Additional Survey Report ancillary to the JBIC FY2011(23rd) Survey on Overseas Business Operations by
Japanese Manufacturing Companies
Response of Japanese Manufacturing Companies to Catastrophic Flood in
Thailand and Risk Management of Overseas Production
April 2012
Research Division, Policy and Strategy Office for Financial Operations
Japan Bank for International Cooperation

This report is made to serve as a reference for the research and discussions of JBIC. The views
expressed in this report do not represent the official position of JBIC. Copying of this report
without the consent of JBIC is strictly prohibited. To the extent permitted by law, JBIC does not
accept any liability arising from the use of this report.

Table of Contents

p. 1

I. Overviews of the Additional and the Previous Survey
1. Overview of the Additional Surveyp.

2(Supplementary Info 1) Overview of the Previous Survey (1): Promising Countries/Regions for Overseas Business over the Medium-termp.

3(Supplementary Info 2) Overview of the Previous Survey (2): Reasons for Countries as Promising and Issues (Thailand)p.

4

1. Summaryp.

5

2. The Impact of Flooding on Productionp.

6

3. Changes in Perception of Thailand as a Promising Country for Overseas Business Operationsp.

7(Supplementary Info) Analysis by Main Industries (Automobiles, Electrical Equipment & Electronics)p.

8

4. Changes in the Prospect of Overseas Business Operations in Thailand (1)p.

95. Changes in the Prospect of Overseas Business Operations in Thailand (2)p. 10

6. Changes in the Prospect of Overseas Business Operations in Thailand (3)p. 11

7. Changes in Attitude for New & Replacement Investment in Thailand

p. 12

8. Risk Management for the Overseas Production against Natural Disasters

p. 13

9. Measures Required for Continuing Business in Thailand

p. 14

II. Summary and Key Findings

Copyright © 2012 JBIC All Rights Reserved.

I. Overviews of the Additional and the Previous Survey

Copyright © 2012 JBIC All Rights Reserved.

I. 1. Overview of the Additional Survey
Survey Overview
 Survey purpose：Since the summer 2011, the flooding
damaged business facilities of many companies in Thailand.
The purpose of this survey is to see the change ofperception of Japanese manufacturers in business
operations in Thailand by comparing with the result of FY
2011 survey which questionnaire was sent last July.

 Survey targets: Companies among the 603 that responded in
the FY 2011 Survey on Overseas Business Operations by
Japanese Manufacturing Companies that have at least one ormore production bases in Thailand (287 Companies) orcompanies that indicated in the FY 2011 Survey that they
viewed Thailand as promising (165 Companies).

 No. of companies questionnaires were mailed to: 352
 Responses returned：200 （response rate: 56.8％）
 Response method: Web survey over the Internet
 Period of survey: March 5 (Mon), 2012 to March 23 (Fri), 2012
 Main survey topics：
The impact of flooding on production
Changes in perception of Thailand as a promising country
for overseas business operations
Changes in the prospect of overseas business operations
and in attitudes for investment in Thailand
Risk management for the overseas production against
natural disasters
Measures required for continuing business in Thailand

p. 2
No. of Respondent Companies by Industrial Classification
Transportation(excl. Automobiles)
1.0%
Petroleum &Rubber
3.5%

Paper, Pulp,& Wood
1.0%
Industry Type

Other
6.0%

Electrical
Equipment &Electronics
11.0%

Steel
3.0%

Ceramics,
Cement & Glass
1.5%
Nonferrous
Metals
4.5%

Textiles
4.5%

200
Automobiles
Companies 28.0%

Foods
6.5%

GeneralMachinery
Metal
8.0%
Products
2.5% Precision

Chemicals
16.5%Electrical Equipment & Electronics
Automobiles
Chemicals
General Machinery
Precision Machinery
Foods
TextilesMetal Products
Nonferrous Metals
Ceramics, Cement & Glass
SteelPetroleum & Rubber
Transportation (excl. Automobiles)
Paper, Pulp, & Wood
Other
Total

No. ofrespondentcompanies
22
56
33
16
5
13
9
5
9
3
6
7
2
2
12
200

Machinery
2.5%

No. of Respondent Companies by Size (in paid-in capital)
Holding company
3.0%Classification
Less than ¥300 mil.

\10 bn. or more
41.5%

Less than \300
¥300 mil. up to ¥1 bn.
¥1 bn. up to ¥5 bn.
mil.
¥5 bn. up to ¥10 bn.
16.5%¥10 bn. or more
\300 mil. up to Holding company\1 bn.
Total
200
7.5%

No. of respondentcompanies
33
15
35
28
83
6
200

Companies\1 bn. up to \5bn.17.5%

 Note: “Overseas business operations” is defined as
production, sales, and R&D activities at overseas affiliates,
as well as outsourcing of manufacturing and procurement.

