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THE EVOLUTION
OF A JAPANESE SUBSIDIARY IN THE UK
Lewis COMBSTOCK
(Nittan (UK)
Ltd)
Hosein PIRANFAR
(University of East
London)
Japanese
Foreign Direct Investment has largely followed the principles of the mainstream
FDI theories in particular those of the eclectic theory, which emphasizes
Ownership of higher technology, Internalisation of production, and,
exploitation of Local advantages such as cheap labour (OLI). The upsurge of
investment since the Mid-1980s, however, has overstepped many of these
principles. This flood of FDI is variously attributed to the particular
circumstances of the Japanese economy such as higher value of the Yen, lower
interest rates at home, overproduction, empire-building efforts at the
Eastern wing of the Triad, and so on. These special features have led many
researchers to relate the Japanese FDI only to some other Macroeconomic
elements of the Japanese economy such as trade, GNP, domestic demand etc.,
while other FDI economists have attempted to relate it to the globalisation
process in which Japan
is a big player. In explaining the special character of the Japanese FDI,
researchers with a business-economic slant, tend to gravitate to the
following issues: export/domestic sales proportions, profit retention/
repatriation, HQ/subsidiary relationships, the role of domestic input,
technology, strategy, culture, quality, and so on. Some valuable large-scale
studies (though in dire need of updating) exist that deal with these issues. These
are of course largely based on 'arms-length' research techniques of
phone-calls, letters, and selective interviews. Without downgrading the value
of these findings, it was felt that they could be beneficial to contrast
these findings against the real life of a Japanese subsidiary in Britain.
The company is one of the oldest cases of Japanese direct investment anywhere
in the world. Its emergence as a Greenfield
investment and survival is quite unique and compares to the flood of
subsidiaries and joint stock companies that came to life during the
pre-crisis optimism. With the help of an R&D-oriented sister-company in Sweden,
and a vigorous pursuit of quality, the old entity in Old Woking is hobbling
on towards the 21st century faced with many challenges. We intend to provide
a hands-on business-economic view of the company and its future in Europe
as a building block for FDI economists.
Full text
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