Japan's total investment overseas falls sharply
Japan's total investment overseas falls sharply
Agence France-Presse, Tokyo
Global foreign direct investment by Japan fell 26.3 percent in the year to March, although investment in China surged as firms shifted factories there, the Ministry of Finance said Friday.
Total investment overseas made during the year fell to 3,954.8 billion yen (US$31.9 billion), with money invested in Japan's largest trading partner the United States plunging 40.6 percent to 797.0 billion yen.
"Investment two years ago was very high because of the technology boom," said finance ministry official Yoshihiko Magofuku.
"But this has declined since then, also there have been less major takeovers," he said.
Bucking the trend, investment in China jumped 64.0 percent to 180.2 billion yen as technology giants -- such as Hitachi Ltd. and Matsushita Electric Industrial Co. Ltd. -- increased production there, the spokesman said.
"There is a growth of manufacturing (in China)," said Magofuku, adding the level of Japanese investment in the nation was the highest in five years.
More Japanese firms are migrating to Asia where labour costs are much cheaper and market potential is vast, economists said.
But the manufacturing exodus is hurting Japan's economy as firms sacrifice Japanese workers, they said.
"What we are seeing is a very clear trend across the world of manufacturers with margins pressured going where the cheapest workers are," said West LB chief economist Andrew Shipley.
"It is an unstoppable incentive," he said noting Chinese wages were far lower than in Japan and still had room to rise but remain attractive.
"There is also tremendous market potential (in the country)," he noted.
Major Japanese automakers Honda Motor Co. Ltd., Mitsubishi Motors Corp. and Mazda Motor Corp. have recently announced plans to boost car production and sales in China on the back of robust demand.
Separately, Japanese electronics giant Toshiba Corp. has said it would invest seven billion yen in creating one of the world's largest production bases for personal computers in China.
The trend was pressuring Japan's unemployment rate, which already stood at a relatively high 5.2 percent in April, analysts said.
"Japan must evolve and develop its economy to create wealth even though its workers are highly paid," said Shipley, suggesting a shift to high-end software production and entertainment from large-scale semiconductor manufacturing.
"Japan has to take measures to promote the emergence of companies in these areas which are real growth areas of the modern economy," he said.