Tokai was seriously considered to start building the first Japanese made Fenders, but after a breakdown in negotiations, Fuji Gen Gakki was chosen instead.
The initial Squier models were launched on July/August 1982.
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 labour 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.
Over time, the Squier series slowly evolved to include original model designs and production has moved from Japan to various other Asian countries such as Korea, China and Indonesia.
The first Fender Japan models introduced in May 1982 were the 19 series, which were Fender Stratocaster models ST'57-115, ST'57-85, ST'57-65, ST'62-115, ST'62-85, ST'62-65 and the Precision Bass models PB'57-95, PB'57-70, PB'62-98, PB'62-75.
The Affinity Series paved the way for the subsequent great success of Squier instrument/amp/accessory packages, such as the Strat Pak and Bass Pak, that provided aspiring musicians with everything they need to enter the world of amplified music in a single all-in-one purchase. For example, CN/VN: C = Cor-Tek (Cort), V = Saehan(Sunghan), S was already taken by Samick so Saehan(Sunghan) used V instead (Saehan(Sunghan) made the Vester guitars), N = Nineties (1990s), the first number following the serial number prefix is the year.
The SQ Squier series was introduced in late 1983 to early 1984.
The SQ Squier series was based more on 1970s Fender models and also had USA made pickups installed.
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.