Moving Manufacturing Bases Overseas

According to a January survey conducted by the Ministry of Economy, Trade and Industry targeting some 700 manufacturing companies, one in seven companies have moved or are planning to move their production bases overseas to reduce their manufacturing costs. Of these companies, 40% are targeting China. Even manufacturers of digital copiers and other types of high-tech equipment are now moving their production overseas.

Of the 700 surveyed companies, 50% were classified as small, 40% were classified as medium, and 10% were classified as large. Many of these companies are manufacturers of home appliances and other electric appliances, but many others operate in fields as diverse as general machinery, ceramics, cement, transportation machinery, and chemicals.

Of the products manufactured at these overseas production bases, 46% were shipped or sold in the country or region of their origin, 32% were shipped or sold in Japan, and the remaining 20%+ were shipped or sold in another country or region-evidence of the increasingly global strategies being adopted by these manufacturers.

The survey also showed that although over 80% of these overseas production shifts affected assembly, processing, or other mass manufacturing processes, companies in some fields have begun to move their research and development functions overseas as well.

These production shifts are a matter of concern in the labor field because large corporations are reducing domestic production to increase overseas production. Reduced domestic production will result in significantly reduced business opportunities for domestic subcontractors, which will feed through to loss of employment.