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IT Alliances: Adding Value to Global Operations

October 2005 -- The development of Asian countries has led businesses in the region to focus their strategies more towards product development and manufacturing. Companies are continuing to shift their low-end manufacturing functions to countries where overhead and labor costs are significantly cheaper. While reducing such costs is crucial to low-end manufacturing, greater amounts of precision and quality are required to make high-end products.

In order to retain industry leadership positions, many American companies are now establishing R&D centers and manufacturing partnerships with Japanese firms. Such alliances are enabling American companies to achieve the high levels of quality essential to their businesses and to remain at the head of world technological trends. And as more high-end products make their way into the global market for consumer electronics and the technology infrastructure, strategic alliances between U.S. and Japanese technology companies are also expected to grow.

Japan: Where trends are set

Since the introduction of the prototype transistor radio in 1952, Japan has often been at the forefront of new technological trends, particularly in the consumer electronics sector. Industry leaders from Japan, such as Sony, Panasonic and Toshiba, have a long history of beginning world trends. "What happens in Japan eventually happens in the rest of the world," noted Yusuke Kojima, president of Kodak Japan.

American companies, looking to stay ahead of world trends have established R&D facilities and partnerships with Japanese companies to develop products and technologies to be marketed in Japan before taking them globally. According to a Cisco Systems press release issued in February, the corporation opened a $12 million R&D center in Tokyo because Japan is a"proof of concept" market. Mike Volpi, senior vice president and general manager for Cisco's routing technology group was quoted as saying, "If the products coming out of our R&D effort can serve the Japanese market, then we believe they would prove themselves robust enough to handle any other market in the world." AMD similarly opened an engineering laboratory last year at its Tokyo headquarters. "Japanese customers typically demand the world’s highest quality," says Kazuo Sakai, corporate vice president of sales and marketing of AMD South Asia Pacific and Japan, "and Japan is the country where mobile computing trends are set."