| Does America say Yes to Japan?
Thought this would be of interest to readers here.
Craig
Article: 5784
From: [email protected]
Newsgroups: alt.bbs.internet
Subject: USA: Conflict in the Trenches ***
Date: 8 Dec 92 15:41:21 GMT
Granted, this article doesn't have much to do with "alt.bbs", yet it is of
GRAVE importance to all of us. Please take the time to "SAVE" this file,
then read it at your convience. It is quite long, so I DO suggest that you
SAVE it, and not read it on the net.
Ted
---------------------------------------------------------------------------
PLEASE...read this article written by a student at the University of Chicago
named Andre. If this article interests you (or if it just flat out UPSETS you)
then send it on to your friends.
You are not alone in your dislike and hate for the current economic situation that
is currently facing our (once) great nation. If everyone that reads this letter
passes it on to just 5 friends, we can spread "the word" to the ENTIRE nation in
a surprisingly short amount of time.
Let's take back our country...help to spread the word, PASS ON THE LETTER !!!
Ted Wollnik
--------------- Begin Included Message ------------------
From pdherzog@hooter Mon Dec 7 16:38:28 1992
Date: Mon, 7 Dec 92 16:37:59 CST
From: pdherzog@hooter (Paul D. Herzog)
To: staley@hooter, pbaniewi@hooter, mchensel@hooter, jmmckenz@hooter,
bath@hooter, mlanders@hooter, mjcramer@hooter, dwmiller@hooter,
twollnik@hooter, kbaker@hooter, dlmeek@hooter
Subject: Japanese business......
Content-Length: 93333
This mail is not directly work related, but is very important reading material.
It was written by a graduate student in Business at the University of Chicago
who spent several months in Japan, researching why they are apparently winning
a global economic war and the United States is losing.
PLEASE distribute this article to anyone who you feel may be interested, and
especially those who blatantly do not understand the depths to the United
States is immersed in the trade deficit and a lack of global competitiveness.
--- Paul Herzog
--------------- Begin Included Message ------------------
D O E S A M E R I C A S A Y Y E S T O J A P A N ?
(A M E R I C A W A N I H O N N I "H A I" T O I U K A)
There are many misconceptions about Japan and its miraculous success
in the post-war era. ". While staying in Japan in mid 1992, I tried to
look at Japan's seemingly miraculous success with the hope to understand
it so that maybe we could apply some of their plan in our own country.
"What makes Japan so good?", "How did they get from third world country to
richest in the world so quickly?" are common questions asked in America.
Today, I will try to answer with examples, at least partially, these
questions.
Going to Japan, I expected to see a very efficient country from which
America could learn in order to regain her former prosperity. During my
trip, the reality began to sink in that what is really happening was quite
different from expectations and in some ways quite disturbing. The
Japanese have a very different approach to doing business than we do. This
paper will elaborate, justify and try to show what is happening and why it
is important that this be understood here in America. Following this
article on Japan, is a piece about the US national debt, which has
relevance to this discussion.
I must thank my fiance, Mutsumi (a native Tokyo-ite herself) for her
help in writing/editing this paper and her guidance as I toured and tried
to understand her country. All names have been changed or omitted to
protect anonymity as we do not wish to reveal anyone involved with or
mentioned in this paper for fear of them being labelled deviants in a
country that is not so tolerant of internal dissent.
Don't be afraid to question what you read here as I am confident that
if you research the points yourself (hopefully by going to Japan to see
for yourself or reading materials on the topic), you will find the points
made in this paper to be truthful.
THE "JAPAN PROBLEM":
Some claims echoed in America which are commonly dismissed as "Japan
Bashing" statements, surprisingly turn out to be true upon investigation.
The following statements may seem brash right now, but their meanings will
become clearer in the explanations and examples that follow.
It seems that Japan is in some kind of economic war against us. Their
objective is for them to win and for us to lose. Through the use of
cartels, price fixing, government-corporate 'anti-foreigner' tactics as
well as adversarial trade and predation strategies, Japan is destroying
much of America's strategic industries, standard of living and military
strength. These actions are also destroying the jobs of ordinary American
people.
Those who study these types of topics know that economic wars can be
even more devastating to a country's long term future than conventional
wars. Japan is organized to fight, uses a tactical strategy and has a
fundamental plan. America's economic strategy is in disarray and there is
no plan. As a result, America is losing the economic war by default.
The greatest transfer of wealth in the history of the world from one
country in the world to an other is happening right now, from the United
States, to Japan. This is no accident and is in a large part responsible
for our economic problems in America today. Many new graduates and
students today realize the consequences of this much more than their
parents. People entering the workforce today are likely to have a standard
of living considerably lower than that of their parents. Members of the
current generation are unlikely to be able to afford a home like the one
they grew up in. They are much more likely to have trouble finding a good
job upon graduation than their parents ever did and will need two sizable
incomes to support their family. Their parents may lose their jobs, and
not be able to find other 'good' ones as they don't exist in America
anymore. These problems may not seem relevant to the 'Japan issue', but in
fact they are.
IN THE BEGINNING, THE TV CARTEL:
A very famous example of Japanese national government and corporate
coordination to take over a foreign industry is that of the Japanese TV
cartel, first set up in the 1960's. This is how Japan took the free-world
TV industry away from the United States. PBS Frontline did an excellent
documentary on this ("Coming From Japan").
In the 1960's, the Matsushita Industrial Electric Company, Sanyo,
Toshiba and others formed a TV cartel in Japan. They got US TV technology
from the giants in the industry (Zenith, RCA Quasar) in the following way.
The Japanese government prohibited US made TVs from being sold in Japan.
Instead, they insisted that the technology be licensed to Japanese
manufacturing companies rather than importing (still often the case today
in Japan). The US companies thinking they could still make money this way,
agreed to these terms which enabled the Japanese companies to acquire the
technology on how to build TVs.
The above Japanese companies, with tacit approval from the Japanese
government, set up a cartel to inflate TV prices in Japan in order to turn
around and use the money to sell below cost TVs in America. This was to
drive US makers out of the American and world markets. US TV makers went
bankrupt or left the industry as they could no longer fund research to
continue making improved and high quality TVs. They could not compete with
the artificially low Japanese TV prices in America and were forbidden to
enter the Japanese market to take advantage of the high prices there.
Hence, the US makers could not make money. Furthermore, secret deals
illegal under US trade law were set up by Japanese TV makers and US
retailers such as Sears and Woolworths to sell the TVs under store brand
names. As a result, once famous brands such as Sylvania, Quasar, Admiral,
Philco and RCA have vanished or are foreign/Japanese owned. Zenith is the
only remaining US TV maker today. No US companies make VCRs.
The transcript of this PBS program is available via FTP at Internet
site: monu6.cc.monash.edu.au in pub/nihongo, or at the address listed in
the appendix of this article. It is very thoughtfully written and is an
excellent case study of what is explained in this paper.
In the 1980's the Japanese applied this same strategy to the machine
tools industry and now completely dominate that industry (a point well
made at a machine tool exhibition I visited in Tokyo). Before that was
motorcycles and computer memory chips (the US tried to retaliate but
failed as our companies couldn't organize with each other during the now
famous 'dram shortages' a few years back). It will be happening again with
major and smaller kitchen/washing appliances during the 1990s. It has
already happened with liquid crystal computer displays where the Japanese
today have 100% market share (these were actually invented in the USA).
DISPELLING SOME STATISTICS:
Several misleading claims are made in the media about how the trade
situation today with Japan is fine. These will now be dispelled. One claim
states that Japan is opening its market because it has increased imports
by 9% in 1986-87 and 18% in 1988. This is a half truth because Japanese
exports during the same period increased by much more than that. In other
words, the trade gap got bigger, not smaller between Japan and its trading
partners.
An other false claim, most often made by Japanese trade
representatives, states that it is naturally expected that Japan has a
trade surplus with America. This is because if every Japanese bought $100
of goods from America, and every American bought $100 worth of goods from
Japan, an imbalance would occur in Japan's favor as there are twice as
many Americans as Japanese in the world.
This is a mathematical fallacy. To see more clearly this picture,
imagine a world with 2 countries, one with 100 citizens, and an other with
1 citizen, you. Each person has $200 to their name. Every year you buy
$100 of goods from the other country, and each of their citizens buy $100
of goods from your country. If you work out this example, you will see
that in a little over 2 years, you will have accumulated all of the money
in the world and the other country will be penniless. This is the current
state of affairs between Japan and its trading partners. Although things
are actually occurring more slowly, this is the trend.
POLITENESS AND CODED LANGUAGES, A BACKGROUND:
Japanese communicate with each other and the outside world a bit
differently than we do. This is often a cause for misunderstanding between
our two peoples.
Because Japan was a communal society, a way of speaking in a way not
to directly offend the other person (who they still had to live close to
after a discussion had finished) has developed over time. There is even a
Japanese word, called 'Tatemae,' which refers to this kind of phrase.
These kinds of phrases are a type of 'lie' in order to be polite. Often,
when Japanese use words like 'goal' or 'difficult' in reference to a
request you make, this is tatemae.
