Japanese SMEs to stay; seek cushion

Some of them feel the need, however, to have a business cushion in place by seeking new clients and suppliers to ensure their survival. 

Kokuo Ishikawa, head of the loan and customer service promotion department at the SME unit of Japan Finance Corp (JFC), said yesterday in Bangkok that Japanese SMEs could not relocate their production easily, as the decisions are dependent on the direction taken by their clients, most of which are big corporations. 

Unlike large companies, Japanese SMEs have limited investment budgets, so they have to think very carefully before deciding whether they will expand their businesses in Thailand.

He said this was a difficult time for Japanese SMEs, as they have to wait to see what their clients will do, and these large businesses are now waiting for clarity on the Thai government’s water-management plans as well. 

As a result of this uncertainty, the SMEs need to seek new partners or suppliers in Thailand in order to survive.

“I’ve met with two Japanese companies operating in Thailand. Both said they would remain in the country. As far as I’m concerned, some Japanese SMEs need new suppliers and clients in order to survive, but there are others that have to diversify risk by looking for other locations. I think it is currently unclear whether Japanese SMEs in Thailand will invest for new expansion,” he said. 

Ishikawa said the government’s water-management plan was now an additional important factor that large Japanese corporations are considering before determining their investment direction in Thailand. 

As a loan supporter, the JFC has to take this factor into account as well, he added. 

He said the JFC since early this year had backed loans worth a combined ¥1.6 billion  (Bt616 million) to 20 Japanese SMEs operating in Thailand for rehabilitation of their production. 

Japanese firms are seeking to invest more outside their home country, driven by the yen’s appreciation, besides which flood-affected firms in Thailand need funding to return their manufacturing to normal. Hence the JFC expects to support more loans for Japanese companies in the Kingdom, he said. 

The JFC, along with the Japanese Chamber of Commerce in Bangkok and the Small and Medium Enterprise Development Bank of Thailand, yesterday organised the Thai-Japanese Business Matching for electronics and automotive companies. About 40 companies each from Thailand and Japan attended the event. 

Shigeru Endo, assistant manager of NMB-Minebea Thai, a giant Japanese electronic-component firm and participant in the event, said the company would definitely remain in Thailand. 

However, to diversify risk, it must seek new suppliers that manufacture spare parts and plating, for example, for the company. The new partners would have to be located near Minebea’s plants in Bang Pa-in, in Ayutthaya province, for the sake of convenient delivery. 

“We don’t mind much if our new partners have manufacturing facilities in flood-risk areas. We believe we can manage it,” he said. 

Tadahiro Ito, administration coordinator of another business-matching participant, Minamida (Thailand), said the company was constructing a facility in Pin Thong Industrial Estate, Chon Buri province, to produce parts for Tier 1 manufacturers in the automotive industry. Construction started last August and operations are scheduled to commence this September. 

The company has strong production in Japan, supplying auto-parts manufacturers that in turn supply to leading Japanese carmakers.