The strategies of Japanese electronics firms have major implications for the electronics industries of the East Asian NIEs as well as the ASEAN (Association of Southeast Asian Nations) member countries. Japan's electronics industry has been undergoing a drastic restructuring in recent years, precipitated to a large extent by the strong revaluation of the yen. A marked shift is occurring away from consumer electronics to industrial electronics and electronic components (in particular, semiconductors). At the same time, within the consumer electronics industry, firms have focused their domestic production on the highest value-added segments of the market. Labor-intensive production processes and products which are not sharply differentiated by quality or special performance features are being shifted to the low wage ASEAN countries.

An elaborate intra-regional division of labor is taking shape. Subsidiaries of Japanese firms established elsewhere in Asia still rely heavily on ...