Toshiba to shift 30-year-old manufacturing unit out of China's Dalian amid reduced profit

Japanese tech giant, Toshiba will relocate its 30-year-old production plant from China's north-eastern city Dalian to Vietnam or Japan, amid the country's ongoing dispute with Beijing. The plant, Toshiba's first in China, employs approximately 650 people and produces industrial motors. However, due to a sharp reduction in production, the unit was put on the chopping block, and the company chose to close it down by the end of the month, according to Nikkei Asia.

The operators have stated that the liquidation of this industrial operation will begin as early as October, with capacity being relocated to Vietnam and Japan. The action occurred amid a recent struggle between Beijing and Tokyo over China's expanding clout in both the South China Sea and the East China Sea, partially in response to Beijing's fears over the growing US military presence in the region as a result of worsening China-US tensions.

Chinese Communist Party has warned Tokyo of nuclear retaliation

Meanwhile, Beijing claims control over practically the entire South China Sea, with Brunei, Malaysia, the Philippines, Vietnam, and Taiwan having conflicting territorial claims. The Chinese Communist Party (CCP) had previously released a video in which it warned Tokyo of nuclear retaliation and 'full-scale war' if it interfered with China's administration of Taiwan.

According to South China Morning Post, Toshiba's impending departure comes as a number of countries, including the US, seek to reduce their reliance on China, according to Liu Zhibiao, a professor of industrial economics at Nanjing University in Jiangsu province. Furthermore, electronic items from businesses like Toshiba are now up against stiff competition from Chinese brands, reducing demand for foreign brands.

The Japanese government announced an initiative last year aimed at 'boosting investment in Japan to enhance supply chains,' with 220 billion yen set out in the country's supplementary budget for the year, according to South China Morning Post. Approved enterprises will receive financial assistance to relocate to Southeast Asia or develop new domestic operations as part of the programme, with the goal of manufacturing more key products and materials for Japan.

More than 60% of Japanese companies in China remained profitable

A poll conducted in March by the Japan External Trade Organization revealed that business confidence among Japanese companies working in China has deteriorated in 2020. However, it was also claimed that, despite the fact that the ratio of enterprises retaining profitability, had declined across all countries and regions, more than 60% of Japanese companies in China remained profitable, according to South China Morning Post.

(Inputs from ANI)

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