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Additional Survey Report ancillary to the JBIC FY2011 (23rd) Survey on Overseas Business Operations by Japanese Manufacturing Companies
Response of Japanese Manufacturing Companies to Catastrophic Flood in Thailand and Risk Management of Overseas Production

  • Region: Others
  • Manufacturing and Services
  • Others
NR /2012-03
April 17, 2012
  1. The Japan Bank for International Cooperation (JBIC; Governor: Hiroshi Okuda) conducted an additional survey to the FY2011 (23rd) Survey on Overseas Business Operations by Japanese Manufacturing Companies and released its result today. It was conducted through the internet, with the responses received between March 5 and 23. This additional survey selected 352 companies, 200 of which returned effective responses. The effective response rate was 56.8%. 
     
  2. A sample of 352 companies selected this time out of 603 companies that responded in the FY2011 Survey, whose result was released last December, are the companies that have at least one or more production bases in Thailand or that responded in the FY2011 Survey that Thailand is a promising country for overseas business operations over the medium term.
     
  3. In the FY2011 Survey, Thailand ranked third, following China and India, as a promising country for overseas business operations over the medium term. In terms of the number of production bases as well, Thailand also ranked second, following China, being recognized as an especially important country by Japanese manufacturing companies.
     
  4. This survey examined "the impact of flooding on production," "changes in perception of Thailand as a promising country for overseas business operations," "changes in the prospect of overseas business operations and in attitude for investment in Thailand," "risk management for the overseas production against natural disasters" and "measures required for continuing business in Thailand."
     
  5. The summary of this survey are as follows:(for the full document, please click here)

    【Summary】
    Of the 200 companies that responded to this additional survey, 66 (40%) of 165 companies with production bases in Thailand replied, "No drop in production occurred" (58 companies) or "Increase production for alternate demand from other companies" (8 companies). On the other hand, 99 companies (60%) of the respondents also stated they were affected by the flood and forced to drop production. When production was scaled down, Japan was the country most often chosen for an alternate supply source, followed by China.

    In response to the question asking for any "change in perception of Thailand as a promising country for overseas business operations over the medium term," about 15% of the respondent companies (199 companies) replied "Somewhat less promising" (26 companies) or "Much less promising" (3 companies). On the other hand, about 83% responded "Not changed since the floods" and 2% said "See it as even more promising". Although there are differences depending on industries, the influence of the flood was limited in the perception of Thailand as a promising country for business operations.

    On the question of the attitude for business operations in Thailand, about 97% of the respondent companies replied "strengthen or expand" or "maintain the preset presence", even in the wake of the flood. Although the number of companies who replied "strengthen or expand" decreased somewhat, the overall finding was the continued positive attitude for business operations in Thailand. When asked about the location where business operations will be strengthened or expanded, most respondent companies indicated they did not intend to shift locations from the present production base. With regards to the attitude for investment in Thailand, about 80% of the respondent companies with plans of new or replacement investment replied they would proceed as planned before the flood, which confirmed that there is no major change in their investment plans.  

    Among the 200 companies which replied to the question about the risk management of the overseas production against natural disasters, responses were concentrated in "Add supplementary or alternate functions to factories in neighboring countries or plants", "Cultivate multiple suppliers for parts and materials" and "Create business continuity plans for quick recovery". These findings indicate that Japanese manufacturing companies are going to deal with the risk in overseas production by adding layers to their supply chains and by making them more flexible.

    Regarding measures required for continuing business operations in Thailand, more than 80% of the 200 companies responded with the desired "reliable implementation of flood control projects". Also, responses showed strong requests for "a preferential tax treatment for the afflicted companies in Thailand" (45.0%) in terms of the support for the companies afflicted, "early disclosure of accurate disaster information and establishment of early warning structure" (51.5%), and "implementation of disaster measures in each factory complex" (49.5%) for information disclosure and disaster measures.
     
  6. Based on findings of this survey, JBIC will support overseas business activities of Japanese companies operating under tough international competition, while conducting dialogues with governments and relevant authorities in foreign countries and regions in an effort to improve their investment climate.

    Attachment:Changes in perception of Thailand as a promising country for overseas business operations

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