Japanese Investment in the World Economy
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Japanese Investment in the World Economy

A Study of Strategic Themes in the Internationalisation of Japanese Industry

Roger Farrell

This book examines Japanese Foreign Direct Investment (FDI) in the world economy over more than five decades. It provides a unique focus on the internationalisation experience of selected industries, such as forestry, textiles, electronics, motor vehicles, steel and services as well as case studies of individual firms. Japanese Investment in the World Economy is distinctive in that it examines overseas investment by firms in the primary, manufacturing and services sectors over the period in which the Japanese economy became the second largest in the world.
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Chapter 18: Globalisation of the Automotive Industry

Roger Farrell


OVERVIEW Japanese overseas automotive investment has developed from the creation of a network of branch offices to facilitate export sales, distribution and servicing to a pervasive network of dealerships, with over 300 in the US market alone by 1980. The industry is dominated by the motor vehicle and parts industries, but also includes the miscellaneous transport equipment industry. The former industry is concerned with the production of passenger cars, buses, trucks, motorcycles, engines and other parts such as brakes, axles, radiators and gears. The latter industry concerns the manufacture of railroad vehicles and parts, vessels, machines for ships, aircraft and accessories and industrial vehicles and parts. Japan has been the second largest motor vehicle market in the world since the late 1960s and its producers have expanded internationally since then to establish a major global presence. Since the 1970s, around 30 per cent of production in Japan was exported. A decade later, Japanese automotive production exceeded that of the United States and it has dominated the world market since then. Output in Japan peaked in 1990 at 13.5 million units and then fell slightly to 10 million units five years later. Overseas production of vehicles by Japanese automakers has continued to increase, reaching 11 million units in 2005, from 5 million in 1998, eclipsing domestic production. The Japanese automotive industry became internationally competitive through a focus on ‘lean manufacturing’ and rapid product development which allowed Toyota, Honda and other producers to achieve high levels of product quality, with low...

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