Japan/China/Vietnam

The South Korean firms are slowly gaining Japanese consumers' support, with their cars and home appliances seen as low-priced but good quality. The firms are shaking off the image previously associated with their products: cheap, but you get what you pay for.

Published 2006-08-26 15:22 (KST)
Amid a lengthy investment spree in China, many of Japan Inc's biggest names are making inroads into one of the world's few remaining communist states: Vietnam.

Vietnam has become an increasingly popular investment destination for Japanese firms seeking to reduce their excessive dependence on China and spread their business risks in Asia more evenly.

Lying behind what some people describe as the "China plus one" attitude among Japanese investors, are concerns about the risks involved in doing business in China. These concerns were fed by Beijing's slow response to the outbreak of severe acute respiratory syndrome (SARS), and also by the anti-Japanese riots that swept through China in April 2005.

More important is the currency factor, since a stronger Chinese yuan weakens the advantage exporters derive from operating in China. In the face of strong international pressure, especially from the U.S., China revalued the yuan against the U.S. dollar in July last year, albeit by a meager percentage. A further rise in the value of the yuan is anticipated in the medium and long terms. Also, labor costs are on the rise and shortages of power and water supplies have emerged as headaches for foreign firms with operations in China as well as for their local counterpartoh my news