Since the initiation of the open door and reform policy, China has experienced the rapid economic growth.
Introduction
Since the initiation of the open door and reform policy, China has experienced the rapid economic growth. During the period, China has drawn numerous worldwide foreign direct investments. For instance, since 1994, China has become the second largest foreign direct investment (FDI) absorber, only after the United State. In 1996 attracted more than 40 percent of the total FDI to the developing countries.1 According to the study of Alvin Y.So, the rapid economic growth of China in the past two decades has strong tie with the inflow of FDI, and the splendid achievement of China's economy has been contributed by FDI in the aspect of capital, technology and management, etc.2 Among those foreign countries which have invested in China, Japan, as the largest trade partner and the neighbour of China, covered a high ratio of direct investment in China. With the increasing investment, Japanese has become one of the most important investment partner of China, according to the statistics, in the years of 1993-5, and 1999, China was the largest direct investment absorber of Japan.3 Because of the economic giant position in the world and the remarkable reputation as advanced technology in the manufacturing sectors, Japanese direct investment is most attractive to China. Therefore, since the late 1970s, China has provided specific incentives for the Japanese investors. The Chinese leaders' tactic in seeking Japanese investment input reflects the two countries' industrial plan and their strategy in the economic development in East Asia. China's abundant natural resources and labour, combined with the capital and technology of Japan, have achieved strong cooperation.4
Taking into account of the significance of the investment from Japan in China, both in capital and in technology, a detailed study on the DIF from Japan will be made in the dissertation, with an aim to propose some suggestions in terms of attracting more investment, thus promote the economic growth in China. In Chapter One, I will do a general literature review on the Japanese Investment in China, covering the relative FDI theory in the aspect of translational motivation, entry mode and location. In Chapter Two, I will introduce the four stages of development of Japanese DFI in China, which have corresponded with the social and economic changes in China. The four stages are: Starting stage of Japanese investment in China (1979-1983); Period of small-scale investment of Japanese investment in China(1984-1990); Period of Large scale Japanese investment in China(1991-1995) and Adjusting stage of the Japanese investment in China (1996-2000). In Chapter Three, I will present a case study of the Japanese DFI in China - Dong-An Automotive Engine Manufacturing Co., Ltd I will introduce the objective and the subject of the study. Then I will discuss the case through the following five aspects: motivation, entry mode, investment obstacle, location and technology transfer. To conclude, during the past two decades, China has played a positive role in attracting Japanese investment, but there still exist obstacles and restrictions on the FDI inflow, which needs further development of open door policy and related legislations. In the long term view, with China's WTO entry, the investment environment of China will become more rational and perfect, which will attract more FDI inflow from Japan, thus promote the prosperity of Chinese economy.
Chapter One: Literature Review on FDI
There exist a series of theoretical perspectives on the utilization and pattern of FDI or the multinational enterprise activities (MNE). However, the following part will mainly concern the relatively important theories on the FDI motivations, entry mode and location choice.
1.1 Motivation
According to the theory of Behrman, he found the perfect competition theory, the motivations of MNE's activity can be divided in to four groups, which are: the resource seeking, the market seeking, efficiency seeking and strategic asset or capability seeking. The resource seeking is motivated by their need for cheaper resources including physical, human, technological or organisational resources. The market seeking motivated by prospects for growth and large market share, its aim is to establish presence in a new market before competitors or to provide the similar production and service as the competitors, such motivation belongs to those companies that seek to protect or exploit new markets. On the other hand, the efficiency seeking motivated by taking advantage of different factor endowments, economic systems, policies and market structures to concentrate production in a limited number of locations thus serve the service and production to other regions or countries. The strategic asset seeking is motivated by the long term strategy and tactic of MNE which aims to sustain and enhance their international competitiveness through the FDI.5 Different with the view of Behrman, Kindleberger built up his own theory about the "market imperfection model", the core idea of this model was transaction cost economics. As FDI, foreign investments of MNEs have to face some comparative disadvantages such as the language and cultural barriers, and local tasteless. The MNEs must guarantee their investment succeeding in the foreign country, therefore, in order to achieve the benefits, the foreign investment must have the comparative advantages in the host country and the benefits only can been gained when the advantages' benefits are bigger that the disadvantages' cost in the host country. Such kind of relation between the MNEs advantage and disadvantage is the true motivation of FDI.6
Furthermore, Buckley also explained the motivation of FDI in the view of economics, the reason for MNEs engaging in FDI arises from market failures stemming from the existence of transaction costs that make direct investment in subsidiaries more feasible than market contracting.7 Jaideep and Andrew highlighted the government policies as the important motivation for the FDI, they believe the government investment incentives provided favourable investment environment to the MNEs which meant the lower risk8. Also Robert emphasised on the importance of government leaders' support in the attraction of FDI, he used the open door policy of China to support his idea. 9
1.2 Entry mode
Four entry modes can be identified using the information reported in Kaigai Shinshutsu Kigyou Souran. These are wholly owned subsidiary, joint venture, acquisition and capital participation. A wholly owned subsidiary is a Greenfield operation in which the Japanese parent holds a 95 percent or greater ownership position in the subsidiary. A joint venture is also a Greenfield operation; however two partners each hold at least 5 percent of the subsidiary's equity. In joint venture, there may be multiple partners, from different country origins such as the host country, Japan or a third country. An acquisition is the purchase of an ownership position in an existing entity in the host country. It can be a complete or partial purchase. Capital participation can also be referred to as a plant expansion. It is a foreign entry mode by the expansion of an existing domestic operation as funded by the foreign investor.10 There exist various factors which may affect the mode for entering a foreign market, Gatignon and Anderson emphasised on certain product characteristics such as degree of differentiation, importance, age, and technological content;11 Root focused on the main characteristics which included size and resources, degree of diversification and corporate policies of certain enterprises;12 Baek and Kwok also highlighted the external environmental factors such as host country trade and investment restrictions, host country market size, host country geographic and cultural distance, and exchange rate fluctuations would also effect the entry mode choice of MNEs.13
1.3 Location
There are five determinants influencing FDI's choice of location.14 The most decisive determinant is the market-related factor. In theory, large landscape, which implies the huge market size behind it, of a targeted nation usually attracts more FDIs. The reason behind that is the scale economy and high revenue generation can be achieved in a relatively shorter term. Also, as Nachum put it, "(A) foreign investment history in a region is typically captured by the term agglomeration economies...Agglomeration economies refer to positive externalities that result from locating in close proximity to geographical clusters of industry".15 Interestingly, Japanese FDI seems to be particularly sensitive to agglomeration. Because of the lion's share of FDI is in the low-value-added manufacturing sector which means the cost of labour is a concern.16 In the light of this, "high wage rates and high unionization rates were often found to act as deterrents to FDI flows".17
Another factor affecting the choice of location is the transportation infrastructure of the local area. Studies have confirmed that "FDI was attracted to regions that had better transportation infrastructure".18 For the purpose of efficient operation, as members of manufacturing sector, those sales' channels, that is, via adequate roads, railways, ports and other facilities are decisive It should not be surprising the government policy such as taxes and promotional activities is another determinant, which support the idea that policy promotions will have a positive impact on the FDI flows. 19
All the factors mentioned above are operating relating issues, the newly conducted research based on the theory of firm heterogeneity has shown that there is another determinant of FDI in the choice of location, that is, the firms are prone to place differential valuations on a regional locational characteristics. Shaver and Flyer propose the idea that heterogeneity tends to be most prevalent among firms with weaker advantages.20 In a similar research context, Chung and Alcacer observed firms that had relatively low R&D intensities more likely to choose where there are more technical capabilities resided.21
Having known the theories on foreign investment, in the following chapter, I will describe the practical situation of the Japanese DFI in China, which has experienced four stages. More importantly, based on my study and research, I will give the reasons that have caused the characteristics of the stages, which is of practical significance for the later research on the Japanese FDI in China.
