Japanese firms in China looking to reposition their bases in PH

Many Japanese companies that have set up their bases in China are facing difficult to continue doing business due to declining economic growth, labor strikes and wage increase. They want to relocate their bases in the Philippines.

This coincided with Philippine, President Benigno Aquino III’s state visit to Japan, which concluded Friday, June 5. The Philippine president, during his 4-day visit, repeatedly invited Japanese investors to put their money in the country, citing improved business climate.

As of now, there are about 1,700 Japanese companies in the Philippines. But they continue to receive inquiries from about 200 manufacturers in China, saying they want to relocate in Philippines, said Japanese Chamber of Commerce and Industry of the Philippines Incorporated vice president Nobuo Fuji on Friday.

In China, there are so many companies invested, but they face wage increase, historical problems, labor strikes, and so on. They want to relocate to other countries in ASEAN (Association of the Southeast Asian Nations), and the Philippines is attractive for them, Fuji said.

According to a Nikkei report, minimum wages in China have almost doubled over the past 5 years. Labor-management disputes over factory closure have also become common in China.

Labor disputes and rising wages are not the only reasons China is losing its competitive edge as a business destination for Japanese firms.

Because of English-speaking workforce and tax benefits given to investors, many Japan companies from China are considering relocation here in the Philippines.

Another reason, Japanese companies are showing interest in the Philippines is the EU (European Union) duty-free entry. Last December, the Philippines was included in the EU’s Generalized Scheme of Preferences Plus (GSP+) tariff reduction program.

Under the GSP+ status about 6,274 Philippine products which includes textile, fruit, coconut oil, footwear, fish and textiles, are charged zero duty.

Around 200 Japanese manufacturers, according to Fuji, are eyeing to set up factories in “PEZA (Philippine Economic Zone Authority) areas like Calabarzon (Cavite, Laguna, Batangas, Rizal and Quezon).