The evolution of Japanese business networks in ASEAN countries since the 1960s

International audienceOur study relies on micro-data obtained from the Toyo Keizai (TKZ) annual survey for analyzing the characteristics and evolution of network structures among Japanese manufacturing overseas subsidiaries since the 1960s. We focus on five ASEAN countries -- Indonesia, Malaysia, the Philippines, Singapore, and Thailand -- that have been among the main recipients of Japanese foreign direct investment since the 1960s, along with Hong Kong, Taiwan, and the United States (and China from the 1980s). The aim of our study is to assess to what extent the Japanese business network structures in ASEAN countries replicated network structures existing in Japan in the same period, and evolved in the same manner. The TKZ database reports micro-data for several thousands Japanese overseas subsidiaries, either wholly owned companies or joint ventures with local partners. Available information enables identifying Japanese and non-Japanese shareholders, and the percentage of paid-up capital owned by each firm. Local partner companies were almost exclusively owned and operated by ethnic Chinese family-based networks (see for instance Suehiro (1992) on postwar Thailand). Ethnic Chinese business networks, initially specialized in trade, finance, and commodity processing, diversified their activities in the postwar period and played a major role in the development of the manufacturing sector in these ASEAN countries since the 1960s. The Chinese diaspora in ASEAN countries mainly originates from late 19th and early 20th century migrations from Guangdong and Fujian provinces. Therefore, we do not expect possible differences in the role of local partners of Japanese networks to be influenced by local cultural values but rather by local conditions, in particular ethnic tensions, political unrest, and sub-optimal institutions; and, in the case of the Philippines, national policies discouraging Japanese investment (Bassino and Williamson 2015). The motivation for comparing Japanese networks in ASEAN countries and in Japan is related to one of the most hotly disputed issues in postwar Japan business history, namely the strength of postwar linkages between companies that belonged to one of the prewar conglomerates owned by kinship networks (i.e. zaibatsu such as Mitsui, Mitsubishi, Sumitomo, and Yasuda, dissolved in 1946 upon request of the U.S. occupation authorities). The major part of the academic community in the fields of management and industrial organization considers that the links between former zaibatsu companies remain strong in Japan during the postwar period and can be identified through information on main-bank, cross-ownership, and transactions (e.g. Gerlach 1992; Aoki and Saxonhouse 2000). This stream of literature also argues that the reconstitution of zaibatsu as so-called “horizontal keiretsu” (literally, keiretsu means “economic line-ups”) in the 1950s and their persistence in the following decades relied on strong non-kinship interpersonal relationships among managers of the companies. Miwa and Ramseyer (Miwa and Ramseyer 2002; Ramseyer 2006) challenge this claim that they describe as an ideological construct devised by Japanese Marxists in the 1950s, later adopted by the Dodwell, a marketing company, and finally by non-Marxist scholars. They argue that the empirical evidence supporting the keiretsu hypothesis is weak. Our study tests the keiretsu hypothesis using data for ASEAN countries

India: A New Player in Asian Production Networks?, Studies in Trade and Investment 75

Chapter I of this study presents a brief review of the appearance and expansion of the Asian IPN phenomenon, followed by a literature survey that explores key drivers of this phenomenon from theoretical perspectives. Theories point to important conditions that countries must meet in order to be successfully integrated into IPNs. These conditions highlight policy implications for creating trade and investment climates that are favourable to IPN development.production network, fragmentation of production, Asia, value chain, India manufacturing sector, China, India, offshoring, MNCs, FDI, Asian IPN

Changing Commercial Policy in Japan During 1985-2010

In this paper we examine the changing nature of Japan's commercial policy over the last 25 years while reviewing Japan's changing structure of trade, FDI and economy that underlay policy changes. We argue that until the late 1990s Japan adopted a two-track approach of relying on multilateral liberalization under the GATT/WTO and open regionalism under Asia-Pacific Economic Cooperation (APEC) on the one hand and on the bilateral trade relationship with the US on the other. Although the Japan-US bilateralism sometimes resulted in "managed trade" and encountered negative perceptions of the US approach in Japan, overall, it had a positive impact on the Japanese economy in opening domestic markets through various reforms and deregulation measures. Japan's more recent commercial policy focuses on bilateral and plurilateral economic partnership agreements particularly with-but not limited to-East Asian economies. We argue that agricultural sector liberalization is key to the further integration of Japan with the Asian and global economies.japan commercial policy; economy; trade; gatt; wto; fta