Chapter Two: Description of Japanese direct investment in China: four stages of development
Since the implementation of reform and opening-up policy in China in 1979, with further reform and the high-speed, though stable development of China's economy, the Japanese investment in China has kept increasing and has reached some scale. According to the statistics of China,22 the Japanese investment in China has experienced four periods during the two-decade development. Generally speaking, in the early 1980s China started its endeavour for promoting direct investment from Japan, however, in particular its investment in China's manufacturing sector did not pick up until early 1990s. The rapid growth of inflows actually began in 1991, and then peaked in 1995. Inflows from Japan during the period of 1996 to 2000 show a few prominent characteristics. The four periods will be talked about in detail in the following.
2.1. Starting stage of Japanese investment in China (1979-1983)
From 1979 to 1983, China's reform and opening-up policy just began, there were not enough ideological preparations for attracting foreign FDI, and there was not the mature social and economic environment. Therefore, during this time, most Japanese enterprises chose the wait-and-see attitude, which resulted in the small number of projects and capital attracted from Japan. During the period, according to China's statistics, the Japanese FDI in China was US$ 955 million, which covered 12.8 percent of the total foreign FDI in China, and it was much lower than the US$4320 million investment from Hong Kong and Macao.23 According to the statistics of Japan, the total Japanese FDI in China were involved with 25 projects of US$730 million, which just covered 0.16 percent of the total foreign FDI from Japan during the corresponding period24. At that time, Japanese FDI mainly focused on the non- manufacturing sectors, with 13 projects of US$ 530 million, which covered 52 percent of the total project sand 72.6 percent of the total capital investment. In the contrast, the manufacturing sector just covered 48 percent and 15.1 percent of the total respectively. Among the investment in the non-manufacturing sectors, the investment in the service industry occupied the highest ratio, which reached the US$ 320 million. Among the investment in the manufacturing sectors, the investment in the chemical industry occupied the highest ratio, which reached the US$ 7 million.25
Obviously, during the first stage of Japanese FDI inflow into China, the Japanese investment was both of small size and of small scope, which did not suit with the corresponding trade relation between China and Japan, since during the time business with Japan covered 25 percent of China's foreign trade. According to Liu Changli26, during the period, most of the Japanese enterprises still had strong misgiving about China's economical and political situation - as the result of the media control policy of Chinese government, it was extremely difficult for the Japanese companies to get the first-hand or even second-hand information about China and its development. All the information they could reach was from Chinese government or the communication through visiting, therefore, under the situation of lack of relative local information and knowledge, the investment process was full of risks and obstacles. 27
Furthermore, there was no clear guarantee in China about stability of the policy 'opening its door to the outside world', hence, even some enterprises decided to invest in China, they always preferred the non-manufacturing sectors, because compared with the manufacturing sector, the non-manufacturing sectors had lower risks and the invested capital could be reclaimed relatively easily.
2.2 Period of small-scale investment of Japanese investment in China(1984-1990)
After 1984, in order to attract more overseas companies to come to invest in China, the Chinese government deepened its reform and opening-up policy, with the establishment of the Special Economic Zone and fourteen Open Coastal Cities (OCCs), which were opened to FDI.28 Therefore, with the increasingly favorable investment environment, the Japanese FDI in China developed gradually. Only in 1984, the Japanese investment increased to 66 projects and US$114 million29, which were 12.2 and 37 times those of the previously year respectively. In 1987, the Japanese investment climbed to US$ 1226 million, which was 9.8 times than that in 1984. However, in 1990, the total Japanese investment in China was just US$349 million, which dropped 71.5 percent in contrast with 198730. The reasons for such a drastic decline of Japanese investment are closely related with the following two elements. First, there was the change of policy of Chinese government at the end of 1980s, with the aim to avoid the excessive economic development. Chinese government rearranged a series of economic policies to slow down the speed of economic development; therefore, some restrains were added to the entry of foreign capital31. Secondly, in 1989 was the Tian An Men Square Incident, which directly caused the social and political instabilities in China. To some extent, the economic environment was damaged; as the result of this political incident, not only Japanese investment was slowed down, but also all the foreign investments in China were prudential during the period32.
From 1984 to 1990, the total Japanese FDI in China were 832 projects of US$ 2748 million, and compared with the first stage mentioned above, both the capital and project quantity increased rapidly33. However, if we compare the average capital value per project in the two periods, there was no great change in the investment scale of Japanese FDI in China from 1979 to 1990. From 1979 to 1983, the average capital value per project of Japanese FDI in China mounted 2.7 million; from 1984 to 1990 the average capital value per project of Japanese FDI in China ...
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From 1984 to 1990, the total Japanese FDI in China were 832 projects of US$ 2748 million, and compared with the first stage mentioned above, both the capital and project quantity increased rapidly33. However, if we compare the average capital value per project in the two periods, there was no great change in the investment scale of Japanese FDI in China from 1979 to 1990. From 1979 to 1983, the average capital value per project of Japanese FDI in China mounted 2.7 million; from 1984 to 1990 the average capital value per project of Japanese FDI in China mounted 3.1 million.34 Therefore, these figures can, to some extent, reflect the number of Japanese investors and their investment, and indicated there was no great development of Japanese FDI in the aspect of the investment scale. During the period, the investments were US$ 20699 million from Hong Kong and Macao, and US$ 3555 million from America, 35 which were far more than the Japanese investment in China. In addition, during the corresponding period, Japanese FDI in China just covered 1.1 percent of its total foreign investment, which only occupied 8.9 percent of its total investment in Asia. Thus it can be seen, in this period, that the Japanese FDI in China did develop in some way, but the scale and the scope of the investment were still small36.
