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When the U.S. Partner Bites the Japanese : Commerce: American steelmakers' and others' trade complaints against Japanese firms involved in joint ventures with them strike the Japanese as disloyal.


Critics say the problem with such deals is that, unlike their Japanese counterparts, American companies invariably fail to follow up and do the homework to learn from the ventures. Although IBM was initially planning to build an LCD plant in the United States identical to its Japanese plant, effectively importing Japanese LCD technology, the company now says it has no plans to do so.

Consequently, the net result of most joint ventures is that Japan increases its manufacturing base in high technology--and absorbs new technology--while U.S. companies avoid making the hard decisions to invest in U.S. production. U.S. high-tech companies end up creating more jobs overseas than they do at home.

But if the joint ventures do not always promote American interests, neither do they necessarily serve Japan's goal of reducing trade friction.

The best example is Chrysler Chairman Lee A. Iacocca's harsh criticism of Japanese auto makers at a time when Chrysler owned a large stake in Mitsubishi Motors and depended on the Japanese company for many of its cars.

The steel industry is another case in point.

Japanese steel companies, which spent an estimated $4 billion over the last decade buying into America's top steelmakers and helping them rebuild their production facilities, had assumed that their American partners would take their side.

When NKK announced May 30 that it had agreed to form a joint venture with Bethlehem Steel to build a $100-million plant to produce galvanized steel, the Japanese press reported that the last of the major U.S. steel companies had now cast its lot with the Japanese. The fiercely independent Bethlehem, which had filed a dumping complaint against NKK and other steelmakers earlier in the month, was now ostensibly less likely to cause trouble.

An NKK official says there was no relationship between Bethlehem Steel's dumping complaint and NKK's decision to form a joint venture with the company. However, he says, the latest filing of dumping complaints was "unfortunate" in view of the Japanese industry's long cooperation with U.S. steelmakers.

Japanese semiconductor makers could soon find that the joint ventures they have been hastily creating with their American counterparts could similarly fail to ease trade frictions.

"Joint ventures are not a substitute for U.S. market share in Japan," says Mathus, the U.S. Semiconductor Industry Assn. official in Tokyo. "To survive, America has to keep its manufacturing capability."

Venturing Forward

A sampling of recent joint ventures between American and Japanese firms:

Companies Venture IBM-Hitachi Develop and produce high-end printers Intel-Sharp Produce flash memory semiconductors Apple-Sharp Develop and produce consumer products Hughes-JVC Develop and produce video projectors NKK-Bethlehem Steel Produce galvanized steel NEC-IBM Distribute semiconductors in Japan

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