\5 bn. up to \10
bn.
14.0%

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(Supplementary Info 1) Overview of the Previous Survey (1)p. 3

Promising Countries/Regions for Overseas Business over the Medium-term (next 3 yrs. or so) (Multiple response)
Q. The respondents were each asked to name the top 5
countries that they consider to have promising prospects
for business operations over the medium-term (the next
three years or so).

Percentage share =Ranking
Country/Region
2011 ← 2010
1
2
3
4
5
5
7
8
9
10
11
12
13
14
15
16
16
16
19
20

－
－

－
－
－
－
－
－
－
－
－
－
－
－
－
－

1
2
4
3
5
6
7
8
10
10
9
12
13
14
15
15
15
24
20
19

China
India
Thailand
VietnamBrazilIndonesia
RussiaUSA
Malaysia
TaiwanKorea
MexicoSingapore
Philippines
TurkeyAustralia
Bangladesh
Cambodia
Myanmar
Great Britain

No. of responses citing
country/region
Total no. of respondentcompanies

No. of
Percentage
Companies
Share
2011 20102011 2010
507 516369 399 72.8 77.3
297 312 58.6 60.5
165 135 32.5 26.2
159 166 31.4 32.2
145 127 28.6 24.6
145 107 28.6 20.7
63
75 12.4 14.5
50
58 9.9 11.2
39
29 7.7
5.6
35
29 6.95.6
31
30 6.15.8
29
29 5.75.6
25
21 4.94.1
15
14 3.0
2.7
12
8 2.4
1.6
8
8 1.6
1.6
8
8 1.6
1.6
8
4 1.6
0.8
7
5 1.4
1.0
6
6 1.2
1.2

Note 1: In addition to the countries listed above, the following regions also gained
responses: EU/Europe (14 companies, 2.8% of the total); North America(13 companies, 2.6%); Eastern Europe (6 companies, 1.2%); Middle East
(9 companies, 1.8%).
Note 2: Countries/regions are listed in alphabetical order in cases where they ranked
the same.

Both no. of respondent companies and the percentage
shares of China and India fell slightly
 The top two spots (China followed by India) remained the same.
Although the number of respondent companies and the percentage
shares of China and India declined a little, the trend whereby about
70% of respondent companies chose China as promising and about
60% of those chose India as promising remains the same.

Respondent companies are clearly more interested inemerging countries: Emerging countries in the top 20 such
as Indonesia, Thailand and Brazil gained in percentage
shares When we look at the year-to-year change in percentage share, we seethat Indonesia, Thailand and Brazil got higher percentage shares, withincreases of 38, 30, and 18 companies, respectively. In addition, Asianemerging countries in the top 20 (excluding China, India and Vietnam),
Mexico and Turkey generally saw gains in percentage share, although
there were some fluctuations in ranking. In contrast, the U.S. (included
in "North America") and EU (included in "Europe") saw decreases in thenumber of respondent companies and percentage share alike. It isclear that there is growing interest in among respondent companies inemerging countries where demand is expected to grow.

 Cambodia broke into the top 20
 Following the rise of Bangladesh and Myanmar to the top 20 in lastyear’s survey, Cambodia rose to the 16th spot in this survey. The main
reason given for choosing these three countries as promising was“inexpensive source of labor”. Many companies singled out “Future
growth potential of local market” as a reason to see promise in
Bangladesh, with its population of around 150 million.

(Supplementary Info) Ranking by No. of Production Bases
Ranking12
3
45Country/Region
China
ThailandNorth America
Indonesia
TaiwanCompanies w/Production
Bases (594)
No. of Bases (Composition)
81.0%
481
287
48.3%
253
42.6%
171
28.8%
165
27.8%

Note 3: The above was attained by tabulating the countries
with at least one base of production reported by the594 companies that responded to questions about the
number of production bases they owned.
Copyright © 2012 JBIC All Rights Reserved.

(Supplementary Info 2) Overview of the Previous Survey (2)：Reasons for Countries as Promising and Issues

No. 3: Thailand

p. 4

80%

70%

Reasons(Total No. of respondent companies: 159)

1
2
3
3
5

Future growth potential of local market
Inexpensive source of labor
Supply base for assemblers
Base of export to third countries
Developed local infrastructure

58.5%
60%

No. ofcompanies

Ratio

93
66
53
53
45

58.5%
41.5%
33.3%
33.3%
28.3%

Changes overpast 5 years

50%
41.5%
40%

1.Future growth potential of local market

30%

2.Inexpensive source of labor20%
3.Supply base for assemblers
3.Base of export to third countries
5.Developed local infrastructure

10%

0%
2007
(130)

Issues(Total No. of respondent companies: 133)

1
2
2
4
5

Security/social instability
Rising labor costs
Intense competition with other companies
Difficult to secure management-level staff
Difficult to secure technical/engineering staff

No. ofcompanies

Ratio

60
51
51
36
26

45.1%
38.3%
38.3%
27.1%
19.5%

2008
(124)

