[asia-apec 142] The Hidden Reality of Japan's Overseas Business

[daga]

The Hidden Reality of Japan's Overseas Business:
Recollection, Remorse and Repentance of an Ex-Businessman

by MIYAMOTO Kenjiro

(Mr. MIYAMOTO Kenjiro, is now an ordained Anglican Episcopal priest serving
the congregation of Sasebo Fukkatsu Church in Sasebo City, Nagasaki Prefecture.)

The phrase "fifty years since the defeat in the war" was the catch phrase in
numerous Japanese television and newspaper articles last year. Citizens in
Japan heard it read over and over again. What follows is my personal
reflection which examines these crucial decades of economic growth in our
history with a main focus on the realities brought about as a consequence of
overseas development by Japanese enterprises.

Several years ago, I myself used to work overseas as a frontline business
soldier assigned to a branch office of a certain Japanese manufacturing
company. My experience involves two countries known generally as developing
nations or those of the Third World. The romanticized prospect of foreign
investment, technological exchange, and technical assistance from so-called
"first class" enterprises opening branch offices in their countries
motivates developing nations to welcome Japanese businesses with open arms.
However, this popularly-held view is too naive if not totally out of touch
with reality. On the surface the business arrangements of foreign overseas
expansion seem mutually beneficial: accelerating the economic growth of host
countries and contributing towards developing aid, while at the same time
promoting the prosperity of the Japanese economy. Yet is there any
supporting evidence that these nations have gained significantly through
this process? In other words, has the overseas expansion of Japanese
businesses ever brought any genuine profit to the host countries and the
business world of those countries involved?

Bottom-line terms for business expansion overseas

Upon considering overseas expanision, any business would confirm certain
favorable conditions exist for a thriving business environment to be
maintained there. It is only common sense for the profit-oriented business
mind to at least take the following points into consideration regarding the
particular host countries' state of affairs.

1) Political stability
2) Low labor cost
3) Abundant natural resources
4) An obedient, mild-mannnered national character
5) Medium level of intelligence
6) No influential ties with former colonial interests
7) Lenient government regulations in regard to environment and labor
8) Good general sanitary conditions
9) No public unrest
10) Availability of nearby recreational facilities   

As separate items, each of these requirements may appear valid and
legitimate, but the true reality is that upon collective examination certain
questionable meanings surface which range from ridiculing to indignifying a
host-country and its people.

Items #1 through #7 relate directly with the management affairs of the
business concerning its establishment and continued prosperity, whereas #8
to #10 concern the Japanese expatriate community. I would like to call
special attention to the item #1, political stability.

Item #1 weighs the political environment in the host country not in terms of
its form of government. The regime is not questioned as long as it has firm
control over its people, even when those persons' basic human rights are
suppressed by the military or police. The oppression of the people quite
often proves to be desirable for the business. Growing awareness in human
rights, liberation movements, voices for democracy and the like therefore
are elements that businesses find threatening to their productivity.

The low labor cost, item#2, plays the most effective role in cutting down
production costs. The availability of natural resources in abundance, item
#3, is an absolute requirement. These resources can be one domestically
available, or those imported from a third country. Whichever the case, the
more the better. Therefore, no business moves into a country poor in
resources. To produce goods with a cheaper labor force, sell the products in
the world market, and ultimately take the maximum profits back home
represent the central concepts and motives of overseas expansion.

What is expected of the local people to support the success of the business
is to be obedient and mild-mannered in character. Similar expectations exist
in terms of their intellectual level, item #5. If it is too high, frictions
may arise in the workplace between the labor force and those dispatched from
Japan over certain disagreements. The question of colonial influence, item
#6, comes in the picture in reference to in-house training. For traits of
the old colonial power could jeopardize the efforts of educating locally
hired employees to the Japanese way of management and thinking. Item #7
concerns the fact that the stricter the regulations and ordinances, the more
financial burdens the business has to bear.

Although items #8 and #9 are beneficial to everyone in the society, the
business requires a guarantee for the safety of its Japanese staff. Item #10
seems quite innocent at first glance and if this referred only to such
recreational activities as golf, tennis, swimming, and other leisure
activities, there is no problem. Even spending time at casinos is regarded
and accepted as a kind of amusement to some. What I am implying is totally
different in nature from these. The word "recreation" has been understood by
some to be a coded message for sex and local establishments that provide it.
For many men away from home, this is considered a popular recreation. I am
now of the opinion that such practice should never be tolerated.

