When Fuji Photo Film U.S.A. announced last week that it was indefinitely postponing the long-planned opening of its professional color film laboratory in Hollywood, the decision represented a stinging defeat for the large Japanese film manufacturer and a heady victory for a small local firm.
A&I Color Laboratory, located just two blocks from the site of the proposed Fuji lab, had conducted a yearlong campaign to stop the Fuji operation.
A&I's owners, David Alexander and Mamoru Ishihara, wrote dozens of letters--to senators and congressmen, to then-Vice President George Bush, U.S. Trade Representative Clayton K. Yeutter, U.S. Ambassador to Japan Mike Mansfield and Los Angeles City Councilman Zev Yaroslavsky. They wrote to the Federal Trade Commission, the U.S. Embassy in Tokyo and a score of other professional color labs around the country. They even wrote to Japan's prime minister, Noboru Takeshita, and to the Rev. Jesse Jackson.
They accused Fuji of deceptive and unfair competitive practices, of unethical conduct and of betraying the American small businessmen who helped the Japanese firm gain a foothold in the U.S. commercial film business.
Fuji Vice President Carl Chapman calls such accusations "absolute falsehood."
"Fuji has never done anything deceitful," he said.
The company says it was all a misunderstanding, fueled in part by simmering anti-Japanese sentiment in this country. In a statement released last Wednesday, Fuji said it decided to postpone the lab "rather than risk that this misunderstanding would affect Fuji's fine reputation."
Surprised at Victory
"I'm a little shocked right now," Alexander said after learning of Fuji's decision not to proceed with the lab. "We never expected to win this. They had all the money and power, and all we could do was keep telling our story. This wasn't about business and competition, it was about what's morally right and wrong. And it's about a little guy fighting a giant."
According to Alexander and Ishihara, the story began shortly before the 1984 Olympics, when two Fuji representatives first showed up at A&I, looking for help.
The Japanese firm was about to launch a major assault on the U.S. commercial film market, long dominated by Eastman Kodak Co., whose pioneering research and development in the film processing field had practically invented the industry.
At the time, Kodak enjoyed a virtual monopoly in photo processing, film and paper sales in this country, controlling an estimated 85% of the business. Fuji's share of the market was less than 5%.
Fuji, however, had a contract as the official color film sponsor for the Olympic Games and a brand-new blimp to hover over the Los Angeles Coliseum and carry the company name into millions of American living rooms.
What Fuji wanted from A&I that day was assistance in making its film more palatable to the top rung of professional photographers, the men and women who produce the color pictures for magazine fashion layouts and ad campaigns, movie posters and record album covers--A&I's customers.
"They came to us and said, 'Help us understand the America market, what American photographers want and appreciate. Please advise us about our film,' " said Alexander, himself a former professional photographer. "We didn't see any harm in that," said Ishihara. "They were a manufacturer, a supplier, and helping them produce a better film for our customers would benefit everyone."
So, for the next four years, A&I and other top professional labs around the country worked closely with Fuji technicians--granting them access to their production areas, running countless tests on Fuji film, providing Fuji with samples of their customized chemical mixes for analysis, pushing Fuji products to their patrons and even giving Fuji lists of their best customers.
During that time, Fuji managed to double its market share to 10% of photo film and paper sales in the United States, according to B. Alex Henderson, an analyst for the Wall Street investment firm Prudential-Bache Securities.
"Fuji has a history of well thought-out, planned and executed entries into various markets," Henderson said. "Their entry into the consumer film market in this country was a particularly adept move, a strategic thrust that really caught Kodak looking."
Fuji's targeting of the professional lab community was a clever move. Kodak was concentrating its energies on the much larger and more profitable amateur photographic market and was virtually ignoring the professional segment, according to lab owners.
"Kodak had become something of a complacent monopoly, and they were difficult to deal with," said one lab operator. "If you had a problem or a technical question for Kodak, they might get back to you in six months. But Fuji really wooed us."
"Fuji figured that if they got the pros to use their products, the amateurs eventually would follow," said another owner.