Japan Opens New Front in Race for Booming Southeast Asia Markets
(Bloomberg) -- In a battle with China for influence and opportunity in Southeast Asia, Japan is making inroads on a new front: education.
Japan is aggressively recruiting students from the region in hopes they will help enhance economic ties with their home countries in the future. That’s because Southeast Asia is a key investment destination for the country -- and an important source of talent.
Vietnamese especially are taking up the offers. The number of Vietnamese studying in Japan, including language schools, grew more than 12-fold in the six years to May 2016, reaching about 54,000, according to the Japan Student Services Organization. They now account for nearly a quarter of international students in Japan, behind only Chinese students, who make up 41 percent but whose numbers have leveled off in recent years.
Japan and China are both seeking bigger roles in Southeast Asia, which boasts rapid economic growth and a large and expanding middle class. It also has huge demand for infrastructure. Japan’s investment in the region has surged in recent years as political tensions and a slowing economy have reduced China’s appeal, while Beijing has sought to strengthen trade ties with the Asian Infrastructure Investment Bank and the One Belt, One Road initiative.
Japan has made it a priority to recruit students from the Association of Southeast Asian Nations. A Japanese government scholarship has helped Tran Thi Quynh My, an official at the State Bank of Vietnam, pay for her two children’s studies in the country.
“I chose Japan because it costs less than other countries while it has a good education system, instilling good discipline in students,” My said. “After studying in Japan my children will have better chance to get good jobs when they come back to work in Vietnam, since there are more and more Japanese companies investing in our country.”
Vietnam’s economy expanded by more than 6 percent for a second year in 2016, making it one of the world’s fastest-growing. Japanese companies are increasingly looking to Southeast Asia, where incomes and consumption are likely to keep growing for years, said Shinobu Kikuchi, senior economist at Mizuho Research Institute in Tokyo.
Japan is already Vietnam’s third-biggest trading partner after China and the U.S. Two-way trade rose to about $30 billion in 2016, almost double the $16.8 billion in 2010, according to Vietnamese government data. The two countries aim to boost bilateral trade to $60 billion by 2020. Japan is also the second-biggest investor in Vietnam, with a total of $42.5 billion of foreign direct investment as of March 2017.
In the past, Japanese manufacturers have entered Vietnam in search of cheap labor, but in recent years its growing domestic markets have attracted more non-manufacturers such as retailers, according to Keisuke Kobayashi, who covers Vietnam at Japan External Trade Organization.
Regardless of sector, Japanese companies are looking for highly-skilled, educated employees who can bridge language and cultural gaps, Kobayashi said.
“Our surveys with companies always show a challenge in hiring,” he said.
The growing presence of Japanese companies in Vietnam has students and their parents thinking about studying in Japan in hopes of landing a good-paying job with a Japanese company, said Itsuro Tsutsumi, director at Jasso’s student-exchange department.
“There are high expectations,” Tsutsumi said. “Their families are sending them as a means of investment, hoping the return will be big.”
Such expectations can be exploited. In April this year, the Japanese embassy in Vietnam warned that a rising number of Vietnamese students and so-called technical interns end up in Japan with a large debt after paying big fees to local agents who deceive them about job opportunities.
Tran Thi Bich Phuong has been more fortunate. She received two scholarships to study marketing at Ritsumeikan Asia Pacific University in Oita prefecture in southwestern Japan. One was from the university and the other from Jasso, she said. The number of Vietnamese students at the university has more than tripled to about 500 over the past decade, according to the university.
Phuong, who grew up in Vinh, Vietnam, plans to look for a job in Japan after graduation in September.
“By working for a Japanese company, I’ll have an opportunity to learn professionalism at work and broaden my horizons,” she said. “In the long term, I want to go back and use my skills and experience in Japan in Vietnam.”