How the Coronavirus Pandemic Impacts Japanese Companies

As of March 23th, 2020, the coronavirus infected more than 337,553 people and killed 14,654 of them. In the archipelago, 14,654 cases and 41 deaths were reported, which makes people wonder if the 2020 Tokyo Olympics will start as scheduled. Unlike people in many countries, the Japanese are not locked up, even though some restrictions are set. They can go out as much as they want but the government asks companies to implement teleworking. So how does Japan, a country where it is valued to spend never-ending hours at work and to build relationships during drinking parties (nomikai), deal with this crisis?

Companies Opt for Teleworking

Both the government and companies encourage people to work from home (telework, or zaitaku gyoumu 在宅業務 ). In railway stations, announcers repeat regularly to avoid taking trains during rush hours (before and after office hours, between 7 am to 9 am and 5 pm to 7 pm) and to opt for teleworking if possible. The trains are less crowded than usual, but many people still take them every day and cars remain full during rush hours. 

Even though the measures taken depend on every company, more of them are taking the virus seriously. In the beginning, some asked their employees to work even though they had a fever or employees were going to work with a fever because they did not think it was the coronavirus. Many firms are now more flexible, like NEC, Panasonic, or Mitsubishi who allow several thousands of employees to work remotely. But it is not new in Japan, Teleworking Day was launched in 2017 to reduce traffic for the 2020 Olympics

However, people who can choose teleworking hesitate. Working at home is originally associated with laziness but also loneliness. When you are in a Japanese company, you are with your second family. Besides, Japanese society is very collectivist, people want to be part of a group and to spend time surrounded by the other members.

Impact on Manufacturers

Because China is the ‘world’s factory’ and the pandemic slows down its industries, many Japanese companies are encountering problems, mostly for their supply chains. The automobile industry especially is impacted, while it represents 20% of Japan’s total export value. For example, Honda had to halt three of its Wuhan production bases. Also, firms owning or working with Chinese factories have to stop or reduce production. Same thing with some companies in Japan which do not receive components as fast as before, due to a labor shortage.  

Source: Bloomberg about Nissan Motor (automobile industry).

Source: Bloomberg about FANUC (equipment, robots, factory automation system, etc.).

According to Forbes, the robot industry is also impacted by the pandemic since there may be less demand in China during but also after this difficult period. However, the crisis is global, companies are affected by the coronavirus everywhere. Many industries are having a hard time, even though many others actually benefit from this pandemic (the gaming or online education industries, for example).

This is why Japanese firms decided to move their production sites temporarily out of China, in Southeast Asia. But they still have to pay the bills in China, which does not come cheap. Among those companies is Nintendo, the air conditioner-maker Fujitsu General, Sharp, Aisin Seiki or Ricoh.

Nobody knows when the pandemic will end, but firms take precautions to keep their employees safe.

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