Transplanting Japanese Success in the UK

David Mayes and Yoshiki Ogiwara

National Institute Economic Review, 1992, vol. 142, 99-115

Abstract: Producing inside the European Community offers various advantages to Japanese firms, many of them related to costs. In manufacturing, for example, it enables them to avoid paying tariffs, to avoid quantitative restrictions, to reduce shipping costs and to obtain better market access. To make the exploitation of those cost advantages worthwhile the production cost differences between a Japanese company's plant in Japan and a plant in Europe should not exceed the advantages to be reaped. It is thus reasonable to expect that while a Japanese transplant in Europe may not be able to achieve parity with cost and productivity levels in its parent it can nevertheless outperform many UK plants in the same industry if the parent was a competitive exporter. Some of the better performance will come from purely technical factors such as more advanced and higher quality products, more efficient production processes and access to higher quality components, all of which can be brought in from outside Europe. However, even after taking account of those ‘technical’ factors efficiency differences remain, largely related to the quality and utilisation of the labourforce.

Date: 1992
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