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2008.11.21 - Auto FDI in Europe

Louis Turner talks about Japanese Business and Europe

On 12 November 2008, the WREAC forum was especially honoured to welcome Louis Turner, chief executive of the Asia-Pacific Technology Network, to present a seminar on the topic of Japanese auto FDI in Europe. Louis has a wealth of experience relating to foreign investment and was one of the pioneer researchers concerning multinational firms back in the late 1960s.

Although his current scope of interest relates to recent Japanese investment in the UK, he presented a detailed and stimulating seminar about the last two decades of investment by Japanese car manufacturers across Europe. As he stated at the outset of his presentation, anyone who wishes to understand the actions of multi-national corporations today must look at the Japanese auto industry, an industry that is technically and financially sound, and that today is unconstrained geographically or historically, thus free to act and invest along clear strategic lines.

Louis began by painting a picture of the Europe that confronted Japanese auto firms in the early 1990s, a Europe that was tied up in political wrangling between those favouring protectionism (such as Italy and France) versus those who saw openness as the way forward (Germany, Holland, and the British). Knowing that the European market was soon to be a reality, the Japanese auto firms were keen to invest and saw the UK as an ideal base, one reason being the positive diplomatic efforts made in Europe by the then-incumbent British government on behalf of Japanese business (for example, fighting the French on definitions of 'imported' cars for quota limits).

Throughout the seminar, Louis made an interesting contrast between the experiences of Toyota - a company going it alone in its global conquest - and Nissan, which has had a very different experience owing to its now-strategic partnership with Renault. The talk contained a mine of fascinating company histories and examples, not just concerning the auto companies themselves but also their strategic decisions concerning their suppliers; one such example was the pressure put on Nippon Sheet Glass to expand globally in order to better supply its customers (the car firms), which then had implications for Pilkington Glass.

The seminar also highlighted the danger of generalising across industry in terms of investment behaviour, Japanese auto investment not conforming to the de-integration of supply chains that is seen in other industries. If anything, it was demonstrated that firms such as Toyota are gaining more influence over their suppliers and foster a relationship of co-development. As a secondary conclusion, Louis also demonstrated that some industries are more 'sticky' than others in terms of hanging on in a host nation when the economic tables turn; whilst the consumer electronics industry may have fled the UK shores, the Japanese auto industry is committed to keeping the factories that it has operating here at a competitive and modern level. This obviously has wider implications in terms of developing nations attracting industries that will offer long-term returns to the nation.

Louis is currently researching a book that is more specifically focused on the recent history of Japanese investment in the UK.
Report written by WREAC PhD student Chris Bond, who is researching FDI in China and its impact on inequality.