Rising Sun

Page 27

"We say it doesn't matter: our companies have moved on to color. But the Japanese government starts an intensive program to develop a color-television industry. Once again, Japan licenses American technology, refines it in their protected markets, and floods us with exports. Once again, exports drive out American companies. Exactly the same story. By 1980 only three American companies still make color TVs. By 1987, there's only one, Zenith."
"But Japanese sets were better and cheaper," I said.
"They may have been better," Ron said, "but they were only cheaper because they were sold below production cost, to wipe out American competitors. That's called dumping. It's illegal under both American and international law."
"Then why didn't we stop it?"
"Good question. Especially since dumping was only one of many illegal Japanese marketing techniques. They also fixed prices: they had something called the Tenth-Day Group. Japanese managers met every ten days in a Tokyo hotel to set prices in America. We protested, but the meetings continued. They also pushed distribution of their products by collusive arrangements. The Japanese allegedly paid millions in kickbacks to American distributors like Sears. They engaged in massive customs fraud. And they destroyed the American industry, which could not compete.
"Of course, our companies protested, and sued for relief - there were dozens of cases of dumping, fraud, and antitrust brought against Japanese companies in federal court. Dumping cases are usually resolved within a year. But our government provided no help - and the Japanese are skilled foot-draggers. They paid American lobbyists millions to plead their case. By the time the suits came to trial twelve years later, the battle was over in the marketplace. And of course all during this time, American companies could never fight back in Japan. They couldn't even get a foot in the door in Japan."
"You're saying the Japanese took over the television industry illegally?"
Ron shrugged. "They couldn't have done it without our help," he said. "Our government was coddling Japan, which they saw as a tiny emerging country. And American industry was perceived as not needing government help. There's always been a strain of antibusiness sentiment in America. But our government never seemed to realize, it's just not the same here. When Sony develops the Walkman, we don't say, 'Nice product. Now you have to license it to GE and sell it through an American company.' If they seek distribution, we don't tell them, 'I'm sorry, but American stores all have preexisting arrangements with American suppliers. You'll have to distribute through an American company here.' If they seek patents, we don't say, 'Patents take eight years to be awarded, during which time your application will be publicly available so that our companies can read what you've invented and copy it free of charge, so that by the time we issue a patent our companies will already have their own version of your technology.'
"We don't do any of those things. Japan does all of them. Their markets are closed. Our markets are wide open. It's not a level playing field. In fact, it's not a playing field at all. It's a one-way street.
"And by now we have a defeatist business climate in this country. American companies got their asses handed to them in black-and-white television. They got their asses handed to them in color television. The U.S. government refused to help our companies fight illegal Japanese trade practices. So when Ampex invented the VCR, they didn't even try to make a commercial product. They just licensed the technology to Japan and moved on. And pretty soon you find that American companies don't do research. Why develop new technology if your own government is so hostile to your efforts that you won't be able to bring it to market?"
"But isn't American business weak and badly managed?"
"That's the standard line," Ron said. "As promoted by the Japanese and their American spokesmen. It's only with a few episodes that people ever glimpsed how outrageous the Japanese really were. Like the Houdaille case. You know that one? Houdaille was a machine-tool company that claimed its patents and licenses were being violated by companies in Japan. A federal judge sent Houdaille's lawyer to Japan to gather evidence. But the Japanese refused to issue him a visa."
"You're kidding."
"What do they care?" Ron said. "They know we'll never retaliate. When the Houdaille case came before the Reagan administration, it did nothing. So Houdaille got out of machine tools. Because nobody can compete against dumped products - that's the whole point of doing it."
"Don't you lose money if you dump?"
