This article analyzes the investments of Japanese food processing firms in the states of California and Washington. Japanese investments are oriented towards one or more of the following goals: First, to secure stable supplies of raw material and/or lowering production costs. Second, to build production facilities to facilitate the export of food products to Japan. Third, to build US production facilities to supply US demand for traditional Japanese foods such as sake and soy sauce. Fourth, to secure access to US food technology. With exception of wineries, Japanese investors generally do not purchase agricultural land, preferring instead to purchase their raw commodities through contracts with local growers. Japanese direct investment remains comparatively small, but has the potential to grow significantly. 0 1993 John Wiley & Sons, Inc. During the last decade, Japanese direct investment (JDI) has become the subject of widespread discussion and political debate. Recent studieslJ have explored the magnitude of foreign direct investment in the United States and the important role Japanese firms play in that investment. Dalton and Genther,3 Chang,4 and This paper is based upon research supported by the Western Rural Development Center in Corvallis, Oregon and by the US Department of Agriculture under agreement number 88-33574-4054. The opinions, findings, and conclusions or recommendations expressed in this publication are those of the authors and do not necessarily reflect the views of the WRDC or the USDA.