This presentation analyzes the rapid growth of Japanese industrial investment in China over the past 25 years, and the ways it was shaped by Chinese industrial policy. It highlights the role of Japanese corporations in expanding ties with the PRC, and points out the ways they successfully expanded market share in key sectors. Significantly, the Japanese companies avoided major technology transfer in the early years of interaction. However, under Chinese government pressure, the Japanese moved to share more manufacturing knowledge by the beginning of the 21st century.
The presentation first chronicles the early years of Japanese investment following China's economic reforms of the early 1980s. It focuses on key sectors such as consumer electronics, information technologies, and automobiles. It indicates that in most of these areas Japanese companies had greater bargaining power than did the Chinese, and therefore succeeded in gaining market access while sharing little knowledge with potential competitors. By the mid-1990s, the strength of the PRC economy and Chinese political imperatives dictated Japanese companies would have to play a role transferring knowledge. Major companies such as Toyota, Toshiba, Honda, and others moved to build research and development centers, and train Chinese engineers and scientists. Japanese market share grew, but at the price of some key technology transfers.
The presentation, based on case study archival fieldwork and interviews done in both Japan and China, concludes that Japan has belatedly begun to follow the path of other nations that early on traded technology transfer for market access. However, Japanese corporate protectionism likely remains strong enough to safeguard the most vital knowledge while still expanding companies' roles in the PRC economy.
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