Some recent examples from the evening news will make this point
clear. Recently, George Bush went to Japan to open the Japanese market to
US goods and to get the Japanese to use more US made car parts in the cars
they sell to America. When he left the Japanese Prime Minister said the
agreement they reached was 'a difficult goal'. This is Tatemae code for
'we have no intention of meeting your demand'. But of course, the Japanese
PM would not say this directly to George Bush, who is president of
America. This would be extremely impolite and Mr. Miyazawa could never say
such a thing directly to an individual of such prestige. The Japanese PM
is thus in a difficult position. This is an occasion for Tatemae.
Foreigners (especially Americans) who don't use Tatemae have extreme
difficulty to understand its usage. Later, when the 'promise' is broken,
Americans often end up thinking they were lied to by the Japanese when
this was never the case. Really, the Americans were supposed to pick up on
the Japanese polite refusal, but failed to because they took what the
Japanese said literally.
As an other example, an agreement was reached where Japanese would
allow more US made computer chips to be sold in Japanese products.
Recently the Japanese have said this goal would be 'difficult' to reach.
This is code for 'we will renege on the agreement'. If you know about
Tatemae, it is much easier to know what the Japanese really plan on doing
when faced with a politically difficult position as well as what they
might be trying to say when they talk on television.
Finally, a claim is often made by cornered Japanese officials that
'Japan is at a crossroads' and the problems described in this article are
being resolved today and the Japanese market is opening, but it takes time
and Americans must be patient for Japan to succeed at this difficult task.
They have been saying this for the last 20 years.
DISCRIMINATION:
Although the Japanese are individually are very polite people, Japan
is a very racist country, maybe even more so than we are. The common name
for foreigners is 'gaijin' in Japan. This is a racial slur somewhat in the
way 'nigger' refers to a black person in America. There is however a
polite form of this word, 'gaikokujin', which means literally 'outsider
person'.
When you enter a rental agency to rent an apartment (the only way to
get a place in Tokyo), some of the rental books say on the cover 'no
gaijin'. If you are a gaijin, you cannot rent anything in these books.
This type practice seems to be very widespread in Japan.
Discrimination does not extend only to foreigners. Looking through
any major newspaper, you will see ads which ask for Japanese only (no
foreigners), men only, young women only, or people of a certain age. I
brought some of these ads back with me. Discrimination doesn't seem to be
illegal in Japan. A law does exist however stating that it is a Japanese
goal not to have discrimination (hint:this is Tatemae). This 'anti-
discrimination' goal/law does not seem to be enforced in any way.
Other races are ranked in a kind of social order in Japan, first is
Japanese, then white people, then other asians, then all other races
besides black people, who are last.
The government sometimes is a partner in racism and discrimination.
There is an 'untouchable' sect of Japanese society in Japan. They are
referred to as 'Burakumin' and are a particular group of Japanese of
Korean decent. A small square on the top corner of the Japanese birth
certificate (I saw Mutsumi's) is filled in if the person is a Burakumin,
or is blank like Mutsumi's if she is not. This is used by the government
and the companies to deny these people good jobs and advancement during
their careers.
SHAME AND HONOR IN BUSINESS:
Japanese people operate on a system of shame and honor (or the
appearance of it anyways). This developed due to the fact that so many
people must live peacefully in crowded conditions. When something does go
wrong, there is a lot of shame on the individual responsible. If the
failure was bad enough, he commits suicide (a practice dating back to when
Samurai committed suicide in front of their superiors when they were
responsible for a major failure). Some major public figure commits suicide
out of shame at least once a year in Tokyo.
For example, while I was there, the CEO of Toyo Rubber (they operate
as B.F. Goodrich here in America) committed suicide by jumping in front of
the subway because profits were poor this year. A couple years back, after
a train wreck in which some people died, the manager responsible for the
whole affair also committed suicide.
An interesting side note to this case is the existence of laws
discouraging suicide by jumping in front of trains in Japan. The
government has laws to fine the jumper's surviving family members based on
how much disruption to service was caused by the suicide of the now dead
family member. Apparently, the intent of the laws is to force the jumper
to think about the harm they will do to their family by choosing the train
as a means of suicide, hoping they will instead choose other means to end
their life and minimize service disruptions. In practice though, these
fines are hardly ever enforced.
THE DISTRIBUTION SYSTEM, WHY FOREIGNERS ARE SET UP TO FAIL IN JAPAN:
An extensive hierarchy of small distributers and shops exists in
Japan which hinders the distribution of foreign goods. When Americans say
the Japanese distribution system is 'difficult', 'byzantine' or 'complex',
this is what they are referring to. In reality, the Japanese distribution
system is fixed. This is why it is so difficult and complicated for the
foreigner to succeed in.
Japan, being a communal society, follows a strict code of loyalty.
Shopkeepers have loyalty to their suppliers and customers. They all have
loyalty to the nation, Japan. Undoing this arrangement that brought the
country and its companies so much wealth and power via the entry of
foreign goods would be disrupt this system of loyalty. This is one reason
it is so difficult for a foreigner to enter the Japanese market. There are
higher forces at work too though:
How important this was became very clear when I befriended a Japanese
government worker, Hiroshi, who explained to be how the system worked and
why a foreigner cannot usually circumvent it. I made him the following
proposal as an example. The discussion went something like this:
I can sell high quality made in USA GE refrigerators and Hoover
vacuums at a much cheaper price in Japan that Toshiba and Sanyo can (this
is in fact true). I want to start a business. I go to Japan, but no store
will carry my products because I am a 'gaijin' (foreigner), and my
products are foreign. Doing so would anger the domestic suppliers of these
distributers who may hold some of the shop's loans or offer them favorable
payment plans.
I decide then, I will set up my own company in Japan, open a shop and
sell the appliances myself since no Japanese store will do so for me.
Hiroshi said 'You can't because you are a foreigner. Foreigners cannot own
companies in Japan'. This is in fact true. It is this government practice
which keeps foreign business ventures in the control of the Japanese (and
hence why they tend not to succeed). It is also the reason there are so
many 'joint ventures' between a Japanese company and a foreign one to
enter the Japanese market. Otherwise, the foreigner is forbidden to enter,
or later set up to fail.
So, anyway to get around this law, I told Hiroshi that I will open
the business in Mutsumi's, my wife's name, so now a Japanese owns the
company. He said 'you will still fail because as you get success in the
market with your inexpensive American goods, the other vendors will get
angry at you. They will politely ask you to raise your prices to that of
the Japanese made goods so the system doesn't get disrupted'. I course
replied that I would refuse to do this as its not in the interest of my
customers. Hiroshi replied 'then the vendors and the Japanese companies
(such as Toshiba, Mitsubishi and other appliance makers) will complain to
the government. The government will then prevent you (subtly though as
free competition is 'the law' in Japan) from operating your business
successfully or profitably. New building permits for your stores will be
delayed for months for no reason. Business license paperwork will get
misfiled or lost without explanation causing you legal hardship. Goods
will be delayed unloading off your ships for 'too busy customs officials'
or 'lost somewhere on the pier for 6 weeks' making you miss delivery
deadlines and angering your customers...' Such 'subtle' persuasion is how
you are brought into line in Japan.
True-life examples of this abound. Here are a few:
This is exactly what was done when a foreign garment manufacturer tried to
sell their clothing in that country (threatening the domestic garment
industry). Customs delayed unloading of the goods until enough of the
summer season had passed making the summer fashion clothing unsaleable.
Making foreign farm produce which competes against domestic Japanese
produce wait on ships long enough to rot or not be appetizing to the
consumer is an other practice....
The Feb 10, 1992 of Time Magazine describes how a U.S. lamp
manufacturing company encountered also exactly this problem. It took them
9 months to get lamps off the ship sitting in the harbor and into retail
stores in Japan after customs, and other government agencies stalled and
stalled (which cost this particular company lots of money).
Many anti-foreign goods laws are often in the form of 'protection' to
the consumer. These are applied discretionarily and are really written to
hinder foreign goods from entering the market.
Some of the more famous ones include a law which for many years
banned US beef from Japan because 'Japanese intestines were too short and
couldn't digest US beef which is too hard'. An other banned european skiis
because the snow in Japan was 'different'. US made towels were banned
because the fibers were 'too rough' for Japanese ears, which are 'softer'
than ours. All foreign rice is banned for 'national security'. Rice in
Japan as a consequence, is the most expensive in the world.
As an example of the no-foreign ownership rule, the recent baseball
team fiasco comes to mind: Nintendo recently bought the Seattle Mariners
Pro Baseball team. It is in great irony that it is illegal under Japanese
law for an American to buy (very lucrative) Japanese Pro baseball teams
(from ABC News Nightline).
THE BUSINESS CARTEL, KEIRETSU:
Let us go now to a primer on Japanese business organization. Almost
all the significant companies in Japan are aligned into one of about 6
keiretsu or business 'groupings'. These are loosely linked 'super-
corporations' for lack of a better term. Most of the Japanese companies
whose brands we know and love here in North America are in these keiretsu.
These keiretsu have been around a very long time (before WWII) dating back
to feudal-like family run trading houses. Mitsubishi and Mitsui are two of
the more famous ones. Famous companies like Nissan, Toshiba, Sumitomo Bank
are all in keiretsus.
Here is why this is so important. Each of these keiretsu have under
them, member companies who operate in each of the major critical business
areas. These are: banking, distribution, steel making, heavy manufacturing
and electronics. Mitsubishi Bank, Mitsubishi Electric Corp, Mitsubishi
Heavy Industries and a wide array of other Mitsubishi companies making all
kinds of other things are in a keiretsu. (Mitsubishi is unusual as most of
their operations have the same name). Each of the companies in the
keiretsu are independent and very specialized in what they do in all
senses of the word except for loyalty. Imagine a keiretsu is something
like a college fraternity. Their individual independence is what keeps
things from getting too big and out of control, yet they can make a united
front for issues important to the national or keiretsu effort.
