Corporate Links and Foreign Direct Investment in Asia and the Pacific Corporate Links and Foreign Direct InvestiDent in Asia and the Pacific edited by Edward K.Y Chen and Peter Drysdale ~ ~ ~~o~~~~~i~G~oup New York London in association with The Pacific Trade and Development Conference Secretariat The Australian National University Centre of Asian Studies, The University of Hong Kong First published 1995 by Westview Press in association with The Pacific Trade and Development Conference Secretariat The Australian National University Published 2018 by Routledge 711 Third Avenue, New York, NY 10017, USA Park Square, Milton Park, Abingdon, Oxon OX14 4RN Routledge is an imprint of the Taylor & Francis Group, an informa business Copyright© 1995, 2002 Taylor & Francis All rights reserved No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers Notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe Copy edited by Beth Thomson Index by Suzanne Ridley Typeset by Minnie Reis ISBN 13: 978-0-8133-8973-8 (pbk) Contents - Tables Figures Participants Preface vii X xii XVll Introduction and overview H adi Soesastro Growth and decline in multinational enterprises: from equilibrium models to turnover processes Richard E Caves The interdependence of trade and investment in the Pacific Peter A Petri 29 Subregional economic integration: Hong Kong, Taiwan, South China and beyond Yun- Wing Sung 56 Chinese capitalism in Thailand: embedded networks and industrial structure Gary G Hamilton and Tony Waters 87 On the causes of low levels of FDI in Japan Ryuhei Wakasugi Japan's low levels of inward direct investment: causes, consequences and remedies Mark Mason v 112 129 CoRPORATE LINKS AND FoREIGN DIRECT INVESTMENT Multinational corporations and technology transfer in Penang and Guadalajara Juan J Palacios 153 A study of the operations of Japanese firms in Asia: the electrical machinery industry Motoshige Itoh and Jun Shibata 187 10 Technological change, foreign investment and the new strategic thrust of Japanese firms in the Asia Pacific Denis Fred Simon and Yongwook Jun 203 11 The international procurement and sales behaviour of multinational enterprises Chia Siow Yue 227 12 Direct investment in low-wage and high-wage countries: the case of Taiwan Tain-Jy Chen, Ying-Hua Ku and Meng-Chun Liu 262 13 Summary of discussion Gordon de Brouwer Index 275 290 vi Tables Table 3.1 Table Table Table Table 3.2 3.3 3.4 3.5 Table 3.6 Table 3.7 Table 3.8 Table 3.9 Table 3.10 Table 3.11 Table 3.12 Table 3.13 Table 4.1 Table 4.2 Table 4.3 Table 4.4 Table 4.5 Measures of regional interdependence (two-way trade), 1938-92 FDI inflows, 1971-92 East Asian FDI stocks, 1988-92 Recent changes in FDI approvals, 1991-93 Distribution of inward foreign investment stocks by source, 1980-92 Distribution of inward FDI stocks Effects of foreign production on trade Sales distribution of Asian affiliates of Japanese and US firms Sales distribution of Asian manufacturing affiliates of Japanese firms, 1988-92 Definitions and sources of variables Determinants of trade/GOP ratios, 1988-90 Determinants of inward FDI/GDP ratios, 1988-90 Correlation of external linkages and protection Basic economic indicators for Greater South China, 1992 Contracted FDI in China by source country, 1979-92 Hong Kong's trade involving outward processing operations in China, 1989-93 Values, growth rates and market shares of Hong Kong's exports, 1978 and 1993 Exports of Hong Kong firms operating in Hong Kong and Guangdong by commodity, 1993 Vll 32 35 36 37 38 39 43 45 45 47 48 49 50 57 62 68 71 73 CoRPORATELINKs AND FoREIGN DJREcr INvEsTMENT Table 4.6 Table 4.7 Table 6.1 Table 6.2 Table 6.3 Table 7.1 Table 7.2 Table 7.3 Table Table Table Table 8.1 8.2 8.3 8.4 Table 8.5 Table 8.6 Table 8.7 Table 9.1 Table 9.2 Table 9.3 Table 10.1 Table 10.2 Table 11.1 Table 11.2 Table 11.3 Table 11.4 Taiwan's exports to Hong Kong and China, 1988-93 Taiwan's 'direct' and indirect trade with China, 1986-93 Changes in market parameters in the United States and Japan,1975-91 Spearman's and Kendall's rank correlation coefficients Regression coefficients of explanatory variables Top 25 foreign-affiliated companies in Japan by reported income, 1992 US exports to majority American-owned affiliates as a percentage of affiliates' total sales, preliminary 1991 estimates US exports to majority American-owned affiliates in Japan as a percentage of affiliates' total sales, preliminary 1991 estimates Structure of Malaysia's electronics industry, 1986 and 1990 Growth of factories in Penang' s industrial estates, 1980-93 Distribution of factories in Penang' s industrial estates, 1993 Employment structure of electrical/electronics industry in Penang's industrial estates, 1993 Location of electronics factories in Penang' s industrial areas, 1992 Major electronics products manufactured in Penang, 1992 Concentration of major exporting companies by state, 1990 Distribution of foreign affiliates of the Japanese