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The 3rd surging wave of Japanese investment in China
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09:13, December 22, 2007

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Major Japanese companies such as Hitachi Ltd. and Fuji Film Co. Ltd. have shifted their strategic aims to China’s market in recent years.

“To gain ground in today’s world market, we must first hit the Chinese market,” the GM of Fuji Film Co. Ltd. was quoted as saying. Over the years, Japan has invested up to 39,000 projects and as much as 60.8 billion US dollars of promised capital in China, making it the second largest source of foreign capital for China. Japanese companies have flourished in various sectors, all with highly complementary industries, sound management, and significant return.

China, without a doubt, has become Japan’s production base for going global; and has driven Japan’s economic recovery.
Experts say the labor and other costs related to production factors in Japan have been increasing steadily, compelling Japan to transfer its labor-intensive industries to Southeast Asian countries. China plays a vital role as one of the target transfer countries and as a production base for Japan.

Fuji, for example, intends to transfer all of its digital camera production bases to China beginning at the end of this year.
Omron Electronica & ProductronicaChina has a staff of 13,000 working in China: more than a third of the total 33,500. Sanyo also dispatched nearly half of its staff to China.

Since China’s entrance into the WTO, the market has become more open and consumer demands in China have been growing. “Produce to meet the specific needs of China’s market” has become a much sought-after strategy among Japanese businesses.

“Shift to higher gears and accelerate (Japan’s) investment mechanism” has become a popular saying among large Japanese firms pouring heavy capital into China. Many of them decided to move their key research and development programs to China, creating an operational system called a connected sequence.
Omron took the lead in this respect. “In the 1990s, China was only a production base for our exports. Now, at the turn of the century, we have a new goal to establish another Omron to fulfill all of our business functions,” said Yamaga, the president and GM of Omron Electronica & ProductronicaChina.

Not accidentally, Sony, Sumitomo and many other Japanese businesses are picking up their pace to complete the strategic shift in investment structures in China.

Sony has thus far moved its product research and development, design, production and sales, as well as after-sales service to China. It has essentially achieved a connected sequence for its business operations system.

The structure of Japanese investments have also fundamentally changed: shifting from manufacturing industries to service industries that include commercial industry, transportation, and banks and equities.

Since the 1980s, Japan’s investment in China has reached three heights. Currently, it is riding its third high tide. Many new industries are developing, such as creative and cultural exchange industries.

The fact remains that from now on China will be the key market in Asia for Japanese investment; and the future looks bright for greater bilateral cooperation in more spheres of business.

By People's Daily Online

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