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To: phil@hyphen.com
Subject: japanyes, Part 2 of 3
Status: RO

it is a form of socialism or communism. Nothing could be further from the
truth. Again, the best explanation is by example, in this case, the successful
Japanese takeover of the very strategic world LCD screen industry.

     LCD screens are the special "flat" viewscreens which are found in almost
every laptop and portable computer on the market today. For a portable computer
to be light in weight, they must have this type of screen (opposed to a
conventional TV screen which is quite heavy and uses too much electricity).

     A few years ago Japanese industry co-ordinated a successful attack to take
over the entire world commercial supply of LCD computer screens by selling them
at 1/3 the price to make them, [PBS Frontline-Losing the war with Japan] and
waiting for the small US upstarts who invented them to go bankrupt. As a
result, today almost all LCD screens in any non military computer in the world
are made in Japan. This is a very strategic component because it will be used
in portable computers, medical imaging equipment, videophones, HDTV, touch
sensitive visual programmable refrigerators and stereos..etc.

     If you are a non Japanese maker of any of the above items, this is very
bad for you, because you will have to go to the Japanese to buy these screens
to put into your product (say a portable PC computer). However, the Japanese
companies also want to make these products too (entering your industry is part
of their long term strategic plan (which is 200 years long)) [PBS Frontline-
Coming From Japan]. As a result, they want to make you uncompetitive. They do
this by selling these screens to you at a price higher than they sell the same
screens to Japanese PC makers (which might even be the same company as the
screen maker). They can do this because they have destroyed the US competition.
You are forced to go to them if you want these screens.

     You need these screens though so your PCs can compete with the Japanese
PCs which will be in the US market soon, so you must buy them as there is no
other supply. This means though, that your PCs are more expensive then the
Japanese ones because you are paying more for your critical components than the
Japanese companies are paying. ...You lose...

     Besides offering to sell you the screen at some ridiculously high price,
the Japanese may offer to manufacture your entire product at a reasonable price
and put your name on it. For example, some of the Apple Mac Powerbook portable
computers are not Macs at all, but really SONYs. Most portable PC computers
today (even those with "American" brand names on them like Tandy and Compaq)
are made in Japan or have their major components made in Japan for the above
reasons [PBS Frontline-Losing the War with Japan].

     This type of deal is really nice for Japan because it gives the Japanese
companies the rest of the technology to make your product (besides the
strategic component). This also makes you dependant on them for all your
manufacturing (because your factory is now closed, your workers unemployed and
new ones too hard to train quickly). Finally, your Japanese supplier can bypass
you entirely at a future date and sell the computers they make for you, but
with their own name on them. They do this in the factory your sales helped them
to build in the first place. Mitsubishi did this to Chrysler with cars, first
it was the Eagle Talon, then later the Mitsubishi Eclipse....both cars are
identical, but really Mitsubishi's.

     The LCD screen monopoly is what enables Japanese companies to have such
a large market share in portable PCs (which need these LCD screens) yet almost
no market share in desktop PC computers (which don't need these screens). Japan
hasn't been able to take over the desktop PC market because its still advancing
too quickly and they have no monopoly on any critical components in these
machines. As a result, this industry can still belong to America. America is
able to hold on rapidly advancing industries through innovation, but Japan
cannot. This is because by the time Japan copies a foreign design innovation,
it is already obsolete. Japan has poor luck trying to hit a moving industrial
target and will usually miss. So long as an industry moves fast enough, and the
Japanese don't succeed in taking hold of some critical component of that
industry, the US will be able to hang on to it until it slows down or matures,
then the Japanese can successfully take it over.

     By focusing on taking over markets like LCD screens, critical computer
chips, high precision machining, and auto manufacturing, Japan has
significantly reduced America's ability to make these things in time of
national need. Japan lost World War II because they had a poor manufacturing
base (they had to stockpile for 4 years before starting World War II). They
have learned very well from that mistake, which now America is making.

     This example shows why something like LCD screens are a strategic
component and why Japan needs to dominate this industry. If one pauses to look,
one will notice that Japan is the dominant or a very major player in
practically every strategic world industry today. This is what is meant by a
well known Japanese phrase: "Business is War". Key markets overlooking
industries are like peaks overlooking cities. The national strategy in a
business war and economic war is the same, and the outcome is the same.
Domestic factories are gone because the industry has been killed economically
(rather than being bombed), workers are out of a job, and the target country
has much less power and safety in the world. It is like a real war, but less
bloody.

THE ECONOMIC WAR, A SUMMARY OF THE GLOBAL PLAN:

      Some may think that only America is having trade problems with Japan
right now. This is not true. Most other industrial countries in the world are
in the same predicament. Today, Japan has a huge trade surplus not only with
America, but with almost every other country in the world it trades with. This
happens when Japan buys less in products from other countries than the other
countries buy from Japan. This is bad because it means Japan takes money out
of America's economy and uses it for their own purposes (such as buying our
real estate, or companies).

     It is said that Japan has a national strategy to control economically,
what it could not get militarily 50 years ago. An impulsive claim perhaps. But,
today, I am not so sure.

     Japan's trade surplus is no accident. It is not the result of Japanese
efficiency, American laziness or anything else the Japanese government
officials may tell you on TV. The real cause is this: Japan trade patterns are
not bi-directional in the common sense where two countries buy each others
exports and a happy state of affairs results. Japanese policy is to
intentionally use foreign cash profits not to buy a foreign country's
exportable products, but rather its capital assets like companies and
real-estate, while preventing the other countries from doing the same thing in
Japan. This enables Japan to get wealthy and powerful extremely quickly while
still being more inefficient and averse to business risk than its trading
partners. Today, Japan and America have basically a one-way trade relationship.
Japan closes their market towards us, but we don't towards them [Wall Street
Journal 04/01/93 A2, 04/02/93 A6]. When "whiners and Japan bashers" claim Japan
is cheating, the following is what they are trying to say. Here is an
explanation of how it works:

-->Defense:

     There is a three tier economic defense which the Japanese use. First is
a set of laws which severely restrict/prevent foreign ownership and control of
Japanese companies and assets in Japan. As a consequence, GM must sell their
cars through Isuzu and Ford through Mazda (Autorama). Chrysler doesn't sell
many cars in Japan. Long ago, Ford used to have a large market share [Yen p112]
(around 70%) in Japan but the Japanese government closed their operations and
forced them out of the country.

     Today, foreigners typically cannot own Japanese companies, especially
those in strategic industries such as manufacturing and technology. This is
because of many "structural" laws and regulations which are really designed to
prevent/restrict foreign ownership. As an example, one such regulation states
that foreign businesses must have a Japanese guarantor "to insure that their
debts will be paid". For various reasons, it is very "difficult" for a foreign
company (particularly a small or medium sized growing one) trying to enter
Japan to get such a guarantor. Conversely, Japanese companies of any size
entering America face very few such restrictions and are allowed to enter the
US market quite freely.

     These types of Japanese laws are also the reason why you hear about so
many "joint" ventures between US and Japanese companies, where the venture is
intended to help the US company penetrate the "difficult" Japanese market
[Agents of Influence p156]. These joint ventures really enable the Japanese
companies to get foreign technology without having to invent it themselves. The
foreign company receives only a token market share in the Japanese market in
return.

     It was in this way Japan learned from the US companies how to make TV's
in the 1960's. More recently, the Japanese government recently forced Texas
Instruments (TI) to join a venture with SONY, where SONY got TI technology in
exchange for TI being able to sell some of their products in Japan.

     The second defense mechanism is the wide "cross holding" of stock shares
between the companies in Japan. This basically works by having the Japanese
companies print up lots of shares and exchanging equal values of these shares
with other Japanese companies. This is very cheap for the companies there to
do. As these shares are never given up or sold, they are effectively taken out
of circulation. Because companies own such a large percentage of each others
shares, it is impossible for a foreign firm or individual to accumulate enough
shares (51%) to take over a Japanese company. As a result, a foreign takeover
of a major Japanese company has never occured.

     A side note of all this is that Japanese companies are able to think long
term because they don't have to answer to stock holders at the annual
shareholders meeting. Because so many shares are cross held, private
shareholders tend to be not so significant in number and hence not a threat to
the board. This is why US companies must worry about short term performance so
much, often at the expense of wiser long term decisions. Japanese companies do
not have to worry about this, so they tend to invest much more in the future
than we do and hence are much more successful.

