The Developing Production Network in Asia and the Change of Regional Economy

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Since the mid 1980s, Japanese firms have been transferring factories to Asian countries, particularly to China. In order to investigate the overseas manufacturing policy of Japanese firms and its effects on the regional economy, I conducted research on Seiko Epson, a large computer and information machinery corporation located in Nagano prefecture in Japan. Seiko Epson formerly transferred only manufacturing sections to China for the purpose of utilizing cheap labor, however, it is currently transferring also technology development sections. This shows the changing international division of labor within a Japanese corporation. Seiko Epson's overseas manufacturing policy has a significant influence on its parts suppliers, most of which are middle sized or small firms. They are conducting two strategies to cope with the influence. One is an overseas strategy of transferring factories to Asian countries following Seiko Epson. The other is a domestic strategy such as diversifying their products or finding out a 'niche' of market. I also conducted research on Sakaki town in Nagano, which is famous for the 'venture business town' in an agricultural area, for the purpose of investigating the 'hollowing out' of regional economy. In the early 1990s, Sakaki had more than 370 manufacturing factories ; nearly 90% of them had less than 30 employees. However, the number decreased approximately by 60 in the last decade. In order to cope with this hard condition, Sakaki local government recently started a new policy of stimulating local firms to introduce the information and communication technology, particularly the use of Internet.