In a blow to China, the Ministry of Economy, Trade, and Industry (METI) in Japan has provided subsidies to Japanese manufacturers to shift their manufacturing sites from China to ASEAN countries. 

India and Bangladesh have been added to the list of relocation destinations.  

By expanding the scope of the subsidy program, Japan aims to reduce its dependence on a particular region and to build a system that is able to provide a stable supply of medical materials and electronic components even in an emergency.

The government has allocated 23.5 billion yen in the 2020 supplemental budget for a subsidy to encourage companies to disperse their manufacturing sites across the ASEAN region.

The supply chain of Japanese companies heavily relies on China. During the recent pandemic, the supply was cut off.

 In the first round of application that closed in June, the Japanese government approved 30 manufacturing-related projects, including HOYA’s manufacturing of electronic components project in Vietnam and Laos, providing subsidies overall total of 10 billion yen.