     The final defense system is a well set up structure of government laws,
behaviour and corporate co-operation which prevent foreign companies who get
around the first defense system from succeeding to make money by selling
products in Japan. The government delays foreign entry of goods through lots
of intentional customs and other regulatory snafu's as well as red tape
designed to hinder a foreign company to the point it becomes non competitive
in the Japanese market place.

     The result of all this is the fact that when Japan is compared to other
industrialized countries (ie. America), it is seen that a far larger percentage
of manufactured goods sold domestically were made domestically. It is often
very difficult to find manufactured products in Japan which were not made in
Japan or not made by Japanese companies.

-->Offense:

     The offensive strategy is also a three tiered system. Firstly, government
(through the Ministry of International Technology and Industry) and corporate
cartels co-ordinate and select targeted strategic industries which they want
to enter, or take over (this happened in the car, camera and consumer
electronics industries).

     Secondly, they obtain the basic technology (often from the current foreign
firms in the industry), then copy and improve upon it. They do trials, have
failures and make further improvements in the Japanese home market which is
protected against encroachment by foreign firms which may be already
established in the rest of the world within that particular industry.

     The final and most critical stage in the offensive system is the practice
of product dumping in order to gain market share overseas. Japanese companies
will initially export a product overseas at a price usually lower than it costs
to make it. The same product is usually sold in Japan at a higher price so the
Japanese company doesn't go bankrupt. This lets the Japanese companies increase
their marketshare as foreign buyers tend to buy the lowest price quality
product. This places stress on non-Japanese competition. Sometimes the foreign
competition is a well deserved target (ie. poor quality US autos of the 1970s),
but more often they are not. Once the foreign competition has given up, or has
been sufficiently weakened and the Japanese dominate that industry, they bring
the prices to a level reflecting cost of manufacture and development and move
on to the next market they want to take over. Using this technique, along with
keiretsu style bank financing, the Japanese can (and do) enter and take over
in a short while, almost any industry they choose no matter how unrelated.

     Because several of their companies participate when Japan attacks an
industry, the industry doesn't become monopolistic on a company level and
monopoly pricing usually doesn't happen in the foreign country. What does
happen though is, when the attack is over, the players are mostly or all
Japanese, meaning Japan as a nation, gets the industry, jobs, technology and
US dollar cash profits instead of America (for use in buying up US real-estate
or companies, or investing in future technologies). The goal is simply to
ensure that most of the industry's competitors are Japanese and that profits
derived from that industry go to Japan instead of some other country. The
result of this is a consistently huge one way flow of wealth and money, from
the United States, to Japan. This appears as those enormous record breaking US
trade deficits with Japan each month. Technology gains (by Japan doing the
engineering and the manufacturing in such industries instead of America) are
also an important by-product of this strategy. This has a snowballing effect,
as technology advantages gained and learned when Japan defeats a US industry,
can be used to gain advantages when entering other industries (ie. see the LCD
example above). Japan's strategy is virtually foolproof as long as you have
trading partners and individual consumers who tolerate or don't understand the
dynamics of what's really happening.

     To keep Japanese companies within a given industry technologically
competitive (even though the Japanese market is closed to outsiders), Japan
usually ensures that the number of Japanese companies participating within that
industry (within Japan) is at least 10. Only the best of these get to export
to the outside world. Cross corporate labor unions (ie. like the UAW) do not
exist in Japan as they tend to create labor monopolies which lead to
inefficiencies in manufacturing (ie. work "rules", pattern bargaining...).

     It should be noted that raising the price of a good within Japan in order
to pay for dumping in the foreign country is becoming less and less prevalent
as the Japanese companies today have enough cash to finance dumping in the
foreign country strictly from cash reserves. Once they have wiped out the
foreign competition, the profits start to roll in.

     In some ways this is America's fault as Japan has taken advantage of the
open US market, as well as America's tolerance to Japan's closed market in
order to help them rebuild their country after WWII. Ironically, America's best
scientists and engineers are working for military projects, whereas Japan's are
working on commercial ventures, where the war is actually being waged.

SUCCESS DOESN'T ALWAYS COME THE FIRST TIME:

     Sometimes, the Japanese will fail at first to enter a market. For example,
the Japanese auto companies entered, and retreated from the US auto market
several times before making their successful onslaught. During the intervals
that they were not so active in the US market, they were learning from their
mistakes, improving, refining and testing their products in their protected
home market, preparing to enter the US market again at a later time, which
ultimately they did.

