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 22: Transport and Communication Services

Roger Farrell


INTRODUCTION The Japanese transport and communications sector includes road, rail and air transport as well as telecommunications services, shipping and carrier and logistics providers. Firms in the sector typically have their main business operations in the regulated Japanese domestic market, but foreign direct investment by the sector is considerable, partly due to the internationalisation strategy of telecommunications provider NTT DoCoMo. Another factor has been overseas registration of vessels by the Japanese shipping industry under ‘flags of convenience’ in tax havens such as Liberia and Panama. In the early twentieth century, Japanese investment in railway infrastructure in its colonial territories was one of the largest components of its foreign direct investment. This infrastructure was considered essential to facilitate trade and commerce with Korea, Taiwan and the Manchuku territory in China and was subsidised by the national government of Japan. The largest railway investment was in the South Manchurian Railway Company, created in 1906, which was partly owned by the Japanese government and had significant political, economic and military importance. Overall, railway investment accounted for over half of total Japanese investment flows into China in the pre-war period (Remer, 1968). By the 1930s, the South Manchurian Railway had expanded to cover over one thousand kilometres of railway networks which linked coastal ports to the hinterland, connecting Shenyang, Dandong, Dalian Anshan and Fushun. In this period, the South Manchurian Railway Company was the largest economic enterprise in Manchuria. It was responsible for the construction of transport infrastructure such as harbour improvements, as...

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