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The higher priced Fender guitars were made in the United States and could not compete with the lower prices of Japanese made Fender copies.

In the early 1980s, Japanese labor and production costs were much lower than in America and to compete with the Japanese made guitars, Fender moved the lower priced Fender guitar production from America to Japan.

This arrangement benefited Fender because it removed the Greco Fender copies from the Japanese market, which were selling in Japan at much lower prices than the American made Fenders and it also benefited Kanda Shokai because Kanda Shokai could then distribute Japanese made Fender branded guitars in Japan.

Further negotiations between Fender and Japanese guitar factories took place.

The first Fender Japan guitars are known as the JV Fenders and JV Squiers, with JV standing for "Japanese Vintage" to reflect the guitars were made from the original blueprints of the vintage US guitars, were made by the Fuji Gen Gakki factory in Japan, using technical support from Fender.

Fender was also losing sales in Japan to Japanese guitar brands such as Tōkai, Greco and Fernandes and the establishment of Fender Japan would benefit Fender sales in Japan, as well as overseas.

Fender began negotiations with several Japanese musical instrument distributors and reached an agreement with Yamano Gakki and Kanda Shokai to establish Fender Japan.

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