"For a while, yes. But you're selling millions of units, so you can refine your production lines, and get your costs down. A couple of years later, you really can make the products for a lower cost. Meanwhile you've wiped out the competition and you control the market. You see, the Japanese think strategically - they're in for the long haul, for how things will look fifty years from now. An American company has to show a profit every three months or the CEO and the officers will be out on the street. But the Japanese don't care about short-term profits at all. They want market share. Business is like warfare to them. Gaining ground. Wiping out the competition. Getting control of a market. That's what they've been doing for the last thirty years.
"So the Japanese dumped steel, televisions, consumer electronics, computer chips, machine tools - and nobody stopped them. And we lost those industries. Japanese companies and the Japanese government target specific industries, which they take over. Industry after industry, year after year. While we sit around and spout off about free trade. But free trade is meaningless unless there is also fair trade. And the Japanese don't believe in fair trade at all. You know, there's a reason the Japanese love Reagan. They cleaned up during his presidency. In the name of free trade, he spread our legs real wide."
"Why don't Americans understand this?" I said.
Connor laughed. "Why do they eat hamburgers? It's the way they are, khai."
From the newsroom, a woman called, "Somebody named Connor here? Call for you from the Four Seasons Hotel."
Connor glanced at his watch and stood up. "Excuse me." He walked out into the newsroom. Through the glass I saw him talking on the phone, making notes.
"You realize," Ron said, "it's all still going on. Why is a Japanese camera cheaper in New York than in Tokyo? You ship it halfway around the world, pay import duty and distribution costs, and it's still cheaper? How is that possible? Japanese tourists buy their own products here because they're cheaper. Meanwhile, American products in Japan cost seventy percent more than here. Why doesn't the American government get tough? I don't know. Part of the answer is up there."
He pointed to the monitor in his office; a distinguished-looking man was talking above a running tickertape. The sound was turned low. "You see that guy? That's David Rawlings. Professor of business at Stanford. Specialist in the Pacific Rim. He's a typical - turn that up, will you? He might be talking about MicroCon."
I turned the knob on the set. I heard Rawlings say: "...think American attitudes are completely irrational. After all, Japanese companies are providing jobs for Americans, while American companies are moving jobs offshore, taking them away from their own people. The Japanese can't understand what the complaints are about."
Ron sighed. "Typical bullshit," he said.
On the screen, Professor Rawlings was saying, "I think the American people are rather ungrateful for the help our country is getting from foreign investors."
Ron laughed. "Rawlings is part of the group we call the Chrysanthemum Kissers. Academic experts who deliver the Japanese propaganda line. They don't really have a choice, because they need access to Japan to work, and if they start to sound critical, their contacts in Japan dry up. Doors are closed to them. And in America, the Japanese will whisper in certain ears that the offending person is not to be trusted, or that their views are 'out of date.' Or worse - that they're racist. Anybody who criticizes Japan is a racist. Pretty soon these academics begin to lose speaking engagements and consulting jobs. They know that's happened to their colleagues who step out of line. And they don't make the same mistake."
Connor came back into the room. He said, "Is there anything illegal about this MicroCon sale?"
"Sure," Ron said. "Depending on what Washington decides to do. Akai Ceramics already has sixty percent of the American market. MicroCon will give it a virtual monopoly. If Akai were an American company, the government would block the sale on antitrust grounds. But since Akai is not an American company, the sale isn't scrutinized closely. In the end, it'll probably be allowed."
"You mean a Japanese company can have a monopoly in America but an American company can't?"
"That's the usual outcome these days," Ron said. "But American laws often promote the sale of our companies to foreigners. Like Matsushita buying Universal Studios. Universal's been for sale for years. Several American companies tried to buy it, but couldn't. Westinghouse tried in 1980. No deal: violates antitrust. RCA tried. No deal: violates conflict of interest. But when Matsushita came in, there were no laws against it at all. Recently our laws changed. Under present law, RCA could buy Universal. But back then, no. MicroCon is just the latest example of crazy American regulations."
I said, "But what do American computer companies say about the MicroCon sale?"
Ron said, "American companies don't like the sale. But they don't oppose it, either."
