Financing Japanese Investments in the United States: Case Studies of a Large and a Medium-Sized Firm

Abstract

The volume of Japanese direct investment in the United States is steadily increasing. The 400-million-dollar plant constructed by N Motor Company to manufacture trucks in Tennessee is a recent case. Another case concerns a medium-sized enterprise that supplies components to larger firms, which has recently committed itself to an almost 10-million-dollar project in the United States. Indeed, there has been quite a large increase in the variety and number of Japanese investment activities in the American market. The financial aspect of these investments is of much interest since a range of techniques, including institutional financing, leasing, and tax-saving schemes, is being used. The purpose of this paper is to describe two examples that will shed some light on the financial techniques used in Japanese direct investment and to assess the potential for their continued use by both Japanese and American enterprises.