INVESTMENTS IN EAST ASIA

The Japanese electronics industry started to develop in the late 1950s and has evolved to become the leading sector in the Japanese economy. The increase in domestic demand for household electric appliances, together with the protection of the domestic market by high tariffs, stimulated growth in the Japanese electronics companies. The companies soon succeeded in expanding exports to the United States, taking advantage of low labour cost and cheap yen. Then they turned their attention to the Asian market, and around 1960 started to set up factories there. These early investments in Asia were intended to avoid the trade barriers imposed by these countries and to supply the domestic markets. For example, in 1961, Matsushita established National Thailand to produce dry batteries, the first foreign operation to be set up by the company after World War II, followed by Taiwan Matsushita Corporation in the next year. By setting up these factories, Japanese electronics companies could avoid paying the high import tariffs imposed by these countries when they sold their products to these markets. (Do I really need to add this?) This early strategy of Japanese electronic companies in East Asia is perhaps best exemplified in the development of the so-called ‘Mini-Matsushita ’ strategy. Under this strategy