Japanese foreign direct investment (FDI)—the setting up of manufacturing plants and sales offices, of banks and finance houseshas become the focus of considerable political and media attention and hyperbole in the UK. In a more sober academic vein, Dunning (1986) has recently produced the first detailed survey of Japanese participation in British industry as a whole. At a subnational scale, most interest has centred upon Wales, were a substantial concentration of Japanese manufacturing plants has emerged (Dicken 1983; Morgan and Sayer 1983, 1985; Morris 1987). The issue has been high on the political agenda since 1979, as the Conservative government began to make very energetic attempts to encourage Japanese firms to set up manufacturing plants in the UK. In the financial services sector, the ‘big bang’ of October 1986 saw a very rapid proliferation of foreign, including Japanese, finance houses establishing operations in London. The political edge has sharpened markedly as the Japanese trade surplus has continued to grow and as trading frictions have intensified. In the case of trade, the issues are a mixture of a high level of import penetration of European (and United States) markets by Japanese firms and the apparently covert barriers which inhibit imports into Japan and also close some parts of the Japanese market to foreign firms (the recent dispute involving the attempt by Cable and Wireless Plc to enter the Japanese telecommunications market is a case in point).