Japanese demand-oriented companies, such as convenience stores, food manufacturers, supermarkets, increasingly moving into Southeast Asia as Japan's population ages, birthrate declines, deflation continues
March 12, 2012
– Spurred by Japan’s declining birthrate, aging population and ongoing deflation, Japanese demand-oriented companies such as convenience stores, food manufacturers and supermarkets are increasingly expanding into Southeast Asia, The Nation reported March 10.
An attractive destination for these companies is Vietnam, in part due to the government’s decision to stop regulating foreign capital after Vietnam’s 2007 entry into the World Trade Organization. Since 2000, Vietnam’s annual growth rate has exceeded 5% under the "Doi Moi" reform policy. In 2010, Vietnam’s gross domestic product hit US$101.5 billion.
Vietnam has a population of almost 87 million people, and the average age of its nationals is approximately 27. Bolstered by strong economic growth, the number of people earning a middle-income has risen considerably.
Japanese companies that are expanding into Southeast Asia include:
• Aeon Co.’s first store in Vietnam is slated to open in 2014 in Ho Chi Minh City. The company also plans to expand into China and other Asian countries. By 2020, Aeon aims to have its combined overseas sales match the level of its domestic sales in Japan.
• Convenience store chains FamilyMart Co. and Ministop Co. have begun opening stores near schools in Vietnam. Vina FamilyMart Co., FamilyMart's local joint venture, intends to open a minimum of 40 additional locations in Vietnam.
• Transportation company Sagawa Express Co. has begun operating a parcel delivery service in a variety of Asian countries including, but not limited to, China, Thailand, Malaysia, the Philippines and Vietnam.
• Kumon Educational Japan Co. operates in 13 Asian territories and countries including Indonesia, Thailand and Vietnam. By the end of 2011, more than 100,000 students in Indonesia and Thailand had registered with Kumon.
By 2020, 1.9 billion people in Asian countries outside of Japan will have a disposal income of at least $5,000 or higher, up from 1% in 2010, predicted the National Institute for Research Advancement. By 2030, that number will most likely increase to 2.5 billion.
According to a Japan External Trade Organisation official, challenges faced by Japanese companies as they move abroad will include abrupt modifications to business rules and foreign capital regulations.
In order to facilitate the movement of Japanese companies abroad, the Japanese government will need to take steps to encourage countries to ease said regulations via economic partnership agreements and the Trans-Pacific Partnership.
The primary source of this article is The Nation, Bangkok, Thailand, on March 10, 2012.