Foreign Direct Investment by Japanese ICT Firms: The Study of Two Firms in Shandon Province, China

Based on the results of theoretical and empirical studies, interviews were conducted with one affiliate and one subsidiary of Japanese ICT firms in Shandong Province. Although the productivity of affiliate and that of subsidiary were dependent on the headquarter, the affiliate made efforts to increase productivity by shifting from labor-intensive to more knowledge-intensive work, while the subsidiary was able to increase productivity even in labor-intensive activity as long as the parent company's management was doing well. Yet, in China, where human capital is growing considerably, the subsidiary was facing increasingly difficulty in recruiting workers for labor-intensive work. This indicates the need to investigate affiliated companies and subsidiaries separately, which has rarely been clarified in previous studies, many of which have been written from the parent company's perspective.