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Foreign Direct Investment in Japan
Finance & Accounting
Pages 4 (1004 words)
Because of its rapid and progressive economic development, Japan was considered the ideal country for European companies as a base for their regional operations. This paper considers such questions like : why invest in Japan, acquisitions that will not meet with resistance, cultural influence, avoiding employee reductions and negotiate with foreign as equals. …
Traditionally, the Japanese have not encouraged foreign investment, as a matter of fact, they have been hostile towards foreigners investing in their country, especially in the manufacturing sector. Any foreign investment currently coming into Japan is in the service industry, especially hi-tech industries such as pharmaceutical and biotechnology. Japan itself has abundant technologies but is not using these technologies in an appropriate manner (Finance and Investment).
The current escalation of the Yen against other global currencies has served to make worse the disparity between Japan’s increasing investment and the dearth of foreign investments into Japan. When the strong Yen is compared with exceptional cultural, it seems that foreign investment in Japan might never increase. The Japanese government is intensifying its efforts to overcome these hurdles and increase foreign direct investment in Japan. Towards this, the government has established the Invest Japan Business Support Center and formulated an all-inclusive, wide-ranging Industry Attraction Plan (Finance and Investment).
Making small changes in the law and incentives by the government really help, but the real issues that discourages foreign investors is Japan’s exceptional culture and the barriers between Japanese culture and other Western Cultures which highlights the difference between both forms of capitalism. The difference is that American companies keep the interests of their shareholders as their highest priority; Japanese workers feel that Japanese companies keep the interest of the stakeholders paramount. ...
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