2009
(108)

2010
(132)

2011 (FY)
(159)

80%

Changes overpast 5 years

70%
60%
50%
40%

45.1%
38.3%

1.Security/social instability

 While the No. 1 reason for listing Thailand as promising was the “future growth potential of
local market”, it is also perceived as one of the best places for manufacturing centers in
ASEAN countries. As evidence of this, the 3rd most frequently cited reason for being
promising was its potential as a “base of export to third countries”, which was mentioned bymore than 30% of respondent companies (a higher ratio than either Vietnam or Indonesia). It
also has a highly rated infrastructure (the 5th reason), although there are significant concerns
over the flooding caused by the heavy rainfall that began around July of 2011 and its impact
on the production activities of Japanese manufacturing companies
 The most frequently cited issue this year as well was “security/social instability”, and out of the
60 companies that listed this issue, 83% of the companies already have bases in Thailand.
Although there were few comments asserting a direct impact of this issue on production, acertain degree of concern remains.

2.Rising labor costs
2.Intense competition with othercompanies
4.Difficult to secure management-level
staff
5.Difficult to securetechnical/engineering staff

30%
20%
10%
0%
2007 2008 2009 2010 2011 (FY)(112) (117) (104) (128) (133)

Copyright © 2012 JBIC All Rights Reserved.

II. Summary and Key Findings

Copyright © 2012 JBIC All Rights Reserved.

p. 5

II. 1. SummaryIn the FY2011 Survey, Thailand ranked third, following China and India, as a promising country for overseas business operations over the medium
term. In terms of the number of production bases as well, Thailand also ranked second, following China, being recognized as an especially important
country by Japanese manufacturing companies. Of the 200 companies that responded to this additional survey, 66 (40%) of 165 companies withproduction bases in Thailand replied, “No drop in production occurred” (58 companies), or “Increase production for alternate demand from othercompanies” (8 companies). On the other hand, 99 companies(60%) of the respondents also stated they were affected by the flood and forced to drop
production. When production was scaled down, Japan was the country most often chosen for an alternate supply source, followed by China. (Seepage 3 and 6)

In response to the question asking for any “change in perception of Thailand as a promising country for overseas business operations over the
medium term”, about 15% of the respondent companies (199 companies) replied “Somewhat less promising” (26 companies) or “Much lesspromising” (3 companies). On the other hand, about 83% responded “Not changed since the floods” and 2% said, “See it as even more promising”.
Although there are differences depending on industries, the influence of the flood was limited in the perception of Thailand as a promising country forbusiness operations. (See page 7)

On the question of the attitude for business operations in Thailand, about 97% of the respondent companies replied “strengthen or expand” or“maintain the preset presence”, even in the wake of the flood. Although the number of companies who replied “strengthen or expand” decreased
somewhat, the overall finding was the continued positive attitude for business operations in Thailand. When asked about the location where business
operations will be strengthened or expanded, most respondent companies indicated they did not intend to shift locations from the present production
base. With regards to the attitude for investment in Thailand, about 80% of the respondent companies with plans of new or replacement investment
replied they would proceed as planned before the flood, which confirmed that there is no major change in their investment plans. (See page 9 to 12)Among the 200 companies which replied to the question about the risk management of the overseas production against natural disasters, responses
were concentrated in “Add supplementary or alternate functions to factories in neighboring countries or plants”, “Cultivate multiple suppliers forparts and materials” and “Create business continuity plans for quick recovery”. These findings indicate that Japanese manufacturing companies aregoing to deal with the risk in overseas production by adding layers to their supply chains and by making them more flexible. (See page 13)Regarding measures required for continuing business operations in Thailand, more than 80% of the 200 companies responded with the desired“reliable implementation of flood control projects”. Also, responses showed strong requests for “a preferential tax treatment for the afflictedcompanies in Thailand” (45.0%) in terms of the support for the companies afflicted, “early disclosure of accurate disaster information andestablishment of early warning structure” (51.5%) ,and “implementation of disaster measures in each factory complex.”(49.5%) as for information
disclosure and disaster measures. (See page 14)

Copyright © 2012 JBIC All Rights Reserved.

p. 6

II. 2. The Impact of Flooding on Production(Q) If your company has bases of production in Thailand, please select from the following the steps that best describe those taken by yourcompany in response to fluctuations in production (caused as a result of your factories being affected or as a result of a parts supplier
being affected) due to the flooding (multiple responses possible). (No. of respondent companies: 165)

1 . Compensated for drop in production in Thailand with an alternate supply of parts/products from
12(7.3%)6(3.6%)

Thai
alternate

Production drop

Japanese
alternate58(35.2%)

Own Factory in Japan

company-owned factories in Japan

2 . （---〃---） from factories in Japan owned by other companies(Other Companies’ Factory)

3 . Compensated for drop in production in Thailand with an alternate supply of parts/products from

