Conference nyoss1::market_investing

605.0. "Does America say yes to Japan?" by CPDW::ROSCH () Tue Nov 02 1993 18:39

    For those of you who haven't seen this "Does America say yes to Japan?"
    here it is. Mr & Ms. Mods - move/delete this if you think it's
    inappropriate. I'm posting it FWIW...
    

    
     
This paper was written by: Louis Leclerc; lleclerc@nyx.cs.du.edu
 
His US mail address is at the end of the article. 
Please send him any corrections or additions to this paper. Information about
the following paper or Mr. Leclerc can be obtained by writing to him.
 
NOTE: This is a rather long but fascinating paper on how Japan Inc. functions.
For a former free-trader like myself, it has shaken some of my beliefs to the
very core. It will open your eyes a little, it will disturb you, and it will
quite possibly lead you to ask some serious questions about the future of the
United States of America as a world-leader. Reading this, IMHO, is well worth
the effort.
 
The level of detail and the overall gist is documented in many well-known,
albeit difficult to read, books. The author's prime service to us is the
distillation of this information into a (relatively) brief synopsis.
 
 
Tom Mathes    mathes@uicc.com
 
------------------------------------------------------------------------- 
* Please see appendix for information on citation references "[]" in text
 
(ed072593)                   3rd Edition/Short            (orig.ed111292)
 
 
 
       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 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 a third world country to be the richest in the world so quickly?"
[Yen! p306] are common questions asked today in America. Today, I will try to
answer with examples, at least partially, these questions.
 
     Today, Japan is a major or dominant power in almost every world strategic
industry including finance, communications, mass-transit, semi-conductors,
motor vehicles, and popular-entertainment. The world's largest banks are all
Japanese[Yen! p37]. The largest record company in America is Japanese (CBS
records(SONY)). Two of the three biggest movie/entertainment companies in
America (Universal/MCA(Matsushita)..makers of "Jurassic Park" and Columbia/Tri-
star(SONY)) are Japanese[Wall Street Journal 03/26/93 R16]. Many big companies
in the US like Loews Theatres, Firestone Tires and 7/11 stores are Japanese
(see appendix below for listing). In fact, today 7 of the 10 largest companies
in the world are Japanese [(sales)Business Week 07/12/93 p53]. Furthermore,
Japan today is the world's biggest manufacturer of autos, having surpassed the
United States in the mid 1980's [Information Please! World Almanac 1992 p144].
These all used to be American dominated industries 25 years ago.
 
     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.
 
     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 (see Appendix) 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, upon investigation are in fact truthful. The following
statements may seem brash right now, but their meanings will become clearer in
the explanations and examples that follow.
 
     Japan is in a kind of economic war against us [Yen! p31]. 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 greatly weakening much of America's
strategic industries, standard of living and national security. These actions
are also destroying the jobs of ordinary American people. While America is
being complacent with its industries, the greatest transfer of wealth in the
history of the world from one country to another is happening right now, from
the United States, to Japan [PBS Frontline "Losing the War with Japan"]. 
 
     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, employs a world economic 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.
 
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 TV's "Frontline" program did an excellent
documentary on this called "Coming From Japan", (see Appendix for how to get
transcript via Internet).
 
     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 to thwart US customs, illegal under US trade
law, were set up by Japanese TV makers and US retailers such as Sears and
Montgomery Ward to sell Japanese TVs under store brand names. Concurrently, the
Japanese mounted an important lobbying effort in Washington to ensure that this
scheme was not disrupted by the US government or customs services [Agents of
Influence p77]. 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 although they
were an American invention.
 
     In the 1980's the Japanese applied this same strategy to the computer flat
panel display industry (also invented in the US) and now completely dominate
that industry as well. Before that was motorcycles, machine tools 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
ago). It will be happening again in the financial services industry [Yen! p32],
telecommunications equipment, kitchen/washing appliances and aircraft
manufacturing during the 1990s and beyond [Newsweek 1/18/93 p17]. 
 
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.
Furthermore, the trade deficit with Japan is actually worse than it appears to
be. This is because Japanese goods manufactured by Japanese plants in other
Asian countries and sold in the US do not appear in the US trade deficit
figures with Japan [Wall Street Journal 03/22/93 A11].
 
     Another false claim, most often made by Japanese trade representatives,
states that it is naturally expected and ok 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.
 
     In the real world though, this is not ok, and cannot happen for very long
without serious consequences. To see more clearly this picture, imagine a world
with 2 countries, one with 100 citizens, and another 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 buys $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, so it will be clarified below.
 
     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.
 
     A recent example 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. After he left, the Japanese Prime Minister said the agreement they
reached was "a difficult goal". This is Tatemae code for "we won't meet your
demand". But of course, the Japanese PM would not say this directly to George
Bush, the 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 aren't used to 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. 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. "The Japanese market is opening, but it takes time and
Americans must be patient for Japan to succeed at this difficult task." Japan
has been saying this for the last 20 years.
 
DISCRIMINATION AND RACISM:
 
     Although the Japanese are individually are very polite people, Japan is
a very racist country, maybe even more so than America is. A common name
Japanese use for the white European race is "gaijin". Although its literal
translation is innocuous, it is a loaded word. "Gaijin" is a racial slur
somewhat in the way "colored" used to refer to a black person in America. There
is however a polite form of this word, "gaikokujin", which means literally
"outsider country person".
 
     When you enter a rental agency to rent an apartment (the only way to get
an apartment 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. There are also
a fair number of restaurants and bars in Japan that do not welcome/serve
"gaijins" (a point made once you enter or try to get service at the
establishment).
 
     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. 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.
Socially, races are ranked in a kind of status order in Japan, first are
Japanese, then caucasians, other asians, then all other races besides black
people, who are last.
 
    Such racism is sometimes reflected in disturbing comments directed towards
America by high ranking Japanese officials: The Speaker of the Lower House of
the Japanese Diet states that Americans are lazy, illiterate and that the U.S.
is becoming Japan's subcontractor [Time 2/10/92 p17]. Ex-Prime minister
Miyazawa states that American servicemen (protecting Japan) can't afford to
take shore leave anymore (due to the high yen), so they'll have to stay aboard
their ships and give each other Aids. Yasuhiro Nakasone, an ex-Japanese Prime
Minister, states that "America's intellectual level is lower than Japan's
because American society has too many blacks, Mexicans and Puerto Ricans" [Yen!
p73]. A widely quoted study in Japan claims that the Japanese race is superior
because Japanese brains develop differently than those of other races [Tadanobu
Tsunoda, The Japanese Brain: Uniqueness and Universality, Tokyo Taishukan
Publishing Co. 1985]. 
 
     Such thoughts extend to immigration policy as well. As a result, the
number of people accepted as Japanese citizens or as immigrants to Japan is
very very small in number each year. It is claimed that Japan sees it as an
advantage to maintain a racially pure society as it is less "disruptive" to
social order [Yen! p74].
 
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 [book: "The Enigma of Japanese power"]. This is why it is so difficult
and complicated for the foreigner to succeed in the Japanese market.
 
