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The ultimate test.

We used to say, 'If you can make it in New York, you can make it anywhere.' The slogan now is, 'If you can make it in Tokyo, you can make it anywhere.'

There are many reasons why American corporations can and will earn a larger share of the Japanese market in years to come. None is more compelling than this reason: Success in a market as demanding as Japan's is a critical element in being successful elsewhere in the world.

At one time, many U.S. manufacturers questioned whether selling in Japan was, on balance, really worth the extra effort and genuine aggravation. This is no longer true. Increasingly, American companies acknowledge that quality-driven, service-sensitive Japan is not a regional exception among markets. It is the global benchmark.

To be sure, American manufacturers remain impatient for an easing of the impediments that make access difficult even for serious global competitors. Climbing this steep mountain of doubt to achieve a more level field of competition is long overdue. Yet, as U.S. interest in world market opportunities increases, that mountain has become one of several positive challenges to more American companies.

Pressed hard by Japan and other trading partners, thousands of American companies now use the Malcolm Baldrige National Quality Award criteria as a reality check on the adequacy of their internal operations. In much the same way, making measurable progress in the Japanese market is becoming both a tactical test and strategic assurance that a company is doing everything essential to compete aggressively worldwide.

There is no mystery as to why America's interest in world market opportunities has increased:

First, we like to compete -- indeed, we're accustomed to competing successfully. However, in recent years, we have not been winning at our accustomed rate, and it has taken time to understand why. It also has taken time for corrective action. Having sorted out the problem, and having taken required initiatives, we now see Japan as a pivotal trade partner for American manufacturers. Those of us established in the Japanese market greatly value our relationships with customers, partners, and suppliers there.

Second, U.S. manufacturers came to realize we could no longer produce a product in one corner of the huge U.S. market, sell that product in a distant corner, and pretend we were an exporting nation.

Finally, it became increasingly apparent that accelerating the positive trends in modern manufacturing, and further expanding exports of American goods and agricultural products, was the way to generate increased job and career opportunities for all Americans. And we should never be timid about advocating policies that create wealth in America for Americans.

In pursuit of all these goals, Japan becomes an even more compelling place for competitive American industries to market the results of their decade-long emphasis on high quality and industrial innovation. And although there is much more to be done, I firmly believe that the Japanese market is more open today than it has ever been.

Committed to Expansion

Evidence abounds that American companies are committed to expanding their presence in Japan over the long haul. Trade between the two countries already totals $150 billion. The stock of gross investment that the countries have in each other amounts to more than $104 billion. There are several thousand active joint ventures involving U.S. and Japanese firms, and there is $1 billion a year in technology payments made between the two countries.

Unquestionably, there are irregularities in trade flow overall. While U.S. manufactured exports to Japan have increased dramatically, from $12 billion in 1984 to $31 billion in 1990, further U.S. export growth and Japanese receptivity to American products is essential. That's because Japanese manufactured exports to the U.S. have also been rising, and U.S. bilateral trade with Japan remains in a substantial deficit.

With a presence in Japan since 1973, Air Products & Chemicals Inc. currently markets industrial gases, equipment, and chemicals in the country. Our strategic reasoning then, as it is now: Japan is the ultimate test. We used to say, "If you can make it in New York, you can make it anywhere." The slogan now is, "If you can make it in Tokyo, you can make it anywhere." We currently export more than $40 million a year in products to Japan, and overall sales there are in the several-hundred-million-dollar range.

Needless to say, Air Products had to meet exacting quality standards in manufacturing, process engineering, and service when, in 1988, we won out over five Japanese competitors and supplied Nippon Steel with its first Western air separation plant. This led to a second major order from Nippon Steel. Partnering with Osaka Gas Co., Air Products is also building a large liquid oxygen, nitrogen, and argon plant there.

The point is that U.S. companies ready to be evaluated in minute detail by prospective Japanese customers can gain access, win orders, and grow. Moreover, these need not all be large companies. For example, Fusion Systems Corp. of Rockville, Md., with overall sales of $39 million, exports fully 29% of its patented ultraviolet curing lamps to Japan and has 14 employees there. By selling to and servicing Japanese companies that are globalizing their manufacturing operations, Fusion Systems itself is being further globalized.

A Positive Turn

Prospects for access by all U.S. companies took its most positive turn in decades when President Bush included a business delegation on his historic tour through the Pacific Rim earlier this year. As a member of that delegation, I am convinced that the trip helped lay the groundwork for a new era. I watched the Japanese, with their admirable focus on the long term, conclude that America's post-Cold War economic strategy was being adjusted for more government-business alignment. That strategy, as the National Association of Manufacturers points out, should be pro-manufacturing, pro-exports, and pro-growth.

Progress toward openness and better access is not limited to high-profile trade talks. Under the Manufacturing Technology Initiatives signed in May, some 150 U.S. engineers and manufacturing supervisors will spend fixed periods of time in Japan on "industrial science" projects with their Japanese counterparts. The U.S.-Japan Business Council decided in July to pursue improved access for America's service industry through a task force of executives from both countries.

American companies, now more agile in pursuit of global opportunity, are developing the staying power to reap the heretofore elusive benefits of the Japanese market. I have no doubt that they will climb this mountain in increasing numbers -- because it is there and because it is so rewarding.

Dexter F. Baker is Chairman of the Board of the National Association of Manufacturers. He retired earlier this year as Chairman and CEO of Air Products & Chemicals Inc., Allentown, Pa., and continues to serve as Chairman of the board's Executive Committee.
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Title Annotation:Accessing the Japanese Market; American companies to access Japanese market
Author:Baker, Dexter F.
Publication:Directors & Boards
Article Type:Evaluation
Date:Sep 22, 1992
Previous Article:Directors: step up to your responsibilities.
Next Article:The Japanese economy: what's ahead.

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