped, opaque legal system", the poor enforcement of intellectual property rights, shortage of qualified local managerial staff and power outages.
It said there is no big difference between China and Asean countries with regard to production costs, and pointed out labour costs in hiring Chinese middle management are relatively high due to their scarcity.
The trade ministry highlighted India as a country with a promising investment climate. It said India had "the possibility of becoming an enormous growing market for export". Although Japan's foreign direct investment in India peaked in about 1997, the report showed 91 per cent of surveyed Japanese manufacturers plan to expand the scale of their operations in India in the near term.
The report also pointed to the rapidly growing rift between the richest and poorest people in China. From 1994-97, there was just a 3 per cent gap between the top 10 and bottom 10 per cent income bracket; by 2000-03, this gap had widened to 16 per cent.
Mr Okamoto said the report was "a tool with which to understand the reality of the Chinese economy, from an objective perspective". Some Japanese companies were in danger of having a myopic view of China, he said.
"Some companies only understand [China] from where their local units are based, and cannot fully understand the macro situation," said Mr Okamoto. "It is useful to let other firms know what the risks are in the Chinese market, so they can use them to create strategic plans for future Chinese operations."
The paper advocates that Japanese companies should build "an optimal network in east Asia" and develop strategies "for mitigating the over-concentration of risk, with an eye to the possibility of a network with Asean".
Japan has been in preliminary talks with the 10-member Asean since April in efforts to forge a trade agreement. "We don't want to see Chinese growth as a threat, we want to create win-win relations with China," said Mr Okamoto.
(1) Put economic pressure trumpeting China's business risks upfront.
(2) Refuse to yield on territorial disputes(Daoyutai Island, Okinotorishima, and gas deposits.)
(3) Maintain military cooperation with Taiwan.
(4) Develop missile defense with U.S..
Ping!
Yes, and I think this from METI will be receive some action.
They live far too clse to, and see THIS much more readily than we do and realize, left unabated, where it will lead..
This kind of realization is overdue from both Japan and the US. Yes, companies like cheap labor, but cheap labor is to be found many places in the third world. Why go to the place that has a government that is sucking up all the profits to buy missiles pointed at Japan and the US?
japan could help develop cafta with profits.
I know not a few people in U.S. still are uncomfortable with such a prospect.
Earth to Walmart, Earth to Walmart; come in Walmart!
91 per cent of surveyed Japanese manufacturers plan to expand the scale of their operations in India in the near term (and the government of Japan promotes investment for India) PING!
I don't envy the choice: the geopolitical risks of China or the legal/financial risks of India.
militarize them! er... the Japanese, of course.
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