To make the point, a car company and electronics company in the same
keiretsu have a long term relationship to help each other, for example to
make a really fancy computer control systems for cars, or to make special
lift-loaders for the computer company's factory. If you walk into a
Japanese transplant auto assembly plant in the United States, you will
find that the equipment from the stamping presses to the forklifts are
Japanese brands, even if it is more expensive (in the short run) to do
this. This is national and keiretsu loyalty at work.
Every Keiretsu has a bank. This is the heart of the keiretsu. The
bank is like a national central bank, but for the keiretsu. The bank takes
money from winning operations and gives it to new ventures in the keiretsu
without the red tape that a bank would usually give before lending to a
new start up venture. Having a bank who is in fact a part of your company
means they will be fiercely loyal, understand your business and not call
your loans for silly reasons like US banks do. This is much more efficient
than the way America does banking and lets companies join forces to use
their capital much more effectively than the US can.
This is also why buying a Japanese product may put buyers of that
product out of a job, even if they work in a different industry. They take
the profits from the product that person bought, shift it through the
keiretsu bank to develop, invest in and dump products into the industry or
market that person now works in, and put them out of a job. See the
telecommunications example at the bottom of this paper for how this works
in practice.
COMMAND AND CONTROL:
Japan's business effort is directed by the powerful Ministry of
International Technology and Industry (MITI). It decides national
strategic industrial policy and determines with the corporations, which
industries to target, enter, exit, take over...etc. This is where Japan's
'united front' when entering a market is co-ordinated from. This is also
why you often see several Japanese companies entering a particular market
at the same time (ie. TVs, and more recently, luxury cars). By acting in
unison, the companies, banks and government can attack and overrun a
foreign industry with a real punch. It also enables strategic moves which
countries like America cannot do as American business efforts are not co-
ordinated in any kind of way.
In fact such moves are illegal for US companies under antitrust laws
from the 1930s. This puts us at an enormous disadvantage again US Japanese
rivals as it is legal for example for Ford and Mazda to join forces, but
not for Ford and GM to do so. The US antitrust laws were written at a time
when US companies were the most powerful in the world. This is not true
anymore and hurts America greatly as US firms struggle in the world
marketplace again large foreign firms who are able to join their forces to
defeat America's companies.
THE PROTECTED HOME MARKET...JAPAN'S LAUNCH PAD TO THE WORLD:
Japan has a protected home market which serves a very important
purpose to the country and the national business effort. The home market
is for trying out new products, copying and improving foreign designs,
getting capital (through price gouging) with out fear of foreign companies
entering and ruining the game.
An unwritten rule is that there is no real competition in the
Japanese home market between Japanese companies which are also strategic
exporters. Real competition occurs in foreign markets outside Japan. The
home market is a 'safe' market where these companies can experiment with
their products, improve upon them, and fix problems with out fear of any
real foreign competition capitalizing on their blunders (a luxury our own
companies do not have in America). For example, SONY and Mazda did or had
done this frequently within Japan. The scheme works as follows and is the
critical reason why a Japanese company can enter almost any world market
or industry from scratch and overrun it so quickly:
Imagine Sony comes out with a new type cassette player which is very
small. It breaks often because the small plastic gears inside are of low
quality and wear out (this was true, actually). This machine though, is
only sold within Japan. Only in the future when it is perfected will it be
sold to the outside world. Now lets imagine GE is the dominant
manufacturer in this market worldwide. They want to sell their player in
Japan (which is better than SONY's) but can't because they are forbidden
for all the reasons mentioned in this article. Sony fixes their gear
problems, tests it in the home market (this is one reason why the latest
Japanese products hit the Japanese market at least 6 months before
anywhere else) and later exports it abroad. Sony maintains its good
reputation in America as their player works well (the US customer never
got a machine with the defective gears). Sony sells this player at 3/4's
the cost to make it in order to increase their market share and drive GE
out of the cassette player business. Sony doesn't go bankrupt doing this
because they can sell players in Japan at twice the cost to make them and
hence cover their losses in America. Because GE is forbidden to sell in
Japan, and can't make money at home in America because Japanese players
sold there are too cheap, they surrender and lose market share. GE asks
the US government for help but is refused. Later when this is exposed, GE
is accused of 'whining' and 'not trying hard enough to enter the Japanese
market' by the Japanese Prime Minister.
Now, imagine the reverse situation. GE also makes a machine that is
poor quality in its home market of America (this was also true). The
Japanese then enter unimpeded, dump their perfected goods here and drive
GE out of the market. As you can see, whenever a US company makes a
mistake in the home market, it suffers greatly, but when a Japanese
company does in their home market, they don't suffer so much. Hence, even
if the American company is more efficient and generally of higher quality,
the Japanese companies will ultimately defeat the US competition. This is
true even if the US companies make fewer and smaller mistakes over the
same period of time because the US company gets hurt for a mistake in the
home market, but the Japanese one doesn't. This is an other reason the
Japanese protected/non competitive home market is so important to their
success.
The non-competitive home market serves an other important function to
Japanese industry. Smaller/weaker Japanese companies are allowed to
survive because it is possible they may some day have a 'winner' which
would be good for Japan (this actually happened to Mazda with the Miata
and other recent offerings in their foreign markets). If the company were
bankrupt though, they could not come up with 'winners' sometime in the
future. Its better to let the weak competitors survive in Japanese market
in the hopes they become strong someday. Because of laws restricting
foreign ownership as well as 'cross-holding' agreements between the
Japanese companies, there is very little risk a non-Japanese company could
take over these weaker players and enter the Japanese market.
Unfortunately, the same protection is not bestowed among America's
promising small companies who are easily taken over up by major Japanese
players who want their technology.
The no-home-competition point is ironic, because some newspaper
reporters who don't understand the Japanese economy write quotes like
"there are 7 car companies in Japan (a country with 1/2 the population of
America) therefore the car industry must be extremely competitive in
Japan". The truth is that there are 7 car companies in Japan because there
is almost *NO* competition in the home market. This is why their market
shares in Japan are stable. They are basically fixed. If there were
competition, the strong players like Toyota and Nissan would have absorbed
or bankrupted their less powerful rivals like Mazda and Daihatsu long ago.
WHAT IS DUMPING AND WHY IS IT BAD:
A New York Times writer last year wrote in his commentary that
Japanese companies are foolish because they practice 'dumping' (selling
their products here for a price lower than it costs to make them), and
that he hopes they continue as it benefits the American consumer. His
article is misguided and shows why it is so difficult to understand why
Japanese business practices are so dangerous to America.
Some Americans think buying dumped products is good. This happens
because they don't see the real costs to themselves which are not on the
low sticker price. These cost turns out to be higher to the buyer than the
savings on the product price (otherwise the Japanese would not be
dumping... ...there's no such thing as the deal that's too good to be
true). The key is that this cost is indirect but very real never the less.
It turns up somewhere else than at the checkout counter and is how Japan
benefits by 'dumping'.
The cost to America (and the benefit to Japan) turns up in the long
term. This is why it is not seen so easily. It turns up in America as
unemployment, closed factories and reduced national strength as US
companies cannot compete against this practice. Japan's factories run,
their people get jobs and later on Japan makes much more profit than it
originally cost to do the dumping. Japan can do dumping by raising prices
in the home Japanese market to pay for dumping in America. US companies
don't have this luxury as the US market is open to the outside world and
prices cannot be artificially raised to pay for dumping elsewhere.
ECONOMIC STRATEGY, WHAT IT ALL MEANS:
Many people ask, what is a national industrial strategy. Some people
claim it is a form of socialism or communism. Nothing could be further
from the truth. Again, the best explanation is by example.
A few years ago Japanese industry co-ordinated a successful attack to
take over the entire world commercial supply of LCD computer screens by
selling them at 1/3 the price to make them, (PBS Frontline, "losing the
war with Japan") and waiting for the US upstarts who invented them to go
bankrupt. As a result, today all LCD screens in any non military computer
in the world are made in Japan. This is a very strategic component because
it will be used in portable computers, medical imaging equipment,
videophones, HDTV, touch sensitive visual programmable fridges and
stereos..etc.
If you are a non Japanese maker of any of the above items, this is
very bad for you, because you will have to go to the Japanese to buy these
screens to put into your product (say a portable PC computer). However,
the Japanese companies also want to make these products too (entering your
industry is part of their long term strategic plan (which is 200 years
long)). As a result, they want to make you uncompetitive. They do this by
selling these screens to you at a price higher than they sell the same
screens to Japanese PC makers (which might even be the same company as the
screen maker). They can do this because they have destroyed the US
competition. You are forced to go to them if you want these screens.
You need these screens though so your PCs can compete with the
Japanese PCs which will be on the market soon, so you must buy them as
there is no other supply. This means though, that your PCs are more
expensive then the Japanese ones because you are paying more for your
critical components than the Japanese companies are paying. ...You lose...
Besides offering to sell you the screen at some ridiculously high
price, the Japanese will often offer to manufacture your entire product at
a reasonable price and put your name on it. For example, the Mac Powerbook
portable computer is not a Mac at all, but really a SONY.