electrical machinery industry in Asia, 1993 Japan's exports to and imports from Malaysia of electrical machinery, 1985 and 1993 Export pattern for parts made in Malaysia and Singapore Location of Japanese FDI, 1988-92 Japanese firms manufacturing VCRs in the Pacific Rim Share of foreign affiliates in total exports of East Asian host countries Export ratios of foreign and local manufacturing firms in Singapore, 1991 Export ratios of foreign affiliates in selected East Asian host countries Measures taken by Japanese firms to cope with yen appreciation viii 77 78 119 121 124 134 144 145 157 158 159 161 161 163 172 189 197 199 214 217 230 231 232 236 TABLES Table 11.5 Role of trading affiliates of US MNEs in exports of US majority-owned affiliates in host countries, 1977, 1982, 1988 and 1989 Table 11.6 Purchases of Singaporean IPOs by source country and destination, 1992 Table 11.7 Purchases of Singaporean IPOs by origin of IPO, 1992 Table 11.8 Sales, inputs and intragroup transactions: a comparison of Japanese affiliates in the United States, the European Union, Asia and the NIBs, 1990 Table 11.9 Procurement and sales of Asian affiliates of Japanese firms, 1989 Table 11.10 Comparison of procurement and sales behaviour of Japanese and US affiliates, 1980 and 1990 Table 12.1 FDI by Taiwan's leading 674 firms, 1986-91 Table 12.2 FDI in high-wage and low-wage countries of Taiwan's leading674firms, 1986-91 Table 12.3 Single equation PROBIT estimates of FDI by Taiwanese firms Table 12.4 Bivariate PROBIT estimates of FDI Table 12.5 Effect of FDI on performance, 1986 and 1992 lX 242 245 245 250 251 256 264 265 268 270 271 CORPORATE LINKS AND FOREIGN DIRECT INVESTMENT Chinese subregional integration has important implications for policy Garnaut used the term 'market integration' to describe the market-driven integration process in China He contrasted this with government-driven processes such as the European Union and NAFTA, which he called 'institutional integration' According to Patrick, the market-driven process works and should be encouraged to continue to so The more flexible goods and factor markets are, the deeper and faster is the ability of the economy to adapt to change Garnaut agreed, saying that in response to a decline in domestic manufacturing and rising real wages, Hong Kong had been able to respecialise rapidly Kwan argued that the governments of more mature economies should distinguish more clearly between GOP and GNP and target the latter, including net factor income earned overseas The process of integration was also seen as carrying seeds of tension and conflict Simon and Chia both pointed to the deficiencies in the legal framework and conflict resolution mechanism in China This created problems for firms in Taiwan and Hong Kong, especially with respect to intellectual property rights and contract enforcement Sung noted that there had been many cases in which negotiations that initially took place in China were subsequently formalised in Hong Kong to ensure the rule of law Chi a observed that subregional integration may also lead to trade diversion from Hong Kong and Taiwan and to the hollowing out of domestic industry in these economies Garnaut noted that, except for the period between the 1949 communist revolution and the start of the Cultural Revolution, Overseas Chinese and their networks had not been regarded as a threat in their adopted countries He warned that the development of China may change this perception Some participants were doubtful about the wider policy relevance of Chinese subregional integration Moktar Tamin warned that, in general, experiences in one region are not readily emulated elsewhere because there is much that is not replicable over time or space Lee argued that the process of integration between Hong Kong and South China does not provide a primer for other countries because Hong Kong reverts to mainland Chinese control in 1997 and so does not negotiate and contract as a sovereign country Sung agreed that the policy implications of integration are not readily applied elsewhere if Hong Kong is to be regarded, not as an autonomous entity, but as the 'Manhattan' or regional headquarters of the Pearl River Delta region Chia stressed that Chinese subregional integration is of the South-South kind, and so cannot form a closed or exclusive system Dobson argued that this is true of East Asian integration in general, and that greater interdependence does not imply that either the Chinese subregion or East Asia is decoupling from the rest of the world; these economies will remain dependent on North American and European markets because of their high incomes and sophisticated consumer preferences In short, the specific policy implications of regional integration are limited to the economies directly involved In this respect, there was optimism about the future role of the Hong Kong economy The putative problem of the de-industrialisation and hollowing out of the