TABLE 4-3 Japanese Multinational Corporations in Asia; 1993 Direct Investment Flow, million dollars

 

1990

1991

1992

1993

1994

Position 3/31/95

NIEs

Hong Kong

1,785

925

735

1,238

1,133

13,881

Korea

284

260

225

245

400

5,268

Singapore

840

613

670

644

1,054

9,535

Taiwan

446

405

292

292

278

3,997

ASEAN

Indonesia

1,105

1,193

1,676

813

1,759

16,981

Malaysia

725

880

704

800

742

6,357

Philippines

258

203

160

207

668

2,817

Thailand

1,154

807

657

578

719

7,184

China

349

579

1,070

1,691

2,565

8,729

Total

7,054

5,936

6,425

6,637

9,699

76,216

NOTE: Figures are based on notifications, not actual transactions and excludes disinvestments. Years are Japan fiscal years. Total includes other countries.

SOURCE: Japan Ministry of Finance data as compiled in Japan EconomicInstitute, JEI Report, September 15, 1995.

movement of final production of a range of low- and mid-tech products to Asia; increased reverse exports of final products back to Japan (substituting for domestic production in Japan), with increased exports of key components from Japan; and integrated supply of lower technology components within Asia. Table 4-4 and Table 4-5 show that Japanese electronics subsidiaries have a higher propensity to export back to Japan and a higher propensity to import than do Japanese manufacturing subsidiaries in general.

Further, Japan's electronics FDI appears to be spread throughout the region much more than U.S. electronics investment, which remains concentrated in Malaysia, Hong Kong, Singapore, and to some extent, Taiwan. Overall Japanese investment in China appears to be increasing rapidly. Table 4-6 shows that Japanese electronics manufacturers anticipate considerable growth in Chinese investments and production.

Trade and investment patterns appear to be much different in the transportation equipment industry. Whereas U.S. MNCs have relatively modest Asian investments in this sector, Japanese MNCs have played an important role in building local automobile production in such countries as Malaysia. In contrast to the integrated production networks that Japanese MNCs appear to be building in electronics, transportation equipment subsidiaries have a low propensity to export and a high propensity to import, implying a pattern of local assembly and sale of products with high utilization of Japanese-made components.

Several concerns have been expressed about Japanese FDI in Asia. 3 First, some have asserted that Japanese MNCs will facilitate the formation of an Asian economic bloc whose integrated production will shut out American and other firms, while most of the output will be shipped to the United States. Another factor fueling this concern about a Japan-dominated Asian bloc is the



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