Japanese electronics manufacturer Panasonic is considering returning the manufacture of its household appliances in China back to Japan as the yen has depreciated while wage increases and worker shortages have become the norm in China, reports Shanghai’s National Business Daily.
According to Japanese news agency Kyodo, Panasonic plans to reallocate production lines for 40 types of household appliances back to its factories in Fukuroi, Shizuoka prefecture. The firm has been studying and reviewing the plan but has not made any formal decision yet, a senior member told the Shanghai news outlet on Tuesday.
Around 70% of Panasonic’s products have been made in other countries since 1990. It announced a plan in June 2013 to bring household appliance manufacturing back to Japan and raised the percentage of its Japan-made products from 30% to 50%, citing the yen’s depreciation as its reason.
It has moved the production of top-loading washing machines back to its Fukuroi factories from China. The manufacturing of air conditioners and front-loading washing machines were moved back to Kusatsu in Shiga prefecture while microwave ovens moved back to Kobe.
Panasonic has three production bases in China. The plant in Hangzhou, Zhejiang province, has been Panasonic’s largest production base in the world, producing around 3.6 million dryers, dishwashers and parts a year in a joint venture with local company Goldfish Electronics. Another base producing air conditioners is also a joint venture formed with Guangzhou Wanbao. Panasonic’s base founded with Shanghai Yantze River Investment manufactures, develops and sells 4 million microwaves a year.
The decision to bring manufacturing back to Japan can be attributed to the fact that the yen has depreciated from 79 yen to 120 yen against the US dollar from the end of 2012, increasing the cost of Panasonic’s China-made products in Japan and reducing their competitiveness.
The increasing labor costs and other related overheads in China have been other significant factors. The country has many workers but few of them are skilled and the wages for skilled laborers are rising, said Su Liang, brand director of China Household Electric Appliance Research Institute’s R&D center.
Many Chinese household appliance producers meanwhile have been shifting production to Southeast Asia for cheaper labor. Panasonic president Kazuhiro Tsuga said in October last year that