China has fallen off the top of a list of Japan Inc.’s favored investment destinations for the first time in more than two decades because of higher labor costs and bilateral tensions, a survey said.
Indonesia took the top spot, up from third place, on support from sectors ranging from automobiles to electronics, the Japan Bank for International Cooperation said.
China tumbled to fourth after 21 years of being named as the most promising destination for overseas expansion, the governmental bank said in its annual survey released Friday.
JBIC asked companies already operating overseas to choose up to five promising nations and regions for their business in the next three years.
Of the nearly 500 companies that answered, 44.9 percent said Indonesia was a good place to do business, while China saw its popularity dive to a lowest-ever 37.5 percent from 62.1 percent.
Among companies that dropped China from their list this year, more than 4 in 10 said rising labor costs and difficulty in hiring enough workers were a concern.
Other concerns cited were a slowdown in the Chinese economy, intensifying competition with rivals and bilateral political relations
India remained in second place and Thailand came in third.