InvestorQ : Is it true that Japan is giving subsidies to Japanese companies to shift their operations out of China and into India?
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Is it true that Japan is giving subsidies to Japanese companies to shift their operations out of China and into India?

Answer
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Rashi Mehra answered.
4 weeks ago


This is the latest in a slew of announcements that Japan has been making of late to encourage Japanese companies to diversify their risk of China dependence. Here is how.

· Japanese manufacturers will get subsidies for shifting production out of China and into either India or Bangladesh. Japan is keen to rapidly diversify its supply chains.

· Japan wants to create a more de-risked and stable supply chain for medical materials and electronic components even in the midst of an emergency like COVID.

· There is a massive allocation of $221 billion that has been made to incentivize manufacturers for this purpose and these subsidies will be paid up-front.

· The supply chain of Japanese companies, like in the case of many global economies, is currently too reliant on China and they cannot risk supplies being cut off.

· In Round 1, Japan has approved 30 manufacturing projects, including Hoya's electronic components project in Vietnam and Laos, with a subsidy of ¥10 billion.

This is seen as a novel method of incentivizing business to reduce their dependence on China for input sourcing.