（Own Factory in Thailand）

16(9.7%)other company-owned factories in Thailand(Other Companies’ Factory in Thailand)

Non-Thaialternate

99 companies

Own Factory other than in Thailand

4 . （---〃---） from factories in Thailand owned by other companies
for drop in production in Thailand with an alternate supply of parts/products from
5 . Compensatedcompany-owned factories outside of Thailand

38(23.0%)7(4.2%) （Other Companies’ Factory other than in Thailand）
23(13.9%) （Unable to Supply）

No production drop
66 companies

for the drop in production in Thailand, we were unable to supply products until the factory was
7 . Asrepaired and brought back on-line

58(35.2%)

No Drop of Production

6 . （---〃---） from factories outside of Thailand owned by other companies8(4.8%) (Increase Production)

8 . Unaffected by flooding and no fluctuations in production occurred
9 . Unaffected by flooding but stepped up production to cater to demand from other companies as
an alternate supplier

0

10

20

30

40

50

60

70
(Companies)

Note 1: The figures in the graph indicate the number of companies responding to this question. The percentages in parentheses were calculated by dividing thenumber of companies responding to each answer by the number of companies responding to this question (165 companies).
Note 2: The 35 companies that said they did not have bases of production in Thailand were not counted among the companies responding to this question.

Among the 165 companies with bases of production in Thailand, 66 companies, or 40% said they were unaffected by the flooding (Responses 8 and 9
combined), while the other 99, or 60%, indicated that they were forced to scale back production. When production was scaled down, Japan is thecountry most often chosen for alternate supply source as 70 companies (42.4%) chose “compensated for drop in production from Japan”.
There were 45 companies (27.3%) that used alternate suppliers outside Thailand (Responses 5 and 6 combined), which was more than the number ofcompanies that chose alternate suppliers within Thailand (22 companies, 13.3%; Responses 3 and 4 combined).
The majority of responses indicated procuring from alternate suppliers in China (24 companies) when alternate suppliers are chosen outside Thailand.
Then, Malaysia (6 companies) and Indonesia (4 companies) were the 2nd and 3rd most cited countries.

Copyright © 2012 JBIC All Rights Reserved.

II. 3. Changes in Perception of Thailand as a Promising Country for Overseas Business Operations p. 7
Q. How has your view of Thailand as a promising country for overseas operations for your company over the medium term (next 3 yrs. orso) changed since the flooding? Please choose from the following the response that best fits your company's stance. (No. of
respondent companies: 199)
(Supplementary Info 1) Correlation between degree of perceived promise and flood impact“See it as even more promising” “Somewhat less promising”
1. 26
26 companies(13.1%)
companies(13.1%)
4. 44 companies(2.0%)
companies(2.0%)“Muchless promising” 3 companies(1.5%)
2. 3 companies(1.5%)

1. Somewhat less promising
2. Much less promising

1 Somewhat less promising
2 Much less promising“Not Changed since the floods”
3. 166 companies(83.4%)
166 companies(83.4%)

3 Not changed since the floods
4 Gained a renewed senseof the country’s
advantages and see it aseven more promising

Note 1: Response 5 was "Did not view it as promising to begin with", which one
company chose, hence the number of respondent companies here is 199.

No. ofNo. of companies
respondent
affected bycompanies (A)flooding (B)*

Response

3. Unchanged
4. More promising
Total

26

16

（B)/(A)
0.62

3

1

0.33

166

82

0.49

4

0

0.00

199

99

0.50

Note 2: Companies affected by the flooding in this table were those that dropped productionlevel, with the choice of responses other than 8 or 9 of the question in page 6.

(Supplementary Info 2) Changes in the perception among companies
which chose Thailand as a promising country in FY 2011 Survey

Said "promising"(Composition)

No. of companies No. of respondent
queriedcompanies
1
165
96
11
58.2% 11.5%
Response rate

Responses
232
79
2.1% 82.3%

4
4
4.2%

In the FY2011 survey, Thailand ranked third behind China and India among countries seen as promising for overseas operations over the medium term
(next 3 yrs. or so). In terms of the number of respondent companies with at least one base of production in a given country, Thailand (with 287
companies) was second only to China (with 480 companies). Thailand is therefore an very important country for Japanese manufacturing companies.
When we look at how promising Thailand is viewed after the flood, we see that 166 out of 199 respondent companies (83.4%) said that their views have
“Not changed since the flood”. At 26 companies (13.1%), and the second most frequent response was “Somewhat less promising”. Only three companies(1.5%) responded with “Much less promising”, while four companies (2.0%) indicated that they gained a renewed sense of Thailand's advantages andsee it as even more promising now. Because one of three companies which responded “Much less promising” and about 16 companies, 60% of 26
companies, which responded “Somewhat less promising” were affected by the floods, we can infer that the flooding did have some effects on the
downward revision regarding how companies see Thailand as promising.
Nevertheless, Responses 3 and 4 combined account for 170 companies or 85.4% of respondent companies to this question, of which 82 companies(48.2%) were affected by the floods. Overall, it can be thought that the appeal of Thailand as a country for business operations has not substantiallychanged, and the impact of the flooding has been limited in this regard.
Copyright © 2012 JBIC All Rights Reserved.

