Asian investment may prove dangerous<\/p>\n
By Mitsuhiko Morimoto<\/p>\n
TOKYO: Against the backdrop of the soaring yen in relation
\nto the dollar, Japanese corporations are eager to invest in Asian
\ncountries--but there are risks involved.<\/p>\n
Large numbers of Japanese companies are known to have gone
\nto China without conducting detailed studies of the local
\nsituation.<\/p>\n
An important element for successful Japanese investment in Asia
\nappears to be making contributions to the countries where firms set
\nup plants and factories.<\/p>\n
There are accelerated moves among Japanese corporations to
\ninvest in Asia, targeting such countries as China, Vietnam,
\nMyanmar and India. It is a phenomenon some analysts describe as a
\n\"third wave\" of Japanese investment, following booms around 1970
\nand the latter half of the 1980s.<\/p>\n
Mirroring the current boom in investment abroad, a travel
\nagent is offering package investment inspection tours for groups or
\nindividuals.<\/p>\n
The agent plans to organize trips this autumn to China and
\nVietnam for various kinds of business groups.<\/p>\n
About 120 people, including car industry executives and the
\nowner of a small restaurant, attended a briefing last month in
\nTokyo. The agent said he was surprised that people from such a
\nwide spectrum were interested in overseas investment.<\/p>\n
The yen's appreciation against the dollar and price busting are
\nsaid to have brought about the latest investment boom.<\/p>\n
Japanese manufacturers, hit hard by a loss of
\ncompetitiveness due to the surge of the yen, to the Y$100 to the
\ndollar level, have been forced to advance into Asia, where labor
\nand other costs are lower than in Japan.<\/p>\n
Inexpensive goods manufactured or low-priced parts procured in
\nAsian countries have resulted in price busting in Japan, and some
\nmanufacturers have sought ways to shift the base of their operations
\nout of Japan, further accelerating moves for overseas production.<\/p>\n
The first overseas investment boom took place around 1970
\nwhen Japanese companies looked to Asian countries to counter
\nlabor costs in Japan, while the second boom took place in the
\nlatter half of the 1980s when the Plaza Accord triggered the
\nyen's rise against the dollar.<\/p>\n
One of the main features of the current boom is that small-
\nand medium-size enterprises have freed themselves from \"keiretsu\"
\naffiliation with major corporations, and a large number of them
\nhave joined in the moves to invest in Asia for their survival.
\nAnother characteristic is that the area of possible investment
\nappears to extend to almost the entire continent.<\/p>\n
The second wave of Japanese investment abroad targeted the
\nnewly industrializing economies and Thailand and Malaysia among
\nmembers of the Association of Southeast Asian Nations (ASEAN).
\nThis time, while Japanese investment again seems concentrated on
\nThailand, it is also spreading to the other ASEAN members.<\/p>\n
Japan's corporate advance into China is in full swing. However,
\nJapanese investors are also beginning to consider India and Myanmar
\nas possible countries for investment. Vietnam is also catching their
\nattention.<\/p>\n
Investors can choose where they want to invest, but analysts
\nsaid that could be dangerous.<\/p>\n
An official of the Japan External Trade Organization, who saw
\nsome Japanese companies set up operations in China while working at
\nJETRO's Beijing office, said there were quite a few that went to
\nChina \"simply because labor costs were low and without making a
\nthorough study of the local situation. Naturally, problems have
\nbeen on the rise.\"<\/p>\n
In some cases, Japanese companies have launched joint ventures,
\nbut relations have been strained because a shortage of qualified
\nstaff has meant the Japanese side sends over personnel only once
\nevery six months.<\/p>\n
An official of an association of Japanese companies
\noperating overseas said a lack of local personnel could be a
\nproblem.<\/p>\n
He said that what worries him is that friction could arise if,
\nfor instance, a company goes ahead with plans to set up an overseas
\nplant thinking that it can somehow launch operations without paying
\nmuch attention to the matter of personnel.<\/p>\n
If Japanese companies hope to go abroad solely for the sake of
\nlow labor costs, they may fail. The reason? South Korean and
\nTaiwanese companies are also rushing into China and Vietnam.
\nJapanese firms may find themselves fighting with others to
\nrecruit workers or see labor costs go up quickly.<\/p>\n
As a result, they may have to behave like migratory birds,
\nmoving from place to look for low costs. While such moves may be
\nin line with economic realities, they may become problematical
\nfrom the standpoint of making contributions to local communities.<\/p>\n
The Tokyo Chamber of Commerce and Industry said in July in its
\noverseas investment guide for small-and medium-size industries that
\ncompanies will not be able to develop their overseas activities
\nif they are overly concerned about the high yen and neglect to
\nmake contributions to local areas.<\/p>\n
It has been 20 years since the late prime minister Kakuei
\nTanaka encountered anti-Japanese sentiment when he visited
\nThailand during a tour of the ASEAN countries. However, there
\nappears to be no fear of a resurgence of such feeling since more
\nlocal people are now involved in management of Japanese-owned
\nfactories.<\/p>\n
Japanese firms should not rush to invest overseas just
\nbecause of the high yen. Other considerations are important, too.<\/p>\n
During the previous two investment booms, the Federation of
\nEconomic Organizations (Keidanren), the Japan Chamber of Commerce
\nand Industry and various other associations issued overseas
\ninvestigation guidelines.<\/p>\n
Now that the third boom is under way, it might be a good
\nidea for them to come up with new ones.<\/p>\n
Mitsuhiko Morimoto is staff writer at the Yomiuri Shimbun<\/p>\n
-- The Daily Yomiuri<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/asian-investment-may-prove-dangerous-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }