Our Real 'Japan Problem'

...Japanese trade statistics that ought to be the primary focus of attention: Although Japan's demand for imports has been growing at an annual double-digit rate over the past four years, the American share of that market has been declining...

...logos generally fail to attract the Japanese consumer...

...More than 600 American corporations have wellestablished and highly profitable operations here, among them IBM, DuPont, General Electric, Texas Instruments, Dow Chemical, Procter and Gamble, and AT&T...

...The new generation of consumers growing up here believes that high quality is synonymous with Made in Japan or Made in Europe, while competitive price is synonymous with Made in Asia...

...At the lower end of the price spectrum there are strong sales in Japanese stores for such foreign products as hair driers made in Taiwan, calculators made in Singapore, radio / cassette players from South Korea, and digital watches assembled in China or Hong Kong...

...kitchen appliances from West Germany and Italy...

...To this the Japanese reply: Until Americans bring their government deficit under control, start saving more and consuming less, and reform their education system to improve the overall quality of the U.S...

...Charges and countercharges flash back and forth, their pace often accelerated by journalists and politicians who thrive on discontent...

...companies, he notes, are investing hundreds of millions of dollars in placing manufacturing and product-design centers in Japan: "It's the smart thing to do...

...It might also stem the overall downward trend in U.S...

...The obvious insinuation is that Japanese trade barriers, in the form of interlocking business relationships and complex distribution systems, explain what has been called the U.S.' "Japan Problem...

...Many of the mass-produced goods we make are no longer competitive with European and Asian brands," says analyst Yim...

...Listening to these set pieces of rhetoric, it is easy to lose sight of the fact that American companies sell more manufactured goods to Japan than to any other nation in the world, except Canada...

...And while Lee Iacocca was complaining about not having a "level playing field" on which to compete with Japanese producers, the West Germans were selling a record 120,527 cars in Japan, 31.3 per cent more than the previous year...

...A MATTER OF TASTE Our Real Japan Problem' BY MICHAEL BERGER Tokyo A generation ago, the Japan scholar Edwin ?. Reischauer wrote a provocative essay about the U.S.' "broken dialogue" with this country...

...All the better U.S...

...Ifwehadmore companies with that kind of commitment, my job would be a lot easier...

...It not only puts them inside the Japanese market, but it positions them closer to all the other Asian markets...

...Michael Berger, a previous contributor to the NL, is the Tokyo bureau chief of the San Francisco Chronicle...

...Export statistics are becoming less significant as a measure of whether the Japanese market is open or closed," says Clifford Clarke, president of a California-based consulting firm specializing in Asian markets...

...Procter and Gamble, for example, has five plants in Japan that produce a variety of items both for domestic Japanese consumption and for shipment to more than a dozen other Asian nations...

...His essential point was that Americans were not paying enough attention to an important ally...

...Consumer electronics accounted for another 20-25 per cent of the deficit, a proportion that is likely to mount because in this category of goods the United States is barely even on the "field...

...But that just isn't realistic...

...if you want to remain a leader in electronics, you must bein Japan," comments Henrikus Hoksbergen, president of the Japan subsidiary of the Dutch conglomerate Philips Limited...

...No American companies make videocassette players without the help of Japanese firms, and not a single American company manufactures portable video cameras, compact discs, or compactdisc players—the strongest growth markets in consumer electronics...

...The best-selling items include fashion labels from France, Italy and England...

...Today it could be argued that there is too much dialogue between the two nations...

...If we're able to trim our trade deficit with Europe, " say many American officials to their Japanese counterparts, "why is it that our deficit with Japan is virtually unchanged...

...companies have a strong product or technology, a global strategy, and the financing and the will tocarryitout,"hesays...

...An American trade official agrees...

...In many fields maintaining a presence in Japan is practically a necessity...

...We've become accustomed to buying European luxury products too...

...Any company that does not position itself in Japan both as a manufacturer and retailer will fail to keep pace not only with production technology but also market trends...

...If you want to be a market leader in fashion, you must be in Paris...

...high-quality glassware from Sweden, Finland, West Germany, and France...

...This yields millions of dollars annually for Ralph Lauren, Calvin Klein and McDonald's— none of which shows up in bilateral trade numbers...

...The same distressing pattern holds true in these categories...

...And that is a reality that cannot be changed by negotiations or rhetorical posturing...

...Ours love to sit on European designer furniture in front of their 32-inch color TV, sipping foreign beer out of a crystal glass...

...In these retail categories, too, U.S.-made goods are few and far between...

...and furniture from Sweden, Denmark and Italy, The prices for these and other goods are high, but the pleasant surprise for their largely European exporters is that millions of Japanese are willing and able to pay them...

...The American assumption may be that more large retail stores in Japan will add up to more imports of U.S...

...The Germans, the French, the Swedes, the Italians, the Thais, the Malaysians, the Koreans, and the Australians (to cite only the outstanding examples) face the same marketing hurdles, yet all those countries are increasing thensales here faster than the U.S...

...sales to Japan...

...trade deficit with Japan was in telecommunications and office equipment: products such as cordless telephones, laptop computers, photocopiers, and facsimile machines...

...The current U.S.-Japan exchanges revolve around two fundamental arguments...

...To understand why this is so, it is necessary to look at the marketplace and the structure of the United States' trade deficit with Japan...

...Americans have had their greatest retailing successes in Japan through licensing and franchising arrangements...

...company makes faxes, only two produce laptop computers, and only one (Xerox) is competitive in copiers...

...Look at our own shopping habits in America...

...We must succeed here if we wish to succeed in the world...

...Rasmussen and other analysts are highly skeptical that these market realities can be altered by intergovernmental trade negotiations...

...Indeed, it is not difficult to find a wide range of foreign-manufactured products in Japan's leading department stores...

...We have couch potatoes in Japan just like in the West," comments Teizo Hotta, general manager for Baccarat Pacific Limited, the Japan subsidiary of the French crystal maker...

...For all the signs of eroding American competitiveness at the retail level, there are plenty of powerful U.S...

...If close to 70 per cent of its trade deficit with Japan is in areas where its companies either don't make the product or are not competitive, " asks Hong Kongbased economist Eric Rasmussen, "how can the United States expect to reduce the overall total...

...workforce, there won't be much change in the trade numbers...

...industrial players in Japanese markets...

...No U.S...

...The enthusiasm of the American negotiators, who made much of this, is not widely shared...

...Automobiles not only accounted for better than 30 per cent of last year's $40 billion deficit, but the leading "American" exporter to Japan was Ohio-based Honda...

...Almost 20 per cent of the U.S...

...A case in point is the recent structural trade barrier talks between the U. S. and Japan that resulted in Tokyo agreeing to revise regulations now inhibiting the proliferation of large retail stores...

...products," says Mark Yim, a retail-markets specialist for Baring Securities in Tokyo...

...The strong demand here for imports is in high-end luxury goods, which usually means made in Europe, or less expensive products, which usually means made in Asia...

...Still, there is a disturbing trend in the U.S...

...An increasing number of U.S...

...Yet the fact remains that U.S...

...His customers pay an average of 10,000 yen (about $67) for a single glass, "but they know they have bought the very best quality—that is what they are after...