As to the content of the investment, in this period, the invested capital in the manufacturing sector was enhanced, which was US$ 705 million and covered 25 percent of the total Japanese FDI in China, but the investment preference during the first period, in the non-manufacturing sectors was not changed. From1984 to 1990, the investment in the non-manufacturing sector was US$1986 million, which covered 72.3 percent of the total Japanese investment in China, and still much higher than the investment in the manufacturing sector.37
Therefore, the Japanese industries did develop their investment in China, but the investment trend was still focusing on the non-manufacturing sector, especially on the service industry, which covered 25.6 percent of the total investment.38 According to the survey conducted by Chen Tianan, in 1989 and 1990, among the eighty-two Japanese enterprises with investment in China, fifty four belonged to the non-manufacturing sectors, and the investment value was just less than US$ 4 million, which accounted for 74.4 percent of the total. The average investment in each project was only US$ 1.5 million. Thus Chen Tianan concluded that there were few large scale investment projects, and most of the enterprises were of medium or small size39. Here, another Chinese economist Liu Changli provided his evaluation about the investment behaviour of Japanese automobile industry in China. In his opinion, during the period, Japan exported large numbers of automobiles per year to China and invested in the foreign countries such as America on a large scale. However, the Japanese FDI in China in the aspect of automobile were only 2 projects and the investment value just accounted for 200 million.40 Compared with the automobile FDI from Germany and America, it was obvious that the Japanese investment was behindhand. In addition, Liu Changli believes that in the period, the less investment in China's automobile industry by Japan was caused by China's dependence on the export of Japanese automobiles, and the mistake of Japanese automobile giants' strategy.41
2.3 Period of Large scale Japanese investment in China(1991-1995)
After 1991, with the rapid economic development and the further reform of the opening-up policy, there was a drastic change in the investment environment in China. Therefore, Japanese FDI in China experienced rapid development not only in the investment scale but also in the investment quality.42 In 1991, the Japanese FDI in China were 246 projects of US$ 579 billion, which increased 42.1 percent and 65.9 percent respectively compared with the previous year. Thereafter, the Japanese inflow kept the rapid growth, and in 1995, the Japanese FDI in China amounted to 770 projects of US$ 4473 billion. With the rapid growth, in 1993 the Japanese FDI in China has surpassed its FDI in the other Asian countries, and from 1993 to 1995, China always attracted the most FDI from Japan among the Asian countries. According to the statistics of table 1, from 1991 the emphasis of Japanese FDI has moved to the investment in manufacturing sector, while the growth of inflows into non-manufacturing sectors was not as impressive as that into manufacturing sector.43 In 1991, Japanese FDI in the manufacturing sector mounted 4.2 billion Yen, which surpassed the 3.11 billion Yen investment in the non-manufacturing sectors and covered 53.4 percent of the total Japanese FDI in China. From then on, the investment proportion in the manufacturing sector kept increasing, which reached its peak in 1995 with 3.368 trillion Yen. About the Japanese investment in the manufacturing sector, during this period, the investment in the electric industry gained the rapidest increase, which covered 20.9 percent of the total Japanese FDI in the corresponding period, which increased from 1.67 billion Yen in 1991 to 9.04 billion Yen in 1995, with the increase of 7.03 billion Yen. The other industries which received more investment were fibre industry and metal industry. In the aspect of non-manufacturing sector, the investment in the estate industry boasts the fastest increase, with 6.8 percent of the total Japanese FDI in the corresponding period, which increased from 0.22 billion Yen in 1991 to 2.39 billion Yen in 1995. The total increase in investment accounted to 2.39 billion Yen.44
From 1991 to 1995, such period was always described as the golden period of Japanese FDI in China. Most of economists such as Robert Taylor, Jaideep Anand, Adrew Delios, Liu Chnagli, and Qing Taichen believed that the rapid growth of Japanese FDI inflow during this period was the result of the drastic change in China's economic and political environment, of cheap labour, government incentives and the improvement of the infrastructure, etc. But they have different views on which factor is of more importance.
According to Yu Qingxing, she believed that it was due to Yuan devaluation that resulted in Japanese FDI boom in China during the period; her study reached the conclusion that devaluation in the value of FDI hosting country's currency stimulates inflows of foreign direct investment, and conversely an appreciation may lead to a reduction in FDI inflows.45 Along with the changing foreign exchange rate, China devaluated its currency a few times in early 1990s. Average nominal exchange rate of Chinese Yuan to US dollar rose sharply from 3.76Yuan/Dollar in 1989 to 8.62Yuan/Dollar, with more than 56% devaluation of Chinese Yuan.46 Dramastic devaluation obviously enhanced China's comparative advantage in domestic production costs, which caused the direct Japanese FDI boom.47 According to Qing Taichen,48 he emphasized that the stable and rapid growth of China's economy - the approximate 9 percent GDP growth of China - guaranteed the huge potential of China's domestic market, therefore the Japanese investor increased their investment in China in order to occupy the new market with great potential. Also, he had the same opinion with Chen, C. H that the cheap labor resource was just one of China's comparative advantages, and during the period it was not the unique characteristic only to China's investment environment. If the aim of Japanese investors was just to seek the cheaper labor force, they could increased their FDI in the other Asian countries such as India. 49 Robert Taylor emphasized on the importance of the effective Chinese government's incentives during the period.50 He pointed out that, compared with other Asian countries, the investment environment of China was quite special, and decisions by Japanese investors should thus depend on the Chinese incentives, and the political relation between two countries was vital to the Japanese FDI in China.
2.4 Adjustment stage of the Japanese FDI in China (1996-2000)
In 1996, according to the China's statistics51, Japanese FDI in China was US$ 3.679 billion, which though increased 18.4 percent, the increasing level was obviously lower than that in 1993-5. Based on the Japanese statistics52, in 1996 and 1997, the Japanese FDI in China continued declining, and in 1997, the investment dropped to 243.8 billion Yen, with a decline of 53.9 percent. As the result, in 1997 the Japanese FDI in China just covered 16.3 percent of Japanese FDI in Asia, which was much lower than the 36.2 percent of 1995. Just as the statistics show on the table 1, the main element of the drastic decline of Japanese FDI in China was the decline of the investment in the manufacturing sector. In 1996, the Japanese FDI in the manufacturing sector was 203.2 billion Yen, dropped 39.7 percent of the previous year, while the investment in the non-manufacturing sectors just declined 12 percent. This tendency of decrease of Japanese FDI in China continued in 1998 and 1999, however, in 2000, Japanese investment in China increased in total value for the first time since 1995, partly due to Chinese government's revision of preferential policies for foreign multinationals, and China's preparation to join the World Trade Organization (WTO). China's relative share increased to 16.8 percent,53 again making China the largest recipient of FDI from Japan as a single country in Asia.
