Protected market? What protected market? Japan's reputation for actively discouraging foreign investment and goods is outdated and unfair, say Japanese government officials.
Foreign influence now reaches every level of Japanese society. It was a French coach, Philippe Troussier, who led Japan to the last 16 of the 2002 soccer World Cup. A Brazilian, Carlos Ghosn, has turned the fortunes of Nissan around after it was rescued by French carmaker Renault. Another Japanese car company, Mazda, is controlled by the US Ford company, and DaimlerChrysler of Germany owns a big slice of Mitsubishi.
Even SA industry has a stake in Japan. The East London assembly plant of DaimlerChrysler SA builds more Mercedes-Benz cars for Japan than it does for SA. Of the 39 000 C-Class cars built here, about 9 000 are for the domestic market and 15 000 for Japan.
Hiroyuki Wakabayashi, vice-president of the Japan External Trade Organisation (Jetro), says manufacturing liberalisation began nearly 20 years ago. Service and financial industries remained protected until the mid-1990s. Now they, too, are open to foreign ownership and investment.
In fiscal 2000, foreign direct investment in Japan increased 31,5% to US$28,3bn, setting a record for the third straight year. The main contributing factor to this increase was non manufacturing investment. In fiscal 2001, the figure fell to $17,4bn. Analysts say this decline was expected, given the heavy investment of the previous three years.
Wakabayashi admits: "We never expected foreign companies to invade Japan in such a dramatic way." However, with recession hitting results and Japanese boardrooms failing to adjust their management methods, companies inevitably became targets for foreign investors.
The shift towards encouraging foreign investment began long before Asia's economic recession. In the 1980s, as Japan's trade surplus grew, so did friction with trading partners. Government accepted that barriers had to come down. Jetro's own role changed from one of promoting exports from Japan to one of encouraging imports and foreign investment into the country.
The cost of investment in Japan is high, though Wakabayashi notes that this has been eased by recession and slower-moving land and labour costs. "Compared with our neighbours, we are still expensive and for labour-intensive industries it would be natural to choose China or another country."
But for investors wanting a quality-focused workforce with sophisticated technologies, and a market with disposable income, Japan is the logical option.
Despite the modern welcome to investors, Japan still has its own way of doing business. Foreign business people negotiating for business or operating in Japan often note the different attitude.
"The philosophy of Japanese corporate governance is to put the customer first, employee second, then investors," says Wakabayashi. "In the US, the order is investor, customer, employee. We are not looking for overseas investors to sell up and go home as soon as the share price goes up. We want them to live and work together with their employees and customers, and share the benefits. We welcome friendly investment."
The same long-term attitude applies to building a relationship with Japanese partners. "Businessmen from some other countries put in an order on the spot," says Wakabayashi. "Japanese like to take time."