Exploitation and corrupt giver-receiver relations of Japanese businesses in
Asia today

During one of my overseas assignments in Asia, the reigning president was at
his peak in every political sphere of his country. Most of the leading
manufacturers and trading firms of Japan had already established themselves
there by that time. Some of the names of those early companies were scarcely
know in Japan. Those apparently small trading companies possessed certain
privileges overseas. Their business dealings were just as unclear to me as
their titles. Nevertheless, they must have been running a successful
business, for most of them had offices located in impressive condominiums,
and their visitors many and frequent.

The company where I was dispatched belonged to a group of one of the new
conglomerates in that country. Though new, the company was quite well-know
among the local people. During this time, the president helped this new
financial group to grow, making an intentional shift from a political power
base with the old groups that had been in existence since the colonial times.

For Japanese businesses, a cheap labor force was the most attractive feature
of this country. The second most important factor was the president's
backing and willingness to exercise enormous political power at will. In
fact, he had complete control at that time over politics, economy, national
defense, and domestic law and order. The corporate leader of the
conglomerate to which my company belonged was a member of the presidential
advisory staff at that time. Knowing what that would mean in terms of his
political influence, we the Japanese personnel had no doubts whatsoever as
to a prosperous business future before us. Our confidence was not unfounded
as the political power and the business management in that country was so
intimately related.

Their relationship was not just "intimate" as I now look back. It was an
outright giver/ receiver bond. To maintain smooth business, the management
was expected to help the president keep his political power. We helped the
president by contributing to his political fund and praising him at our
workplace. In fact, when he paid a visit to our company, all the employees-
including ones from Japan- gave him a heartfelt welcome. While endorsing his
decisions regarding the power of the state, we of  the Japanese business
community believed that any efforts concerning human rights or political and
administrative reforms were useless. By using our political connections, we
had no difficiluty manipulating officers and bureaucrats in the
administration and the judicial communities. We could also utlilize these
connections and the system to threaten workers.

Under the national slogan of industrialization, the country was in full gear
constructing a special processing zone. Industrialization sounded sweet to
everyone's ears. But it had little substance- existing in name only- because
most Japanese businesses there were in fact importing major parts from home
anyway. The "industrialization" carried out in the local plant was the
simple processing, assembling, inspecting , and packaging. Furthermore, the
products manufactured were older models compared to Japanese counterparts.
This automatically meant their lesser value in the world market and resulted
in little business earnings. Worse yet, when manufacturing plants expanded,
the host country spent more of its hard-earned foreign currency because
major facilities for manufacturing had to be dependent on imports from Japan
in the first place. And then suddenly time runs out. With rumors of an
external debt crisis running rampant, the Japanese prepare to withdraw from
the country.     

There are no feelings of guilt whatsoever lingering in the minds of the
Japanese in abandoning the plants and offices overseas since these
establishments have contributed greatly to the profits of the mother company
back home. The business people have no pain in retreating. While taking
advantage of the political influence of the president and his power, it is
not considered disloyal to change allegiance overnight. It is simply a
matter of survival. So one by one, company by company, they withdraw from
the delapidated, devastated market.

Once again degrading Asian women's dignity

The beauty of an overseas assignment for some businessmen lies in the many
opportunities for pleasure. The charm of women there is simply superb,
especially to those of the opposite sex. As I hinted earlier, everyday life
for most businessmen from Japan or anywhere, includes paying visits to those
nicely dressed women day and night. Numerous beauties await them among whom
are many minors and young teenagers receiving passionate attention not
intended for girls of their age. To my knowledge, there were many
businessmen who "kept" women individually by providing for their housing and
living expenses in exchange for a steady relationship. These men would visit
their steadies' homes even in the daytime, anxious about what their women
might be doing.

When business-related people visited from abroad, the local businessman made
arrangements of women for these guests. This was considered an important
duty and among the local Japanese, buying sex was understood on the same
level as planning an important golf outing. As a matter of fact, I recall a
Japanese businessman trying his best to persuade me that this trend was
nothing but a sport. In terms of entertaining business acquaintances,
providing sex for guests cost less for the host than a dinner party. On top
of that, it was cost-effective in satisying the hosted. Of course, this can
only happen when we refuse to respect women. Any such practices mentioned
should never be allowed.

Seemingly, all these men are ordinary, hardworking company employees who
while back home are good husbands and fathers. Yet these same men- once they
leave Japan- get utterly obsessed with women from morning until night. Their
change is dreadful. During World War II in this country, Japan violated the
dignity of the people and took their lives with rifles and bayonets. The
environment was destroyed through the destruction of war. Today, Japan is
determined to put that country under its control again- this time with Yen
and technology.

