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Businesses urged to cut reliance on China

2020-07-21 | Corporate

"Made in China" Japanese goods may be the latest casualty of the coronavirus pandemic as Prime Minister Shinzo Abe resolves to wean companies off their dependence on China. To help them do it, Abe has earmarked about ¥240 billion (S$3.2 billion) to support domestic companies in decoupling their supply chains from China, especially those in high value-added manufacturing. As Japan wants to boost its output of the drug Avigan as a potential cure for Covid-19, manufacturer Fujifilm has run into a core problem: a key raw ingredient is sourced from China. "The strategy among businesses has long been China-Plus-One," said Dr Takashi Suzuki, an expert on Sino-Japan ties at Aichi Prefectural University, referring to how some businesses cover their baseline by supplementing a non-China location. "But in the medium to long term, there will likely be a shift to 'Plus China'," he added, as companies reduce their risks by putting fewer eggs in the Chinese basket.