     Japan, being a communal society, follows a strict code of loyalty.
Shopkeepers have loyalty to their suppliers and customers. They also 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 disruptive to 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 I'll call Hiroshi. He explained to me how the system worked
and why a foreigner cannot usually circumvent it. I suggested 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 typically 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 threaten Japanese industry seriously). 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 prevented from
entering, or is later set up to fail.
 
     So, anyway to get around this law, I told Hiroshi that I will open the
business in my Japanese wife's name (I told Hiroshi to imagine I was married),
so now a Japanese owns the company. Hiroshi said "you will still fail because
as you find 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, of 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. The consequences
of the above example (which is true) are seen in the US and Japan today: Hoover
and GE make very few sales in Japan while Sanyo, Toshiba and others sell many
vacuums and appliances here in America. Ultimately, this weakens US firms like
Hoover and GE and may one day cause them to leave these industries entirely. 
 
Other true-life examples of this abound. Here are a few:
 
     A US lamp manufacturing company encountered exactly this problem [Time
2/10/92 p19]. 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). Making foreign goods (ie. food, or apparel) which compete against
domestic Japanese products wait on ships long enough to rot or not be desirable
to the consumer is another practice.
 
     Many anti-foreign goods laws are often written in the form of "protection"
to the consumer [Time 2/10/92 p19]. These are applied discretionarily and are
really written to prevent or make it expensive/slow/impossible for foreign
goods to enter the Japanese market. For example, one well known Japanese tactic
is the intentional use of too few "inspectors" who are responsible for
"inspecting" every single one of an importer's products entering Japan (ie.
bicycles or cars). As every item must be individually "inspected" very
carefully, this takes very long to do. This intentional bottleneck costs the
importer lots of money as well as preventing timely delivery to the customer.
Competing Japanese made goods are often exempted from these "consumer
protection" laws as inspection is "done at the factory by the Japanese
manufacturer".
 
     As an example of a consumer "protection" law really created to prevent
foreign competition in Japan, one may look at the auto industry. All non
Japanese cars which enter Japan today must be "safety-tested" by Japan for
"safety to the consumer". The fee for this "safety-test" is several thousand
dollars PER CAR imported and must be borne by the importer (and consequently
the buyer) of the car. Cars made by Japanese companies (even if they originate
from foreign Japanese plants such as the US Honda Accord plant) are exempted
from the inspection and the fee as Japanese car companies are permitted to
"safety" their cars themselves at their factories. The result of this practice
is to make the prices of non-Japanese brand cars uncompetitive against Japanese
brands sold within Japan. This law adds upwards of $5000 to the price of each
US car for sale in Japan. [New York Times/CNN 12/25/92]. To further discourage
non-Japanese car purchases in Japan, auto insurance rates for non Japanese
brand cars in Japan have been rigged by auto producers (who own many of the
insurance companies) to be three times higher than rates charged for equivalent
Japanese brand cars [Agents of Influence p156]. It is these practices and laws
(and not that the steering wheel is on the wrong side) that prevent US car
companies from making headway in the Japanese market. Both GM and Ford ship
cars to Japan with the steering wheel on the correct side for Japanese roads
[Agents of Influence p156].
 
     Of some other more famous "consumer protection" laws, one until recently
banned US beef from Japan because "Japanese intestines were the wrong length
and couldn't digest US beef which is too hard" (today, though US beef is
allowed in Japan, in practice it must often come from a Japanese owned ranch
in the US). Another law banned european skiis because the snow in Japan was
"different". All foreign rice is banned for "national security"[Agents of
Influence p11]. Rice in Japan as a consequence, is the most expensive in the
world.
 
     Finally, 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. Americans however, are not allowed to buy Japanese
Pro baseball teams [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 keiretsus. Several of these keiretsus 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 keiretsus 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/high technology/chemicals. Mitsubishi Bank, Mitsubishi Electric
Corp, Mitsubishi Heavy Industries and a wide array of other Mitsubishi
companies (several hundred) 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, but for companies. 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 system 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, to the parts used to
assemble the cars are Japanese brands, even if it is more expensive (in the
short run) to do this. Japanese companies located in America tend to overlook
high quality low price U.S. suppliers and buy parts directly from Japan, or
from Japanese suppliers located in America, again, even if it is more
expensive, or troublesome to do so [PBS Frontline-Coming From Japan/PBS
Frontline-Losing the War with Japan]. This is national and keiretsu loyalty at
work.
 
     Every Keiretsu has a bank. This is the heart of the keiretsu and is like
a national central bank, but for the keiretsu. The bank takes money and foreign
cash from winning companies in the keiretsu and gives it to new ventures in the
keiretsu for investment 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. The keiretsu banking
system is what enables Japanese companies to make very long term investments
which US firms cannot make (as US investors are usually more averse to risk and
are not as patient for returns as Japanese keiretsu banks are). 
 
     In upcoming high technologies like HDTV, or data-telecommunications, such
long term (several years or decades) investment before any payoff is crucial.
In such technologies, Japanese firms, due to keiretsu banking, have enormous
financial advantage over western companies which are not allied with each
other. As a result, keiretsu-grouped Japanese firms are much more likely than
non-keiretsu grouped US firms to invest large sums of money in long term
projects. This is because the collective risk to the keiretsu is lower than it
is to any given independent company. Furthermore, short term stock performance
is unimportant, and the keiretsu has the cash flows (from its profitable
industries such as automobiles and consumer electronics) to finance investment
in the new industries. 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.
 
     As a result, Japanese firms ultimately defeat foreign competitors and win
in the market. Ironically, many US banks and investors, aware of what happens
to industries targeted by the Japanese, act oppositely, avoiding to loan money
to a US company in (or trying to enter) an industry targeted by the Japanese
(ie. video, home electronics) [PBS Frontline-Losing the war with Japan]. US
investors know that it is almost impossible for independent US companies to
survive against organized Japanese keiretsus and cartels and hence, tend to
abandon such US firms. This fact puts US companies at a severe disadvantage
against Japan. This is also why you often see US firms "not trying" to enter
or strongly compete in a given market today dominated by the Japanese such as
consumer electronics. Using their keiretsu financial strategy, Japanese
companies are able to out finance all other foreign competitors and ultimately
take over almost any industry they choose (which is what they have been doing).
 
     The above reasons are why buying a Japanese product, even in an industry
unrelated to the one a person works in, can cause that person to lose their
job. This is much more likely than one may think. Many otherwise smart people
do not understand this so it will be explained: Japanese keiretsus use the
profits from a product such a person bought (ie. a car or stereo), then shift
the money through the keiretsu bank to develop, invest in and dump products
into the industry or market that person now works in (ie. telecommunications
manufacturing, the latest Japanese targeted industry), and later puts that
person out of a job. Federal, state and municipal governments in America which
buy Japanese products, also accomplish the same thing, putting their own (or
each other's) constituents (and tax base) out of jobs.
 
COMMAND AND CONTROL:
 
     Japan's business effort is directed with the aid of the 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 one reason 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, Japanese companies, banks and
government can attack and overrun a foreign industry with a much bigger "punch"
than had they done so separately. 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 against 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 against 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) without fear of foreign companies entering and ruining
the game.
 
