Japanese Companies Slowly Slinking Away From Thailand

 | Thu 20 Feb 2014 09:17 ICT

CityNews – Vietnam offers cheaper labour than Thailand, and Japanese companies are currently planning to hopefully take advantage of that, amidst the political uncertainty and its effects on their business in Thailand. Japanese trade officials are busy urging Vietnam to improve their policies and strengthen their supporting industries in order to attract their business, which would detract a percentage of their business from the Kingdom.

Interesting artwork on Japanese money from the 40’s.

A survey run by the Japan External Trade Organization (JETRO) found that average annual salaries for workers in Thailand were around 200,000 baht, while in Vietnam they added up to around 85,000 baht. Managers in Thailand made around 885,000 baht while managers in Vietnam made around 400,000 baht. These figures are attractive for foreign investors wishing to relocate their labour-intensive production facilities to Vietnam. Vietnam is also considered more competitive than Laos and Cambodia, with a more skilled workforce.

However, Japanese investors are holding back for now because of Vietnam’s lack of supporting industries, compared to Thailand where supporting industries are well developed for the most part. In terms of business, this means it would be wise for the more valuable parts of production processes to remain in Thailand.

The biggest threat to Japanese business in Thailand is the political instability, along with problems in the auto industry. Thailand is a Southeast Asian car hub and has remained so throughout the 2011 floods and the 2013-14 political crisis, meaning Japanese business will most likely stay for a while to come.