The main causes for the two years of drastic decline of the Japanese FDI in China were complex; it was the result of the change of domestic and international economic environment. First, with the rapid economic development in China, the economic condition has changed extremely. Hence, the producer market and the consumer goods market became more mature and abundant, which helped China's economy move from place of raw materials to the market with vast potential consumers. In addition, especially in the electrical consumption market, because of the increase of foreign investment, the market competition became more and more intense, therefore, the Japanese FDI had to face the pressure and competition from Chinese enterprises and foreign enterprises.54
Secondly, the Japanese FDI decreased dramatically, due to the distracting factors of difficulties in the SOEs management; the slowing down of the GNP growth, the latent high liabilities of SOEs, loads of laid-offs and the redundancies; increased bad debts of national banks, which have seriously affected the export trade and foreign investment of China because of the aftermath of the East Asian Financial Crisis.55
Thirdly, the pay rise and five-working day schedule during the period, to some extent, increase the basic cost of production and labour factors of Japanese enterprises.56
Fourthly, due to the Chinese government's amendments of the FDI policies, especially the application of the national treatment to all the FDI, Japanese enterprises' enthusiasm of further investment is dampened.57
In summary, after the rapid development of FDI from the Japanese manufacturing sector in China in the early 1990s, these Japanese enterprises have experienced a period of drastic decline. In order to stimulate the Chinese government's initiative to optimise the foreign investment conditions, the Japanese entrepreneurs strategically magnify the volume of investment in Indonesia, which can also be regarded as one of the major factors leading to the dramatic decrease of Japanese FDI in China. After the general description of the four stages of Japanese DFI in China, and the reasons of change, in the following chapter, I will present my study on a specific case of Japanese DFI in China - case study on Dong-An Automotive Engine Manufacturing Co. Ltd, to discuss in depth issues concerning the Japanese DFI in China.
Chapter Three: Case study of Japanese FDI in China: Dong-An Automotive Engine Manufacturing Co., Ltd
3.1 The research objectives
The Dong-An Automotive Engine Manufacturing Co., Ltd is selected as the case study, and the data were collected during interviews, as well as from secondary sources of information such as annual reports, brochures and the business press. The major questions posed in considering Japanese FDI in China, are related to the benefits and objectives sought by investors, the method of market entry including issue of ownership and internalization, and the location and obstacles that may be caused by current legislation and policy. On the basis of the above this study aims to explore in depth the following issues concerning the Japanese DFI in China:
. The motivations for entering and investing in China;
2. The modes of market entry including issue of ownership;
3. The obstacles of Japanese investment in China's automobile market.
4. The location of establishment and the underlying reasons;
5. The knowledge and technology transfer of the enterprise
3.2 The research subject
The interviewees included all level employees from the manger and expert to the worker who came from two countries in the company except two presidents because of their commercial affairs, the total number of interviewees were ten which have been employed before the establishment of the company, four come from Japan and six come from China, the four Japanese interviewees all could speak in Chinese or English which made the interview convenience. Among the four Japanese interviewees, their duty were different, they were engine expert, marketing and projector manager, plant supervisor and equipment maintenance man respectively. All of them were professional and have received high level education in their relative aspects. Among the eight Chinese interviewees, six of them came from Harbin and two came from other provinces which included one engine expert, one marketing investigator, one operation manager, one human resource manager and two workers. Except two workers all the Chinese interviewees have received high level education in their relative aspects. The entire questions during the interview involved in the questions about the motivations, entry mode choosing, and relative obstacles during the investment process, location, and technology transfer. Besides these, the personal ideas about the company of them were also paid high attentions during the research.
3.3 Brief introduction of company
Harbin Dong-An Automotive Engine Manufacturing Co., Ltd was established by Mitsubishi Motors Corporation, together with Harbin Dong-An Engine Manufacturing Company and the Harbin Aircraft Manufacturing Corporation (both affiliates of Aviation Industry of China), MCIC (Malaysia China Investment Corporation) Holdings Sdn. Bhd. and Mitsubishi Corporation, in 1998 in Harbin Heilongjiang Province. Mitsubishi Motors Corporation invests RMB 50 million, and holds 15.8 percent share of the company. The total Japanese share holding was 31.1 percent. The company is to develop, produce and market automotive engines and transmissions. The new factory has started production since 2000 and by the end of Nov 2002; the production of DA471Q electronic fuel injection engines has reached ten thousand.
3.4 Brief introduction of the Mitsubishi investment situation and investment strategy in China
Judging from the current strategies adopted by Mitsubishi, it won customers hearts and exerted its influence by entering the Chinese market from periphery areas such as setting up maintenance base, and implementing technology transfer. Some sedan brands such as Zhonghua, Hafei Saima, Lingshuai, and other Chinese manufacturers or JVs equip their models with Mitsubishi engines. Among them, Harbin Hafei Motor Corporation (HHMC) has imported the parts of model "Dingo" from Japanese Mitsubishi Auto. With the technological support from Mitsubishi, HHMC successfully duplicate its own Chinese version "Saima". The first "Saima" becomes available on the market in 2002, the sales of which are under way all over China. This model is equipped with the DA471Q electronic fuel injection engines, including 3L and 6L manufactured by Mitsubishi's Chinese partner - Harbin Dong'an Auto Engine Manufacture Ltd. Mitsubishi, under the situation that it has no direct investment in China, materialize the goal that Mitsubishi branded vehicles can be seen everywhere on the streets. Mitsubishi, via the way of technology transfer, has set up co-operation program with Changfei Puma, Beijing Jeep, Dongnan Auto, and Hafei Auto. Also two other engine manufacturers like Aeronautics Mitsubishi Engines (Shenyang) and Harbin Dong'an Auto Engine Works Ltd are set up in the same manner. Analysing from Mitsubishi's choice of partners and location, it is obvious that Mitsubishi has had a second thought about its choices. These four partners scatter over the North, the South, the West, and the East, and its two engine manufacturers are located around the "heart" of the bellwether of the Chinese auto manufacturer - First Auto Works (FAW).
Four partners and two engine manufacturers, together with the sale channel of imported cars, means the brand name - Mitsubishi has been well known at the folk level. Moreover, the presence of its representative offices in China means Mitsubishi can invade the Chinese market anytime. Mitsubishi has seven long-term representative offices, they are: Mitsubishi Beijing Consultancy, Mitsubishi Beijing Consultancy -Shengyang Representative Office, Mitsubishi Beijing Consultancy -Yongzhou Representative Office, Mitsubishi (Shanghai) Auto Ltd, Mitsubishi (Guangzhou) Auto Ltd, Mitsubishi (Dalian) Auto Ltd, and Mitsubishi (Tianjing) Auto Ltd. The intrinsic role of these seven offices, instead of as promoters and sale offices of Mitsubishi, is to do research and collect and process information about the Chinese auto market for the decision-makers from its Japanese parent company.
3.5 Discussion of the case
3.5.1Motivations
The main motivations for the Mitsubishi were concluded through the interview, which included the actual and potential market size, and business opportunities for growth and profitability. Therefore, the market seeking could be thought as the main motivation of Mitsubishi.
First of all; the interviewees emphasized on the huge Chinese market and its tremendous potential with the increasing economic growth. In fact, market seeking has always been the main motivation of Japan. China is a huge country with a population over 1.2 billion, and in 2002, the overall automobile market in China grew by 40 percent to 3.25 million units, including 1.13 million passenger cars. The figures were attractive to any automobile enterprise in any country, therefore, there was no reason for Mitsubishi to give up such an opportunity. Furthermore, with the stable GDP growth of average 8 percent in the last two decades, the consumption capacity in China has increased dramatically, so has the purchase capacity for automobiles. According to the interviewees, until now, Mitsubishi has sold about 300 thousand automobiles of different models, though such an achievement has used 23 years from 1980 to 2003, and more than half of the sale has been achieved in the last 10 years. The increasing speed of Chinese automobile consumption is unbelievable. In fact, the investment in Harbin was the latest in China, and before this, Mitsubishi has invested in Hunan and Shenyang.
