An Early History of Thailandʼs Electronics Industrialization :Subsidiaries Evolution and Industrialization Strategy of Thailand

Susumu YAMAMOTO and Shusuke KANAI
SummaryThis paper investigates Japanese electronics subsidiaries’ evolution in Thailand with a focus on their relationship with national industrialisation strategy of the government ofThailand. Full-scale relocations of Japanese electronic MNEs production process to Thailand were the consequence of interaction of host countryʼs government policy, global business environment and those MNEs’ business strategies. It was also found out that heterogeneous evolution processes the subsidiaries coexisted during the 80s and the 90s as areflection of the host countryʼs government policy.

1．Introduction
The Japanese electronics industry was, together with the car industry, one of theleading sectors of the Japanese economy in the late 20th century. Semiconductors andconsumer electronics products such as TVs and “Walkman” contributed to a large amountof trade surplus. However, it was a few years after the turn of the century when a declineof the Japanese electronics industry became apparent to many observers.
Many papers were written in Japanese about the Japanese electronics industryʼs foreign direct investment（hereinafter referred to as “FDI”）before the new millennium.
Among the others, there existed a few research works on Japanese electronics FDI in
Thailand.
Suehiro（1989 b）was one of early research works on electronics industry in Thailand. He gave a comprehensive analysis of “the FDI booming since 1987” from various aspects such as the trend of FDI data, background of the booming and its impact on the domestic economy of Thailand. He emphasized that FDI played the key role inindustrialisation during this period rather than domestic firms. He also gave an analysis ofglobalisation strategy of Japanese consumer electronics manufacturers in connection with193

An Early History of Thailandʼs Electronics Industrialization:

their FDI to Thailand1）.
Shortly after Suehiroʼs work, a few Thai researchers published their works in Japanese in Japan. Chintayarangsan（1991）gave a concise description of the trend of production, employment and export by Thai electronic industry, and pointed that the major roleof FDI was born by US firms in the 70s and then Japanese firms in the 80s. His data ofimport duty imposed on electronic final products such as TVs shows that the Thai government has had maintained its domestic industry protection policy in the late 80s in parallel with export promotion policy.
Pornavalai（1995）argued industrialization of Thailand by focusing on Japanese consumer electronics manufacturers’ FDI in Thailand from a Thai point of view. Pornavalai
particularly paid attention to those manufacturers’ contribution through their exports, employment and technology transfer.
Onishi（1999）analysed Japanese electronics industryʼs FDI to East Asia from international division of labour point of view. He traced FDI data of the 90s and investigateddevelopment and evolution of division of labour in the area. But, the number of papers
written in Japanese on the Japanese electronics industryʼs FDI in Thailand was drasticallydecreased afterwards2）.
Instead, non-Japanese researchers started to write in English about the industryʼs
FDI, particularly in East Asia. Song（2002）, by using panel data of Japanese electronics
manufacturers’ subsidiaries in Taiwan, Korea and Singapore covering from 1988 to 1994,
analysed the sequential FDI in the region. He concluded that “previous investments in capabilities serve as platforms for future upgrading of activities.3）”
Edgington and Hayter（2013）examined the changing roles borne by subsidiaries ofJapanese electronics manufacturers in ASEAN countries by analysing a large-scaled interview data. They tried to integrate Birkinshaw-Hood model with Michael Porterʼs “value
chain” model for their approach4）.
Those research works published in Japan before the turn of the century mostly focused on the Japanese FDI to Thailand from the economic development point of view.
Therefore, they were discussed mainly the economic and policy environment in Thailand,and economic and industrial impact of the FDI.
On the other hand, literature published in the new millennium in English and outsideof Japan took a totally different approach. Edgington and Hayter（2013）based on “theMNE subsidiary role approach” taken by Birkinshaw and Hood（1998）. Song（2002）also
belonged to so-called “subsidiary role stream” which was named by Birkinshaw and Ped194

東京経大学会誌

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ersen（2009）.
This stream of literature is largely based on the idea that FDI is a sequential process
where the initial investment induces following upgrading additional investments. Theirworks pay particular attention to dynamic evolution process of subsidiary roles of MNEs.
In addition, their works covers those Japanese subsidiaries in the last part of 80s or evenafter the 97-98 Asian financial crisis period.
This paper examines the Japanese electronics subsidiaries activities in Thailand in
the 80s and the 90s covering the 1985 “steep Yen appreciation” period. This is an attempt
to analyse an early period of Japanese subsidiary development in connection with economic and political environment in the country.

2．A Brief History of the Consumer Electronics Industry
Foreign MNCs have been playing an important role in Thailandʼs industrialisation
process. In particular, the consumer electronics industry has been a driving force ofThailandʼs industrialisation. It is, therefore, useful for the analysis of industrialisation process of Thailand to review the history of the industry briefly.
2-1．The Beginnings of the TV Industry（before the 70s）
Television is the largest category in consumer electronics industry. In 2001, the total
shipment value of colour television in Japan was 506 billion yen（9.6 million sets）, whilethat of VCR（video cassette recorder）was 120 billion yen（（6.1 million sets）in the same
year5）. Television had an exceptionally long product life cycle started in the 1940s. Most
major suppliers of consumer electronics products produced televisions in parallel withother products such as stereos. Therefore, let us focus on the history of the televisionindustry as a representing example of the consumer electronics industry.
The first television broadcasting service was started in the US in 1946. Commercial
production of black and white television（B&W TV）started at the same time. The B&W
TV market in the US grew much faster than even the most optimistic prediction in the
40s. Encouraged by this booming market situation, the number of firms producing TV
sets reached a peak of 140 in 19506）. However, the television market slowed down its paceof growth and stayed at a plateau. The next market booming had to wait until 1962, eight
years after introduction of colour television（CTV）in 1954.
TV broadcasting began in Japan in 1953, seven years behind the US. In the same195

