Jul 3, 2014

Cambodia - Japanese companies seek opportunity in Southeast Asia

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More and more Japanese companies have begun to expand their businesses into countries with small economies in Southeast Asia such as Cambodia, Myanmar and Vietnam. Japanese companies have been shifting their presence in Asia from China through Thailand to nations considered to be less economically advanced.

Retail giant Aeon Co. on Monday opened a shopping mall in Phnom Penh, the capital of Cambodia, that is one of the nation’s largest commercial complexes. The facility houses about 190 stores, including an Aeon supermarket, a movie theater, a bowling alley and brand-name clothing shops. Aeon Co. invested about 20 billion yen (US$197 million).

“Unless we advance into new regions, we cannot ride the wave of the shift to Asia” by many companies, Aeon President Motoya Okada said at a press conference in the city, adding they are considering making forays into other nations such as Myanmar.

The major retailer also opened its first shopping mall in Ho Chi Minh City, Vietnam, in January. Two more Aeon shopping centres are set to open in Binh Duong Province near the city this autumn and then in the capital, Hanoi.

Aeon Co. plans to have more than 10 shopping centres in the three nations of Cambodia, Vietnam and Indonesia within the next three years.

Mazda Motor Corp. plans to open its first store in Yangon, the largest city in Myanmar, in August or later. The company set up dealerships in Laos in 2012 and in Cambodia in 2013.

“Though sales are really small, we are prepared for future demand,” said an employee of the car maker.

Toyota Motor Corp. has been increasing the number of its dealerships in Laos as well.

Companies from other countries are also active in entering into such nations. Britain's luxury car maker Rolls-Royce announced in early June that it would open a dealership in the centre of Phnom Penh, where a Chinese company has been developing a project to open a large shopping mall.

In Laos as well, foreign firms have been carrying out development projects such as opening a Chinese-financed shopping centre in Vientiane.

Thus far, when foreign corporations, including Japanese firms, saw labor costs rising in China—into which many companies had entered—they began operations in Thailand such as building factories there.

However, personnel expenses have also risen in Thailand, and the nation’s wage level is more than three times as high as that of Cambodia, Myanmar or Laos.

As a result, there is a growing trend to set up production bases in Southeast Asian nations considered less advanced than China and Thailand. The trend has been that the increase in employment leads to the expansion of the middle-income group in the regions.

As Japanese companies face the issue of a shrinking domestic market due to the low birth rate and the aging population, such nations in Southeast Asia are positioned as an important market to improve their business performances.

Takahiro Tsujimoto

The Yomiuri Shimbun

Business & Investment Opportunities 

Saigon Business Corporation Pte Ltd (SBC) is incorporated in Singapore since 1994. 

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