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Low-cost Eastern Europe entices Japanese, conference told

Japanese corporations doing business in Europe are conscious that sites in Eastern Europe offer lower operating costs than Germany, where many are currently based, a conference in the German city of Dusseldorf was told Friday.

Payroll costs in Germany were almost five times as high as in Eastern Europe, where Japanese corporate investment has risen markedly, Takayoshi Nakano, president of the city's Chamber of Japanese Industry and Commerce said. Despite this, the Dusseldorf region remained very attractive, he told delegates at the Japan Business Conference. A recent survey showed that out of 1,200 Japanese companies with offices in Germany, 500 had their bases in North Rhine Westphalia state. More than half of them were in charge of sales throughout Europe. Next placed in the survey were Bavaria with 230 Japanese corporations and the state of Hesse with 170.

Germany offered a ready supply of expert staff and was a market with demanding consumers, Japanese business-people said. Enterprises such as Rheon, a maker of automated food-making machinery, Muji, the retailer of no-name design products or ITM, a maker of special fibres, told pollsters they preferred the western state's array of Japanese facilities and central position in Europe. Dusseldorf boasts Europe's largest Japanese community. But ITM's European chief, Soji Takenaka, said he could never completely rule out relocating factories from the Rhine to lower-cost locations in Eastern Europe or eastern Germany.

Christa Thoben, the economy minister of the state of North Rhine Westphalia, told the conference the state regarded itself as the bridgehead to Europe for Japanese investors. Speakers at the conference criticized the German tax system, saying there had been some improvements but the system was still not sufficiently transparent from the point of view of a foreign investor. They said that last year, Germany had taxed corporate earnings more than any other nation in the European Union. Thoben replied that relief was underway with a corporate tax reform which was passed a week ago by the Bundestag parliament in Berlin. This would enhance Germany's attractiveness to investors. (