Foundations of Collective Action in Asia: Theory and Practice of Regional Cooperation

This paper argues that the collective action in Asia by its regional organizations has historically suffered from a “capability–legitimacy gap”: a disjuncture between the capability (in terms of material resources) of major Asian powers to lead regional cooperation on the one hand and their political legitimacy and will as regional leaders on the other. Successful collective action requires leadership with both capability (as suggested by rationalist theories) and legitimacy (as suggested by constructivist approaches). A central point of the paper is that the putative or aspiring leaders of Asian regionalism throughout the post-war period never had both.asian regionalism; regional cooperation; asian regional cooperation

Industrial competitiveness of the auto parts industries in four large Asian countries : the role of government policy in a challenging international environment

Rationalization and stabilization following the Asian financial crisis of the late 1990s combined with the expansion and liberalization of regional and global trade to create significant parts industries in China, Indonesia, and the Republic of Korea. Conventional policies of stabilization and liberalization, however, cannot fully explain growth patterns. Japan and Korea grewinto major players before liberalizing trade and investment, while even after extensive liberalization Indonesia has yet to move from extensive to intensive growth. These anomalies suggest that to explain success in the auto parts industry we need to move beyond liberalization to look at policies and institutions promoting economies of scale, skill formation, quality upgrading, supplier-linkage cooperation, and innovation. In Japan, the regional and global leader, innovative assemblers led industrial development and supported key suppliers, but the government also supported diffusion of quality control techniques and new technology to small and medium enterprises, and encouraged stable employment among core employees. Korea remains weaker on both small and medium enterprise and employment fronts, but government-encouraged consolidation around a small number of business groups, an extended period of protection, and support for export promotion led to economies of scale. Liberalization of foreign investment after the financial crisis helped ameliorate the excessive statism of earlier policies and strengthened the parts industry. In China, liberalization for WTO entry, rapid expansion in demand, and strong support by local governments encouraged a wave of foreign investment in both assembly and parts. In contrast, institutional weaknesses continue to constrain development opportunities in Indonesia.Technology Industry,Economic Theory&Research,Water and Industry,Markets and Market Access,Non Bank Financial Institutions

Monetary regionalism: regional integration without financial crises

The financial crises of the late 1990s have marked a watershed for the global economy and for regionalism. Prior to these crises, deregulation and liberalisation, in particular of financial markets, enjoyed widespread support. On the other hand, regional integration was aimed at improving conditions for regional trade and was based on Bela Balassa’s forty year old theory of regional integration. At the beginning of the 21st century, the theoretical approach to regional integration will have to be a different one. Regionalism will have to offer enhanced protection against financial crises, whereas trade liberalisation in an era of rapid trade liberalisation both offers fewer benefits and may be too complicated to implement due to high administrative costs associated in particular with free trade areas. The aim of this paper is to provide a theoretical framework for the emerging new monetary regionalism. Regions that wish to strengthen their co-operation in monetary and financial affairs today have the option of regionalism without trade agreements. East Asia is the most likely candidate for the implementation of monetary regionalism, also because East Asian policy makers continue to be frustrated with the lack of progress in the IMF’s reform process

Regional and World-Wide Dimensions of Globalization

Since the Second World War, western governments have implemented trade liberalisation policies which have been very successful and have spread across the rest of the globe. However, some countries have remained outside this general movement because of national policies aimed at self-reliance, or because of the debt crisis, or falling commodity prices, the combination of which has reduced the purchasing power of developing countries, with the exception of those in East Asia. The degree of internationalisation has also varied across sectors. Trade is most extensive in electronic, textile and petroleum products, while other products (cement, food, electricity, domestic and public services) are, by their very nature, more difficult to trade. However, even in these sectors there has been a marked trend towards internationalisation as a result of deregulation and direct investment.international integration; Globalization; international trade