STRATEGIC LOCALIZATION OF JAPANESE ENTERPRISES IN CHINA－AN EMPIRICAL APPROACH
STRATEGIC LOCALIZATION OF JAPANESE ENTERPRISES IN CHINA－AN EMPIRICAL APPROACH

Summary/Abstract: This paper presents a new framework with the aim to deliver a solid basis for further analysis and discussion about the various forms of localization strategies towards the Chinese market. The localization of Japanese companies in China is still at a low level, although it did progress to some degree. As for “goods”, the proportion of sales within local markets or regional markets is still low. As to “manager”, local staff is rarely promoted to managerial positions. As to “capital”, funds are still procured from Japan. The success of Japanese companies depends on deciding on the right localization strategy or the right localization strategy mix bearing in mind the particular circumstances of the Chinese markets. Different factors influence the decision-making process of the strategic Japanese management style, such as new competitors, strong suppliers, and new technologies etc. Based on this theoretical understanding the main objective of Japanese companies should be to strengthen their capability building that aims for better technology and quality. To reduce costs and to enhance access to local markets and the regional market in China, R&D and the development of products intended for Chinese local markets should be strengthened. At the same time, it will be essential to nominate local staff who is familiar with domestic conditions to the ranks of top management in Japanese enterprises more frequently than now. At the same time, the Japanese companies should develop their strategic management in order to make the most out of the long term capability building. However, the most important question for a successful localization strategy of Japanese companies in the Chinese market is still if and how China’s economy will continue to develop against the background of the difficulties in the political and social system.

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