Truth behind deserting businesses

There is no doubt that the labor force of that country is of good quality
and yet cheap at the same time. Recent statistics show that the wages of
ordinary factory workers are still less than one tenth of the national
average of the Japanese workers in the same category. The labor scene could
even be worse in the countryside. We must look seriously at the injustice of
delegating the simple manual work to the host country while the major jobs
are done in Japan. In recent years from certain Asian regions, voices are
being raised in protest against such exploitative practice by Japanese
businesses. It must be our humble duty to listen to these voices and be
accountable for what they have to say.

I have also worked in another country, again as ain in-house dispatcher from
Japan. When I arrived, the host country had been doing quite well in terms
of its national revenue, owing to oil exports. By then a number of American
and European businesses had already established themselves well in that oil
land, which also promoted industrialization as a national policy. As time
elapsed, an external debt crisis surfaced which was faithfully followed by
gradual yet steady waves of desertion on the part of Japanese firms. When I
was on that wave myself, I came to discover the racial discrimination and
biases I had within me toward some people. This personal experience, or the
pains of it to be exact, still haunts me to this day. Truly regrettable is
the usual strategy of Japanese businesses to retreat from a country once the
region faills into the pits of foreign debts.

The actual goal of developing countries is not to rely on imports, but to
domestically supply a finished product to the best of their ability. This
becomes a national policy and mandate. In reality, however, no Asian
countries, with only a few exceptions, have yet to succeed in such an
endeavor. Possible reasons for the failure to achieve complete independence
in industrialization projects could be as follows:

1) Initial royalities must be paid at the time of entering into a contract
of technical assistance. Since royalty payments are to be made on a
product-to-product basis, the total means a great deal of money.

2) Continuing royalties must be paid with every individual product that is
manufactured locally.

3) Facilities and equipment must be those of the designated makers and be
imported through designated channels as well. In the costs of the
manufactured products, the profit for the provider of the technology is
included.

4) Major parts must be imported from the technology-providing country and
the parts contribute toward the provider's profits.

5) Supplemental parts and spare parts are required in stock and are very costly.

6) As to major parts, no technology transfer information is shared. The cost
of the major parts cuts into the final products rather heavily
proportion-wise. As to local procurement of parts and materials, there are
cases where in the end only packaging materials were needed from the host
country after all.

7) Due to possible risk factors calculated into production, the selling
price for the developing countries is sometimes set slightly higher than
that for European and American market.

8) All of the expenses for the Japanese overseas workers are expected to be
provided by the receiver of the technological assistance (i.e. travel
expense, salary, exclusive housing, luxury car with chauffeur, housemaid,
cook  and security guard to mention the minimum requirements).

People's resolution to be made now in Japan

Given the aforementioned situation, there is no possibility that any
industrialization efforts will be successful or profitable for the host
countries. As external debt crises arise, the International Monetary Fund
and/or the World Bank begin to draw up measures for their own action. These
international financial organizations usually tell local governments to
fulfill the following requirements:

1) cut back on the national budget
2) devaluation of currency
3) reduction of imports

These requirements place an immediate strain on the life of the people at
large. A budget cutback would directly affect various social welfare
programs, a devaluation would trigger expansive disturbances with the local
currency needed for foreign payments, and restrictions on imports would
cause a sharp increase in the price of all commodities. This is the best
scenario to further worsen the people's well-being. What is at work here may
be described as a frame-up to make the rich richer and the poor poorer.

Prosperity for the west and Japan through business expansion in developing
countries is eloquent evidence of the fact that they, the very member states
to the IMF and the World Bank, have already gained more than enough profits,
clearly more than their share. One magazine recently reported that the
external debt of the developing countries has increased more than 9% above
last year's level (1995-1996), and that the increase was particularly
noticeable among Asian countries. Of the creditors, according to the report,
Japan stands first by claiming 13.8% of the total, out of which 72% falls
under the category of loans to Asian neighbors.

I have already stated that Japan inflicted tremendous sufferings upon
present Asian business partners up until its World War II surrender. If
Japan ever wishes to be recognized by these countries as a peaceful comrade
and friend in the true sense of the word, it needs to resolve to cancel this
debt entirely. Until and unless this resolution is carried through. God will
never pardon Japan's sin of that war of invasion.

Source: Asia Tsushin (English edition)
No. 3, August 1996

Centre for Christian Response to Asian Issues
National Christian Council in Japan
2-3-18 Nishi-Waseda, Room 25
Shinjuku-ku, Tokyo 169, Japan