This type of deal is really nice for Japan because it gives the
Japanese companies the rest of the technology to make your product
(besides the strategic component). This also makes you dependant on them
for all your manufacturing (because your factory is now closed, your
workers unemployed and new ones too hard to train quickly). Finally, your
Japanese supplier can bypass you entirely at a future date and sell the
computers they make for you, but with their own name on them. They do this
in the factory your sales helped them to build in the first place.
Mitsubishi did this to Chrysler with cars, first it was the Eagle Talon,
then later the Mitsubishi Eclipse....both cars are identical, but really
Mitsubishi's.
The LCD screen monopoly is what enables Japanese companies have such
a large market share in portable PCs which use these screens yet almost no
market share in desktop PC computers (which don't need these screens).
Japan hasn't been able to take over the desktop PC market because its
still advancing too quickly and they have no monopoly on any critical
components in these machine. As a result, this industry can still belong
to America. America is able to hold on rapidly advancing industries
through innovation, but Japan cannot. This is because by the time Japan
copies a foreign design, it is already obsolete. Japan has poor luck
trying to hit a moving industrial target and will usually miss. So long as
an industry moves fast enough, and the Japanese don't succeed in taking
hold of some critical component of that industry, the US will be able to
hang on to it until it slows down or matures, then the Japanese can
successfully take it over.
By focusing on taking over markets like LCD screens, critical
computer chips, high precision machining, and auto manufacturing, Japan
has significantly reduced America's ability to make these things in time
of national need. Japan lost world war II because they had a poor
manufacturing base (they had to stockpile for 4 years before starting
World War II). They have learned very well from that mistake, which now
America is are making.
This example shows why something like LCD screens are a strategic
component and why Japan needs to dominate this industry. This is what is
meant by a famous Japanese phrase: 'business is war'. Key markets
overlooking industries are like peaks overlooking cities. The strategy in
a business war and economic war is the same, and the outcome is the same.
Domestic factories are gone because the industry has been killed
economically (rather than being bombed), workers are out of a job, and the
target country has much less power and safety in the world. It is like a
real war, but less bloody.
THE ECONOMIC WAR, A SUMMARY OF THE MASTER PLAN:
Free world trade is a good thing for all countries. Generally,
countries raising protectionist barriers against each other is very bad.
This in fact, helped cause the 1929 depression. What is happening now
though is worse. Although some will tell you that US and Japan are
practising free bilateral trade, this is not true. Today, Japan and
America have basically a one-way trade relationship. Japan closes their
market towards us, but we don't towards them.
Some say that Japan has a national strategy to control economically,
what it could not get militarily 50 years ago. An impulsive claim perhaps.
But, today, I am not so sure.
Some may think that only America is having trade problems with Japan
right now. This is not true. Most other industrial countries in the world
are in the same predicament. Today, Japan has a huge trade surplus not
only with America, but with almost every other country in the world it
trades with. This happens when Japan buys less in products from other
countries than the other countries buy from Japan. This is bad because it
means Japan takes money out of America's economy and use it for their own
purposes (such as buying our real estate, or companies).
Japan's trade surplus is no accident. It is not the result of
Japanese efficiency, American laziness or anything else the Japanese
government officials may tell you on the TV. The real cause is this: Japan
trade patterns are not bi-directional in the common sense where two
countries buy each others exports and a happy state of affairs results.
Japanese policy is to intentionally use foreign cash profits not to buy a
foreign country's exportable products, but rather its capital assets like
companies and real-estate, while preventing the other countries from doing
the same thing in Japan. This enables Japan to get wealthy and powerful
extremely quickly while still being more inefficient and averse to
business risk than its trading partners. When 'whiners and Japan bashers'
claim Japan is 'cheating', the following is what they are trying to say.
Here is an explanation of how it works.
-->Defense:
There is a three tier economic defence which the Japanese use. First
is a set of laws which severely restrict/prevent foreign ownership and
control of Japanese companies and assets in Japan. As a consequence, GM
must sell their cars through Isuzu and Ford through Mazda. Chrysler
doesn't sell many cars in Japan. Long ago Ford used to have a large market
share in Japan but the government closed their operations and forced them
out of the country. Today, foreigners typically cannot own Japanese
companies, especially those in strategic industries such as manufacturing
and technology. It is because of these laws and regulations that you hear
about so many 'joint' ventures between US and Japanese companies, where
the venture is intended to help the US company penetrate the 'difficult'
Japanese market. These joint ventures really enable the Japanese companies
to get foreign technology without having to invent it themselves. The
foreign company gets only a token market share in the Japanese market in
return.
It was in this way the Japanese companies learned from the US
companies how to make TV's in the 1960's. More recently, the Japanese
government recently forced Texas Instruments to join a venture with SONY,
where SONY got technology in exchange for TI being able to sell some of
their products in Japan.
The second defense mechanism is the wide 'cross holding' of stock
shares between the companies in Japan. This basically works by having the
Japanese companies print up lots of shares and exchanging equal values of
these shares with other Japanese companies. This is very cheap for the
companies there to do. As these shares are never given up or sold, they
are effectively taken out of circulation. Because companies own such a
large percentage of each others shares, it is impossible for a foreign
firm or individual to accumulate enough shares (51%) to take over a
Japanese company. As a result, a foreign takeover of a major Japanese
company has never occured.
A side note of all this is that Japanese companies are able to think
long term because they don't have to answer to stock holders at the annual
shareholders meeting. Because so many shares are cross held, private
shareholders tend to be not so significant in number and hence not a
threat to the board. This is why US companies must worry about short term
performance so much, often at the expense of wiser long term decisions.
Japanese companies do not have to worry about this, so they tend to invest
much more in the future than we do and hence are much more successful.
The final defense system is a well set up structure of government
laws, behaviour and corporate co-operation which prevent foreign companies
who get around the first defence system from succeeding to make money by
selling products in Japan. The government delays foreign entry of goods
through lots of intentional customs and other regulatory snafu's as well
as red tape designed to hinder a foreign company to the point it becomes
non competitive in the Japanese market place.
-->Offence:
The offensive strategy is also a three tiered system. Firstly,
government (through the powerful Ministry of International Technology and
Industry) and corporations co-ordinate and select targeted strategic
industries which they want to enter, or take over.
Secondly, they obtain the basic technology (often from the current
foreign firms in the industry), then copy and improve upon it. They do
trials and further improvements in the Japanese home market which is
protected against encroachment by foreign firms which may be already
established in the rest of the world within that particular industry.
The final and most critical stage in the offensive system is the
practice of product dumping in order to gain market share overseas (ie.
Matsushita, Hitachi...below). Japanese companies will initially export a
product overseas at a price usually lower than it costs to make it. The
same product is usually sold in Japan at a higher price so the Japanese
company doesn't go bankrupt. This lets the Japanese companies increase
their marketshare as foreign buyers tend to buy the lowest price quality
product. This places stress on non-Japanese competition. Sometimes the
foreign competition is a well deserved target (ie. poor quality US autos),
but more often they are not. Once the foreign competition has given up, or
has been sufficiently weakened and the Japanese dominate that industry,
they bring the prices to a level reflecting cost of manufacture and
development and move on to the next market they want to take over. Using
this technique, the Japanese can enter and take over in a short while,
almost any industry they choose no matter how unrelated (which they have
done). Their system is virtually foolproof as long as you have trading
partners and individual consumers who tolerate or don't understand the
dynamics of what's really happening.
It should be noted that raising the price of a good within Japan in
order to pay for dumping in the foreign country is becoming less and less
prevalent as the Japanese companies today have enough cash to finance
dumping in the foreign country strictly from cash reserves. Once they have
wiped out the foreign competition, the profits start to roll in.
In some ways this is America's fault as Japan has taken advantage of
the open US market, as well as its tolerance to Japan's closed market in
order to help them rebuild their country after WWII. Ironically, America's
best scientists and engineers are working for military projects, whereas
theirs are working on commercial ventures, where the war is actually being
waged.
SUCCESS DOESN'T ALWAYS COME THE FIRST TIME:
Sometimes, the Japanese will fail at first to enter a market. For
example, the Japanese auto companies entered, and retreated from the US
auto market several times before making their successful onslaught. During
the intervals that they were not so active in the US market, they were
learning from their mistakes, improving, refining and testing their
products in their protected home market, preparing to enter the US market
again at a later time, which ultimately they did.
This strategy is still used today. For example, recently the Hitachi
company, a major Japanese telecommunications maker announced it was
withdrawing from the US telephone switching market (large specialized
computers used by telephone companies to make your phones work). It would
be foolish on the part of the US telecommunications makers to believe that
they have defeated Hitachi (some actually believe they have) because
telecommunications is a Japanese government designated strategic industry
and Hitachi will most certainly be in it in the future. As happened in the
auto industry, Hitachi is at home right now refining and improving their
products based on what they learned from their last campaign in America.
They will be back stronger than before. I know this because I saw some of
their new and upcoming products when I was Japan. Once their improvements
are complete and proven in the home market, they will re-enter the U.S.
market, possibly surprising America's domestic makers.
INNOVATION:
A serious problem, which the Japanese themselves have acknowledged is
the lack of originality and innovation. This is quite notable when you
look at the companies' histories. The Toshiba company in Tokyo has a big
science center with a time line of its history on a wall. On it were its
achievements. It read something like 'transistor imported into Japan 1950,
manufactured here in 1953', 'teletype imported 1931, manufactured here
1935'...etc. There were no inventions, only refinements. Hitachi, NTT (the
telephone company), Nissan and Matsushita had similar 'timelines' in their
centers with quotes like above.
