ABSTRACT
This study examines the importance of balancing FDI and local industrial clusters as a survival strategy employed by local industries, in this case, the towel-related industries in Shikoku, Japan. This study postulates a model for a competitive local industry, which is led by a number of advanced knowledge-based firms, which internationalize this knowledge through manufacturing and marketing alliances with foreign affiliates. Pipelines and buzz play crucial roles in strengthening relationships between firms outside and inside the local industry. Along with initiatives for internationalization of business by leading firms, a branding strategy coordinated by the trade association of the industry is key to uniting the multiplicity of firms in the local cluster. These combined efforts help heighten the status of its products for making the cluster competitive in the globalizing world.
