From: edhall@rand.org (Ed Hall)
Newsgroups: sci.lang.japan
Subject: Re: Japan-USA
Date: 11 Apr 92 01:22:41 GMT
Organization: The RAND Corporation

In article <1992Apr10.224819.22120@gibdo.engr.washington.edu> tvp@gibdo.engr.washington.edu writes:
>> . . . .
>I agree that this [Japanese investment] is not the reason for our recession.
>But the knee-jerk response that Britain is the largest foreign investor in
>the US ceased to be true in 1990 when Japan surpassed them with several
>mega-deals. It became a common refrain when Japanese pointed out in
>1989 that they were the #2 or #3 foreign investor, and then everyone
>picked up on this defense and has repeated it ever since. Show me the
>numbers for 1991 showing Britain as #1 and then I'll believe it.

At first I wasn't going to respond to flamebait terms like "knee-jerk",
but since the rest of your post is quite reasonable, I'll let it pass.

Yes, the annual rate of investment by Japanese in the US was astronomical
in 1990.  Investment in 1991 was quite a bit less, and 1992 might well be
even lower--maybe half--given the developing resession in Japan.  Great
Britain investment has been down, too (they've been in a resession for
longer than we have).  I'll have to dig out the figures, but I think
Canada was #1 last year--don't quote me on it yet, though...

The point here is that yearly figures aren't nearly as useful as the
overall cumulative worth of investments.  The Japanese come out even
worse here, since they invested quite heavily in properties, many of
which are now worth only half of what they paid.  They have never been
#1 in terms of total investment.  The 1990 figure would have been quite
worrisome if it had been maintained--or increased, as some thought.
But I don't think there is any danger of that, at least for the next
few years.

>>. . . .
>These factors are all valid but gloss over some other things. Japanese
>are definitely "take-no-prisoners" businessmen. I don't fault them for
>it but if you're going to play hard ball (very hard in their case)
>don't complain about the reputation it gets you.

I don't think "hardball" is necessarily an accurate description of the
Japanese business style, if by that you mean "winning at any cost."
We're certainly their equal if one wants to put things in those terms.
Their advantage is having a government and an entrenched bureaucracy
which will dance to their tune.  We might have that here in time (some
say we do already), but there it is the thousands of minor bureaucrats
directed by a government addicted to money politics which form their
most formidible trade barrier.  (This is not to disparage Japanese public
servants, who are mostly honest and hard-working, but rather their
political bosses.)

Yes, the Japanese are intense competitors, not least of all among
themselves.  Cartels aren't as common as one might assume--collusion
tends to be more vertical than horizontal. (A nicer word might be
"cooperation", although in the case of the relationship of a large
company with its suppliers, "coercion" is sometimes a better word.) It
might not look like it from over here, but megacorporations (>10000
people) make up less of the Japanese economy than they do ours.  The
Japanese home market is at least as intensely competitive as its export
market.

I'm not trying to apologize for the trangressions of Japanese business.
They exist, and they aren't that rare, either.  Nonetheless, the
Japanese generally are honest and straight-dealing.  Accusations of
dishonesty and avarice--regularly made by politicians in the U.S. such
as Sen. D'mato of New York (and duly reported in Japan)--don't apply to
Japanese business any more (or less) than they do to American business.

		-Ed Hall
		edhall@rand.org