In February there was a meeting between UK Prime Minister Theresa May and 19 Japanese business chiefs. Among them, Tokyo’s ambassador to Britain warned about what might happen if Brexit took an unfavorable turn for foreign investors. He said, “No private company can continue operations in the UK if it becomes unprofitable. It is as simple as that.”
Many months after, Japanese companies are not waiting to find out whether May can deliver. Out of patience, a growing number of them are heeding the ambassador’s warning, shifting operations out of the UK or threatening to scale back if the country crashes out of the EU without a deal.
Companies, such as robot maker Yaskawa Electric, are choosing sites in continental Europe for new operations to stay close to European customers if Brexit creates trade hurdles.
Minister for public diplomacy and media for the Japanese embassy in London, said in an interview, Shinichi Lida, “A lot of Japanese companies, manufacturing companies in particular, have invested in this country as a gateway to Europe. A no-deal Brexit in March next year will be nothing short of a cliff edge for our businesses.”
The stakes are high for both countries because of their close economic ties. About 1,000 Japanese companies operate in the UK employing roughly 160,000 workers.
Now some of them are sizing up new sites in Europe. Japanese banks such as Nomura Holdings, Daiwa Securities Group and Sumitomo Mitsui Financial Group have all opened Europe hubs in Germany. Mitsubishi UFJ Financial Group has chosen the Netherlands as a base for its investment banking business in Europe, while Mizuho Financial Group is bolstering its operations in both countries.