Boosting Japan’s economic security through enhanced supply chain resilience
The environment surrounding Japan and the wider world, is experiencing uncertainty and difficulty, due to a number of factors including: the emergence of geopolitical risks such as U.S.–China friction, Russia’s invasion of Ukraine, and the Israel–Gaza conflict; global climate change and resulting food shortages and soaring raw material prices; and rising financial costs brought about by persistently high interest rates, and ongoing global inflation. Amid these difficulties, Japanese companies are facing extremely tough challenges. They need to rebuild robust supply chains for essential industries like semiconductors, as well as work to realize a decarbonized society that simultaneously prevents global warming and achieves corporate profits. We believe that the role of the financial community, including JBIC, is becoming increasingly important in overcoming these challenges.
The Industry Finance Group will contribute to Japan’s economic security by supporting Japanese companies in strengthening and rebuilding their global supply chains through understanding their needs and proactive risk-taking. We are also making efforts to maintain and improve the international competitiveness of Japanese industries by strengthening supporting measures for: overseas M&A aimed at acquiring next-generation technologies; projects that contribute to the prevention of global warming through green finance; and the development of cutting-edge and innovative key technologies.
Further, JBIC is utilizing its global network to collect and analyze information around the world pertaining to efforts being made to strengthen industrial supply chains and to achieve carbon neutrality.
By providing information to our clients accurately and in a timely manner, we hope to support their dynamic global expansion under the rapid changes in industrial and social structures.
As a platform for the overseas expansion of Japanese companies, JBIC aims to meet stakeholder expectations and become a presence that supports economic security and the creative innovation of Japanese industry.
SASAKI Satoshi
Managing Executive Director
Global Head of Industry Finance Group
Group Outline
The Industry Finance Group comprises the Corporate Finance Department, the Finance Office for SMEs, the Marine and Aviation Finance Department, and the Osaka Branch. We use a variety of financing methods to support the strategies and needs of Japanese companies expanding overseas, and are engaged in the following efforts to maintain and improve the international competitiveness of Japanese industries.
- Providing support for the overseas expansion of Japanese companies, including mid-tier enterprises and SMEs, and the export of marine vessel and plant equipment, to maintain and improve the international competitiveness of Japanese industries
- Lending support to strengthen and rebuild Japanese companies’ global supply chains and cross-border M&A aimed at acquiring next-generation technologies
- Supporting projects that contribute to helping provide a sustainable future through green finance and other methods
Business Environment: Risks and Opportunities
Uncertain business environment
Japanese companies continue to operate in a highly uncertain business environment. In the Survey Report on Overseas Business Operations by Japanese Manufacturing Companies released by JBIC in December 2023, approximately 90% of companies polled responded that, regardless of the country or region where they operate, soaring global energy, raw material, parts, and other costs are forcing them to take measures such as curbing energy use and cutting expenses. This reaffirms our belief that rising prices are an important factor affecting the overseas business expansion of Japanese companies. Furthermore, we are also seeing a move to reassess raw material procurement sources, particularly among major corporations. This comes in response to the rise in geopolitical risk associated with the Russian invasion of Ukraine, prolonged U.S.–China friction, and the Israel–Gaza conflict that began in 2023.
Globally, government-led digital transformation (DX) investments are proceeding apace, particularly in Europe and the U.S., and the semiconductor industry, which is at the core of industrial DX, is becoming increasingly important. As supply chains are being restructured in light of rising geopolitical risks, and the trend toward DX and green transformation creates new investment opportunities, Japanese companies are continuing to expand their overseas businesses through M&A among other capital investments. There were 661 M&A transactions undertaken by Japanese companies overseas in 2023, which is more than in 2022, with an increase in large-scale transactions of ¥100 billion or more indicating a recovery in cross-border M&A investments, partly due to easing concerns about a global economic recession.
The shipping, shipbuilding, and aviation industries are also working to help realize a decarbonized society. Specifically, they are using state-of-the-art marine vessels that comply with environmental regulations, and promoting developments aimed at the introduction both of ships powered by new fuel, and aircraft with high fuel-efficient performance. As efforts to realize a decarbonized society accelerate in various countries, the promotion of these efforts has become an urgent issue in order to maintain and improve the international competitiveness of Japanese companies.
Mid-tier enterprise and SME business environment awareness
Compared with large enterprises, mid-tier enterprises and SMEs have limited human resources and capital. When expanding overseas, they are under great pressure to respond to the impact of rising financing costs. They seek to overcome the higher costs, due to high, mainly dollar- based interest rates by, for example, borrowing in local Asian currencies such as the Thai baht. They are also forced to take measures to counter supply chain disruptions and breakdowns resulting from growing geopolitical risks. Remedial action taken might be pulling out of China and relocating to other countries, such as Vietnam or India.