An Early History of Thailandʼs Electronics Industrialization:

year, totally 35 Japanese manufacturers（excluding Tokyo Tsushin Kogyo（the predecessor of “Sony”））concluded technical license contracts with RCA which held the most ofmajor TV patents. The Japanese B&W TV market also grew rapidly, mirroring what happened in the US market until 1960 when CTV gradually began to dominate the market in
Japan.
Shintaku（1994）pointed out that the Japanese TV industry began B&W TV production seven years behind its US counterparts and CTV production six years after. In thissense, the Japanese manufacturers were typical late comers to product technology, manufacturing capability and marketing know how. However, TV production volume in Japansurpassed that of the US in 1967, fourteen years after the first TV was produced in Japan.
This reversal of production volume between the two countries was due to the fact thatJapanese TV exports to the US steadily increased while hardly any US made TVs wasexported to Japan. In the early 70s, Japanese TV exports to the US stayed at 1 - 1.2 million units a year, while American TV manufacturers suffered from frequent ups anddowns due to business cycles7）.
2-2．The US-Japan Television War（the 1970s）
The US TV manufacturers became increasingly frustrated by the number of TV imports mainly from Japan. In the late 60s, the major TV manufacturers repeatedly demanded that the US government take a counter measures. In 1968, the US government conducted an investigation into dumping against Japanese TV exports to the US. This action
was taken in parallel to many other anti-dumping investigations and the enforcement of
the anti-dumping law on various products including carbon resistors, transformers, speakers and other electronic components.
In fact, Japanese consumer electronics manufacturers were pushing forward with amajor technological innovation : the introduction of transistors and semiconductors to consumer electronics. The originator of the idea of transistor application to consumer electronics was Sonyʼs transistor radio of 1955. In the mid 60s, most of Japanese consumer
electronics manufacturers substantially increased their transistor usage for consumer
electronics products including TVs.
Japanese manufacturers were ahead of their US counterparts in transistor application, which in the US was considered mainly for military purpose. Transistor application
for military purposes was a much more lucrative business than civilian applications in the
US. The introduction of transistor technology had two by-products in Japan. Firstly, the196

東京経大学会誌

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sales of conventional vacuum tube TV declined and it caused a decline of their market
price which triggered the dumping investigation by the US8）. The second by-productemerged in the 70s as production technology innovation that will be discussed further
later in the chapter.
On 16 August 1971, President Nixon announced a drastic US dollar rescue package
including, among the other things, the abandonment of gold convertibility of US dollars,
an increase of imports duty by 10％. This announcement implied a serious impact on theJapanese economy as well. It was called “Nixon Shock”. The exchange rate of the Japanese yen against US dollar had been fixed at 360 yen to a dollar throughout the post war
period since 1947. However, the yen/dollar exchange rate was changed to 308 yen to thedollar by the Conference of Finance Ministers representing ten major economic countries
in New York on 18 December 1971. The new exchange rate scheme is called Smithsonian
Rate named after the venue of the conference.
Most expected Japanese export oriented manufacturers such as the consumer electronics industry to suffer from this yen appreciation. However, Japanese TV exports to
the US did not decrease in number even after the yen appreciation. US TV manufacturers on the other hand suffered seriously from sluggish business conditions caused by the
first oil crisis in 1973.
In 1976, the US TV market showed a recovery from post-oil crisis recession. Its production volume grew by 32％ compared with 1975. In the same year, Japanese TV exports to the US peaked at 2.96 million units which was an extremely steep increase of 144％ from the previous year（1.75 million units increase）. Consequently, 88％ of that yearʼsmarket growth of 1.98 million units was taken by Japanese exports9）.
The US manufacturers made an urgent appeal to the US authorities. The US government approached the Japanese authorities for a trade agreement, because it did not findsufficient evidence for dumping. In 1977, both governments concluded an agreement
called the “Orderly Marketing Agreement（OMA）” which, in effect, forced Japanese manufacturers to voluntarily restrain their exports to the US. Under the OMA, in which aceiling of Japanese TV exports to the US was set at 1.75 million units, a drastic decline toapproximately a half a million in 1980 was seen. Consequently, TV production in the US
by seven Japanese manufacturers reached 3.57 million units.
During this troubled decade, all the major Japanese TV manufacturers started production in the US. Sony began its US production in 1972, and Matsushita（Panasonic）
purchased Quaser, TV division of Motorola, to initiate its TV production in the US. Sanyo
197

An Early History of Thailandʼs Electronics Industrialization:bought Warwick, one of the major American manufacturers in 1976. After the OMA in
1977, Mitsubishi, Toshiba, Sharp and Hitachi had built US production facilities by 1979.
This US-Japan TV war brought about two things. First, most of the major JapaneseTV manufacturers established their US production bases and then increased their total
TV sales（export + US domestic production）in the US. Secondly, most American TV
manufacturers were sold to either Japanese or European（Phillips and Thomson）TV
manufacturers. Only Zenith survived until the early 90s.
There may arise a question why this happened. The US manufacturers had various
advantages compared with their Japanese counterparts. Technologically, they were thefront runners in the 50s and early 60s. They had the worldʼs largest market. This meant
they had an advantage in the learning curve, and consequently cost competitiveness.
One of the most promising answers to this question was proposed by Shintaku（1994）. He argued that Japanese manufacturers were, at least, a few years ahead of their
American counterparts on the introduction of transistors and ICs10）. This can beinterpreted in two ways. First, transistorised TVs had many quality advantages comparedwith conventional vacuum tube TVs, which, for example, took longer to start showing a
picture. As transistor and semiconductor technology developed, the product defect rate
drastically fell and the product life became much longer.
Secondly, the wide application of transistors and semiconductors achieved a reductionin the number of required components and production technology innovation. By introducing transistors and ICs, it is said that Japanese manufacturers reduced number ofcomponents for a TV set by more than 30％. This also made the introduction of an autoinsertion machine possible. This improvement of production technology successfully reduced production cost by, on average, 37.9％.
With these technological innovations, Japanese manufacturers established a technological and cost advantages over their American counterparts. By the end of the 1980s,
Japanese TV manufacturers had acquired a competitive advantages in the world market.
Only European TV manufacturers such as Philips and Thomson remained as competitors.
This dominant market situation lasted for a long time, until the Japanese manufacturers
faced the toughest challenge in 1985, the steep yen appreciation.

3．Industrialisation Policy of Thailand
After the Second World War, recovery of the Thai economy was achieved through198

