Japanese Companies Court China

TUESDAY, JULY 29, 1997

The buzzwords being thrown around the conference room are decidedly those of corporate Japan: “benevolent management,” “superb technology,” “team spirit.”

But the seven eager students at this training session for Matsushita Electric Industrial Co. managers are not your average bunch. They are Chinese - and represent the front line of a renewed push by Japanese industry into the Chinese market.

Much of the impetus for the concern over the huge Chinese market is defensive. Japanese corporate leaders fear the United States is becoming a stronger competitor in their back yard and they want to protect their turf.

And their interests are considerable. Japan’s investment in China - at $4 billion - is about double that of the United States.

And the list of Japanese companies is extensive, including the likes of Nissan Motor Co., NEC Corp. and Nisshin Steel Co.

Matsushita alone has invested $558 million in 31 joint ventures and three fully owned companies in China.

The electronics giant has courted China since 1978, when Chinese leader Deng Xiaoping, eager to modernize Chinese manufacturing, visited a Matsushita color TV plant in Japan.

Deng also met company founder Konosuke Matsushita, famous as the inventor of a quirky, uniquely Japanese management method that emphasizes zen-like character-building, such as humility, courtesy and dedication.

But, with Deng’s death this year, some Japanese business leaders are worried that their old-boys network in China may be rapidly withering with age.

“The Chinese have more respect for Americans. They just see Japan as having the technology,” said a Matsushita executive, Yukio Shohtoku.

Shohtoku sees disturbing signs of growing anti-Japanese sentiment among younger Chinese, who are increasingly drawn to the democratic freedoms, superpower prowess, even rock ‘n’ roll of the United States.

The sagging interest in Japan is also reflected in a drop of Chinese exchange students enrolling in Japanese universities over the past two years - the first decrease in two decades.

If more and more Chinese go to the United States, Japanese officials fear, they will likely opt to do business with the Americans they have grown to trust.

U.S. automakers, for instance, have developed an edge over their Japanese rivals by using Chinese-American employees with the language and cultural skills to serve as a bridge between the two nations.

“Japan has to catch up with the U.S.A. in terms of attracting Chinese people,” Shohtoku said. “That’s what I am most worried about when I think of the long-term future.”

The image battle won’t be easy.

Japanese companies know they are up against the legacy of their country’s military aggression before and during World War II, which left many Chinese with bitter hatred toward the Japanese.

Japanese soldiers committed atrocities in China, including massacres of civilians, sexual enslavement of Asian women for front-line brothels and a special unit that experimented on prisoners of war.

“When you think about history, there is an element of difficulty,” said Akira Yokoi, Toyota Motor Corp.’s vice president in charge of its China business. “The memory of a war from 50 years ago is something the Americans don’t have to deal with.”

Americans also have the edge in diplomatic leverage.

Although the Japanese government has a reputation for orchestrating economic growth at home, it likes to keep a low profile on the international stage.

During Vice President Al Gore’s visit to Asia in March, China signed contracts with General Motors Corp. and Boeing Co. Japanese Prime Minister Ryutaro Hashimoto’s visit in September is unlikely to land similar deals for Japanese corporations.

Matsushita leads the Americans in its TV, air-conditioner and other electronics business in China. But it is likely to be at a disadvantage in winning telecommunications projects, where politics are bound to play a bigger role.

One possible plus the Japanese have is appealing to the Chinese as fellow Asians who have an intertwined history and culture.

At the recent workshop for the Chinese executives from Matsushita’s joint ventures, one of the Chinese trainees said Chinese and Japanese at Matsushita work well together because they share a common outlook.

Some Japanese businesses also think they could benefit from U.S.-Chinese tensions over human rights, copyright violations and, more recently, allegations that Beijing may have funneled money to the Democratic Party.

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