The following are processes and requirements that local governments need to observe, to support Taiwanese companies and effectively promote their investment in Japan.
From a yet different perspective, it is also worth considering linking measures for attracting tourists and companies, as a means of promoting business investment based on personal exchanges between Taiwan and specific regional cities in Japan (*11). For this type of strategy, the following flow of activities would be effective.
1.Coordinating regional brand strategies with Taiwan-side needs
2.Exploring the possibility of creating a linkage between tourism resources and local industries and promoting industrial exchanges
3.Emphasizing the advantages and providing clear incentives for investing in the specific region
4.Developing the necessary infrastructure for inviting foreign companies and enhancing the framework for welcoming foreigners
5.Implementing PR activities on a continuous basis to promote investment in Japan by Taiwanese companies
In regard to the third point, many Taiwanese companies have the wish to establish a business base in Japan, but they primarily place importance on whether or not preferential measures are available to them. In fact, many have commented that local governments, as the main actor in inviting Taiwanese companies, should take the initiative in proposing preferential measures if they want Taiwanese companies to invest in their cities. Compared to South Korean and Chinese companies, Taiwanese companies tend to feel a stronger psychological barrier to investing in Japan (*12). Therefore, it is important to consider how best to compensate for that barrier, whether by cost performance or by establishing a relationship of trust through mutual exchanges. In Japan's case, the probability of success is overwhelmingly high in the latter case, taking the time to establish a good relationship with Taiwanese companies.
In regard to the fifth point, Taiwan's administrative officers and Taiwanese companies have strongly pointed out that local governments in Japan need to publicize their cities to relevant Taiwanese parties on a continuous basis, if they wish to invite Taiwanese investment. Taiwanese companies place primary importance on relationships of trust, in conducting business transactions or making investments. For this reason, there is essentially no method more effective in inviting investments from Taiwanese companies than to send promotion missions composed of local government personnel directly to Taiwan. To obtain information about Taiwan, as well as to assess the needs of tourists from Taiwan, local governments need to launch regular investment promotion campaigns in Taiwan. Ultimately, the strong enthusiasm and desire of the local government side to receive Taiwanese companies to their cities will move Taiwanese companies to making investments in Japan.
Ultimately, the strong enthusiasm and desire of the local government side to receive Taiwanese companies to their cities will move Taiwanese companies to making investments in Japan.
Taiwanese companies have extremely few needs for greenfield investments in Japan (*13). In addition to securing access to Japanfs market, their main purpose of investing in Japan is to reinforce their technical capabilities so that they can better compete in the global competition against China and other Asian rivals in the future. Based on this awareness, an effective way to attract Taiwanese companies to regional cities would be to present the possibility of business tie-ups with powerful local ventures, such as by investing in an SME seeking a successor or funding, or by establishing a business in a designated industrial cluster.
Additionally, certain trends have become conspicuous in recent years, in regard to investment in manufacturing industries in mainland China and ASEAN countries. That is, Taiwanese companies are advancing into those countries in groups composed of horizontally-related companies, or are being invited by those countries as a group. If there are municipalities in Japan that are interested in such clusters of Taiwanese companies, providing some form of incentive to groups of Taiwanese companies willing to invest in a specific area could be an effective tool for attracting Taiwanese companies.
Furthermore, foreign companies engaging in M&A investments in Japan are inducing regional revitalization in Japan with their economic activities, such as by leveraging their characteristically high productivity and profitability to expanding sales and making capital investments. Therefore, instead of proposing greenfield investments to Taiwanese companies and offering an investment presence in an labor-intensive location, stronger efforts should be directed to appealing the advantages that a relief-type M&A would bring to Taiwanese companies. This type of M&A would be based on Japanese venture companiesf technical strengths, could provide a solution to the issue of finding successors, and create an even stronger win-win relationship between Taiwanese and Japanese SMEs.
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 Taiwan's 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.
