WHEN Japanese firm Iris Ohyama agreed in April to begin producing much-needed face masks in Japan, it marked a win for Prime Minister Shinzo Abe who wants to bring manufacturing back from China.

Spooked by coronavirus-induced factory shutdowns in China, Abe’s government has earmarked US$2 billion to help companies shift production home. The policy, part of a massive stimulus package to cope with the pandemic, has even been termed by some bureaucrats as a matter of national security.

“We have become dependent on China,” Japan’s Economy Minister Yasutoshi Nishimura told reporters last week. “We need to make supply chains more robust and diverse, broadening our supply sources and increasing domestic production.”

Japanese production of masks, for which domestic demand has skyrocketed, makes sense. But Iris Ohyama, which until this month had only made face masks in China, is so far the only large firm known to be taking advantage of the subsidies.

Many other Japanese firms say shifting output back home is simply impractical and uneconomical. They need to be physically present in China because much of what they are making is ultimately for the Chinese consumer, and to meet the demands of “just-in-time” production which prioritizes short delivery times for efficient manufacturing.

“The parts we make are so big that we need to be near our customers to control our costs,” said Chikara Haruta, a spokesman at Yorozu Corp., which makes suspension and other auto components.

Its plant in Wuhan is located just 7 kilometers from a Honda Motor Co. assembly factory.

For Japan’s carmakers, reliance on Chinese suppliers in the world’s biggest auto market is also just good business.

“Even if we wanted to, it would be difficult to lower our exposure to China-made parts,” an executive at a Japanese automaker said, declining to be identified.

He added that over the past decade, Chinese suppliers had upped their game and now provide a vast range of quality, low-cost parts.

Toyota Motor Corp., Nissan Motor Co. and Honda also have at least three R&D centers each in China, and their suppliers are following suit.(SD-Agencies)