Japan's Computer and Communications Industry: The Evolution of Industrial Giants and Global Competitiveness

By Martin Fransman | Go to book overview

carrier systems were analysed in the first section of this chapter on the company's competences.)

Shortly after its first exports overseas, NEC began to open sales companies in foreign countries. The first one was a joint venture with a Taiwanese trading company, Tung Cheng Dong, in 1958. In 1966 this was replaced with a sales venture with the Taiwanese electronics company Tatung, which had more activities in common with NEC. The company's first wholly owned overseas sales office was started also in Taiwan in 1961 and was followed in the same year with offices in Bangkok and New Delhi.

It took several more years for NEC to open its first overseas production facilities through direct foreign investment. Interestingly, the company's first such plant was opened not in East Asia, NEC's 'natural' hinterland, but in Brazil. In 1968 NEC's first production subsidiary was started in Brazil producing microwave communications equipment, carrier transmission systems, and also crossbar switches. Brazil's import-substituting industrialization policies at the time provided the necessary incentive for NEC together with that country's nationalist sentiment which favoured broadening the source of telecommunications supplies beyond North America and Europe. Later the same year another NEC subsidiary was opened in Mexico and in 1969 one started up in Australia. However, it was only in the mid-1970s that NEC began producing semiconductors in overseas subsidiaries, revealing that it had taken longer for the company to establish internationally competitive competences in this field. In 1974 NEC's first overseas plant dedicated to semiconductors began operations in Malaysia and in 1976 another one began in Ireland.

By 1993 NEC had 22 consolidated subsidiaries in 10 countries. The company's 30 majority-owned manufacturing subsidiaries and affiliates (in which it had ownership interests of 20-50 per cent) operated a total of 31 plants in 15 countries, and had 68 marketing and service subsidiaries and affiliates in 27 countries. The company also had one overseas R&D subsidiary, NEC Research Institute in Princeton, New Jersey. By 1993, 23 per cent of NEC's sales were outside Japan.


Conclusion

In this chapter the interdependent evolution of NEC's competences, vision, forms of organization (including R&D organization), and selection environment have been analysed in detail. One key question remains: How 'successful' has NEC been? This question is reserved for the concluding chapter in this book, where NEC's performance is analysed together with those of the other Japanese information and communications companies.

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