Japan's SMC Corporation steps up manufacturing relocation to Vietnam

The information was revealed by Yoshiki Takada, president of SMC, at a financial results briefing for fiscal year 2023, which ended in March 2024.

"We have begun discussions to move mass-produced products to Vietnam and to have Chinese factories specialize in the Chinese market," Takada said, adding that the aim is to be prepared for contingencies like a geopolitical risks between the United States and China, as well as rising labour costs in China.

According to Takda, the relationship with the United States has deteriorated considerably, and US regulations are likely to come in, so SMC is planning to transfer everything fairly soon. SMC has already shifted a significant portion of its business to Vietnam, and the company would like to continue this move as soon as possible.

In the same vein, Masahiro Ota, director and executive officer, said, "The cost in Vietnam is 20 per cent lower than in China. But of course, China has been doing this for many years now and has become a very efficient factory base. I hope that Vietnam will catch up to that level as quickly as possible."

"We are now in the process of providing technical guidance and production technology guidance from our Chinese factories to Vietnam to quickly start up there," he added.

SMC Vietnam was established in 2008 as a representative office. In 2011, it became a 100 per cent foreign-owned establishment, a subsidiary of SMC Corporation, with three main offices in Ho Chi Minh City, Bac Ninh, and Danang, and a warehouse for fast deliveries.

Last year, SMC, which has an automatic control devices factory in Long Duc Industrial Park, was licensed by Dong Nai People's Committee to increase its investment capital from $449.4 million to $549.4 million.

With the latest incarnation of the Vietnam-Japan Joint Initiative in a New Era, bilateral investment ties are expected to enter a new period of stronger development. Takeo Nakajima, chief representative of the Japan External Trade Organization (JETRO) in Hanoi, talked to VIR’s Bich Thuy about future prospects.

A new biomass power plant project is expected to be built on an area of about 10 hectares, with a total investment of up to $120 million at Bac Van Yen Industrial Cluster in the northern province of Yen Bai.

Japanese wholesale companies are betting on the Vietnamese market by striking up deals with local companies in food and technology.