A good numbers of the large investors of Japan, Germany and USA are not resuming production at China and have launched drive shift their factories outside China, sources said.
Japanese Honda Motor, Toyta Motor, Mitsuvishi Heavy industries, Lawson, Nitto Denko and Rohm have stopped resume their factory operation at China, they are searching for new place in other countries South Asia, a survey conducted by Japanese Nikkei said.
“Of 80 companies answering Nikkei’s question on alternative production plans, 17 said they could shift Chinese operations to other countries and regions.,”
“Nitto Denko is considering supplying automotive materials out of South Asia instead of China. Rohm will rely on products from such places as Thailand, Malaysia, the Philippines and South Korea if Chinese hubs face prolonged shutdowns,” the report quoted.
On top of this, the U.S.-China trade war blew in, speeding up the march of companies leaving China, rattling the country’s manufacturing sector even further.
Concurrently, nearby countries, such as Vietnam, Thailand, Cambodia, Indonesia, and Bangladesh began upping their game as suitable manufacturing hubs by making big investments in transport infrastructure and the development of sprawling special economic zones, US based Forbes Magazine said.
US companies like SOSV, bitcoin mining hardware startup Bitmain, edtech company VIPKid (which is also backed by Sequoia China) and apartment rental service Ziroom are in strong move to shift from China.
On the other side of the table, Chinese companies, including some of the world’s most valuable, have garnered significant backing from American investors. Ant Financial, for example, has raised substantial capital from Sequoia and private equity funds such as The Carlyle Group and General Atlantic. Similarly, Didi Chuxingis backed by US firms including 2020 Ventures, Matrix Partners and several others, all in mess to redesign ownership.
Uber, for example, is backed by prominent Chinese Venture Capital’s like Hillhouse Capital Group. Hony Capital and Legend Holdings are WeWork investors. And Airbnb has landed investments from China Broadband Capital Partners and Hillhouse, among others are also in trouble.
“I think it is going to be very costly for China because I think that U.S. companies are going to come under huge pressure to pull out manufacturing and other things, both to diversify for risk reasons and political pressure,” said James Palmer, the author of the Death of Mao and the upcoming Heaven’s Empires.
Earlier this month, Japan earmarked $2.2 billion to help its companies shift production out of China following the coronavirus pandemic.
However, But analysts at Morgan Stanley suggest businesses are unlikely to take the opportunity to tilt parts of their manufacturing operations away from China, at least for now.
They said cash-starved companies currently lack the funds to invest in new operations and tinker with existing supply chains. At the same time, Chinese assembly lines have been swift to bounce back, even as other economies remain in lockdown.
Bangladesh can grab the opportunity of wooing big investments as foreign investors are willing to leave China due to coronavirus pandemic fallout, a government report says.
That diplomats will be active on the mission to woo the investors and they have to start negotiations with those conglomerates or governments directly to relocate their investment in Bangladesh was revealed in the report titled “The Global Economic Recession due to Unprecedented Spread of Deadly Coronavirus and the Possible Economic Impact on Bangladesh” was prepared by the ministries commerce and finance.
The ministries have already presented the report to Prime Minister Sheikh Hasina for further discussion.
Foreign ministry has already informed private sectors, specially FBCCI, to pursue matter of big economic investments to bring to Bangladesh.