Flight of foreign companies from the United Kingdom has been one of the biggest fears about the formal competition of Brexit. Among the companies from a range of countries which have their own operations in the UK, Japan is one of the most important, and there was a widespread belief that companies from the country were going to pull out en masse once Brexit was formalised. However, according to a new poll of Japanese businesses with interests in the UK, no such mass pullout is planned and instead they are going to gauge the situation before making a formal decision. The poll was conducted by Reuters.
For decades, the United Kingdom has been a strategic location for many Japanese businesses since an outpost in the country helped them with their expansion plans into mainland Europe. However, that strategy will no longer be in play once Brexit is formalised and free movement of export items pretty much come to a halt. For instance, the car manufacturing industry has reaped the biggest benefit from that strategy and Japanese car makers like Nissan have set up mega-factories in the UK to facilitate their expansion into Europe. The British public’s decision to leave the UK, has, however, completely thrown their plans into disarray and earlier this year, Nissan decided against making a new model of car in their plant in Sunderland. Needless to say, similar actions and eventual exit from the UK has been widely predicted for many other Japanese companies.
The results of the Reuters have however come as a surprise, and it seems that Japanese companies are showing restraint in their policy regarding Britain. It is particularly surprising since the Japanese government had stated that if businesses turned unprofitable, then these businesses would have no option but to close down their operations in the UK. After the United States, Japan is the biggest foreign investor in the UK and hence, those warning from the government were not taken lightly. None of the companies which participated in the survey was ready to quit the UK anytime and perhaps it comes as an indictment of the patient approach that is the hallmark of Japanese business. One of the firms noted, “Britain still takes up an important position in Europe, and we have not completely figured out concrete effects of Brexit.” Brexit was supposed to be completed by the 29th of March, but the British Parliament has still not been able to agree to an exit deal with the EU.