     This strategy is still used today, most recently in telecommunications
where Hitachi (a Japanese telecommunications maker for 40 years) has recently
announced they are retreating from the US telecommunications market. In Japan,
they will continue to improve their products. Once their improvements are
complete and proven in the home market, they will re-enter the US market,
possibly surprising America's domestic makers. An other Japanese maker, Fujitsu
has already scored some important successes over AT&T in the US
telecommunications manufacturing industry, having recently made multi-million
dollar sales of advanced data-telecommunications equipment to US phone
companies like Nynex and Bell-South.

INNOVATION:

     A serious problem, which the Japanese themselves have acknowledged, is the
lack of originality and innovation. This is quite notable when you look at
their companies' histories. The Toshiba company in Tokyo has a big science
center with a time line of its history on a wall.  On it were its achievements.
It read something like "transistor imported into Japan 1950, manufactured here
in 1953", "teletype imported 1931, manufactured here 1935"...etc. There were
no inventions, only refinements. NTT (the telephone company), Nissan and
Matsushita had similar "timelines" in their centers with quotes like above.

     If a Japanese firm wants foreign technology but can't buy it, they
sometimes steal it by patenting a very large number of similar (but legally
"different") items derived from the foreign company's original and then
intimidating/bankrupting the small company through a blizzard of legal action.
If the company is publicly traded, or the owner wants to sell, the company is
bought outright by the Japanese. America, unlike Japan, makes no effort to
protect its strategic companies from foreign takeover. Imagine your small
company and its patents versus the attorney war chest of Mitsubishi Industrial
Company.

     This is actually what happened to Fusion Systems, a small American firm
which invented and patented a new way to get spray paint to stick on pop cans
[Agents of Influence p126/PBS Frontline, "American Game, Japanese Rules"].
Mitsubishi bought one of this firm's machines and came out a few months later
with one of their own. The small firm sued. Mitsubishi then made many small
modifications to the machine (not improvements, just voluminous iterative
changes), patented all of them and sued the US company many times over (for
each patent). Mitsubishi just waited for Fusion Systems to run out of money
defending them all (and offered to drop the cases if the small company sold
them the rights to the machine).

     If Japan can't get technology this way, they get it free from public
research done in non-Japanese universities and published in academic journals
which are available to anyone. A major reason for getting foreign research this
way is the fact that Japanese universities themselves don't do much research.
Their equipment is extremely outdated (in contrast to corporate labs). These
schools are literally straight out of the third world (possibly the last
physical part of the third world still in Japan). University is a place for
students to drink and party before joining a company. At the main campus of
University of Tokyo, the most prestigious university in all of Japan, the
buildings are in extreme state of disrepair. Stench of raw sewage permeates and
leaks down the hallways of the buildings and the students live in squalor.
Academics did not seem to be taken seriously by the students who were too busy
drinking or playing sports. Libraries were almost devoid of students. Some
buildings like the Library for American Studies were very nice, but many others
were in shambles. Half of all the windows in many of the buildings were broken
and glass was strewn about the floors. Electricity wires were hanging exposed
in hallways and lighting was not functioning (for many years it seemed) in
parts of buildings. Piles of garbage and wrecked cars were strewn about the
campus and behind buildings. Cats and other creatures lived in some of the
buildings. The school swimming pool was a filthy algead mess. If this seems
unbelievable, one can get off at Todai-komaba station in Tokyo and go see for
themselves. This is all the more surprising as the rest of the country is so
rich and modern, more so than most parts of America today.

     There is an important reason for all of this. In the world, universities
typically do research to advance learning and science for the world. This is
extremely expensive to fund, and is a lousy way for a country to get the most
value for its money, so Japan does not do this. The Japanese government and
companies make no effort to seriously support its universities. This does not
mean that Japan does not value basic research. Quite to the contrary. It is far
cheaper to let the other countries' schools and governments do (and pay for)
basic research which is published openly to the world and to simply translate
and read their papers.

