The Nikkei Weekly, a financial newspaper, reported that direct investment in the Czech Republic, Hungary and Poland by Japanese concerns were worth 156 million dollars by the end of 1999, an increase of more than 50 per cent over the previous period.
The newspaper quoted the Mitsui Global Strategic Studies Institute and other data.
By the end of 1999 there were 43 Japanese companies that had set up shop in the three countries which are on the waiting list to join the European Union. That is five more than in the previous year.
"This is an opportunity as we will not have again," the newspaper quoted a spokesman for the Mitsui Institute as saying.
While most of the investment has been concentrated recently in Hungary, Japanese companies are also expanding their operations in other Eastern European countries.
Japan's leading auto concern Toyota is planning to start production of transmissions in Poland, while Mitsubishi Electric is has decided to produce parts for electric cars in the Czech Republic.
Advantages for Japanese firms in Eastern Europe are the proximity to the E.U., low production costs and a skilled labour force.
The newspaper said that the situation in the United Kingdom (U.K.) was also a factor in Japanese companies looking to Eastern Europe. The strong sterling has become a major headache for Japanese companies that had established themselves there with the purpose of gaining marketshare in the E.U..
Matsushita Electric Industrial has already moved its production of colour television sets from the U.K. to the Czech Republic. Sony, which also has colour television factory in the U.K. has increased the production of its plant in Slovakia.
The newspaper reported that the Eastern European market itself was fascinating for Japanese businessmen.
But not all is rosy with poor infrastructure, including unreliable electricity supply, being problematic.
Rising labour costs as well as the increasing costs of making production more environmentally friendly as the Eastern European countries eye entry into the E.U. are coming more into play.
Uncertainty also exists over the actual entry of these countries into the E.U.
(la/dpa)