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Hitachi Thrives in U.S. Despite Sullied Image : Consumers Overlook Company's Darker Side and Snap Up Goods

November 17, 1985|DONALD WOUTAT | Times Staff Writer

TARRYTOWN, N.Y. — Hitachi, the big Japanese conglomerate, has had its troubles with the U.S. government. The antitrust people at the Justice Department, for instance, are investigating a Hitachi sales document that suggests that the $20-billion-a-year company was trying to nickel-and-dime its competitors into the ground earlier this year by slashing prices below cost on some $1-apiece semiconductor chips.

Back in 1982, Hitachi was the main target of one of the FBI's famous "stings," an elaborate undercover operation usually aimed at burglars or crooked politicians. The G-men caught agents of the venerable company buying IBM computer secrets.

Not all of Hitachi's run-ins with the government have been unpleasant, however. Uncle Sam seems to like Hitachi's big mainframe computers, which are bought and then resold in this country, under a different name, by a subsidiary of National Semiconductor in Santa Clara, Calif.

"Our biggest customer," said a smiling Tsuneo Tanaka, president of Hitachi America, "is the IRS."

As trade tensions between the two nations grow ever worse, Hitachi's schizophrenic relationship with the U.S. government mirrors an ambivalence displayed by the rest of the nation toward Japan and its hugely successful industrial companies: Americans find it easy to condemn Japan's trade tactics and, at the same time, embrace its products.

Hitachi represents an object lesson in both cases.

The company has become a symbol of the dark side of Japan's image here, which has Japanese companies stealing U.S. technology, "dumping" their high-tech gadgets on the market, throwing Americans out of work and sapping our industrial strength. Hitachi's misadventures seem to confirm the worst suspicions about Japan's trade strategies and motives.

"At the mention of their name," says research director Brian Jeffery of the International Technology Group in Palo Alto, Calif., "people cross their hearts."

But the indignation somehow peters out when it comes to Hitachi's products, which range from washing machines to supercomputers and are apparently too good to pass up. National Semiconductor, for instance, is one of the sharpest critics of Hitachi and other Japanese semiconductor makers, yet is buying Hitachi mainframes at the rate of $150 million a year and reselling them through its National Advanced Systems subsidiary.

(It wasn't any of the IRS' 14 Hitachi mainframes that malfunctioned on income-tax returns earlier this year, the government allows, but some American-made Sperry machines. The only foreign makes in the agency's inventory of 106 mainframe computers, the Hitachi-NAS machines were purchased on the basis of competitive bidding.)

And there are testimonials like this one from Jack Ordway, who was marketing vice president for Hitachi's U.S. semiconductor operations for six years until he left in 1984 to join Vitelic, a start-up company: "I didn't see any sign whatsoever of any illegal or unethical business practices. Never once did anyone ask me to do anything unethical or illegal."

Espionage Not Unique

At the same time, corporate espionage and brutal marketing tactics are nothing new in Silicon Valley. Thus there is a "There but for the grace of God go I" reaction to Hitachi getting caught at various misdeeds. Said analyst Jeffery, referring to the confidential IBM material that was dangled in front of Hitachi engineers in 1982, "A lot of U.S. companies might not have turned their noses up at that information."

In fact, according to court documents, it was employees of National Advanced Systems who first made IBM materials available to Hitachi. Mitsubishi, another Japanese electronic conglomerate, became the second defendant in the case.

Indeed, consumers seemed to view the intrigues as a case of business as usual. While the FBI sting operation and subsequent criminal charges were a humiliation at home in Japan, a Hitachi sales executive said the firm's own U.S. surveys soon after the incident found a "significant awareness" of the indictments but that "the average consumer felt nothing negative about it. They felt this is the way business is done."

A Major Conglomerate

In other words, the consumer said, "Bring on more of those Hitachi videocassette recorders"--the most visible of an incredible range of products made and sold around the world by Hitachi under various brand names. It is a company whose structure and products defy categorization.

How does one describe a company with 47 subsidiaries and 700 affiliates--a firm that built the Japanese bullet train and whole power plants, is at the forefront of research into fifth-generation computer technology and, according to company sources, is the world's leading producer of the type of vibrator sold in sex shops?

"They're an odd company," summed up Marc Brien, a telecommunications and computer analyst at Domicity Ltd., a Toronto, Ont., management consulting firm.

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