Japanese media: Global dependence on China's cutting-edge products increases

According to a report by the Nikkei on August 6, the Nikkei conducted an investigation and analysis of the market share of major products and services and found that Chinese companies accounted for more than 30% of the market share in as many as 15 products, including liquid crystal panels, battery materials, etc. The US government has proposed to strengthen domestic production of cutting-edge products, but the difficulty of building a supply chain that does not rely on China is becoming more prominent.

The report said that the Nihon Keizai Shimbun conducted a "Major Commodity and Service Share Survey" in 2020 for 70 categories of products, services, core components and materials that are very important in global economic activities. The survey also includes environmentally friendly products such as solar panels and car batteries, which are in growing demand due to the decarbonization trend, as well as digital transformation-related products such as cloud services that help companies innovate their business.

As the COVID-19 pandemic spreads, the conflict between the United States and China over economic security is becoming increasingly intense, and the momentum of global economic division is intensifying. The United States not only requires increasing the use of American raw materials through government procurement, but also expands domestic production in areas such as semiconductors. Japan is also strengthening the supply chain of semiconductors and other products.

However, the results of the "Major Goods and Services Share Survey" highlight the world's heavy reliance on Chinese companies for important products. Chinese companies account for more than 30% of the market share in 15 categories, including smart speakers, smartphones, surveillance cameras, computers, home air conditioners, washing machines, etc., of which 13 categories are dominated by Chinese companies.

According to the report, in the field of solar panels, Longi Green Energy Technology Co., Ltd. occupied the largest market share in 2020. In the field of large and medium-sized trucks, China First Automobile Group Co., Ltd. ranked first. In the field of small and medium-sized liquid crystal panels and large liquid crystal panels for information technology products, BOE Technology Group ranked first. In the field of on-board batteries, which is the core product of electric vehicles, Contemporary Amperex Technology Co., Ltd. still ranked first despite the fierce offensive of South Korea's LG Chem.

The report also said that in the field of lithium battery insulators, Shanghai Enjie New Materials Technology Co., Ltd. has a market share of 22.3%, ranking first. In 2015, Japanese companies occupied 80% of the market share, and now Asahi Kasei Corporation has a share of 14.5%.

The report mentioned that Huawei Technologies Co., Ltd. has the largest market share in the field of communication base stations, which are indispensable in the construction of 5G networks. Despite the strong vigilance expressed by the United States and the changes in procurement plans by allies, Huawei's share has still increased to nearly 40%. Although some people believe that it has become difficult for Chinese high-tech companies to purchase parts and sell products to European and American countries, the actual impact is relatively minor.

In terms of IT infrastructure-related products, US companies have the largest market share in 24 categories, such as servers and routers. Japanese companies are the largest in only seven categories, mainly in the shrinking market for copiers and digital cameras. In terms of competing for customers in growth areas, Japanese companies are in a passive position, and industrial metabolism has not made progress.

Keisuke Okano, a partner at Deloitte, warned about the reliance on certain countries for the purchase of important products: "Procurement risks caused by accidents, disasters and diplomatic issues will increase, making it difficult to maintain a strong stance in price negotiations."