Japanese firms seek ‘after-care service’

COUNTRIES of the central and eastern European region still remain attractive for Japanese investors and serve as a kind of entrance gate to European markets.

Japanese company Yazaki has a plant in Michalovce.Japanese company Yazaki has a plant in Michalovce. (Source: TASR)

Though some big Japanese investors have recently closed their plants in Slovakia and moved production elsewhere, new investments keep coming to the country, the Japanese embassy claims.

“As recent Japanese investments show, Slovakia is still an attractive destination,” the Japanese Embassy in Slovakia told The Slovak Spectator. 

Labour Code changes harmed some companies

Slovakia can be attractive to Japanese firms for several reasons. Aside from competitive labour costs, productivity of the labour force is the highest in the region. It also boasts membership in the eurozone, and has a strategic location around other European Union member states, as well as proximity to the Russian market, according to the Slovak Investment and Trade Development Agency (SARIO). In addition, the Japanese embassy praises people’s diligence and foreign language skills, as well as an existing supplier network for the automotive and electronics industries.

“We are especially pleased to mention the fact that we have heard from many investors working here that the Slovak and the Japanese have something in common, as the Japanese feel comfortable in their jobs with the Slovak employees here,” the embassy said.

There is also some room for Slovakia and Japan to learn from each other in business. There is, for example, the practice for continuous improvement in factory production, called “kaizen” or the customer-oriented corporate attitude of Japanese companies, both of which are highly valued around the world, the embassy said.

Though Japanese investors are generally content with the business environment in Slovakia, they see some room for improvement.

“It is important for Slovak authorities to be open to voices of foreign investors and enhance the ‘after-care service’ after launching a business in Slovakia,” the Japanese embassy said.

Regarding recent legislative changes, some Japanese companies are negatively affected by the amendment to the Labour Code.

“Foreign investors should be duly informed and consulted about important legislative changes well in advance,” the embassy added.

Imports from Japan outmatch the exports

Japan has been reporting a trade surplus with Slovakia, with the latter’s imports being much higher than its exports. Imports from Japan have, however, been decreasing over the past three years. While in 2012 their share of total imports amounted to 1.5 percent, in 2013 it was only 1.4 percent and in 2014 1.3 percent. Exports from Slovakia to Japan increased between 2012 and 2013, but then dropped in 2014. The share of total exports, however, remained at 0.2 percent, data from the Slovak Statistics Office show.

In 2012, Slovakia imported goods and services worth €962.2 million from Japan, but it dropped to €816.1 million in 2013 and further down to €766 million in 2014. Slovakia’s exports to Japan amounted to €112.3 million in 2012, then rose to €135.4 million in 2013, and dropped to €104.6 million in 2014.

Slovakia’s trade balance amounted to -€849.9 million in 2012. It increased to -€680.7 million the next year, and then to -€661.4 million in 2014.

Some Japanese companies are leaving

SARIO successfully completed altogether 12 investment projects from Japan between 2002 and 2014, with the estimated cumulative investment amounting to more than €254 million. 

The investments, which helped to create more than 3,000 new jobs, went to various regions, SARIO spokesperson Richard Dírer said.

Despite the general satisfaction with the business environment in Slovakia, several Japanese firms have recently closed their plants in the country. One of them was Panasonic, which announced it was closing its plant in Krompachy (Košice Region) in October 2014, leaving more than 650 people jobless. In March 2015 the company SEWS Slovakia, employing about 460 people, informed about closing its plant in Topoľčany (Nitra Region).

There may be several factors why these firms left Slovakia, like wage increases, market trend or a shift in global business strategy when a company decides on withdrawal or a decrease in production, Japanese Ambassador to Slovakia Akio Egawa told The Slovak Spectator, adding it is difficult to comment on the reasons for specific business decisions.

Dírer adds that the reason might be the competitive pressure of the divisions in one company located in several countries or the shrinking market of a specific product. In case the factors arise from the business environment, SARIO and respective local and state institutions try to offer solutions to satisfy the needs of the investor, he added.

Despite the departure of some big investors, there have also been some openings of new plants, including Akebono Brake Industry in Trenčín, Egawa said. 

When it comes to sectors with the biggest potential to lure foreign investors, SARIO mentions mostly logistics.

“We expect that investing Japanese capital into logistics in Slovakia might positively impact the decisions of other Japanese investors from other fields to invest in Slovakia,” Dírer said.


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