Japan: Clarion call to the men of business.

Japan: Clarion call to the men of business. - "Cracking the Japanese Market: Strategies for Success in the New Global Economy" by James C Morgan and J Jeffrey Morgan (Free Press, 295 pages, £18.95).

Last Updated: 31 Aug 2010

"Cracking the Japanese Market: Strategies for Success in the New Global Economy" by James C Morgan and J Jeffrey Morgan (Free Press, 295 pages, £18.95).

Review by Ian Gow.

Over the past decade or so there has been a massive expansion in English-language writing about Japanese business and the Japanese economy. There is no doubt that we should observe and analyse Japanese business practices more closely, in order to compete or collaborate with, or simply to learn from, this amazingly successful industrial state.

Unfortunately, the increase in the literature has tended - with honourable exceptions - to be quantitative rather than qualitative. It has ranged from "quick fix" consultants' advice on Japanese-style management, quality circles and just-in-time, through to the conspiracy theories of the trade warriors (railing against the closed nature and unfair tactics of Japan's Government and industry at home and abroad), and on to the obfuscations of the Japanologists (who continue to mystify Japanese business practices in ecstacies of Confucianist - or should it be confusionist? - theology).

It is probably accepted by most people that, despite the pyrotechnics of the trade war, the United States has a closer and more knowledgeable relationship with Japanese business than Europe has. The US has also been able, through government pressure, to force the Japanese into concessions, by liberalising and deregulating key areas of their economy. The European Community has only managed this on rare occasions, although sectoral initiatives - on textiles or spirits - have shown just how ineffective bilateral country-level negotiations with the Japanese have been.

However, there is a growing suspicion - inside and outside Japan - that government pressure is being over-used, and to the benefit of some companies which are simply not equipped to penetrate (and, more important, to defend a position in) the Japanese market.

This market is, in the eyes of most informed observers, the most competitive in the industrial world. The reasons for trying to gain (and maintain) a foothold in the arena are compelling. First, there is the existence of more than 130 million sophisticated consumers with ever increasing disposable incomes - particularly as house prices spiral away out of reach of most of them. Second, there is a growing belief that the only way to compete successfully with the Japanese in our domestic markets - or in third markets - is to engage them on their home ground ab initio.

Third, successful penetration of the Japanese market will boost corporate competitiveness to such an extent that global success is well nigh assured. Fourth, Japan is now the only really stable base in East Asia. Hong Kong and Taiwan look increasingly unstable in view of the Chinese situation. Singapore is suffering from a succession problem. South Korea is in a rather delicate condition. In these circumstances Japan can be regarded as the ideal base for companies wishing to attack the rapidly growing markets of the Asia-Pacific region. Lastly, there are key lessons in technology transfer, joint venturing in overseas markets, etc. to be learned by maintaining a worthwhile competitive presence in Japan.

Despite its snappy title and journalistic section headings, this book is a major contribution to the literature. Its authors, who are both US businessmen, have real hands-on experience of the subject and a gift for clear, well researched, analytical writing. They tell us a lot about current US thinking on Japan, but they have little time for the bellyaching of a US business world licking the wounds that it has received in the ongoing battle with Japan. Far too many American corporations prefer to seek the comfort of softer markets. Either they are addicted to quick fixes, it seems, or they cultivate an entirely false air of superiority. There are certainly no quick fixes, no instant panaceas, on offer in these pages.

The Morgans seek to demystify Japanese business. Yet they show clearly the tremendous efforts that need to be made by non-Japanese management teams - especially those engaged in manufacturing - if they are to gain and maintain a foothold in Japan. The chapters on the authors' own experience make an excellent case study for students of a market where the home team are ruthless competitors and inveterate seekers after global leadership. There are useful guidelines on licensing, joint venturing and the like, although I would have welcomed more about their thoughts on the development of western-style mergers and acquisitions in Japan.

The book is unashamedly a clarion call to American business, just as Ezra Vogel's "Japan as Number One" was a dozen years ago. This time, however, we have that rare breed, the practitioner-communicator, giving pertinent - but very tough - advice on how to crack Japanese markets. The American angle may seem overdone to European readers but what the Japanese have done in (and to) the US they could well repeat in the EC. That is why this book should be on the shelves of every top manager thinking about competing with the Japanese. Along, perhaps, with Abegglen and Stalk's "Kaisha", it should also be required reading for anyone who has to study elements of Japanese business. It contains much useful data - and a good bibliography.

(Professor Gow is director of the Scottish Centre for Japanese Studies at Stirling University.)

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