UPS announced the first “UPS Japan Manufacturing and Trade Trends” survey, which looks into the current and future trends of the manufacturing industry in the context of global trade and logistics

UPS announced the first “UPS Japan Manufacturing and Trade Trends” survey, which looks into the current and future trends of the manufacturing industry in the context of global trade and logistics. The continuing shift in manufacturing from Japan to overseas markets, the importance of logistics and the opportunity to streamline and optimise operations to remain competitive, and the emergence of new trade markets, particularly Southeast Asia, are key findings from the survey.

“The manufacturing landscape in Asia is evolving while global demand has remained cautiously optimistic. It is pivotal for manufacturing companies to find ways to compete in the evolving marketplace, effectively,” said KK Leung, president, North District, UPS Asia Pacific Region. “UPS has been partnering with companies to assist them through the shifting business landscape for over 26 years. Combined with our insights on the specific needs of various vertical industries, manufacturing companies will be benefited from a long-term winning strategy.”

While China remains a key trade partner, Southeast Asia’s trade presence grows 
According to a recent report from Transport Intelligence, China continues to be the “manufacturer of the world”, even as low-value and mass manufacturers steadily move to lower-cost countries such as Vietnam, Myanmar, Cambodia, Laos and Bangladesh. This shift in manufacturing will lead to greater trade opportunities within Asia, giving rise to a need for a reliable intra-Asia logistics partner.

The UPS survey shows that today, China is the top export (81.3 per cent) and import (76 per cent) partner of Japanese manufacturers overall. Nearly 40 per cent of the respondents agree that China is currently the most important market for their businesses, while the United States is the second most important market (20.4 per cent), and Southeast Asia for the third (16.8 per cent).

Looking into the future however, only 30.8 per cent of the respondents continue to recognise the importance of China. Meanwhile, one quarter of Japanese manufacturing companies anticipate that Southeast Asia, i.e. ASEAN countries, will gradually play a bigger role in intra-regional trade in the future, nearly doubling the importance ASEAN holds today.

Japanese manufacturers continue to look overseas for growth
The global financial crisis and Japan’s natural disasters in recent years have likely impacted Japanese manufacturers’ decisions to shift production overseas. According to the UPS survey, large enterprises (LEs; companies with more than 300 employees) indicated an increase in overseas production sites (38.6 per cent; 12.4 per cent for SMEs), an increase in overseas clients (37.3 per cent, 21 per cent for small-and-medium enterprises (SMEs)), and an increase in third-country shipping (31.8 per cent; 7.4 per cent for SMEs). 

Given the importance of global trade, Japanese manufacturers also see how free trade agreements can enhance their business. Around 56 per cent of the respondents from large enterprises believe the Trans-Pacific Partnership (TPP) will positively affect their business. By contrast, half of Japanese SMEs believe the TPP will have no impact on their business.

“Though representing over 90 per cent of businesses, SMEs in Asia are particularly disadvantaged by trade barriers because they do not have the resources of large firms to overcome them. Trade agreements such as the TPP, can help SMEs by simplifying trade and eliminating trade barriers. The low recognition of free trade agreements among Japanese SMEs shows that there are still opportunities for them to take advantage of trade liberalisation to capture new growth opportunities,” added Leung. 

Logistics and the need to streamline and optimise is important to manufacturers
Logistics supporting international operations and trade is viewed as “important” or “somewhat important” by 88.6 per cent of the survey’s respondents. However, 53.7 per cent expressed that they have yet to successfully streamline and optimise their logistics operations.

According to the UPS survey, 74 per cent of respondents expressed that they use two or more types of transport modes for exporting, while 71 per cent shared the same view for import shipments.

“Our survey shows that manufacturers recognise the need to move faster and more nimbly across the world, as their sourcing origins and shipment destinations continue to expand internationally. With the growing complexity of the logistics process, UPS’s multi-model services and suite of innovative technology solutions will help the manufacturers to optimise their supply chain and expand their business globally,” concluded Leung.