But that’s not all: Many of the Japanese companies heading out to Southeast Asia today are smaller, regional concerns that are looking to the ASEAN before even considering Tokyo, notes Yuto Matsumura, partner at Japanese Big Four firm Mori Hamada & Matsumoto (MHM).“The type of company looking to expand outside Japan is different now,” he says. “Earlier, it was the bigger companies. Now, regional companies want to go directly to Southeast Asia to take advantage of the upsurge in demand. We’ve seen a lot more small and mid-cap deals in recent months.”
As Japanese-owned industrial parks in Southeast Asia begin to swell with this upswing in interest in the ASEAN region, could law firms be far behind? MHM has already announced an office opening in Singapore early this year. But currently, the leader of the pack seems to be Nishimura & Asahi (N&A), which opened in Ho Chi Minh City in October 2010, Hanoi in August 2011 and planned a Singapore office in January 2012. “We decided to open two offices in Vietnam because many Japanese companies are now doing business in Vietnam, and other SE Asian countries., Naturally, these companies will need to be able to access reliable legal advice in this region, particularly from Japanese lawyers who can bridge the legal and cultural differences between these countries and Japan,” say Hikaru Oguchi and Kazuyoshi Furusumi, partners at N&A.Even regional firms are getting savvy to the demand; Tilleke & Gibbins, for example has a resident Japanese advisor called Torajiro Ohashi advising Japanese
entities that trade with or invest in Thailand, or wish to do so.
China plus one
For the past two decades, Japanese corporations have been opening factories and service businesses in China in order to access booming Asian markets, and take advantages of relatively low costs. But times have changed: The economy has matured, skills have increased, and wages have correspondingly climbed, ensuring that China can no longer be counted among Asia’s cheapest labour markets. So instead of relying on China as their sole outpost in Asia, Japanese companies are now looking to operate in countries such as Vietnam, Thailand, Indonesia and even India as part of a strategy termed as “China plus one.” These countries have less of a reputation for counterfeiting than China, generally stable governments, and younger and cheaper workers than China making them ideal locations to run operations. It is the reason why Japanese investment in key sectors in Vietnam continues to grow. In Thailand, there are an estimated 3,500 to 4,000 Japanese companies operating, according to Pornavalai from Tilleke & Gibbins.
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