Front Row Seat on Japan-U.S. Trade : Commerce: Ryozo Yanagiushi, who runs Cypress complex of electronics giant Matsushita, has watched the action for 35 years.
When trade disputes rage, the distant thunder can be heard in the quiet industrial parks of Cypress.
Here, behind manicured lawns on gently rolling slopes, are titans of Japanese industry like the Western headquarters of Matsushita Electric Corp. of America. It is a name that would mean nothing to the average person until you roll off the brands it represents--Panasonic, Quasar and Technics.
Matsushita sold $6.5 billion worth of electronics, from laptop computers to camcorders, in North America in its most recent fiscal year. So when the United States and Japan talk trade, Matsushita has more than a passing interest.
So, too, does Ryozo (Ricky) Yanagiushi, the vice president who oversees the company’s sprawling 25-acre complex in Cypress. An unassuming, gracious 58-year-old, Yanagiushi is also chairman of the Orange County chapter of the Japan Business Assn. of Southern California, a trade promotion group.
He watched as the United States and Japan announced a breakthrough trade agreement a week ago that could make it easier for American manufacturers to sell medical and telecommunications equipment to the Japanese government, and for makers of flat glass to enter a market that has been virtually closed to them.
But the agreements stopped short of American negotiators’ largest goal: a bigger piece of the automotive parts business, which accounts for two-thirds of the nation’s $60-billion annual trade deficit with Japan.
For Yanagiushi, these events are only the latest chapter in a struggle he has seen unfold over a 35-year career at Matsushita from both sides of the Pacific. In an interview late last week, Yanagiushi shared his thoughts on the latest trade talks and U.S.-Japanese relations in general:
Question: What do you think the trade agreements will ultimately mean?
Answer: My general feeling is that this event, as reported, is a very happy ending to the series of negotiations. Those key issues have come to an agreement, except for auto parts. Those three areas (agreed upon) will set a basis for future agreements.
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Q: Are Americans closing the quality gap?
A: In electronic parts imported to Japan, this quality gap became the key issue in the last 10 years. We were enthusiastic about importing from the States. We did really extensive study and negotiations with U.S. vendors. There had been a rather large gap in quality, which was not accepted in Japan. It’s a fascinating game you have to go through. And one by one, it can be changed on both sides.
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Q: How can it be changed?
A: (Japanese) quality-minded manufacturing systems want (American parts) as equal in quality to their own domestic parts as possible. The robotization, or automatic manufacturing system (in Japan), is very precise. U.S. suppliers had to adjust themselves to feed into those systems.
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Q: Are Japanese customers ready to buy American goods?
A: I think that, especially last year, American automobiles have been gaining popularity. The total number of cars sold is small, but the rate of growth is high.
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Q: What kind of Japanese customer would want to buy an American car, the ones who want to stand out?
A: Those who want to stand out is one segment. That has been there for many years, but that did not support the numbers of cars being sold from the States now. These days it’s because American cars are reasonably priced.
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Q: Is the quality of the cars better?
A: Consumers in Japan feel that American cars are up again in quality.
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Q: Why wouldn’t the Japanese government, then, not want American auto parts sold in Japan?
A: I can appreciate the government’s attitude of not being able to force the private sector to buy them. Japan’s system is not that way. They have a certain limit of guiding the private sector.
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Q: And that’s good?
A: Yes. The trend shows that American components coming into Japan have more room for growth because Japanese auto manufacturers are eager to expand the import portion of their components. Therefore, I think U.S. suppliers who are there and successful are not complaining. But since there are varieties of auto parts manufacturers in the States who want to sell in Japan, they want to see easier access.
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Q: Do you think the progress being made in trade talks is a result of the Japanese government’s fear of sanctions?
A: Of course.
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Q: Is that good, that the United States should be acting through threat rather than mutual cooperation?
A: I, of course, would like to see more dialogue in front-line talks that can be the basis for any negotiations. The talk will reflect the political situation of both countries.
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Q: Is the Japanese government protectionist?
A: They are not protectionist at all. . . . Newcomers have to learn (how to break into Japanese business). For the government to satisfy foreign suppliers, they have to lower the bar for everybody . . . and that takes time.
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Q: Given how low prices are for the same products here as they are in Japan, particularly rice, isn’t that proof that Japan has kept the barriers too high?
A: Well that hasn’t been set artificially. When we look around and see the (price) difference, particularly with the States, we came to know that it is quite a big difference. There is an effort to make it narrower.
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Q: How about the United States? In your experience as an importer here, have you encountered trade barriers?
A: Punitive tariffs are imposed on color TVs. That has really worked for the United States. There are no complete color TVs coming in today from the outside. Manufacturers like us are manufacturing here.
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Q: It’s been said that the United States was shortsighted in adopting such a policy because it virtually guarantees that foreign manufacturers will set up plants here and forever be shipping the profits back to their home countries. Your assessment?
A: I think it’s a good thing that the plants were built here. Perhaps it’s not as good for our colleagues in Japan, because there are fewer jobs. But we are a multinational operation and we consider it positively. We want to be a real corporate citizen. . . . For us, it is good if the trade agreements encourage global activities so that good things produced in certain places can be supportive of other areas. Today, we are exporting American-made color TVs to Japan--built in Illinois--and microwave ovens to Europe.
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Q: As more Japanese plants open overseas, won’t it eventually mean more unemployment in Japan?
A: We will be able to keep new things. We will be able to take care of ourselves.
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Q: How are relations overall between the United States and Japan?
A: We feel a lot easier than last week (laughs).
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Q: Are the Japanese people thinking better of the United States these days?
A: I think so. The Japanese people are more cost-oriented. The economic recession has hit everyone, and they are looking for something better. They are price conscious and value conscious. When the economy peaked, people thought they could reach for anything. They wanted luxury. Not today. Today, they want reasonable price, which is a good thing. The same thing has taken place in the States.
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Q: Are American workers still viewed as lazy?
A: I think those kinds of extreme views are diminishing, and they are not popular at all.
