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From page 4... ... 4 Japanese acquisitions of firms in industries with both commercial and military markets, such as semiconductors, semiconductor manufacturing equipment, and machine tools, cause particular concern because some important industry segments are already dominated by Japanese companies. The fear is that dependence on Japan for particular products and technologies might leave the United States vulnerable during a crisis or have a negative long-term impact on the defense industrial base.• Yet if Japanese firms are the world's leaders in a product or technology, excluding them from producing here may reduce U.S. Read the entire page →
From page 5... ... 2 Assessing the Evidence - Japanese Investment and Technology Transfer DEFINITIONS AND APPROACH Indices of "foreign direct investment" seek to measure the "extent to which foreign firms and individuals control U.S. production."10 The very nature of multinational corporations raises difficulties in defining "foreign" firms, and there are legitimate grounds for disagreement over the extent of ownership necessary to exercise "control." The approach used by the U.S. Read the entire page →
From page 6... ... 6 There are a number of possible approaches to the analysis of "technology transfer." Technology is "applied science" or the application of knowledge to the production of goods and services. The most common image of "industrial technology" is proprietary knowledge subject to intellectual property protection through patents or trade secrets. Read the entire page →
From page 7... ... 7 ogy transfer from U.S. subsidiaries to Japanese parents - will be addressed to a limited extent because it is a major focus of the concerns expressed by Americans about Japanese investment in the United States. Read the entire page →
From page 8... ... 8 affiliated manufacturing firms operating in the United States,14 and the book value of Japanese direct investments in U.S. manufacturing now exceeds $17 billion.15 By these measures Japanese investment, despite rapid growth through most of the eighties, is still not an overwhelming influence on the overall U.S. Read the entire page →
From page 9... ... 9 TABLE 2 Royalties and Licensing Fees Between the United States and Japan: Affiliated Entities (millions of dollars) Read the entire page →
From page 10... ... 10 to repatriate earnings in the form of licensing fees from subsidiaries in countries with foreign exchange controls. These motivations bear little relation to the value of the technology itself, so drawing conclusions about the actual technology transfer situation from intra-firm licensing transactions is problematic. Read the entire page →
From page 11... ... 11 enterprises as a whole. However, the rapid increase in 1apanese FDI in recent years signifies that the situation is in flux and that the statistics should be interpreted with caution. Read the entire page →
From page 12... ... 12 States no doubt exists, but more study is needed before this complex process is fully understood. One final statistical measure of the possible contribution of 1apanese firms to the level of technology in the United States is the output per worker, or productivity, in manufacturing operations. Read the entire page →
From page 13... ... 13 overall productivity growth of Japanese affiliates may stagnate in response to increased acquisition activity of this type. 2.5 The real test will come a few years hence, when it can be determined whether or not Japanese management has succeeded in turning these acquired enterprises around. Read the entire page →
From page 14... ... 14 JAPANESE CORPORATE STRATEGY Concerns have been raised about large Japanese firms purchasing majority or minority interests in small, high-tech American companies in fields like semiconductors, software and biotechnology.29 Some see Japanese firms as "vacuum cleaners" that invest abroad in order to acquire foreign technology. What is the evidence for this assertion? Read the entire page →
From page 15... ... 15 TABLE 6 Partial Ust of Japanese Investments in Silicon Valley 1986-1990 Company J1panne Investor Equity amoum or percentage Ardelt Computar Kubota $51.5 million Akashic Memories Kubota 100% Aegis OlinAsahi 100% AcMntage Prod. Read the entire page →
From page 16... ... 16 presented above, arguing that technology acquisition is generally not the primary motivation for direct investment by Japanese companies.34 Japanese manufacturing investment in the United States has historically been prompted by U.S. trade barriers or potential barriers. Read the entire page →
