41% of Japanese Business Leaders "Reconsider China Strategy in the Trump Era"

More than 40% of Japanese executives responded that they are reviewing or considering reviewing their China-related strategies, including supply chains, in preparation for the so-called 'Trump 2.0' era. The biggest concern following the inauguration of the next U.S. administration led by Donald Trump in January next year was high tariffs.

According to the results of the "100 CEOs Survey" released by Nihon Keizai Shimbun (Nikkei) on the 30th, 41% of respondents said they are reviewing or considering reviewing their business strategies in China due to the impact of the U.S. regime change. Specifically, 8.6% answered that they are currently reviewing, and 32.4% said they are considering reviewing.

President-elect Trump, who will take office on the 20th of next month, has already announced plans to impose high tariffs of up to 60% on China immediately after his inauguration. Nikkei reported, "Many Japanese companies have production bases in China and export products to the U.S. and other countries," adding, "Rebuilding supply chains requires enormous costs or mergers and acquisitions, so most companies are still taking a wait-and-see stance, but a considerable number of executives feel the need to reconsider." Some respondents in this survey directly mentioned options such as relocating production bases from China to Thailand.

38.9% of respondents believed that the inauguration of President-elect Trump would have a negative impact on their company management. This is higher than the response rate (37.0%) to the same question in the survey conducted in December 2016, just before Trump's first term in office.

Concerns about the Trump 2.0 administration (multiple answers allowed up to three) were led by an increase in tariffs on imports at 68.3%, followed by geopolitical risks at 43.4%, and a rebound in inflation at 36.6%.

Additionally, four out of ten respondents said they expect deregulation from President-elect Trump. Nikkei introduced comments from executives who believe that future deregulation could create new business opportunities. It also added that, like in the U.S., Japanese companies are closely watching President-elect Trump's words and actions and are seeking flexible responses.

Meanwhile, this survey was conducted from the 2nd to the 18th of this month targeting presidents, chairpersons, and others from 145 major Japanese companies.