If you want to understand how Japan hopes to become increasingly flush in the world economy, look no further than Toto Ltd., a maker of high-tech bathroom fixtures.
"Toto flushing-toilet sales in China double every year," notes Osamu Watanabe, chairman of the governmental Japan External Trade Organization.
It is a clear indicator, Watanabe says, that "living standards are rising in China" -- and that Japan is firmly focused on tapping that growing wealth.
In all, Japan ships about $80 billion of goods to China, up from $20 billion six years ago.
Meanwhile, like their counterparts in the United States, Japanese companies have been outsourcing more and more of their manufacturing to China.
But unlike in the United States, there appears to be little hand-wringing over the trend.
That's a switch. In the early 1990s, "we saw China as a threat," explains Watanabe, who has worked for 40 years in Japan's powerful trade and industry ministries. "If a factory moved production to China, a village in Japan would have unemployment.
"But then we saw that as products are assembled, China needs parts and materials from Japan" -- in particular, the most sophisticated components.
So in 1996, Japan decided to move away from trying to compete with China in churning out lower-cost goods. Instead, it began to concentrate on making high-tech products.
The result: China may assemble all sorts of electronic gadgets. But Japan is determined that its companies, such as Sharp Corp. and Seiko Epson Corp., will develop the high-end liquid-crystal displays that go into these computers, telephones and televisions. China may put together toilets and bidets, but Toto will supply their microprocessor controls.
As it pursues this strategy, Watanabe says, Japan is eager to attract more investment from U.S. companies, particularly small and mid-size firms that can bring their technological know-how with them.
American companies "will find Japan a good place to invest because we are a gateway to Asia," Watanabe told an audience of businesspeople in Los Angeles last week.
It is striking, of course, that Japan -- which before its bubble burst was poised to become the world's leading economy -- now considers itself a mere "gateway" to someplace else.
But China's allure is incredibly powerful.
