We Should Listen to Japanese, Trade Expert Says : Commerce: The State of California's Jim Vaughan, who is leaving Tokyo, also says the Japanese should be more open-minded.


As California's top trade official in Japan, Jim Vaughn has participated in more than 50 California wine promotions. So many, in fact, that his 12-year-old daughter, Shannan, once answered a question about what her dad did for a living this way: "He drinks a lot of California wine."

In between wine tastings, Vaughn's role as the state's top pitchman here has been expansive: official meetings with 10,000 Japanese and Americans, travels to 12 Pacific Rim countries, visits to 30 of the country's 48 prefectures (similar to states.) He has also conducted 50 investment seminars in Japan.

By his reckoning, he has provided "significant" assistance to 70 Japanese companies that made direct investments in California worth $2 billion and 8,000 jobs. And he has helped California firms sign initial contracts with Japanese companies to sell $150 million worth of goods ranging from medical equipment to T-shirts.

Now, five years after opening the California State Office of Trade and Investment, he is heading home.

What has Vaughn gleaned from such transpacific experience? Among his parting shots:

"Americans talk too much and don't listen. . . . The Japanese markets are open, but the minds are not totally."

Straight talk is a hallmark of the gangly, bearded 43-year-old Vaughn. Sometimes it gets him in trouble. A few years ago, he told a reporter that Silicon Valley electronics firms weren't trying hard enough to penetrate the Japanese market. They descended on the California governor's office in droves, demanding his resignation.

But Vaughn emerged with both his political hide--and his candor--intact.

He still makes these kinds of outspoken observations about Americans, for example:

"Too many Americans come over here and have a meeting with a Japanese for one hour. The American talks for one hour, then says it was a great meeting.

"Yeah, I say, but did you learn anything? And the American says, no, they didn't say anything . . . And I tell them, that's because you didn't give them a chance. Japanese won't interrupt. They'll sit there and put up with it, and in the end nothing's been accomplished. You should try to learn what the Japanese is interested in. No. 1, it gives them the impression you care about what they think. And No. 2, you gain some of your own market intelligence."

And what about the Japanese?

"When I first came here, I thought that Japan was open from an American sense. But what I realized was that the mentality of Japanese business and government is not as open as the official statistics and documents on tariffs and quotas suggest," Vaughn said.

"There is a very strong feeling among Japanese to continue to do business with the people they've always done business with, and in that definition that's mostly other Japanese."

As one example, Vaughn said he once asked an official of a Japanese consumer electronics firm if he would ever consider using a California bank to finance its activities. The official immediately said no. Even if the interest rate were 30% lower? Still he said no.

The Japanese executive then explained that in 1898 his company's only manufacturing plant burned down in Yokohama. Only one banking institution was willing to lend the money to rebuild, and "we will never forget that. We will always bank with that bank," the executive told Vaughn.

That loyalty has worked for Vaughn too. After he did several favors for a Japanese retail chain store, it reciprocated by granting Vaughn's request to display a California ice cream in the stores. This came after the ice cream maker himself had failed to make headway with the company.

"The Japanese retailer felt a tie and obligation to the state of California, and that relationship was more important than the product."

Although such loyalty is admirable, Vaughn said, "it sure makes it impossible for a newcomer with any price and quality to break in."

Vaughn said the good news for California firms is that a growing number of smaller Japanese companies are attempting to trade directly with the United States. In the past, they relied on major trading firms--which would not often do business with the small- and medium-size firms that make up 80% of California companies--to act as go-betweens.

And more and more California firms are trying to export to Asia, he said. When he first took the job, he split his time about equally between drumming up Japanese investment in California and helping the state's firms sell products in Japan. Now the ratio has changed to 35% for investment, 65% for trade.

Among other things, Vaughn's office helps with introductions, market information, economic statistics and trade shows. As chief state promoter, he has donned an apron and passed out free samples of California peaches at supermarkets, and he has hosted a quiz show for "California Week" in Fukui prefecture near the Sea of Japan.

The former California Department of Commerce official regards his biggest success as helping persuade NEC to choose Roseville, near Sacramento, as the site for a semiconductor factory. The investment has grown to $1 billion, providing 2,000 jobs.

One of his biggest failures: wild rice. Through a loophole in the Japanese law, wild rice is exempt from the nation's virtual import ban on rice. But all of his efforts to get the Japanese to buy it have come to naught.

"They look at it in shock and say, 'It's black.' They just can't get beyond the color."

His most embarrassing moment came when he brought then-Gov. George Deukmejian to a welcoming dinner in Tokyo but could not get up from the table because someone had mistakenly taken his shoes. Finally, he had to go home wearing hotel slippers--all the while worrying about what kind of reputation he had left after his first official event with the state's chief executive.

His most frightening moment: facing 1,000 rice growers in Akita to give a speech on why Japan should open its rice market.

His most incomprehensible event: the "Sister Bridge" relationship between the Golden Gate Bridge and the Seto Ohashi Bridge near the island of Shikoku. "Why two bridges want to be related, I don't understand," he said. But he attended the event like a trouper anyway.

And his biggest difficulty: "Controlling my temper," Vaughn said. "I don't have a bad temper, but in Japan it's very bad form to show any negative emotion. Sometimes as an American, I feel the need to say, "That's crazy.' But I can't. I have to keep smiling."

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