This happens because inventing means failure (for a time at least)
and no guarantee of success. Because the Japanese cannot be seen to fail
(this is shameful and very bad in Japan), they do not invent. As their
companies become more powerful, I wonder who would be around to make the
discoveries like xerography, the transistor and LCD TV (all invented in
USA). I found 2 Japanese government sponsored organizations in Japan with
the task of short circuiting this problem.
One, the Technology Transfer Institute, specializes in finding small
companies around the world with new technology and helping Japanese firms
buy the technology. If the Japanese firm wants it but can't buy it, they
sometimes steal it by patenting similar items copied from the foreign
company's original and then intimidating/bankrupting the small company
through a blizzard of legal action. If the company is publicly traded, or
the owner wants to sell, the company is bought outright by the Japanese.
America, unlike Japan, makes no effort to protect its strategic companies
from foreign takeover. Imagine your small company and its patents versus
the attorney war chest of Mitsubishi Industrial Company.
This is actually what happened to Fusion Systems a small American
firm which invented and patented a new way to get spray paint to stick on
pop cans (PBS Frontline, "American Game, Japanese Rules"). Mitsubishi
bought one of this firm's machines and came out a few months later with
one of their own. The small firm sued. Mitsubishi then made many small
modifications to the machine (not improvements, just voluminous iterative
changes), patented all of them and sued the company many times over (for
each patent). Mitsubishi just waited for the Fusion Systems to run out of
money defending them all (and offered to drop the cases if the small
company sold them the rights to the machine).
If Japan can't get technology this way, they get it free from public
foreign research. A Japanese institution exists which is called the 'Japan
Research Foundation'. It actually does no research, but translates foreign
research papers into Japanese for the Japanese companies to use.
A major reason for getting foreign research this way is that Japanese
universities themselves don't do much research. Their equipment is
extremely outdated (in contrast to corporate labs). These schools are
literally straight out of the third world (possibly the last physical part
of the third world still in Japan). University is a place for students to
drink and party before joining a company for life. At the University of
Tokyo, the most prestigious university in all of Japan, the buildings are
in extreme state of disrepair. Stench of raw sewage permeates and leaks
down the hallways of the buildings and the (often drunk) students live in
extreme squalor. Academics did not seem to be taken seriously by the
students who were too busy drinking or playing sports. The libraries were
almost devoid of students. Some buildings like the Library for American
Studies were very nice, but many others were in shambles. Half of all the
windows in many of the buildings were broken and glass was strewn about
the floors. There were no working safety/fire control systems. Electricity
wires were hanging exposed in hallways and lighting was not functioning
(for many years it seemed) in parts of buildings. Old gas stoves were
running unattended in kitchens with cardboard covering broken windows.
Piles of garbage and wrecked cars were strewn about the campus and behind
buildings. Nothing had been painted or cleaned in about 20 years. The
grass hadn't been cut in a very long time and had reached full height.
Cats and other creatures lived in some of the buildings. The school
swimming pool was a filthy algead mess. If this seems unbelievable, one
can get off at Todai-komaba station in Tokyo and go see for themselves.
This is all the more extremely surprising as the rest of the country is so
rich and modern, more so than most parts of America today.
There is an important reason for all of this. In the world,
universities typically do research to advance learning and science for the
world. This is extremely expensive to fund, and is a lousy way for a
country to get the most value for its money, so Japan does not do this.
The Japanese government makes no effort to seriously support its
universities. Furthermore, unlike their U.S. counterparts, Japanese
companies give no money to universities. This does not mean that Japan
does not value basic university research. Quite to the contrary. It is far
cheaper to let the other countries' schools and governments do and pay for
basic research (which is published openly to the world) and to simply
translate and read their papers.
Japanese research money and results stays in the corporate and
government labs, where it may be kept secret from the foreign countries,
which are the enemy in the economic war. Japan does do research (lots of
it actually), but not for public dissemination and world advancement.
Research is done to gain advantage over their rivals. Last year, the
Toshiba Company alone spent more on research than was spent (privately and
publicly) in all the country of Canada. This is the fundamental reason why
Japan refuses to fund universities and diverts it to corporate research
instead. It is something we must understand.
Ironically, it may not be a weakness of theirs that their
universities are so awful. If they know that they can get research from
America for free, they are smart to put their money in their private
company labs instead where they can use it against the US companies.
In spite of all this, Japanese workers still get an excellent
education. This is because education up to (but not including) university
is very good and extremely well funded. In great contrast to the
universities, the elementary, secondary and tertiary schools are very well
stocked with the best of equipment, facilities and teachers. They are as
nice as anything in America. Furthermore, highly specialized training
programs are provided to newly hired workers when they join their
companies. This makes up for the weakness of the Japanese university
system.
A further point to this, companies do not to give grants to charities
(nor universities). Corporate citizenry doesn't not exist in Japan in the
way we know it here. This is why it is extremely rare to find Japanese
corporate run foundations in Japan or America. This is also why it is
extremely unusual to see for example, a PBS program sponsored by a
Japanese company (though recently, this is changing for the US branches of
Japanese firms as they learn how important Americans relate charity to a
company's image).
JAPANESE PEOPLE AND THE MARKET:
The Japanese people are extremely kind and polite, don't go stealing
things out of each other's houses nor do they go shooting each other as
much as Americans do. They are however naive about the forces in their
world around them (a point which probably can also be made about America's
own citizens). There is little individual thought nor questioning of the
government and companies, which is very dangerous. This is compounded by
the fact that 1 political party (the LDP) has ruled the country ever since
it has had a democratic constitution. Results of this include the fact
that many cartels operate in the country yet no one seems to notice this
occurs. Many Japanese aren't even aware that foreign countries make the
same products that Japanese companies make. Formally, Japan has laws
against cartels, but they are not enforced. Only one major cartel group
has been prosecuted in the last 15 years (plastic wrap companies), and
this was only after a lot of pressure from the United States. As America's
power in the world diminishes, so will its ability to exert such pressure.
Ordinary Japanese don't have much idea of why they can't buy foreign
goods at reasonable prices in their stores. When I asked Japanese people
why they don't buy American (or other foreign goods), they often say
because they can't find them, or they are much too expensive. This is
true.
Foreign goods are often impossible to buy at any price and are
usually very expensive when found. For example, I looked for, but found no
Korean products at all in Japan even though this country is very close to
Japan on the map (1000 miles max distance). Because Korea has little
political influence, it cannot pressure Japan to allow their products in.
As a consequence Korea cannot sell their products in Japan even though
they make many of the same types of high quality electronics and
automotive goods the Japanese make, but at a lower price. U.S. (and other
foreign products) which must face a Japanese domestic maker are also
extremely hard to find in Japan. Ironically, the American flags in the
Tokyo-Shinjuku Mitsukoshi department store were also made in Japan.
I realized that Japanese people would buy American goods if they could
when I told them the prices of US and Japanese goods in America. I used
some of the examples in this paper to try to explain why there was 'Japan
bashing' in America. I also happened to have a US newspaper, so I showed
them product prices of US and Japanese goods in America. I took them out
into their shops and proved the differences to them. When I finished,
they were shocked at what I had just shown them. Japanese goods are
sometimes cheaper in America than in Japan and non Japanese goods are much
more expensive in Japan than they should be, especially if the good is in
an industry targeted by the Japanese companies and government.
For example, the major Japanese appliance manufacturers are planning
to enter the US market for appliances (refrigerators, stoves, vacuums) in
the 1990's. In a major Hiroshima appliance store (the only store I could
find any foreign appliances), I saw a GE refrigerator selling for $3000
(US). This was a very low end model you could buy here in America for
about $600. The Toshiba right next to it was a high end model and sold for
$2500. A comparable refrigerator in America would sell for about $1000.
This didn't seem right to me. The government and more elite business
people I spoke with already knew about these points and acknowledged that
they could see it was a 'problem' for America.
ESCALATOR DOLLS AND OFFICE LADIES:
An escalator doll is a young women in her 20's who stands by the
escalator all day and welcomes you to the floor of the store or office
building. She says goodbye and thank you when you leave. You find these at
Mitsukoshi (the classiest department store I've ever walked into), the
Toyota main showroom in Tokyo, the government offices and the corporation
offices (Sony, Toshiba, Nissan..). Other women serve as temporary labor to
bear the bumps generated by the economic cycle. It is these people (and
foreigners) who get laid off in order to permit a system of lifetime
employment for the Japanese males. Escalator dolls (and their counterpart
within corporate offices, 'Office Ladies') must often sign a contract with
the employer stating that they will quit when they reach the age of 25.
The true purpose of these girls (besides serve tea and welcome guests) is
to become mates for the men, who are at work for such long hours that they
have difficulty to find women on their own.
Young women in Japan are expected to marry by 25 year old. A well
known quote in Japan makes the point bluntly: "Single women are like
Christmas cake, after the 25th, useless, so they go for 1/2 price."
Marrying by 25 is very important. If a women is nearing 25 and can't find
a mate, chances are she will have a pre-arranged wedding to an eligible
bachelor set up by the parents.
