Japan pneumatics firm SMC plans relocation from China to Vietnam

Japanese pneumatic instrument producer SMC Corp is planning to move mass-produced products to Vietnam and to have Chinese factories specialize in the Chinese market, said SCM president Yoshiki Takada.

Takada revealed the plan at a review meeting for fiscal year 2023 (ending March 2024). He said the aim was to prepare for contingencies like geopolitical risks arising out of tensions between the U.S. and other countries as also rising labor costs in China.

“We have already shifted a significant portion of our business to Vietnam, and we would like to continue this shift,” Takada said.

With the U.S. likely to enforce stricter rules, “we are planning to transfer everything fairly soon,” he added.

Masahiro Ota, director and executive officer of SMC, said costs in Vietnam were 20% lower than that in China. However, China has experience and the China facility is a very efficient factory. “I hope that Vietnam will catch up to that level as quickly as possible.”

SMC is in the process of providing technical guidance from its Chinese factories to Vietnam, Ota said.

SMC Corporation entered Vietnam in 2008 with the establishment of SMC Vietnam as a representative office. In 2011, it became a wholly foreign-owned establishment and a subsidiary of SMC Corporation.

SMC currently runs a 26-hectare factory in the southern province of Dong Nai to produce tubing equipment, solenoid valves and actuators. In March 2023, Dong Nai granted a certificate allowing SMC to raise its investment by $100 million to $549.4 million.