Kanda Shokai own the Greco brand name and one of the conditions of the Fender Japan agreement was that Kanda Shokai cease production of its own Greco Fender copies. Yamano Gakki are also known for once being part of Orville by Gibson. Fender began negotiations with several Japanese musical instrument distributors and reached an agreement with Yamano Gakki and Kanda Shokai to establish Fender Japan. In the early 1980s, Japanese labor and production costs were much lower than in America and to compete with the Japanese made guitars, Fender decided to move the lower priced Fender guitar production from America to Japan.įender were also losing sales in Japan to Japanese guitar brands such as Tōkai Guitars and Greco guitars, so the establishment of Fender Japan would benefit Fender in Japan as well as overseas. The lower priced Fender guitars were made in America and could not compete with the Japanese made Fender copies lower prices.
In the late 1970s and early 1980s Fender was facing competition from lower priced Japanese made guitars. Until the introduction of the Fender Squier series, Fender had never produced lower priced guitars based on their main Stratocaster and Telecaster designs and had always used different model designs for their lower priced guitars.
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Before the Fender Squier series were introduced in 1982, Fender were making lower priced guitars such as the Fender Lead series at their Fullerton California plant. Fender, under the ownership of CBS, acquired the Squier brand name in the mid to late 1960s when it bought a USA based string making firm, but it lay dormant for many years.