Japanese Manufacturers, Facing Yen Depreciation and Supply Chain Crisis, Return to Home Country?

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Jeong Hyunjin] Reports have emerged that the weak Japanese yen and the global supply chain crisis are encouraging Japanese manufacturers to return to their home country, a process known as reshoring.

According to Bloomberg News on the 15th (local time), Kiyoshi Imamura, Executive Director of Tokyo Steel, a Japanese steel company, said in an interview held in Tokyo last week that the movement of Japanese manufacturers bringing their overseas supply bases back to Japan is gradually expanding.

Executive Director Imamura cited reasons such as the weak yen, supply chain crisis, geopolitical risks, and rising wages, noting that this trend spans from the automobile sector to cosmetics and consumer electronics, and is expected to spread further by the end of this year. He predicted that Japanese production bases in China, Southeast Asia, and Russia are highly likely to be relocated, and that new factories will be built in Japan, leading to increased demand for related steel products.

He stated, "With the yen's value falling too much and Japan's trade balance not returning to surplus, Japanese companies will judge that producing domestically is better," adding that steel orders for building factories and other facilities have increased by 10% compared to the previous year. The yen's value against the dollar has dropped 11% since the beginning of this year.

However, Bloomberg also reported that prior to the yen's depreciation, the Japanese government had been expanding support measures to increase domestic production by its companies. The Japanese government decided to provide funding for building factories producing essential products and materials to address the supply chain crisis. In particular, in November last year, it pledged 774 billion yen (approximately 7.7 trillion won) to support semiconductor investments within Japan.

This content was produced with the assistance of AI translation services.