The mother factory system is said to have broadly diffused the system of international division of labor used by Japanese manufacturers. However, is that truly the case? This paper provides an example of a supplier having a "facade mother factory" to respond to the demands of assembly manufacturer customers. This facade mother factory was not "a unit that continuously supports overseas factories," as defined in prior studies. Instead, it was rather a "mother factory" needed as a facade to provide technical support services for customers, who happened to be Japanese companies.
In response to arguments on the hollowing out of industries whereby an expansion in overseas production causes decreased domestic production, recent studies, primarily in the field of international economics, have pointed out the increase in domestic production due to an expansion in overseas production. Regarding specific mechanisms, Amano (2000) emphasized that when large companies with abundant management resources expand their overseas production, their spontaneous and induced conversion behaviors cause an increase in domestic production. Responding to this assertion, on the basis of case studies on small-and medium-sized enterprises (SMEs) with few management resources, this paper discovered a mechanism in which abundant management resources are not assumed. This mechanism was observed in the automotive parts industry in Japan, which faces difficulties in acquiring new customers because of fixed relationships. In this industry, it is a) Faculty of Economics, Seikei University, 3-3-1 Kichijoji-kitamachi, Musashino-shi, Tokyo, Japan, hamamatsu@econ.seikei.ac.jp A version of this paper was presented at the ABAS Conference 2016 Spring (Hamamatsu, 2016). ©2016 Shohei Hamamatsu. This is an Open Access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted reuse, distribution, and reproduction in any medium, provided the original work is properly cited. Hamamatsu 212 possible to acquire new customers domestically through torihiki-jisseki ("track record of transactions" in Japanese) when overseas manufacturing sites conduct business with new customers. However, this strategy is a paradox for SMEs in Japan that wish to grow and survive domestically since it advocates overseas expansion rather than domestic expansion.
Discussions regarding managers in overseas subsidiaries often center around only two options: (a) sending someone from the parent country (a parent-country national expatriate, or P-CONE), or (b) using a local resource (a host-country national). The conventional wisdom is for a parent company to send a P-CONE when an overseas subsidiary is in the initial start-up phase, and to eventually promote a local host-country national. However, this paper introduces a case where headquarters (c) hired a local resource (a host-country national expatriate, or H-CONE) and sent that person to the host country, and this was a superior solution to the other two options for externalizing local issues and developing a business based on a relationship with the parent country. Exchange students from other parts of Asia are currently increasing in Japan, as are exchange students being hired by Japanese companies. For Japanese companies expanding in Asia, this third option is becoming more of a reality. A new human resource strategy needs to be developed that breaks away from only the dual options of (a) and (b) and includes (c).
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