Research On Support Mechanisms For Japanese SMEs' FDI

Japanese economy almost had stagnated after the World Warâ…¡,While Japan has become one of the economic power sin the world. There is no doubt that the development of Japanese Foreign Direct Investment(FDI) gives rise to Japan's economic recovery and rising, while the FDI of Japanese Small and Medium-sided Enterprises(SMEs) has developed fast which is a salient feature of Japanese FDI. How could the SMEs beat its peersin the international market? For one thing, Japanese SMEs have the irown strengths; foranother, the Japanese government's support mechanisms for SMEs'FDI have reduced the burden on SMEs, cleared away obstacles to FDI by SMEs and to, alarge extent, promoted FDI by SMEs. This paperisd ivided into four parts to analyze the Japanese government's support mechanisms for SMEs'FDI.The first part described the basic situation of SMEs and FDI, mainly including:(â…°) the concept of SMEs and FDI;(â…±) the motives of SMEs to invest overseas;(â…²) the process of the SMEs'FDI and the feature so fJapaneseFDI;(â…³) the reasons for the Japanese government supporting SMEs'FDI.As Japan's economy has recovered and developed rapidly after World Warâ…¡, the development of Japanese FDI has accelerated. In the mid-1980s, Japan's FDI surpassed the USA's, Japan has become the world's largest country who developed in foreign countries. SMEs'FDI is an important component of Japanese FDI, and SMEs'FDI have it sown characteristics. The motives of SMEs'FDI is as below:(â…°) Japan's basic conditions of small size, lack of resource and shortage of labor;(â…±) the special relationship between large enterprises and SMEs;(â…²) some international factors (such as trade friction, fluctuations in the exchange rate, etc.). Generally speaking, the reare two main reasons why the Japanese government supported the FDI of SMEs.(â…°) From the perspective of macro-economic development in Japan, the development of SMEs'FDI could stimulate Japan's industrial upgrading and enhance the international competitiveness of Japanese SMEs. When foreign countries confined the imports from Japan, Japanese enterprises could use FDI to replace exports as to benefit, so FDI is beneficial to the overall development of the Japanese economy.(â…±) From the strategic point of view, Japan develops FDI in the world, especially in Asian countries, will help strengthen the relationships between Japan and other countries and also will strengthen Japan's constraining role in Asian countries. Development of FDI will do well to the formation and consolidation of Japan's international status.In the second part of this paper, it discussed the support me chanisms of Japanese government for SMEs'FDI, mainly including:(â…°) the support mechanisms of Japanese government for SMEs;(â…±) the support mechanisms of Japanese government for SMEs'FDI.Japanese government always made and implemented consistent policy to support SMEs, and government's support policy for SMEs is changing along with the Japanese economic situation. It made SMEs develop fast and laida foundation for SMEs to enter the international market. A series of policies have reduced the burden on overseas-invested SMEs, provided adequate protection to overseas-invested SMEs and,to alarge extent, encouraged the development of SMEs'FDI.Government support include legal support,financing support,credit guarantee support,financial and taxation support and service support. Basically, it covers every aspect SMEs encounter when they invest in foreign countries.The third part analyzes the effect and the problems of the support mechanisms for SMEs, mainly including:(â…°) the effect of the support mechanisms for SMEs;(â…±) the problems of the support mechanisms for SMEs.Because government's support policy for SMEs has being changed along with the Japanese economic situation, Japan's SMEs policy and the development of Japanese SMEs is related. Everything has two aspects; there are many problems in the Japan's SMEs support mechanisms.The forth part suggests how to build the support mechanisms in China, mainly including:(â…°) the situation and the develop trend of Chinese SMEs'FDI;(â…±) how to build the support mechanism of China through learning from Japan.After reform and opening up in china, there strictions against FDI have gradually weakened. Party Central Committee established the"goingout"strategy in 2000; in 2001 the"goingout"strategy has been included in the"10thFive-Year"pleasant important recommendation. China's FDI develop rapidly these years. In 2005 it amounted to 12.26 billion dollars, increased 123%. It can be said that the prospects of China's FDI is bright. According to the specific circumstances of China's FDI, China should strengthen the support mechanisms in law,financing,credit guarantee,financial and tax and services through learning from Japan. Chinese government should promote the development of SMEs'FDI actively.