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Illinois and Japan: Two-way street investment

By Kim Vidal
-    Dec 02, 2017
Credit : GMI Post

Strategically located in the U.S. heartland, Illinois remains one of the U.S. Midwest’s most attractive destinations for Japanese investments and still offers new business opportunities, particularly in the tech industry. In fact, its own economy is the 17th largest in the world.

Many U.S. companies here recognize Japanese technological expertise and thus seek to set up their own operations in Japan. This continuous inbound and outbound flow of investments forms the foundation of the strong relationship between these two economies.

For some, however, expanding into a new market can be a daunting task. Illinois-based law firms Masuda Funai and Jenner & Block understand this challenge and have built their services around navigating the legal complexities for its Japanese clients.

With Masuda Funai President Thomas McMenamin and Marketing Manager Renee Medema

Headquartered in Chicago, Masuda Funai specializes in helping foreign companies enter the United States. Since it was established in 1929, the law firm has grown to 40 lawyers and three offices, one of which is in Los Angeles. Almost two-thirds of its clients come from Japan. While its serves big multinationals, it also supports smaller Japanese corporations wishing to gain a foothold in the country.

“There’s been a sort of a paradigm shift. We see those tier two and tier three suppliers coming out here. Their first investment is usually coming out here, and it’s sink or swim for a lot of them,” President Thomas McMenamin said.

The firm offers a wide range of expertise from setting up U.S. operations, real estate management, employment benefits, counseling, dispute resolution, trademark & licensing to highly demanded services, such as intellectual property litigation and mergers and acquisitions. Its  established Japanese network and cross-cultural team have made Masuda Funai a preferred partner in the Midwest and West Coast.

Another Chicago-based law firm with a solid Japanese partnership is Jenner & Block. The group has over 400 lawyers, five offices and 103 years of experience in providing legal services, such as litigation and corporate transactions, in various industries, like communications, energy and aviation. Although it doesn’t have a headquarters in Japan, the group has nurtured a robust network of relationships in Tokyo.

“The fact that a third of the world lives in Asia, by some extension whether directly or indirectly, is going to have an influence on our law firm even though we don’t have an office there. We spend a lot of time and energy in Japan. It’s a very big focus for what we’re doing,” Managing Partner Terrence Truax.

Despite the many cultural difficulties, many of the firms’ Japanese clients continue to seek out opportunities in the United States. “While there is a high cost of doing business because of the regulatory framework, they get great value here,” Truax added.

With Molex Senior Vice President, Treasurer and Chief Financial Officer Travis George and CEO Martin Slark

As the legal environment becomes more navigable, more Japanese and U.S. businesses are able to pour investments into and out of the state’s leading sectors. Molex and Omron are two good cases in point.

Molex is an American manufacturer of electronic, electrical and fiber optic interconnection systems. It sells 60 billion products a year to roughly 10,000 customers across the world. While it serves a diverse range of industries, its main markets are in car automation systems, intelligent health software, cloud computing, and electronic solutions. 

Molex has built a strong presence in Japan, with its consumer and commercial electronics division operating in the country for 50 years. Previously Japan-focused, its headquarters there is now a hub for markets in Asia and the rest of the world. Investments in R&D and the workforce are thus growing in the country.

“We are proud of being a global company. As we think about moving into the future and the need to have micro-miniature technology, we want to continue to leverage the skills of our Japanese employees and build on the capabilities we have there,” CEO Martin Slark said.

With Omron Management Center of America Chairman President and CEO Nigel Blakeway

Japan-based Omron, on the other hand, provides automation solutions that specialize in automotive electronics, healthcare systems, and energy management. Its American headquarters is located in Illinois and oversees 17 facilities and eight manufacturing facilities spread across the United States and Mexico. Its special commitment to the Midwest and Illinois is thanks to the work ethic and Japanese-American relationships in the area.

Like most tech firms, Omron places an emphasis on R&D and has an organization called Omron Venture Capital that helps develop new technology and products. 

“We place substantial investments into R&D every year in the spheres that we know. That continues our own product development, but our management is seriously looking at those technologies and areas that we don’t have an expertise today,” Omron Management Center of America Chairman President and CEO Nigel Blakeway said.

By April 2018, the company is set to open its first R&D facility in North America. 

With Illinois Intersect Marketing and Communications Manager Sarah Schwartz and President and CEO Mark S. Peterson

At the junction of these legal advisory firms and expanding corporations is privately-owned Intersect Illinois. The group works closely with the Japanese Chamber of Commerce Chicago (JCCC) and Japanese Consul General Naoki Ito to help American companies with their overseas ventures in Japan and position Illinois as a Midwest center for Japanese investments.

“We’re looking forward to conversations with our existing companies who are thinking about an Asian presence and about partnering with Japan, so that it flows both ways,” said.

For Peterson, the common values between Japanese and American cultures and mutual respect have built relationship-driven and collaborative businesses in the state’s high-growth industries. 

“The world is changing. Many companies want to have a footprint in the United States. Illinois has a lot to offer with its logistics, fresh water, low-cost energy, educated workforce, and diverse community. There are a lot of opportunities for Illinois to invest in other countries, as well. We consider it a two-way street,” Peterson also said.

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