Postwar Japanese Cotton Textile Investment in Brazil, 1955-1980

The literature suggests that cotton textiles should be unattractivefor foreign direct investment (FDI). The product is largelyundifferentiated; sellers need an intimate knowledge of localmarkets; and textiles use process technology, which multinationalfirms cannot monopolize. Indeed, since the 1970s, cotton textileshas been one of the few industries in Brazil in which localcapital dominates, joint ventures prevail, and American firmsare almost completely absent. Yet, between 1955 and the mid-1970s,Brazil saw significant foreign direct investment in textilesfrom Japanese firms. There were two successive waves of Japaneseinvestment in the Brazilian cotton textile industry. The firstran from the mid-1950s to the early 1960s. The second took placefrom the late 1960s to the mid-1970s. Four Japanese textilefirms participated in the first wave—Kanebo, Toyobo, Tsuzuki,and Unitika. Four more—Daiwa, Kurabo, Nisshinbo, and Omi—participatedin the second wave.