Hong Kong economy would become an internal Chinese issue after Hong Kong's 286 SUMMARY OF DISCUSSION economic and political integration with mainland China in 1997 Garnaut suggested that Hong Kong would in future play an increasingly important intermediary role in southern China, in step with the greater complexity and differentiation of production, goods, services and business structure in the region Kwan thought that rapid development in China would see Hong Kong threatening Singapore's position as the procurement centre of East Asia Steve Parker wondered whether the process of development in China could be described as a pushing back of the market frontier, from Hong Kong to Guangdong, and then in time further back into the mainland Garnaut thought that policy formulation would follow similar lines, speculating that the increasing integration of Hong Kong and Guangdong would progressively force the central authorities to relax controls in China as a whole and adopt more marketoriented policies He also wondered whether an easing of restrictions on labour movement would ease the decline oflocal manufacturing production and employment in Hong Kong, though he thought that high property prices might prevent this The optimism about Hong Kong's future was not shared equally by all Simon argued that the very diversity and heterogeneity of China limits the importance of Hong Kong both as an entry point to the mainland and as an intermediary Common language, family connections and contiguous borders may underpin the role of Hong Kong in Guangdong province, but would not extend much beyond southern China Indeed, he argued that in Beijing and Shanghai, for example, there is resistance to Hong Kong If the bulk of the penetration of Guangdong by Hong Kong is by small and medium sized firms for whom cultural affinity is important- as discussants thought it may be- then one would expect less penetration of the rest of mainland China to come from Hong Kong What, then, are the implications of Chinese subregional integration for growth and development in the Asian region? The question is important in two respects In the first place, the development of China, with its huge population, carries with it the prospect of substantial export growth for both developed and developing East Asia Tamin, for example, reported that detailed micro analysis of Sino-Malaysian trade predicted growth in a variety of Malaysian exports as a consequence of China's development He also spoke of the new interaction in East Asia, whereby the NIEs and ASEAN had in turn become suppliers of FDI to China, as a welcome opportunity for deeper integration in East Asia Min Tang hailed the development of the Singapore Industrial Park in Suzhon City in eastern China as an example of ASEAN interaction with China and as a model for FDI in developing countries Singapore's experience in foreign investment promotion and regulations will be applied in the park This should help to attract multinational corporations to China by creating a familiar and secure environment It can also provide the Chinese government with a good example of how to administer investment arrangements Second, concern was expressed that the wave of investment into China may be occurring at the expense of investment and development in developing East Asia, particularly ASEAN countries To illustrate this, Kwan referred to a 1993 JETRO survey of the investment intentions of 625 Japanese firms in light of the severe yen 287 CoRPoRATE LINKS AND FoREIGN DIRECT INvESTMENT appreciation The striking and surprising result of the survey was that 60 per cent of investment by these firms was targeted for China (and about 15 per cent each for the European Union and the United States), with the general outcome holding for all industries regardless of factor intensity The implication is that Japanese investment in China is about to boom Kwan argued that the attractiveness of China lies not so much in its inexpensive labour and natural resources, but in its large population, rapid growth and huge potential domestic market, especially given the prospects for extended slow growth in mature markets This suggests that current events are not so much a diversion of investment from A SEAN as an independently motivated flow into China Conference participants were relatively sanguine about investment diversion and the unwinding of clusters in A SEAN Dobson reasoned that the unravelling of a cluster would be associated with actual disinvestment, such as had occurred in the US auto and electronics industries, but both she and Urata said that there was no evidence as yet of this occurring in East Asia Much more industry-specific study needs to be done before the hypothesis of diversion can be accepted, according to Dobson Chia said that there is limited evidence of investment diversion In the first place, the apparent decline in new investment into A SEAN occurred before the wave of new investment into