Question

Please respond to the following discussion post:

Host governments utilize a wide variety of controls to restrict foreign direct investment (FDI) in one way or another, including ownership restraints and performance requirements, which are the two most common controls. Foreign direct investment (FDI) is defined as, “direct investment in business operations in a foreign country.” (Hill, p. 627, 2015). Based on my reading of the Closing Case “Walmart in Japan”, there are a number of reasons why the level of FDI or foreign direct investment has been so low in Japan, historically. However, several of the most essential reasons are the regulations of the Japanese government that made it difficult for companies to establish direct presence in Japan, along with cultural differences. In addition, the government enacted a large Scale Retail Store law to protect politically powerful small retailers. This law made it impossible for foreign retailers to open mega stores in the country, eventually the law was abolished in 1994. (Hill, pp. 244, 249, 2015).

Some of the potential benefits to the Japanese economy of greater foreign direct investment are: Japan’s capital investment increased faster than domestic companies (per employee), their profit margin grew faster than domestic companies, employees are paid higher salaries, sales and profit margins are substantially higher than domestic corporations, etc. (“Case on Walmart, “ 2018). Despite these setbacks, Walmart adjusted to the Japanese market, and created special products to cater to the aging Japanese population, and introduced others products that appealed to local consumers. (Hill, p. 250, 2015).

Answer 1

Host government imposed variety of restrictions FDI (FOREIGN DIRECT INVESTMENT) Imposed be like ownership restrict, etc Beacause FDI means direct investment in foreign called FDI.

Walmart :Historically, the level of FDI is low because of restriction in the direct investment and also of cultural differences in host and other countries (different countries have different culture) the relatively low FDI stock in Japan is partly the result of official Inhibitions on FDI.

Potential benefits to the Japanese economy of greater foreign direct investment are

• Japan revenue growth is faster than domestic companies.
• Higher total factor productivity than domestic companies
• Higher average wage then domestic companies
• Higher spending on research and development thn domestic
• More capital investments than domestic

Faster revenue, higher profitability, done Beacause of greater foreign direct investment, with the increase in direct investment in business in foreign japan increases average wage profitability etc

With these set back Walmart adjusted market in Japan Beacause Walmart helped restructure Japan by boosting productivity, by gaining market share and increase sale and profit margins and also create special products to cater Japanese population and also introduced other product for local consumers uch as Walmart cut edge information system, and adopted tight inventory control and also provide low cost goods and extending opening hours.