From: buzy@quads.uchicago.edu (Len Buzyna) Subject: Does America say Yes to Japan Message-ID: <1992Dec5.023139.16824@midway.uchicago.edu> Date: Sat, 5 Dec 1992 02:31:39 GMT Organization: University of Chicago Computing Organizations Lines: 822 This has been an immensely popular and requested paper about Japan at my (and many other) sites. A new edition has come out which you may find interesting. -Len ----------------------------------- (JAPANYES; From Internet FTP: monu6.cc.monash.edu.au in: pub/nihongo) (This contains both sections concatenated.) Japanyes; THE SECOND EDITION; The following article, JAPANYES, (2nd edition) comes from FTP site monu6.cc.monash.edu.au. The most recent version is in pub/nihongo. This paper was written by: Louis Leclerc; lleclerc@nyx.cs.du.edu Please send him any corrections or additions to this paper. 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 (see appendix). The author's prime service to us is the distillation of this information into a (relatively) brief synopsis. Tom Mathes tom-mathes@email.sps.mot.com --------------- In the 2nd edition, typographical and content errors/omissions were corrected, sections re-organized for better flow and less relevant sections were deleted/condensed to make room for new material (the entire file must be under 100K to fit through email gateways). Japanese names were removed to protect their anonymity. Sections significantly expanded/added in the 2nd edition: DISCRIMINATION TRUE, BUT ONLY ON THE SURFACE IT'S NOT ALL JAPAN'S FAULT CONCLUSION COMPANY LISTING (many new names) Sections deleted/condensed in the 2nd edition: WHERE IT ALL BEGINS (combined with BUSINESS IS WAR) DEBT, AMERICA'S SUPERWEAPON OF SELF DESTRUCTION (important, but less relevant) ------------------------------------------------------------------------- (ed112992) Second Edition D O E S A M E R I C A S A Y Y E S T O J A P A N ? (A M E R I C A W A N I H O N N I "H A I" T O I U K A) There are many misconceptions about Japan and its miraculous success in the post-war era. While staying in Japan in mid 1992, I tried to look at Japan's seemingly miraculous success with the hope to understand it so that maybe we could apply some of their plan in our own country. "What makes Japan so good?", "How did they get from a third world country to be the richest in the world so quickly?" are common questions asked in America. Today, I will try to answer with examples, at least partially, these questions. Going to Japan, I expected to see a very efficient country from which America could learn in order to regain her former prosperity. During my trip, the reality began to sink in that what is really happening was quite different from expectations and in some ways quite disturbing. The Japanese have a very different approach to doing business than we do. This paper will elaborate, justify and try to show what is happening and why it is important that this be understood here in America. Don't be afraid to question what you read here as I am confident that if you research the points yourself (hopefully by going to Japan to see for yourself or reading materials on the topic), you will find the points made in this paper to be truthful. THE "JAPAN PROBLEM": Some claims echoed in America which are commonly dismissed as "Japan Bashing" statements, surprisingly turn out to be true upon investigation. The following statements may seem brash right now, but their meanings will become clearer in the explanations and examples that follow. It seems that Japan is in some kind of economic war against us. Their objective is for them to win and for us to lose. Through the use of cartels, price fixing, government-corporate 'anti-foreigner' tactics as well as adversarial trade and predation strategies, Japan is destroying much of America's strategic industries, standard of living and military strength. These actions are also destroying the jobs of ordinary American people. As a result, the greatest transfer of wealth in the history of the world from one country to an other is happening right now, from the United States, to Japan. As well, Japan is today, the largest holder of net foreign assets in the world. Those who study these types of topics know that economic wars can be even more devastating to a country's long term future than conventional wars. Japan is organized to fight, uses a tactical strategy and has a fundamental plan. America's economic strategy is in disarray and there is no plan. As a result, America is losing the economic war by default. IN THE BEGINNING, THE TV CARTEL: A very famous example of Japanese national government and corporate coordination to take over a foreign industry is that of the Japanese TV cartel, first set up in the 1960's. This is how Japan took the free-world TV industry away from the United States. PBS Frontline did an excellent documentary on this 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, illegal under US trade law, were set up by Japanese TV makers and US retailers such as Sears and Woolworths to sell the TVs under store brand names. As a result, once famous brands such as Sylvania, Quasar, Admiral, Philco and RCA have vanished or are foreign/Japanese owned. Zenith is the only remaining US TV maker today. No US companies make VCRs although they were an American invention. In the 1980's the Japanese applied this same strategy to the machine tool industry and now completely dominate that industry as well (a point well made at a machine tool exhibition I visited in Tokyo). Before that was motorcycles and computer memory chips (the US tried to retaliate but failed as our companies couldn't organize with each other during the now famous 'dram shortages' a few years ago). It will be happening again with major and smaller kitchen/washing appliances and telecommunications equipment during the 1990s. It has already happened with liquid crystal computer displays where the Japanese today have 100% market