China This downturn was associated with similar falls in investment in Japan and elsewhere, and was therefore more likely to be a cyclical phenomenon than a trend Second, the data quoted by Kwan refers only to new investment- investment yet to eventuate- and not toreinvestment, which remains relatively strong She also argued that ASEAN remains important as a platform for entry into China The scope for investment diversion is limited while the opportunities for investment and trade creation are considerable Moreover, Chia and Chen both noted that official Taiwanese policy favours investment in other parts of East Asia over investment in mainland China Pangestu commented on the significant problems encountered with data on foreign investment Taking Indonesia as the example, she noted that the apparent decline in FDI in 1993 had more to with the fact that data are lumpy and were 'artificially' boosted by three big projects in 1992 Jun suggested that the increased interest in China of Japanese business interests is explained by the Japanese 'pack' mentality and predicted that the bandwagon effect will be shortlived Pangestu and Chia welcomed competition from China as a discipline on ASEAN governments to implement market-conforming policy and to further liberalise domestic markets Chinese subregional integration was also discussed in the context of the potential for future conflict with competing business networks, especially those of Japan Japanese networks were characterised by Jun as being highly vertically integrated, subject to bunching and follow-the-leader behaviour, focused on bilateral networks, and motivated by market share and long-term profit Chinese networks were characterised by Hamilton as being family oriented, horizontally integrated and flexible, more amenable to multilateral networks, but concerned with maintaining control over key assets Simon queried whether both types of network could coexist over time in their present form, since they are not fully complementary Garnaut and Chia also 288 SUMMARY OF DISCUSSION noted that the development of China could create tension and unease in non-Chinese East Asia about ethnic Chinese networks Young wondered whether the emergence of China as an economic superpower would destabilise East Asia, notably by inducing political and economic friction between China and Japan Drysdale andY oung argued that it is imperative that regional and global arrangements and organisations remain open, and that China (and Taiwan) join the World Trade Organisation They saw the link between an open, non-discriminatory trade regime and welfare-enhancing FDI activity as being particularly important for the region A discriminatory or preferential approach to trade policy, with rules of origin and other problems, would erode both confidence and expanding regional integration Conclusion The discussion focused on the multinational firm as actor, and how the firm re-creates itself in the light of interaction with other firms and its changing environment Change and development are ever more rapid, and so the need to reappraise analysis and techniques is greater The discussants saw the area as rich with potential for further analysis, particularly with respect to microeconomic and industry developments, internal networks and parent-subsidiary dynamics, and the welfare implications of changes in business organisation and behaviour 289 Index - Advanced Micro Devices Export (AMD), company 166 advertising 17, 117, 142, 155 AFT A see ASEAN Free Trade Area agriculture 75, 138 see also food air conditioners 195, 200, 216, 235 air transportation 65, 138 A1buro, Florian A xii, 283 Alcatel, company 244, 246 American Family Life Insurance, company 134 Amway International, company 134 Arbor Acres, company 104 Argentina 58 ASEAN countries 36, 162, 182, 212, 233 see also Brunei; Indonesia; Malaysia; Philippines; Thailand; Singapore and see foreign direct investment from ASEAN and Taiwan 75 GNP 87 growth triangles industrialisation 234 ASEAN Free Trade Area Asian Foundation xvii Asia Trust group 102 Asian Development Bank xvii asset control 91 Association of South East Asian Nations see ASEAN countries AT&T, company 174, 175, 244 audio-visual equipment 193, 196, 197 see also tape recorders; television sets; VCRs Australia 130 automotive industry 5, 75, 87, 90, 119, 135, 137, 187, 190-2, 198 see also motorcycles aviation see air transportation Baht Economic Zone 58 Bangkok, Thailand 96 stock exchange 94 Bangkok Bank group 95, 99, 100, 101, 102-4, 106, 108n banking 65, 102, 107, 135, 138 Banyu Pharmaceutical, company 142 BASF, company 120 Bayer, company 131, 134 beer brewing 105, 106 Beijing, China 56, 83 Belgium 105 Bergsten, C Fred xii Berli Jucker, company 97 Bermuda 130 Bolland, Alan E xii, 276, 277 Brazil 130, 182 290 INDEX broadcasting 138 de Brouwer, Gordon vi, xii, 275 Brunei 1, 5, 58 building materials 75, 101 Burma see Myanmar Burroughs de Mexico, company 176 business