American MNEs pursuing cost-reduction strategies. Japanese firms began to relocate their production bases during the early 1970s towards the NIEs and Malaysia, while during the 1980s they also moved towards the Philippines, Indonesia and Thailand. A peculiar characteristic of the recent years is the increasing role of Asia as a market for microelectronic devices. This is principally due to the process of industrial relocation occurring in the Region, which in turn induces the activity of reciprocal local sourcing from the various countries to increase.

## Electronic Parts : Components

The industrial transfer in the production of non-microelectronic parts and components is driven by small and medium enterprises which follow the previous relocation of their customers. They usually serve under subcontracting foreign producers of consumer goods, the sub-sector were the most intense transfer process is occurring. In particular, the industrial relocation trend was accelerated during the second half of the 1980s in the wake of the FDI growth from Japan, Taiwan and South Korea towards the ASEAN4 countries. Despite the fact that usually the required technology is not particularly difficult to be mastered, especially in the ASEAN4 countries it seems difficult for local firms to develop and enter the production network of the foreign MNEs as parts suppliers, due to several problems mainly related to quality standards, delivery time, and experience in dealing with foreign partners.

#### 3. JAPANESE ELECTRONICS INDUSTRY AND ITS STRATEGY IN ASIA-PACIFIC 3.1 Recent trend of Electronics in Japan

Since the 1980s, Japanese electronics industry presents two major tendencies. First, the relative share of Japan to the overall international industrial production is rapidly increasing. Second, electronics has been playing a leading role in terms of contribution to the development of the internal economy.

The Japanese model of production is losing its traditional vocation to the export of household consumer electronics and is becoming more and more oriented towards high-technology equipment goods and electronic parts for industrial use. This tendency is marked by the gradual reaching for Japan of independence from western and in particular from American technology in the more sophisticated goods. In fact, the process of electronics development in Japan was started by technology borrowing from the more advanced countries and relied for long time on foreign efforts for research. Internally, the focus was primarily on the development of new products, which in turn fostered the Japanese success in the field of consumer goods. In the recent years, however, the engagement in basic research has been increased, and Japan is gradually shifting its structure of comparative advantages towards more technology intensive products, like telecommunication equipments and computers.

Table 3.1 shows the relative shares of Japan, USA, Europe and East Asia to their combined output for electronics in 1988 $ ^{17} $ . Japan was leading the overall production with a share of 35.9%, and in particular was still relatively very strong in consumer electronics (54.4%) as well as in electronic parts (37.9%). With regard to the output of industrial goods, however, the United States held the largest share (41.6%), followed by Europe (31.6%) and finally by Japan (22.1%).