Deal Maker Prescription
The Japanese certainly have the money to lend and spend on American real estate and a growing desire to joint venture with their U.S. counterparts.
All that American would-be deal makers have to do is have lots of heart and patience.
That was the crux of four days of discussions among 100 delegates attending the second annual Pacific Basin Development Conference, sponsored by the Los Angeles Times, in Wailea, Hawaii.
With the expected continuation of major Japanese investments throughout the United States, particularly in Southern California, the timely sessions provided blunt advice on deal making. It also showcased the successful efforts of five Californians who have already dealt with the Japanese.
Prior to the conference, some Japanese participants had expressed hesitance about attending the meetings. Not because of its picture-book location, obviously, but because Japanese investors own a considerable number of properties throughout Hawaii, and there has been some backlash, particularly in Honolulu.
Coincidently, a newly completed study of the Hawaiian tourist and lodging industry by Kenneth Leventhal & Co., national CPA firm, found that Japanese investors now own more than half of Hawaii’s hotels, including 92% of those in the posh class.
The report also notes that the Japanese account for about 20% of all visitors to the islands and more than 30% of visitor spending. On a per trip basis, they outspend western visitors by 106%.
Two principal speakers at the conference made it very clear that once negotiations and discussions commence on a proposed joint venture, details of the project must be examined repeatedly to remove any chance of misinterpretation.
Then the discussion can broaden and turn to the design, financing, timing and management processes, again with minute attention to each detail in those categories. That’s where ultra patience comes in.
With the expected continuation of Japanese investments in the United States, Yukuo Takenaka, Los Angeles-based partner of Peat Marwick Main and the first Japanese-American to be admitted to partnership with that national accounting firm, predicted that investors can expect many joint ventures between the Japanese and Americans to be financed in the near future through syndication.
The obvious, excellent yields on their American investments will continue to attract Japanese lenders to joint ventures, Takenaka said. Once a comfortable and clear relationship has been established between the two international partners, there should be no need for continual “selling” of the American product, he added, but conceded that “good things don’t last forever.”
Economist Wolf Reitsperger of the University of Hawaii’s College of Business Management traced his involvement with Japanese philosophy and attitudes to earlier years as an engineer when he tried to deal with Japanese firms. His frustrations led him to research the rationale for what he felt were negative actions.
He found that cultural differences and approaches to business transactions were neither “bad” nor “good”--just different. He found that the two groups are at opposite poles in certain attitudes, that Americans tolerate and even invite, seemingly, a great deal of uncertainty, a factor abhorrent to the Japanese.
Other differences: While Americans are individualists, Japanese are collectivists. Work in Japan is determined by gender but far less so in America. Japanese avoid litigation, while Americans live with it.
One Japanese fable epitomizes their approach to any deal making. If the discussions fail, then the best thing to do is to leave the table the way a bird would take flight from a lake--without leaving a wake.