Group Strategy
Ⅰ. Realize a sustainable future
We will support projects that contribute to resolving global issues related to renewable energy, electric vehicles and fuel cell vehicles, environmentally friendly marine vessels and aircraft, food, medical care, and other areas.
Ⅱ. Strengthen resilience of Japanese industry and support creative innovation
We will support projects that help eliminate bottlenecks in the supply chains of Japanese industries (semiconductors, electric vehicles, aircraft parts, etc.). Further, with regard to mid-tier enterprises and SMEs, we will expand, strengthen, and deepen cooperative ties and partnerships mainly with regional financial institutions, and support the overseas expansion of enterprises that are important for stabilizing the supply chain and possess technological capabilities expected to be useful in the future.
Ⅲ. Provide JBIC’s own unique solutions by strategically functioning as an international financial institution
In countries surrounding Ukraine, we will back investment projects by Japanese companies that are supporting energy transition there.
Project Highlights
Loan for manufacture, sale of semiconductors chemicals by U.S. subsidiary of Mitsubishi Gas Chemical Company, Inc.
—Supporting supply chain resilience—
MGC Pure Chemicals America, Inc. Texas Plant(Source: Mitsubishi Gas Chemical.)
JBIC signed a loan agreement with MGC Pure Chemicals America, Inc. (MPCA), a U.S. subsidiary of Mitsubishi Gas Chemical Company, Inc. The loan will fund the expansion of MPCA facilities producing the chemicals used in semiconductors: super-pure hydrogen peroxide and super-pure ammonium hydroxide.*
Mitsubishi Gas Chemical manufactures and sells chemicals for semiconductors in the U.S., and is planning to increase MPCA production capacity in anticipation of rising demand for semiconductor chemicals, reflecting long-term growth in the semiconductor market. The loan will support Mitsubishi Gas Chemical’s overseas business
deployment, thereby helping maintain and improve the international competitiveness of Japanese industries.
Note
- *
Chemicals are essential in semiconductor manufacturing. They are used for the cleaning, etching, and photoresist stripping of silicon wafers.
Loans to acquire Fairfield Chemical Carriers of Singapore by MOL Chemical Tankers under auspices of Mitsui O.S.K. Lines
—Supporting overseas M&A—
A chemical tanker operated by the acquired Fairfield Chemical Carriers(Source: Mitsui O.S.K. Lines.)
JBIC signed loan agreements with Mitsui O.S.K. Lines, Ltd. (MOL), and Singapore-based MOL Treasury Management Pte. Ltd., to provide a portion of the funds necessary for Singapore-based MOL Chemical Tankers Pte. Ltd. (MOLCT) to acquire Fairfield Chemical Carriers Pte. Ltd. (FCC). FCC is a Singapore-based company specializing in the operation of chemical tankers with global sea routes.
In acquiring FCC as a wholly-owned subsidiary, MOLCT will significantly increase its fleet of chemical tankers, and aims to further expand its business and capture additional earning opportunities by acquiring a new customer base.
The loans provide financial support for MOL Group companies’ overseas M&A activities, and contribute to maintaining and improving the international competitiveness of the Japanese shipping industry.
Loans to set up FUJIX subsidiary in Vietnam
—Supporting Japanese electrical and electronic component companies to strengthen their supply chains—
FUJIX ELECTRONIC VIETNAM COMPANY LIMITED(Source: FUJIX.)
JBIC, in cooperation with MUFG Bank, Ltd., signed a loan agreement with FUJIX CO., LTD., to provide the funds necessary to establish a subsidiary, FUJIX ELECTRONIC VIETNAM COMPANY LIMITED (FEV).
FUJIX manufactures and sells wire harnesses and aluminum die-cast products used in servo motors and inverters for industrial robots. FEV was established in November 2023, amid growing demand for electrical components required for industrial robots and other applications in line with the expansion of global factory automation demand. The funds provide financial support for FUJIX overseas business developments, and help maintain and improve the international competitiveness of the Japanese industry.
Loans for manufacture, sale of shipping container packaging by Shinwa Package’s Indonesian subsidiary
—Supporting SME overseas business development through local currency- denominated financing—
SHINWA PACKAGE INDONESIA (Source: SHINWA PACKAGE.)JBIC signed a loan agreement with PT. SHINWA PACKAGE INDONESIA (SPI), a subsidiary of SHINWA PACKAGE CO., LTD. The loan provides the funds SPI needs to manufacture and sell shipping container packaging in Karawang Regency, Indonesia. It will be used to expand SPI’s manufacturing facilities.
SHINWA PACKAGE is an SME that makes and sells packaging materials for steel containers used to transport automobiles, construction machinery, industrial equipment, and semiconductors. In line with the overseas expansion of major Japanese steel manufacturers and other companies, SHINWA PACKAGE has been developing its overseas business by expanding into Thailand and Indonesia. These funds are helping to finance SHINWA PACKAGE’s overseas business, and are contributing to maintaining and improving the international competitiveness of the Japanese industry.