From: fester@island.COM (Mike Fester)
Subject: Re: Try it again - RE: Please give me your opinions...
Organization: /usr/local/rn/organization
Distribution: na
Date: Thu, 12 Nov 1992 17:56:55 GMT

In article <1992Nov10.000753.13204@oakhill.sps.mot.com> rvkl60@aus18a25.sps.mot.com (Tom Mathes) writes:
>In article <SMITTIE.92Nov6113448@tui.csulb.edu> smittie@beach.csulb.edu (Smittie) writes:
>>I replied to this once already. This article is far too long and inane to go
>>through line by line and discuss of refute in this medium.

While Mr Smittie and I have had some very public disagreements in this forum
in the past, and I have a few quibbles with his rebuttal of the argument, 
overall I'd have to agree. My feelings:

>Oh really?  I think the author has a good paper.  If you have a
>qualm with it, be specific.  Having dealt with the Japanese in 
>business settings, and having gone there myself, I can vouch for 
>everything I read in there.  None of it was new to me.

As Mr Smittie pointed out, though, none of the article was original. It was
essentially rehashed criticisms (some valid) of things OTHER people have been
saying for years. BTW, I too, have dealt with the Japanese in business settings,
and in fact lived and worked there for about two years.

>They are in an economic war with the US.  I find it ironic that
>whenever America trys to retaliate against obvious Japanese 
>protectionism, we are lableled as "Japan bashers" or 
>"protectionist".  We are just applying the same rules of
>trade as the other side.

I agree with you that the label of 'Japan basher' is flung a bit too easily.
However, I am against retaliation. The Japanese DO change if pressured to 
do so (and no, I do not necessarily believe such pressure is bad), but it must
be very peristant, low-profile pressure. 

>Why is Japan not labeled "racist" when high-level government
>officials call Americans "dumb and lazy"?  Why is it not protectionist
>when American rice farmers aren't allowed in the Japanese 
>market?  Or when our retailers, like "Toys 'R' Us" are given
>fits to open stores in Japan?  I know first hand the
>grief my employer, Motorola, had in getting access to the
>cellular phone market in Japan.  We had to get US government
>intervention to get the markets opened.  Had we not, Motorola
>would never have gotten access to the Japanese market.  Gov-
>ernment interference was keeping us out, at the behest
>of other Japanese companies.

1) It *IS* labelled 'racist', and has been ever since people started paying
attention to Japan. It *IS* labelled protectionist when the foreign rice is
not allowed in Japan. It is simply that the best way to handle these things is

2) the way the 'Toys-R-Us' and Motorola examples were handled (BTW, an American
friend of mine worked at Motorola in Tokyo). After a bit of low-key, firm
pressure, the US companies were given access to the markets (though Motorola
still doesn't have bandwidth allocated in the Kantou, so far as I know). And it
was NOT Japanese companies keeping out Toys-R-Us; it was small retail outlets
who felt they could not compete with a large retail outlet.

>What about Allied-Signal's problems in marketing a new
>transformer alloy in Japan?  That was well documented by
>"Business Week" several months ago.  A/S came out with a 
>new low-loss metal alloy for transformers, and tried to
>market it in Japan.  BUT, since no Japanese company could
>produce the product (A/S held the key patents), the government
>there blocked the sale of the metal until the domestic
>metal makers could effectively clone it and undercut A/S.
>In essence, they stole the idea with government help.

The government did NOT block the sale of amorphous metals; the giant companies
decided not to purchase it until such time as a Japanese manufacturer could
produce it. The way to handle it: the same way we handled the other problem.
Continuous, non-confrontational (publically, anyway) pressure.

>How about the recent problems that Cray Research had in
>selling supercomputers in Japan?  That too was well
>documented in "Business Week" about a month ago.  Here
>is a company that sells successfully worldwide, yet has
>fits getting into the Japanese market.

Actually, Cray does very well in Japan. They have problems selling to the
government and to educational institutions. The reason is that the governement
buys almost exclusively Japanese (well, you can't blame them for that) and
that NEC, etc, donate computers to educational facilities. Note that companies
such as Hitachi, Fuji, NEC, etc, DO buy Cray's computers. Other companies
do as well, and they seem to be (in my experience) the most heavily used
computers if more than one super-computer is available (I had a chance to visit
NTT's Iibaraki lab; they used almost exclusively American-made computers for
their work. The engineers said they were more reliable).

>To this day, a foreigner cannot buy into a majority stake
>or outright own a Japanese business.  Look at the problems
>T. Boone Pickens had in trying to buy a supplier to Toyota.
>That proves again that Japan doesn't play by the same rules
>as others.  They again prove protectionist.

