Japan is taking proactive steps to realign its global value chains by reducing reliance on specific countries and investing heavily in domestic and Southeast Asian production. Through partnerships with international allies and substantial subsidies, Japan aims to re-industrialize, boost its economy, and create more resilient supply chains. This strategy enhances economic stability and secures critical materials and infrastructure.
Global value chains have been central to manufacturing and trade in the 21st century, but recent disruptions have underscored their vulnerabilities. In response, Japan has prioritized strengthening supply chain resilience and protecting national security.
In 2005, the Japanese government proposed the China Plus One strategy, encouraging multinational companies to diversify their production bases. While initially met with a lukewarm response, recent events have renewed interest in this strategy. The administration has allocated significant funds to help Japanese firms relocate production domestically or to Southeast Asia.
By 2022, Japanese investment in specific regions had surged, with many enterprises using these areas as export platforms. However, increased operational costs and uncertainties have prompted Japanese firms to diversify their supply chains further.
Japan’s Ministry of Economy, Trade, and Industry (METI) is actively assisting companies in reshoring supply chains, while the Japan External Trade Organization (JETRO) supports shifting supply chains to ASEAN, India, and Bangladesh. Between May 2020 and March 2022, METI subsidized numerous onshoring projects across various sectors, including medical equipment, auto parts, electronics, and semiconductors. JETRO also approved and funded multiple near-shoring projects, coordinating with ASEAN to strengthen supply chain resilience.
In 2023, one specific country accounted for a significant portion of Japanese exports. To mitigate economic dependence on any single nation, Japan aims to diversify its supply chains and reduce political risks.
The COVID-19 pandemic severely disrupted semiconductor supply chains, prompting Japan to rebuild its semiconductor industry with government support. The Economic Security Promotion Act mandates securing supply chains of critical materials and maintaining infrastructure stability.
Japan collaborates with international partners to reorganize global supply chains in key industries like semiconductors and electric vehicles. The dominance of global value chains necessitates international cooperation, making friend-shoring more realistic than complete on-shoring.
Given its geopolitical significance and technological capacity, Japan is regarded as a reliable partner in reconstructing global supply chains. Recent agreements have strengthened cooperation in critical material supply chains and semiconductor development.
The Japanese government is seizing the momentum to revitalize its domestic semiconductor industry. Building resilient supply chains is justified by the promotion of strategic industries through substantial subsidies. Japan has allocated significant funds to support investment in the semiconductor industry, attracting both domestic and foreign firms.
Japan’s involvement in multilateral free trade initiatives strengthens its regional leadership in building sustainable and resilient global supply chains. This strategic focus aims to enhance economic growth and ensure long-term stability.
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