Analysis Of Japan's Direct Investment In China

Multinational corporations through direct investment not only to obtain the necessary means of production, bypassing customs barriers, and providing a convenient to around potential market, but also for the host country, has brought capital, advanced technology and management experience and so on, promoting the economic development of the host country . As China's 20 years of reform and opening up, economic growth is rapid, coupled with China joined the WTO in 2002, also accelerated convergence of domestic market and the international market, which further improved our investment environment and the rule of law to more perfect, more and more international capital invest into our country. Japan is the world's largest country for investment, and its foreign direct investment around the world in various major countries and regions, as well as is the main foreign investment country of china. Since the beginning of the Japanese direct investment in China, many well-known Japanese multinational corporations, have been investing in China, and have been achieving great success. By the end of 2006, the Japanese investment in China was a total of 37,714 projects, and the actual investment amounted to 57.97 billion US dollars, second only to Hong Kong Special Administrative Region to become the second largest country for investment in China.Based on the theory of international direct investment, this paper introduced the development process and main characteristics and specific strategies and major business strategies the of the Japanese direct investment in China, analyzed the impact and the existing main problems of the Japanese direct investment in China, to better for China's utilization of foreign capital, in light of these problems, the corresponding measures.This paper is divided into four parts:The first part addressed the international direct investment theory on the system. The main contents include the connotation of international direct investment and international investment theory. These theories include the dominance theory of Hymer, the product life cycle theory of Vernon, the island-marginal production expansion theory of Kiyoshi Kojima, the internal theory of Buckley and Casson, and the international production compromise theory of Dunning.The second part introduced the development process and main features of Japanese direct investment in China. The Japanese direct investment in China is broadly divided into five stages. The first stage, from 1979 to 1983, is the exploratory stage, at this stage, Japanese direct investment in relatively level, investment projects is few, and scale is very small. The second stage, from 1984 to 1990, is the growing and development stage, the amount and projects of investment increased gradually, which laid the foundation of the rapid growth of the third stage. The third stage is from 1991 to 1995, because the accumulation and development of the former section, and domestic and international economic impact and role of Japan, Japanese direct investment in China reached a climax at this stage, investment projects soared, investment scale expanded rapidly. For the past few years, the projects and the amount of investment increased over 35 per cent each. The fourth stage is from 1996 to 2001, because of the financial crisis in Southeast Asia and so on, Japanese direct investment in China showed a downward trend. The fifth stage is from 2002 to date, Japan's direct investment is showing a situation of high-speed growth. This part also introduced four main features of Japanese direct investment in China. First, the single-value of Japanese direct investment is greater, and the availability of funds rate is higher, it can be seen that the quality and credibility of Japanese direct investment is higher. Second, from the regional investment, the Japanese enterprises in China are mainly concentrated in the economic development center of the Yangtze River Delta, Pearl River Delta and the Bohai-rim regions, but the Japanese enterprises is much less. Third, from the investment industry, Japanese direct investment in China mainly concentrated in the manufacturing sector, accounting for 75 per cent of the total investment, with China's accession to the WTO, the commercial, financial and insurance industry is opening up, so the investment proportion of the non-manufacturing sector is increased. From an investment perspective of the industrial structure, in the manufacturing sector, Japan mainly invested in capital-intensive manufacturing industry, in the non-manufacturing sector, Japan mainly invested in the financial and insurance. Fourth, from the main body of investment, beginning, Japanese direct investment mainly included small and medium-sized enterprises, through the development, now mainly also included large and medium-sized enterprises and multinational corporations, which is going to group. At the same time, the ways of investment are more diversified, not only had joint venture, cooperation, but also had mergers and acquisitions.The third part introduced the strategic and business strategies of Japanese direct investment in China. At different periods of Japanese direct investment in China, Japan implemented different investment strategies. Initially, Japan has adopted the combining international resources strategy, that is, with its own technology, management, and other areas, take advantage of China's cheap labor to produce high quality and low price products with international competitiveness, and then resell most to the domestic or foreign exports, only a small number of suppliers to the Chinese market. By the 1990s, Japan began to introduce the market-oriented strategy, using China's cheap labor at the same time, beginning to pay attention to the Chinese market, more and more emphasis on the opening of China's market, that is, to China as an important sales market and achieving local production , and local sales. With the guidance of this strategy, Japanese enterprises in China to take a number of successful business strategies, we should learn from and study, including the product differentiation strategy to Identify the target market, technical conservative strategy to protect the superiority of their products, the advertising publicity strategy to promote the sale of their products and the localization strategy to make full use of local resources.The fourth part analyzes the role and the existing problems of Japanese direct investment in China, and the corresponding measures to deal with these problems. Japanese direct investment in the promotion of China's reform and opening up and developing the market economy, promote the development of China's economy has played an important role. First, the Japanese direct investment in China has eased the problem of insufficient funds for construction of China. Second, with the establishment of Japanese enterprises in China continues to increase, growing employment opportunities, to alleviate the country's employment surplus has played an important role. Third, the Japanese direct investment in China has promoted the expansion of China's exports and the upgrading of the structure of trade. Fourth, the Japanese direct investment in China has promoted the upgrading of the industrial structure in China. Fifth, the Japanese direct investment in China has promoted the modernization of China's enterprises. The main problems of the Japanese direct investment in China include: First of all, compared with other countries, the proportion and the scale of the Japanese direct investment in China is smaller. Second, the Japanese direct investment in the region is too concentrated, industrial investment imbalance, to a certain extent, aggravated China's non-balanced regional economic development, and expanded our enterprise structure deviation. Third, the Japanese direct investment in China is relatively low level in technology transfer. Finally, the hollowing out of Japanese industry and the China threat theory problem is becoming increasingly serious. To solve these problems, China should further improve the investment environment in China, so as to enhance Japan's investment proportion and quality; China should use appropriate policies and means, to guide and encourage the Japanese direct investment in the region and the industrial structure to the direction of balance development; China should actively formulate policies and regulations, to improve technology content of the Japanese direct investment; China should be clearly understand the hollowing out of Japanese industry and the real of China threat theory. In short, we should be combined with China's actual conditions and economic development laws, making more efforts to attract the Japanese direct investment, improve the use of the Japanese direct investment in the level and efficiency, so as to promote China's economy to a faster, and better direction and further increase the attractiveness of Japanese direct investment, improve the use of Japan's direct investment in the level and efficiency, so as to promote China's economy to develop faster and better.