First, we indicate that Japanese manufacturers have increased both offshore production and exports from Japan during the 1990s to the 2000s. Offshore production and exports are not a substitute relationship but a complementary relationship for Japanese manufacturers. Japanese offshore production is strongly supported by industrial goods imported from Japan such as machine tools, materials and components. Second, we insist that there is a big gap between the nominal local procurement rate of finished goods and the real local procurement rate based on value added analysis including the local content of local suppliers. Finally, we analyze the impact of the increase in real local procurement rate. The value added amount of the Japanese production depends not only on the real local procurement rate in offshore production but also on the overseas sales amount of Japanese firms.

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This paper aims to shed some light on the development of inter-business relationships based on an international alliance. With the maturation of the domestic market, more and more Japanese companies are making inroad into overseas markets. It is important for firms to properly assign suitable functions to their domestic and foreign plants. More concretely, by considering its core competence and efficiency, firms should assign suitable functions to their production plants to achieve internationalization of their activities. Especially, constructing a cooperative partnership to foreign firms is an important matter for Japanese firms. In this paper, a single case study method was employed to explore how a Japanese machine tool provider entered into a strategic alliance (JV) with a Taiwanese manufacturer of a different type of machine tools. The key findings of this case is that the Japanese firm is able to succeed in extending its business in China, and develop optimization of production and cooperative relations for international specialization through the alliance with the Taiwanese firm. In the process of the business activities of the JV and the headquarters, to recognize their competitive advantage each other build a complementary relationship and develop the international specialization. It is possible for such a relation to recognize their strength and develop the further division which can make use of them. Theoretically, we enrich/extend the entry strategy by pointing out that 1) forming a strategic alliance could be a way of entering a foreign supply market; 2) in a Japan-China context, it is recommended for the Japanese firms to form alliance with Taiwanese firms who have the same root as Chinese and are influenced by Japanese culture in the modern era when Taiwan was colonized by Japan. Taiwanese are therefore accepted by both Chinese and Japanese. Practically, this approach (forming international alliance with Taiwanese firm), as an emerging market entry model, could be recommended to Japanese firms to enter Chinese markets.

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Generally, as modularization of products gets more developed and common in emerging markets, products developed by Japanese makers tend to lose their initial competitiveness there. This is a dilemma for Japanese makers which have entered into emerging markets. To get over such dilemma there, Japanese makers, from now on, need to develop new types of products that should be based on a strategic-integration platform, and comprehensively satisfy low-cost production and quality requirements. As a very good example of such new product, this paper deals the case of Super Cub (locally modeled), developed by Honda Motor Co., Ltd. (hereinafter "Honda") in Thai and Vietnamese markets. Regarded as the closest to commodities of two-wheeled vehicles, Honda's Super Cub remains highly competitive in emerging and other markets. The factor behind this success is that Honda was able to simultaneously achieve 1) the excellent quality of locally modeled Super Cub, based on the perfectly integrated platform, and 2) the effective reduction in production costs that resulted from collaborative interorganizational relations with its suppliers. This paper elaborates that it is feasible for Japanese makers to keep their products competitive even in emerging markets if they can achieve both the excellent quality of their products, based on a strategically-integrated platforms, and the effective reduction in production costs by close relationship with their suppliers.

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