This paper analyzes what explains the production behavior of overseas subsidiaries of Japanese companies and how they affect the industrial productions of Japan. Using data from 1998 to 2006, it reviews the FDI developments of Japanese companies and conducts correlation analyses with economic variables. Additionally, it investigates, based on factor analyses and regression analyses, responses of overseas subsidiaries of Japanese companies to economic changes. Those companies that had entered ASEAN4 countries varied their local employments in response to the changes in interest rates and wages. These responses are shown to increase the exports and industrial productions of Japan.