networks 5-6, 89, 205, 247-9 business units 3-4, 9, 203-5 see also turnover Caballero-Anthony, Mely xvii Calafell, Javier Guzman xii calculators 195 Caltex Petroleum, company 134 Cambodia 58 cameras 215 Canada 130, 132, 143, 257 Canon, company 215 Capannelli, Giovanni xii, 279, 280 capital movements 3, 115, 138 capitalism 88-93, 101 Cargill, company 138 Carrier Corporation, company 135 cartels 18, 138, 139 Caves, Richard E v, xii, 3, 9, 275, 276, 281 Central Bank of Thailand 104 ceramics 124 Charoern Pokphand group 95, 100, 101, 104-5, 106, 107 Chau, Brian T.H xvi Chau, Lawrence L.C xii, xvii chemicals 39, 75, 124, 134, 232, 253, 264 Chen, Edward K.Y xii, xvii Chen, Po-Chih xii Chen, Tain-Jy vi, xii, 4, 262, 275 Cheng, Leonard xii, 278, 279 Cherokee Electr6nica, company 174 Cheung Kong, company 64 Chi a Ek Chor 104 Chia Seow Nooy 104, 108n Chi a Siow Yue vi, xii, 7, 227, 276 Chiaravanont, Dhanin 105 Chiaravanont, Sument 105 Chiaravanont family, Thailand 108n chickens 104, 106 China 6, 57, 212 see also Greater South China and Australia 84 and Canada 84 and France 84 and Germany 84 and Hong Kong 59, 60, 64-74 and Italy 84 and Japan 84, 189, 195, 216, 221, 235 and Singapore 84 and Taiwan 59, 60-1, 74-80, 83-5 and Thailand 97-9, 104, 106 and United Kingdom 84 and US 82, 84 business networks 247 capitalist China see Hong Kong; Taiwan Chaoan region 98 Dalian 221 domestic markets 82-3 exports 64, 66 foreign exchange controls 85 Hangzhou 221 industrialisation 234 opening of 59, 60 subregional integration 284-9 Chinese Academy of Sciences 216 Chu, Yun-peng xii Ciba-Geigy, company 120 Clarion (M), company 163-4 clothing 70, 73, 82 clustering 31 coal 133 Coca-Cola, company 131, 134, 136-7, 149n commerce 64, 135 commodity chains 89-91 communications 30, 173, 219-20 see also information technology Compaq, company 88 291 CoRPORATE LINKS AND FoREIGN DIRECT INVESTMENT Concrete Products and Aggregate, company 101 construction industry 74, 147 consumer welfare 8, 143 copyright see intellectual property, protection of corporate links 5, see also business networks creditworthiness Cremer, Rolf D xii Crown Property Bureau, Thailand 94, 95, 97, 99, 101-2, 106, 108n cultural factors 284-5 see also Overseas Chinese currencies 60 see also revaluation appreciation of yen 2, 118, 142, 188, 190, 197, 234, 236, 243 Daewoo, company 92, 181 DEC Corp., company 120 Dell Computers, company 90 Deng Xiaoping 64, 81, 82 deregulation 204 Direct Foreign Investment in Asia and the Pacific, book xvi Dobson, Wendy xiii, 276, 280 Drysdale, Peter xiii, xvii, 279, 281 EAGA, growth area East Asiatic Corporation 97 Eastman Kodak, company 135, 149n, 174 economic growth 88 China xvi, 30, 87 East Asia xvi, 2, 29 England 30 Hong Kong xvi Indonesia 87 Japan xvi, 30 Malaysia 87 Singapore xvi, 87 South Korea xvi Southeast Asia 87 Taiwan xvi, 93 Thailand 87 transmission of xvi, 51 electrical equipment 39, 229, 252 see also television sets; VCRs household 2, 34, 90, 193, 197 electrical machinery 5, 70, 73, 119, 124, 134, 187-201 electronics industry 8, 34, 39, 75, 87, 119, 137, 153, 156-81, 232, 234, 254, 277 Encarnation, Dennis J xiii, 278, 280 Eng Hardware Engineering, company 168-9 English, H Edward xiii, 276 entrepot trade see trade - entrepot entry barriers 17-18, 115, 136 see also tariffs Epson, company 244 equilibrium models 9, 21 Esso Eastern, company 134 Europe and East Asia 32 European Union 60, 69, 71, 204, 230, 276 exchange rates 60, 117 FDI see foreign direct investment fibre optics Filippini, Carlo xiii, 279 financial services 74, 143, 145 fisheries 138 'flying geese' paradigm 3, 182, 212 food 124, 133, 264 for animals 104, 138 processing 104, 145, 232 Ford, company 135, 164, 196 Ford Foundation xvii foreign direct investment 6, 20, 34, 41-2, 48-51, 112-14, 153, 203, 229, 258-9, 266 see also portfolio investment and trade 280-1 cross-investment 292 INDEX from Asian NIEs 1, 34 from China 65 from Europe 1, 189 from Germany 131 from Hong Kong 3, 37-8, 39 from Japan 1, 3, 5, 43, 162, 188-90, 197, 200, 213, 214, 277 from NIEs 37 from Taiwan 3, 4, 56, 162, 262-3 from UK 131 from US 1, 129-48, 162, 189, 233 in A SEAN countries 1, 7, 34, 188, 200, 227 in China 1, 2, 35, 37, 40, 58, 61, 62, 82-3, 213, 221, 227 in Europe 200, 214 in France 114 in Fujian province 56 in Germany 130 in Guangdong province 58, 63 in Hong Kong 34, 35, 65, 214 in Indonesia 34, 35, 51, 213, 214 in Japan 7, 112-27, 129-48, 281 in Korea 35, 214, 232 in Malaysia 34, 35, 162, 188, 214 in NIEs 200, 227 in Philippines 35, 214 in Singapore 34, 35, 188, 232, 240 in Taiwan 188, 232, 262-74 in Thailand 35, 43, 188, 232 in UK 114, 130, 131 in US 112, 114, 130,200,214 in Vietnam 35, 227 increases in 1, 29, 35, 36, 112, 114 intraregional 1, 2, 29, 205 foreign exchange policies 46 forestry 138 Formosa Plastics, company 75, 283 France 130, 132, 143, 144 franchising 155 Frankenstein, John xiii Fudan University 216 Fujian, China 56, 57 Xiamen Special Economic Zone 57, 75 Fujitsu, company 