Determining factors for foreign direct investment by Japanese food and agricultural companies: An approach by the application of Tobit model and field survey in Liaoning and Jiangsu provinces in China

This paper aims to investigate the movement of foreign direct investment (FDI) by Japanese food and agricultural companies and the factors determining this movement. By applying the Tobit model for qualitative selection, the following points were clarified. The four business types, namely, agricultural manufacturing, food manufacturing, food wholesale and restaurants, were analyzed to understand the factors determining FDI by Japanese food and agricultural companies. It was found that the larger the company's sales amounts and employment size, the larger their FDIs. In addition, the FDIs of companies working in the Asia-Pacific region tended to be smaller than that of those working in the other regions. On the other hand, the FDIs of companies working in the NAFTA region tend to be larger than that of those working in the other regions. FDI sizes of companies working in the EU region tend to be midway between those in the two regions already discussed. Moreover, the FDIs made in the 1980s tend to be larger than those made in the other decades. In order to confirm the actual movement of FDIs of Japanese food and agricultural companies, field surveys were carried out in Liaoning and Jiangsu provinces in China. Based on this part of the study, the following points were clarified. Japanese food companies working in Liaoning and Jiangsu provinces in China have been enjoying better infrastructure conditions to some extent, as far as electricity and water resources in coastal zones, especially in economic development promotion areas, are concerned. However, some of them have suffered because of unreliable regulations by the local governments, which were often changed without any advance notification and applied retroactively. Some of these companies have complained about the lack of compliance with international agreements, such as WTO and patent protection rules.