     An unwritten rule is that there is no real price 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 Japanese 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). 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
receives 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 for a time). The
Japanese then enter unimpeded, dump their perfected goods here at below cost
prices 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 does not. For example, Japanese car companies have also come out
with disasters comparable to the "exploding Ford Pinto". But, by using their
protected market for experimentation and improvement, they are able to resolve
problems like this before they arrive on our shores. Our car companies have no
such luxury and hence suffer the consequences each time they make a mistake. 
 
     The non-competitive home market serves another important function to
Japanese industry. Smaller/weaker Japanese companies (ie. Mazda) 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. It's
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 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* price 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:
 
     Many Americans think that Japanese companies are foolish because they
practice "dumping" (selling their products here for a price lower than it costs
to make them), and hope Japan continues as it benefits the American consumer.
Such thinking is misguided and shows how it is very 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 costs turn 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 nevertheless. It turns up somewhere else than at the
checkout counter and is how Japan profits 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 and hence go bankrupt. Japan's factories run, their
people get jobs and later on Japan makes much more profit than it originally
cost to do the dumping once the non Japanese competition has been wiped out by
the practice. Japan can do dumping by raising prices in the protected 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, in this case, the successful
Japanese takeover of the very strategic world LCD screen industry.
 
     LCD screens are the special "flat" viewscreens which are found in almost
every laptop and portable computer on the market today. For a portable computer
to be light in weight, they must have this type of screen (opposed to a
conventional TV screen which is quite heavy and uses too much electricity).
 
     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 small US upstarts who invented them to go bankrupt. As a
result, today almost 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 refrigerators 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)) [PBS Frontline-
Coming From Japan]. 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 in the US 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 may offer to manufacture your entire product at a reasonable price
and put your name on it. For example, some of the Apple Mac Powerbook portable
computers are not Macs at all, but really SONYs. Most portable PC computers
today (even those with "American" brand names on them like Tandy and Compaq)
are made in Japan or have their major components made in Japan for the above
reasons [PBS Frontline-Losing the War with Japan].
 
     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 to have such
a large market share in portable PCs (which need these LCD 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
machines. 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 innovation,
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 making.
 
     This example shows why something like LCD screens are a strategic
component and why Japan needs to dominate this industry. If one pauses to look,
one will notice that Japan is the dominant or a very major player in
practically every strategic world industry today. This is what is meant by a
well known Japanese phrase: "Business is War". Key markets overlooking
industries are like peaks overlooking cities. The national 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 GLOBAL PLAN:
 
      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 uses it for their own purposes (such as buying our
real estate, or companies). 
 
     It is said 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.
 
     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 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. Today, Japan and America have basically a one-way trade relationship.
Japan closes their market towards us, but we don't towards them [Wall Street
Journal 04/01/93 A2, 04/02/93 A6]. 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 defense 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 (Autorama). Chrysler doesn't sell
many cars in Japan. Long ago, Ford used to have a large market share [Yen p112]
(around 70%) in Japan but the Japanese 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. This is
because of many "structural" laws and regulations which are really designed to
prevent/restrict foreign ownership. As an example, one such regulation states
that foreign businesses must have a Japanese guarantor "to insure that their
debts will be paid". For various reasons, it is very "difficult" for a foreign
company (particularly a small or medium sized growing one) trying to enter
Japan to get such a guarantor. Conversely, Japanese companies of any size
entering America face very few such restrictions and are allowed to enter the
US market quite freely.
 
     These types of Japanese laws are also the reason why 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
[Agents of Influence p156]. These joint ventures really enable the Japanese
companies to get foreign technology without having to invent it themselves. The
foreign company receives only a token market share in the Japanese market in
return.
 
     It was in this way Japan learned from the US companies how to make TV's
in the 1960's. More recently, the Japanese government recently forced Texas
Instruments (TI) to join a venture with SONY, where SONY got TI 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 defense 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.
 
     The result of all this is the fact that when Japan is compared to other
industrialized countries (ie. America), it is seen that a far larger percentage
of manufactured goods sold domestically were made domestically. It is often
very difficult to find manufactured products in Japan which were not made in
Japan or not made by Japanese companies.
 
-->Offense:
 
     The offensive strategy is also a three tiered system. Firstly, government
(through the Ministry of International Technology and Industry) and corporate
cartels co-ordinate and select targeted strategic industries which they want
to enter, or take over (this happened in the car, camera and consumer
electronics industries).
 
     Secondly, they obtain the basic technology (often from the current foreign
firms in the industry), then copy and improve upon it. They do trials, have
failures and make 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. 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 of the 1970s),
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, along with
keiretsu style bank financing, the Japanese can (and do) enter and take over
in a short while, almost any industry they choose no matter how unrelated.
 
     Because several of their companies participate when Japan attacks an
industry, the industry doesn't become monopolistic on a company level and
monopoly pricing usually doesn't happen in the foreign country. What does
happen though is, when the attack is over, the players are mostly or all
Japanese, meaning Japan as a nation, gets the industry, jobs, technology and
US dollar cash profits instead of America (for use in buying up US real-estate
or companies, or investing in future technologies). The goal is simply to
ensure that most of the industry's competitors are Japanese and that profits
derived from that industry go to Japan instead of some other country. The
result of this is a consistently huge one way flow of wealth and money, from
the United States, to Japan. This appears as those enormous record breaking US
trade deficits with Japan each month. Technology gains (by Japan doing the
engineering and the manufacturing in such industries instead of America) are
also an important by-product of this strategy. This has a snowballing effect,
as technology advantages gained and learned when Japan defeats a US industry,
can be used to gain advantages when entering other industries (ie. see the LCD
example above). Japan's strategy 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.
 
     To keep Japanese companies within a given industry technologically
competitive (even though the Japanese market is closed to outsiders), Japan
usually ensures that the number of Japanese companies participating within that
industry (within Japan) is at least 10. Only the best of these get to export
to the outside world. Cross corporate labor unions (ie. like the UAW) do not
exist in Japan as they tend to create labor monopolies which lead to
inefficiencies in manufacturing (ie. work "rules", pattern bargaining...).
 
     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 America's 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 Japan's 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, most recently in telecommunications
where Hitachi (a Japanese telecommunications maker for 40 years) has recently
announced they are retreating from the US telecommunications market. In Japan,
they will continue to improve their products. Once their improvements are
complete and proven in the home market, they will re-enter the US market,
possibly surprising America's domestic makers. An other Japanese maker, Fujitsu
has already scored some important successes over AT&T in the US
telecommunications manufacturing industry, having recently made multi-million
dollar sales of advanced data-telecommunications equipment to US phone
companies like Nynex and Bell-South.
 
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
their 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. NTT (the telephone company), Nissan and
Matsushita had similar "timelines" in their centers with quotes like above.
 
