Japanese Diversification Strategy in the Early 21st Century

The aim of this article is to highlight the main changes in the Japanese FDI strategy in 2000– 2016. The beginning of the 21st century appeared to be a period when the Japanese foreign economic policy was changed and adapted to new conditions of international market in the context of globalization and growing level of international competition. Japanese companies started to enter and develop in the new markets while ensuring their economic involvement in traditional partner nations. In the beginning of 2000s, the Japanese outward FDI grew signifcantly, especially in the South-East and East Asia. Despite the drastic decline in the Japanese FDI after the fnancial crisis of 2008, it started to increase again in 2010 reaching the previous levels. The Fukushima-1 accident forced Japanese government to revise its energy security strategy and initiated diversifcation of energy suppliers. Among the main recipients of Japanese investment there are the USA, China and ASEAN nations. The recent new foreign economic strategy that is supposed to take the country out of stagnation has resulted in diversifcation of its FDI flow to non-traditional developing markets such as Latin America countries, India, ASEAN including Myanmar, Laos, Cambodia, Vietnam, CIS countries, and Russia. Russia is a strategic supplier of energy resources for Japan and an important consumer market as well. In addition to the energy sector, the investments are growing into the Russian fnancial sectors, retail markets, vehicle manufacturing and pharmaceutical industry. The Russian Far East is the most attractive Russian region due to its territorial proximity and diverse natural and bio resources. Moreover, for Japanese investors Russia may be seen as a growing market with high level of consumption. However, current international political situation and sanctions have slowed down bilateral collaboration and had a negative effect on the Japanese investment activity in the Russian market. Despite that both sides show high interest in strengthening their economic and political relations.