A Study of Strategic Themes in the Internationalisation of Japanese Industry
New Horizons in International Business series
Chapter 3: Strategic Motivations
OVERVIEW Over the past half century, Japanese ﬁrms have established over twenty thousand foreign subsidiaries to facilitate international trade and investment. The strategic motivations of these investors have varied over time and by industry. While some ﬁrms sought to secure a stable supply of imported food, raw materials and energy to Japan, others built networks of marketing, distribution and sales aﬃliates. Other ﬁrms relocated manufacturing processes to lower cost locations or by-passed market barriers through investment in assembly operations in the host country. Waves of Japanese foreign direct investment occurred during these ﬁve decades, from diﬀerent industries and towards varying countries, reﬂecting the evolution of the Japanese economy and the changing pattern of trade between Japan and the rest of the world. An initial focus on exports of primary products, light manufactures, and crude items of the 1950s changed as heavy industrial goods, complex machinery and equipment, and consumer durables became key exports. Gradually overseas production and sales became more essential. By the mid-2000s, clusters of production-oriented aﬃliates predominated in East Asia, while sales bases were more prevalent in developed economies in North America, Europe and around the world. As the Japanese economy transformed, the pattern of trade and investment shifted. Outward FDI helped Japanese ﬁrms to sustain foreign market shares and assisted the restructuring away from older industries, such as textiles. In 1960, textiles accounted for more than 30 per cent of Japanese exports, but this share fell to less than 3 per cent three...
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