Japanese media: Honda Motor considers decoupling its supply chain from mainland China

According to the Japanese “Sankei Shimbun” reported on August 24, Honda Motor (Honda Motor) considered establishing another set of supply chains to reduce its dependence on the mainland. Honda has established extensive production bases in the mainland in recent years but was hit hard by the epidemic that closed the city in the first half of this year.

The Sankei Shimbun reports that growing tensions between the US and China are also driving Honda’s consideration. Honda will retain its supply chain in the mainland to meet mainland market demand while creating a separate supply chain for markets outside the mainland. No source was provided in the report. Forty percent of Honda’s vehicles will be produced on the mainland in fiscal 2021.

In response, a Honda spokesman said the Sankei News report was not an announcement by the company, adding that the company has been thoroughly evaluating its supply chain and taking risk-averse measures. The review of the mainland supply chain and risk aversion are factors that need to be considered, but they are not exactly the same as the goal of decoupling,” the spokesman said.

Reuters reports that Japan has previously offered companies incentives to move production back to Japan, but this has been less forceful, with some corporate executives and analysts saying that it would be difficult for Japanese companies to suddenly leave the stable production and logistics centers they have successfully established.

Nevertheless, some Japanese companies have started to reduce their dependence on the mainland after the closure of Shanghai. Another Japanese carmaker, Mazda Motor, said this month that it would ask its component suppliers to increase their inventories in Japan and produce components outside the mainland. Previously, Mazda was forced to shut down its plant for 11 days in April and May due to unstable supplies caused by the epidemic.

Mazda said it now plans to include increasing domestic inventories and diversifying production overseas in conjunction with long-term contracts with suppliers for new model designs.

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