OSAKA (Kyodo) Japanese firms that shifted their production bases to China and other nations with cheaper labor costs have begun a homeward retreat in terms of their cutting-edge technology.

Like most companies, Japanese firms protect their prowess in advanced technology by keeping their development and production processes cloaked in secrecy.

Widely used technology can be safely passed on to overseas plants, but firms are beginning to see that state-of-the-art technology is more easily hidden at home.

The move is part of an effort “to attach greater importance to home and choose the right crop for the land,” said Tadashi Okamura, president of Toshiba Corp.

“Even the president cannot enter this plant easily,” said an executive at Sharp Corp.’s Kameyama plant in Mie Prefecture, which produces wide-screen liquid-crystal displays and LCD televisions.

To maintain its position as the world’s top producer of LCD televisions, Sharp closely guards its new technology.

The Kameyama plant is the most important production facility for these goods. Sharp is investing 150 billion yen in the plant in fiscal 2003 and fiscal 2004 to focus on developing and manufacturing LCDs in the Kansai area.

It also has a plant in Tenri, Nara Prefecture, producing LCDs for personal computers.

Business analysts say that Japanese companies focused on manufacturing digital-electronic household appliances are pursuing “vertical integration” to cope with the “horizontal division of labor” of U.S. enterprises, in which cheap personal computers are produced and sold in tieups with firms in Taiwan and China.

According to the Cabinet Office, capital investment in domestic plants decreased with the collapse of the technology bubble but reached a record high of 94.338 trillion yen in fiscal 2003 and has continued to grow.

Matsushita Electric Industrial Co. plans to build the world’s largest plasma-TV manufacturing plant in Amagasaki, Hyogo Prefecture.

Meanwhile, Canon Inc. will locate its production facilities for new digital cameras in Oita Prefecture. “Let’s make things in Japan,” said Canon President Fujio Mitarai.

In the automobile industry, Daihatsu Motor Co. has begun operating an Oita Prefecture plant whose construction was suspended after the collapse of the bubble economy. Mazda Motor Corp. has also resumed operations at plants that were once shut down.

Sumitomo Metal Industries Ltd. is investing in its production division, including the repair of a blast furnace in Ibaraki Prefecture.

Hideo Wakabayashi, chief analyst at Mizuho Securities Co., said that although facilities and personnel are being downsized, major electronics companies will be unable to catch up with record-high performances achieved around 1990, even in the digital boom of fiscal 2004.

A senior official at the Ministry of Economy, Trade and Industry said that for Japanese firms to survive they need an annual investment of 200 billion yen in carefully chosen businesses, 70 percent of sales overseas and a global share of 10 percent.

But few such companies exist and foreign competition is stiff.

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