東京経大学会誌

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exports growth of primary agricultural commodities, such as rice, rubber, teak, tin andtapioca. Because of this, promotion of industry was not the central focus of government
policy. The history of Thai industrial development policy began in the 50s.
The Japanese Chamber of Commerce in Bangkok（JCCB）publishes a comprehensive Thai Economy Almanac. A part of this almanac gives concise description of the history of Thailandʼs industrialisation policy. According to this description, the history up to
the end of the 80s can be divided into five periods11）.
Attempt by Government-led industrialisation（the 1950s）
The Korean War, which was started on 25 June 1950, ended with a cease-fire agreement in July 1953. During the war, a large amount of emergency supplies for the war wasprovided by many Asian neighbours. However, the end of the war caused a steep declineof the international price of agricultural products. While Thailandʼs export earning declined, import of industrial products that had increased during the booming period was
not changed much. Because of this, Thailand suffered from growing trade deficits so that
Thai government was urged to take a necessary action to improve the trade balance.
In addition, nationalistic sentiment in many developing countries developed a belief
that they should industrialise their countries through their own capital accumulation.
Some of them chose Socialist system where the central command system and public ownership system prevailed. One typical example was China. India also introduced a quasi-socialist system.
The others chose non-socialist strategy preserving private ownership. For those nonsocialist countries, it was natural consequence to make efforts to promote indigenous industries to improve chronic trade imbalance. Therefore, “the import substitution industrialisation” was introduced by many developing countries.
In October 1954, the Thai government drafted an “Industry Promotion Law” and initiated its industrialisation efforts. The law stipulated establishment of an industrialisation
promotion government body, the Board of Investment（BOI）. The principal aim of thisindustry promotion law was to implement government-led industrialisation by establishing public corporations and enforcing strict control of industry by government. For thispurpose, the law had a clause that made governmentʼs capital participation into industrialisation projects compulsory. Therefore, Thailand was not attractive for foreign investors.
In fact, hardly any significant foreign investment was implemented during this period. In
addition, the government attempt of industrialisation through public corporation did not
199

An Early History of Thailandʼs Electronics Industrialization:achieve noteworthy success.
Beginning of private sector industrialisation（the 1960s）
Government-led industrialisation policy in the 50s did not succeed in either the promotion of industry, or an increase of foreign investment. At the end of the 50s, the Thaigovernment changed its industrialisation policy from a government-led industrialisation to
private sector-led industrialisation.
In line with this policy change, the Thai government enacted the “Industrial Investment Promotion Law（1962）”. Based on the unsuccessful experience of the governmentled industrialisation attempt, the new law gave the private sector a central role, while thegovernment was supposed to provide the private sector various supports such as subsidies and incentives. At the same time, the government introduced a clear policy to promote foreign direct investment. The new policy included the following measures ;1） Clarification of private and public sectors role respectively（private sector plays
the central role, while public sector concentrates in infrastructure development）
2） Promotion of import substitution industries
3） Promotion of foreign direct investment（Abolition of many restrictive measures forforeigner : a foreign investor is allowed to purchase and own a piece of land for a
factory, to remit profit from the factory to abroad, to hold a majority share of a
joint venture, and to be qualified to receive various incentives from the BOI）
Period of selective foreign direct investment promotion（1st half of the 1970s）
From 1969, the trade deficit of Thailand widened particularly, the trade imbalancewith Japan seriously worsening. Approximately, Thailandʼs imports from Japan were
three times larger than her exports to Japan. In line with the expansion of Japan-Thai
trade relationship, Japanese direct investment to Thailand substantially increased.
This Japanese direct investment brought not only capital but also Japanese management style into Thailand. Thai public negatively reacted to some types of Japanese management style. This may be a typical case of cultural conflict in relation with foreign direct investment. According to Kobayashi, a symbolic example of such cultural conflicts inthis period was “Noguchi Kick Boxing Gym” in 1972 which was designed to show the Kick
Boxing, a traditional and national sports of Thailand, in a coffee parlour. Thai general public took this as insult to Thai tradition and formed a negative public opinion against Japanese foreign direct investment12）.
200

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In 1972, the Thai government introduced a selective promotion policy for foreign direct investment by bringing into practice the “Investment Promotion Law” and the “Foreigners Occupation Control Law”. The new laws contained the following measures ;1） Promotion of export industry（import duty exemption for those components andraw materials for export manufacturing, corporate tax holiday for export-oriented
business）
2） Promotion of factory location in less industrialised regions（tax incentives for thosefactories located in designated less-industrialised regions）
3） Strengthening of BOIʼs administrative authority（BOI was given authority to decide length of tax holiday and level of import duty exemption）
Foreign investment promotion under strengthened BOI authority（2nd half of the 70s
and 1st half of the 80s）
Under the selective foreign direct investment promotion policy, the industrialisationof Thailand showed sluggish development and the Thai economy even suffered from recession. There were two factors behind this slow down of Thailandʼs industrialisation.
First, a few neighbouring countries such as Singapore introduced very well organised foreign investment promotion policy. Malaysia followed the policy change in the similar line.
Thailand, because of this, became less attractive for foreign investors.
Second, the second oil crisis slowed the world economy particularly the US. Foreign
direct investment aimed at either domestic market or export market. While export market showed a sluggish growth, the Thai domestic market was suffering from recession.
The Thai government consequently had to change its policy direction again from a selective and restrictive policy to liberalisation and export promotion.
Booming foreign direct investment（2nd half of the 1980s）
The so-called “Plaza Accord” was concluded among the leading world economies in
September 1985. This triggered an exceptionally steep Japanese yen appreciation. Thissudden and steep yen appreciation was far too severe for normal productivity improvement efforts even for Japanese export oriented-industries to absorb. The consumer electronics industry was no exception. The major consumer electronics companies werepressed to relocate their export bases from Japan to ASEAN countries.
In the case of Thailand, the number of investment applications to the BOI increased
five times, and the value of investment grew by nine fold during 1986 and 1989. Due to201

An Early History of Thailandʼs Electronics Industrialization:

the booming foreign direct investment, average GDP growth recorded double digits.
As we have observed in this brief history of Thailandʼs industrialisation policy, its
stance on foreign direct investment seems to shift from government intervention to laissez-faire. However, the following points should be noted ;1） Except for a short period（the early 70s）,Thailand maintained her tolerance to foreigners and foreign investment.
2） After unsuccessful government-led industrialisation, the Thai governmentʼs basic
industrialisation policy has been private sector centred.
3） Thai native business groups have been, unlike Korea, concentrating mainly not on
manufacturing sectors, but on service sectors such as commerce and finance.
4） Thailandʼs foreign direct investment policy particularly focused on export-oriented
industries after the mid 70s.
While Thailand was trying to improve their investment environment, many neighbouring countries did not implement policy change. Indonesia, because of her rich natural
resource such as oil, imposed many restrictions on foreign investments and held importsubstitution strategy. The Philippines took the similar policy stance, although it did nothave substantial natural resources.
For instance, only the Philippines and Indonesia maintained the pre-shipment inspection system for customs clearance for a long time. This pre-shipment inspection system isthat all the commodities exported to these countries had to go through the customs classification and valuation inspection at the shipping ports such as Yokohama. Although thissystem was intended to be an improvement of corrupt customs clearance at their home
ports because these inspection works were implemented by Swiss-based neutral organisation, it was highly time consuming and not relevant to the modern industrial production
system.
For foreign investors considering direct investment into the ASEAN region for their
manufacturing bases, the Philippines and Indonesia did not look “investor friendly” because of these countries restrictive measure for foreign investors. Therefore, the investment environment of these countries was not necessarily attractive to direct investment.
When the steep Japanese yen appreciation took place, the Japanese export-oriented industry found the investment environment of Thailand the most promising among the ASEAN countries.
202東京経大学会誌