I sometimes wonder how much of a willingness to change the system
exists in Japan, even among the women themselves. While there, I met one
of Mutsumi's friends, Hanako. Hanako went to university in America and
studied in Political Science. I asked her what she thought of the way
Japan treated their women. She didn't see a problem. In her opinion, the
women should stay at home as it leads to family stability and enables the
husband to concentrate on his work and not family affairs. I asked Hanako
where she was working. She works at a Japanese company as a tea server
(office lady). 'What would you like to do at your job in the future', I
asked. She replied 'they told me that if I did a good job now, I could be
a secretary in a few years and file things'. Hanako has a university
degree.
In Japan, the percentage of women who are managers of men is much
lower than in America. Furthermore, women typically don't hold any
positions of importance. They are more like office decoration or marriage
material for the men. It may also surprise you, but almost all women in
Japanese companies, regardless of professional status or level in the
organization are required to prepare and serve tea daily for the men as
part of their daily chores.
"BUSINESS IS WAR":
This is a well known quote in Japan. It may be surprising, but this
has more meaning to the Japanese than you may first think. The word
'business man' in Japanese translates literally into English as 'Company
Soldier'. Japanese businessmen do not have pictures of their family or
loved ones at the office because they 'do not want to mix family with
battle'. When a Japanese man joins a company, he usually does so for life.
Loyalty is extremely high. For this, and other reasons, job hopping is
very rare in Japan. This has some advantages, as well as some
disadvantages. The man (and his family if he has one) will be housed in
the company residence, use the company health center, and make all of his
friends among those within the company. He will likely find his mate
through the company if he doesn't have one already. His first allegiance
is to this company and his team. The family is secondary in its
importance.
There are important drawbacks to be considered though. A man once
hired, cannot without extreme difficulty and shame, change companies.
Companies know that to hire away workers from other companies means to
risk losing their own to the other companies. This would disturb the male
employment stability which is important in Japan. The smaller companies
are kept in line by the larger ones via the power they hold via the loans,
terms of sale etc...over the smaller companies. This helps ensure
stability in the work force at times of economic growth and contractions.
WHERE IT ALL BEGINS:
While I was in Japan, I went to Mutsumi's elementary school to see
her younger cousin participate in a kind of 'Olympic Sports Day'. This
event though was quite unusual. There were no individual activities, and
the theme of the day was extremely militaristic in nature. There were two
main teams, the red and white teams symbolizing the country's national
colors. They had big banners, taiko (battle) drums which the team leader
beat on while chanting the team slogan. If one person made an error in the
competition, the whole team would suffer. Rewards, and failure were shared
among all members of the team. Stress and peer pressure were very high, as
they are for most Japanese throughout their lifetimes. Before the
competition, everyone on the teams sang the school anthem louder and more
clearly than I ever heard a school anthem sung here in America. Their
diligence and effort was quite remarkable.
What we call individuality in America is called deviation (be it in
school, or at work) in Japan. It is not tolerated nor tried very much. (In
fact, kids who's hair is not black enough get it dyed so as not to get in
trouble at school by the teacher). Anyone with an 'outsider's' mind is
rejected by the others, even by the teacher.
A consequence resulting from this fact appears when families who have
lived outside Japan for a few years return to the country. These people
(especially the kids) have a lot of trouble being accepted and integrating
back into the Japanese society.
'Peer stresses' in Japan lead to what could be considered 2 major
problems. #1 is stress. Many kids can't take it and commit suicide before
reaching university age. Mutsumi's best friend in high school did this.
Many others suffer from a wide variety of stress related nervous ticks and
twitches (if you ride the subway in Tokyo and look at the other riders,
you will notice this very readily). The second problem, is shame:
Other 'strategic markets' the Japanese have entered (or are doing so
now) include:
>machine tools (the world is now dependant on Japan for much of the most
modern machine making equipment (imagine the importance of this if a real
war broke out somewhere in the world where the US and Japan each supported
the opposing parties). Japan has also made a strong effort in the area of
power tools (Makita, Hitachi), again with some dumping (Hitachi...).
>computer memory chips and semiconductors (Akio Morita (SONY CEO) and
Ishihara, in their famous book "Japan that can say no! (to America)"
stated that Japan was powerful because could alter the balance of power by
selling its critical Japanese-made-only microchips to the Russians instead
of the USA). They also claim that we dropped the A-bomb on Japan because
we are racists.
>high performance telecommunications equipment (see the final example)
>automotive (US auto plants were used in WWII to make bombers...today many
of these plants don't exist anymore).
>automotive parts (Japanese cars made in USA are really assembled from
parts which are all MADE in Japan). These are the cars' critical
components. The high precision equipment and technology to make these
parts reside in Japan, not here. That's why high precision machining and
advanced manufacturing is usually done in Japan, and assembly here.
EXAMPLE, HOW ALL THIS WORKS TOGETHER:
Buying a Japanese product, even in an industry unrelated to yours can
cause you to lose your job! This is much more likely than one may think.
Many otherwise smart people do not understand this so I will explain it
with the following true example:
AT&T is a large US telecommunications manufacturer that is well
placed in the world market and hence pays its employees very well. Many of
them like to buy Hondas, Acuras, Mitsubishis and Toyotas. Most of these
Japanese companies are in one of the 6 or so keiretsus in Japan.
MITI and Japanese industry have made it a public national priority to
enter and become the major player (today, they are a very minor force) in
the telecommunications industry during the 1990s. In fact, they have a
plan to wire every house in Japan with fiber optic cable within the next
10-15 years in order to get good at making fiber and its associated
communications hardware.
Japan will have to spend money to research and develop their new
telecommunications equipment. This will be very expensive and they will
need the help of the keiretsu banks to do it. Where do the banks get this
money? From their biggest export of course, automobile sales. This means
that although AT&T managers and engineers only bought cars, they are
helping fund Toshiba's, NEC's, Hitachi's and Matsushita's effort to put
them out of a job.
Imagine one of AT&T's engineers recently bought a new Acura
automobile. One day, that AT&T engineer will lose his job due to fierce
Japanese competition in the telecommunications industry, get into his
Acura, go home, yet never ever equate the two events!
Let's continue this example a little further to summarize this paper
so far. The Japanese want to enter a new industry, telecommunications.
Based on previous experience, this is how they are likely to do it.
Firstly, telecommunications in the future will be based on something
called digital technology. This will enable those picture-phones you used
to see on Star-Trek to be a reality. Fiber optic cable and data
transmission are very important to do this too. This is why they want to
put fiber cable all over their entire country.
Today, the Japanese are lousy at making high quality major
telecommunications equipment that your telephone company would buy. In the
world market though, there is lots of money to be made in this, which
right now AT&T mostly gets. Because Japan doesn't know how to make good
telecom equipment, they will need to do three things:
>1) get some good telecom equipment so they can copy it and improve it.
>2) pick a very strategic but simple niche market in the industry and take
it over completely (ie. dumping) to get a foothold so they can use it as
an anchor to increase the market share in telecommunications (like the LCD
screens)
>3) start small.
It turns out they have already started to do these things. For (1),
they promised some US big name telecom makers that they might get a piece
of the Japanese telecommunications market in return for a small sale of
their best equipment to the Japanese national telephone company. AT&T and
other North American firms fell for this scheme (maybe the laid off TV
maker executives went to work for AT&T). AT&T sold them one copy of their
most advanced equipment for a promise to 'possibly' buy many more. This is
pretty foolish as AT&T has just given their best equipment to a country
which has made a public declaration to be the world leader in that
industry. This equipment will get copied and show up as Japanese brands a
few years from now.
For (2), Japan already has acquired two main strategic industries.
Firstly, as you know they have 100% market share in the small LCD screens
that the new picture phones and tele-computers/tele-bank machines will
use. If AT&T wants to make a picturephone, they have to get the screen
from their competition who also makes these phones (which I saw when I was
Japan). Imagine the laptop computer example above all over again. This is
an other reason why these small LCD screens are so strategic. Secondly,
Japan has made an effort to be the best and cheapest (via dumping) at
making a highly specialized component of fiber optic transmission systems
which America uses in its network. Now Japan's salesmen talk to every
phone company in the world to sell them this part. Now on his future
visits, he can use his existing contacts to sell them other things Japan
will soon be making.
For (3), you probably have already seen what's going on when you go
shopping. Panasonic, Murata, Fujitsu and others all make very fancy
electronic phones. They also make small telephone switching equipment
(like AT&T's smaller products). Eventually, these will get bigger and
bigger till they make the bread and butter items of AT&T. This is the same
strategy they used to enter the car market too. They started with
motorcycles, moved to cheap cars, then to trucks, then to sports cars,
then to luxury cars. Today we know the results. Again, this is also true
with TVs, first they made black and whites, then color TVs. Today the TV
in your house is most likely Japanese (even if its a store brand). This
was an industry which America had 100% market share about 25 years ago.
This is what is likely to happen to telecommunications too.
ITS NOT ALL JAPAN'S FAULT:
American's behavior when trying to do business in Japan is not what
it should be. After seeing how some American firms operate there, it is
little wonder our success rate is often so poor. For example, something of
annoyance (and also advantage) to the Japanese is American business people
working in Japan who don't speak Japanese, or know nothing about the
country they are dealing with. These included some people from Boeing whom
I met at a Nissan factory, some from the Govt. of Wisconsin at a machine
tools fair trying to attract Japanese industry to their state and some
representatives from an Oregon company.
