business

Brexit accelerating Japanese exodus from UK: analysts

34 Comments
By Miwa Suzuki and Hiroshi Hiyama

The requested article has expired, and is no longer available. Any related articles, and user comments are shown below.

© 2019 AFP

©2019 GPlusMedia Inc.

34 Comments
Login to comment

No big deal. After a "no-deal" Brexit, and the accompanying growth in the UK economy, firms will come crawling back.

-9 ( +7 / -16 )

They are preferring pride and sacrificing economy.

1 ( +5 / -4 )

Panasonic, Sony, Nissan and now Honda: a recent exodus of Japanese firms from Britain is not solely down to Brexit, analysts say, but it has in many cases accelerated the decision to leave.

Suggesting that these and other corporations were planning on leaving anyway? If Brexit is not the main reason, then just what is?

No big deal. After a "no-deal" Brexit, and the accompanying growth in the UK economy, firms will come crawling back.

I highly doubt that manufacturing will ever return to GB after Brexit, particularly because of "no-deal". The costs of operating these corporations will outweigh any potential profits, and the GB economy along is nowhere near strong enough to support nor justify manufacturing of this size. Honda and other automobile makers in GB export a majority of their product to either the US or Europe. GB consumption alone is not enough.

Not to mention in the financial markets, there already has been a move to Amsterdam as London is also going to quite possibly lose it's place as a financial center as well.

Business is not going to come crawling back, GB is going to have to give incentives for any business to return!

2 ( +9 / -7 )

If Japanese companies are pulling out of the UK and moving to another country in the EU, you know it's because of Brexit. This would also suggest that they (Japanese companies) prize the European market before anywhere else.

However, if they are moving out of the UK and relocating to Japan, it's obvious that these companies don't need to be located in Europe, and their decisions haven't necessarily been made because the UK is leaving the EU.

These changes will have likely been made regardless. It also reveals the fact that the UK remaining in the EU wouldn't guarantee Japanese companies staying. 

Despite this, there are some who will scream "It's because of Brexit!" until they are blue in the face. I just don't think it's that simple.

-3 ( +6 / -9 )

No big deal. After a "no-deal" Brexit, and the accompanying growth in the UK economy, firms will come crawling back.

There is no way you could know that.

3 ( +7 / -4 )

These changes will have likely been made regardless. It also reveals the fact that the UK remaining in the EU wouldn't guarantee Japanese companies staying. 

Have to agree with this for manufacturers like Honda. The EU market has to be tough for them and they can make more money in China and the US markets.

2 ( +3 / -1 )

The EU market has to be tough for them and they can make more money in China and the US markets.

Of the top ten selling cars (models) in Europe a Nissan comes in at number 6 (was 4 last year)

All the rest are European.

Actually, I am surprised to see no Toyota on the list.

https://focus2move.com/europe-best-selling-cars/

Gary

2 ( +2 / -0 )

Relocating production for something as complex as cars is very complex and expensive. It is not something you "just" do. Companies will need a lot of motivation, and Brexit is helping provide it. It sounds like the Honda plant was not exactly thriving, but would have stuck around without idiot politicians in the UK plunging the country into chaos. That this is all originally motivated by a shouty wing of the Conservative party is truly tragic.

Btw, a Honda spokesman said that that plant makes 94% petrol cars, so diesel regs are hardly a factor. The beneficiary of diesel regs should be hybrid manufacturers, like err, Honda. Cars in the UK are taxed by CO2 and company fleets will choose fuel efficient models.

-1 ( +2 / -3 )

No big deal. After a "no-deal" Brexit, and the accompanying growth in the UK economy, firms will come crawling back.

Perhaps you could explain how a "no-deal" will lead to economic growth in the UK?

1 ( +4 / -3 )

UK is not going to disappear, as Japan is not going to sink.

2 ( +4 / -2 )

No big deal. After a "no-deal" Brexit, and the accompanying growth in the UK economy, firms will come crawling back.

1) With a deal, the UK economy will shrink by 3% based on reports. Without a deal, it will shrink from 9-10%.

2) A referendum takes 22 weeks, and there are only 6 weeks to go.

3) A referendum would be confusing because the options would be confusing. What will the referendum say?

4) With a deal or without a deal, there will be a hard border. It will either be around Northern Ireland or between Ireland and the rest of the UK.

5) This second border will put inspections on all the UK ports of entry which means the system will breakdown and trucks will miss ferries which will cause deliveries to be delayed up to a week or more. There will be shortages!

6) In the EU agreement, there is a simple provision that allows for the UK to simply revoke their plans to leave, and everything would return to normal.

*The UK's pride is a causing a situation of escalating commitment which will screw over the average person because politicians don't want to admit their mistakes and loose power.**

1 ( +4 / -3 )

Tange,

If you have a choice of importing cars to the EU tariff-free (from Japan) vs potentially having to pay tariffs to import from the UK, on top of customs barriers to the cross-border supply chain between the UK and the EU, which are you going to choose?

Thank you.

-3 ( +2 / -5 )

@theeastisred

Of course Japan will choose the tariff-free option.

