Motorola’s Strategic Ace Takes on Japan as Kodak CEO : Manufacturing: World’s biggest imaging firm says Fuji Photo Film and the government in Tokyo have conspired to deny it fair market access.

When it comes to prying open Japanese markets, few U.S. industrialists have succeeded like George M.C. Fisher, who believes the combative strategy he once used at Motorola can work just as well for Eastman Kodak Co.

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“Never lost to them. Don’t intend to start,” the Kodak CEO said with a tight smile, remembering his feuds with Japanese high-tech companies since the late 1970s.

“I am not afraid to stand up for what is right,” Fisher added. “And quite frankly, my experience tells me the Japanese respect people who do that and do it out of strength, not out of weakness. And that’s what we’re doing.”

With the backing of the Clinton Administration, on July 3 Kodak, the world’s biggest imaging company, accused archrival Fuji Photo Film and the Tokyo government of conspiring to deny it fair access to the Japanese photographic market over the past 20 years.

The U.S. trade representative’s office has one year to conduct an investigation under a special trade law that allows for sanctions to be imposed against Japan if the dispute cannot be settled. Kodak’s chief executive expects the disagreement can be resolved quickly and amicably.

The spoils are considerable. At $13.7 billion, Japan’s photographic market is bigger even than America’s, partly because the Japanese pay more for photo processing, film and photographic paper.

“For every billion dollars of sales per year that we would get, that would be thousands of jobs,” Fisher said in a recent interview at Kodak headquarters in this manufacturing hub on Lake Ontario’s southern shore.

Kodak estimates it has lost $5.58 billion in sales since 1975 because of Tokyo-based Fuji’s lock on Japan’s major photographic distributors. Fuji, with 70% of Japan’s film sales to Kodak’s 9%, says Kodak’s lackluster share stems from bad marketing, not unfair trade.

“If we’re not very good at marketing, I’d have to ask why we have about twice the market share they have in the rest of the world,” Fisher said.

Kodak holds 44% of the worldwide film market. Of course, in the 80 years before the Japanese entered the business in the 1970s, it enjoyed a global monopoly.

To salvage Kodak’s blue-chip status in an increasingly competitive business, Fisher is investing heavily in high-tech digital products and fast-growing overseas markets, such as Asia, where Fuji dominates.

But right after his move to Kodak from Motorola in late 1993, Fisher said he realized the Japanese market was a special case only government intervention could solve.

“Whether it’s electronics or photography or autos . . . it is absolutely clear to me that any company that wants to be the best in the world in these high-tech areas especially has to compete with the Japanese,” he said. “To do that, you have to have a level playing field.

“I probably have more experience in this than most people, period. The best way and maybe the only way to get effective resolution of market-access issues is to have the U.S. government work with the Japanese government.”

Soon after joining Motorola Inc. in 1976, Fisher made his mark as chief of the pager division by breaking into the Japanese market. He did it by enlisting Washington’s help, a strategy that also won the electronics company wider access to Japan’s cellular telephone and semiconductor markets.

The difficulty in Japan used to be tariffs and quotas. But when regulations on foreign investments were liberalized in the 1970s, Tokyo replaced them with non-tariff barriers, Kodak alleged in a 275-page petition.

Unlike the United States, where manufacturers can sell to nearly all retailers, it said Japan’s four big distributors of photographic products have been transformed into “vassals” that deal exclusively with Fuji.

As a result, Kodak film is kept off store shelves almost everywhere except in the center of big cities, it said.

Kodak said Japan’s “keiretsu” system of interlocking relationships among companies that operate with the blessing of government regulators have kept its market share artificially low.

Coming just days after the two countries settled a bitter auto-trade dispute, Kodak feared its action against Fuji “could look like piling on to some people,” Fisher said.

However, “I think our case is so strong that I don’t think we need to jump on the coattails of anything,” he said.

In the meantime, Kodak is pouring money into Japan, notably in sponsoring the 1998 Olympics in Nagano. “Most of this is in anticipation of opening up the market,” Fisher said.

If he succeeds again, even modestly, Fisher might win back some of the tens of thousands of jobs Kodak has lost since the 1980s. And Japanese consumers would likely benefit from greater price competition, he said.

“I think it has to be a win-win for both countries. That doesn’t necessarily mean a win for Fuji,” Fisher said.

Calling himself “probably one of the greatest admirers of Japan and the Japanese of anybody I know,” Fisher said, “they really are good enough [to compete]. They do not have to do this sort of stuff anymore.”

“They won’t say that, but they know we’re right.”