p. 8（Supplementary Info）Analysis by Main Industries（Automobiles, Electrical Equipment & Electronic (E&E)）（Supplementary Info1） Influence of floods over Production by Major Industries※Breakdown of answers from 53 companies out of 56 respondentcompanies with production facility in Thailand （Multiple Question
possible）【Automobiles】
Procuringfrom Japan

Other Companies’ Factory10（18.9％）7（13.2％） (Other Companies’ Factory in Thailand)
Own Factory outside Thailand

13（24.5％）3（5.7％） （Other Companies’ Factory other than in Thailand）

No Dropor Increase
Production

10

13 companies（68.4%）

2(10.5%) （Other Companies’ Factory outside Thailand）

12 companies（22.6%）

158(42.1%)Own Factory other than in Thailand

41 companies（77.4%）

Companies
which
drop
production

1(5.3%) （Unable to supply)

1（1.9％） (Increase Production)
5

4(21.1%) (Other Companies’ Factory in Thailand)11（20.8％）

No Drop of Production01(5.3%) （Own Factory in Thailand)Companies
which
drop
production

13（24.5％）

Unable to supply

9(47.4%)

Own Factory in Japan1(5.3%) （Other Companies’ Factory）

1（1.9％） （Own Factory in Thailand）

Procuringfrom outside
Thailand※Breakdown of answers from 19 companies out of 22 respondentcompanies with production facility in Thailand （Multiple Question
possible）

21（39.6％）

Own Factory in Japan

Procuring
withinThailand

【E&E】

20

25 （Companies）

No Drop of Production

3(15.8%)

Increase Production

3(15.8%)0

2

4

6 companies（31.6%）

6

10 （Companies）

8（Supplementary Info2） Changes in perception of Thailand as a promising country【E&E】【Automobiles】“See it as even more promising”“Somewhat less promising” 5 companies （8.9％）“Much less promising” 0 companies

1 company （1.8％）“Somewhat less promising”
3 companies （13.6％）“See it as even more promising”
1 company （4.5％）“Much less promising”
1 company （4.5％）“Not Changed since the floods”“Not Changed since the floods”

50 companies （89.3％）

17 companies （77.3％）

 From the ratio of being affected by the floods and reducing the production level, automobile (77.4%) and Electrical Equipment & Electronic (or E&E)
(68.4%), two of major industries, are more suffered and the level of the ratio of the companies which reduced production is higher than the average ofthe industry （60.0％）. It is understood that the Automobile and E&E industries are more suffered by the floods from the fact above.
 The ratio of choosing “Not changed since the floods” and “See it as even more promising” combined in automobile industry reached over 90% (91.1%),
which is above the industry average (85.4%), when we see the changes in perception of Thailand as a promising country before and after floods. On
the other hand, the ratio above in E&E industry is lower (81.8%) than the industry average. From this survey, more companies in automobile industry
showed the unchanged preference toward Thailand although more were suffered by the floods.
Copyright © 2012 JBIC All Rights Reserved.

p. 9

II. 4. Changes in the Prospect of Overseas Business Operations in Thailand (1)Q. How have prospects for your company's business in Thailand changed as a result of the flooding? Please choose from the following the
response that best fits your company's views. (No. of respondent companies: 166)
(Unit: Companies)

100%

3.0%

90%

Pre-flooding

Composition

Post-flooding

Composition

1. Strengthen/expand

107

64.5%

99

59.6%

2. Maintain present level

57

34.3%

62

37.3%

(+5 companies)60%

3. Scale back/withdraw

2

1.2%

5

3.0%

(+3 companies)

50%

166

100.0%

166

100.0%

Total

1.2%

(8 companies)

80%

34.3%

37.3%

70%

40%
30%

64.5%

59.6%

Pre-flooding

Post-flooding

20%
10%

(Supplementary Info) Correlation between business prospects and flood impact0%

No. ofrespondentcompanies
Unaffected by flooding(Note 1)
Affected by flooding & scaled
back production(Note 2)
Total

Composition

Companies thatshifted from 1 to
2Composition

66

40.0%

5

45.5%

99
165

60.0%
100.0%

6
11

54.5%
100.0%

3. Scale back/withdraw
2. Maintain present level
1. Strengthen/expand

Note 1: Companies deemed unaffected by the flooding were those that chose response 8 or 9 of the questions in page 6.
Note 2: Companies that were affected by the flooding & scaled back production in this table are the companies that chose responses
other than 8 and 9 in question in page 6.

