Investing in Japan

Looks at the viability of opening a business in Japan as a means of foreign investment.

This paper looks at Japan’s economic status, with an emphasis on its automobile industry. The paper looks at the problems faced by Japan’s automobile industry and analyzes the different strategies available for approaching those problems. This overview is then followed by a look at Japan’s economic scene and both the advantages and disadvantages to investing there.
Between April of 1990 and July of 1993, the yen rose from 158 yen per dollar to 106, a thirty percent rise in three years. Since Japanese wages didn’t fall relative to those in the US, this meant that Japanese exporters, like Toyota, faced a comparable increase in their costs. In the North American market, this gave the Big Three a big competitive advantage, a replay of the situation of the late 1980s. This left the Japanese automobile exporters with three options: (1) to maintain current prices and allow for a significant decrease in profit margin; (2) to increase the price so as to maintain profit margins on car sales in the US or (3) to increase the price by less than the thirty percent change in order to maintain market share but with the result of minimally decreased profits.

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