205, 216, 218, 220, 244 Funai, company 217 The Gap, company 87, 91 Garnout, Ross xiii, 282, 283, 284, 285, 286, 287' 288 General Motors, company 135 Germany 66, 71, 130, 131, 132, 143, 144 globalisation 203, 207, 222, 239, 258 gold trading 102 government policies 30, 50, 222, 237, 281-3 see also foreign exchange policies; tariffs; taxation Greater South China 4, 56-64, 80-2, 85 see also Fujian; Guangdong; Hong Kong; Macau; Taiwan growth triangles 5, 58 see also Greater South China; SIJORI Guadalajara, Mexico 153, 170-81 Guadalajara Industrial Park 171 Guangdong, China 57, 82 see also Shantou, China autonomy 56 exports 56 Hong Kong investment in 4, 64, 67-72 land in 82 Shantou Special Economic Zone 56 Shenzhen zone 56, 60 Taiwanese investment in trade with Hong Kong 72 Zhuhai zone 56 Hamilton, Gary G v, xiii, 5, 87, 275 Harianto, Farid xiii, 277, 279 Heineken, company 105 Hewlett Packard, company 172, 174, 176, 178 Hewlett Packard (Pg), company 166-7 Hill, Hal xiii, 279 Hitachi, company 92, 183, 205, 215, 216, 293 CoRPORATE LINKS AND FoREIGN DIRECT INVESTMENT 217, 218, 220, 244 Hoechst, company 120 Holmes, Frank xiii, 283 Honda, company I 05 Hong Kong 57, 72 and Japan 189, 195, 218, 219 and Taiwan 80 and China 59, 60, 62, 66, 72, 81, 283, 284-7 Basic Law 81 exports 56, 69-72 GDP 56 labour importation 81 Legislative Council 81 Sino-British Agreement 60 stock exchange 64, 65 Huenemann, Ralph xiii Hutchison-Whampoa, company 64 Hyundai, company 92, 218 intellectual property, protection of 138 international procurement 227-59 intracorporate trade see trade - intrafirm Itoh, company 243 Itoh, Motoshige vi, xiii, 5, 187, 275 IBM, company 115, 120, 131, 134, 137, 172, 173, 174, 176, 183, 244 Imai, Ken'ichi import substitution 228 IMT, growth area income 47 growth 30 Indonesia I, 4, 5, 58, 234, 288 exports Japanese investment in 189, 196, 215 primary industries 39, 104 Thai investiment in I 04 industrial structure 88-93, 154, 212 inflation 47 information 117,126,140,155,204,207, 222 see also technology transfers information technology 209-11, 213 infrastructure 22, 30, 64, 87, 97, 173, 214, 243 insurance industry 65, 102, 135, 138 Intel, company 183, 206 Intel Malaysia, company 165-6 Japan 6, 182, 236 and China 66, 71, 235 and Malaysia 197 and Pacific Rim 213-17 and Southeast Asia 87, 187-201 and US 112, 144-8 deregulation 144-9 exports 44, 45, 197, 199-200, 218, 230, 233, 254 Foreign Capital Control Law 114, 116 Foreign Investment in Japan Development Corporation 138 Foreign Investment Law 136, 138 imports 196-7, 213, 235 in OECD 115 interfirm networks 92, 140, 146, 204, 213-23, 238, 247 investment in China 3, 62, 213, 214 investment in US I, 7, 130, 214 Large-Scale Retail Store Law 139, 140 Nagano province 190 Security Transactions Law 117 Shibushi 139 Japan Development Bank 126, 138 jewellery business 102 Jha, Satish C xiii JIT see Just-in-Time system Johor, Malaysia 5, 58 joint ventures 2, 19-20, 24n, 62, 155 China 82-83, 87 Mexico 175 Thai-Japan 4, 100 Thai-Taiwan Thai-US 100 Jun, Yongwook vi, xiii, 5, 278 Just-in-Time system 190, 241, 246 JVC, company 217 294 INDEX Kansai Federation of Economic Organisations xvii Kaosa-ard, Mingsarn xiii, 279, 280 Kentucky Fried Chicken, franchise 105 knitwear 75 Kohsaka, Akira xiii, 279 Koito Company 117 Kojima, Kiyoshi xiii, 277 Korea see also South Korea and Japan 189, 196, 214, 215 manufacturing 39 stock market 40 wages 268 Korea Development Institute xvii Korean Peninsula 58 Krause, Lawrence B xiii Krugman, Paul Ku, Ying-Hua vi, xiii, 262 Kueh, Y Y xiii Kuomintang, Taiwan 103 Kwan, C.H xiii L.A Gear, company 90 labour 5, 64, 80-1, 187 costs 20, 59, 82, 117, 160, 190, 277, 278 quality 87, 156 shortages 57, 216 Lamsam family, Thailand 99, 102 Laos 58 Lau, P.K xiii, 279, 280 Lee Tsao Yuan xiii, 280 Leung, Edward xiii Li, K W xiii liberalisation 204 licensing 6, 155, 207, 211 Lim Chong Eu 157 Lin, Justin xiv Liu, Meng-Chun vi, xiv, 262 Loh Kim Teow group 169 Louis Vuitton Molletier, company 134 Lucky Goldstar, company 92, 215, 218 MacDonald's Corp., company 134 Macau 56, 57, 79 machinery production 102, 124, 135, 214, 232 see also electrical machinery Makro, stores 105 Malaysia 1, 5, 58, 153, 156, 234 see also Penang Japanese in 189, 195, 196, 199, 215, 216 National Council for Scientific Research and Development 168 Outline Perspective Plan 157 stock market 40 manufacturing 207 American subsidiaries 233-4 components 7, 197-9 in China 52, 64, 67-72 in Hong Kong 65 in Japan 133, 145, 234, 251 in Southeast Asia 87, 215, 232 Japanese investment in 1, 3, 187-90, 214, 215, 234 mechatronics 207 reprogrammability 208 marine transportation see shipping marketing 155, 241-3 Marubeni, company 243 Mason, Mark v, xiv, 7, 129 Matsushita Electronics, company 134, 188, 190, 192-3, 194-5, 205, 216 Mazda, company 196 Mekong River Basin Project 58 Merck & Co., company 141 metal products 124, 133, 135, 232, 264 Mexico 58, 143, 153, 170, 183, 279 see also Guadalajara Alamo