The Sun Rises over the Pacific: The Dissolution of Statutory Barriers to the Japanese Market for U.S. Joint Ventures (1991)

Amidst regular newspaper reports of U.S.-Japan trade deficit and impenetrable Japanese marketplace, a few U.S. companies have been successful in establishing a presence in At same time, many other companies still bemoan an inaccessible Japanese market. This Note, through an examination of Japan's current statutory scheme and experience of successful U.S. companies, argues that most of existing barriers to investment in Japan are extralegal in nature. Recent changes in government policy have led to relaxed enforcement of previous statutory barriers. The Note concludes that greater adaptation to Japanese societal norms will likely result in increased market penetration for interested U.S. businesses. INTRODUCTION The U.S. public and many U.S. corporations continue to denounce Japanese for their refusal to permit market access for U.S. products. In fact, over last several years, debate has raged as to whether Japan is an economically closed, overly nationalistic society or a country fertile with business opportunities. The real truth probably lies somewhere between these two extremes. However, truth remains elusive as U.S. public clings to a jingoistic mentality. (1) U.S. concerns may result from consumption-drive, U.S.-centric pattern of relationship between Pacific Basin and United States. (2) This relationship has generated both short-run prosperity for Japan and deep-seated, long-range structural problems for United States. (3) U.S. companies fail to perceive that Japan is culturally and socially a very different country than United States and other Western nations. Adaptation to unique Japanese business climate is necessary for U.S. firms intent on establishing a presence in Japanese market. The relationship between United States and Japan has steadily progressed and there is little chance that this alliance will be interrupted. Indeed, military, political, financial, and trade relationships between two countries are so complex (4) that disengagement from trans-Pacific interdependence has become virtually impossible for United States as well as for Japan. (5) Furthermore, these relationships have likely stabilized North Pacific and elevated living standards on both side of it. (6) The evolution of Japanese business environment has been closely watched by many in international community. Japan now has world's largest stock market in terms of capitalization and trading volume, and is currently greatest source of investment capital for other Asian countries. (7) In fact, Japan is the fastest-growing investor, premier banker, largest donor of aid, and in terms of national net worth, richest country. (8) All of this information points to inescapable conclusion that Japanese exert substantial influence in international economic markets and have developed a growing domestic marketplace with a potentially explosive demand for Western products. Access to Japanese market is thus an ever growing concern for many U.S. companies. This Note will explore nature of alleged barriers to investment in Japan for U.S. companies engaged in international joint ventures. A brief survey of characteristics of Japanese marketplace will be presented to demonstrate relative advantages of employing joint venture structure to direct capital into After reviewing some important elements of an international joint venture, Note will examine specific statutory restrictions which are often focus of criticism by U.S. companies. Next, several informal restrictions that U.S. companies have experienced during last decade will be analyzed to establish feasibility of surmounting these obstacles. The Note will conclude by demonstrating that statutory restrictions, which are often blamed for creating barriers for U. …