China’s loss could be India’s gain as Japan Inc sours on China

Japanese companies are pulling back from China at a pace not seen in years. The shift is being driven by more than weak Chinese demand. Geopolitical tensions, tougher operating conditions, rising costs and increasingly formidable Chinese competitors are changing the calculation for Japan Inc.  For Japanese manufacturers, the China problem is also increasingly commercial. Automakers are a clear example. Japanese carmakers once benefited from China's rapidly expanding vehicle market. They now face aggressive Chinese electric vehicle manufacturers with strong domestic supply chains and increasingly competitive technology. Kei Koga, a professor at Singapore's NTU, told CNBC that automakers, parts suppliers and export-oriented manufacturers are likely to be among the companies most likely to scale back. Companies that have deeply localised their operations and can compete successfully with Chinese rivals, particularly in areas such as medical and precision equipment, have stronger reasons to remain.

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