VIEWPOINTS : Closing ‘Communications Gap’ Can Ease U.S.-Japan Trade Gap

The dramatic increase in America’s trade deficit with Japan has been the subject of much study and debate. However, most analyses have focused on problems specific to one sector of the economy, such as last week’s semiconductor negotiations.

In taking this approach, we neglect a deeper problem that underlies all others: the “communications gap” between the United States and Japan.

Currently, a lack of understanding inhibits the cooperation and exchange of ideas needed to encourage mutually beneficial trade relations. Executives on both sides of the communications gap claim to be misunderstood by their counterparts.

Americans argue that the Japanese have not done enough to promote access to their markets and that this failure has seriously jeopardized relations between the two countries. It is, to these businessmen, a crisis that requires the Japanese to respond as they did to the political and economic crisis of 1945, by making some very fundamental changes. In particular, they say, the Japanese must work to overcome the nationalist outlook that has made it so difficult for foreigners to sell their goods in Japan.

For their part, Japanese executives acknowledge that theirs is a particularly homogenous society but deny that they are in any way subverting what they regard as a most vital alliance with the United States. The Japanese argue that they have opened markets, lowered tariffs and done everything else in their power to encourage the success of U.S. business in Japan. The problem, they say, is not with Japan but with American companies that simply are not very adept at penetrating Japanese markets.

Despite these conflicting perceptions, one thing is clear: The Japanese do have an advantage over Americans. They understand us a lot better than we do them.

I witnessed a striking instance of this four or five years ago when the public affairs officer of a major Japanese company mesmerized his American audience with an articulate and informed account of how businesses should deal with the intricacies of the California state legislative process. More recently, the New York Times reported that the Japanese pay about $50 million a year to Washington firms alone for legal, public relations and other advice. The Japanese have learned to understand our system and adopt their business practices to it.

In contrast, American businessmen tend to rely almost exclusively on our embassy officials in Tokyo for information concerning Japanese government. While the American Chamber of Commerce in Japan and other organizations are working to change this, the failure of American businessmen to capture and apply detailed information about Japanese society limits their ability to profit from a deeper understanding of the Japanese governmental system.

This particular failing is but one instance of a more widespread ignorance on the part of U.S. business that widens the communications gap. A recent study involving 108 major U.S. corporations found that corporate leaders are reluctant to pursue a “Japanese strategy,” even though they are fully aware of how Japanese businessmen use their knowledge of American culture, business practices and the English language to succeed at trade in America.

The study indicates that corporations lack a systematic approach for recruiting people trained in the study of Japanese language and culture. U.S. business has very little contact with specialized Japanese studies programs in our universities. Even those businessmen willing to adopt alternative organizational and marketing strategies in Japan still don’t know how to institute such a transition.

To be fair, the Japanese must share some of the blame for the communications gap. Americans in Japan are institutionally barred from access to government decision-making and policy development. The Japanese have acknowledged the problem and claim to have instituted a new, more open policy. Nevertheless, for Americans to obtain an intimate look at Japanese decision-making is still very difficult, if not impossible.

What, then, can be done to bridge the communications gap?

American businessmen have started to reassess the degree of cultural expertise needed to deal effectively with business in Japan. They must continue to do so. They must also be prepared to take a longer-term view of their Japanese investments--in this the Japanese are right, we do despair too quickly. The problem is that most American companies require their Far Eastern, Pacific or Japanese operations to show tangible progress within a fiscal year, if not a quarter.

American companies should instead follow the lead of Seiko Corp. in China. There, the Japanese company was willing to endure several dry years until the Chinese gained some disposable income and started buying watches. Now Seiko has established itself as the market leader. Seiko adapted its business strategy to the market instead of trying to force the market to conform to inappropriate business strategy.

America must also get its own house in order if its businesses are to be competitive in Japan.

The Baker initiative, a sounder dollar-yen relationship and the maintenance of lower interest rates would all be moves in the right direction. But we must stop overreacting to the “threat posed by Japan.” Congress should soft-pedal its protectionist rhetoric of the past few years. Even the most vocal supporters of import restrictions and higher tariffs know that this Administration is not likely to allow strong protectionism to flourish.

Instead of debating each other here, with no productive result, we must continue to pressure the Japanese in a wise and discriminating manner. We should adopt their style, to a certain degree, to gain advantage in the political arena as we should in business. We should negotiate firmly but without the public confrontation that they abhor, which forces them to solidify their position.

Of course, the Japanese themselves have plenty of work to do. Their government needs to provide greater stimulation to the economy. Capital markets must be further liberalized. Social infrastructures that meet these new conditions must be encouraged, thereby enabling Japan to integrate itself with a world from which it can no longer be isolated. Most importantly, the Japanese still need to allow foreign companies greater access to Japanese markets.

One bridge over the gap, which I favor strongly, is through joint ventures. If American companies can be made more competitive--by putting more time and money into research and development and through some changes in U.S. antitrust laws--cooperation on equal terms might prove both possible and fruitful.

Finally, we should take advantage of the significant new role of the communications industries in narrowing the gulf between our two societies. Public communication, especially through the news media, is becoming instrumental in policy formulation. The increased exposure of Japan-U.S. public affairs and business dealings has put pressure on policy-makers both here and in Japan to act on important problems. These actions--or rather, reactions--may begin to soften once exposed to further public scrutiny, which will reveal that hard-line ideological positions on both sides are unproductive. If we are attentive to this process, and use communications well, the Japanese might be led to change certain longstanding habits, and so might we.