Industrial Zone 174 El Saito Industrial Corridor 171, 173, 175 Electronics and Communications Industry Chamber 172 295 CORPORATE LINKS AND FOREIGN DIRECT INVESTMENT Foreign Trade National Council 172 National Council for Sciences and Technology 178 microelectronics 207, 208, 213, 215, 218 Microsoft, company 183 microwave ovens 217 migration 60, 98 Military Bank, Thailand 94 mining 138, 243 Mitsubishi, company 215, 217, 244 Mitsubishi Heavy Industries, company 92 Mitsubishi Petrochemical, company 134 Mitsui, company 243 Miyairi Valve, company 117 MNEs see multinational enterprises Mobil Petroleum, company 134 Molteni, Corrado xiv Mongolia 58 Most Favoured Nation (MFN) status 82 motorcycles 105, 106 Motorola, company 149n, 172, 177, 178, 244 multinational enterprises 3, 4, 9-10, 1534, 156, 180, 203-5, 209, 222, 258, 275 American 13, 14-15, 16, 134, 137, 143, 230, 233, 244, 249 asset control 91 decline of 18-21 European 14, 16, 233, 244 growth of 13-17, 203, 218 in Mexico 170-1, 175, 179, 180 in Penang 158, 160, 162-8, 169, 180 in Southeast Asia 87, 227, 241-3 in Thailand 100 Japanese 14, 18, 194-6, 218, 230-1, 233, 244, 249 procurement policies 239-41, 244 Myanmar 58 NAFTA 171, 204 National Semiconductor, company 164 natural resources 228 NCR, company 134 NEC, company 172, 174, 205, 216, 21820, 244 Nestle, company 131, 134 Netherlands 130, 132 New World, company 64 newly industrialising economies see NIEs Nicholas, S.J xiv NIEs 36, 39, 100, 154, 182, 183, 212 see also Hong Kong; South Korea; Taiwan Nike, company 87, 90, 278 Nintendo, company 140 Northeast Asia 58 Nyaw, Mee-Kau xiv, 284, 285 OEM contracts see original equipment manufacturers office machines 73, 166 oil see petroleum industry Oki, company 244 Oreton, company 216 original equipment manufacturers (OEMs) 6, 90, 174,211, 234 Otis Elevator, company 135 Overseas Chinese 3, 6, 30, 53n, 59, 100, 103 and Shantou zone 56 entrepreneurs 88, 105, 107, 248 Pacific Plastics, company 102 Pacific Trade and Development Conference xvi, xvii, 3, 21, 275 PAFT AD see Pacific Trade and Development Conference Palacias, Juan J vi, xiv, 8, 153, 280 Pangestu, Mari xiv, 276, 278, 280 Parker, Steve xiv, 287 Patrick, Hugh xiv, 277, 279, 280, 281 Patten, Christopher xvi PCBs see printed circuit boards PDC see Penang Development Corporation Penang, Malaysia 153, 156-70 296 INDEX Bayan Lepas 158, 161, 162, 166 industrial estates 158-60, 180 Wellesley Province 160 Penang Development Corporation (PDC) 157-8, 168, 170 Penang Electronics, company 158 Penang International Education and Technology Centre 167 Penang Skills Development Centre 162, 167 Penang Strategic Development Plan 158 Penang Technoplex 167-8 Petri, Peter A v, xiv, 2, 6, 29, 275, 280 petrochemicals 102, 105 petroleum industry 116, 135, 138, 145, 243, 264 Pfizer, company 120 pharmaceuticals 120, 141 Philippines 1, 5, 58, 87, 104, 156, 189, 194 Philips, company 134 photocopiers 215 picture tubes 190 Pirie, Graeme xiv pollution control 237 portfolio investment 40 Portugal 104 poultry see chickens prawns see shrimp farming printed circuit boards (PCBs) 176, 192 printing and publishing 133 privatisation 204 production networks 8, 20, 89, 92, 190-4, 209-11, 229 see also Japan - interfirm networks productivity 11, 155-6 profitability 125, 276 property rights 65 protectionism 82, 83, 221 pulp and paper 102, 124, 133, 264 radios 197 Rank Xerox, company 131, 134 real estate 64, 65, 75, 135 Reebok, company 90 refrigerators 197, 198, 23 regionalisation 204 rental costs 117, 118 research and development 17, 23n, 120, 123, 154, 165, 179, 181-2, 207, 209, 212, 216, 237 resource allocation 3, 9, 204 resource development 243 revaluation of the yen 2, 34 see also currencies - appreciation of yen Riau, Indonesia 5, 58 Robert Bosch, company 165, 244 Rockefeller Brothers Fund xvii Rockefeller group 104 royalty payments 14, 120-2, 123, 124 Russian Far East 58 Sabah, Malaysia 58 Saha Union, company 100 Sahapathanapibul, company 100 sales networks 227-59 Salomon Bros, company 134 Samsung, company 216, 218 Sankyo Seike, company 117 Sanyo, company 195-6 Sarawak, Malaysia 58 securities industry 138 Seiko, company 244 Semiconductor Technology Centre, Mexico 177, 179 semiconductors 2, 34, 87, 156, 162, 170, 190, 197, 207, 213, 215, 218, 229, 235 service industries 84, 135, 243 Seven Eleven, company 105 Shanghai Jiaotong University, China 216 Shantou, China 102, 104, 107 Sharp Corporation 162, 217, 220 Shell Petroleum, company 134 Shibata, Jun vi, xiv, 5, 187, 280 shipping see also transportation 65, 138, 243 297 CoRPORATE LINKS AND FoREIGN DIRECT INvESTMENT Shizuki Electronics, company 174 Showa Shell Oil, company 134 shrimp farming 105 Siam Cement, company 97, 101-2, 107n Siam Commercial Bank 97, 99 Siam Fibre-Cement, company 101 Siam Iron and Steel, company 101 Siam Kraft Paper, company 102 Siam Kubota Diesel, company 102 Siam Motors, company 100 Siam Nawaloha Foundry, company 102 Siam Tyre, company 102 Siam Vidhaya