A summary of the survey results is as follows.
(1) Overseas business slows down sharply, and recovery from the impact of COVID-19 is expected in 2023
This year’s survey was conducted under the influence of COVID-19 in addition to the US-China trade conflict. Supply chains appeared to be disrupted in Japan and overseas simultaneously due to the lockdown implemented in each country, with the impact going beyond short-term inventory adjustment. According to the survey, the overseas production ratio dropped sharply from 36.8% to 33.9%, which is almost same level seen 10 years ago, and a recovery is currently expected by 2023. Against this backdrop, manufacturers’ willingness to strengthen and expand overseas business in the near future dropped dramatically from 71.4% to 59.3%, the lowest level since the survey started.
(2) China returned to the top of the promising countries ranking, and new countries of interest emerged
Regarding promising prospects for business operations over the next three years, China overtook India, once again returning to the top spot. It appears that this outcome was decided by COVID-19, that is, China was quick to resume its economic activity while suppressing the spread of infection, while in India, the economic slowdown worsened with their long-term lockdown, reversing the lead they previously held. In the ASEAN region, Vietnam showed promising results, as it did last year. In addition, it is noteworthy that previously inconspicuous countries such as Bangladesh attracted attention.
(3) Supply chain reinforcement is underway; “local production for local consumption” is the keyword following COVID-19
According to the survey, the impact of COVID-19 on supply chains was the greatest from April to May, 2020, but is now seeing a resolution. As for the regional breakdown, China and ASEAN appeared to be more affected than Japan and the United States, reaffirming the importance of the production network in this region for Japanese manufacturers. Companies intend to continue investment to strengthen their supply chains in preparation for the next pandemic, but few respondents are considering reshoring to Japan; therefore, it appears that supply chain reinforcement by companies is being conducted while maintaining their overseas activities. Among such companies, a number of respondents answered that they have decoupled their supply chains between the United States and China, or that they plan to do so. In this regard, it has been suggested that reorganization of the supply chain to “local production for local consumption” type production networks is being recognized as one promising solution in the so-called “after COVID-19 (or after Trump)” world.
(4) Almost half of companies are taking on the challenge to accommodate SDGs under growing social awareness
Regarding the relationship between SDGs and the manufacturing industry, the survey found that almost half of companies are working on SDGs in some way, such as business strategy and CSR. Many companies have chosen “increasing interest from consumers, buyers and industry,” “self-motivation” and “RM with investors” as their motives for doing so, which implies growing awareness among stakeholders in all industrial sectors. The survey also implies that this awareness is trickling down to the supply chain activities of SMEs. Finally, a number of companies who acknowledge having “no introduction” of SDGs simultaneously selected some of the “current” activities related to SDG goals, which implies Japanese manufacturers’ potential approach toward the materiality of SDGs.
(5) Companies are trying to overcome this situation by adopting a new framework
In our survey conducting process, many voices recognized COVID-19 and the US presidential election as being a game changer. Although the situation is very volatile and it is difficult to draw a picture of mid-term business, some companies are looking toward a shift and optimization to a “local production for local consumption” production network to adapt to the new business environment, or are putting more resources into network digitalization. In addition to the above, we found that efforts to rediscover corporate value using a new SDGs framework have begun.