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4．Japanese Investment in Thailand
For Thailand, Japan has been the largest source of foreign direct investment（FDI）
as well as official development aid（ODA）. Japanʼs accumulated FDI to Thailand was thelargest in both pre-Plaza Accord period（before ’85）and post-Plaza Accord period.
In particular, Japanese FDI to Thailand in the late 80s showed unprecedented fast
growth. Its share among the foreign investors increased from 26.7％（’65-’85）to 40.6％（’86-’99）as shown in Table 1. Thailandʼs export-oriented industrialisation has been said tohave started in this post-Plaza Accord period. During this period, the largest amount of
FDI came from Japan. The most of exporting factories in the consumer electronics industry in Thailand were built in this period. However, there was preceding history of a smaller Japanese investment booming in Thailand.
In the late 60s and early 70s, five major Japanese electronics manufacturers, Matsushita, Mitsubishi, Sanyo, Toshiba and Hitachi, established their production bases as joint
ventures in Thailand. Their investment was mainly aiming at the Thai domestic market
rather than exports. Under the import substitution policy of the Thai government, these
five companies decided to invest in Thailand as a response to an increase of import duty
rates13）.
Although most of these joint ventures had more than a 30,000 unit of TV production
capacity, even the largest manufacture, Sanyo, produced only 4,500 units a year. Most ofelectronic components require more than one million units of production to be commercially viable. Therefore, their TV production was a form of “Kit Production” where almost
all components are imported and only the very final assembly was completed in Thailand.
This can be confirmed by the fact that these factories employed only 692 people on
average. Compared with modern export oriented manufacturing facilities which usually
have over 1,000 employees are employed and more than one million units of TVs are produced, the production total of these five joint ventures were rather small and not full-scale
production systems.
As discussed in the preceding sections of this paper, the Japanese consumer electronics industry achieved global cost and quality competitive advantage through technologicalinnovation by introducing transistors and ICs. However, these joint venture production facilities were not designed to materialise these technological innovations into practice.
Rather they were typical FDI under import substitution policy of Thailand.
Labour intensive and small lot production, and heavy protection by import duty and203

An Early History of Thailandʼs Electronics Industrialization:
Table 1

Registered Capital Since 1965 in Thailand

Accumulated Total（Unit : million Baht）

Share（%）

ʼ65-ʼ85ʼ86-ʼ99ʼ65-ʼ85 Total ʼ65-ʼ85 Foreign ʼ86-ʼ99 Total ʼ86-ʼ99 Foreign

Total
ThailandForeign Total
Japan
USA
Taiwan36,63526,276
10,359
2,768
1,717
937

780,087
509,090
270,997
109,966
30,55821,530100.0%
71.7%
28.3%
7.6%
4.7%
2.6%

Hong Kong
UK
Singapore
Netherlands
Switzerland
Malaysia
FranceGermany

509
724
458
276
152
271
66
0

12,693
11,061
11,401
0
3,337
4,342
1,774
9,244

Others2,481

55,102100.0%
26.7%
16.6%
9.0%

100.0%
65.3%
34.7%
14.1%
3.9%
2.8%

100.0%
40.6%
11.3%
7.9%

1.4%
2.0%
1.3%
0.8%
0.4%
0.7%
0.2%
0.0%

4.9%
7.0%
4.4%
2.7%
1.5%
2.6%
0.6%
0.0%

1.6%
1.4%
1.5%
0.0%
0.4%
0.6%
0.2%
1.2%

4.7%
4.1%
4.2%
0.0%
1.2%
1.6%
0.7%
3.4%

6.8%

24.0%

7.1%

20.3%

Source : Board of Investment, Annual Activity Report,（various issues）

Table 2 TV Production Capacity and Production Statistics
Name of the Company
Kan Yong Electric Manufaturing（Mitsubishi)
Sanyo Universal（Sanyo)
National Thai（Matsushita)
UEI-Hitachi（Hitachi)
Thai Toshiba Electric Industries（Toshiba)

Year of
Establishment

Production Production
Production
Statistics
Statistics
Capacity
B&W
CTV

n.a.

18,000

2,000

250

1970
1969
1971

45,50036,00036,000

4,000
2,000
3,000

500
1,000

n.a.

30,000

1,500

150

500

Note : Production statistics is based on interview for 1979 and 1980 annual production
Source : Suehiro, Akira, Chapter 8 Thailand, in Institute of Developing Economies（IDE）ed.,“Hatten Tojokoku no Denki Denshi Sangyo （The Electric and Electronics Industry ofDeveloping Countries）,” IDE, 1981, pp. 240

other legal entry barriers are the typical features of the manufacturing industry under
the import substitution policy. Needless to say, the supply of components for a few thousand units of production in Thailand was far from commercially viable.
The Thai government, and almost all researchers and scholars, in those days, fully204東京経大学会誌

第 287 号

expected the import substitution industry to eventually grow and transform itself into anexport industry. However, the metamorphosis from an import substitution industry to anexport industry did not happen naturally. Thailand had to wait until another steep yen
appreciation by the Plaza Accord in 1985 to acquire an export oriented consumer electronics industry with a completely different production system from the import substitution system.
The steepest yen appreciation in Japanʼs history was triggered by the Plaza Accord
in 1985. In three years, Japanese yenʼs value against the US dollars was doubled. This
meant that the price in yen became twice more expensive in the US dollar terms in three
years. The Japanese consumer electronics industry, one of the leading exporting industries in Japan, faced serious situation. If it continued to export its products to the US fromJapan with the same export price in Japanese yen, its products would be sold twice more
expensive in the US dollar terms. If it reduced the export price in Japanese yen by half, itwould lose money. Most of the leading manufacturers rushed to Asian NIES（Newly Industrialised Economies）countries and ASEAN countries to find alternative export oriented production bases.
According to the survey by the Japanese Chamber of Commerce and Industry in
Bangkok（JCCB）in 1996, 76.7％ of member companies belonging to the manufacturing
Fig.1

Yen/$ Exchange Rate

280
260
240

Yen

220
200
180
160
140

Jul

Note : Monthly average exchange rates at the Tokyo Foreign Exchange market
Source : Bank of Japan（https://www.stat-search.boj.or.jp/ssi/cgi-bin/famecgi2?cgi=$ap181g3f）

205

Oct

Apr

Jan 88

Jul

Oct

Apr

Jan 87

Jul

Oct

Apr

Jan 86

Jul

Oct

Apr

Jan 85

Jul

Oct

Apr

Jan 84

Jul

Oct

Apr

Jan 83

Jul

Oct

Apr

Jan 82120

An Early History of Thailandʼs Electronics Industrialization:industry were established in Thailand after the yen appreciation in 1985. As shown in Table 3, 63 companies（54＋9）were established after 1985 in the electronics and electricalmachineries industry, while only 9 companies had been established before 1985. In theelectronics and electrical machineries industry, the share of those companies establishedafter this steep yen appreciation in 1985 reaches 87.5％. This fact can be interpreted as
the result of Japanese consumer electronics industryʼs relocation of their export bases
from Japan to Thailand.
Japanese electronic machineries manufacturing companies established in Thailand
were divided into two groups, those founded before 1985 and the rest. There seems to bea gap between these two groups. The first group established before 1985 is, as discussed
before, an import substitution type where most of the components are imported and assembled by relatively labour intensive methods. Because of this, the required amount ofinvestment was rather small. Among the other things, they did not have to face international competition because of government protection.



