The Evolution of Japanese Trading Companies into Today's Multinational Corporations
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Multinational Corporation is not new. The United States and Great Britain have been manufacturing overseas long before the recent surge since 1980 of Japanese multinational corporations. Within the last decade Japan has become one of the major multinational nations. Japan has increased foreign direct investment each year since postwar period. Today Japan is the largest investor in the United States and one of the largest investor in developing countries. The process which Japan has undergone to achieve this leadership position in the world has not been easy. The damage caused by World War II was tremendous. Every industry in Japan was hurt, over 40o/o of the economy was destroyed. Japan surprised many people with the quickness of its recovery. Not only did Japan improve their postwar condition at a fast rate, they have also grown the fastest in their national income of any industrialized nation, except the United States. The Japanese have also led in certain areas such as having an "export-led" economy, which keeps Japan's current account surplus afloat. It was due to Japan's national strategy of being "export-led" economy that the Japanese were able to achieve their present status. Both the private and public sectors worked together for the well-being of Japan. In other words, the Japanese population was all working for the same company, "Japan Inc.". The post-war goal was to regain Japan's stability as soon as possible by close collaboration between the government and private enterprises. The government supported the private enterprise with subsidies, financing, preferential allocation of raw materials, and assistance with foreign government relations. Today's Japanese multinational corporations played an important role in the recovery of Japan. Historically, these multinationals were the results of industrial changes in Japan. Japan once dominated in supplying the world with cheap, low quality goods, but now they supply the world with high-technological goods. This transformation of industries was necessary in order for Japan to survive. Japan was not endowed with an abundance of natural resources. As a result, Japan had to use its resources efficiently. The change from light to heavy industries then to high-technological industry was a direct effect of poor resource availability. initially, Japanese trading companies or the general trading firms were the links between manufacturers and sources of raw materials. These trading companies were once family-owned companies called zaibatsu, which later evolved into large conglomerates called sogoshosha,and then into what is known today as Japanese multinational corporations. The number of Japanese multinational corporations have been increasing each year. The reasons for the massive increase within the last decade is the appreciation of the yen and circumvention of trade barriers. More and more firms are manufacturing abroad to avoid trade barriers and to tap into the available opportunities there. As more and more firms continue to diversify their product lines, more firms are willing to seek overseas base through acquisitions and mergers. This is the easiest way for a Japanese firm to tap into new opportunities. Acquisitions and mergers will continue to grow among the Japanese enterprises, especially in the United States.