NEWS ANALYSIS : In Japan, Fair Trade Is Matter of Perception

Hiroshi Soma, a professional jewelry appraiser with an avid interest in cars, had never remotely considered buying an automobile made in America.

“It’s legendary that they break down very easily,” Soma said, ticking off a list of other common fears: low resale value, inability to get good service, lack of available dealerships.

Lately, though he has yet to buy an American car, Soma has started to change his mind.

“They are getting better every year,” he said.

Like those of many Japanese consumers, Soma’s traditional suspicions of foreign products appear to be changing.

But as trade tensions rise between the United States and Japan, Soma’s lingering ambivalence is a telling example of the prevailing attitudes in a nation that remains reluctant to open its markets completely.

To Americans, Japan’s motives seem rooted in a deep-seated suspicion of foreigners.

Japan, after all, cut itself off from the world for 250 years, prohibiting trade with foreigners until the mid-19th Century, when the cannons of Commodore Matthew Perry’s Black Ships abruptly ended the empire’s isolation.

But to the Japanese, the issue is more pragmatic.

For consumers such as Soma, it is a matter of avoiding what they perceive to be inferior or unsafe products and bad service.

Interestingly, Japanese consumers are grappling with perceptions similar to those that Americans held 30 years ago about products made in Japan.

For business executives, the issue is a matter of protecting the security of jobs in a nation where the concept of lifetime employment remains viable, as well as the independence of home-grown industries--many developed with the help of Americans in the post-World War II era.

For others, it is a matter of preserving a system that they believe is fair.

“We do not seek trade restrictions,” said Hiroya Noguchi, assistant general secretary at Zensen, a national federation for the textile industry. “What we look for is trade based on rules.”

The recent debate here has focused on how Japan may suffer from the rising value of the yen and a continued drop in an already battered stock market in the wake of the breakdown of U.S.-Japan trade talks last week.

Yet many Japanese have also applauded Prime Minister Morihiro Hosokawa for refusing to yield to American demands for numerical targets for imports and to threats of sanctions on Japanese products sold in the U.S.

The reality is that many American companies are doing well in Japan, and change is occurring rapidly here, though many features of Japan’s economic structure and society still make this an exceptionally difficult place for foreigners to do business.

On Wednesday, Japan’s Ministry of Finance reported that Japan’s trade surplus with the United States grew to $3.1 billion in January from $2.9 billion in the same month a year earlier.

In a way, Japan has simply taken to heart the lessons of the West, practicing a kind of mercantilism long ago abandoned by Europe and the United States, American executives argue.

“In the long term, Japan always protected its industries . . . from foreign influence of any kind,” said Andrew Procassini, president of the Semiconductor Industry Assn. in San Jose, Calif.

But for the Japanese, there is a real fear that imports will overwhelm Japan’s industry. So far, that fear has focused more on imports from Asian countries than on those from the United States.

Japanese garment manufacturers are being hit by the growth of imports, especially from neighboring countries, and have begun pleading for help.

“Inexpensive textile imports are coming in like a flood because Japan is the only industrialized country that has never invoked a quota” under a textile agreement approved in 1974 under the General Agreement on Tariffs and Trade, or GATT, said Noguchi at Zensen.

The Japanese government has also been nervous about the rapid growth of discount stores--allowed under pressure from Washington in 1990--partly because of the threat they pose to traditional retailers.

Discounters such as Aoki International Co. and Aoyama Trading Co. have grown rapidly, in part by selling imported garments.

To appreciate the American perspective, Ford Motor Co. officials say that their experience in Japan is instructive.

Once a dominant force in the Japanese auto market, the firm was asked to leave just before World War II broke out.

Afterward, the occupying Americans, led by Gen. Douglas MacArthur, favored allowing Japanese industry to rebuild with limited foreign competition, Ford spokesman Al Chambers said.

Ford was unable to resume auto production at its Yokohama plant, a situation that persisted until 1979, when Ford sold the property and bought a stake in Japanese auto maker Mazda.

Now, Ford is finding that the best way for it to break back into the market is by having Mazda build autos and sell them under the Ford badge--unlike in Europe, where Ford sells its own cars.

“The Japanese say that we’re not serious about the market,” Chambers said. “We think that . . . the (Japanese) auto industry does not want competition.”

Japanese auto executives say they have no fear of competition and argue that U.S. auto makers simply lack the will to succeed.

“When we developed our export business in the United States around 1960, we left cars at gas stations to sell,” said Yoshikazu Kawana, executive managing director at Nissan Motor Co. “We started from scratch. . . . I’d say, how much effort are they going to put into developing the Japanese market?”

As U.S. makers shift toward cheaper, smaller, right-hand drive cars with better gas mileage, car buff Soma predicted that American cars will gain favor.

“It’s a matter of time, like the Berlin Wall in Germany coming down,” he said.

Changing consumer attitudes toward American products account in part for the success of American firms such as Apple Computer, now the No. 2 seller of personal computers in the country.

For foreign manufactured goods to sell in this environment, they must either be noticeably cheaper or offer something special, said Yoshiko Hiramatsu, a Yokohama housewife. Otherwise, she said, the Japanese will buy domestic products for their reliability and familiarity.

One of the most sensitive sectors for foreign companies is food. Here, taste and cleanliness are of paramount concern.

For the first time, American rice is being allowed into Japan under an emergency program to make up for shortages. Rice imports will also be allowed under GATT.

When U.S. rice finally hit the shelves in Tokyo last week, some supermarkets reported selling out in just a few hours as consumers seemed willing at least to try it.

But it is no simple matter to sell foreign rice in what California industry spokesman John Roberts calls “the most discriminating rice market in the world.”

Taste comparisons of Japanese and foreign rice are a hot topic.

Nikkei Trendy Magazine, a popular lifestyle publication, conducted a taste test, which placed a Japanese variety predictably on top. Surprisingly, a U.S.-Japanese blend placed second.

Not everyone is convinced. A blend of U.S. and Japanese rice makes a “pretty decent” combination for use in Yokohama-based Tokatsu Foods Co.’s bento lunch boxes, said Akira Arahata, the firm’s managing director.

But he added: “It has a smell.”

Consumer tastes aside, the threat of imports to Japanese agriculture stirs real concern. During the first 11 months of 1993, beef imports from Australia and the United States soared 24%, spurred by lower tariffs.

As a result, wholesale prices for domestic beef have dropped about 15% since 1991.

“I thought the difference in quality would enable us to survive,” a cattle grower in northern Japan recently told the Nikkei Weekly, an English-language economics newspaper. “But I’m not so sure any longer.”

Holley reported from Tokyo and Lee from Los Angeles. Times researcher Chiaki Kitada in Tokyo contributed to this article.