Table 3 Japanese Direct Investment to Thailand（Number of Companies in the Year of Establishment）

Food/Agriculture/Fisheries
Textile/Garment
Lumber/Paper
Chemical/Pharmaceutical
Petroleum
Ceramics
Steel/Non Ferro-Metals
Metal Products
Machineries
Electronics/Electric Machineries
Transport Machineries
Car
Motor Cycle
OthersPrecision Machineries
Other Manufacturing Industry
Sub-total

～69

70～79

80～84

85～89

the 90s

2
8
0
6
1
1
3
2
0
4
5
3
3
1
0
0
32

3
2
0
9
0
1
0
1
0
2
3
1
0
1
1
6
28

1
2
0
1
0
0
2
0
1
3
0
0
0
0
0
2
12

14
12
3
13
1
5
16
28
10
54
14
9
2
2
6
38
203

3
5
0
2
1
1
2
8
2
9
4
3
2
0
2
1
34

Note（1）: Figures indicate the number of JCCB member companies established in each decadeNote（2）: Some of companies are engaged in more than one category of business. Sub-total does notnecessarily correspond to a simple total number of companies.
Source : Survey on Japanese Manufacturing Industry in Thailand, June 1996
“Shoho（Monthly Bulletin）”, Japanese Chamber of Commerce and Industry, Bangkok

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Table 4 is the export ratio of those JCCB member companies.
In the first place, the export ratio of the electronics and electrical machineries industry was higher than the manufacturing industryʼs average. It is noteworthy to point out
that 41.8％ of companies belonging to the electronics and electrical machineries industry
have had 100％ export ratio. Furthermore, in the case of the companies belonging to theelectronics and electrical machineries industry, totally 79.1％ exported more than a half of
their shipment.
Before looking at the further details, there are a few points to be noted.
1） Japanese manufacturers successfully introduced transistors and ICs into TV manufacturing in the early 70s.
2） By introducing transistors and ICs, they achieved a substantial reduction of thenumber of required components.
3） This reduction of the required number of components brought about a cost reduction and improvement in the quality and performance of products.
4） The introduction of transistors and ICs also made the introduction of automaticcomponents insertion machines into workshops possible. These automatic components insertion machines replaced labour intensive production process and contributed further to improvement of productivity and quality control.
Taking the fact that 87.5％ of the companies belonging to the electronics and electrical machineries industry were established after 1985（Table 3）into consideration, themajority of those factories established after 1985 were likely highly export oriented and,then consequently, might be considered as a result of transfer of export bases from Japan
to Thailand.
Table 5 is the industry-wise breakdown of the member companies of JCCB. The typeof industries is highly diversified from the electronics and electrical machineries industry
to the ceramics industry. However, it is noticeable that the electronics and electrical ma-

Table 4 Export Ratio （Share of Exports in Total Shipment）

Electronics & Electrical Machineries
Manufacturing Industry AverageLess than 30%

30～49%

50～99%

100% Export

16.4%
27.4%

4.5%
10.9%

37.3%
38.3%

41.8%
23.8%

Source : Survey on Japanese Manufacturing Industry in Thailand, June 1996
“Shoho（Monthly Bulletin）”, Japanese Chamber of Commerce and Industry, Bangkok

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An Early History of Thailandʼs Electronics Industrialization:
Table 5 Japanese Manufacturing Companies by Business Category

Electronics and Electric Machineries
Metal Products
Chemicals and Pharmaceuticals
Textile and Garment Products
Transport Machineries
Food, Agriculture and Fisheries Products
Steal and Non Ferro-Metals
Machineries
Precision Machineries
Ceramics
Petroleum Products
Lumber, Paper and Pulp
Other Manufacturing Industry

No. of Companies

Share（%）

74
39
31
30
28
23
23
13
9
9
3
3
49

23.3
12.3
9.7
9.4
8.8
7.2
7.2
4.1
2.8
2.8
0.9
0.9
15.4

Note : Some companies are engaged in more than one category of business.
Real total number of the companies does not correspond to a simple sumof numbers indicated above.
Note : The numbers above are the member companies of JCCB
Source : Survey on Japanese Manufacturing Industry in Thailand, June 1996
“Shoho（Monthly Bulletin）”, Japanese Chamber of Commerce andIndustry, Bangkok

chineries industry is the largest group of companies with 74 members. It should be notedthat the electronics industry consists of the final product industry and the component industry. Among those 74 companies belonging to the electronics and electrical machineries
industry, some are the final product manufacturers and some others are component manufacturers.
Component manufacturers supply their products to final products manufacturers either in Thailand or outside of country. However, those final product manufacturers tend
to have higher export ratio.
Table 6 is the breakdown of the JCCB member companies on the basis of the type ofindustry. In the table, “Assembly Industry” corresponds to the final products industry inthis studyʼs terminology, and “Supporting Industry” corresponds to the component industry. Values in Table 6 require some special attention to understand. Some of the member
companies of JCCB are both final product manufacturers and component manufacturers
at the same time. For instance, some final product manufacturers produce components bythemselves for their final products. At the same time, they supply those components toother final product manufacturers. Therefore, there is some double counting in number of
208東京経大学会誌

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Table 6 Japanese Companies by Business Category and by Type of Industry
Assembly Industry Supporting Industry No Answer
Metal Products
Machineries
Electronics/Electric Machineries
Transport Machineries
Car
Motor Cycle
OthersPrecision Machineries
Other Manufacturing Industry

21（53.8%）
10（83.3%）
51（68.9%）
16（57.1%）
11（64.7%）
7（87.5%）2（50.0%）5（55.6%）28（62.2%）25（64.1%）
4（33.3%）42（56.8%）
14（50.0%）6（35.3%）3（37.5%）2（50.0%）7（77.8%）25（55.6%）

