• Car Makers Dipping Their Toe into Onshoring in Japan: When people think of things clearly made in Japan, two broad categories are electronics and cars. We were able to find a few examples of car makers slowing down their practice of investing abroad, but as yet we are unable to cite any major automaker shutting down large overseas production and bringing it back to Japan:
– Nissan now plans to continue making some of its engines at a plant in Fukushima, after previously considering shifting to Tennessee.6
– Honda is looking to shift some of its mini-bike production from Vietnam and China back to Japan.7
An Important Trend within Abenomics
While the weakening yen and the advent of the most aggressive central bank easing program in the world have been important features of Abenomics, they are not the end goals. What’s just as relevant is that Abe’s government is extremely pro-business. The key lies in revitalizing the third largest economy in the world. Nearly two years into this new policy regime, we think that seeing concrete evidence of firms bringing some of their production back to Japan is an early sign of success that cannot be ignored. Combined with what we’ll write about in some future blog posts, it’s making us excited about Japan’s prospects.
Read the Japan Society Series.
As of March 31, 2015, Toyota was a 5.81% weight, Mitsubishi UFJ was a 4.88% weight, Canon was a 3.94% weight, Panasonic was a 0.76% weight, Daikin was a 0.34% weight, TDK was a 0.30% weight, Nissan was a 3.12% weight, and Honda was a 3.03% weight in the WisdomTree Japan Hedged Equity Index.
1Source: “Toyota Operations 2015”; data as of 12/31/14.
2Source for quotation and data in bullet point: Hiroyuki Kachi, “Canon to Return Some Production to Japan,” Wall Street Journal, 1/29/14.
3“Panasonic Bringing Most Production Back to Japan,” Nation, 1/6/15.
4“Weak JPY Bringing Manufacturing Back to Japan,” MarketPulse, 1/8/15.
5“TDK Bringing Production Back to Japan Thanks to Weak Yen,” Nikkei Asian Review, 2/26/15.
6Yoko Kubota, “Nissan to Make More Cars in Japan, Boost Exports Next Year,” Wall Street Journal, 12/19/14.
7Kubota, 2014.
Important Risks Related to this Article
Investments focused in Japan increase the impact of events and developments associated with the region, which can adversely affect performance.