TOKYO, 17 July 2004 — More Japanese firms are returning home from Asia in an effort to keep their high-tech expertise to themselves and to cash in on Japan’s economic rebound, the Cabinet Office said yesterday.
“Japanese companies are now coming back to production bases in Japan,” Kenji Umetani, director for economic assessment and policy analysis at the agency, told a briefing on the Annual Report on the Japanese Economy and Public Finance.
To cope with the rising value of the yen that undermined their price competitiveness, many Japanese electronics makers moved production abroad, mainly to Asia, in the early 1990s.
That trend, however, went into reverse in the wake of the Asian financial crisis in 1997-98 and as labor costs rose in some Asian countries, Umetani said.
“Some companies find that being in Japan is the best for high value-added products, such as flat-screen TVs and other digital equipment and machinery,” he said.
Umetani also pointed to fierce technological competition, saying Japanese firms are very cautious about protecting their patents.
“Formerly some technologies were exported to foreign countries and the Japanese businesses lost their technological competitiveness,” he said.
Japanese manufacturers are also now able to find affluent consumers at home who are willing to pay top dollar for value-added products, such as large flat-screen television sets, Umetani said.
“A very virtuous cycle of domestic consumption and domestic investment is now happening and this virtuous cycle could be a good engine for a continued Japanese economic recovery,” he said.
Japan’s economy has shown strong rebound from a decade of stagnation, first led by booming exports to China and now underpinned by reviving corporate and consumer spending.
In the year to March 1996, there were more than 700 cases of Japanese companies setting up factories and launching joint ventures in Asia, according to Trade Ministry data cited in the report.
Seven years later the pace slowed to below 300.