Britain Becomes Japan’s Favored Outpost in Europe

Thirty years ago, when World War II memories were still fresh, Japan was a four-letter word in this country.

Except for a few sales representatives, Japan had no economic presence here.

It also had minimal human presence. Nobody knows for certain the number of Japanese who then lived in Britain because the best official figure--1,497--also included Britons born in Japan.

But no Japanese could have felt at ease.

Japan’s forces had routed the British from East Asia, savaged Asian cities, abused civilian internees and beheaded British prisoners of war. Few Britons were prone to forget or forgive. Even Germans received more empathy.

And from prewar days, Britons still associated Japan with the dumping of cheap and inferior products.

“In our minds, the Japanese were guilty of atrocity in war and shoddy merchandise in peace,” said George Bull, a British author who was foreign editor of the Financial Times in the late 1950s.

In the three decades since then, Japan has supplanted Britain as No. 2 among the Free World’s economies, almost single-handedly has demolished British shipbuilders and steelmakers as world players and has far surpassed British efforts in a wide range of technologies.

And now, Japanese corporations have made Britain their favored outpost in Europe.

With an outlay of $2.8 billion--about one-third of Japan’s direct investment in all of Europe--Japanese companies have established 44 manufacturing subsidiaries in the United Kingdom, most in the past decade or so. And the flow of capital is continuing.

Major Representatives

In the City, London’s equivalent of Wall Street, no fewer than 66 Japanese financial institutions have set up shop, including Japan’s “Big Four” securities houses, Nomura, Daiwa, Yamaichi and Nikko. From a two-man operation in 1964, Nomura has grown into a 310-employee London operation. The Bank of Tokyo has more than 300 employees.

About 20,000 Japanese reside in Britain, nearly twice as many as five years ago, and the number is growing.

In Milton Keynes, a new town for high-tech industries outside London, the Japanese plan to build a school for as many as 1,200 children of Japanese executives based in Britain and elsewhere in Europe.

Not only have Japanese penetrated the British market with consumer products ranging from television sets and videocassette recorders to cars, fishing tackle and ophthalmic lenses, but Japanese technology and management know-how also have won admiration in the ailing British economy.

Shoichi Saba, president and chief executive of Japan’s Toshiba Corp., was named last year to the board of Imperial Chemical Industries, Britain’s largest manufacturing company, the first Japanese on a major British board.

In Britain, as well as on the continent--where British car makers once saw their future--Toyotas and Nissans are a common sight. In the first nine months of this year, Japanese producers sold a record 1 million cars in West European markets, nearly 21% more than in the same period of 1985.

This year, the ailing British car industry received a shot in the arm from the opening of a Nissan car plant in the depressed Northeast and a joint venture between the Austin Rover group and Honda.

Attracted to Each Other

Obviously, Japan, with cash from its huge world trade surplus to recycle, and Britain, desperate for investment, find each other attractive.

Britain offers a major market (55 million people), as well as access to the rest of the European Communities--which has begun to impose tighter trade restrictions on Japanese imports even as its members have succeeded in attracting Japanese subsidiaries.

“We think English is a major factor (in Britain’s favor),” said Colin Bailey, a Department of Trade and Industry official. “The Japanese have learned English because it is the universal business language, and they feel more at ease here.”

The Japanese have clustered most of their British factories in Wales, Scotland, the northeast of England (paradoxically, among areas hardest hit by Japanese competition in shipbuilding and steel) and in Milton Keynes. In many cases, the British government offered the Japanese firms cash subsidies to locate there.

From all these locations, satellite communication with home offices in Japan is excellent. Executives can fly non-stop from London to Tokyo.

But the Japanese and British blend strangely.

Superficially they have much in common: Both are island nations with maritime, monarchical, class system and mercantile traditions. In every other sense they are far apart.

Sense of Family

In Japan, something like a sense of family tends to exist between management and the work force, reflecting, some experts say, a desire for harmony rooted in the Confucian ethic.

In British labor relations, a tradition of guerrilla warfare exists. (During the past 30 years, industrial disputes have cost Britain 242 million work days; Japan has lost only 106 million, although it has twice the population--and only half the strikes involved manufacturing).

Although strikes are rare in Japanese-owned British plants, the Confucian ethic comes to less than full flower.

Obviously frustrated Japanese managers are polite about it.

“I would put it this way,” said Suehiro Nakamura, managing director of Sony’s color television factory in Bridgend, Wales, which employs 1,000 Britons and 33 Japanese. “British workers need more supervision than Japanese workers, and they get tired more quickly.”

In Britain’s corporate world, Japanese investment is seen as a welcome stimulant because it is investment, not necessarily because it is Japanese. “We also welcome investment from the United States and elsewhere,” said Sir Arthur Norman, former president of the British Confederation of Industries and chairman of De La Rue, a securities printing and electronics company.

Healthy Impact Seen

“The Japanese have been built into being gods and people ask, ‘Who can compete with the Japanese?’ ” Norman said. “But we bloody well can compete with the Japanese. They have a healthy impact on us because they are efficient and they make us more competitive.

“If you’re going to be in the world, you must be part of it and not be cozy and comfortable in a protected home environment.”

Some Britons do not find the Japanese all that daunting.

“The Japanese are superb at development but weak on invention,” said Sir John Harvey-Jones, the Imperial Chemicals Industries chairman.

“In chemicals we can beat the spots off them because our business depends more on invention than on development,” he said. “But there is no reason for British individuality not to triumph in other fields, why my robot should not be as good as a Japanese robot.”