0
1
0
0
0
0
0
0
4

Note（1）: Figures indicate the number of JCCB member companies established in each decade.
Note（2）: Some of companies are engaged in more than one category of business. Sub-total does
not necessarily correspond to a simple total number of companies.
Source : Survey on Japanese Manufacturing Industry in Thailand, June 1996
“Shoho（Monthly Bulletin）”, Japanese Chamber of Commerce and Industry, Bangkok

companies. Totally 74 companies of JCCB members belong to the electronics and electrical machineries industry. Among those 74 companies, 51 companies（68.9％＝51/74）arefinal product manufacturers, while 42 companies（56.8％＝42/74）are component manufacturers. Therefore, 19 companies（51＋42－74＝19）belong to the final product industry
and the component industry at the same time.
As pointed out, 56.8％ of Japanese companies belonging to the electronics and electrical machineries industry located in Thailand are component manufacturers（Table 6）.
Table 4 shows that only 20.9％ of companies exporting less than half of their shipmentfrom the electronics and electrical machineries industry. Therefore, it is presumed thatthose companies with high export ratio are not limited to the final product manufacturers.
The Japanese component manufacturers in this industry located in Thailand are presumed to be internationally competitive and capable of exporting their components to theoverseas market.
Based on analysis of statistical data, it is useful to point out the followings ;1） The electronics factories located in Thailand were mainly established after 1985.
2） Both final product and component industries established after 1985 were export-oriented.
3） Because they were the result of transfer of export bases from Japan to Thailand,
they had to be globally competitive in terms of productivity.
4） In order to achieve high productivity and a high level of quality control, a large
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An Early History of Thailandʼs Electronics Industrialization:

scale automatic production system was introduced along with their large scale production volume.
5） Regardless to all these, there still remained some import-substitution subsidiaries inparallel to other export-oriented subsidiaries
These facts can be explained from three different aspects. First, Yen appreciation
since 1985 made all the costs of production in Japan much more expensive in the US dollar terms. It was not just a hike in labour cost. Therefore, partial relocation of labour intensive part of production process did not make sense to the Japanese consumer electronics industry. As long as the products are made in Japan, those products became twice
more expensive in the US dollar terms. They did not have any other choice but to implement full-scale relocation of their export bases from Japan to, for example, Thailand.
Second, as discussed in the preceding section of this paper, the Japanese consumer
electronics industryʼs export bases in Japan were highly automated and integrated aslarge production systems. Because of this, it was not relevant to consider to extract only apart of the system to do partial relocation of production process. Consequently, a full-scale
relocation of production process as large export base was chosen for FDI by the Japanese
consumer electronics industry after 1985 Plaza Accord.
Third, nevertheless, the government of Thailand still imposed higher import duty on
final consumer electronic products, as pointed by Chintayarangsan（1991）. In addition, it
was easier to build a new export oriented factory rather than transforming a small import-substitution factory to export oriented one. Consequently, the import substitution factories and export oriented factories co-existed in the late 80s and the 90s.

5．Investment Environment of Thailand
Among the member countries of ASEAN, Thailand has been one of the most favoured destinations for Japanese foreign direct investment（FDI）together with Singapore and Malaysia. Harada and Ino（1988）compiled a list of the major reasons why Thailand has been popular among Japanese investors for their FDI14）.
1） Political and social stability2） Laissez faire policy and FDI promotion measures3） Social tolerance towards foreigners and foreign capital4） Rich in human resources with competitive labour cost210

東京経大学会誌

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5） A relatively large domestic market
6） Gateway to greater Indo-China
7） Compared with other countries, Thailand does not have any particular disadvantage.
Harada and Ino（1988）write that although Thailand may not be particularly outstanding in any one or a few factors to attract foreign investors compared with neighbours, when all the factors are taken into consideration, Thailand offers the best investment environment overall.
Indeed, these factors can be accepted as general attractive points of Thailand for FDI
from foreign investorʼs point of view. However, an analysis on the motives of FDI to Thailand discovers some differences among industries and a change in the same industry interms of motives of investment into Thailand. Table 7 shows difference in reasons for Japanese FDI between the two groups of companies established in Thailand.
JCCB survey shown in Table 7 covers totally 312 JCCB member companies in the
manufacturing industry. In the Table, those companies are divided into two groups. The
first group of 68（22.3％）companies started their production before 1985, while the second group of 236（77.6％）came to Thailand after 1985. It should be noted that those import substitution manufacturers coming to Thailand before 1985 focused on domestic market expansion. On the other hand, those Japanese investments after 1985 came toTable 7 Reasons for Direct Investment Decisions in Thailand by Start Year of Production（Before（No. of Co.）
1985 and After 1985）
～ʼ84

ʼ85～

No answer

Domestic Market Growth
Yen/Dollar Exchange Rate Changes *Requests by Business Partner **

48
2
3

62
52
35

4
1
1

Labour Resources ***Supply to Third Country
Raw Material Resources
Response to Governmentʼs Import Restriction
Sub-Total（312 firms answered）

2
5
4
4
68

35
32
11
5
236

1
0
1
0
8

Note : Totally 312 companies（Japanese affiliated）answered to this questionnaire survey.
No answer means that the company did not specify the start year of production.
* Yean/Dollar exchange rate changes imply “steep Yen appreciation against US$.”** Requests by Business Partners implies requests from those companies purchasing components and/or
raw materials.
*** Response to labour shortage in Japan
Source : Survey on Japanese Manufacturing Industry in Thailand, June 1996
“Shoho（Monthly Bulletin）”, Japanese Chamber of Commerce and Industry, Bangkok

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An Early History of Thailandʼs Electronics Industrialization:

Thailand for both the domestic market and the yen appreciation against the US dollars.
Table 8 shows the industry-wise distribution of reasons for investment. In Table 8,
the electronic machineries industry focused on both the domestic market（21 companies :28.7％）and yen appreciation（19 companies : 26.0％）, while transport machineries industry（car and motorbike）focused almost solely on the expansion of domestic market（18companies : 64.3％）. To this extent, it can be confirmed that Japanese electronics manufacturers came into Thailand to transfer their export production bases from Japan to Thailand. They were export oriented. Nevertheless, they also intended to cultivate the Thai
market.
Unlike the electronic machineries industry, the transport machineries industry did
not transfer their export base from Japan to Thailand. Rather, they built factories to caterfor their specially designed Asian cars for the ASEAN market.
Therefore, it is noteworthy that the motive for FDI by the electronics industry waschanged in 1985 from import substitution type of investment to export-oriented type ofinvestment. However, the motive of the transport machineries industry continued to be
domestic market and regional market oriented.
The discussion has been focusing on attractiveness of Thailand for FDI. However, theattention should also be paid to comparative advantage of Thailand as FDI destination.
After 1985 Plaza Accord, there were five countries, among the ASEAN member
states, that tried to attract foreign direct investment. They were Thailand, Malaysia, SinTable 8