     Japanese research money and results stays in the corporate and government
labs, where it may be kept secret from the foreign countries, which are the
enemy in the economic war. Japan does do research (lots of it actually), but
not for public dissemination and world advancement. Research is done to gain
advantage over their rivals. In 1991, the Toshiba Company alone spent more on
research than was spent privately and publicly in all the country of Canada
[Canadian Broadcasting Corporation (CBC) News;Venture-Racing the Rising Sun].
This is the fundamental reason why Japan refuses to fund universities and
diverts it to corporate research instead.

     Ironically, it may not be a weakness of theirs that their universities are
so awful. If they know that they can get research from America for free, they
are smart to put their money in their private and company labs instead; where
they can use it against US companies in order to defeat them.

     In spite of all this, Japanese workers still get an excellent education.
This is because education up to (but not including) university is very good and
extremely well funded. In great contrast to the universities, the elementary,
secondary and tertiary schools are very well stocked with the best of
equipment, facilities and teachers. They are as nice as anything in America.
Furthermore, highly specialized training programs are provided to newly hired
workers when they join their companies. This makes up for the weakness of the
Japanese university system. In cases where advanced training unavailable in
Japan is required (ie. in certain types of engineering, or technology), the
student will be sent to America or another foreign country that has good
universities to study.

     Sometimes, Japanese companies buy their way into cash hungry quality US
universities (usually for pennies on the dollar) to make up for the lack of
innovation in Japan. A recent deal between Hitachi and the University of
California at Irvine makes the point [ABC 20/20 12/06/91]. It went as follows:
Hitachi will pay to build an advanced research building on the campus and
occupy the top floor. The university occupies the rest. The provision however
is that Hitachi gets access to all research and discoveries in the building
done by the university (paid for by the US taxpayer). Furthermore, Hitachi is
granted the power to restrict all university research discoveries from this
building to the outside world whenever it is to the advantage of Hitachi to do
so. Research done on the Hitachi floors is never available to anyone, not even
UC Irvine (the information flow is one way only). Similar arrangements with
other Japanese companies exist at other US universities like Princeton, MIT,
U of Oklahoma... Advanced Japanese research organizations make no such deals
with US companies.

JAPANESE PEOPLE AND THE MARKET:

     Ordinary Japanese don't have much idea of why they can't buy foreign goods
at reasonable prices in their stores. When I asked Japanese people why they
don't buy American (or other foreign goods), they often say because they can't
find them, or they are much too expensive. This is true. Non Japanese goods are
much more expensive in Japan than they should be (especially if the goods are
in an industry targeted by the Japanese companies and government) and Japanese
goods are often cheaper in America than in Japan.

     Typically, foreign goods are often impossible to buy at any price and are
usually very expensive when found. For example, I looked for, but found no
Korean products at all in Japan even though this country is very close to Japan
on the map. Because South Korea has little political influence, it cannot
pressure Japan to allow their products in. As a consequence South Korea cannot
sell their products in Japan even though they make many of the same types of
high quality electronics and automotive goods the Japanese make, but at a lower
price. US (and other foreign products) which must face a Japanese domestic
maker are also extremely hard to find in Japan. Even the American flags in the
Tokyo-Shinjuku Mitsukoshi department store were made in Japan.

     For example, the major Japanese appliance manufacturers are planning to
enter the US market for appliances (refrigerators, stoves, vacuums) in the
1990's. In a major Hiroshima appliance store (the only store I could find any
foreign appliances), I saw a GE refrigerator selling for $3000 (US). This was
a very low end model you could buy here in America for about $600. The Toshiba
right next to it was a luxury high end model and sold for $2500. It is these
Japanese cartel tactics which lead ordinary Japanese people to believe that US
goods are inferior and overpriced.

     Conversely, in America, Japanese made Sears brand refrigerators (similar
to the Toshiba I saw in Japan) sold for about $1000. This didn't seem right to
me. The government and business people I spoke with already knew about these
points and acknowledged that they could see it was a "problem" for America.

     The Japanese are successfully using the same strategy utilized in home
appliances in other industries as well (desktop personal computers, bicycles,
golf equipment, musical instruments...) where US product quality and price is
better than competing Japanese products.

