Japan investment in Southeast Asia surges amid China slump

Apr 18 2014, 19:17 IST
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Rising wages in China are also having an impact on companies trying to keep costs down and maximise profits. Reuters Rising wages in China are also having an impact on companies trying to keep costs down and maximise profits. Reuters
SummaryRising wages in China are also having an impact on companies trying to keep costs down and maximise profits.

Japanese companies' investments in Southeast Asia surged last year to almost three times the amount invested in China, after relations between Beijing and Tokyo soured in 2012 and Chinese labour costs rose, a government agency of Japan said on Friday.

Japanese companies invested 2.33 trillion yen ($22.8 billion) in Singapore, Thailand, Indonesia, Malaysia, the Philippines and Vietnam last year, compared with 887 billion yen in China, Japan's largest trading partner, the Japan External Trade Organization (JETRO), said.

Investments doubled in Southeast Asia and fell 18 percent in China over 2012 and China's waning attraction is likely to continue as the ratio of companies planning expansion there fell to a record low of below 55 percent, JETRO said, citing a survey of Japanese companies.

"Viewed from the Japanese companies' headquarters, China's economy and China's political situation present a considerable amount of risk," JETRO Chairman Hiroyuki Ishige told reporters at a briefing.

Sino-Japanese ties have been strained by a territorial row over tiny disputed isles in the East China Sea and perceptions in Beijing that Japanese Prime Minister Shinzo Abe wants to rewrite Japan's wartime history and tone down past apologies.

The fall off in Chinese investment follows the outbreak of riots against Japanese interests in 2012 when the territorial dispute escalated after the Japanese government bought the uninhabited islands in the East China Sea.

Rising wages in China are also having an impact on companies trying to keep costs down and maximise profits.

China's average salaries now exceed those of Thailand, according to a JETRO survey carried out between October and November last year.

The Philippines and Indonesian labour costs are about one third lower than China's, while those in Vietnam are less than half, the survey showed.

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