Foreigners CAN buy a majority stake: they need to have at least 2 Japanese
partners (note: a British firm recently bought Sansui outright). And while I
have zero sympathy for ANYONE citing Mr Picken's well-deserved problems (and
may he have many more, and ill-health to boot), that was NOT the case. He DID
purchase a ~25% stake in a Japanese company, and demanded a seat on the board
of directors. It turned out that Pickens put up none of his own money for this:
he was backed by a Japanese businessman with strong ties to the yakuza (in some
cases, that is redundant, I know). In short, that was a case of a Japanese
trying to buy influence into another Japanese company by using a foreigner as
a front. 

>I'm sick of the term "Japan bashing" whenever someone points
>up that Japan is still a closed market.  If we played by the 
>same rules as the Japanese government did, then Japanese products
>would effectively be shut out of our markets.  I don't want
>to shut off trade, but it's got to be a two way street.
>Right now, it's not.

And if we played by those rules, most likely our cars would still be of the 
quality produced in the 70s (remember the Mustang II? the early 70's Camaro?
Ugly abominations). Also, you might bear in mind that those American companies
who go into Japan with a good product AND their own distribution network can
succeed there on a scale unmatched by their success in the US markets. Coca-
Cola controls about 50% of the softdrink market, MacDonald's is by far the 
largest of the fast-food chains, you can't walk more than a couple blocks in
Tokyo without running into a Shakey's, Kentucky Fried Chicken, Wendy's, etc,
Harley-Davidson is doing so well that the Japanese government had to remove its
restrictions on sales of motorcycles over 750cc on its OWN manufacturers, 
Pampers has about a 55% share of the disposable diaper market, and just TRY to
fight your way into a Tower Records on the weekend. 

Now, some of this came about as a result of US pressure to open the markets,
but those companies that can put their own distribution system in place do
very well. Note: Toys-R-Us has been so successful that they were able to 
force concessions out of JAPANESE toy manufacturers, including price reductions
on large quantities and bypassing the "complicated" distribution system. Oh,
and I believe MacIntosh is doing well since they started marketting directly.

>Whenever I hear the term "Japan bashing", I almost always
>find someone with their hands in Japanese pockets or
>someone who hasn't studied the subject.  The only ones
>who call the article inane are ones who still live in
>a fantasy land of academic unreality.  In the real world,
>no one practices "free trade", not even the US.  BUT,
>Japan is by present standards a protected market and a
>country that practices predatory capitalism.  The US is
>by a long shot the most open market in the world.

Well, I have (IMO) studied the subject quite thoroughly, and continue to do
so, and I *WISH* my hands were in Japanese pockets :-)

I agree fully that we are by far the most open market in the world. Note that
several very prominent, non-vocal, well respected economists/businessmen 
still are far more impressed with the US economic strength than with anyone
else's. See Peter Drucker's work for more on this. He wrote in the 50s that
Europe would soon make huge inroads into American markets, due to the US
falling behind in investment in new facilities, upgrading equipment, etc. He
wrote in the late 60's and early 70's about the Japanese and their huge
investment in new technologies, and warned that we were in danger of falling
behind in several important areas. He is still FAR more impressed with the 
US economy than with that of any other nation, due to the flexibility of of
our economy. 

Now, are the Japanese unfair? Yes, in many cases, extremely unfair, and Mr
Smittie did not deny this. Have these unfair practices damaged some of our
industries? Again, yes. Is there any sort of Japanese conspiracy/trade war?
Well, frankly, I don't think they are organized enough to fight one. Japan
has an incredible problem with its bureaucracy marching to its own tune, while
the government marches to its own tune, and the large businesses try to march
to THEIR own drummers. And they suffer just as much as, or more than, we do
for their blunders. The securities industries are still reeling from the 
recent scandals. The banking industry is facing a prospect of a debacle equal
to the worst projections of OUR S&L scandals AND our POSSIBLE banking scandal
combined; recent articles in the NY Times, as reported in the SF Chronicle 
indicate that it *may* take a $500 BILLION bailout to save the Japanese banks!
This, in an economy half our size! Note: this is due to the land-price 
collapse. I personally do not believe it will be this bad, but it will 
certainly be tight there for a while. In fact, just a few months ago, a law
was enacted by the Parliament which made it legal for large securities and 
banking businesses to withhold from the public their actual financial status.
Bear in mind, too, that the Japanese stock market is still at less than half
its peak level (IMO, it is now closer to its "real" value, but undervalued
now).

So, in short, the article, while containing useful information, presented
nothing new, and was hopelessy one-sided. In this, I fully agree with Mr
Smittie. As for America's problems with Japan, I must agree fully with 
David Barry (BTW, my wife thought the book was hilarious): the Japanese, if
nothing else, have reminded us that just being American is not enough to 
succeed. It takes hard work and dedication to succeed, now more than ever.

Mike

-- 
Disclaimer - I'm only doing what the little voices tell me to do. 
Xref: sparky soc.culture.japan:10272 soc.culture.korean:5139