Companies that already have bases of production in Thailand were asked in this question to choose one response out of a possible three regarding changes in theirviews of the medium-term (next 3 yrs. or so) prospects for their businesses in Thailand before and after the flooding.
Out of 166 companies which responded this question, 99 companies (59.6%) selected “strengthen/expand”, while 62 companies (37.3%) chose “maintain present
level” after the flooding (the number of companies which selected both “strengthen/expand” and “maintain present level” was 161 (97.0%)) and there was an overall
trend for the strengthening of operations with comparison of the situation before the floods although the number of the companies choosing “strengthen/expand”
decreased. Before the floods, the number of companies selected “strengthen/expand” was 107 (64.5%) and the number of companies choosing “maintaining present
level” was 57 (34.3%). In addition, the number of companies choosing “scale back/withdraw” increased from two before the floods to five after the floods.
After the floods, the number of companies which changed their prospect for business in Thailand from “strengthen/expand” to “maintain current level” was only 11, in
which the number of the companies affected and not affected by the floods were almost the same. This result showed that lower revision of their prospect forbusiness in Thailand was not caused only by being affected by the floods.

Copyright © 2012 JBIC All Rights Reserved.

II. 5. Changes in the Prospect of Overseas Business Operations in Thailand (2)p. 10

Q. Please choose from the following the response that best fits your company's views on the direction of change in the prospects for yourcompany's business in Thailand.
(1) Scale back/withdraw (5 companies)
Specific courses for scaling back/withdrawing

No. ofrespondentcompanies

1. Withdraw

0

2. Transfer part of the business to other areas in Thailand

0

3. Relocate the entire business to other areas in Thailand

1

4. Transfer part of the business to areas outside Thailand3

5. Relocate the entire business to areas outside Thailand

1(2) Maintain present level (62 companies)
Specific courses for maintaining present levels
1. Present level of operations is maintained while new and additional
investments are frozen, and part of the existing business is relocated toother areas in Thailand.
2. Present level of operations is maintained while new and additional
investments are frozen, and entirety of the existing business is relocatedto other areas in Thailand.
3. OtherNo. ofrespondentcompanies4058

Note: At the time when questionnaires were made, it was assumed that respondent companies which chose “maintain present level” would
freeze new and/or replacement investment. However, in fact, many respondent companies choosing “maintain present level” gave
comments that they would maintain current business operations while they maintain the planed level of investment, not freezing them.

In page 9, companies were asked to choose their intentions regarding businesses after the flooding among "to strengthen/expand", "to maintainpresent levels", or "scale back/withdraw". In this page, companies were also further asked about the specific measures by which they planned toachieve these ends.
Among the five companies that chose “scale back/withdraw”, none chose “1. Withdraw”, and three chose “4. Transfer part of the business to areas
outside Thailand”.
Among 62 companies that chose “maintain present levels” after the floods, very few companies indicated that they would freeze new and additional
investments and relocate part or the entirety of the existing business to other areas in Thailand, while the majority (58 companies) chose “3. Other”.
One can infer that many companies that chose “maintain present levels” plan to maintain current levels of operation by staying at the same site andthat there are few that plan to relocate to other areas in Thailand.
Copyright © 2012 JBIC All Rights Reserved.

II. 6. Changes in the Prospect of Overseas Business Operations in Thailand (3)p. 11(c) Strengthen/expand (99 companies)
Specific courses for scaling strengthening/expanding
1. Strengthen/expand business in the areas where the company
is currently operating based on the anticipated demand arisingfrom reconstruction
2. Relocate part of the business to other areas in Thailand andstrengthen/expand business based on the anticipated demandarising from reconstruction
3. Relocate the entirety of the business to other areas in Thailandand strengthen/expand business based on the anticipateddemand arising from reconstruction
4. Strengthen/expand business in the areas where the company
is currently operating based on the potential for market growth inThailand5. Relocate a part of business to other areas in Thailand andstrengthen/expand business based on the potential for market
growth in Thailand
6. Relocate the entirety of the business to other areas in Thailandand strengthen/expand business based on the potential formarket growth in Thailand
7. Still under consideration
Total

No. ofrespondentcompanies (A)Composition

companies
affected byflooding (B)*

(B)/(A)

10

10.1%

6

0.60

0

0.0%

0

－

0

0.0%

0

－

79

79.8%

48

0.61

1

1.0%

1

1.00

1

1.0%

1

1.00

8

8.1%

3

0.38

99

100.0%

59

0.60

Note : Companies affected by flooding in this table are the companies responded to the question in page 6 with Responses
1 through 7 and that scaled back their production.

