Fdi in Japan

Topics: Economy of Japan, Democratic Party of Japan, Government of Japan Pages: 11 (3733 words) Published: February 6, 2011
Executive Summary

This assignment is an analysis on PEST environment for Japan, prepared for the audience who are several managers from the Food and Beverage industry interested in Foreign Direct Investment (FDI) in Japan. The following pages discuss the political-legal environment, economy environment, social-culture environment and technological environment in Japan allowing with random but related issues in each environments. Before any attempt on FDI in Japan, it is important for potential investors to know how the environments could bring impact, negatively or positively to a business in Japan. There will be discussions on issues which should be considered such as language barriers, or business etiquettes, facilities and etc so investors are prepared to expect similar adversities after venturing into Japan. Included are some recommendations which in hope will serve as guide for potential decision making for investors. The recommendations are in no particular order with no extra considerations on which is the most important issue. All the recommendations are to serve as guideline for the investors to evaluate their own capacities before deciding any FDI plans in Japan. Graphics and tables are also added to enhance this assignment.

Introduction to Japan4
1.Political-Legal Environment4
2.Economic Environment7
3.Social-Culture Environment9
4.Technological Environment12
Appendix 118

Foreign Direct Investment (FDI) is no longer a strange word to businesses today. FDI occurs when a firm invests directly in facilities to produce products or start a business operation in the selected country, commonly known as Greenfield investments or acquisition or merger with local companies of the host countries (Hill, 2010). The following pages are discussions and research on Japan. The audience is a group of managers from food and beverage manufacturing industries who are interested in FDI in Japan. Secret Recipe is a company example representing the audience during the analysis of the PEST environments and its impacts. This assignment includes also includes recommendations to assist in decision makings.

Introduction to Japan

Japan the land of the rising sun is also the land of opportunities. But before investors could invest, they have to understand that Japan itself is a unique country, with its own distinguished language, cultural beliefs and business systems in Southeast Asia. In the past, Japan was reluctant and was reserved to open up to foreign investments though the main objective in allowing FDI is because of the technology foreigners offer but it is all changed because now Japan encourages FDI (Lasserre & Schutte 2006). The following is Japan’s PEST analysis discussing issues which will affect FDI decision-makings.

1. Political-Legal Environment
Political-legal environment is an important factor which determines whether or not a business can even gain entry. One issue to consider is the corruption and bribery in Japan. Kyodo News (2008) reports that Japan ranked 18th out of 180 countries and territories in global perception index in 2008 through a research done by Transparency International. This means audience like Secret Recipe might have to be engaged in such practices, to win favours or to create connection with officials. However, there is a thin line between bribery and gift-giving culture practiced in Japan. Gift-giving is a norm to Japanese and it is expected for gift exchange with meetings with the Japanese. Therefore, countries such as Malaysia, even accepting gifts are frowned upon. Kim (2007) mentioned some multi-national companies are strict and reviews receiving gifts as a form of bribe. Therefore Secret Recipe might have to respect the culture and create good relationship with potential associates...
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