group, Thailand 94 Siemens, company 173 Siemens de Mexico, company 176 Siemens Litronix Malaysia, company 164 SIJORI 5, 58 Sime Darby, company 97 Simon, Denis Fred vi, xiv, 5, 275, 278, 281 Singapore 1, 5, 58, 156, 189, 190, 195, 196, 199, 212, 214, 215, 231 foreign ownership 229-30, 231 international purchasing offices (IPOs) 243-7 Singapore Economic Development Board 240 Singapore Trade Development Board 247 Singer Sewing Machine, company 137 smuggling 60 Soesastro, Hadi v, xiv, Solvay, company 105 Sony, company 196, 217, 218, 244, 246 Sophonpanich, Chatri 103, 108n Sophonpanich, Chin 102-3, 108n Sophonpanich family, Thailand 99, 1024, 108n sound recording equipment 70, 73 South Korea 156, 212 exports 230, 232 interfirm networks 91 steel 134 stock markets 40, 51 strategic alliances Structural Impediments Initiatives (SII), talks 112, 116-17 Subainge, Devinda xiv subcontracting 6, 90, 155, 190, 192, 211, 238-41, 253 subregional economic zones see growth triangles Sun Hung Kai Properties, company 64 Sung, Yun-Wing v, xiv, xvii, 56, 284, 285, 286 Sweden 230 Switzerland 130, 132 Taiwan 57, 156, 212, 213, 215 and ASEAN countries 75 and China 59, 60-1, 62, 74-80, 83-5 and Japan 189, 194 exports 79, 230, 231, 266 GDP 56 interfirm networks 92-93 stock market 40 Thai investment in 104 Taiwan Council of Economic Planning and Development 263 Taiwan Institute of Economic Research xvii Taiwan Semiconductor Manufacturing, company 182, 215 Takahashi, Tomoko xiv Tamin, Moktar xiv Tandem Computers, company 174 Tang, Min xiv tape recorders 195 Target, company 87 tariffs 20, 7, 59 taxation 22, 126, 238 technological change 203-13, 221, 238, 278 technology transfers 7, 8, 83, 153-6, 167-70, 179, 180, 181, 204, 279-80 see also research and development Tecnopolis, Mexico 177 298 INDEX telecommunications 70, 73, 87, 105, 116, 135, 138, 162, 213, 215, 222 television sets 192, 196, 198, 200, 216, 217,235 Texas Instruments, company 115, 120, 131, 137, 149n textiles 2, 34, 39, 70, 73, 75, 82, 100, 124, 134, 232, 264, 265, 283 Thai Ceramic, company 101 Thai Farmer's Bank 100, 102 Thai Polyethylene, company 102 Thailand 1, 5, 58 Bowring Treaty 94 Chinese Chamber of Commerce 98 Chinese ownership in 93-102, 106 exports 56, 230, 231 financial sector 95 industrialisation 94-5, 99, 234 interfirm networks 93-105 Japanese investment in 189, 190, 194, 214 Ministry of Economic Affairs 103 monarchy 95-7, 101, 106 stock market 40, 94 Taiwanese investment trade with China 96 Thonburi, Thailand 102 Tokyo Chamber of Commerce xvii Tokyo Stock Exchange 142 Toshiba, company 183, 216, 217, 218, 220, 244 tourism 74, 75, 79, 81 Toyota, company 90, 92 toys 70, 73, 90, 139 Toys 'R' Us, company 139, 140 trade 9, 29, 41-51, 135, 145 costs 84 entrepot 65, 66, 74 extraregional 41 in services 72, 74, 145 imbalances interdependence 32-41 intrafirm 7, 19, 227-8, 229, 233, 234, 235-8, 255-8 intraindustry 7, 79 intraregional 32-4, 61, 229, 247 transshipments 76 transaction costs 3, 9, 21, 30, 218, 276 transport equipment 39, 124, 133, 264 transportation 30, 74, 116, 215 see also air transportation shipping costs 59, 187, 190 systems 87 travel goods 70, 73 Tsang, John Chun-Wah xiv Tulon de Mexico, company 174 Tumen River Area Development Project 58 Turkey 104 turnaround time 59 turnover 10-13, 21-2 Unisys, company 173, 176, 180 United Kingdom 130, 132, 143, 144 United States of America and China 66, 69, 82, 142 and Japan 1, 7, 112, 129-48, 243 Department of Commerce 143 East Asian investment in exports 145, 230, 254 investment in China 62 investment in East Asia 40, 242 investment in Japan 129-48, 243 manufacturing in Southeast Asia 87, 142 trade with Hong Kong 71 trade with East Asia 7, 32 University of Guadalajara, Mexico 177 University of Sains Malaysia 162, 167 Urata, Shujiro xiv, 276, 277, 278, 280 VCRs 5, 190-1, 195, 198, 216, 217, 235 Vicuna, Ricardo xiv Vietnam 58 299 CoRPORATE LINKS AND FoREIGN DIRECT INVESTMENT Vietnam War 88, 95 Wong-Kwong, Teresa xv Wu Rong-1 xv wage rates see labour - costs Wakasugi, Ryuhei v, xiv, 7, 112, 281 Wal-Mart, company 87, 91, 105 Wang, company 174, 176, 180 Wang, D.D xiv washing machines 197, 198 Waters, Tony v, xiv, 5, 87 Weber, Maria xv Wong, Anissa xv Wong, Terisa Y.C xvii Xerox, company 244, 246 Yakouleva, Eugenia xv Yakubovsky, Vladimir xv Yamazaki Mazak, company 214 Yamazawa, Ippei xv Youn&Soogil xv,281 Zhu Naixiao xv, 285 300 .. .Corporate Links and Foreign Direct Investment in Asia and the Pacific Corporate Links and Foreign Direct InvestiDent in Asia and the Pacific edited by Edward K.Y Chen and Peter Drysdale... has been foreign direct investment An earlier PAFTAD volume, Direct Foreign Investment in Asia and the Pacific, explored the role of foreign direct investment in Asia Pacific development and growth... behaviour in multinational corporate operations in the region For this reason, P AFT AD 21 chose to focus on corporate links and foreign direct investment in Asia and the Pacific as its central theme