Abstract: Developing localized products that accurately reflect the needs of local customers became an important issue for many Japanese companies that have globally expanded using standardized products. This is because the reasoning and value standards of local customers concerning cost or product performance are tacit market knowledge. Thus, the technological knowledge of home country engineers is not enough for developing successful localized products. Here, the role of local engineers becomes critical. In the case of Denso India, local engineers have been sent to Japan for training since the late 1990s, that is, when new Denso factories were launched in India. The purpose of the training is to strengthen local engineering capabilities by encouraging talented local engineers. This served to effectively connect Japan's technological knowledge with the knowledge of local markets. The local engineers who were trained in Japan have access to technological resources at Denso's headquarters. In addition, local engineers can observe and interpret customer needs more accurately and incorporate them into products designs because they share tacit market knowledge with the local customers. This case highlights the importance of training and utilizing local engineers for connecting technological knowledge in the headquarters with market knowledge in the host country.Keywords: localized products, knowledge liaison, technological knowledge, market knowledge, local engineers, Denso IndiaIntroductionProduct localization is frequently cited as a keyword for emerging market strategy. Accurately understanding local customers' needs and developing and supplying products that incorporate those needs is important for multinational firms to gain success in emerging business markets. Then, how is a company able to develop such products? What is required from these companies to have successfully developed localized products? For example, research on business management emphasizes communication between a headquarters and a local subsidiary. The frequency and contents of communication are important because communication is considered a proxy variable to measure knowledge exchange. Communication is particularly emphasized in the studies discussing innovation by overseas subsidiaries (Ghoshal & Bartlett, 1988; Ghoshal, Korine, & Szulanski, 1994; Mudambi, Mudambi, & Navarra, 2007; Nobel & Birkinshaw, 1998). Discussions about global product development also stress on communication among team members. This type of collaboration is also called as virtual team, because the team members work together despite physical distances and cultural gaps. These studies share a consensus about the importance of establishing trust among team members through mediums of social exchanges and encouraging communication flow (Ambos & Schlegelmilch, 2004; Gassmann & Zedtwitz, 2003; Govindarajan & Gupta, 2001; Lagerstrom & Andersson, 2003; Moenaert, Caeldries, Lievens, & Wauters, 2000). This is based upon the assumption that new products are created through knowledge sharing among team members spread across the world.Figure 1 shows the types of knowledge that are necessary to be shared between the headquarters and a local subsidiary when developing localized products.Previous studies have discussed technological knowledge (Almeida & Phene, 2004; Pearce & Papanastassiou, 1996) and market knowledge (Lord & Ranft, 2000; Subramaniam, Rosenthal, & Hatten, 1998) separately, depicted on the horizontal axis of Figure 1. In addition, the vertical axis shows dimensions of knowledge. Many studies explored explicit knowledge and tacit knowledge when it comes to product development (Lagerstrom & Andersson, 2003; Leonard & Sensiper, 1998; Lord & Ranft, 2000; Madhavan & Grover, 1998; Nonaka, 1994; Subramaniam & Venkatraman, 2001). All the types of knowledge are believed to be necessary for successful product development. …