An empirical study of the R&D globalization of Japanese firms towards China

Abstract

Japanese companies have been actively globalizing their R&D activities in Western countries since the 1990s. However, compared to other Western countries, Japan has been a late comer in terms of setting up corporate R&D labs in China. Japanese companies' foreign direct investments towards China have concentrated on manufacturing, based on low labour costs. The main contribution of this paper is to analyze the motives and strategies of Japanese firms which have established their own R&D labs in China. In addition, the organization and function of the R&D labs, merits, demerits, problems of R&D management are identified. A preliminary analysis was carried out by reviewing literature as well as previous studies on Japanese companies' activities in China. Interviews were carried out with four companies which have set up manufacturing or R&D bases in China. In the second phase, a detailed questionnaire survey was carried out on a sample of 12 leading companies in the field of electronics, office automation equipment, electronic components, wire and cable, machinery, automobile industries. Statistical analysis carried out on the data confirmed that 6 companies were identified as having a ‘market pull’ type R&D strategy and 5 companies, a ‘technology push’ type R&D strategy. This research has shown that Japanese companies R&D strategies in China are driven by both ‘technology push’ and ‘demand pull’ strategies, revealing that Japanese companies' R&D activities have entered a new phase.