MILITARISM:

     In the book "A Japan that can say no! (to America)", by Akio Morita (CEO
of SONY) and Shintaro Ishihara (an influential parliament member), the authors
state that Japan has under development the world's most advanced military jet
because American made planes are not suitable for Japanese terrain, which is
"different" because it has mountains. Not only does Japan have the world's
second largest military budget, they are also accumulating the largest
stockpile of plutonium in the world (more than the US or Russia) [Chicago
Tribune 02/03/92 s1 p1] for reasons of "national security". In Japan, Fujitsu
has built several nuclear breeder reactors (such reactors are sometimes used
to make nuclear weapons). The Japanese claim however, that they are for
peaceful purposes. Hopefully this is so.

     There also exists a well funded extremist nationalist movement in Japan
which posts large posters at most major intersections and subway stations in
Tokyo calling for restoration of the emperor as ruler and re-militarization of
the country. Every day in the business and shopping areas of the city, vans
drive around with huge loudspeakers blaring nationalistic music and making the
above demands. Apparently, the older Japanese ignore this, aware of the west's
generosity after the war, but feelings of the younger people who don't have the
memories of Japan's dark past are more uncertain. What is happening today in
Germany may be a foreshadowing of things to come.

     This may seem implausible at first, but not after one looks at Japanese
elementary students' textbooks. In the texts, the sections about World War II
are extremely distorted. In these books, Japan is played out as the victim to
world aggression and the atrocities of the Japanese Imperial Army are not
mentioned anywhere. Furthermore, the Japanese government to this day maintains
and actively uses its legal right to overrule book authors in order to
"whitewash" and dictate textbook history whenever it is in the national
interest to do so. They have recently done this to prevent disclosure to the
Japanese people of World War II Japanese atrocities in China and germ warfare
experiments on prisoners held by the Japanese [Toronto Globe & Mail
(Reuters);A1;03/17/93].

     The massive US aid to rebuild Japan after the war is mentioned on only one
line in the Japanese elementary text which went "America provided Japan with
some help". Japan's postwar success is credited only to the hardworking values
of its people (partially true), and not to the massive US aid for
reconstruction of its industries (paid for by American taxpayers), free access
to the US market, and US tolerance of Japan's closed market. After reading
these books, one is lead to believe that WWII was America's fault. It is hoped
that the younger Japanese learn what really happened before their parents grow
old and die, or America and Japan may face new misunderstanding and
confrontation in the future.

EFFICIENCY:

     Japan is perceived by the outside world to be an efficient country. In
actuality, Japan is a very inefficient country. The valuable intellectual
resource of women is wasted by giving them only the most menial jobs such as
"escalator dolls" and tea servers. The banking and farming systems are the some
of the most inefficient you will find in the modern world. Because of this
inefficiency, there are a lot of people employed on the farms and banks who
otherwise may not have a job. Although this is an inefficient use of people and
resources, it helps maintain a low unemployment rate. Japan prevents all this
from collapsing by keeping foreign products and services out of their country.
As a result Japan can be inefficient, non innovative, yet still get enormously
rich at the expense of its trading partners. Japan is now per-capita, the
richest industrialized country in the world and is expected to be the richest
absolutely by the year 2000, surpassing America [CBC News Venture "Racing the
Rising Sun"]. Ironically, it may surprise many people, but the most efficient
country in the world today is the United States ($49,600 production per
person), not Japan. Japan ranks pretty far behind ($38,200 production per
person) [New York Times 10/13/92]. In manufacturing though, Japan is the best
in the world.

TRUE, BUT ONLY ON THE SURFACE:

     it is claimed that Japanese transplant factories in the USA are good for
America and create jobs. Although a Japanese transplant factory may be good for
the town which gets it, its bad for the country as a whole. Japanese factories
opened here tend to be only assembly plants which put together parts which were
originally made in Japan. This is important because most of the value of
manufactured products resides in the research and development of machine tools,
plastics, technology as well as the manufacture of parts which make up that
product. There is little value in assembling pre-made parts together to make
a final product. This is true even for Japanese products "made in USA" like the
famous "US made Honda Accord". Final assembly of Japanese auto parts is pretty
low tech and low value. It doesn't keep money in America. The costs of paying
for welfare and unemployment for unemployed US engineers and parts maker
employees are much higher than the benefits of the Japanese transplant factory
and later wind up on American's tax bills. In the cases where Japanese
transplants do buy US made parts, they are usually from Japanese owned parts
makers which have also set up plants in America.

