The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&D2005). The process is often complicated by the current Japanese attitude toward itshistory of having had political ambitions to dominate the neighboring area.Another example of how Japan is responding to pressure from developing countriescan be seen in their push for technology/industrial standards, especially in collaborationwith China and South Korea. For example, the three Asian countries have agreed tojointly develop the next generation of mobile phone technology (4G). If their technologyis selected for use around the globe, their telecommunications technologies andproducts will have a good chance of becoming the global standard. In addition, and aspart of the process, the Japanese mobile telephone company, Docomo, has establishedan R&D center for 4G technology in China. Another example of collaboration is theagreement among technology ministers from China, South Korea and Japan to run acommon project to develop a new computer operating system based on the open softwareplatform Linux (NIKKEI 2005).The pressure from developing Asian countries (viewed as a special case of global competitivepressure discussed earlier) is yet another very strong force driving the internationalizationof Japanese corporate R&D today.9.3.6 Foreign Direct Investment (FDI) OutflowsAnother very important indicator of future R&D activities abroad is the level of foreigndirect investment (FDI) outflows. In absolute figures, Japan holds the seventh positionafter the U.S., U.K., Luxemburg, Spain, France and Canada. This figure is not thatimpressive, considering that Japan is the second largest world economy. In 2004 theFDI outflows from Japan reached just 13 percent of the level of outflows from UnitedStates (UNCTAD 2005).During the last ten years Japan invested heavily in North America and Europe (seeFigure 9-10). However, over the last five years the total level of FDI outflows decreasedconsiderably after a peak in 1999.If this trend continues, the declining level of Japanese FDI outflows could jeopardizethe process of internationalization of Japanese corporate R&D in the near future.221