One of several misunderstandings about investment in Japan is that investment promotion activities mainly revitalize the economy in the Tokyo metropolitan area only (*9). It is true that the needs of Taiwanese and East Asian companies surveyed so far have been concentrated in large metropolitan areas such as Tokyo and Osaka. However, excluding companies who have clients in those cities, other companies only had the option of selecting either Tokyo or Osaka to begin with, and did not consider other cities. Why is this? It is because they have "no information whatsoever" -neither the advantages nor disadvantages- of investment opportunities in regional cities in Japan.
On the other hand, however, if by some chance a Taiwanese company develops a close business relationship with a regional SME and feels an attachment to the land and its people, exchanges between the companies will eventually increase, and as is often the case, the Taiwanese company will begin to consider way to maintain its connection to the region on a continuous basis. If, at this stage, a proposal for a joint venture is made by the local company, or the local company seeks a business acquisition by the Taiwanese company, the Taiwanese company may give serious through to investing in the region or the local company. Needless to say, Taiwanese companies would not capitalize on an unprofitable business, in principle. However, even in cases where rehabilitation of a proposed business is deemed difficult, many Taiwanese companies have created an effective profit model for that company by leveraging their naturally shrewd business management skills to reduce costs and turn the company around. Therefore, by promoting investment by Taiwanese companies, local governments can acquire tax revenues from the relevant companies as well as secure employment, and expect a certain degree of revitalization of regional economy. For example, in the case where Advanced Semiconductor Engineering, Inc. (ASE) acquired NEC Corporation's Yamagata Plant, ASE first sold NEC's unprofitable semiconductor post-processing plant and thereafter succeeded in returning the plant to profit in only a year, with its shrewd management skills, without making any changes to the plant's facilities and employees. The company is fully accepted by the regional government, with a sense of gratitude.
Below is a list of strategies that local governments in Japan may perhaps employ to promote investment by Taiwan.
Continuous promotion activities by local governments will lead to a dramatic increase in the awareness of Taiwanese companies. Rather than holding a number of isolated investment seminars, a series of seminars should be held sequentially over a period of two to three years, to better appeal to Taiwanese companies.
Taking advantage of alliances between regional SMEs and Taiwanese companies is certainly an extremely effective method of attracting investment in Japan. However, the downside to this method is that it is largely dependent on the individual skills of the corporate managers involved, and the process and results become unclear. The holistic effect of chain-reaction investment cannot be expected from this situation. Atomistic strategies are important, but so are holistic strategies. For example, it is necessary to hold "cluster exchanges" that aim to match member companies of the software park operated by Taiwanfs Institute for Information Industry (Taiwan Digital Content Institute) and member companies of the Industrial Technology Research Institute (ITRI) , Advanced Industrial Science and Technology (Taiwan AIST) and other public incubation centers, with groups of local SMEs and specialist clusters in Japan (*10).
Taiwanese companies tend to more readily establish long-term relationships compared to other foreign companies. Rather than short-term investments, they excel at creating effective business models in Japan in close cooperation with local governments and regional SMEs in Japan. If local governments formulate a promotion scheme in consideration of the fact that it usually takes a plan that covers 3 to 5 years to attract Taiwanese companies to Japan, they could probably attract investments by Taiwanese companies with success.
Given the recent increases in M&A deals by foreign funds, there are negative impressions about investment by foreign companies and out-in M&A activities. Many Japanese companies fear the outflow of Japan's technologies or that they would be bought for next to nothing, divided up, and sold off. However, from the perspective of Taiwanese companies, investment in Japan accompanies a larger risk of harming their relationship with their Japanese partners. Truth be told, they have no desire to go where they are not ready to be received. Due perhaps to their history of having achieved economic growth based on OEM products of Japanese companies after the war, many Taiwanese companies are strongly disinclined to promote any image of Taiwanese companies advancing into Japan with flags waving in triumph and buying up companies and land. For this reason, only a small percentage of investment projects by Taiwanese companies comes to light, despite there being many more. In the case of M&A projects, they are actually implemented in response to requests by the Japanese company side, in most cases. As represented by the acquisition of Nippon Steel Semiconductor by Taiwan Semiconductor Manufacturing Company Limited (TSMC), there have been many cases where Taiwanese companies have acquired companies that would require considerable amount of time to turn profitable. This type of acquisition is hardly ever seen among other foreign companies. Even profit models that have appeared non-viable at a glance have restored the profitability of businesses after acquisition, through great perseverance toward reform. Such unprecedented M&A cases characterize Taiwanese companies' investment projects in Japan.
