Regulatory Developments More and more European automotive components firms are dedicating resources to attracting business in Japan by investing in local infrastructure and improving technical competence, with the goal of promoting more direct contact and closer relationships with Japanese clients. European firms are looking to take advantage of the opportunities in Japan that have surfaced as a result of the recent transformation of the Japanese automobile manufacturing sector. Globalisation and intense competitive pressures at home and abroad have forced Japanese manufacturers to reassess procurement strategies, placing more emphasis on global procurement and cost-effective product development. Unfortunately, European automotive component and systems manufacturers continue to face difficulties in promoting European technical expertise to the Japanese automobile industry, mainly due to continued reluctance in the industry to outsource product development on a global basis. Japanese firms are still uneasy about divulging proprietary information to outsiders, continuing to favour traditional suppliers for product design and production. It is also still often necessary to provide "Japanese solutions" to customers in order to adhere to company-specific requirements, which defies the global trend towards single platform development and volume production. The process of globalisation and intense competitive pressures has meant that outsourcing of automobile component development and supply has emerged as a clear trend in the European automobile industry. The European system offers low risks, reasonable price and flexibility. However, for European component manufacturers these advantages have yet to translate into significant new opportunities to supply the Japanese automobile industry. Those that have enjoyed success with Japanese transplants in Europe have seldom been able to build on this to become suppliers of the parent company in Japan. Against this background, the EBC greatly values the ongoing, regular dialogue between European component manufacturers and Japanese carmakers as a vital mechanism for sharing information and promoting understanding. It is hoped that this will, over time, foster increased opportunities for mutually beneficial business development. Prospects for EU-Japan Economic Integration Japan is the second largest market in the world, yet European automotive manufacturing companies hold only a small share of the market. As Japanese automakers business is steadily growing overseas, this should provide an opportunity for growth for European automotive component manufacturers. The process of globalisation and intense competitive pressures has meant that outsourcing of automobile component development and supply has emerged as a clear trend in the European automobile industry. The European system offers competitive price, reliability and flexibility. However, for European component manufacturers these advantages have yet to translate into significant new opportunities to supply the Japanese automobile industry. Key Issues and Recommendations ■ Globalisation of the automobile industry Yearly status report: limited progress. The EBC welcomes the opportunity that internationalisation presents for innovative European firms to strengthen their relationship with Japanese automobile manufacturers in developing new products and sharing technical expertise. European firms are not tied to specific European automobile manufacturers, and have products proven to the rest of the auto industry. Japanese automobile manufacturers are increasingly making use of foreign tie-ups to develop their business and respond to competitive pressures both at home and abroad. Many firms are also reassessing their procurement strategies. Nevertheless, European automotive component and system manufacturers continue to face numerous challenges in promoting European technical expertise to automobile manufacturers in Japan. In general, Japanese manufacturers are still reluctant to outsource product development on a global basis and procure from non-traditional sources. Japan-specific requirements are common, and it is not unusual for specifications to differ between domestic and overseas production, even within the same company. Hence, even European component manufacturers successfully supplying to Japanese transplants in Europe are seldom able to build on this to become a supplier of the parent company in Japan. Recommendation:
■ Promoting information exchange Yearly status report: limited progress. Face-to-face meetings between the European Association of Automotive Suppliers and Japanese car manufacturers were established in 1995 to promote information exchange between European and Japanese companies. These meetings have proven to be an extremely effective venue to discuss issues of mutual concern relating to products, platforms, global strategies and other important matters affecting the industry. The next meeting is scheduled for autumn 2008 in Turkey, and the EBC encourages top-level Japanese industry participation. The EBC also sees much potential in the Japan Society of Automotive Engineers' (JSAE) Automotive Engineering Exhibition and the annual congress/paper presentation scheduled for 21-23 May 2008 in Yokohama. Recommendation:
■ Green procurement Yearly status report: new issue. A significant number of Japanese companies purchasing departments are introducing "green procurement" (green chotatsu) requirements. Suppliers are required to document, specifically for Japan, a list of substances used in their manufacturing process, instead of accepting conformity to an RoHS-type "negative" list. Recommendation:
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