Foreign Auto-related Companies Boost Their Japan Presence

The Japan External Trade Organization (JETRO) has helped 11 foreign auto-related companies invest in Japan in 2007 (January-October period), up from one in 2003, three in 2004, six in 2005, and eight in 2006. This demonstrates the steadily growing desire by foreign auto-related suppliers to improve the products, technologies, and services they supply to Japan's auto industry.

The recent boom started in February, when integrated system and parts maker Cooper-Standard Automotive Inc. of the US established a presence in Aichi prefecture. "We've been selling to Japanese car makers in the US for some time, but to expand our business we want to strengthen our ties with them by doing design and development in Japan," said Lee Turner, Cooper's vice president for Asia. Marks Shedrick, president of Germany's Karmann Japan K.K., made similar comments in November 2006, when his company started making convertible-car tops in Kanagawa prefecture: "Our provision of unique technology limited to Europe from design to development is linked to our support for global strategies of Japan's growing auto makers." These remarks underscore the strategy of foreign parts makers to bolster their ties with Japanese car makers from the R&D level on up.

The growing number of auto-industry manufacturers and service providers setting up in Japan reflects the increasing willingness of Japanese auto makers to tie-up with foreign suppliers. And the foreign companies recognize that to remain globally competitive they cannot ignore the important business opportunity this represents. "While boosting the proportion of cars they make overseas, Japanese auto makers have been increasing their procurement of parts and technology abroad," says Yoshihiro Yano, director general of the Japan Automobile Manufacturers Association's international department. "But today they are shifting from merely procuring parts from foreign suppliers to working with them from the design and development stages."

Of the 29 foreign auto-related companies JETRO has helped enter Japan in the past five years, Aichi and Kanagawa prefectures have each attracted 10, further concentrating Japan's auto industry in these two areas. "They like Aichi prefecture because that's where world-leading Toyota and such tier 1 suppliers as Denso and Aishin are located," says Kazuya Nakajo, deputy director-general of JETRO Chicago, which has helped five US auto-related companies locate in Japan. "It has the biggest concentration of Japanese automotive development." The area, located in central Japan, also provides good access to R&D centers of other auto makers and major auto suppliers scattered across Japan, he adds.

According to Minoru Komazaki, an adviser at JETRO's Invest Japan Business Support Center Kanagawa, six of the prefecture's ten automotive manufacturers are Germany-based. Accounting for this, he says, is the fact that the German Center for Industry and Trade is located in Kanagawa and the prefecture is also home to a German school and a German community.

JETRO hopes the increasing presence of foreign companies will strengthen the Japan's industry and lead to the birth of new technologies and innovative management. Aggressively supporting investment into Japan will therefore continue to be one of JETRO's priority tasks.