Reasons for Direct Investment Decisions in Thailand by Categories of BusinessElectronics &Transport
Chemical &Electrical Mach. Machineries Pharmaceuticals

Domestic Market Growth
Yen/Dollar Exchange Rate Changes *Requests by Business Partner **Labour Resources ***Supply to Third Country
Raw Material Resources
Response to Governmentʼs Import Restriction
Sub-Total

21
19
7
11
12
1
1
73

18
1
5
0
2
0
2
28

22
0
5
0
3
1
0
31

* Yean/Dollar exchange rate changes imply “steep Yen appreciation against US$.”** Requests by Business Partners implies requests from those companies purchasing components and/or
raw materials.
*** Response to labour shortage in Japan
Source : Survey on Japanese Manufacturing Industry in Thailand, June 1996
“Shoho（Monthly Bulletin）”, Japanese Chamber of Commerce and Industry, Bangkok

212東京経大学会誌

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gapore, Indonesia and the Philippines. Vietnam was not member of ASEAN and did notstart its Doi Moi, liberalisation policy until 1987.
Among these countries, Singapore obviously offered the most attractive investment
environment. Singapore facilitated the most extensive tax incentives for foreign direct investors starting from Pioneer Status covering not only manufacturing sectors but the service sectors. As far as manufacturing sectors are concerned, Singapore was the most successful country to attract foreign direct investment. However, Singapore had alreadyshifted its focus on investment promotion from labour intensive manufacturing to information and knowledge intensive functions such as RHQ（Regional Headquarters）or OHQ（Overseas Headquarters）, and R&D centres. From the investorʼs point of view, the labour
supply in Singapore was already limited and the operation cost for manufacturing bases
was much higher than her ASEAN neighbours.
Although Indonesia received the largest Japanese direct investment, most cases of direct investment were either oil related or textile related. The largest sector for foreign direct investment in Indonesia was petrochemical plants using Indonesiaʼs rich oil resources.
Historically, Indonesiaʼs investment promotion policy has swung between nationalistic import substitution policies and pragmatic export oriented policies. On the one hand, nationalistic and political motives to build ethnic Indonesian owned businesses rather than Chinese Indonesian business groups prevailed among the political leaders. On the other hand,Indonesiaʼs rich oil and gas resources had been one of the largest sources of foreign currency income. Because of these factors, import substitution policy became dominant when
the price of oil was high, and an export oriented policy prevailed when oil prices declined.
For instance, Indonesia amended its tax related system on 1 January 1984. In thisamendment, various investment promotion measures including tax incentives for foreign
investors were abolished. There consequently remained only various restrictions for foreign capital and an unnecessarily complicated customs clearance and taxation systems. In
such a way, regardless of the fact that it had the largest population among the ASEAN
nations, Indonesia was not the most attractive destination for non-oil foreign direct investment after 1985.
Indonesia also changed its policy towards liberalisation and deregulation in the early90s. However, the massive Japanese foreign direct investment boom was already finished.
The Philippines has been promoting foreign export oriented manufacturers. However,it has kept a basic policy to segregate foreign manufacturers from the domestic market.
One may consider this policy as a classic export promotion policy that is in line with im213

An Early History of Thailandʼs Electronics Industrialization:

port substitution strategies. Traditionally, the Philippines has followed an American stylepolitical system as well as business practice.
Because many American manufacturers’ way to cope with global competition was torelocate their production base from their soil to other countries with cheaper labour cost,almost all finished or semi-finished products produced overseas have been supposed to betaken back to the US. To this extent, the American way of overseas production had to be
conducted with maximum usage of cheap labour and a minimum number of American expatriates assigned to a factory.
The Philippines adopted the best way to attract such American business style to promote American investment. Its foreign investment promotion scheme did not have toopen domestic markets. Because of this, the Philippines kept its free trade zone（FTZ）
isolated from her domestic market. It also kept a large negative list for foreign entry. On
top of this, the Philippines had the notorious PSI（Pre-Shipment Inspection）that requiredcomplicated and time-consuming procedures for custom clearance. The tax incentive andadministrative flexibility was much less than that of Malaysia. Labour disputes and security problems were also an inevitable part of doing business in the Philippines. Because of
these, Japanese direct investors looking for export bases did not find the Philippines attractive as a destination for their investment.
Consequently, only Thailand and Malaysia were seen as promising foreign direct investment destination for Japanese manufacturers who were looking to relocate their export bases from Japan. Malaysia was one of the most successful cases for foreign direct
investment among the ASEAN countries. However, her small domestic market and thebumi-putra（Malay First）policy as a political agenda limited her success as export basedevelopment.
On the basis of the abovementioned analysis, we may notice that general and static
conditions proposed by Harada and Ino（1988）are not sufficient to explain the success ofThailand. The general investment conditions offered by Malaysia were much more generous : facilitating various tax incentives and a “one window” administration system. The
Malaysian government were prepared to respond favourably to various requests by foreign direct investors. Indonesia liberalised cumbersome administrative procedures andpromoted industrial estates development by Japanese trading companies to promote Japanese direct investment from the early 90s.
Regardless of Malaysiaʼs favourable investment environment in general, car manufacturers, with the exception of Mitsubishi which joined Malaysiaʼs national project, did not
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invest in Malaysia but in Thailand. Because the Malaysian government set an entry barrier for foreign car manufacturers to protect its own national car industry, Proton, Thailand
became the car manufacturing centre of the ASEAN nations.
Indonesia, regardless of its efforts, could not attract non-oil manufacturing industries
the way that Thailand and Malaysia had, because Indonesia simply came too late. The
Japanese and subsequently Taiwanese and Korean manufacturing investment boom
slowed down in the early 90s.
Therefore, we may add the following to the list of reasons for Thailandʼs success ;1） The Thai government maintenance of “hands off” industrial policy which did not attempt any government-led industrialisation project such as “National Car.” This
hands off policy successfully kept the door of Thailand open for many foreign investors.
2） Liberalisation of Thai foreign direct investment promotion was timely making thebest of the steep Japanese Yen appreciation and the subsequent Japanese overseas
investment boom.
3） The investment environment Thailand was favoured by two leading industries fordifferent reasons. The electronics industry chose Thailand as their export base,while the transport machineries industry favoured Thailand because of her relatively large domestic and regional market.

