Japanese manufacturers most bullish on India, Vietnam: survey

India ranked first in all four sectors.

India topped the list of promising countries that Japanese manufacturers consider for overseas business in the next three years, followed by Vietnam which beat China to the second spot, according to the latest survey by the Japan Bank for International Cooperation (JBIC).

In a recent survey measuring Japanese manufacturers’ sentiment in 2023, JBIC said India continued to hold onto the top spot two years in a row owing to the market’s huge growth potential.

The subcontinent also ranked first in all four major industries, namely, automobile, electrical equipment and electronics, chemicals, and general machinery.

“In terms of issues, many continue to point out ‘execution of the legal system is unclear;’ ‘intense competition with other companies;’ and ‘securing human resources.’ The survey showed that competition for the market, including the need to secure human resources, is intensifying,” JBIC said in the English version of the report published late last month.

Vietnam climbed to the second spot last year from the fourth place in 2022, beating China which went down by a notch to the third place in 2023. China’s score in the rankings fell to a record low in the latest survey due to the country’s economic slowdown, tightened regulations, as well as its prolonged conflict with the US.

“While China‘s vote share has decreased, Vietnam's reputation as a production base for Japanese firms, backed by its inexpensive labour force and other factors, was likely a reflection of the country's popularity,” JBIC said.

The United States also slid by one place to the fourth ranking as the economic giant struggles with high inflation and labour costs. Indonesia, meanwhile, rose to the fifth place in 2023 from sixth the year prior.

Rounding out the top 10 were Thailand, Mexico, the Philippines, Malaysia and Germany, respectively.