China's Rising Labour Costs Push Japanese Firms to Southeast Asian Nations

by CFO Innovation Asia Staff, 29 May 2012

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Rising wages in China have prompted some Japanese companies to increase investments in Southeast Asia.

Japan's investment to the Association of Southeast Asian Nations (Asean) more than doubled to US$19.6 billion last yearcompared with 2010, according to the Japan External Trade Organisation (Jetro). FDI to China and Hong Kong rose 52 percent to US$14.2 billion.

China's average wages may increase about 20 percent nationwide this year, according to the Ministry of Industry and Information Technology.

According to Bloomberg, Hitachi Construction Machinery, Japan's second-biggest maker of excavators, will boost production capacity in Indonesia, while Terumo, a maker of medical devices, will invest about 15 billion yen (US$188 million) in Vietnam and the Philippines.

The 10 members of Asean are Indonesia, Thailand, Malaysia, Singapore, Brunei, the Philippines, Cambodia, Laos, Myanmar and Vietnam.

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