TOKYO - Around 80 percent of Japanese manufacturers view the procurement of rare earths as a pressing challenge for their managements or a critical operational risk, according to a recent survey, as China tightens its export controls on the minerals essential for high-tech products.
The survey by Resilire Inc., a provider of information on supply chain risk management, also showed 45 percent of company executives in the manufacturing sector believe their companies' high reliance on rare earths from China is an issue.
The research firm conducted the survey in June, targeting 400 executives at manufacturers of materials, parts and other items, after China in January imposed tighter restrictions on exports to Japan of dual-use items that have both civilian and military applications, amid a deterioration in bilateral relations.
In the survey, 43.8 percent of the executives said procurement concerns were a challenge for managements, followed by 36.2 percent who viewed them as a business risk. Around 16 percent said addressing rare earth procurement was a challenge "to a certain degree," while 4 percent said it posed "almost no problem."
More than half of the respondents said they are facing difficulties in procuring rare earths, such as neodymium and samarium, likely as a result of China's export restrictions.
Asked about the outlook for the next year, 51.7 percent anticipated a severe or slight deterioration, while 17 percent expected a significant or slight improvement.
Diplomatic ties deteriorated after Prime Minister Sanae Takaichi suggested in parliament in November that Japan could intervene if Taiwan is attacked. Beijing views the self-ruled democratic island as a renegade province to be reunified with the mainland by force if necessary.
China's increasing economic pressure, coupled with energy disruptions caused by the effective closure of the Strait of Hormuz amid the Iran war, have highlighted the urgency for Japanese companies to review their supply chains and secure alternative sources. The Japanese government is boosting investment to enhance economic security.
A Resilire official said companies are becoming cautious about procurement, adding, "It is very important to find alternative suppliers and secure stocks."