Of the 99 companies responded that they would strengthen/expand their businesses after the flooding, 79 companies (79.8%) said that they would
strengthen/expand business in the areas where their companies are currently operating based on the potential for market growth in Thailand, 10
companies (10.1%) based on the potential for the anticipated demand arising from reconstruction in Thailand. As to relocation, we can see from theresult that almost all plan to strengthen/expand their businesses in the areas in which they are currently operating businesses and only two plan torelocate. In addition, only eight companies responded that such matters were “still under consideration“ and this suggests that almost all companies
that gave "strengthen/expand" responses have made up their minds on business prospects in Thailand.
Eighty-nine companies responded that they would strengthen/expand their businesses in the same areas where they are currently operating, and 54of those were affected by the flooding. This fact demonstrates that although many companies have been affected by the flooding, many wish to bolster
their businesses in the very same places in which they are operating.

Copyright © 2012 JBIC All Rights Reserved.

p. 12

II. 7. Changes in Attitude for New & Replacement Investment in Thailand

Q. This question is for companies that had plans for new investment and replacement (including additional investment) in Thailand before theflooding. Please choose from the following the responses that best fit your company's views regarding the change in investment plan
before and after the floods. (No. of respondent companies: New investment 95 companies, Replacement investment 131 companies)【Replacement Investment】【New Investment】“change of plan (relocation)”
1 company(1.1%)“still under consideration”
14 companies(14.7%)“still under consideration”
15 companies(11.5%)“freeze or postpone plans”
4 companies(3.1%)“freeze or postpone plans”
1 company(1.1%)“revise upwards”
4 companies(3.1%)“revise upwards”
2 companies(2.1%)“revise downwards”
2 companies(2.1%)“change of plan (relocation)”
1 company(0.8%)“revise downwards”
4 companies(3.1%)“same plans as before”
75 companies(78.9%)“same plans as before” and “”revise
upward” 77 companies (81.1%)“same plans as before”
103 companies(78.6%)“same plans as before” and “”revise
upward” 107 companies (81.7%)

Implement the same plans as before the flooding

Freeze or postpone plans

Implement the same plans but revise downwards (in scale or budget)

Implement part or all of the plans in a country other than Thailand

Implement the same plans but revise upwards (in scale or budget) in anticipation ofreconstruction-driven demand or future increases in levels of demand

Still under consideration

In this question, companies with plans for new investment and/or replacement were asked about changes in attitudes for new and/or replacement
investment in Thailand after the flooding.
Out of 95 companies that had plans for new investment, 75 (78.9%) of them responded that “they would implement the same plans as before theflooding” and even two companies responded that they would revise them upwards because of the increase of future demand in Thailand. On theother hand, 14 companies (14.7%) had put their decisions on hold, indicating that the plans were still under consideration. Only one company said it
had “frozen or postponed” its plans and there were very few responses by companies indicating that they would revise the scale of their new
investment plans downwards (2 companies; 2.1%) or would implement their plans in countries other than Thailand (one company, 1.1%).
Out of 131 companies that had plans for new investment, 103 (78.6%) of them responded that “they would implement the same plans as before theflooding” and even four companies responded that they would revise them upwards because of the increase of future demand in Thailand. On theother hand, 15 companies (11.5%) had put their decisions on hold, indicating that the plans were still under consideration. Only four company said
they had “frozen or postponed” their plans and there were also very few responses by companies indicating that they would revise the scale of their
new investment plans downwards (4 companies; 3.1%) or that they would implement their plans in countries other than Thailand (one company,
0.8%).
It is indicated that respondent companies would carry out investments according to the plan even after the flooding and that there is not muchconcern over investment in Thailand substantially dropping off as a result of the flooding.
Copyright © 2012 JBIC All Rights Reserved.

p. 13

II. 8. Risk Management for the Overseas Production against Natural Disasters
Q. Please choose from the following the responses that best fit your company's stance on managing risk against natural disasters inoverseas production in the wake of the recent flooding (multiple responses possible). (No. of respondent companies: 200)

1 . Add supplementary or alternate functions to factories in neighboring
countries or locations

83(41.5%)

Add supplementary/alternate functions to nearby factories

Production
Base-related

2 . Add new factories and spread out production
18(9.0%) (Add new factories and spread out production)

Recovery plans

3 . Create business continuity plans (BCPs) and other plans to lay the73(36.5%)

Create business continuity plans (BCPs)

groundwork for a speedy recovery

4 . Maintain a large inventory21(10.5%) (Maintain a large inventory)

Inventory

Cultivate multiple suppliers for parts and materials
Diversification/
standardization

71(35.5%)5 . Cultivate multiple suppliers for parts and materials

38(19.0%) (Further standardize part and materials)

6 . Further standardize parts and materials

18(9.0%) (Demand that suppliers diversify production)

7 . Demand that suppliers diversify production
Other

15(7.5%)8 . Other
0

20

40

60

80

100
(Companies)

Note: The figures in the graph indicate the number of companies responding to this question. The percentages in parentheses were calculated by
dividing the number of companies responding to each answer by the number of companies responding to this question (200 companies).

