Logistics, Decarbonization, and Hydrogen? – the Post - COVID World as seen by Japanese Companies

By Suzuka YOSHIDA

 

JBIC (Japan Bank for International Cooperation) conducts an annual questionnaire survey every year for Japanese companies active overseas, entitled "Survey Report on Overseas Business Operations by Japanese Manufacturing Companies". The results were announced in April. From the contents, we can see the medium- to the long-term policy of Japanese companies investing overseas. "Myanmar" was one of the keywords.

 

Myanmar ranked 16th in the medium-term promising countries, although it was on the negative list.

 

This JBIC survey was conducted by asking 965 Japanese companies expanding overseas and having at least one factory overseas to select keywords. Since the survey was mainly for companies that already have a track record overseas in the manufacturing sector, it can be said that the results are quite realistic. Myanmar is a news keyword in a negative sense on current affairs. Myanmar is the only country that has been named singly and attracted many companies’ attention to it.

 

Looking at another subject, Myanmar is ranked in this year as well when asked about countries/ regions that are considered promising in the medium term (about the next three years). Last year it was 10th, but this year it has dropped to 16th. It is because it was regarded as the government that violated human rights in the coup d’état on 1 February 2021, and the investment motivation was chilled. Another reason for not raising the rank is that the business in Myanmar did not yet generate the expected profits. On the contrary, it ranks 8th in the long-term (about 10 years) promising countries. From this, it can be seen that Japanese companies think that Myanmar will become a normal country within 10 years.

 

Featured news keywords

China, India and the United States have become promising countries in both the medium and long term. JBIC sees that the United States may outperform India in 2022, as India's vote rate has dropped considerably and the United States has conversely gained support for semiconductors and automobiles to increase its vote rate.

 

Looking at the keywords that Japanese companies are paying attention to in their overseas business strategies, it is clear why they seemed "promising."

 

In the questionnaire survey, some keywords were presented in terms such as “COVID”, “Logistics disruption”, “Supply Chain”, “Energy”, “Regional economic cooperation”, and “Current affairs”. It turns out that there are companies that take some subjects negatively. "Decarbonization," "DX: digital transformation," and "EV shift," which have been researched in Japan in recent years due to the spread of SDGs, are regarded as positive. It is interesting that Japanese companies are paying attention to "Hydrogen" as new energy, although Hydrogen energy is not so popular in the United States and EU. It can be said that it is a peculiar keyword in Japan.

 

Strengthening Logistics and Decarbonization are key to Economic Recovery

Japan is in a geographical condition in a way of its location far from the United States, Europe, the Middle East and even ASEAN countries. Therefore, both exports and imports from Japan emit a large amount of carbon during the transportation process. This is a structural concern for Japanese companies aiming for "Decarbonization." In addition, the COVID hit countries all over the world, reducing the availability of all companies and stagnating the supply of parts. When all the parts are not available, problems should occur in the manufacturing process. Thus, the supply chain was disrupted. Companies around the world have also been hit by a shortage of semiconductors. To solve these problems, Japanese companies will need to invest and manufacture in other countries.

 

Where will Japanese companies invest in the medium to long term? In addition to the above challenges, there is no doubt that they will invest in countries where security, energy and human rights are protected.

 

Source: https://www.jbic.go.jp/en/ information/press/press-2021/ pdf/1224-015678_4.pdf