share (these were also invented in the USA). DISPELLING SOME STATISTICS: Several misleading claims are made in the media about how the trade situation today with Japan is fine. These will now be dispelled. One claim states that Japan is opening its market because it has increased imports by 9% in 1986-87 and 18% in 1988. This is a half truth because Japanese exports during the same period increased by much more than that. In other words, the trade gap got bigger, not smaller between Japan and its trading partners. An other false claim, most often made by Japanese trade representatives, states that it is naturally expected 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 an other with 1 citizen, you. Each person has $200 to their name. Every year you buy $100 of goods from the other country, and each of their citizens 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. Some recent examples from the evening news will make this point clear. Recently, George Bush went to Japan to open the Japanese market to US goods and to get the Japanese to use more US made car parts in the cars they sell to America. After he left, the Japanese Prime Minister said the agreement they reached was 'a difficult goal'. This is Tatemae code for 'we have no intention of meeting your demand'. But of course, the Japanese PM would not say this directly to George Bush, who is president of America. This would be extremely impolite and Mr. Miyazawa could never say such a thing directly to an individual of such prestige. The Japanese PM is thus in a difficult position. This is an occasion for Tatemae. Foreigners (especially Americans) who 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. As an other example, an agreement was reached where Japan would allow more US made computer chips to be sold in Japanese products. Recently, the Japanese have said this goal would be 'difficult' to reach. This is code for 'we will renege on the agreement'. If you know about Tatemae, it is much easier to know what the Japanese really plan on doing when faced with a politically difficult position as well as what they might be trying to say when they talk on television. Finally, a claim is often made by cornered Japanese officials that "Japan is at a crossroads" and the problems described in this article are being resolved today. "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. SHAME AND HONOR IN BUSINESS: Japanese people operate on a system of shame and honor (or the appearance of it anyways). This developed due to the fact that so many people must live peacefully in crowded conditions. When something does go wrong, there is a lot of shame on the individual responsible. If the failure was bad enough, he may commit suicide (a practice dating back to when Samurai committed suicide in front of their superiors when they were responsible for a major failure). Some major public figure commits suicide out of shame at least once a year in Tokyo. For example, while I was there, the CEO of Toyo Rubber (they operate as B.F. Goodrich here in America) committed suicide by jumping in front of the train because company profits were poor this year. A couple years back, after a train wreck in which some people died, the manager responsible for the whole affair also committed suicide. An interesting side note to this case is the existence of laws discouraging suicide by jumping in front of trains in Japan. These demonstrate the 'group' orientation of this society. The government has laws to fine the jumper's surviving family members based on how much disruption to service was caused by the suicide of the now dead family member. Apparently, the intent of the laws is to force the jumper to think about the harm they will do to their family by choosing the train as a means of suicide, hoping they will instead choose other means to end their life and minimize service disruptions. In practice though, these fines are hardly ever enforced. DISCRIMINATION: Although the Japanese are individually are very polite people, Japan is a very racist country, maybe even more so than we are. The common name for foreigners is 'gaijin' in Japan. This is a racial slur somewhat in the way 'nigger' refers to a black person in America. There is however a polite form of this word, 'gaikokujin', which means literally 'outsider 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. This type of practice seems to be very widespread. As an example of how deeply this goes, one may look at the now famous Konishiki affair of last summer. Konishiki was the best sumo wrestler in all of Japan. However, he was an American (Hawaiian). The overseers of Japanese sumo continuously denied him the title of 'Yokozuna' (sort of an entry into the Japanese sumo Hall of Fame for grand champions like Konishiki). Konishiki won title after title, but was still refused. When pressed, the overseers claimed that the holder of the Yokozuna title must possess 'hinkaku', a special kind of 'Japanese grace'. They also claimed that it was impossible for a non Japanese to be capable of possessing hinkaku. As a result, Konishiki was refused the honor of the Yokozuna title. In the end, he never became Yokozuna (and neither has any other foreigner in the history of the sport). 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. Races are ranked in a kind of social order in Japan, first are Japanese, then white people, other asians, then all other races besides black people, who are last. The government is sometimes a partner in racism and discrimination. There exists an 'unclean' sect of Japanese society who are referred to as 'Burakumin'. They are a particular sect who's ancestors had an 'unclean' religious history. A small square on the top corner of the Japanese birth certificate is filled in if a person is a Burakumin, or is blank if they are not. This is used by the government and the companies to deny Burakumin people good jobs and advancement d