The group of businessmen I met from the Oregon company I met in
Roppongi (an entertainment/love-hotel district in Tokyo). These people
were a disgrace to American industry and opened my eyes to why the
Japanese are able to take such advantage of us in business. Firstly, these
men spoke no Japanese at all (so they couldn't understand what their
opponents at the negotiating table were saying) and knew nothing about the
culture. They asked me what it was like to be a 'gringo' in Japan. It
seemed that they thought the business adversaries they were negotiating
against in Japan were running some 2 peso Mexican hot dog factory. My
conversation with them was a real eye opener to many of America's problems
when dealing with the Japanese in business.
At least their company didn't send a women to do their negotiating
though. This would have been a mistake of huge proportions. Japanese
corporations and businessmen typically treat any company who sends a woman
with ridicule. Its one of the best ways to lose a contract. Although
Americans may dislike Japanese sexism, Japan is fast becoming the world
economic power which means they get to make the rules, not us. This is
part of the price Americans pay for buying all those Toyotas and Sonys for
so many years. As Japanese industrial influence spreads throughout the
world, expect to see more of this type of treatment of women by Japanese
companies (as any women working in a Japanese transplant company in the US
can attest).
MILITARISM:
In the book 'Japan that can say no! (to America)', by Akio Morita
(CEO of SONY) and Shintaro Ishihara (an influential parliament member),
the authors state that Japan has under development the world's most
advanced military jet because American made planes are not suitable for
Japanese terrain, which is 'different' because it has mountains. Mutsumi
told me about one of her friends who quit the Fujitsu company partially
because they were required to work on a nuclear weapons research project
and didn't feel a Japanese company should be involved in such work.
In Japan, Fujitsu has built at least 2 nuclear breeder reactors (such
reactors usually are used to enrich plutonium for nuclear weapons). The
Japanese claim however, that they are for peaceful purposes.
There is also a well funded extremist nationalistic movement of sorts
in Japan which posts large posters at most major intersections and subway
stations in Tokyo calling for restoration of the emperor as ruler and re-
militarization of the country. Every day in the business and shopping
areas of the city, vans drive around with huge loudspeakers blaring
nationalistic music and making the above demands. Apparently, the older
Japanese ignore this, aware of the west's generosity after the war, but
feelings of the younger people who don't have the memories of Japan's dark
past are more uncertain. What is happening today in Germany may be a
foreshadowing of things to come.
This may seem implausible at first, but not after one looks at
Japanese elementary students' textbooks. In the texts, the sections about
World War II are extremely distorted. In these books, Japan is played out
as the victim to world aggression and the atrocities of the Japanese
Imperial army are not mentioned anywhere. The massive US aid to rebuild
Japan after the war is mentioned on only one line which went "America
provided Japan with some help". Japan's postwar success is attributed only
to the hardworking values of its people (partially true), and not to U.S.
aid for reconstruction of its industries (paid for by American tax
payers), free access to the U.S. market, and U.S. tolerance of Japan's
closed market. Furthermore, after reading these books, one almost thinks
that WWII was America's fault. It is hoped that the younger Japanese learn
what really happened before their parents grow old and die, or America and
Japan may face new misunderstanding and confrontation in the future.
EFFICIENCY:
Japan is perceived by the outside world to be an efficient country.
In actuality, Japan is a very inefficient country. The subway people count
change out of tin plates. The valuable intellectual resource of women is
wasted by giving them only the most menial jobs such as 'escalator dolls'
and tea servers. The farming system is one of the most inefficient you
will find in the modern world. Because of this inefficiency, there are a
lot of people employed on the farms who otherwise may not have a job.
Although this is an inefficient use of people and resources, it helps
maintain a low unemployment rate. The protected domestic market keeps all
this from collapsing. As a result Japan can be inefficient, yet still
rich. It is now per-capita, the richest industrialized country in the
world (and is expected to be the richest absolutely by the year 2000,
surpassing America). It may surprise many people, but the most efficient
country in the world is the United States, not Japan. Japan ranks a bit of
the way down. In manufacturing though, they are best in the world.
Inefficiency is also apparent in city planning. Tokyo seems to have
the design of a 'rich' third world city. It is very crowded, chaotic and
streets are extremely narrow and go every which way. Streets in Tokyo have
no names in order to 'confuse the enemy' in the event Japan was ever to be
invaded again. (The U.S. Army named some of the streets during the
occupation, but these were removed shortly after occupying forces left the
country).
CONCLUSION:
America's citizens have failed to realize that Japan practices a
different kind of trade than America does. Japan practices adversarial
trade, where the goal is to wipe out the foreign countries' industries in
order to dominate them entirely. For the Japanese, business is in every
sense of the word, like war. Americans who buy Japanese goods, unknowingly
help them reach this goal. The Japanese are not our economic allies, they
are our competitors.
America often complains that Japan must change its ways to become
more like us. This is not true as America is not number one anymore. It is
not a request we can make. Today, the tables are turned. This time,
America will have to change its ways to become more like the Japanese.
Japan will likely surpass the United States to become the world's leading
economic, technological and manufacturing nation by the end of this
decade, even though they have only 1/2 the population of America. They
will not have to change their ways to become like us, as tomorrow they
will wield the power, not us.
---------------------------------------
List of companies:
This is a list of some Japanese (or Japanese owned and controlled)
companies. Some of the names that make this list may surprise you,
depicted by '*':
Acura (Honda Motor Company, cars)
Aiwa (consumer electronics, stereos)
* B.F. Goodrich Tire (owned by Toyo Rubber)
* Brother (electronic typewriters)
* Bridgestone Tire Company (tires)
C. Itoh (computer printers)
Canon (laser printers, cameras, photocopiers, consumer electronics)
* CBS Records/Columbia House Records (owned by SONY)
Citizen (watch company)
* Columbia Pictures (owned by SONY)
Denon (cassette tapes, consumer electronics, stereos)
* Dunlop Tire and Rubber
Epson (computer company)
* Firestone Tire and Rubber (Bridgestone Tire Company, Japan)
Fisher Electronics (Stereo Maker)
Fuji Film (film and chemical products)
Fujitsu (nuclear and breeder reactors, consumer electronics, heavy
industry)
Geisha Foods (tuna and canned food products in the USA)
Hino (heavy truck maker)
Hitachi Industries (heavy industry, railroad, appliance and
electronics)
Honda (autos, motorcycles, small trucks)
Infiniti (Nissan Motor)
Isuzu (autos)
* JVC (Japan Victor Company; owned by Matsushita Industrial Electric)
Kawasaki Heavy Industries (Motorcycles, trains, industrial steel)
Kikkomann Foods
Kenwood Electronics (Stereo Maker)
Komatsu (A heavy Equipment maker)
Konica (photocopiers, cameras)
Kubota (heavy equipment, backhoes, tractors, bulldozers)
Kyocera (computer and electronics maker)
Lexus Automobile (Toyota Motor Company)
Makita (power tools)
Maxell (cassette tapes)
Mazda (autos)
* MCA Home Entertainment (tv show company;ie. Dragnet..etc) (SONY)
Memorex (cassette tapes)
Michael Jackson (rock star, he works for SONY)
Minolta (copiers, fax machines, electronics)
Mita (photocopiers)
Mitsubishi (a huge keiretsu...banking, steel, autos, trucks, lead
pencils, electronics, bicycles...and on and on)
Mitsui (an other huge keiretsu)
Murata (fax machines and electronics)
NEC (Nippon Electric Company; computers, cash registers, TV's,
electronics)
Nikko (consumer electronics, stereos)
Nintendo Electronics (video games)
Nissan (autos, power boats, trucking and heavy transport vehicles)
* Nomura Securities (financial firm)
Okidata (computer printers and accessories)
Olympus (cameras)
Onkyo (electronics and stereo maker)
Panasonic (Matsushita Industrial Electric Company)
Pentax (cameras)
* Pentel (lead pencil company...Japanese have a huge share of the lead
pencil market, look at your lead pencil, its probably
Japanese)
* Pilot (lead pencil company)
Pioneer (Stereo and electronics maker)
* Quasar (Matsushita Industrial Electric Company) (Televisions, VCR's)
* Raven (computer printers, faxes and accessories) (Matsushita Industrial)
Ricoh (they make computer printers)
* Roland (musical instruments)
* Rockafeller Center (a Japanese holding company)
Sanyo (electronics)
* Seattle Mariners Pro Baseball Team (Owned by Nintendo)
Sega (video games)
Seiko (Watches)
Sharp (copiers, faxes, TV's, electronics)
* Shiseido (perfumes, cosmetics)
Sony (electronics, movie production)
Star Electronics (they make computer printers)
Subaru (autos)
Sumitomo (banks, heavy industry, ships, steel, electronics)
Suzuki (autos, motor bikes)
TDK (cassette tapes)
Taito (video arcade games)
Tomy (toy company)
Toshiba (electronics, eletrical, home appliances, heavy industry,
nuclear reactors)
Toyota (autos, heavy transport trucks)
* Universal Pictures (Matsushita Industrial Electric Company)
Yamaha (motorcycles, musical instruments)Yokohama (Tires and Rubber
products)
Yokohama Tire and Rubber (tire and rubber goods)
YKK (zipper company (look at the zipper on your clothes, its
probably YKK as this company has an over 50% market share
in the world))
---------------------------------------------
Some U.S. products which are really Japanese (or other)
Chevy Nova car (Toyota)
Chevy Sprint/Pontiac Firefly cars (Suzuki)
Dodge Colt car (Mitsubishi)
Dodge Stealth car (Mitsubishi)
Eagle Talon car (Mitsubishi)
Ford Mercury Villager Minivan (Nissan)
GM's Geo cars (mostly Korean)
HP printers (some of them are Canon's)
Macintosh Powerbook Computer (SONY)
Sears Televisions and other electronics (Matsushita and others)
*****Some articles referred to here are available
via the Internet Computer Network at FTP Site:
monu6.cc.monash.edu.au
in directory: pub/nihongo
matsushita.pbs (Transcript of a PBS-TV special on the Japanese
television cartel)
japanno (The US. Department of Defense version of the text of Akio
Morita's and Shintaro Ishihara's book, "A Japan that Can Say
No! (to America)". Note the version of this book sold in stores
is a phony. 1/2 of the original version is missing (Akio Morita
removed his part fearing it would hurt SONY's sales in the
U.S.) and there is a new appendix specifically written for
American consumption, much of which is blantantly false).
