THE EVOLUTION OF A JAPANESE SUBSIDIARY IN THE UK

Lewis COMBSTOCK (Nittan (UK) Ltd)
Hosein PIRANFAR (University of East London)

Japanese Foreign Direct Investment has largely followed the principles of the mainstream FDI theories in particular those of the eclectic theory, which emphasizes Ownership of higher technology, Internalisation of production, and, exploitation of Local advantages such as cheap labour (OLI). The upsurge of investment since the Mid-1980s, however, has overstepped many of these principles. This flood of FDI is variously attributed to the particular circumstances of the Japanese economy such as higher value of the Yen, lower interest rates at home, overproduction, empire-building efforts at the Eastern wing of the Triad, and so on. These special features have led many researchers to relate the Japanese FDI only to some other Macroeconomic elements of the Japanese economy such as trade, GNP, domestic demand etc., while other FDI economists have attempted to relate it to the globalisation process in which Japan is a big player. In explaining the special character of the Japanese FDI, researchers with a business-economic slant, tend to gravitate to the following issues: export/domestic sales proportions, profit retention/ repatriation, HQ/subsidiary relationships, the role of domestic input, technology, strategy, culture, quality, and so on. Some valuable large-scale studies (though in dire need of updating) exist that deal with these issues. These are of course largely based on 'arms-length' research techniques of phone-calls, letters, and selective interviews. Without downgrading the value of these findings, it was felt that they could be beneficial to contrast these findings against the real life of a Japanese subsidiary in Britain. The company is one of the oldest cases of Japanese direct investment anywhere in the world. Its emergence as a Greenfield investment and survival is quite unique and compares to the flood of subsidiaries and joint stock companies that came to life during the pre-crisis optimism. With the help of an R&D-oriented sister-company in Sweden, and a vigorous pursuit of quality, the old entity in Old Woking is hobbling on towards the 21st century faced with many challenges. We intend to provide a hands-on business-economic view of the company and its future in Europe as a building block for FDI economists.