     If a Japanese firm wants foreign technology but can't buy it, they
sometimes steal it by patenting a very large number of similar (but legally
"different") items derived 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
[Agents of Influence p126/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 US company many times over (for
each patent). Mitsubishi just waited for 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
research done in non-Japanese universities and published in academic journals
which are available to anyone. A major reason for getting foreign research this
way is the fact 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. At the main campus of
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 students live in squalor.
Academics did not seem to be taken seriously by the students who were too busy
drinking or playing sports. 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. Electricity wires were hanging exposed
in hallways and lighting was not functioning (for many years it seemed) in
parts of buildings. Piles of garbage and wrecked cars were strewn about the
campus and behind buildings. 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 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 and
companies make no effort to seriously support its universities. This does not
mean that Japan does not value basic 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. In 1991, the Toshiba Company alone spent more on
research than was spent privately and publicly in all the country of Canada
[Canadian Broadcasting Corporation (CBC) News;Venture-Racing the Rising Sun].
This is the fundamental reason why Japan refuses to fund universities and
diverts it to corporate research instead.
 
     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 and company labs instead; where
they can use it against US companies in order to defeat them.
 
     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. In cases where advanced training unavailable in
Japan is required (ie. in certain types of engineering, or technology), the
student will be sent to America or another foreign country that has good
universities to study.
 
     Sometimes, Japanese companies buy their way into cash hungry quality US
universities (usually for pennies on the dollar) to make up for the lack of
innovation in Japan. A recent deal between Hitachi and the University of
California at Irvine makes the point [ABC 20/20 12/06/91]. It went as follows:
Hitachi will pay to build an advanced research building on the campus and
occupy the top floor. The university occupies the rest. The provision however
is that Hitachi gets access to all research and discoveries in the building
done by the university (paid for by the US taxpayer). Furthermore, Hitachi is
granted the power to restrict all university research discoveries from this
building to the outside world whenever it is to the advantage of Hitachi to do
so. Research done on the Hitachi floors is never available to anyone, not even
UC Irvine (the information flow is one way only). Similar arrangements with
other Japanese companies exist at other US universities like Princeton, MIT,
U of Oklahoma... Advanced Japanese research organizations make no such deals
with US companies.
 
JAPANESE PEOPLE AND THE MARKET:
 
     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. Non Japanese goods are
much more expensive in Japan than they should be (especially if the goods are
in an industry targeted by the Japanese companies and government) and Japanese
goods are often cheaper in America than in Japan.
 
     Typically, 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. Because South Korea has little political influence, it cannot
pressure Japan to allow their products in. As a consequence South 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. US (and other foreign products) which must face a Japanese domestic
maker are also extremely hard to find in Japan. Even the American flags in the
Tokyo-Shinjuku Mitsukoshi department store were made in Japan.
 
     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 luxury high end model and sold for $2500. It is these
Japanese cartel tactics which lead ordinary Japanese people to believe that US
goods are inferior and overpriced.
 
     Conversely, in America, Japanese made Sears brand refrigerators (similar
to the Toshiba I saw in Japan) sold for about $1000. This didn't seem right to
me. The government and business people I spoke with already knew about these
points and acknowledged that they could see it was a "problem" for America.
 
     The Japanese are successfully using the same strategy utilized in home
appliances in other industries as well (desktop personal computers, bicycles,
golf equipment, musical instruments...) where US product quality and price is
better than competing Japanese products.
 
MILITARISM:
 
     In the book "A 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. Not only does Japan have the world's
second largest military budget, they are also accumulating the largest
stockpile of plutonium in the world (more than the US or Russia) [Chicago
Tribune 02/03/92 s1 p1] for reasons of "national security". In Japan, Fujitsu
has built several nuclear breeder reactors (such reactors are sometimes used
to make nuclear weapons). The Japanese claim however, that they are for
peaceful purposes. Hopefully this is so.
 
     There also exists a well funded extremist nationalist movement 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. Furthermore, the Japanese government to this day maintains
and actively uses its legal right to overrule book authors in order to
"whitewash" and dictate textbook history whenever it is in the national
interest to do so. They have recently done this to prevent disclosure to the
Japanese people of World War II Japanese atrocities in China and germ warfare
experiments on prisoners held by the Japanese [Toronto Globe & Mail
(Reuters);A1;03/17/93].
 
     The massive US aid to rebuild Japan after the war is mentioned on only one
line in the Japanese elementary text which went "America provided Japan with
some help". Japan's postwar success is credited only to the hardworking values
of its people (partially true), and not to the massive US aid for
reconstruction of its industries (paid for by American taxpayers), free access
to the US market, and US tolerance of Japan's closed market. After reading
these books, one is lead to believe 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 valuable intellectual
resource of women is wasted by giving them only the most menial jobs such as
"escalator dolls" and tea servers. The banking and farming systems are the some
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 and banks who
otherwise may not have a job. Although this is an inefficient use of people and
resources, it helps maintain a low unemployment rate. Japan prevents all this
from collapsing by keeping foreign products and services out of their country.
As a result Japan can be inefficient, non innovative, yet still get enormously
rich at the expense of its trading partners. Japan 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 [CBC News Venture "Racing the
Rising Sun"]. Ironically, it may surprise many people, but the most efficient
country in the world today is the United States ($49,600 production per
person), not Japan. Japan ranks pretty far behind ($38,200 production per
person) [New York Times 10/13/92]. In manufacturing though, Japan is the best
in the world.
 
TRUE, BUT ONLY ON THE SURFACE:
 
     it is claimed that Japanese transplant factories in the USA are good for
America and create jobs. Although a Japanese transplant factory may be good for
the town which gets it, its bad for the country as a whole. Japanese factories
opened here tend to be only assembly plants which put together parts which were
originally made in Japan. This is important because most of the value of
manufactured products resides in the research and development of machine tools,
plastics, technology as well as the manufacture of parts which make up that
product. There is little value in assembling pre-made parts together to make
a final product. This is true even for Japanese products "made in USA" like the
famous "US made Honda Accord". Final assembly of Japanese auto parts is pretty
low tech and low value. It doesn't keep money in America. The costs of paying
for welfare and unemployment for unemployed US engineers and parts maker
employees are much higher than the benefits of the Japanese transplant factory
and later wind up on American's tax bills. In the cases where Japanese
transplants do buy US made parts, they are usually from Japanese owned parts
makers which have also set up plants in America.
 
     Another claim goes that "America is successful in Japan and one only has
to look at Mcdonald's, Disneyland and others to see America's success". These
are not "American successes" in Japan because in reality, these are Japanese
owned franchise companies. Their appearance is American, but their ownership,
production and management is Japanese. A very small token number of foreign
companies are allowed to have a presence in Japan (ie. Toys-R-Us, P&G, BMW,
Kodak, IBM), but their overall market share is kept quite small via the means
described in this paper.
 
     Finally it is claimed that Germany is much more successful than America
in selling cars to the Japanese, so it means that America is lazy and isn't
trying hard enough to sell in Japan. This is false. Germany is successful in
selling cars (and other products) in Japan due to the fact that the European
Community (which Germany is a member of) forced Japan to open their market more
to Europe if Japan was to continue to have access to the European market
[Agents of Influence p156]. The US government never made Japan abide to similar
trade terms with America so as a result, America has far less success selling
in Japan.
 
AMERICA IS ALSO TO BLAME:
 
     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 an
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 trade representatives from an Oregon
company, some people from Boeing whom I met at a Nissan factory, and some from
the Government of Wisconsin at a machine tools fair trying to attract Japanese
industry to their state.
 