From page 17... ... 17 A number of factors give rise to differences in investment and technology flow patterns among the three industries considered here. These include the relative technological levels of American and Japanese companies in a given industry, U.S.-Japan differences in industry structure, the industry • s technology intensity, the relative importance and sophistication of product and process technology. Read the entire page →
From page 18... ... (billions$) Read the entire page →
From page 19... ... 19 as Japanese factories shift to newer products. The transfer of less sophisticated production to Asia is almost complete, with the more sophisticated operations going to the newly industrialized economies (NIBs) Read the entire page →
From page 20... ... 14 12 10 8 en E ,_ u.. 6 -- I ••• 4 2 0 '71 '72 '73 '74 '75 '76 '77 '78 '79 '80 '81 '82 '83 '84 '85 '86 '87 '88 '89 FIGURE 2 Number of Japanese Consumer Electronics Manufacturing Subsidiaries, Acquisitions and Joint Ventures Begun in the United States, 1968-1989 Sourre: Michael Borrus ~ Read the entire page →
From page 21... ... 21 TABLE7 Top 15 Japanese Consumer Bectronics Manufacturers in the United States, 1989 Comp1ny PI Inti Employees Products Malsushita 6 2,467 Color TVs, color pictiJe lubes, VCRs, car audio, pagers, cellular phones, m icrowaw owns, stereo speakers, etc. Toshiba Corp. Read the entire page →
From page 22... ... 22 With respect to R&D activities. there is some product specific development work done in the United States. Read the entire page →
From page 23... ... 23 TABLE 8 Value-added In U.S. Consumer Electronics Products, 1983 Color TVs (seledad companies) Read the entire page →
From page 24... ... 24 The unmistakable conclusion is that almost twenty years of accumulated investment by Japanese companies in the U.S. consumer electronics industry has resulted in only limited technology transfer from Japan to the United States. Read the entire page →
From page 25... ... 25 amonized against a global market.46 At the same time, firms must service regionally distinct markets for all but the most undifferentiated commodity products. This is especially true for application-specific integrated circuits (ASICs) Read the entire page →
From page 27... ... 27 Technology acquisition can also motivate Japanese investment. There are examples of Japanese companies buying small, U.S. Read the entire page →
From page 28... ... 28 U.S. semiconductor manufacturers typically trust equipment suppliers to service installed equipment without telling competitors details of their manufacturing process. Read the entire page →
From page 29... ... 29 proportion of the finished product's value-added for the country in which a car is assembled. At the same time, auto manufacturers buy a significant proportion of their components from outside suppliers. Read the entire page →
From page 30... ... 30 The study indicates that Japanese supplier management practices do differ from American practices and that the differences appear to give Japanese manufacturers an advantage." The Japanese procure more parts from outside suppliers, have fewer suppliers per part, maintain longer relationships with suppliers, and assign more of the design and engineering of parts to suppliers than the American manufacturers. An important aspect of Japanese supplier management is the effort that is made by the manufacturer to work closely with the supplier to reduce prices and defects over the lifetime of a model. Read the entire page →
From page 31... ... 31 TABLE I Summary of Main Survey Results: Supplier-Manufacturer Relations DlmMalon u.s. Read the entire page →
From page 32... ... 32 TABLE10 Summary of Main Survey Results: Supplier Performance Dimension u.s. JapanJU.S. Read the entire page →
From page 33... ... 33 TABLE 11 Early Versus Later 1980s Comparisons Amqe Sample Size f'erformarg Varjab! as Target Price ll¥lex Price Change 'lit Delact Rates Defect Rate Change 'lit DllcrjDijYA Variable 514! Read the entire page →

From page 4...

... 4 Japanese acquisitions of firms in industries with both commercial and military markets, such as semiconductors, semiconductor manufacturing equipment, and machine tools, cause particular concern because some important industry segments are already dominated by Japanese companies. The fear is that dependence on Japan for particular products and technologies might leave the United States vulnerable during a crisis or have a negative long-term impact on the defense industrial base.• Yet if Japanese firms are the world's leaders in a product or technology, excluding them from producing here may reduce U.S.