Japan offers $2.2 billion for manufacturers to move their production out of China


Japan is set to fork out billions to help their China-based Japanese manufacturers to move out of the country amidst coronavirus controversies.

In the recent economic stimulus package announced by the government, an estimated $2.2 billion was allocated for the production shift aid of Japanese companies that are still operating in China.

“The extra budget compiled to try to offset the devastating effects of the pandemic, includes 220 billion yen (USD$2 billion) for companies shifting production back to Japan and 23.5 billion yen for those seeking to move production to other countries, according to details of the plan posted online,” reads a Bloomberg report.

A Uniqlo garment factory in China

Credit: Nikkei Asian Review

They are given options to either move back to Japan or set up their base in any other Southeast Asia regions.

Despite being the top trading partners, Japan’s decision comes following a devastating decrease for imports from China since early February, which went down by almost half the usual rate.

With the retraction, Japan is clearly sending a message to China in regards to slowing down their reliance on the country as a main hub for manufacturing.

Since the virus outbreak turned catastrophic earlier this year, almost all companies and factories have been shut down and ceased operation in China. This has proved to be difficult for many foreign based establishments to continue their business there as the state of economy was uncertain.

At the moment, there are no definite assurance or initiatives being carried out by the nation to revive the business industry as they are still recuperating from the aftermath of the pandemic.

Japan hopes that the announcement will encourage most, if not all of their manufacturers to move out of China permanently.