Moreover, according to the interviewees, their optimism about the expansion of Chinese automobile market has another reason, which is related to the new policy of the bank loan specially for the purchase of automobile in China. Since 2000, the China People's bank has promulgated the new loan policy for the purchase of automobile: anyone who has wage over RMB 2 thousand per month and the guarantee of a stable job will meet the requirement of the local bank to get some loan in the purchase of automobile especially the car58. Hence, such kind of favorable policy has provided splendid prospective for the growth of Chinese automobile market.
In addition, the interviewees believed that in China, especially in the Southeast regions, there existed strong enthusiasm in Chinese people to buy an automobile with a good brand. They regard the brand of automobile as the symbol of wealth, and this was not the economic effect but the ideological. Such phenomena coincided with the study of James J. Flink, who held that recently, with the development of the automobile industry, a new ideology appeared as one's identity in relation to others in modern society depends in part on what kind of automobile one owns; driving a automobile like a social cachet.59 Therefore, as the famous brand in the automobile production, Mitsubishi would have its favourable position in the regional market.
Compared with the wage of some costal cities and SEZs, the wage level in Harbin is much lower.60 Generally speaking, a worker's wage is about 5 hundred to one thousand RMB; manager's wage is about one thousand to 15 hundred RMB; even the maximum of a medium manager's is just about 40 hundred RMB. Interestingly, according to the interviewees, the lower cost of labor in Harbin is not significant determinant for investment. This evidence just coincides with the agreement between Chen, C. H. and Chen Qingtai whose studies were mentioned in the first Chapter. Also Chi Huangkwan61 argued that some Japanese FDI in China such as automobile aimed to cross the trade barriers, and the cheap labor cost was only attractive to the labor intensive sectors. Besides, the interviewees also confirmed that the cheaper land-related costs were not key determinant for their investment motivation. However, they did prefer the lower costs of labor and land in Harbin, but they did not thought them as the direct motivations of the investment.
When the question involving why Mitsubishi chose engine production for the investment, the answer was that the engine was the heart of the automobile, and it directly affect the performance and the price of the automobile. Currently in China, many automobile makers plan to improve their automobile making technology, but what most of them do is to improve the appearance, since they can not improve the technology of the engine making completely. Therefore, such condition provides the investors huge market in the sale of engine with advanced technology. For instance, some sedan brands such as Zhonghua, Hafei Saima, Lingshuai and other Chinese manufacturers or JVs all equip their models with Mitsubishi engines.
3.5.2Entry mode
According to the interviewees, exporting the engines to China's market directly was the lowest risk entry mode. Because of China' entry into WTO, there is a great reduction on tariff and restrictions about the automobile, and the engines made in Japan are also cheap and of high quality. However, the interviewees believed only exports were not enough, and even with the engine production, it still needs to think about the local taste and local tradition, and the after-sale service must be provided. Therefore, in order to achieve the long term global strategy of Mitsubishi, they chose the FDI entry mode into China. About the entry mode of licensing and franchising, the interviewees indicated that the headquarter in Japan had done careful analysis about the entry mode. They highlighted that the investment in engine production was intensive investment in capital and technology, and although licensing and franchising were really low risk entry mode, they were not suitable for the investment in engine production. Both of the modes are easy to release the relatively high technology and it is possible to beat a competitor in short term, however, it is difficult for such kind of entry modes to control the quality, which did not coincide with the emphasis on high quality in Japan enterprises.
According to the interviewees, compared with JV, WOS is easier to control, operate and manage by a head office, and it is easier to transfer technology and know how to control the subsidiary than the partner, therefore, the risk of the release of high technology is slim. However, in China the government regards the automobile industry as its backbone industry, and the current laws and regulations promulgated by the central authority put strong restrictions to the WOS in the automobile industry. That was a key element for Mitsubishi choosing JV entry mode which has provided Mitsubishi the access to the regulated automobile industry in China.
Besides, there also existed complex reasons for Mitsubishi choosing JV entry mode. According to the interviewees, compared with WOS, JV has relatively low risk, because the engine production project involves a large capital investment, therefore, a JV mode not only means the less input of capital, but also more support from the local partner, the latter of which is vital to the success of the investment. A local partner means a reduction of local rival and contribution of quite a lot knowledge and information about the local market. Mitsubishi Motor has comprehensive knowledge and relatively sophisticated technology in the automobile production, and the Chinese partner Harbin Dong-An Engine Manufacturing Company also has over fifty years of experience in the engine production and has accumulated its own technology, hence the combination of resources, technology and knowledge from these two partners could create new business opportunities in technological advancement.
In fact, the interviewees indicated that when Mitsubishi planed to find the Chinese partner in the northeast of China, they had done a lot of research about the Chinese engines makers. The reasons for them to choose to cooperate with Harbin Dong-An Engine Manufacturing Company are as follows. Firstly, this company had high position and good reputation in China, especially in the northeast China, and it covered more than 40 percent of the regional market. Secondly, this company has its own technology in the engine production and its own R&D research center which was highlighted by the Japanese interviewees, because the transferred technology from Mitsubishi was very sophisticated, and it would be impossible for a company which did not have relatively high technology to accept and absorb. In fact, technology was the important advantage of Mitsubishi, and it would be very inefficient if the partner could not utilize it completely. Thirdly, this company had well established sale and after-sale service stations in the main automotive factories and key cities of China - it has nearly 500 repair shops covering almost all the cities of China except Tibet, Hongkong, Macao and Taiwan. All these provide Mitsubishi perfect distribution channels and guarantee the market service. Fourthly, this company was the affiliate of Aviation Industries of China, therefore, cooperating with such a company will receive the favorable policies from central and local authorities which means the risk reduction.
Such kind of cooperation as between Mitsubishi and Harbin Dong-An Engine Manufacturing Company is a very popular style of the foreign FDI in China - the foreign enterprises have advanced technology, knowledge and management, while the Chinese firms have local knowledge and market distribution channel. Such cooperation combines the comparative advantage of both sides, which do strengthen their competitiveness in the market competition.
