Partners for the China Circle? The Asian Production Networks of Japanese Electronics Firms
68 Pages Posted: 4 Apr 1998
Date Written: March 1997
The focus of this paper is on the evolution of international production by Japanese electronics firms. In the first two parts, I trace the development of Japanese production networks in Asia through three different periods. Each of these periods reflects fundamentally different strategic rationales for engaging in Asian production activities and hence gives rise to very different incarnations of Japanese production networks. Part I deals with the period of domestic market orientation which lasted roughly until the early 1980s, and with the shift to export platform production which has gathered momentum especially after 1986. I show that Japanese production networks have started out with a loose, locally embedded structure during the period of domestic-oriented production. This dramatically changed, once the focus shifted to export platform production, which has led to the establishment of highly centralized governance structures and very limited local roots. A new stage is reached in this zig-zag movement during the early 1990s. Part II deals with recent developments since 1991, the year of the "bursting of the bubble economy" in Japan. The pendulum now swings back again toward decentralization and local embeddedness. I analyze four sets of objectives that have guided this reorganization of Japanese Asian production networks: a regionalization of procurement; the penetration of Asia's contested growth markets; attempts to harness the region's improved capabilities, and a shift to more decentralized governance structures. Some possible implications for local capability formation are discussed in Part III. I first describe the regional specialization that is now beginning to emerge for Japanese production networks in Asia, with particular reference to the role of China. I conclude with a brief discussion of new opportunities and challenges that are likely to emerge for Taiwanese electronics firms.
JEL Classification: L11, L63
Suggested Citation: Suggested Citation