10 - Managing in Major MarketsSelling and Making in the United States and China

Summary

As a result of mounting balance-of-trade surpluses for Germany and Japan with the United States by the 1970s, the US federal government exerted pressure on Germany and Japan to decrease the countries’ trade surpluses. Private German and Japanese firms stepped in to accommodate the wishes of their own and the US governments, although they did so in different ways. There has been a recognisable pattern to Japanese foreign direct investment (FDI) in the post-war period, one with its roots in culture and in the history of Japan’s relationship with the target country for the firms’ investments. And there is a distinctly German one, too. The same has been true of the countries’ FDI in the People’s Republic of China since the late 1970s. Relocation of expensive labour-intensive production has formed one strand of this, cultivation of new markets another, and concern for protection of intellectual property related to the design and production of goods a third important strand. German firms have often done better at cultivating the new Chinese market and cooperating with Chinese producers than Japanese companies for a variety of reasons, not least because of animosities arising from before 1945.