The Globalization of Japanese Corporate Management in Asia: The Progress of Management Localization and the Policies in Response

ABSTRACT

Investment and local production in Asia are conducted by Japanese enterprises in order to reduce costs, sell products locally, and establish production systems. Top priority is placed on the production function to utilize the low cost of labor in Asia. Thus, Japanese-affiliated companies in Asia achieve higher incomes than those in Europe and North America. Specifically, the low cost of labor in Asia has contributed to a reduction in overall costs for Japanese companies.

Although there has been progression to a certain extent, the localization of Japanese-affiliated companies in Asia is limited. In respect to goods, the proportion of sales within local or regional markets is still low. As for management, local staff are rarely promoted to managerial positions. Insofar as capital is concerned, funds are still procured from Japan.

With respect to sales and procurement, and production and technology, incorporated local subsidiaries have a close relationship with their Japanese head offices. Local production in Asia has influenced and greatly affected many aspects of Japanese domestic production; this reflects the fact that a division of labor is forming between incorporated local subsidiaries and their head offices in Japan. From the perspective of equity contribution, Japanese-affiliated companies in Asia are more committed to local enterprises than are European or North American companies.

The Asian market will continue to grow in the future due to China's accession to the WTO and the formation of AFTA. To reduce costs and enhance access to local markets and the regional market in Asia, R&D and product development aimed at local Asian markets should be strengthened. At the same time, it is essential to nominate local staff who are more familiar with local conditions to the ranks of top management at a more frequent pace.

Conclusion