3.5.3 Investment obstacles
There was a general consensus among the interviewees that the most serious obstacle for them to invest in Harbin was not the language problem, cultural difference, nor the lack of local information and knowledge, but a series of barriers in getting the license. Before the granting of an entry license, there were lots of processes and long waiting time to pass the examination from the central government and local authorities. Both of the interviewees were not satisfied with the application process. In fact, Mitsubishi Motors had been engaged in discussions about the promotion of an automotive engine joint-venture enterprise with the Aviation Industries of China (of which the Harbin Dong-An Engine Manufacturing Company and the Harbin Aircraft Manufacturing Corporation are affiliates), MCIC Holdings Sdn. Bhd., and Mitsubishi Corporation since 1995. These discussions produced general agreement among the parties in August 1996 and on that month a joint venture agreement was signed in Beijing in the presence of Chinese premiere Li Peng, vice premier Zhu Rongji and Malaysian prime minister Dr Mahathir bin Mohamad. The application was approved by the Chinese government in July 1998, and the joint venture was established in September 1998. As mentioned by Robert r and Cheng, and Kwan, in China, the policies and decision were highly determined by the central government's leaders; therefore the regional willingness to the FDI also partly depended on these. However, even such kind of project which was appreciated by the Chinese leaders still need wait two years for the approval. To the investors, obviously, despite the open door and reform policy has been initiated over two decades, there still existsome barriers for the entry of FDI into China.
The investment barriers, first of all, according to the interviewees, was the Chinese government's regulations on the investment category. To Chinese government, the automobile industry is vital and sensitive, therefore it was extremely difficult for FDI to establish a wholly owned subsidiary in the automobile industry in China. Besides, some relative laws were still not clear and subject to change, and it was difficult for the foreign investors to find the fixed rules, which means risks in investment. The approval of the FDI in China must be achieved through authorities at both local level and national level, and the long time waiting is easy for the investors to lose the market oppotunity and hence, the investment risks rise. In addition, the guanxi (relation) in China seemed a unique characteristic which concerns all the aspects of life in the sociaty, politics and economy. It was difficult for the Japanese investors to understand the "role of game" even though Japan and China were both affected by the confusionasim. For instance, the Japanese interviewees indicated that it was difficult to communicate with the departments of the local authorities, since some decision making was interminable, while the Chinese managers always found easier way to achieve their goals through guanxi. Sanyal and Guvenli also identified the importance of relationships with government departments for the achievement of foreign companies' objectives in China62.
3.5.4 Location
About the choice of the location, the interviewees explained why Mitsubishi chose Harbin as the city to investment. Harbin, located in the northeast of China, was the capital city of Heilongjiang province. Compared with the south coastal cities, it seems not having such reputation and prosperity, but with the rapid growth of regional economy and the special privilege from the central government, the investment environment of Harbin has changed drastically.
Most interviewees were satisfied with the infrastructure of Harbin such as the transportation, harbour, and telecommunication. It just takes two hour from Harbin to Japan by plane. To the investors, the development of the transportation especially the railway not only meant the convenience, but also the commercial opportunities. The interviewees pointed out that the well established transportation facilities will promote the growth of auto market directly or indirectly, therefore, it means the expansion of the local market.
In addition, the interviewees stressed that the human resource was important to the development of the enterprise, and the success of their investment needed well educated employees. Now in Harbin, there are 21 universities and colleges, nearly 521 scientific research institutes and 0.376 million engineers and technicians. In terms of comprehensive strength in science & technology, Harbin ranks the 6th in all the major cities in the whole country,63 therefore, that is another attraction of Harbin. Obviously, that the cooperation partner Harbin Dong-An Engine Manufacturing which has good reputation and market dominance is located in Harbin was also the key reason for Mitsubishi to choose Harbin.
Furthermore, Harbin Air Craft Industry Group, another cooperation partner of Mitsubishi is also located in Harbin, the new production of which is Hafei Saima, which utilized the Dingo technology of Mitsubishi and the DA471Q electronic fuel injection engine produced by the new joint venture. Obviously the strategy of Mitsubishi in choosing Harbin as its investment location was full of tactics. When the new company was established, it could serve the big clients directly and locally, and the local advantages were not only the reduction of costs in the avoidance of transportation fees, but also the tight and close ties with the design and equipment of the big client.
Also, the enthusiasm of the Heilongjiang and Harbin government in attracting the FDI from Mitsubishi could not be ignored. According to the interviewees, in the past decades, Heilongjiang and Harbin government have improved the local policies especially in attracting Japanese investment, for instance, the new company has received a series of favorable policies such as the tax-free of two years after the plant began production, and the water and electric fees are free of the first year. The interviewees believed that Harbin presented opportunities for long-term development and could provide windfall returns after a period of 5-10 years. On the basis of this finding it may be postulated that the location decision may be associated with long-term strategy of Mitsubishi in Southeast of China.
3.5.5Knowledge and technology transfer
In the aspect of the technology transfer, the company introduced the relatively advanced technology which emphasized on the production of DA471Q electronic fuel injection engine from Mitsubishi Motor directly under the contract between the both sides. All the necessary production equipments were imported from Japan and Mitsubishi used their technology and equipment as a part of investment. The DA471Q electronic fuel injection engine was excogitated by Mitsubishi Motor in 1999, which was designed for the medium sized family car of Dingo model. The technology involved was advanced and sophisticated compared with the international automobile engine production level. The interviewees believed that the technology was not the latest excogitation of Mitsubishi Motor, but it was also not the behind the times, since such kind of engine technology was suitable for the current technological need.
Furthermore, because the market competition of Chinese engine production was intense, it was impossible for Mitsubishi to hesitate their technology input. The interviewees highlighted the importance of the knowledge and technology transfer as the core of the cooperation; it would decide the future of the company. Therefore, before the actual technology transfer, both sides sent representative experts to do the preparation work. In order to achieve the efficiency, Mitsubishi sent different groups to Harbin, the group of the designers of the engine aimed to discuss the sophisticated issues with Chinese experts, the group of equipment setup aimed to setup and examine the equipment in the new factory and train some technicians about the equipment, the group of professional and experienced workers aimed to train the labours who would work in the plants. Most of the preparation work began two years before the new factory started production in 2000. Such kind of careful preparation guaranteed the successful technology transfer between the two sides. After the operation, in order to keep tight technology tie with the home country, the company sent study and research group to the Japan and Mitsubishi Motor's subsidiaries in the other countries to draw the experience and learn the latest technology.
In addition, in order to improve the technology and catch the local demand of different Chinese market, the company invested 20 million RMB in developing its R&D and its training centre; the former contributed greatly in the integration of engine technology between both sides and in developing the engine design and production to the more sophisticated way; and the latter provided a series of training courses for the managers and workers, which played important role in promoting the efficiency.
3.6 Implications of the case study
This study aims to examine the Japanese investment in China in its motivations, entry mode choosing, and relative obstacles during the investment process, location, and technology transfer. As the result of the study, the motives for entering China include the size of the market and the potential it presents for automobile business, and base on current evidence the motives may not be related to cost-saving factors. Joint Venture entry mode was preferred by the Japanese investors because of its characteristics: the lower risks, easy to reach the local resources and market through the cooperation with the local partner, and cooperating with a local partner with governmental background to solve the guanxi with relative authorities. In the aspect of location, the tactics of Mitsubishi in choosing Harbin as the investment city shows that Japanese FDI will not always focus on the coastal cities in the South China and the main determinants are the local infrastructure, local partner and opportunities. The obstacles involved in the Mitsubishi investment - the investment barriers and restriction still disturb the process of Japanese investors and their investing enthusiasm. In addition, based on the study, the Japanese technology transfer in China in the automobile industry did reach some high level, which contributed greatly to the technological improvement of Chinese automobile industry. According to the qualitative results from this study, market size, economic growth and increase in trade may be positively related to Japanese FDI in the prospect of automobile industry. China's recent accession to the World Trade Organization (WTO) may have market entry-related implications for the Japanese automobile making companies. It will be interesting to investigate how this development will influence market entry in terms of reduction of entry barriers in the shipping and logistics context.
