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Japanese drinks maker Suntory is prioritising expansion in India while taking a cautious stance on business in China, especially given concerns over spy laws recently used to detain foreign workers, Chief Executive Takeshi Niinami said in an interview.
Suntory is looking for local partners in India to expand its drinks and nutrition businesses, he said, although in China, which he acknowledged is still an attractive market, he cannot justify sending in international staff for an investment push in the current environment.
"They are worried," Niinami said about workers' concerns in an interview on Thursday at the Reuters Global Markets Forum (GMF) in Davos. "We are willing, but there is a hampering factor that is the espionage act."
The comments from Niinami, who also heads one of Japan's biggest business lobbies, embody concerns among global executives about the operating environment in Asia's biggest economy and over-reliance on production there.
Tokyo's relations with Beijing, already fraught from trade disputes and military tensions around the Taiwan Strait, soured further last year with China's arrest of an employee from Japanese drugmaker Astellas Pharma on suspicion of espionage.
Japanese companies are trying to lower risks by moving supply chains to Vietnam and other Southeast Asian countries, Niinami said, but it is difficult because China has a lock on production of some basic inputs.
"It can't be done overnight," he said.
Bilateral meetings between leaders will help to thaw relations, Niinami said, adding that he expects Japanese Prime Minister Fumio Kishida may pay a visit to Beijing in March or April.
But with China investment on hold, growth in India is more in focus.
Suntory is looking to invest "much more" in the India market, eyeing possibilities both for building new factories and for acquiring existing businesses, Niinami said.
"Both are very feasible, but the key thing is how to locate a good, worthy local partner," he said. "That's very important."
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