6．Conclusion
Thailand achieved full-scale industrialisation in the late 80s through the introductionof foreign direct investment as well as technology transfer. As the largest foreign investor
into Thailand, the Japanese manufacturing industry played the most important role during the period. To this extent, Thailand, in parallel with Malaysia, was the first case of industrialisation by foreign capital rather than indigenous capital. Compared to Korea andTaiwan, Thailand chose a strategy to achieve industrialisation by using foreign capital,technology and know how for the first time in modern history15）.
There seem to be three major factors which contributed to the industrialisation ofThailand. First is the investor side factor. Japanese consumer electronics manufacturers
succeeded in achieving technological innovation through introduction of transistors andICs. They substantially improved performance and quality of CTVs and, at the same time,215

An Early History of Thailandʼs Electronics Industrialization:

established a cost advantage by introduction of automated production systems. In the early 1980s, the only real competitors for Japanese consumer electronics manufacturers werea few European manufacturers.
When a very steep yen appreciation took place after the 1985 Plaza Accord, Japanesemanufacturers tried to find a way to cope with this external shock where products produced in their factories in Japan became three times more expensive in dollar terms injust three years. The only choice was to relocate their export bases from Japan to somewhere else very urgently.
The second is the foreign direct investment recipient factor. Thailand had given up
its government-led nationalistic industrialisation attempt at an early stage in the post war
period. Thai local business groups mainly focused on the service and finance sectors, rather than the manufacturing sector. Therefore, Thailand did not have indigenous businessgroups to protect in manufacturing sector. Furthermore, it continuously suffered fromtrade deficits, hence eagerly looked for any industry to contribute to her exports. By theearly 80s, Thailand had already facilitated a foreign investment friendly environment.
This foreign investment environment included opportunity for foreign capital to produce
products in Thailand not only for exports but also for the domestic market.
The third is changes in the way of foreign direct investment. In the post war period,
the first dominant way of foreign direct investment in manufacturing industry was theAmerican way. Some American manufacturers relocated their most labour intensive partof the production process to some places where labour cost was much cheaper. Let us callthis “Type I FDI” where “a partial relocation of the production process” takes place andfinal products are exported back to home country（the US）.
This style of FDI was also convenient for a country like the Philippines that had domestic industry to protect, because all the semi-finished products were shipped back to
the US, not to harm domestic market at all. Instead, this style of foreign direct investment
produced only a large number of low labour cost employment opportunities and a few
privileged local business people either as joint venture partners or as the elites assuming
top management posts of those joint ventures.
The second way of foreign direct investment was “a partial relocation of production
process” to cater for the host countryʼs domestic market. A development country thatmaintains import substitution policy sets high import duty or quantitative restriction on
imports to protect its domestic market. If a foreign manufacturer who intends to cultivate
this developing countryʼs market, it has to find a way to cope with the high import duty.
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It is theoretically possible to export its products regardless to the high import duty. However, a practical solution for most cases is to build a small factory which has only final assembly capability to cater this protected market instead of export. Let us call this “TypeII FDI.” Although many developing countries hope this type of FDI would turn to real industrialisation in the future, such transformation did not happen.
The third way of direct investment is full-scale relocation of production bases. Thevery steep yen appreciation after 1985 was far too large an external shock to absorb by
cost reduction through “Kaizen” for Japanese manufacturers. They did not have any otherchoice but to relocate the entire production process to a third country whose local currency was not appreciated and rather stable against the US dollar. Unlike the Type I and II
FDI, the finished products were meant to be exported to the third countries such in the
North-America and the Europe. This was particularly necessary for price sensitive low
end products. Let us call this “Type III FDI.”
Because this was full-scale relocation of production bases by final products manufacturers, component manufacturers could expect their customers in Thailand. Foreign direct investments by component manufacturers, in Thailand, took place in parallel to thoseby final products manufacturers. This is the reason why Thailand has a more balanced industrial structure where both final products and component manufacturers are located. In
this period, liberalisation of capital movement became part of mainstream discussion in
GATT Rounds. This also contributed to the third type of foreign direct investment.
It is noteworthy that the Type II FDI remained in Thailand in the 80s and the 90s inparallel with Type III FDI because of remaining relatively high import duty on finishedproducts. As discussed in introduction, those recent research works by Song, Edingtonand Hayter found out dynamic evolution of subsidiaries of Japanese electronics MNEs in
East Asia. However, in the early part of Thailandʼs industrialisation by electronics industry, there were heterogeneous evolution processes of the subsidiaries roles.
Notes
1 ）Akira Suehiro is a pioneer of Thai economic and business studies in Japan. He wrote numerous papers and books including Suehiro（1989 a）which has been considered as a pioneer
work on economic studies of Thailand. This book entitled “Capital Accumulation in Thailand
1855-1985” covers the period before the Japanese investment booming period starting 1985.
In contrast, Suehiro（1989 b）covers the booming period since 1987.
2 ）Onishi（1999）focused international division labour and global strategy of Japanese electronics on the whole covering ASEAN countries and China. Therefore, his work is not necessar-

217

An Early History of Thailandʼs Electronics Industrialization:
ily specialized in the Japanese electronics subsidiaries in Thailand
3 ）Song（2002）investigated in individual company specific data collected from Toyo Keizai
and others.
4 ）Edgington and Hayter wrote many other papers closely related to their works published in
the same year, Edgington and Hayter（2013 b）, Edgington and Hayter（2013 c）
5 ）The data were taken from JEITA（2002）: Japan Electronic and Information Technologies
Association, “The Electronics Industries Data Book”, JEITA : Japan Electronic and Information Technologies Association（JEITA）is the industrial association of Japanese electronics
manufacturers. In collaboration with the ministry of economy, trade and industry（METI）,
it publishes many periodicals including JEITA（2002）.
6 ）Porter（1983）is the most comprehensive case study of early development history of the
US television industry and the market. The detailed description is given in pp. 453.
7 ）Shintaku（1994）attributes this Japanese manufacturers’ success to fast introduction ofsemiconductors（transistors）and subsequent drastic improvement of productivity in pp. 41.
8 ）JEITA（2002）
9 ）Shintaku（1994）pp. 4410）Shintaku（1994）pp. 49-69.
11）JCCB（2000）pp. 124-127
12）Kobayashi（2001）pp. 75-77
13）IDE（1981）pp. 240-244
14）Harada and Ino（1988）pp. 113-118
15）For the development of Thai electronics industry, in addition to Japanese MNEs, many
American MNEs also made substantial contribution. However, this paper is an attempt to
examine the Japanese electronics subsidiaries activities in Thailand in the 80s and the 90s
covering the 1985 “steep Yen appreciation” period. Analysis on those American MNEs’ contribution is given to another opportunity.

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