     The group of businessmen I met from the Oregon company I met in Roppongi
(an entertainment district in Tokyo). These people were a disgrace to American
industry and opened my eyes to why the Japanese are able to take 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.
 
    Secondly, the very presence of the trade group from Wisconsin at the
machine tools fair is the result of a very foolish, self destructive and
shortsighted US practice which will now be explained. With so many jobs leaving
America (due to many of the above Japanese tactics), some states have decided
to go to Japan to try to attract Japanese companies and plants to their state.
Because America (unlike almost all other industrialized countries) doesn't
co-ordinate or regulate this in any way, what happens is that states get played
off against each other by Japanese companies and the Japanese government. The
state which gives the most tax breaks or contributes the most money to build
the plant gets the plant. This is probably good for the winning state in the
short run, but is much worse for the country as a whole (and that state) in the
long run.
 
     Here's why: What this leads to is Japanese companies opening US branch
plants paid for by the US taxpayer and which pay little or no taxes themselves.
With many states doing this to each other to "win" a few jobs, everyone winds
up losing. This is because after each state has "won" a plant from some other
state, the final tally shows that no one state has gained any jobs from any
other state (or very little anyways), yet every state is short lots of tax
money which must be made up by placing more taxes on individuals, or
pre-existing US businesses (who must now compete against the American state
subsidized Japanese businesses). The only winner in all of this is Japan who
receives property tax free (or discounted) factories and in worse cases plants
which we the taxpayer, sometimes pay to partially build through government
grants. The Honda Accord plant in Marysville, Ohio was a result of this
practice. Japanese companies producing out of tax free plants are also at an
advantage to defeat US companies, who must pay taxes. Ultimately, this practice
makes America lose, not gain, jobs (see above section "assembly plants") and
pay more taxes. This very topic is the subject of many sick jokes in Tokyo
about America's greed and foolishness today.
 
-->"Foreign Agents"
 
     So, why does our government even allow the things explained in this paper
to take place? The reason is due to another problem (and is also the subject
of many good jokes in Tokyo). It lies at the highest levels of our federal
government and has to do with much of the recent talk in the last federal
election about "foreign agents". These are very high level Federal public
servants and elected members Americans sent to Washington to represent them,
who go work in the U.S. Federal government for a short time, make contacts in
the government or US Commerce Department, then betray the country by selling
themselves out as representatives to foreign interests.
 
     These people were our front line trade negotiators, staff members, trade
attorneys, elected officials and have the inside knowledge the foreign
interests need to circumvent our trade laws, defeat our companies and find out
what our confidential future trade laws are likely to be. These people sell
themselves to the other side in order that they may personally get rich through
the resulting huge amounts of "blood money" as they use their contacts they
made while serving the public, in order to betray America. The amount of money
involved is in the millions of dollars per person. Some claim these are delayed
bribes which are paid after public service is completed for favors done while
in public office. Often, these people start representing foreign interests
within weeks of quitting their government job.
 
     The popular book "Agents of Influence" (1991) by Pat Choate, contains the
list of people who became foreign agents, a thorough explanation of how this
scam works, and how this is obliterating our status as a rich industrial
country. The book also explains very well the point made on the 11/27/92
edition of ABC's 20/20 (which did a segment on this problem) about how much
more the Japanese "invest" in bribery and how we have lost billions of dollars
and hundreds of thousands of jobs as a result of this small handful of people
willing to sell out their country and their kids for cash.
 
     For one example of bad this all really gets, one can look in the very
highest level of our national government, at the case of Mr. Ronald Brown (who
is by no means an exception). Ronald Brown has been appointed the Secretary of
Commerce by President Clinton. This is the highest position in the US Commerce
Department, the agency whose job it is to ensure US interests are protected in
the world trade arena. Mr. Brown however, is a foreign agent who until
recently, worked for the Japanese for big money. After leaving his past
government job as a US senate aide, Mr. Brown went to work as a lobbyist for
big Japanese companies such as Toshiba and Sony who wanted government insiders
to help further their interests in America. Now he is again "working for
America" ("against" his old cronies at Sony, Toshiba and others) as he has been
appointed chief of the US government agency which is supposed to ensure that
foreign companies (including the ones Mr. Brown lobbied for) do not have undue
advantage or resort to illegal tactics (such as those mentioned in this paper)
when competing against US companies at home and abroad.
 
-->The "media effort"
 
     The "Agents of Influence" book mentioned above has a very controversial
section [p147,193] on what the author depicts as the "Japanese propaganda
machine". The fact that today Japan has so much power in the US government and
owns so much of the US popular media industry has lead many (including the
author of that book) to believe that Japan uses their media power to prevent
distribution to the public of information unfavorable to Japan. Such
manipulation has already taken place in the motion picture industry.
Matsushita, owners of Universal Pictures, recently changed the script of one
of Universal's major U.S. motion pictures in order to portray certain Japanese
customs as being superior to American customs and to remove negative references
about Japan which were in the original script [Chicago Tribune, 11/30/91 s.1
p22/New York Times 11/20/91 A1]. The film "Rising Sun" however, made by one of
America's remaining non-Japanese movie companies, is a definite exception to
this trend as it does try (albeit indirectly) to warn people about what is
going on.
 
     Today, Japan owns many very large US popular media companies including the
largest record company (CBS/Epic records[SONY]) in America and two of the three
largest entertainment companies in America (MCA Entertainment/Universal
Pictures[Matsushita] and Columbia/Tri-star Pictures[SONY]). They also own
Columbia House Records, Loews Theatres, MCA home entertainment (TV shows like
Dragnet) and a part of Cineplex Odeon (about 50%). America doesn't own large
Japanese media/entertainment companies.
 
-->Accepting Reality, America's problems at home:
 
     America must pay more attention to the future and not take for granted
that it will always be rich and powerful. One only has to look at the social
and economic troubles today in countries like Britain (which years ago in its
time, was also the richest and most powerful in the world) to see our destiny
if we continue in our erroneous and divisive ways. Britain failed to take
action in time and suffered the consequences. They were once the world's most
powerful economy. They too thought that any damage to their economy would have
profound impact to the world, and hence, thought they were safe as the rest of
world would not let anything bad happen to the British economy. They were
wrong. People saying this today about the US economy are also wrong. Britain's
economic power diminished gradually and unnoticeably, such that today, what
happens in Britain is not so important to the world global economy. They are
now a minor player and now have a much lower standard of living. Our economic
power is now in decline, following the "British pattern" which occurred many
years ago. We will suffer their fate if we don't change.
 
     America has many problems which are not the fault of the Japanese, but are
of our own doing. Japanese work as a team much better than we do. They struggle
together to save their companies when in need (versus jumping ship, staging
strikes like the recent ones at GM, or selling out to foreign interests). They
don't pay some of their CEO's millions while driving their companies into the
ground. They also realize that management and workers are not each other's
enemy. The competition is the enemy and foreign competition is the ultimate
enemy. No war was ever won with internal conflict and the same goes for this
one. Labor strikes (no matter how justified) and management selfishness and
shortsightedness are not the answer to our problems.
 
