U.S. Envoys Concerned Over Asia : Trade: American industry is being outflanked and outsmarted by the competition, a team of ambassadors says.

A team of American ambassadors to Southeast Asian capitals has come home to sound the alarm: U.S. industry is being outflanked and outsmarted by the competition in Asia, and if it doesn’t act soon it will miss strategic opportunities.

At stake is more than commercial interest, they suggest. As the U.S. military begins to trim forces in the region and prepares to withdraw from the Philippines, strong economic ties will be essential in maintaining American leadership in Asia. And tapping into the dynamic growth of the region may make the difference in future national competitiveness.

“Ultimately, we’re talking about preserving industries, jobs and economic growth in the United States,” said Paul M. Cleveland, the U.S. ambassador to Malaysia. “Overseas business enterprise is the first line of American security.”

Cleveland and three other American envoys from Singapore, Bangkok and Manila made an extraordinary appeal to a gathering of California business people here last week, urging greater investment and export efforts in Asia to help stave off a grim scenario of American decline.

In doing so they stepped out of their traditional diplomatic roles and demonstrated how U.S. foreign policy is increasingly emphasizing pragmatic economic issues in the post-Cold War era. Government-sponsored investment seminars and international trade fairs are old hat, but intervention by top American envoys is something new.

Thursday’s full-day symposium was a pilot program for an apparently unprecedented barnstorming campaign that will take the ambassadors to five American cities in March.

“What I’m really trying to do is goose everybody and say ‘Let’s get out there and compete,’ ” said Cleveland, a seasoned career diplomat who has served as ambassador to New Zealand and deputy chief of mission to Seoul.

The idea for the road trip came earlier this year, when Cleveland was commiserating over breakfast with his counterpart from Singapore. They believed that America seemed to be missing its cue, particularly in the region covered by the Assn. of South East Asian Nations--which groups Indonesia, Thailand, Malaysia, the Philippines, Singapore and Brunei and has a population of about 325 million people.

“Japan recently replaced the United States as Southeast Asia’s top trading partner, and super-aggressive Korea and Taiwan are not far behind,” Robert D. Orr, ambassador to Singapore, told the audience. “It’s no fun for us at Embassy Singapore to watch the United States cede market after market to businesses from other countries.”

Indeed, raw data shows that since the mid-1980s, when currency realignment nearly doubled the value of the yen against the dollar and gave Japan a windfall of hard cash, investment in ASEAN has been dominated by Japanese manufacturers. The trend was global, as Japan became the world’s No. 1 creditor and the United States sank to become the top debtor nation.

But nowhere was it more evident than in this neighborhood of Asia. Japanese firms, strapped by high wages and costly components at home, moved much of their lower-value-added production abroad to retain competitiveness despite the effects of the high yen on prices to the consumer.

Some analysts predicted the formation of a regional “yen block,” while cynics declared that Japan’s wartime aim of the “Greater East Asia Co-Prosperity Sphere” had been achieved. Both assertions proved somewhat off-base, but there was no denying the balance of economic presence between the United States and Japan had been tipped suddenly askew.

Between 1986 and 1990, total U.S. foreign direct investment in ASEAN rose a healthy 22% to $12.3 billion, but Japanese investment nearly doubled to about $26 billion during that time.

Tokyo’s foreign aid program, often criticized as benefiting Japan’s commercial interests, has given Japanese trading companies a leg up in many sectors of the ASEAN economies. Not surprisingly, Japan does more contracting business and sends more products and machinery to the region than any other country, while the U.S. market takes the greatest share of ASEAN exports--leading to charges that Japan is shifting part of its contentious U.S. trade surplus to Asian surrogates.

“It would be in the best interests of all countries concerned for U.S. firms to counter this with an increased presence of its own,” said Michael G. Plummer, a research associate at the East-West Center’s Institute for Economic Development and Policy in Honolulu.

“The United States . . . would be able to participate in and gain from the growth of these dynamic countries; on the other hand, ASEAN countries would welcome greater balance between U.S. and Japanese investors,” Plummer and his colleagues wrote in the booklet, “Is the United States Missing the Boat in ASEAN?”

Cleveland and his fellow ambassadors took pains to speak in cautious, even respectful, terms about Japan.

“Sometimes American firms feel the Japanese have gotten into the woodwork and are corrupting things,” said Cleveland, in an apparent reference to frequent rumors that Japanese are bribing local officialdom in Malaysia. “I don’t believe that. I just think they’ve been on the ground for many years.”

Orr said: “It’s not just the Japanese, it’s the Taiwanese and the South Koreans too. . . . Our concentration on the Japanese competition is weakening our ability to compete against the rest of the world.”

Is the call-of-Asia message sinking in?

“Malaysia sounds very interesting,” said David G. Sant, managing director of international operations for Centigram Communications Corp., a $40-million-a-year packager of voice mail systems in San Jose. “Our plans are to proceed and investigate.”

Sant said he was waiting to see what kind of concrete advice and assistance he could get from the representatives of state and federal agencies, who were staffing afternoon sessions on the nuts and bolts of investing and doing business in ASEAN.

“One of the most difficult things about dealing with government agencies is finding out who to turn to for help,” Sant said. “I’m going to be very interested in seeing what kinds of services they can provide.”

The ambassadors concede that American companies--especially smaller businesses--have been lulled to complacency by a lucrative domestic market, and it hasn’t been part of their culture to think in terms of exports or offshore investment.

“The most difficult thing of all is changing attitudes, changing the mind of America,” said Orr, a former two-term governor of Indiana.

Orr cited some Americans on the scene in Singapore, such as the Los Angeles-based Pacific Architects & Engineers, which is active throughout Southeast Asia, and Disney Consumer Products.

But he lamented that while Japanese department stores have a heavy presence and “push lots of Japanese merchandise,” there are no American-brand retail outlets on the scene, with the exception of Toys R Us.

It all boils down to a question of national strategic image, as well as commercial interest.

“The Japanese have inundated the marketplace with their signs and with their products,” Cleveland said.

“When you drive in from the airport to Kuala Lumpur you see a great big sign saying Hitachi, then you see a great big sign saying Panasonic, but you don’t see any American sign until way down the road on the wall of the Motorola plant,” he said. “There’s no impression in the minds of the local people that Americans are out there.”