Where the Land of the Rising Sun meets the Aztec Sol , the future is very bright. At least that's the message that Mexican officials hope Japanese Prime Minister Toshika Kaifu will take back to Japanese investors this week from his visit to Mexico.
With its new regulations liberalizing foreign investment, the administration of President Carlos Salinas de Gortari has been aggressively courting Japanese investment in tourism, petrochemical, assembly plant and other industries.
Each month, groups of Japanese businessmen visit Mexico to tour the beaches of Cancun and the Baja California peninsula, or the industrial cities of Monterrey and Tijuana. While encouraged by the government's spirit of free enterprise, Japanese bankers and businessmen so far have been cautious about launching projects in Mexico.
"Although the investment environment is more favorable, the Japanese investor is taking a wait-and-see attitude," said Masami Tsutsumimoto, representative of the Bank of Tokyo in Mexico.
"The general feeling is that even the new investment rules are still not that clear," said Rafael Valenzuela, spokesman for the Japanese External Trade Organization in Mexico. "There are gaps in the interpretation."
Valenzuela added, however, that he expects a boost to Japanese investment from Kaifu's visit beginning today.
"Naturally, this will strengthen ties between the two countries. It sends a signal to investors," Valenzuela said of the visit.
In addition to the economic attraction, President Salinas seems to have a personal interest in Japan. The Harvard-educated Salinas has his two children in the Japanese-Mexican Lycee, a school that he has said he selected for the Japanese emphasis on discipline and design.
Salinas himself visited Japan in 1986 as Budget and Planning Minister under the administration of President Miguel de la Madrid. It was there, according to a government source, during a meeting with the Japanese Chamber of Commerce, that Salinas realized the potential of Japanese investments and of the Japanese market for Mexico.
Since then, Salinas has publicly emphasized that Mexico is a country on the Pacific and should be incorporated into the Pacific Rim economy.
Japan is the fourth-largest investor in Mexico, after the United States, Britain and West Germany. Japanese investments in Mexico nearly doubled from 1983 to 1988, to $1.3 billion.
Investors are attracted by Mexico's raw materials, its inexpensive labor, with a minimum wage of about $3 a day, and, most important, by its proximity to the United States. Mexico also provides a door to the rest of Latin America.
But still, Japanese investment represents only 5.5% of foreign investment in Mexico, and businessmen say there are many drawbacks--one of which is the United States. Japan views Mexico as the United States' back yard and does not want to add to U.S.-Japanese trade problems with friction over Mexico.
Considers United States
Japan holds 17% of Mexico's nearly $100-billion foreign debt and doubled its membership on the advisory committee of banks that negotiated an agreement to reduce Mexico's debt earlier this year. But the role of the Japanese in that negotiation was largely to support the United States, according to Japanese and Mexican sources. Under the final agreement, Japan provided $2 billion toward a fund to secure payment on the reduced loans.
"The Japanese government would like to help Mexico, but always considering the U.S. position and making good relations with the United States," said Yoshikazu Kameyama, representative of the Long-Term Credit Bank of Japan in Mexico.
"Japanese banks and businessmen still feel it is not easy to develop in Mexico except in maquiladoras (assembly plants), and these pose some conflict between Japan and the United States, so we promote them very carefully," he said.
Only about 50 of the approximately 1,600 foreign-owned assembly plants in Mexico are Japanese, but those 50, situated along the U.S.-Mexico border, export all of their production to the United States. Japanese businessmen say they fear U.S. labor and producers may someday fight for trade barriers against Japanese imports from the plants.
Kameyama said his bank is bullish on Mexico and is considering financing a hotel development in Cancun, a joint venture between the Japanese International Development Organization and Mexican investors.
He said he also will hold a seminar in Tokyo this fall to explain the new Mexican regulations permitting 100% foreign ownership in some industries and minority foreign investment in industries that previously were off-limits to outsiders.
Most Do Even More
The seminar is to pave the way for a visit by Mexican Secretary of Commerce and Finance Jaime Serra Puche and Tourism Secretary Hank Gonzalez to Tokyo to promote investment in Mexico. The officials are stressing that Mexico also has deregulated the trucking industry to bring down costs and opened the production of most petrochemicals to foreigners.
But other investors and analysts say the Mexican government will have to do even more if it hopes to lure investment away from Japan's back yard--Thailand, Taiwan, Singapore, Malaysia and Indonesia.
Japanese analysts say there are still many drawbacks to Mexico, including a lack of quality control on raw materials such as iron and copper, a shortage of mid-level management and skilled labor, and problems with the Mexican industrial infrastructure.
The Mexican mail and telephone systems also leave much to be desired, Japanese businessmen say. In many areas roads and water supply are insufficient. Although the Salinas government has broken many unions, the Japanese feel that labor is still too strong in areas in which they might invest, such as in fishing and petrochemicals.