     Another claim goes that "America is successful in Japan and one only has
to look at Mcdonald's, Disneyland and others to see America's success". These
are not "American successes" in Japan because in reality, these are Japanese
owned franchise companies. Their appearance is American, but their ownership,
production and management is Japanese. A very small token number of foreign
companies are allowed to have a presence in Japan (ie. Toys-R-Us, P&G, BMW,
Kodak, IBM), but their overall market share is kept quite small via the means
described in this paper.

     Finally it is claimed that Germany is much more successful than America
in selling cars to the Japanese, so it means that America is lazy and isn't
trying hard enough to sell in Japan. This is false. Germany is successful in
selling cars (and other products) in Japan due to the fact that the European
Community (which Germany is a member of) forced Japan to open their market more
to Europe if Japan was to continue to have access to the European market
[Agents of Influence p156]. The US government never made Japan abide to similar
trade terms with America so as a result, America has far less success selling
in Japan.

AMERICA IS ALSO TO BLAME:

     American's behavior when trying to do business in Japan is not what it
should be. After seeing how some American firms operate there, it is little
wonder our success rate is often so poor. For example, something of an
annoyance (and also advantage) to the Japanese is American business people
working in Japan who don't speak Japanese, or know nothing about the country
they are dealing with. These included some trade representatives from an Oregon
company, some people from Boeing whom I met at a Nissan factory, and some from
the Government of Wisconsin at a machine tools fair trying to attract Japanese
industry to their state.

     The group of businessmen I met from the Oregon company I met in Roppongi
(an entertainment district in Tokyo). These people were a disgrace to American
industry and opened my eyes to why the Japanese are able to take advantage of
us in business. Firstly, these men spoke no Japanese at all (so they couldn't
understand what their opponents at the negotiating table were saying) and knew
nothing about the culture. They asked me what it was like to be a "gringo" in
Japan. It seemed that they thought the business adversaries they were
negotiating against in Japan were running some 2 peso Mexican hot dog factory.
My conversation with them was a real eye opener to many of America's problems
when dealing with the Japanese in business.

    Secondly, the very presence of the trade group from Wisconsin at the
machine tools fair is the result of a very foolish, self destructive and
shortsighted US practice which will now be explained. With so many jobs leaving
America (due to many of the above Japanese tactics), some states have decided
to go to Japan to try to attract Japanese companies and plants to their state.
Because America (unlike almost all other industrialized countries) doesn't
co-ordinate or regulate this in any way, what happens is that states get played
off against each other by Japanese companies and the Japanese government. The
state which gives the most tax breaks or contributes the most money to build
the plant gets the plant. This is probably good for the winning state in the
short run, but is much worse for the country as a whole (and that state) in the
long run.

     Here's why: What this leads to is Japanese companies opening US branch
plants paid for by the US taxpayer and which pay little or no taxes themselves.
With many states doing this to each other to "win" a few jobs, everyone winds
up losing. This is because after each state has "won" a plant from some other
state, the final tally shows that no one state has gained any jobs from any
other state (or very little anyways), yet every state is short lots of tax
money which must be made up by placing more taxes on individuals, or
pre-existing US businesses (who must now compete against the American state
subsidized Japanese businesses). The only winner in all of this is Japan who
receives property tax free (or discounted) factories and in worse cases plants
which we the taxpayer, sometimes pay to partially build through government
grants. The Honda Accord plant in Marysville, Ohio was a result of this
practice. Japanese companies producing out of tax free plants are also at an
advantage to defeat US companies, who must pay taxes. Ultimately, this practice
makes America lose, not gain, jobs (see above section "assembly plants") and
pay more taxes. This very topic is the subject of many sick jokes in Tokyo
about America's greed and foolishness today.

-->"Foreign Agents"

     So, why does our government even allow the things explained in this paper
to take place? The reason is due to another problem (and is also the subject
of many good jokes in Tokyo). It lies at the highest levels of our federal
government and has to do with much of the recent talk in the last federal
election about "foreign agents". These are very high level Federal public
servants and elected members Americans sent to Washington to represent them,
who go work in the U.S. Federal government for a short time, make contacts in
the government or US Commerce Department, then betray the country by selling
themselves out as representatives to foreign interests.

     These people were our front line trade negotiators, staff members, trade
attorneys, elected officials and have the inside knowledge the foreign
interests need to circumvent our trade laws, defeat our companies and find out