More Incentives Needed for Large Companies
An increasing number of governments are expanding their reshoring policies with global manufacturing networks seriously affected by the spread of COVID-19.
For example, the Japanese government recently announced that it would bear half of reshoring costs for large corporations relocating some of their production facilities to Japan and two-thirds for non-large companies doing so.
A notable point is that the Japanese government’s incentives for reshoring are not limited to smaller companies. In fact, reshoring of large corporations has already resulted in sizeable economic effects in Japan. For instance, Toyota returned to Japan in 2015 and Nissan, Honda and Canon followed suit in 2017 to 2019 to increase both investment and employment in their home country.
On the other hand, the South Korean government has yet to come up with more incentives for large companies. According to its plan, subsidies, corporate tax incentives and support for facility automation will be provided for large and smaller companies returning with each other.
However, companies’ requests for lower criteria and so on have not been met. According to the government, a reshoring company must relocate at least 25 percent of its facilities. Companies are claiming that the ratio is excessively high. Besides, the corporate tax incentives are reduced in the case of those returning to the metropolitan area.