I didn't say otherwise. I am not talking about that. You have misread my comments again. I suggest you look at what I am saying instead of trying to disagree for the sake of disagreeing.

1 ( +2 / -1 )

Ergo, it's Brexit related. I'm glad you now admit that.

-4 ( +0 / -4 )

Brexit has nothing to do with these companies leaving the UK. If half of you had bothered to read previous stories on the companies mentioned you'd know they're leaving because of a lack of business growth there!

Brexit is going to be a great thing for the UK, except for the Remoaners.

-3 ( +3 / -6 )

UK can be great again if its economy becomes viable. In fact, the exit reflects reality that UK lost ground against Germany in EU. However, with more freedom and more flexibility, UK still has more hopes if it can handle relationship with China correctly, as what Germany does. Chinese market can absorb two times UK easily, and I predict that UK will double its economy in ten years, if everything is going as I predicted.

-4 ( +2 / -6 )

Oh how the mighty have fallen. This seems to be the beginning of the end for the once mightiest empires the world had ever seen. Here's to hoping they can figure something out and get back on track after Brexit, for the sake of all the citizens affected by their politician's hubris.

0 ( +2 / -2 )

Perhaps you could explain how a "no-deal" will lead to economic growth in the UK?

Howz this? https://fee.org/articles/the-unseen-economic-benefits-of-brexit/

-2 ( +1 / -3 )

Oh well it's got to be done, no more of our industries will benefit with manufacturing in England due to Teresa Mays fantasy of former colonial era day's

We should invest in Ireland and Africa more for EU exports. Zero benefits in England and the EU is almost bankrupt anyhow

2 ( +3 / -1 )

However, if they are moving out of the UK and relocating to Japan, it's obvious that these companies don't need to be located in Europe, and their decisions haven't necessarily been made because the UK is leaving the EU.

These changes will have likely been made regardless. It also reveals the fact that the UK remaining in the EU wouldn't guarantee Japanese companies staying. 

Despite this, there are some who will scream "It's because of Brexit!" until they are blue in the face. I just don't think it's that simple.

Like the article says, Brexit is just one of several factors that go into decisions like this. But I don't think you can dismiss the relevance of Brexit based on the logic you are employing. The mere fact that they aren't relocating production to the EU doesn't mean that Brexit wasn't a factor in the decision these companies have made. The choice they had was keeping production in Brexit UK, moving it to somewhere in the EU, or moving it to Japan. Without Brexit their decision would have been simply keeping production in the UK or moving it to Japan.

So Brexit has already complicated their decision tree and presented them with options that are more costly (keeping production in post Brexit UK and facing tarrifs on exports to the EU, or incurring the cost of moving to an EU country) than they otherwise would have, which makes moving production to Japan (which now has a free trade deal with the EU and already has production facilities) more attractive than it would have been without Brexit.

1 ( +3 / -2 )

Completely agree with tangerine's first post.

Having said that, I still think that 'this' Brexit doesn't make much sense. You don't burn bridges when you want to remain a global power.

Nothing wrong with going it alone if you're anti globalisation, want to scale down & do things your way but it's not what they want (apparently).

The pbm I see with 'this' Brexit is that until now insular and ultra safe countries/companies like Japan/honda will now realise that euros are as good/competent ( if not better in some sectors) as the Brits, something all euro countries already know. They won't go back, why would they? And it's never easy to win back lost customers.

Am reading that the Dutch will benefit the most from Brexit which makes sense (central/convenient location, not too expensive, speak English and a couple more euro languages etc).

-1 ( +1 / -2 )

Serrano:

I had a read of the article you cited. It claims that the common external tariff "involves a misallocation of resources on a vast scale.". The trade-weighted average tariff is 2.6%; given that the British pound has lost far more than 2.6% in value since the referendum I would say the effect of the tariff on import prices is negligible.

The other points all seem to be related to the EU being too cautious in approving GM food and being too heavy-handed in regulating new industries. I note that one of the criticisms, of "a counterproductive tax on the turnover of tech companies", has also been proposed by the British government, although the article blames the French.

I don't see much in the way of benefits there, and most economists agree that the UK economy will be smaller in the event of a no-deal exit from the EU than otherwise.

1 ( +3 / -2 )

Still, the UK job market is doing fine even with the high number of illegals in the country.

Plenty of work in the UK!

-2 ( +2 / -4 )

The pound is quite cheap making investment in Britain a good deal. Once the political situation stabilizes soon I think foreign investment will accelerate in the UK.

2 ( +3 / -1 )

most economists agree that the UK economy will be smaller in the event of a no-deal exit from the EU than otherwise.

Wouldn't re-establishing control over your borders and not having to accept policies made by bureaucrats in Brussels outweigh having a smaller economy ( at first )?

