Japanese, South Korean, Chinese companies flocking to Mekong region

TOKYO - The economic zone in the basin of the Mekong River is starting to thrive as a key location for businesses pursuing so-called "China or Thailand Plus One" strategies.

Japanese, Chinese and South Korean companies are flocking to the area to take advantage of inexpensive labour, raising a question of whether they and other foreign companies will leave the zone for the sake of "Mekong Plus One" strategies if local wages rise.

Ando, a well-established maker of small articles for Japanese kimono in Kyoto, manufactures in Pakse, a major city in southern Laos. To the sound of local popular music, some 60 young women weave braided cords with Japanese looms, sew drawstring purses and examine the quality of products at the Ando plant.

Operation manuals are written in Japanese. The women workers include nine who have completed a three-month training programme in Japan and speak basic Japanese.

Ando built the Laos plant at a cost of some US$500,000 (S$670,000) and began operating it in 2014. Founded in 1923, Ando already had plants in Kyoto and China but added the Laos plant because, as third-generation CEO Ichiro Ando put it, "We'd be in trouble if something happened in China, and we find the integration of Southeast Asia attractive."

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