TABLE 2-2 Motives for MNCs Entering Japan By Time Period

Motive for entering Japan

Past

Present

Past and Present

Total

Size and growth in market

56 (25%)

66 (16%)

247 (30%)

369 (25%)

Overcome Japanese protectionism

5 (2)

0 (0)

5 (1)

10 (1)

Attract skilled personnel

7 (3)

26 (6)

57 (7)

90 (6)

Access to materials/parts

8 (4)

17 (4)

29 (4)

54 (4)

Access to technology/know how

4 (2)

28 (7)

32 (4)

64 (4)

Gather technology and market information

7 (3)

40 (10)

62 (8)

109 (7)

Establish base for Asia

40 (18)

49 (12)

70 (9)

159 (11)

Achieve high profits

18 (8)

34 (8)

47 (6)

99 (7)

Proximity to Japanese competitors

5 (2)

27 (6)

26 (3)

58 (4)

Fill unaddressed niche market

23 (10)

24 (6)

41 (5)

88 (6)

Japan's importance for global strategy

25 (11)

107 (25)

194 (24)

326 (22)

Other

24 (11)

2 (0)

2 (0)

28 (2)

Total

222 (100)

420 (100)

812 (100)

1,454 (100)

SOURCE: H. Yoshihara, Foreign Capital Companies (Tokyo: Toyokeizai-shinposha, 1992), p. 34.

Structural comparisons of foreign capital companies in Japan are shown in Figure 2-1 according to five different categorizations; (1) by industry, (2) by country, (3) by total assets, (4) by foreign ownership ratio, and (5) by year of establishment. A major role is played by U.S. based companies, which make up 46.4 percent of all foreign capital companies. The manufacturing sector constitutes 30.3 percent of all business activities and other industries evenly divide the remainder. Over 40 percent of the companies have been in business at least 15 years and over 40 percent were established in the past eight years. The five year period from 1985 to 1989 accounted for 30.3 percent of new establishments, the highest among the periods. In the most recent period of the survey, from 1990 to 1992, there were over 300 new entries into the market and major MNCs established R&D centers.

Table 2-3 shows a list of entry years of leading U.S. companies in Japan. The table is not at all complete. It was assembled for the purpose of selecting the companies for case studies. Several companies such as ITT, which had played important roles prior to the Second World War, are not listed because they have changed their core business areas almost completely. Relatively new entries of high potential are also not listed since their management credibility has not yet been established.

Referring to Mr. Yoshihara's survey again, the relationship between the period of the MNC's entry and its success or failure is shown in Table 2-4 . The rate of success of 79 percent is surprisingly high, during the entry period prior to 1970, when the market was tightly controlled. The rate of failure is a mere 7.5 percent. There might have been many failed companies that were not on the survey list or failed to reply. However, it is more likely that those companies, which entered into the market during such difficult time, had made very careful studies of the market,



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