Conclusion
The 1978 Treaty of Friendship between China and Japan positively initiated a new era in Sino-Japanese relations, and also promoted by open- door policy of China, during the past two decades, the Japanese direct investment in China has experienced a long-term development. Such development also coincided with the rapid economic development of China. As the largest invested country by Japan in the Asia, it is impossible to ignore the important role played by the Japanese direct investment in the aspect of China's economic development in the capital, technology and management. But based on the study made in the dissertation - from the description of the four stages development about Japanese direct investment, we should be conscious of the drawbacks in Chinese political and economic investment environment, which have sometime impeded the further development of Japanese FDI in China. A study in depth on the Japanese FDI in China has been made, from the discussion on the data, we can see clearly the importance of Japanese investment in the development of Chinese economy, and at the same time, the shortcomings in China' policy concerning foreign investment - both politically and economically, also showed themselves clearly.
Considering the importance of Japanese FDI in the economic development in China, based on my study, I would like to make the following suggestions as to how to promote the investment. First, since the motivation of investment is the most important, the government of each level should try their best to enhance the investment environment - to enhance the infrastructure of the city, to relax controls on the foreign companies, to reduce the restriction and barriers on the relative laws and regulation, to make the policy of relative authorities more transparency, etc. Secondly, more research should be made on the FDI in China, only based on which, can the government and their officials really see the importance of FDI in China's development, and can legislations more favourable be made, and can a more favourable foreign investment environment be achieved, in the true sense. In fact, since China has only opened its door to the outside world for about 20 years, there is still a long way for the Chinese government to perfect its performance in the attracting of foreign investment. However, with China's entry to WTO, with the determination of the government to attract FDI, and the consciousness of the Chinese people on the importance of the foreign investment, more investment, both in capital and in technology, will inflow into China, not only from Japan, but from other countries, thus play its utmost role in the promoting of the development of China.
Year
989
990
991
992
993
994
995
996
Total 1979-1996
Manufacturing
Food
Fibre
Lumber pulp
Chemical Industry
Steel,Non-iron Metal
Machinery
Electric Machinery
Transportation
Others
85
276
6
8
23
5
3
2
1
5
5
8
6
57
4
07
2
2
5
52
13
237
8
3
40
31
3
2
6
7
8
20
6
74
1
33
2
2
29
45
78
420
1
26
87
95
2
6
5
1
6
5
39
22
67
2
2
33
48
381
838
35
37
87
55
5
4
8
25
3
38
9
65
34
246
9
41
61
226
579
587
39
77
247
268
20
48
26
10
29
91
46
265
57
386
20
98
95
244
558
943
30
37
283
349
5
0
8
06
38
64
26
37
66
516
29
233
63
289
675
3368
33
37
255
455
3
68
33
38
59
347
58
463
94
904
45
370
85
485
303
2032
22
207
12
212
5
44
8
98
31
203
29
319
29
445
4
280
43
224
3177
1237
249
720
279
614
72
94
66
580
216
927
220
452
366
3020
28
046
481
685
Non-manufacturing
Agriculture, Forestry
Fishery
Mining
Architecture
Commerce
Fiancé, Insurance
Service
Transportation
Real-estate
Others
40
310
0
3
7
6
5
7
2
3
8
235
3
20
5
1
51
270
4
2
4
7
7
29
1
5
4
4
25
99
3
4
63
311
3
3
3
4
2
0
1
9
4
35
255
2
2
6
22
03
467
4
7
5
6
2
2
4
9
8
31
50
283
1
34
9
85
17
315
6
5
9
7
5
7
40
64
2
38
43
1
29
7
47
69
632
2
3
7
4
80
8
56
28
215
7
23
8
46
88
851
7
3
0
3
7
3
86
8
249
25
73
5
47
0
261
58
749
4
2
6
3
67
7
46
22
22
287
6
23
6
95
843
6611
37
47
58
19
9
64
43
272
88
756
6
70
347
2612
65
96
76
930
4
546
Total
26
587
65
511
246
787
490
381
700
954
636
2683
770
4319
365
2828
4066
8429
Appendix: table on 1989-1996 the development of Japan's direct investment to China
( unit:category,a hundred million, first line is investment category, second line is investment value)
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2 Alvin Y.So, China's developmental miracle : origins, transformations, and challenges, (M.E. Sharpe press,2002), at p38
3 Liu Chang-li, RiBen DuiHUa ZhiJie TouZi YanJiu, 1st ed., [The Study on Japanese Direct Investment in China], (East-North University Press, 1999), at p45
4 Robert Taylor, Greater China and Japan: prospects for an economic partnership in East Asia, 1st ed., (Routledge, London, 1996) at p58
5 Behrman, J. N., The Role of International Companies in Latin America: Autos and Petrochemicals. (Lexington, MA: Lexington Books, 1972)
6 Kindleberger, C. P., American Business Abroad, (New Haven, CT: Yale University Press, 1969)
7 Buckley, P. J. & Casson, M. C., The Economic Theory of the Multinational Enterprise: Selected Papers, (London: Macmillan, 1985)
8 Jaideep Anand and Andrew Delios " How Japanese MNCs have Matched Goals and Strategies in India and China" Japanese Subsidiaries in the New Global Economy (MPG books Ltd, Bodmin, Cornwall, 2001)
9 Robert Taylor, Greater China and Japan: prospects for an economic partnership in East Asia, 1st ed., (Routledge, London, 1996), at p 75
0 Andrew Delio, Paul W. Beamish and Shige Makino "The Nature of Japanese Investment Worldwide" Japanese Subsidiaries in the New Global Economy, (MPG books Ltd, Bodmin, Cornwall, 2001)
1 Gatignon, H., & Anderson, E. (1987) The Multinational Corporation's Degree of control Over Foreign Subsidiaries: An Empirical Test of a Transaction Cost Explanation. Report Number 87-103. Cambridge, MA.: Marketing Science Institute.
