Americans seem to be of two minds regarding the Japanese Challenge. Many seem convinced that country's trade successes result from unfair practices, that absent tariffs and restrictions we could knock them out of the box. Recently this has taken the form of demands that we do to them what they do to us: restrict entry of goods.
Others claim the Japanese have mastered the industrial arts to the extent that their products are innately superior to ours. This is nothing new; earlier we assigned the role of industrial champion to the Germans and even the Soviets. Some will recall how it was when the Soviets orbited Sputnik in 1957, when commentators demanded to know why they were so far ahead of us in aerospace.
In his most recent book, Robert C. Christopher, author of "The Japanese Mind," obliquely addresses both theories. Yes, he argues, the Japanese manufacturers have done very well in American markets by providing superb products at relatively low prices. No, the Japanese do not have insurmountable barriers to entry today, though at one time, this was the case. Their home market is more open than ever, welcoming aggressive, intelligent, informed and sophisticated American businessmen and their wares, and in fact even eager to help them establish beachheads. The trouble, says Christopher, is that few American firms exhibit these qualities. "Second to None" details the ways several have not only cracked the Japanese market but are succeeding there admirably.
Start out with the book's major problem, that it does not address the major source of friction between the two countries, namely the negative balance of trade and arguments that the Japanese deliberately exclude many foreign products through bureaucratic manipulation. Rather, the book is concerned with those American companies that manufacture goods in Japan, doing so by playing by the host country's rules. The argument between the two countries today concerns charges that the Japanese are protecting their farmers, cigarette companies and others at the expense of American exporters, the most dramatic (if minor) example being the frustrations suffered by American manufacturers of metal baseball bats two years ago. The vital issue today is that of the so-called "level playing field" in international trade and not the degree to which Japan permits foreigners to conduct a domestic business within its boundaries.
In making his case, Christopher offers some fairly familiar material regarding the differences between American and Japanese manufacturers--the latter patient, willing to plug away at it for years before realizing profits, more concerned with market share than anything else and obsessed with quality and on-time performance. To succeed in Japan, he suggests, Americans must understand this, and when appropriate, behave in a like fashion. It also would be well for Westerners to rid themselves of delusions that they can really understand the Japanese market on their own. Instead, they must take on partners, enter into joint ventures and above all, utilize local managers.
Caterpillar, for example, has the "counterpart" system in its successful joint effort with Mitsubishi, in which each American manager has a Japanese counterpart who takes care of directing efforts on the plant floor and dealing with suppliers. "The Japanese has the line authority and the American does not interfere with that," said Caterpillar Mitsubishi Chairman Robert Talbot. "But if (the American) feels something needs to be changed in terms of strategies or objectives--not in terms of how to put a bolt on--he'll work it out with his Japanese counterpart."
Christopher offers many such statements and anecdotes about companies such as Coca-Cola, McDonald's, Texas Instruments and Max Factor, the last a small player in the American cosmetic market but an important force in Japan. All make important use of local management talent, drawing whenever possible from the top graduates of prestigious Tokyo University.
However, this is not the way the Japanese have acted in their drive to conquer American markets. With the important exception of investment banking, where Americans outnumber Japanese in most areas, the pattern for Japanese firms in the U.S. has been for leadership to rest with Japanese management--while the Americans look on and learn. They send over their technocrats to "invigorate" our moribund plants, and to a remarkable extent, they have been successful because the Japanese have managed to transplant their elan here.
Take the Toyota-General Motors cooperative venture, New United Motor Mfg. (NUMMI) in Fremont, Calif., where 2,500 employees are now turning out 240,000 cars a year where before it took twice as many workers to obtain that output. "The Japanese philosophy is to make people an important item, as opposed to the typical U.S. philosophy that workers are just an extension of machines," said NUMMI's general manager for human resources D. William Childs.
This is the obverse of Christopher's coin. Americans in Japan can prosper by taking on Japanese managers and learning Japanese ways; Japanese firms here do well by using their own managers and encouraging Americans to work like Japanese. The author claims that many U.S. companies out-compete the Japanese rivals on their home turf but does not tell us the other part of the story. To succeed in Japan, Americans have to go native; to perform well in America, it appears the Japanese retain those qualities that have served them well in their homeland.
"Second to None" is a useful survey of the subject by an observer who knows whereof he writes and has a fine instinct for a story. While not as insightful as his earlier book, it should dispel the notion that the Japanese market can't be entered. Christopher shows how this is possible--most of the time--by being more Japanese than the Japanese.