The collapse of Japanese companyist regulation and survival of the upstream industry: developing East Asian production linkage

The rise of the global economy has transformed competitive and interdependent relationships in East Asian production linkage. With the development of globalization, Japanese downstream industry, such as manufacturing and especially the consumer electronics industry, is facing fierce competition from the catch-up phenomenon in South Korean, Taiwanese, and Chinese manufacturers. Many factories for Japanese consumer electronics firms have been forced to shut down. In addition, their suppliers, upstream Japanese firms like electronic component and equipment suppliers, have lost their business in the domestic Japanese market and have experienced pressure to enter global markets. With regard to the Japanese upstream industry and Taiwanese thin film transistor liquid crystal display (TFT-LCD) downstream firms, the Japanese electronic component and equipment suppliers have been integrated into the strategic production linkage in East Asian countries by way of responding to this transformation in competitive relationships in global TFT-LCD markets. Thus, they are increasingly abandoning Japanese clients to become the main electronic component and equipment suppliers for TFT-LCD manufacturers in Taiwan. In spite of the long-term recession in the Japanese economy and decay in the downstream industry, under the Japanese regulatory regime, Japanese upstream industry has thus far maintained its technological advantage in the global TFT-LCD markets and has continued to dominate the electronic component and equipment business for TFT-LCD manufacturers in Taiwan.