Japanese consumer goods manufacturer Iris Ohyama will become the first company to receive state aid to move its production outside China as part of Tokyo’s efforts to build more sustainable supply chains for businesses.

From June, Iris Ohyama will begin producing face masks at its Kakuda factory in its plant located in Miyagi Prefecture in Northern Japan. The goal of the company is to break its dependence on overseas suppliers. It plans to start producing 150 million masks a month by August.

The government has allocated more than 240 billion JPY (2.2 billion USD) in the additional budget for fiscal 2020 to prepare subsidies for companies reorganizing their supply chains.

Initially, Iris Ohyama intended to use a government subsidy that promotes the manufacture of masks. It will now also apply for a subsidy to reconfigure its supply chains. The total investment to start the production of masks in Japan will increase to 3 billion JPY from the original plan of 1 billion JPY, which the company hopes subsidies will cover approximately 75% of the value.

Currently, Iris Ohyama manufactures face masks in its Chinese factories in the port city of Dalian, Liaoning Province, and in Suzhou, west of Shanghai, of nonwovens and other basic materials purchased from local companies.

The spread of the coronavirus has halted production and logistics around the world, with Japanese companies relying on more than 20% of their parts and materials that need to be particularly vulnerable.

Prime Minister Shinzo Abe has announced support for investments to strengthen production and supply networks in the country. “Products that depend on one country and have high added value will be returned to Japan as production bases”, said Abe during a government meeting last month. “Even if the products do not depend on one person and have no high added value, production will be diversified into the Association of Southeast Asian Nations (ASEAN)”, added the Japanese Prime Minister.

The government will urge companies to consider whether they can maintain stable orders and production in times of crisis. It will also support reforms in industries such as automotive and electronic parts manufacturing.