Just to add: Chasen Holdings will be a big beneficiary from relocation of Japanese businesses (in particular hi-tech) to other countries due to the strong yen.


The Business Times
Asia-Pacific News 
Published November 17, 2011

Strong yen puts 'Made in Japan' brand on the line
Big firms forced to consider shifting production abroad to secure profits


(TOKYO) The 'Made in Japan' brand is at a crossroads as more firms face a tough choice over whether or not to move production overseas to escape the impact of the relentless rise of the yen, say analysts.

According to the Ministry of Economy, Trade and Industry, some 46 per cent of large manufacturers it surveyed in August said they would move production bases abroad if the yen stays around 76 yen against the dollar for half a year.

Currently near 77 yen to the greenback, the unit's strength risks causing the 'collapse' of the Japanese auto industry, Toyota executive vice president Satoshi Ozawa said last week.

Toyota's first half net profit dived 72 per cent partially due to the impact of the strong currency.

For the maker of the Prius hybrid, every one yen rise against the dollar can wipe tens of billions of yen from annual operating profit. In the year ended March, Toyota made around half of its cars in Japan, more than rival Nissan.

The nation's biggest automaker, along with other Japanese giants such as Sony, Mazda, Honda and Canon all reported recent quarterly earnings that saw profits eroded by the impact of the strong yen and the March disasters.

A strong Japanese currency hurts the nation's key export sector by making goods made in Japan less competitive abroad and cutting into repatriated overseas earnings.

Prime Minister Yoshihiko Noda has spoken of his fear of industrial 'hollowing out' as companies threaten to take jobs overseas. Japan's efforts to intervene in markets to weaken the yen have had little lasting impact.

'Industrial hollowing is now more serious than in the past as Japanese firms are forced to move to secure profit,' said Takunori Kobayashi, an economist at Daiwa Institute of Research.

For semiconductor foundry and data storage firm Elpida Memory, the shift of 40 per cent of the firm's production from its home in Japan to Taiwan is an imperative move as a high yen erodes profits. 'Under this currency situation, we have to carry out (the plan) no matter what,' president Yukio Sakamoto said recently when it announced a net loss of 56.7 billion yen (S$941 million) in the first half ending September.

Recent supply shocks caused by the March earthquake and tsunami have only helped accelerate the process, say analysts.

Wacom, holding more than 80 per cent of the global market for pen-input tablet devices, is setting up a parallel component production base in China after the March disaster triggered power shortages and crippled component supplies at home.

'We have to minimise risks of supply,' Wacom president Masahiko Yamada said. 'I'm aware of concerns about industrial hollowing, but national borders have already been disappearing,' he said.

'Staying here does not always benefit Japan. Should we put everything within the fence or should we go out and contribute to the country from outside? I will choose the latter.'

Panasonic, which last month forecast its biggest annual loss in a decade because of a stronger yen, is moving its procurement operation to Singapore from Osaka.

Yet other firms are reluctant to shift from an industrial system famed for its ability to produce high quality precision instruments and components crucial to everything from cars to screens for smartphones.

Said Kazuma Sekiya, president of Disco, a Tokyo-based firm controlling 80 per cent of the global market for machines that grind and cut microchips: 'Even if we built factories overseas, we would have to bring almost all the parts from Japan.' - AP