     The US auto industry is a prime example of this. Managers grossly overpaid
themselves and the UAW bosses kept in power by promising its workers a labor
monopoly, "job security", outrageous salaries and ridiculously inefficient work
rules. Over the long term, this was of course, unworkable. Like many other
monopolies, over time it self destructed. The environment the labor leaders
provided to their workers caused them to lose concern about quality and
efficiency. As a consequence, many of these people ultimately lost their jobs.
 
     However, as much as many Americans want these companies to go bankrupt,
it is a unrealistic and dangerous hope. These are still US companies. We need
them in this country as they are a key part of our industrial base and our
wealth. Rather than destroying them, America will have to change them from the
inside by altering both worker and management attitudes. The current ways (on
the part of both management and labor leaders) only serves to ensure our kids
won't have these kinds of jobs in the future. Co-operation and a common vision
are the only solutions to this problem. On a positive note, it should be noted
that quality in the US auto industry has improved considerably and today is at
par with the Japanese (ironically as a result of the Japanese competition which
broke the UAW labor monopoly). The lesson from this is that America will have
to revisit laws which help enforce labor monopolies (which in the long term
tends to destroy American jobs and industries) and restrict the schemes which
allow public company top management teams to set their own and their friends
salaries to ridiculously high levels while not acting in the best interests of
their companies, employees, customers and stockholders.
 
     One note should be remembered on this example. Some try to apply the model
of the US auto industry to other US industries devastated by Japan. This is
incorrect. Comparisons between the successful Japanese attack on US autos and
other industries must be made carefully, as US auto, a very old and very
unionized industry, is in many ways very different from the other US industries
Japan has successfully targeted. Though the US auto industry was complacent,
other US industries (such as high technology) which were very efficient,
innovative and high in quality, were still devastated by Japan.
 
CONCLUSION:
 
     The article is not meant as an affront to the ordinary Japanese people (to
whom nothing is held against). Like most conflicts, it is the ordinary people
who get caught in the middle and wind up suffering. The same, unfortunately,
is true for this conflict. This paper is not about them, but is about their
companies and their government policies.
 
     America's citizens have failed to realize that Japan practices a different
kind of trade than America does. Japan practices adversarial trade and "taisen"
or war economics, 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.
 
     Some say protectionism is bad for America. This is true and this article
is not about protectionism. Free trade is almost always a better alternative
as it provides foreign markets for US goods and helps keep our firms
competitive. Today, however, we do not have free trade with Japan, we have one
way economic war "trade" where Americans buy Japanese goods and Japan buys
America. 
 
     Forty years ago, Japan was a third world country. It had almost no
industry and its people lived in third world squalor. Their "war" economic
strategy, though devastating to its trading partners is very effective. It has
quickly made Japan the most modern country in the world and average Japanese
people much richer than they would have been otherwise under US style
free-market capitalism (which would have lead the development of Japan to take
place much more slowly). They did what was best for their country, which is
what I would expect them to do. Though I do not blame them for the economic
strategy they use against us, we must still recognize it for what it is.
 
     Consequences for a country defeated in economic conflict are strikingly
similar to consequences of being defeated in a military conflict. In both
cases, the industries of the defeated country are destroyed or severely
weakened and the nation's technological and advanced manufacturing base are
shattered. The standard of living of the defeated country ultimately declines
drastically (though slowly and steadily over many years in the case of an
economic war). Ultimately, the country tends to become less stable socially and
politically as people try to blame others or take personal/political advantage
of the fact that there is little wealth to go around (which ultimately is the
root cause of instability in most shaky countries around the world today).
 
     The danger of an economic conflict such as the Japanese have mounted
against America is that ordinary citizens generally are unaware or do not
understand what an economic war is, what the consequences of losing one is and
that one is taking place today here in America. The Soviets used to parade
their bombs every May through Red Square. The threat to America and its way of
life was very apparent and most people could understand it. As a result,
Americans stood up and took action to defend against the Soviet threat.
Economic wars are much more complex to understand and for that reason, far more
dangerous.
 
     We either have to learn about and apply Japan's superior (for survival
anyways) economic strategy, or find a way to defeat it. Else, there is little
hope for us. If we do not adapt to today's economic climate, America will most
certainly fade away as a modern world leader. Most Americans however, don't see
the world for what it is: an economic and military jungle; and the laws of the
jungle do often apply. The Japanese realize this, we don't. 
 
     Americans who buy Japanese goods, or US companies that actively source
Japanese parts for their produces unknowingly help Japan reach the goal of
their economic war. As Michael Crichton wrote in "Rising Sun", The Japanese
(and other countries such as Korea and Taiwan who have adopted the same
Japanese style business practices described in this paper) are not our economic
allies, they are our competitors. America will have to learn to invest more in
the future, and make a sincere effort to protect its manufacturing base,
technologies and university resources from foreign countries and corporations
who have chosen to destroy the nation's industries and wealth through "economic
war" strategies.
 
     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. America, which used to be
the world's largest creditor nation, is now the world's largest debtor nation.
Japan today is the world's largest creditor nation and we are one of their
biggest borrowers. Each year, Japan acquires ever larger amounts of our
government debt bonds (which we issue to cover our massive deficit), land and
industries. With these holdings, they increase their influence and ownership
on our government [Yen! p77] and our citizens and use it accordingly when it
is in their interest.
 
     America will have to change its ways to become more like the Japanese.
Japan will surpass the United States to become the world's leading economic,
technological and manufacturing nation by the end of this decade, even though
it has only 1/2 the population of America [CBC News;Venture "Racing the Rising
Sun"]. History has pointed out every time, that the richest and most
economically powerful country in the world, ultimately becomes the strongest
militarily. We have to realize this and be prepared to accept it, or we have
to do something about it. Japan will not have to change their ways to become
like us, as tomorrow they will wield the power, not us.
 
 
This article by:
 
Louis Leclerc
P.O. Box 453
Jackman, Maine 04945-0453
 
lleclerc@nyx.cs.du.edu
 
Please send me any corrections or omissions and this article will be updated.
Inquiries about this article, or this topic are also welcome. The most recent
version of this article (JAPANYES) is kept at FTP site: monu6.cc.monash.edu.au 
(login: anonymous), in directory pub/nihongo
 
This article is copyright (1992, 1993) under the laws of the United States of
America. However, I hereby give permission that it be distributed widely and
freely over any media. This article cannot be sold or licensed without prior
written permission.
 
Author's Note: 
 
     Hopefully this article has interested you in learning more about the
seriousness of this topic. The following bestsellers: Pat Choate's "Agents of
Influence" ISBN 0-671-74339-2 and Daniel Burstein's "Yen!, Japan's new
financial empire and its threat to America", ISBN 0-449-90460-1 each give very
in-depth background on what I've discussed above and provide far more facts and
references than I did in this (relatively) short paper. Both make for very
true, but frightening reading and are very well backed up. The book "Trading
Places, How we are giving our future to the Japanese and how to reclaim it",
by Clyde Prestowitz, New York: Basic Books 1989 is also very worthwhile to
read.
 
