Market Focus : Welsh Have New Name for the Japanese--Boss : Corporations are pumping in plenty of capital as they await the unification of the European Community in 1992. Meanwhile, British workers seem happy working for their new bosses but beneath the surface frictions are growing.
The bell rings and Neil Lindsay sprints into the cafeteria with his co-workers for a subsidized lunch of cannelloni, topped with mystery cheese sauce, before it’s time to dash back to the assembly line.
Lindsay was an unemployed steelworker when the Panasonic TV factory hired him six years ago, but he’s still not sure he likes working for the Japanese. Discipline is tough, work rules are overbearing and the daily routine is choreographed down to the minute.
“It’s very intense pressure. They’re always on us,” Lindsay said. “But it’s a job.”
Lindsay is one of approximately 40,000 people in Britain who now owe their livelihoods to Japanese investment. The number is growing steadily as corporate Japan continues pumping capital into British industry, part of a scheme to gain status as an insider before the European Community unifies its markets in 1992.
The trend was well illustrated last week when Fujitsu, Japan’s computer giant, announced plans to spend $1.3 billion on a majority stake in International Computers Ltd., Britain’s largest mainframe manufacturer. The controversial buyout would make Fujitsu the second-largest computer company in the world and give it strategic access to the EC’s markets as well as to its guarded research community.
In the countdown to 1992, Japanese direct investment in Europe is mushrooming: The $14.8 billion that Japan invested in the region last year was nearly 28 times greater than the level of 1980. And Britain got the lion’s share of it--approximately $5.4 billion.
A look at the scene in Wales--home to many of the earliest transplanted Japanese operations in Europe--may offer a preview of things to come on the Continent.
In Wales, 30 Japanese manufacturers provide an estimated 10,000 jobs, or three times as many as the moribund coal industry, which was once the backbone of the Welsh economy along with steel. The Osaka-based Matsushita Group--known in these parts by the brand name Panasonic--has been so happy with the results that it built five plants over the past 16 years and plans even further expansion.
What might have led to an unpleasant clash of work ethics has grown into a grudging synergy of economic necessity. Labor has been docile and work-stopping disputes extremely rare under a pattern of single-union agreements demanded by the Japanese.
Even ex-steelworker Lindsay, 26, said he proudly points out the Panasonic logo to his friends whenever he sees it in public.
“I see very little downside,” said Max Munday, an economist at the University of Wales in Cardiff who monitors local Japanese investment. “They’ve created a lot of jobs and the companies are very stable. These definitely are not fly-by-night operations.”
But beneath the harmonious surface lies early strains of what might soon be called Euro-friction.
As the Japanese settle in for the long haul, they are facing increasing pressures to upgrade the “quality” of their investment by moving research and development operations to Europe and by handing greater responsibility to locally hired managers.
“If the Japanese are going to successfully integrate themselves into the European industrial landscape, they are going to have to hire more local managers,” said Seamus Gillespie, an official with the EC mission to Tokyo. “There’s no evidence yet that they’ve made substantial progress.”
Matsushita, for one, has a particularly poor record in “localization.” Not a single one of its European units is headed by a European.
“For a British manager to fully understand Matsushita’s basic company policies is very difficult,” said Yuzo (Gerry) Koyama, managing director of Matsushita Electric (U.K.) Ltd., the division that grew out of the television plant established in Cardiff in 1974.
“I’m eagerly looking forward to having our first local top manager,” Koyama said. “But it will take time.”
Koyama’s deputy, plant director Colin Leahy, has been eagerly studying the Japanese language since joining the company in 1976, but he also seemed skeptical about the wisdom of entrusting top responsibilities to a Welshman.
“It’s not just the language barrier,” Leahy said. “The policies and philosophies of our founder, Mr. (Konosuke) Matsushita, are quite alien to most European thinking. Not only to understand them but to feel a responsibility to adapt them to the situation in Europe--that is a very difficult task.”
Lindsay, the assembly line worker, agreed. “It wouldn’t be a Japanese company any longer if we had a British managing director,” he said.
By many accounts, the Japanese and the English feel they have much in common. This may partly explain why Japanese investors have tended to cluster in the British Isles since 1972, when Japanese zipper-maker YKK became the first.
