The Japanese competitor
Henry Scott Stokes
I sometimes wonder whether my comPatriots have the faintest idea what a tough lot the Japanese are—in business. The other day 1 read that A. J. P. Taylor was giving Yet another series of television chats (on Great Men); and he noted that Winston Churchill, notwithstanding all his successes, had underestimated those whom he. Churchill, called 'the little yellow men'. 1 suppose such attitudes were good enough at Harrow but they are scarcely sufficiently broad to encompass all that has gone on in the past seventy years or so, at least since the time When the Russian Imperial Grand Fleet rounded the Cape on its way to a monstrous humiliation at the hands of the Japanese in the closing episode of the Russo-Japanese War. And yet we still seem unable to comprehend how quick off the mark are the small-sized, ochre-coloured men from NipPon; the hundred to one trade imbalance in Motor cars, for example—with the Japanese selling a hundred cars to us for every one that we ship to them—has been accepted by the British authorities as normal under the circumstances.
The actual trade figures mean nothing to anyone apart from a handful of 'experts' in the Department of Trade. But that hundred to one imbalance in cars should surely have woken us up years ago—even without an even crasser situation in motor-cycles, Where the Japanese have destroyed 98 per cent of our industry on the ground, a still more grotesque situation in shipbuilding (where the Japanese are taking 80 to 90 per cent of world orders), and yet another extreme situation in television tubes, which the Japanese make at half our cost. Sleepy old England, yes. But sleepy old Europe, too. In the summer I visited Brussels for the first time in years and was amazed to discover that they were not taking the Japanese seriously there either; which is to say that Men like Finn Gundelach and Sir Christolphftr Soames had no answer to the problem of Japanese trade. They admitted this.
And here the odd statistics come in useful. Back in 1970, the year in which the JaPanese laid on their excruciatingly ugly E.xPo or World Fair at Osaka (definitely the City for the occasion), still a time when they
nad not dented us all that badly—trade be
tween the current EEC members and NipWas more or less in balance. They had tiny surplus; but it was of no consequence. cly last year, the Japanese surplus had
Mounted to 83,200 million, in the short
space of five years; and it is due to mount— cording to learned friends at the Financial ','"Ies in Tokyo—to 84,000 million in 1976. '""id, of course, there is a happy situation in the motor trade again; the Japanese will sell
a good twenty cars to the Europeans of the EEC for every one that they themselves buy.
Why do we sit back and allow this kind of thing to happen? It passes all belief, not least when one sees what the Japanese have in mind for poor old backward, non-hardworking, self-centred Europeans. By the middle of the next decade, say in ten years' time, the Japanese propose to have a surplus with us of some s17,000 million; this would be most convenient for them as it would just about coincide with the potential deficit between Japan and the Middle East. We deadbeats, in other words, would be paying for Japan's oil; that at least is the notion enthroned in a majestic study by the Japan Economic Research Centre (acronym JERC), published a couple of years ago. People sometimes politely refer to this body as a private research organisation; but in fact it is run by a friend of mine, Hisao Kanamori, who used to write Economic White Papers, and is a dyed-in-the-wool trade ministry official. I like the man very much. but his figures are ridiculous.
Such numbers, however, seem to have not the slightest impact upon the Brussels bureaucracy. Their answer is that our exports to Japan will be pushed up. Freetraders to the last breath, they will fight the battle fairly to the last European shipbuilding company. But this is really an absurd nonsense. How can you expect a European maker to export cars to Japan? It is not just that the Japanese are madly competitive abroad; they tear each other to pieces within their own country too, if given a chance. Selling cars to Japan would definitely be a more uphill task than carting coals to Newcastle.
So what are we to do? I imagine that the best thing would be to copy the old Japanese technique—shut the ports and roll out the muzzle-loading cannons; but the Brussels men may finally be right when they say that this would not work. Short of a policy of total isolation the only possible course will be to press the Japanese to stop where they are; they will have to be content with the present deficit and leave off at a maximum of s4,000 million. The negotiations must be conducted at the level of the EEC and the Japanese Ministry of International Trade and Industry in Tokyo; and the Japanese must be informed that they will either sort the situation out by voluntary controls, euphemistically so called, or they will be discriminated against by Brussels. One can imagine the horror that would be caused by such a course of action; it would be totally against the 'philosophy' of the Brussels freetraders, not to mention the British Government. Yet the stick is the only way, when the Japanese, overall, are already selling twice as much to us as we to them.
The point is that life is going to be hard enough anyway with the Japanese. They are raping us in third markets, not least the most attractive and rapidly growing of places—the Middle East. The Japanese (a little known fact) are the largest traders with the Arab world, if you exclude arms in which they most virtuously do not traffic: give them a couple more years on that. And they are undercutting our plant exporters by truly Nipponesque margins: 30 to 40 per cent is the order of the day, as exemplified by a recent Abu Dhabi power station order, for which Mitsubishi trounced GEC and others backed by our National Enterprise Board.
There is absolutely nothing we can do about this—except hope that the yen will appreciate by at least 20 per cent. This is just possible, since starting from 300 to the dollar, it has reached under 290 already. So where our own home markets are concerned, at least, we have no choice but selfprotection. This would not have to be the beginning of a great protectionist era; the trade negotiations at Geneva for a new round of tariff cuts—sometimes known, not inappropriately, as the 'Tokyo Round'— can still go forward. But the only way to deal with the Japanese is to be tough: they don't understand any other medicine, as they amply demonstrated with the Americans in the late 1960s—eventually leading Nixon and Connally to force a revaluation of the yen.
Not that politeness should not have been attempted at the outset. All manner of scrupulous notes verhales have gone from the EEC to the Japanese Government via the Community's little office in Tokyo; but such approaches simply take too much time, and achieve nothing in the end—bar such piffling concessions as Japanese agreement to test our cars in Europe (rather than turning them back on arrival in Japan, where pollution controls are now being enforced with all strictness). As I say, the way to have the Japanese respect one can only be by use of the baton: the signs are, however, that nothing will be done.
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