Japan producers need to transform supply chains as they shift manufacturing abroad, UPS finds

The continuing shift in manufacturing from Japan to overseas markets, the importance of logistics and the opportunity to streamline and optimise operations to remain competitive, and the emergence of new trade markets, particularly Southeast Asia, are among the key findings of the survey. 

“The manufacturing landscape in Asia is evolving while global demand has remained cautiously optimistic. It is pivotal for manufacturing companies to find ways to compete in the evolving marketplace, effectively,” said KK Leung, president for the north district, UPS Asia Pacific Region.

“UPS has been partnering with companies to assist them through the shifting business landscape for over 26 years. Combined with our insights on the specific needs of various vertical industries, manufacturing companies will benefit from a long-term winning strategy.”

 

Growing presence 

According to a recent report from Transport Intelligence, China continues to be the “manufacturer of the world”, even as low-value and mass manufacturers steadily move to lower-cost countries such as Vietnam, Myanmar, Cambodia, Laos and Bangladesh. 

This shift in manufacturing will lead to greater trade opportunities within Asia, giving rise to a need for a reliable intra-Asia logistics partner.

The UPS survey shows that today, China is the top export (81.3 per cent) and import (76 per cent) partner of Japanese manufacturers overall. Nearly 40 per cent of the respondents agree that China is currently the most important market for their businesses, followed by the United States (20.4 per cent) and Southeast Asia (16.8 per cent).

Looking into the future, however, only 30.8 per cent of the respondents continue to recognise the importance of China. Meanwhile, one-quarter of Japanese manufacturing companies anticipate that Southeast Asia, especially Asean countries, will gradually play a bigger role in intra-regional trade in the future, nearly doubling the importance Asean holds today.

 

Thai-Japan ties 

“Our survey results underpin the strong trade ties Thailand has with Japan,” said Edmund Lo, managing director of UPS Thailand. 

“As Thailand’s second-largest trade partner and [its] largest foreign direct investor, Japan’s trade initiatives will help further the long-term economic development of Thailand and its manufacturing sector.” Logistics supporting international operations and trade is viewed as “important” or “somewhat important” by 88.6 per cent of the survey’s respondents. However, 53.7 per cent expressed that they had yet to streamline and optimise their logistics operations successfully.

 According to the survey, 74 per cent of respondents expressed that they used two or more types of transport modes for exporting, while 71 per cent shared the same view for import shipments.

“Our survey shows that manufacturers recognise the need to move faster and more nimbly across the world, as their sourcing origins and shipment destinations continue to expand internationally,” Leung said. 

“With the growing complexity of the logistics process, UPS’s multi-model services and suite of innovative technology solutions will help manufacturers optimise their supply chain and expand their business globally.”