The book "Yen!", mentioned above, talks about an important aspect of this issue
not covered in this article due to complexity: the financial "war" being waged
by Japan against America. Today, world US financial power is rapidly being
annihilated by the Japanese finance industry (using many tactics mentioned in
this article). Once complete, Japan will then become the number one superpower
in the world, having won world dominance of both advanced
manufacturing/technology industries (already happened) and the financial
services industries. The book goes on to imply that Japanese military
superiority will occur shortly after as America will then lack the economic
resources and revenue (as happened to the ex-USSR) to support its military
infrastructure. The details behind all of this are even more dangerous to
America than what's discussed in this article.
 
 
                   A    P    P    E    N    D    I    X
 
 
-->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 '*':
 
*7/11 Convenience Stores: US operations owned by Ito-Yokado, Japan
 Acura (Honda Motor Company, cars) 
*ABC-TV Building, New York City
 Aiwa (consumer electronics, stereos) 
*Brother (electronic typewriters) 
*Bridgestone Tire Company (tires) 
*Bruce Springsteen (works for SONY, his record contract is with SONY) 
 C. Itoh (computer printers) 
 Canon (laser printers, cameras, photocopiers, consumer electronics) 
*CBS Records/Columbia House Records (owned by SONY) 
*Cineplex Odeon (movie theater chain; about 50% owned by Matsushita) 
*Citizen (watch company) 
*Clarion (musical instruments) 
*Columbia Pictures (owned by SONY) 
 Denon (cassette tapes, consumer electronics, stereos) 
*Dunlop Tire and Rubber (owned by Sumitomo keiretsu) 
*Epic Records (owned by SONY) 
 Epson (computer company) 
*Firestone Tire and Rubber (owned by Bridgestone Tire Company, Japan) 
*Fisher Electronics (stereo maker; owned by Sanyo) 
 Fuji Film (film and chemical products) 
 Fujitsu (nuclear and breeder reactors, consumer electronics, heavy
          industry, telecommunications) 
 Geisha Foods (tuna and canned food products in the USA) 
 Hino (heavy truck maker) 
 Hitachi Industries (heavy industry, railroad, appliances & electronics)
 Honda (autos, motorcycles, small trucks) 
*The IBM Building, Atlanta GA 
 Infiniti cars (Nissan Motor) 
 Isuzu (autos) 
*JVC (Japan Victor Company; owned by Matsushita Industrial Electric) 
 Kao (computer disks and supplies) 
 Kawasaki Heavy Industries (motorcycles, trains, industrial steel)  
*Kenwood Electronics (stereo maker) 
 Kikkomann Foods 
*Kirin Breweries [one of the largest brewers of Coca Cola in America [Yen p54]
 Komatsu (A heavy equipment maker) 
*Konami (video games) 
 Konica (photocopiers, cameras) 
 Kubota (heavy equipment, backhoes, tractors, bulldozers) 
 Kyocera (computer and electronics maker) 
*Lexus Automobile (Toyota Motor Company) 
*Loews Theatres (owned by SONY) 
 Makita (power tools) 
*Matsushita Industrial Electric Company (consumer electronics, telecom) 
*Maxell (cassette tapes) 
 Mazda (autos) 
*MCA Home Entertainment (home videos; tv shows,ie.Dragnet..etc)(Matsushita) 
*Michael Jackson (works for SONY, his record contract is with SONY)   
 Minolta (copiers, fax machines, electronics) 
 Mita (photocopiers) 
 Mitsubishi (a huge keiretsu;...banking, steel, autos, trucks, lead
    pencils, electronics, electricity generation, bicycles...and on and on)
 Mitsui (another huge keiretsu, similar to Mitsubishi) 
 Miyata (bicycles) 
 Mizuno (golf equipment)
 Murata (fax machines and electronics) 
*NEC  (Nippon Electric Company; computers, telecom, cash registers, TV's,
       electronics) 
 Nikko (consumer electronics, stereos) 
 Nintendo Electronics (video games) 
 Nishiki (bicycles) 
 Nissan (autos, power boats, trucking and heavy transport vehicles) 
*Nomura Securities (financial firm) 
 Okidata (computer printers and accessories) 
*Olympus (cameras) 
*Omron (medical equipment, cash registers)
 Onkyo (electronics and stereo maker) 
 Panasonic (Matsushita Industrial Electric Company) 
*Pebble Beach Golf Course California (Japanese Investors) 
 Pentax (cameras) 
*Pentel (lead pencil company...Japan has a huge share of the lead pencil 
         market, look at your lead pencil, its probably Japanese) 
*Photofast Photo Labs 
*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 Building in New York City (Japanese holding company)
 [NBC-TV is located there]
*Ryobi (power tools)
 Sanyo (electronics) 
*Seattle Mariners Pro Baseball Team (Owned by Nintendo) 
 Sega (video games) 
 Seiko (Watches) 
*Sharp (copiers, faxes, TV's, electronics) 
 Shimano (bicycles, fishing gear) 
*Shiseido (perfumes, cosmetics, a rising star in pharmaceutical) 
 Sony (electronics, movie production) 
*Spencer's (Shopping mall novelty store chain; owned by Matsushita)
*Star Electronics (they make computer printers) 
*Stouffer Foods & Snacks 
 Subaru (autos) 
 Sumitomo (banks, heavy industry, trains, shipbuilding, steel, electronics)
*Suntour (bicycle shifters & mechanical accessories) 
 Suzuki (autos, motor bikes) 
*TDK (cassette tapes) 
 Taito (video arcade games) 
*Tokyo Disneyland (majority share belongs to a Japanese holding company)  
 Tomy (toy company) 
 Toshiba (electronics, electrical, home appliances, heavy industry,
          nuclear reactors) 
*Toyo Rubber (Tire & Rubber goods) 
 Toyota (autos, heavy transport trucks, industrial machinery) 
*TriStar Pictures (movie company, owned by SONY) 
*Universal Pictures (Matsushita Industrial Electric Company) 
*U.S. News and World Report Building, Washington D.C.
*Westin Hotels (Aoki Corporation, Japan)
 Yamaha (motorcycles, musical instruments) 
 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))
 
*Japan owns over 80% of all prime Honolulu hotel/resort real estate
*Japan owns over 40% of all prime downtown Los Angeles commercial real estate
 
America (or anyone else for that matter), owns very little real-estate in
Japan as it is Japanese practice through various means not to allow us to.
 
-->Some US products which are really Japanese
 
Chevy Nova car (Toyota)
Chevy Sprint/Pontiac Firefly (Suzuki)
Dodge Colt (Mitsubishi)
Dodge Stealth (Mitsubishi)
Eagle Talon (Mitsubishi)
Ford Mercury Villager (Nissan)
Ford Mercury Tracer (Mazda)
Ford Probe (The body & styling is by Ford, the engineering & 'guts' is Mazda) 
GM's Geo cars (mostly Japanese) 
HP printers (many of them are really Japanese) 
Macintosh Powerbook Computer (some are SONYs) 
Some Radio Shack Portable computers 
Some Sears major appliances, TVs, and electronics (Matsushita and others)
 
 
----
Strategic markets which used to belong to America that the Japanese have
entered (or are doing so now) include:
 
->banking and finance: Japan's stock & banking system is the world's largest
 
->machine tools and robotics: invented by America, today Japanese dominated
 
->optics: Not only for camera, photocopiers, but chipmaking too. Japan gains
an advantage in microchip manufacturing and development over foreign rivals by
providing advanced chip making equipment to Japanese companies before making
them available to non-Japanese companies (who subsequently are later to market
with new products than are Japanese chip makers) [Wall Street Journal 09/25/91
B3].
 
