While many of Japanese manufacturers still continue to recognize the importance of China as a “manufacturer of the world,” only a minority said that China could maintain this status into the future as more Japanese firms anticipate ASEAN to double its importance than what it holds today, survey said.
This was revealed in the first “UPS Japan Manufacturing and Trade Trends” survey, which looks into the current and future trends of the manufacturing industry in the context of global trade and logistics.
SEAN headquarters in Jakarta / Photo by Gunawan Kartapranata (Own work) [CC-BY-SA-3.0 via Wikimedia Commons[/caption]The UPS survey was conducted online between July 4 to 10, 2014 with 1,010 respondents from Japan’s manufacturing industry, including large enterprises that consist of more than 300 employees and SMEs with less than 300 employees. These companies are specialized in industries such as automotive, general purpose machinery, electronic components, industrial machinery, commercial machinery, plastic and rubber products, electrical machinery, metal products and others.
The UPS survey showed that today, China is the top export (81.3 percent) and import (76 percent) partner of Japanese manufacturers overall. Nearly 40 percent of the respondents agree that China is currently the most important market for their businesses, while the United States is the second most important market (20.4 percent), and Southeast Asia for the third (16.8 percent).
“Looking into the future, however, only 30.8 percent of the respondents continue to recognize the importance of China. Meanwhile, one quarter of Japanese manufacturing companies anticipate that ASEAN countries will gradually play a bigger role in intra-regional trade in the future, nearly doubling the importance ASEAN holds today,” said KK Leung, President, North District, UPS Asia Pacific Region.
The global financial crisis and Japan’s natural disasters in recent years have likely impacted Japanese manufacturers’ decisions to shift production overseas.
According to the UPS survey, large enterprises; companies with more than 300 employees indicated an increase in overseas production sites, 38.6 percent; 12.4 percent for SMEs, an increase in overseas clients 37.3 percent, 21 percent for SMEs, and an increase in third-country shipping 31.8 percent; 7.4 percent for SMEs.
Given the importance of global trade, Japanese manufacturers also see how free trade agreements can enhance their business. Around 56 percent of the respondents from large enterprises believe the Trans-Pacific Partnership (TPP) will positively affect their business. By contrast, half of Japanese SMEs believe the TPP will have no impact on their business.
“Though representing over 90 percent of businesses, SMEs in Asia are particularly disadvantaged by trade barriers because they do not have the resources of large firms to overcome them. Trade agreements such as the TPP, can help SMEs by simplifying trade and eliminating trade barriers. The low recognition of free trade agreements among Japanese SMEs shows that there are still opportunities for them to take advantage of trade liberalization to capture new growth opportunities,” added Leung.
The UPS survey also quoted a recent report from Transport Intelligence, China continues to be the “manufacturer of the world”, even as low-value and mass manufacturers steadily move to lower-cost countries such as Vietnam, Myanmar, Cambodia, Laos, and Bangladesh.
This shift in manufacturing will lead to greater trade opportunities within Asia, giving rise to a need for a reliable intra-Asia logistics partner.
The survey also noted that manufacturers need to streamline and optimize logistics for growth.
Logistics supporting international operations and trade is viewed as “important” or “somewhat important” by 88.6 percent of the survey’s respondents. However, 53.7 percent expressed that they have yet to successfully streamline and optimize their logistics operations.
According to the UPS survey, 74 percent of respondents expressed that they use two or more types of transport modes for exporting, while 71 percent shared the same view for import shipments.
“Our survey shows that manufacturers recognize the need to move faster and more nimbly across the world, as their sourcing origins and shipment destinations continue to expand internationally. With the growing complexity of the logistics process, UPS’s multi-model services and suite of innovative technology solutions will help the manufacturers to optimize their supply chain and expand their business globally,” concluded Leung.
“The manufacturing landscape in Asia is evolving while global demand has remained cautiously optimistic. It is pivotal for manufacturing companies to find ways to compete in the evolving marketplace, effectively,” said Leung.
UPS has been partnering with companies to assist them through the shifting business landscape for over 26 years. - © Provided by Manila Bulletin
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