investment flows were respectively 31 million ringgits (15 projects) in 1986 and 2 billion ringgits (51 projects) in 1990.

The sub-sectorial classification of the Japanese electronics industry's production facilities in Malaysia (confronted to the total for ASEAN4 countries, Asia and the World) is shown in table 3.6. At the end of 1990, EIAJ registered a total of 94 Japanese companies operating in Malaysia, mainly concentrated in electronic parts (64) and consumer goods (30). Malaysia covered a relatively high share with respect to the total of the ASEAN4 and more in general of Asia. Considering the total of electronics industry, Malaysian share was in fact 20% of Japanese FDI towards Asia (449 projects) and 59% of that towards the ASEAN4 countries (160). The relative importance of Malaysia in ASEAN4 is higher in the case of electronic parts (64 projects - 65%) and lower for industrial goods (5 projects - 31%).

With regard to the size of the firms, Japanese investments can be divided into two groups which present remarkable differences: projects of MNEs and those of SMEs $ ^{28} $ . “Globalization” is the new strategy adopted by Japanese electronics MNEs in response to the increasing level of international competition and the markets’ evolution, after the second half of the 1980s. According to this strategy, their production and commercial operations - planned from a global perspective - have been re-organized into four areas: Japan, Asia, North America and Europe. As for Asia, the new production operations tend generally to be located in the ASEAN4 countries, while part of their head-quarters, R&D and commercial centres is gradually shifting from Tokyo to Singapore.

These changes have induced an intensification of the intra-firm and intra-industry trade in the Region for two main reasons. First, the reciprocal sourcing of parts among Asian Pacific countries has been dramatically intensified by the industrial transfer occurred from Japanese electronics firms. Second, export-oriented government policies. Take for example the investment incentive packages offered by Malaysian authorities: projects whose production is totally destined to export markets receive greater privilege. Consequently, locally established firms may be induced to export 100% of their output to other Asian Pacific countries and eventually to re-import from Singapore the share needed for internal consumption $ ^{29} $ .

The strategy to invest in Malaysia followed by the Japanese electronics SMEs is basically different. Their process of relocation started only during the late 1980s, as they were forced to follow the shift of the markets for their products from Japan to Asia, due to the massive transfer occurred from the MNEs. In fact, Japanese electronics SMEs are generally part suppliers, linked to the big companies through sub-contracting or OEM $ ^{30} $ contracts which strictly limit their strategic decisions.

There are two main patterns they usually adopt to invest in Malaysia. The first one is when their market is restricted to only one company and they usually receive many pressures but also assistance to follow the previous transfer from the MNEs. The second one is when they sell their output to several producers and they are induced to go abroad due to the overseas relocation of their customers. In this case, in particular, they may not have any preferential relationship with one big company and can afford the investment decision more independently. In both cases the risk is high. SMEs usually lack of experience and of adequately prepared personnel. Moreover, they might be hampered by the eventual presence