Overseas Relocation Makes Profits?

The concern over deindustrialization has become strong ignited by the Great East Japan Earthquake. First of all, why does a company establish a subsidiary in a foreign country?

Market Expansion Type Oversease Relocation

There are two patterns in the overseas expansion of Japanese companies. It is whether  relocate as a seller, or to relocate as a maker. Relocating as a seller, i.e., product, and build a sales base abroad. The high-growth era was the time when this just began. If cheap and good goods are made, it will attract attention also overseas, and will begin export via a trading company. And distributor is found abroad, when volume of sales is increased, an overseas subsidiary is established and expanded, and it is begun to make the product of specification for overseas. In such cases, it is mainly business and a marketing department that is engaged in foreign operations, and it is restricted to production-model products as a kind of goods. Therefore, Japanese people are only in an overseas branch as an administrator, and the center of corporate activity is established in Japan in many cases.

Factory Extensive Type Oversease Relocation

Another overseas expansion pattern is the advance as a maker, i.e., overseas factory deployment. Since part supplier shifts abroad to compensate for a major manufacturer doing overseas expansion, the companies may be made to shift abroad in the form that they are not willing. Or they tries to move a factory to overseas themself. Conversely, why doesn't it have a factory in Japan? To close to the place of production of materials, it is surely one reason. It is more rational than to spend transportation cost to carry materials to Japan for the steel industry, medicine business, etc. which are greatly dependent on materials by the material industry to manufacture there. On the contrary, there is a reason for building an overseas factory, since it is close to a consumer place. If cheap mass consumption goods are carried from Japan, they are inefficient. Making there and selling there is also one method. In this case, the product for Japanese markets will be made in Japan.

Reason for Avoiding Japan

Also besides having stated in the top, there is an enterprise with which is most elated at Japan's manufacturing industry, and most anxious about an overseas outflow. It is a high-value-added product which requires production technology, need to receives customer's noisy liking, and its specification is various. In Japan, overseas relocation of a factory has been large fashion since the depression of the 90s. It is a simple reason of since the manufacturing cost is cheap in almost cases. The cost of high-value-added product consists of a material cost, labor costs, and expenses. A labor-cost ratio is overwhelmingly large in it, therefore, a price changes in most proportion to the increase and decrease. It is also a risk of quality or a dead stock, and low wages of exchange.On the other hand, the phenomenon called Japanese revolution of the manufacturing industry has also occurred. Even though it is performing many manufacturing processes in foreign countries, it is because the metal parts which require high accuracy still must be manufactured in Japan. Furthermore, in order to meet various needs, carrying out the neighborhood of the spot of design to manufacture more is also thought as important.