-3 ( +1 / -4 )

Wouldn't re-establishing control over your borders and not having to accept policies made by bureaucrats in Brussels outweigh having a smaller economy

Possibly. The fear is that the EU will still be able to dictate immigration & economic policies to a large degree despite Brexit. There is no doubt that it is going to be a messy few years for us, the EU will make sure of it even if our politicians don't

0 ( +2 / -2 )

Wouldn't re-establishing control over your borders and not having to accept policies made by bureaucrats in Brussels outweigh having a smaller economy ( at first )?

A) "re-establishing control over your borders" in this context means establishing barriers to trade that don't currently exist with by far the most important market for UK exports (among other things), which is an act that has no economic upside. So no on that count.

B) "not having to accept policies made by bureaucrats in Brussels" is not accurate since if the UK intends to actually continue doing business with the EU, as it must, it will be just as bound by most of those policies after Brexit as it was before, only now those policies will be more difficult to follow since they will be formulated without any input from the UK. So no on that count too.

0 ( +2 / -2 )

The EU market has to be tough for them and they can make more money in China and the US markets.

It's not tough now. The new EU Japan free trade deal will lower EU tariffs on Japanese cars to zero, which means the Japanese will make more cars in japan and the EU auto industry will suffer drastically.

1 ( +1 / -0 )

It's not tough now. The new EU Japan free trade deal will lower EU tariffs on Japanese cars to zero, which means the Japanese will make more cars in japan and the EU auto industry will suffer drastically.

What's the point of even making them for the EU market when no one is going to buy them?

0 ( +0 / -0 )

Did political expediency play a prominent role in securing a Economic Partnership Deal with Japan?

Did the need to send a message to the Trump administration that the EU/Japan co-operation, basically that it is essential to forge a strong rules based global trading alliance, in essence closer political ties, took precedence over the paramount importance to pay close attention to the quality and detailed framework of the agreement.

The Japanese delegation, negotiators and Government has landed a remarkably favourable and propitious deal.....

Scroll down to 3.1 Provisions under the agreement to Agricultural goods, JA is still fully protect with a vague set of formal and informal NTBs. also it is unclear how the agreement fully addresses divergent standards, and especially the traditional keiretsu partnership supply system.

Outside of Honda proposed “optimising” production in Turkey to assess production, assembly or storage of electric vehicles in 2021/2, all manufacturing and assembly will transfer to Japan. Essential to keep tight reign of costs

Furthermore Japan Banks have significant stock of investment in UK financial services. The cost of

subsidiarity branch operations are eye watering costly to hedge loss of diversification benefit.

EU-Japan Economic Partnership Agreement: texts of the agreement

http://trade.ec.europa.eu/doclib/press/index.cfm?id=1684

Bruegel/INTA The EU - Japan

Economic Partnership Agreement impact assessment.

http://bruegel.org/wp-content/uploads/2018/10/EXPO_STU2018603880_EN.pdf

Impact of loss of mutual market access in financial services across the EU27 and UK

https://www.pwc.co.uk/financial-services/assets/pdf/impact-of-brexit-on-fs-in-europe.pdf

0 ( +0 / -0 )

Apologies .......3.1 Provisions under the agreement to Agricultural goods is located within the

Bruegel/INTA The EU - Japan

Economic Partnership Agreement impact assessment........

0 ( +0 / -0 )

Of the top ten selling cars (models) in Europe a Nissan comes in at number 6 (was 4 last year)

All the rest are European.

Actually, I am surprised to see no Toyota on the list.

https://focus2move.com/europe-best-selling-cars/

Didn't know Ford is European

0 ( +0 / -0 )

Wouldn't re-establishing control over your borders and not having to accept policies made by bureaucrats in Brussels outweigh having a smaller economy ( at first )?

If that's what "the people" want, then they can have it, but they need to understand that there will be a cost and not start whining when they get fired.

0 ( +0 / -0 )

@tangerine2000

However, if they are moving out of the UK and relocating to Japan, it's obvious that these companies don't need to be located in Europe, and their decisions haven't necessarily been made because the UK is leaving the EU.

By the same logic, we'd expect the withdrawal of Japanese car manufacturers from other EU countries - but we are only seeing talk of it in the UK. Where are the stories of Suzuki scaling down in Hungary? Or Nissan scaling down their plant in Spain?

In the case of Honda, they've also pulled out of Turkey too - but they're not in the EU and have been hit by issues with the weakness of the consolidation. So their overall withdrawal back to Japan is part of a wider consolidation to tackle electrification. Brexit is not the main/only driver of their withdrawal, but I think it's pretty obviously a factor, regardless of whatever statements they may have made.

You're right in saying it's not simple, because there are many facets to this, but pinning the tail on diesel or a downturn in China (whilst simultaneously theorising that "that's why companies are going back to Japan") when all of the other EU plants are reporting no change is missing the enormous Brexit elephant in the room.

Japan accounts for almost half of our automotive manufacturing in the UK, so any trend like this is really worrying.

0 ( +0 / -0 )

Login to leave a comment

Facebook users

Use your Facebook account to login or register with JapanToday. By doing so, you will also receive an email inviting you to receive our news alerts.

Facebook Connect

Login with your JapanToday account

User registration

Articles, Offers & Useful Resources

A mix of what's trending on our other sites