The paper "Japanese Firms and Intra-Asian Trade and Investment" is an outstanding example of a business case study. The development of close trade ties between Asian countries in the 1980s was influenced by the dynamics of different production networks. The aspect of specialization in different Asian countries led to the rise of sophisticated products in the electronics industry, the textile industry as well as in the automobile industry. The Japanese economy established these production networks in different Asian countries encouraging intra-Asian trade as well as economic integration. In this article, a clear insight into the influence of the production networks to the intra-Asian trade as well as the integration of the East Asian region is provided.
A clear analysis of the financial system adopted in the region and their role in the integration process during the 1980s. The paper also reviews the specific features of the firms that played a role in the integration process. It also incorporates the different features of the Intra Asian trade as well as the causes of change across the region. Some of the countries articulated include Taiwan, the people’ s republic of china, South Korea, Bangladesh, India, Singapore, as well as Hongkong.
The paper further reviews the implications to the business systems of the Asian countries hosting the different Japanese firms. Both the advantages of hosting the firms as well as the disadvantages are covered. Background The establishment of production networks by Japanese firms in southeast and East Asia was encouraged by Japanese FDIs since the 1980s. This was motivated by typical foreign direct investments between developed nations and the developing nations. This was based on the factor of prices and the equalization model and this has been the basic motivation for most Japanese companies to invest in Asian countries. Taiwan leadership under the independent union movement help in building links with Japan.
Japanese companies went into Taiwan searching for cheap labor. The development of Taiwanese companies led to the demand for iron, steel, technology, chemicals, as well as spare parts, which mainly came from Japan. Since 1985, Japan has relied more on foreign investment other than trading within their own country. This was considered as an overseas production as a concept of internationalization.
The demand for Japanese technological production system encouraged trade between Japan and Taiwan. It is pertinent to note that the increased balance of trade on the Taiwanese side triggered interests in economic integration since this would help enhance their economy. South Korean companies such as Hyosung group as well as SK holdings sourced technology from Japan two decades ago. Japan was instrumental in encouraging technological development in South Korea. During the 1980s, most of the Japanese companies started developing and establishing networks and market niches South Korea.
This led to the growth of credit flows, aid, and trade, which rose together with Japan’ s foreign direct investment and significantly strengthened the economic ties between Asia and Japan. The policies implemented in the Korean economy highly reflected the Japanese economic integration concept. The table below indicates some of the aspects that explain the trade relationship between Japan and South Korea. The South Korean government policies were drafted to encourage the smooth exchange of goods and services between the two countries. This was in the spirit of economic integration
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