2 Root, F. R., Foreign Market Entry Strategies. New York: AMACOM,1987
3 Baek, H. Y., & Kwok, C. C. Y., "Foreign exchange rates and the corporate choice of foreign entry mode", International Review of Economics and Finance, 2002, 11, 1-21
4 See Bartik T. J., "Business location decision in the United States: Estimates of the effect of unionization, taxes and other characteristics of states", Journal of Business and Economics Statistics, 1985, also in Yamawaki,H. Thiran, J., & Barbarito, L., Regional and country determinants of location decisions: Japanese multinationals in European manufacturing. Paper presented at the Academy of International Business Conference, Banff, Canada,1996
5 Nachum, L., "Economic geography and the location of TNCs: Financial and professional service FDI to the USA", Journal of International Business Studies,2000
6 Zhao H. and Zhu, G., "Location factors and country of origin differences: An empirical analysis of FDI in China", Multinational Business Review, 2000
7 Friedman J.et al., "What attracts foreign multinational corporations: Evidence from branch plant location in the Untied States", [1985] Journal of Regional Science
8 Loree D. & Guisinger S., "Policy and non-policy determinants of US foreign equity investment", Journal of International Business Studies,1995
9 Kotabe, M., "The promotional roles of the state government and Japanese manufacturing direct investment in the United States", Journal of Business Research,1993
20 Shaver J. M. & Flyer, F., "Agglomeration economies, firm heterogeneity and foreign direct investment in the United States", Strategic Management Journal,2000
21 Chung W. & Alacer, J., Heterogeneous investment motives and location choice of foreign direct investment in the United States. Working paper: Stern School of Business, (New York University, New York, 2001)
22 China Statistic Year Book 1979-2000, 2001, China Statistic Press
23 See China's Foreign Economy and Trade Year Book 1983, [ZhongGuo jingji maoyi nianjian, 1983], (ZhongGou JingJi Press, 1984)
24 Toyo Keizai1983, Kaigai Shinshutsu Kigyou Souran-kuni besu, 1983 (Japanese Overseas Investment by Country), Tokyo, Japan: Toyo Keizi,Inc
25 Ibid
26 Liu Chang-li, RiBen DuiHUa ZhiJie TouZi YanJiu, [The Study on Japanese Direct Investment in China], 1st ed., (East-North University Press, 1999) at p 74
27 Qing Tai-chen, ZhongRi TouZi HeZuo CeLue [China-Japan investment cooperation strategy], 1st ed., (Chinese Development, 1999) at p34
28 Robert Taylor, Greater China and Japan: prospects for an economic partnership in East Asia, 1st ed., (Routledge, London, 1996), at p72
29 China Statistic Year Book 1979-2000, 2001, China Statistic Press
30 Ibid
31 Qing Tai-chen, ZhongRi TouZi HeZuo CeLue, [China-Japan investment cooperation strategy], 1st ed., (Chinese Development, 1999)
32 Ibid
33 Toyo Keizai 1984, Kaigai Shinshutsu Kigyou Souran-kuni besu, 1984 (Japanese Overseas Investment by Country), Tokyo, Japan: Toyo Keizi,Inc
34 Ibid
35 UNCTAD, 1996, World Investment Report 1996. New York and Geneva. United Nations
36 China Statistic Year Book 1979-2000, 2001, China Statistic Press
37 Toyo Keizai 1991, Kaigai Shinshutsu Kigyou Souran-kuni besu, 1991 (Japanese Overseas Investment by Country), Tokyo, Japan: Toyo Keizi,Inc
38 Ibid
39 Chen Tianan, "Japanese firms with Direct Investment in China and Their Local Management", and quoted in Robert Taylor, Greater China and Japan: prospects for an economic partnership in East Asia, 1st ed., (Routledge, London, 1996), at p76
40 Toyo Keizai 1991, Kaigai Shinshutsu Kigyou Souran-kuni besu, 1991 (Japanese Overseas Investment by Country), Tokyo, Japan: Toyo Keizi,Inc
41 Liu Chang-li, RiBen DuiHUa ZhiJie TouZi YanJiu, [The Study on Japanese Direct Investment in China], 1st ed., (East-North University Press, 1999), at p96
42 Peter Drysdale & Dong Dong Zhang, Japan and China: rivalry or cooperation in East Asia? , (Australian National University, 2000) at p77
43 China Statistic Year Book 1979-2000, 2001, China Statistic Press
44 Toyo Keizai 1991-5 Kaigai Shinshutsu Kigyou Souran-kuni besu, 1991-5 (Japanese Overseas Investment by Country), Tokyo, Japan: Toyo Keizi,Inc
45 Yu Qingxing, The Impact of Real Exchange Rates on Japanese Direct Investment in China's Manufacturing: An Empirical Assessmet, (International University of Japan Press, 2002)
46 China Statistics Year Book 2001
47 In China, all the foreign currency must be changed into dollar be changed into dollar firstly then changed into RMB, therefore, the devaluation of Yuan/Dollar did reduce the cost to the Japanese investor.
48 Qing Tai-chen, ZhongRi TouZi HeZuo CeLue, [China-Japan investment cooperation strategy], 1st ed., (Chinese Development, 1999) at p34
49 Chen, C. H. (1996). Regional determinants of foreign direct investment in mainland China, Journal of Economic Studies, 23, 18-30
50 Robert Taylor, Greater China and Japan: prospects for an economic partnership in East Asia, 1st ed., (Routledge, London, 1996), at p77
51 China Statistic Year Book 1979-2000, 2001, China Statistic Press
52 Toyo Keizai 1996-7 Kaigai Shinshutsu Kigyou Souran-kuni besu, 1996-7 (Japanese Overseas Investment by Country), Tokyo, Japan: Toyo Keizi,Inc
53 UNCTAD, 2000, World Investment Report 2000. New York and Geneva. United Nations
54 Liu Chang-li, RiBen DuiHUa ZhiJie TouZi YanJiu, [The Study on Japanese Direct Investment in China], 1st ed., (East-North University Press, 1999), at p 94
55 Liu Chang-li, RiBen DuiHUa ZhiJie TouZi YanJiu, [The Study on Japanese Direct Investment in China], 1st ed., (East-North University Press, 1999), at p 95
56 Chen, C. H. (1996). Regional determinants of foreign direct investment in mainland China, Journal of Economic Studies, 23, 18-30
57 Cheng, L. K., & Kwan, Y. K. (2000). What are the determinants of the location of foreign direct investment? The Chinese experience. Journal of International Economics, 51, 379-400, and see also Chi Schive, The foreign factor: The multinational corporation's contribution to the economic modernization of Republic of China, (Hoover Institution Press, 1990)
58 New Car Loan Rules to Boost Car Purchase, accessed at website: www.fiducia-china.com/News/2002/2606-1651.html
59 James J. Flink, The Automobile Age Cambridge: MIT Press, 1988, at p234-35
60 Knight,J and Song,L Wage Inequality in China: Efficiency Versus Equity 1999, Institute of Economics and Statistics Oxford press
61 Chi Huangkwan 2002 Is FDI in China Hollowing Out Japan's Industry? The Need to Differentiate Between Good and Bad Direct Investment, http://www.rieti.go.jp/en/china/02110801.html
62 Sanyal, R. N., & Guvenli, T., "Relations between multinational firms and host governments: the experience of American-owned firms in China", International Business Review, 2000, 119-134
63 http://www.digiharbin.net.cn/english/commerce/tzxm1.htm