->electronics, 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 they could alter the balance of power
by selling its critical Japanese-made-only microchips which make US bombs
'smart' to the Russians instead of the USA). 
 
->high performance telecommunications equipment: They don't dominate this yet,
but they may by the beginning of the next. Already, (with important sales to
US telephone companies Bell-South and NYNEX) Japan is very strong in data
transmission systems, which are the foundation of the next generation of
telecommunications.
 
->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 usually MADE in Japan). These are the cars' critical
components. The high precision equipment and technology to make these parts
resides in Japan, not here. That's why high precision machining and advanced
manufacturing is usually done in Japan (and why they also targeted that
industry).
 
->popular media: Today Japan controls a vast portion of popular media in the
US (see above article for company listing). 
 
->pharmaceutical: Large Japanese companies like Shiseido are making big
investments in pharmaceutical research in preparation for entry into this
industry.
 
->aviation: Japan is getting back into the commercial aviation manufacturing
industry, which today, is still US dominated.
 
----Other Markets already taken over:
 
->Digital & analogue watches: Seiko, Citizen, Pulsar, Baylor. Japan took over
this market from the Swiss and later, America.
 
->Motorcycles, small off-road and water recreational vehicles: Yamaha,
Kawasaki, Suzuki, Honda...This was a very strategic industry in the past, which
today is completely dominated by Japan. Japan used motorcycle making technology
to build its first small cars, which mechanically, were very much like
motorcycles (small, low cylinder number smooth running engines...). It is
through motorcycles that Honda got into the car business. 
 
->Consumer electronics: US invented, today Japanese dominated
 
----------------------------------------------------------------------------
-->The following articles referred to in the above paper are available via the
Internet Computer Network at FTP Site: monu6.cc.monash.edu.au   in directory:
pub/nihongo
 
You login with name: anonymous
Use your first name as the password
 
 
JAPANNO:
An unauthorized translation of a best selling book in Japan "A Japan that can
say no (to America)!" about why Japan is now number one and should take the
place of the US as world leader. By Shintaro Ishihara (Japanese Parliament
Member) and Akio Morita (SONY CEO). This is a good analysis of many of
America's problems. 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 seems to be
false).
 
MATSUSHITA.PBS:
Transcript of a shocking PBS Frontline special about how a Japanese cartel
wiped out the US TV industry and went on to take over the rest of world
consumer electronics.
 
LOSEWAR.PBS:
Transcript of another excellent PBS Frontline special about how yet another
Japanese cartel conspired and took over the world supply of small computer and
electronic displays. Good segments on how Honda used unethical (and possibly
illegal) measures to drive U.S. auto parts makers out of business and a segment
on the Nintendo cartel.
 
 
-->The following article referred to in the above paper is available via the
Internet Computer Network at FTP Site: slopoke.mlb.semi.harris.com in
directory: pub/doc/misc
 
 
AGNTLIST:
The list of 'foreign agents' (with figures): former high level U.S. government
public officials who later used their inside government contacts to work as
agents for foreign interests in order to make quick money while betraying
America. Many of them made over a million dollars doing this.
 
--------------
Good books to read on the topic:
 
-->"Agents of Influence", Pat Choate, 1991. This is an excellent book on many
of the topics mentioned in this paper concerning the Japanese economic war. 
 
-->"Yen!", Daniel Burstein, 1990, Ballantine Books. An frightening, but
excellent book about Japan's world onslaught in the financial industry.
 
-->"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 Van Wolferen, 1989, Alfred A. Knopf
Press. This is an other very good, but very thick book on the topic.
 
-->"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)
 
-->"The Reckoning", by David Halberstam, William Morrow & Co., 1986.  An
historical novel about Ford and Nissan from founding to the present.
 
-->"Head to Head - The Coming Economic Battle Among Japan, Europe, and
America", by Lester Thurow, William Morrow & Co., 1992.
 
------------------------------------------------------------------------
AFTERWORD, by Andre Robotewskyj; ar12@midway.uchicago.edu
 
     The Japanese government and industries have treated the America that
rebuilt (with US taxpayer dollars) and helped Japan so much after World War II
with 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 nation. America should respond swiftly and soundly: If Japan
won't play by our rules, then until things change, we should play by theirs:
meaning we close our market to Japan, and we forbid Japan from owning our major
corporations and technology, like they do to us.
 
     I used to buy lots of Japanese products, probably for the same reasons you
might now. Others may not know the full consequences of their decisions like
you do now. Telling them is important. 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.
 
     America belongs to you and you have to do something for it once in a
while. This is one of those times. She needs your help. If you have questions,
please ask. Use this network and fax machines to organize yourselves to get
this message out. Put copies of this article in lounges or on the
company/school computer network. Send this article to the media, your
representatives, or your favorite political party or anonymously to company
upper management. Leave copies in airline seat magazine pouches. Scatter copies
of it into the 4 winds or call radio/TV talk shows and tell the people. These
are all things which can be done.
 
     If you are a student or recent graduate, you probably already realize much
more than your parents do that your standard of living is likely to be a
considerably lower than theirs was. 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 get your friends & family
to tell others and organize or inform 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. It is much better than the movie version and is a very good factually
based fiction murder mystery book on the subject. It is a #1 best seller.
 
     Remember that a problem like this can be fought, one American at a time.
Think of America when you do business and remember that 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, let
them know.
 
     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.
 
     I run a mailing list which occasionally distributes articles like this
one. If you'd like to be on the email receiver list, please send me a note (to
the address below).
 
Andre Robotewskyj; ar12@midway.uchicago.edu
 

    Interesting article.
    
    		...and we're giving Mitsubishi our Alpha technology !
    
    
    LIVE WIRE : Worldwide News
    --------------------------
    Digital announces Alpha AXP second source relationship with Mitsubishi
    
    Digital announced today that Mitsubishi Electric Corp. will become a
    second source for the Alpha AXP microprocessor architecture. Mitsubishi
    will manufacture and sell Digital-designed versions of Alpha AXP
    microprocessor chips, as well as build and sell its own designs based 
    on the Alpha AXP architecture.  By providing a second source of Alpha AXP
    microprocessors, Digital is furthering its commitment to establish the 
    Alpha AXP 64-bit architecture as an open market standard.
    
    ...

Does anyone remember the importing of American Rice scandal a few months back.
Sushi-Boy restaurants of Japan has all the sudden gone bankrupt....the holder
of the loan called the paper.

this is very scary.

/mtb

    Very scary. This is obviously no free-trade; more like a one way trade.
    
    Would you think twice about buying a Japanese product?
    

has anyone noticed that the Japanese market has been getting hit since NAFTA
started gaining momentum.  Could there be a correlation between the two?  Does
anyone know what the tariff on goods coming into Canada and Mexico from Japan?
Will the elimation of tariffs on U.S. goods make our products much more
attractive in these countries?

just a thought.

/mtb