"Why not?"
"Because American companies feel over-regulated by the government already. Forty percent of all American exports are covered by security regulations. Our government doesn't allow our computer companies to sell to Eastern Europe. The cold war is over but the regulations still exist. Meanwhile the Japanese and Germans are selling products like mad. So the Americans want less regulation. And they see any attempt to block the MicroCon sale as government interference."
I said, "It still doesn't make sense to me."
"I agree," Ron said. "The American companies are going to get killed in the next few years. Because if Japan is the sole source of chip-making machines, they're in a position to withhold the machines from American companies."
"Would they do that?"
"They've done it before," Ron said. "Ion implanters and other machines. But the American companies can't get together. They squabble among themselves. And meanwhile the Japanese are buying high-tech companies at the rate of about one every ten days. For the last six years. We're being disemboweled. But our government doesn't pay attention, because we have something called CFIUS - the Committee on Foreign Investment in the United States - that monitors the sale of high-tech companies. Except CFIUS never does anything. Of the last five hundred sales, only one was blocked. Company after company gets sold, and nobody in Washington says boo. Finally, Senator Morton makes a stink, and says 'Wait a minute here.' But nobody's listening to him."
"The sale is going through anyway?"
"That's what I heard today. The Japanese PR machine is hard at work, cranking out favorable publicity. And they are tenacious. They are on top of everything. I mean everything - "
There was a knock at the door, and a blond woman stuck her head in. "Sorry to disturb you, Ron," she said, "but Keith just got a call from the Los Angeles representative for NHK, Japanese national television. He wants to know why our reporter is bashing Japan."
Ron frowned. "Bashing Japan? What's he talking about?"
"He claims our reporter said on air, 'The damn Japanese are taking over this country.' "
"Come on," Ron said. "Nobody would say that - on air. Who's supposed to have said that?"
"Lenny. In New York. Over the backhaul," the woman said.
Ron shifted in his chair. "Uh-oh," he said. "Did you check the tapes?"
"Yeah," she said. "They're tracing the download now in the main control room. But I assume it's true."
"Hell."
I said, "What's the backhaul?"
"Our satellite feed. We pick up segments from New York and Washington every day, and replay them. There's always about a minute before and after that isn't aired. We cut it out, but the raw transmission can be picked up by anybody with a private dish who wants to hunt for our signal. And people do. We warn the talent to be careful what they do in front of a camera, But last year, Louise unbuttoned her blouse and miked herself - and we got calls from all over the country."
Ron's phone rang. He listened for a moment, and said, "Okay. I understand," and hung up. "They checked the tape. Lenny was talking on camera before the feed, and he said to Louise, 'The goddamn Japanese are going to own this country if we don't wise up.' It wasn't on air, but he did say it." He shook his head ruefully. "The NHK guy knows we didn't run it?"
"Yeah. But he's saying it can be picked up and he's protesting on that basis."
"Hell," Ron said. "So they even monitor our backhaul. Jesus. What does Keith want to do?"
"Keith says he's tired of warning New York talent. He wants you to handle it."
"Does he want me to call the NHK guy?"
"He says use your judgment, but we have a deal with NHK for the half-hour show we send them every day and he doesn't want that risked. He thinks you should apologize."
Ron sighed. "Now I have to apologize for what wasn't even on air. God damn it." He looked at us. "Guys, I have to go. Was there anything else?"
"No," I said, "Good luck."
"Listen," Ron said. "We all need good luck. You know NHK is starting Global News Network with a billion dollars in capitalization. They're going to take on Ted Turner's CNN around the world. And if past history is any guide..." He shrugged. "Kiss the American media goodbye."
As we were leaving, I heard Ron say on the phone, "Mr. Akasaka? Ron Levine, over here at AFN. Yes, sir. Yes, Mr. Akasaka. Sir, I wanted to express my concern and deep apologies about what our reporter said over the satellite - "