Here are a few good books to read on the topic:
-->"Trading Places, How we are giving our future to the Japanese and how
to reclaim it", Clyde Prestowitz, New York: Basic Books 1989
-->"The Enigma of Japanese Power"; by Karl Wolferen, 1989, Alfred A. Knopf
Press (this book used to be given away when ever your bought a
subscription to Forture Magazine. I'm not sure if it still is.)
-->"Unequal Equities, Power and Risk in Japan's Stock Market"; Zielinski,
Kodansha International, 1991
-->"The Japanese Company", Rodney Clark, Charles E. Tuttle Company 1979
(Yale University)
-------------------------------------------------------------------
DEBT, AMERICA'S SUPERWEAPON OF SELF DESTRUCTION:
First, some definitions:
National Deficit: The amount of new money America borrows this year only
($400,000,000 this year)
National Debt: The total amount of money the government owes (a result
national deficits adding onto each other year after year
+ interest)
(The government has now borrowed a total of
$4,000,000,000,000. Each American's share is $16,000)
It should be noted that a lot of America's problems today are its own
fault; a poor educational system, poor corporate management, lack of
loyalty to our own country and its products and politicians who do exactly
what we want them to in the short term. Perhaps America though it was so
rich it could afford to be careless about its future. This all lead to the
big issue, the national debt.
For the last 10 years, our standard of living has been maintained by
borrowing when it should have declined drastically as our imports shot up
and our exports plummeted (eroding our national industries).
Unfortunately, because of the massive borrowing, the cracks forming in
America's national economy were not so visible.
Today, America is now a much weaker player in automobiles (the motor
capital of the world is now in Toyota City, Japan, not Detroit), machine
tools, motorcycles, consumer electronics, display technology, banking (in
1970, 9 of the 10 largest banks in the world were American, today 9 of the
10 largest banks in the world are Japanese) and materials. All of these
industries today are dominated by the Japanese. All were dominated by
America only a short time ago. Americans could not see the effects of
losing industry after industry on their national strength and standard of
living marketshare because of the borrowing... until now.
Today 1/3 of every American's taxes go to pay interest on the
national debt. If the US didn't have this debt, everyone in America would
be working 4 days instead of 5 and still have the same living standards,
as this is the part of each person's taxes which go to the debt.
Conversely, Every American's standard of living would be higher by 20%
with 5 day workweeks but no debt. At the current rate, in 10 years, all
Federal taxes collected will go to the debt. This all points to extremely
bad things which will happen to the US economy in a few years. Already,
America is in the longest recession since the depression with no sign of
an end. If America tries to balance the budget now, it will likely trigger
a much more severe recession or a depression as the US economy is
extremely dependant on this borrowed money flowing in (1/3 of this year's
federal spending was borrowed) to keep everything going.
Balancing the budget now isn't so bad though, because depressions are
temporary and things would get better about 10 years later. After that,
several decades of lower standard of living would take place as Americans
pay down the debt back to a reasonable level (every American's debt share
right now is $16,000). Balancing the budget is of course political
suicide. Many of the politicians today prefer to commit national economic
suicide as it lets them save their jobs for now.
Sadly, the (more likely) alternative is much worse:
If America doesn't balance the budget now, but waits, then the debt
and interest costs will get much higher than they are today. The
government will start raising taxes and cutting services more rapidly than
ever before, but will be unable to raise taxes so high to pay such
interest. They will then resort to printing more money to pay the
interest. This will lead to hyper inflation rates and rapid decline of the
standard of living in the country. This results in a depression that won't
go away. If it sounds unbelievable, one may read one of the many books on
Latin American economic history in the 20th century. You'll see a play by
play description of what is happening now in America. This is what
happened to all those latin American countries who right now are wondering
why America is so foolishly making the same mistakes they did in the 60s
and 70s. This is compounded by the fact that alot of this debt is owed to
the Japanese. Once America is in hock, Japan can tell America what to do
as then, they literally own it. This is why the debt has people like Paul
Tsongas and Ross Perot so afraid right now.
Fixing the debt problem will require (for a short time) lots of pain
that American's haven't experienced since the depression and tax hikes
with the likes that have never been seen before. Americans will have to
expect this and be tolerant. Gas will sell for $2.50, social security will
be taxed and many loopholes will have to dissappear. For a time,
American's living standards will plummet drastically.
On the other hand, not taking these measures will yield the same
consequences a little later, but they will be permanent instead. America
will be a very different place in 25 years should this happen. Its the
choice of every American about what happens. We will have to face our
future grandkids about it one day if we decide to do nothing about it now.
There is still time, it would be wise for us not to waste it.
-----------------------------------------------------------------------
THE END
The above file is available from FTP site: monu6.cc.monash.edu.au in
directory: pub/nihongo, as JAPANYES.
"A Japan that Can say No" by Akio Morita (SONY CEO) is there as JAPANYES
The PBS FRONTLINE transcript about the Matsushita TV Company is there as:
MATSUSHITA.PBS
I'd welcome any comments you have about the article. It looked
relevant to some of our problems today and seemed worthwhile to post.
You see, Japan's government and companies have organized to fight an
economic war against us which we are losing badly. What the ordinary
Japanese people allow their government and companies to do is not
acceptable. Outright discrimination against foreigners and treating women
as 'non-people' is also not tolerable in the modern world. The Japanese
government and industries have treated the America that helped them so
much after World War II with utter contempt and insolence. We had accepted
their closed market and opened ours to them so they could rebuild their
country and become full members of the peaceful world. Instead, their
government and their industries chose to use this generosity as weapons
against us in order to destroy our companies, our jobs, and our national
strength.
I used to buy lots of Japanese products, probably for the same
reasons you might now. Not everyone can go to Japan, so others may not
know the full consequences of their decisions like you do now. Telling
them is important. It just takes understanding and thoughtful explanation
for others to understand. If you know an effective way to get this message
out to people, then it would be wise to do so, don't wait for someone else
to do it for you as by then, it may be too late.
America belongs to you and you have to do something for it once in a
while. This is one of those times. If you have questions, please ask. Use
this network and fax machines to organize yourselves to get this message
out. Hang up copies of this article and others in lounges, or on the
windshields of Japanese cars. Try to start an awareness newsgroup on the
internet. These are all things which can be done.
If you are a student, you probably realize much more than your
parents do that your standard of living is likely to be a considerably
lower than theirs. You are much more likely to have trouble finding a good
job upon graduation than they ever had. That is how this problem affects
you directly. As a result, you may wish to tell your friends and organize
student groups to get the word out about this problem. If you don't act,
its you (and your kids someday) who will suffer the most as a result of
all this, so its up to you.
In the meantime, one very good way to get people aware of the topic
is to get them a copy of Rising Sun (by Michael Crichton) as a birthday or
Christmas present. This is a very good factually based fiction book on the
subject. All parts about Japanese business in the book are true and are
backed up with a bibliography at the end. This book is a #1 best seller
and is by the same author who wrote "Andromeda Strain", "Great Train
Robbery" and other very famous and very good books/movies. I'm not sure of
the publisher. It is a very good fiction/murder mystery book and is loaded
with lots and lots of facts about this issue which are not exaggerated. It
will convert the most ardent 'America Basher'. A movie version of this
book is being made and should be out next year though it may not be as
complete and factual as the book.
If what you read in the articles above really disturbs you, you may
wish to tell or fax your friends about this article or others you which
find at the above FTP site or elsewhere. You could avoid Japanese products
and expect the same from your friends and associates. If a salesman drives
up to you in a Japanese car, you may wish to tell him you expect him not
to visit you next time in one. Plenty of other countries who aren't out to
destroy us make fine automobiles.
Remember that a problem like this can be fought, one American at a
time. Remember to be thoughtful and loyal to your fellow Americans and
treat them as you would like to be treated. Exclusive self-centered
thinking will only make problems in America worse than they are. That is
the true lesson of the 1980's. Self centeredness doesn't work in the long
run. If we were as loyal to each other as the Japanese are to each other,
we wouldn't be in the economic and social mess we are now. Remember that,
and expect it from your family, friends and associates. If you don't get
what you expect, say so.
Hopefully in the future, the economic war will be called off and our
two countries will live peacefully and with co-operation. I look forward
to that day.
-Andre
[email protected]
|