Indeed, both countries once had empires (although Britain’s lasted considerably longer), both peoples are known for their courtesy and reserve, and both societies have a strong attachment to the game of golf.
“I suppose there is an element of conservatism in both our island races,” observed John Alderson, a British diplomat in Tokyo.
British society is comfortable enough that about 30,000 Japanese expatriates live in Greater London, which now has the obligatory sushi restaurants and karaoke sing-along bars, as well as five exclusively Japanese primary and secondary schools. An estimated 10,000 Japanese live scattered around the rest of Britain.
But signs are emerging that Britain may stand to lose its dominance as Japan’s door to the EC. Its share of Japanese investment in Europe declined slightly last year as more projects spread out to the Continent. Investors may still shun the high wages of West Germany, but they appear intrigued by the opening of Eastern Europe and want to get close to the center.
To cope with the challenge, Britain’s central investment agency and its regional development authorities are escalating promotional efforts. For the regional agencies--many of which already have offices in Tokyo--competition is keen, fought with thick brochures, seminars and sometimes unusual services.
Welsh Development International, the investment-seeking agency based in Cardiff, is focusing on the “second wave” of Japanese medium-sized components suppliers, and even courting some of the big South Korean conglomerates. The agency will organize its first golf tournament for Japanese expatriates in Wales in September.
“Part of our pitch is that we don’t bring you here and forget about you,” said David Langford-Jones, the agency’s manager for the Far East. “After-sales is very important.”
Golf is enough of an obsession for the Japanese that apocryphal tales abound of how local development authorities have proffered golf club memberships--in addition to standard tax breaks--as inducements to Japanese companies looking for investment sites.
Everyone denies this, but it may be worth noting that Scotland, original home of golf, lately is a fierce rival to Wales and the various regions of England for new Japanese investment. Officials in Derby reportedly offered Toyota the exclusive use of an 18th-Century mansion adjacent to a golf course as bait for its $1.2-billion auto factory. That report could not be confirmed.
Besides, if a Japanese company really wanted its executives to have golf privileges, it could easily buy the course. Japanese interests have acquired a number of Britain’s more prominent country clubs in recent years, sometimes raising a few hackles.
One non-controversial links purchase was in Wales. In 1988, Sanyo Oil Co. bought “The Rolls of Monmouth,” a golfing estate that once belonged to automobile pioneer Charles Stewart Rolls. Sanyo plans to develop the property into an “international” resort.
Anti-Japanese sentiment in Britain has been relatively subdued, if expressed at all. A notable exception was when Emperor Hirohito was on his deathbed in late 1988 and the tabloid press pounced. One newspaper branded the emperor a war criminal and wished him a speedy journey to hell, evoking a horrified protest from the Foreign Ministry in Tokyo.
The prevailing image of Japan is a positive one, however. This is particularly true when it comes to perceived quality in consumer products, which inspired Dixons, a London-based retail chain, to devise bogus Japanese names for electronics goods made either locally or in Turkey, Hong Kong and South Korea.
Dixons sells “Matsui” and “Seisho” brand televisions, videocassette recorders and microwave ovens after ordering them from “a variety of sources, not necessarily Japanese,” said spokeswoman Nicola Marsden.
“We’re using these names to appeal to consumers who believe that goods made in the Far East are technically advanced,” she said.
Matsushita’s Koyama--whose Panasonic brand name would hardly sound Japanese to the uninitiated--said the company “felt odd” when it first heard about the ersatz Japanese televisions on the market.
“For a period, there was some confusion in the market, but now consumers know the difference,” Koyama said. “Once consumers know the quality level of these products, they won’t buy them anymore.”
Koyama recently hosted at his factory a fact-finding delegation from Samsung, the South Korean conglomerate that makes many of the same consumer electronics goods as Matsushita, among other products.
“I told them Wales is a good place. I wasn’t dishonest with them,” Koyama said. “But I didn’t tell them they were welcome here either.”
Japan’s Growing Taste for Europe
Throughout Britain, about 40,000 people owe their livelihoods to Japanese investment. The number is growing steadily as corporate Japan continues pumping capital into Europe to make inroads before the European Community unifies its markets in 1992. In Wales, 30 Japanese manufacturers provide an estimated 10.000 jobs, or three times as many as the coal industry, which was once the backbone of the economy along with steel.
