Japanese and American entrepreneurs gather for a freewheeling discussion of the differences that divide them, and the ventures that may bring them together.
It is a weird war, the Japanese-American trade war: Its weapons are products; its legends are written in statistics. If there are people involved, they are leaders of giant corporations, heads of state, the field marshals of a great struggle. The human scale in missing somehow, a crucial dimension on both sides of the Pacific, where personal ambitions are played out, destroyed, or fulfilled, and where feelings may run as high as they did in the real war 40 years ago.
Last spring, INC. invited four Japanese and three American executives, most of them chief executive officers of small entrepreneurial companies, to sit down together at Yamaichi Securities Co., a leading investment bank in Tokyo, to discuss this human dimension of the trade war. The Americans were all members of SoCalTEN, the Southern California Technology Executives Network (see "Networking: A Little Help from Your Friends," June); some of the Japanese belonged to the Nikkei Venture Business Center.
The panelists' discussion ranged over the broadly cultural, as well as the narrowly economic, circumstances of their business lives. They discussed, sometimes heatedly, whether American executives were lazy -- and whether the Japanese were afraid of failure. They talked about how young American engineers often prefer to work for a start-up business, whereas their Japanese peers prefer the status, and the security, of working for a huge corporation.
The encounter was revealing, often in surprising ways. Americans stereotypically pride themselves on their blunt forthrightness, the Japanese on their unflappable civility. The participants coolly upset this comfortable assumption. Few American executives, for example, are so blunt -- or at the same time so courteous -- as Shigenobu Nagamori, the 40-year-old president of Kyoto-based Nippon Densan Corp. (Nidec), which, with more than $100 million in sales and 1,150 workers, is one of Japan's most successful entrepreneurial companies. No less outspoken on the Japanese side was Hiroshi Kato, 55, a director of Yamaichi's $70-million venture capital fund and the author of several books and articles on Japanese entrepreneurship. Zenjiro Sano, age 47, founder of the Tokyo-based Zax Corp., is one of a new breed of Japanese venture businessmen who are determined to prove that Japanese creativity isn't a contradiction in terms -- even if this means opening a research-and-development facility in Irvine, Calif., and staffing it mostly with Americans. Rounding out the Japanese panel was Masakatsu Makino, president of Creative Systems Corp., a fledgling Japanese software company in Kanagawa, an hour's drive southwest of Tokyo. With last year's sales of slightly more than $1 million, Makino, like many entrepreneurs on both sides of the Pacific, is beset by more established companies in his struggle for market share and capital resources.
The Japanese, too, may have been pleasantly surprised to discover that their American counterparts could be polite, even formal, without in the least abandoning their notorious candor. Rod Hosilyk, for example, co-founder and president of Rosscomp Corp., a $1-million Irvine manufacturer of tape drives, has been doing business in Japan for 20 years -- and he freely expressed his frustrations with Japanese business practices. Equally courteous, equally forth-right, was his fellow Orange County executive, Alpha Micro System's president Richard Cortese, age 42, who showed a connoisseur's appreciation of the possibilities of international commerce and cooperation. Steven Panzer, the 39-year-old co-founder and executive director of SoCalTEN, was the third and final American panelist.
The roundtable was held in Yamaichi Securities's conference room. Two stenographers and two simultaneous translators were on hand to capture the discussion, as were two Japanese journalists, Ikuo Umebayashi of the Nikkei Industry Research Institute and Kenichiro Takahashi, senior editor of Aspect magazine. The roundtable was conducted by INC. editor George Gendron and Joel Kotkin, INC's West Coast editor.
INC.: We hear a good deal about how hard it is for a small, non-Japanese company to do business in Japan. How true is this?
HOSILYK: I have been doing business in Japan now for probably 20 years, always in joint activities, true joint activities, in which we have tried to match the capabilities of a U.S. company to a Japanese company. And I must say that they've all been successful, at least to the extent that they satisfied the requirements that were placed on them. Furthermore, I found that the only precaution that we had to take over here was to use the same, normal, good business judgment that you would use doing business in the United States or anywhere else in the world. Japanese companies don't have any more secret weapons than anybody else.
However, I can say that the most frustrating part of our doing business in Japan is government regulation. You have what is called the Fair Trade Commission (FTC) in Japan, which imposes very strict requirements on the agreements we attempt to negotiate. We don't have this in the United States, so agreements tend to become one-sided. In addition, the banking industry in Japan imposes its own requirements on contractual arrangements, which we also don't have in the United States. Just recently, we structured a tripartite agreement among our company and two large Japanese companies. By the time we considered all of the regulations of the FTC -- which I call the UTC for "Unfair Trade Commission" -- we had to remove a lot of the business points that we originally negotiated in the deal.
CORTESE: I agree. Japan is viewed as a particularly difficult place to do a joint venture that's beneficial to both parties. And the reason is the restrictions placed on it by government agencies -- by what we perceive, rightly or wrongly, to be a certain protectionist attitude. This perception reduces the willingness of American companies to do joint ventures. Of course, that's why I am here: to learn. But you should know that many other Americans don't even try to learn. They see easier opportunities in other parts of the world, countries where government policies or cultural conditions make it easier to put together fair and equitable joint ventures.
