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Over 40 per cent Japanese firms in China having sensitive tech are planning to shift base: Survey

NEW DELHI: More than 40 per cent of Japanese companies Tokyo recognises as possessing sensitive technology linked to security are shifting their manufacturing bases and sources of parts supplies from China in a bid to persify their supply chains, according to a Kyodo News survey.

The move to reduce their reliance on China and mitigate security risks comes in response to rising US-China competition over technological supremacy and concerns about potential concentration of medical production in China amid a shortage of medical supplies propelled by the coronavirus pandemic, according to a report in the South China Morning Post (SCMP).

A total of 42 per cent, or 42 companies, of 96 respondents said they have persified or are considering persifying their supply chains by moving to India and Southeast Asian countries, according to the survey.

Kyodo recently surveyed some 150 major listed companies, of which 96 responded. The respondents include Canon, Toyota, KDDI, NEC, Kobe Steel and Mitsubishi Heavy Industries.

While the Japanese government has been urging firms to shift their production bases back home to avoid risks associated with China, only eight respondents said they have or are thinking about doing so, SCMP reported.

Around 60 per cent from the survey said they have been conducting in-house training or identified their “important technologies” as Japanese businesses that deal with both the United States and China have put emphasis on implementing measures against information leaks.

26 companies, said they placed restrictions on joint research with partners that could leak technology. Six said they have taken no such action, and one said it is conducting joint research with an entity that is subject to regulations of exports from Japan and the US, according to the survey.

A total 59 per cent, or 57 respondents, said they have introduced a system to focus on human rights in conducting business as a growing number of companies work to implement standards determining whether their products have been manufactured in forced labour conditions, SCMP reported quoting the survey.

The businesses have started taking such action after it was found multinational companies made deals with Chinese factories that have been suspected of imposing forced labour on Uygurs and other ethnic minorities in China, reported SCMP.