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I was relieved to see that the prediction I made in September 2019 that Japanese companies would be well prepared for a hard Brexit has proved to be correct. I would imagine Japanese logistics companies had a large part to play in this.

Japanese car manufacturers have had to halt production in the UK, but this has been more to do with the impact of coronavirus and a shortage of semiconductors than any Brexit related problems.

According to a JETRO survey at the end of last year, the main countermeasure adopted by Japanese manufacturers in the UK to cope with a hard Brexit was to stockpile. Other British companies have stockpiled too, and as a consequence there have not been as many trucks backing up in the UK or France as was feared. But I suspect Japanese companies have also faced few problems because many have adopted the second most popular countermeasure chosen by Japanese manufacturers in the JETRO survey – to reconfigure their supply chains. I estimate at least 30 Japanese companies in the UK have moved their EU supply hubs to the continent over the past few years.

The companies who are suffering the most from Brexit are those smaller British companies who are reliant on supplying EU countries. Up until now they had been able to ship small quantities to EU based customers cost effectively, without any worries about certifications or customs clearance.

Now they have to fill in all kinds of forms and if they are supplying food or livestock, they need health and hygiene certification. Some European logistics companies are refusing to supply the EU from the UK because they cannot cope with the paperwork. They also do not want to send trucks with imports into the UK if they cannot find a load to take back to the EU to justify the expense.

This may all resolve itself eventually, but I suspect that many of the measures that Japanese companies have taken are not temporary and reflect long term trends, as well as the impact of Brexit. For example, the number of Japanese companies manufacturing in the UK has fallen by 22% since 2014, according to Ministry of Foreign Affairs data. This is greater than the 11% overall drop in Japanese companies in the UK. Many of them have converted to sales companies and others have become branches of EU parent companies. As a consequence, there has been a 31% increase in the number of branches in the UK, and a 16% drop in the number of incorporated subsidiaries. Companies who have converted to branches include financial services companies ensuring they can continue to trade in the EU.

Japanese companies are continuing to start up in the UK, but they are mostly in the energy and lifestyle sectors, which are very domestic in orientation. Japanese logistics companies may find that their expertise in international goods trade is more in demand from British companies than Japanese companies in the UK from now on.

This article originally appeared in Japanese in the Teikoku Databank News in March 2021

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Last updated by Pernille Rudlin at 2021-11-11.