When asked about risk management strategies for overseas production to deal with risk posed by natural disasters, the most frequently given strategy(83 companies; 41.5%) was “1. Add supplementary or alternate functions to factories in neighboring countries or locations”, followed by “3.Createbusiness continuity plans (BCPs) and other plans to lay the groundwork for a speedy recovery” (73 companies; 36.5%), “5. Cultivate multiple suppliers
for parts and materials” (71 companies; 35.5%), and “6. Further standardize parts and materials” (38 companies; 19.0%). These responses indicatethat most companies would manage risk in overseas production flexibly by adding supplementary or alternate functions to factories in neighboring
countries or locations while cultivating multiple suppliers, etc.
In contrast, few companies are taking measures that would incur extra costs, as exemplified by “4. Maintain a large inventory” (21 companies; 10.5%)
and “2. Add new factories and spread out production” (18 companies; 9.0%).
Fifteen companies responded with “8. Other”, which includes such risk management strategies as “Learning from flood damage that occurred in thepast and relocating control rooms to the second floor”, “Demanding that suppliers in risk-prone areas take measures”, and “Procuring boats andfortifying external walls in case of floods”.
Copyright © 2012 JBIC All Rights Reserved.

p. 14

II. 9. Measures Required for Continuing Business in Thailand(Q) Please select from the following measures that best describe required for your company to continue business or quick recovery to thenormal operation in Thailand (multiple responses possible). (No. of respondent companies: 200)

Support mechanisms for
affected companies

1 . Tax breaks in Thailand for affected companies
90(45.0%)

Tax breaks in Thailand

2 . Measures for affected companies to ease the burden of capital investments associatedwith acquiring land and building factories

61(30.5%) (Easing the burden of capital investment)

3 . Preferential placement of affected companies at other industrial complexes in Thailand

31(15.5%) (Preferential placement to other industrial complexes)

4 . Establishment and expansion of industrial complexes in areas less susceptible to(Expansion of industrial complexes in areas less54(27.0%) susceptible to disaster)natural disasters

5 . Measures for affected companies to ease the burden of financing

43(21.5%) (Easing the burden of financing)6 . Full and detailed disclosure of risks when moving into industrial complexes

Disclosure/flood
control-related

47(23.5%) (Disclosure of risks of industrial complexes)
164(82.0%)

Reliable implementation of flood control projects
Disaster control by industrial complexes

7 . Reliable implementation of flood control projects

99(49.5%)8 . Implementation of disaster control strategies at industrial complexes

103(51.5%)

Provide early warning of disaster9 . Establishment and improvement systems to provide accurate disaster information

4(2.0%) (Other)and early warning

10 . Other
0

50

100

150

200
(Companies)

Note: The figures in the graph indicate the number of companies responding to this question. The percentages in parentheses were calculated by
dividing the number of companies responding to each answer by the number of companies responding to this question (200 companies).

Out of 200 respondent companies asked about measures required for continuing their operations in Thailand, an overwhelming majority consistingof 164 companies (82.0%) expressed a desire for the "7. Reliable implementation of flood control projects". Furthermore, 103 companies (51.5%)
chose "9. Establishment and improvement systems to provide accurate disaster information and early warning", and 99 companies (49.5%), "8.
Implementation of disaster control strategies at industrial complexes". Overall, most of the responses centered on not only flood control measures
but also the availability of disaster-related information.
In the realm of taxation and finance, 90 companies (45.0%) cited “1.Tax breaks in Thailand for affected companies" and 43 companies (21.5%)
chose “5. Measures for affected companies to ease the burden of financing".
There were also calls for assistance with land acquisition and factory construction among which were "2. Measures for affected companies to easethe burden of capital investments associated with acquiring land and building factories" (61 companies; 30.5%) and "4. Establishment andexpansion of industrial complexes in areas less susceptible to natural disasters" (54 companies; 27.0%).
Among other responses were those that took issue with delays in the underwriting of damage insurance in the wake of the recent floods, noting that
"It will be necessary to improve the insurance system against natural disasters."
Copyright © 2012 JBIC All Rights Reserved.

Additional Survey Report ancillary to the JBIC FY2011 (23rd) Survey on Overseas Business
Operations by Japanese Manufacturing Companies-Response of Japanese Manufacturing Companies to Catastrophic Flood in Thailand and
Risk Management of Overseas Production(Not for sale)

Edited and published by the Research Division, Policy and Strategy Office for Financial Operations,
JBIC Tokyo
Published on April 17, 2012©2011 Japan Bank for International Cooperation. All rights reserved.
Website: http://www.jbic.go.jp/en/(For further information)
4-1, Ohtemachi 1-chome, Chiyoda-ku, Tokyo 100-8144, Japan
Research Division, Policy and Strategy Office for Financial Operations, Japan Bank forInternational Cooperation
Telephone: +81-3-5218-9244
Facsimile: +81-3-5218-9696
E-mail: fdi@jbic.go.jp(Printed on recycled paper.)