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70% of companies say they will continue current China operations, Sankei Shimbun poll of 118 major companies

  • January 5, 2022
  • , Sankei , Lead story
  • JMH Translation
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The majority of Japan’s major companies that they plan to continue their current business activities in China, it was revealed on Jan. 4 in the Sankei Shimbun poll of 118 major companies. China is under fire for its forced labor in the Xinjiang Uyghur Autonomous Region (XUAR). While acknowledging the risks posed by human rights and other issues in China, Japanese firms remain eager to expand their business activities in view of the massive Chinese market. With the rise in criticism against China, however, trust in the companies could decline if they are viewed as making light of human rights issues. 

 

The survey was conducted of 118 companies from late November through the middle of December 2021. Asked about their future business plans in China, a total of 70.3% of major corporations said they plan to continue China projects, with 78 companies (66.1%) saying they will continue their current business activities in China and 5 of them said they will conduct business there more actively. No companies said they intend to pull out of the Chinese market, and only one said it would gradually shrink its operations there.

 

This year marks the 50th anniversary of the normalization of diplomatic ties between Japan and China, and the economic ties between the two countries are growing closer each year, as witnessed by the coming into force on Jan.1 of the Regional Comprehensive Economic Partnership (RCEP), which is the first economic partnership agreement for Japan to conclude with China and South Korea. Most of the companies surveyed that said they intend to continue their current China operations gave as their reason that “the massive Chinese market.” This suggest that the companies cannot forgo the revenues to be gained from that market.

 

These companies could expose themselves to new risks if they decide to concentrate on expanding operations and take a wait and see stance on the human rights issue. The governments of Japan and other major countries are asking companies to deal harshly with human rights issues. More and more countries are declaring diplomatic boycotts of the Beijing Winter Olympic and Paralympic Games, which are scheduled for February and March this year.  A certain general trading company comments that it “is aware that China business involves various risks,” and there is a chance that these risks would deal a blow to the company.

 

The poll also probed views on the impact of the U.S.-China conflict on operations. Some 29 companies said that their operations are being negatively impacted, as witnessed by an electrical equipment manufacturer that said that it has switched to domestic production after additional tariffs were applied to some of its products manufactured in China.

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