As the American trade deficit with Japan climbs inexorably to the $50 billion level this year, the American negotiators -- official and private -- who inundate this city cry "access, access, access!"
But it is one thing to demand access to this thriving market, and another thing to get it -- not necessarily because of overt, identifiable barriers (although there are some of those), but because of the close intragroup ties among Japanese businesses called "keiretsu."
Until recently almost totally ignored by American and European companies, keiretsu is the Japanese equivalent of an old-boy network: Japanese companies buy from their own subsidiaries first, then from within the family group to which they belong, after that from other Japanese companies and, finally, from foreign companies.
"If you are having drinks with someone from the Sumitomo chemicals group, you'd better order Asahi beer, which belongs to Sumitomo, instead of Kirin beer," another Japanese brand, a Japanese friend explains. Obviously, it would be a no-no to ask for a Miller Lite.
On a more serious level, a recent case in point involved the pressure brought to bear by the U.S. government on Nissan Motor Co. to buy a super computer from Cray Co. in the United States. Cray's only serious world-class competitor is Hitachi Co. here, which happens to be part of the Nissan keiretsu. Hitachi put enormous pressure on Nissan to preserve the intragroup tie, and to keep the super-computer purchase in the family. American negotiators insist that it was only the demonstrable superiority of the American computer that broke the keirestu tie in this case.
But the belief on the American side is that this is the exception that proves the rule.
"Nissan basically buys all of its electronics from Hitachi," a senior American official told me. "That means that Matsushita, which is tied to Toyota, doesn't sell much in the way of electronics to Nissan, and Hitachi can't do much business with Toyota. So if two Japanese companies can't be competitive -- if Hitachi can't crack Toyota -- how the hell can Motorola or Texas Instruments crack it?"
Thoughtful Japanese react in various ways to the suggestion that keiretsu constitutes the kind of trade barrier that can't be dealt with in any of the government's "action programs" to lower the trade deficit. Tadashi Yamamoto of the Japan Center for International Exchange says that, by raising the keiretsu issue, the United States comes dangerously close to demanding that its own culture be imposed on Japan.
The close ties that bind some of these companies together have been handed down through the generations, and reflect the homogenous nature of Japanese society: Japanese are more comfortable dealing first with family and friends, and are not always comfortable with foreigners.
Nonetheless, Yamamoto acknowledges that the key question "is how to make our system more compatible with the international system. The trouble is, we can't do it overnight: Most of the easy stuff has been taken care of."
Kazuo Nukazawa, director of the international economic affairs department of the Keidanren (the Japanese equivalent of the National Association of Manufacturers), scoffs at the notion that keiretsu has been a significant barrier to imports.
If the system had operated as a real old-boy network, favoring in-family suppliers over cheaper or higher-quality goods from outside the group, "that would have been a prescription for decay and decline," he says. The fact that Japanese industry has been highly competitive overall, with greater productivity gains than scored by American industry, punctures the theory that keiretsu can explain the inability of some firms to penetrate the Japanese market, he holds. Like many Japanese, he puts most of the blame on the high dollar exchange rate.
Nukazawa's skeptical view is supported by an American management consultant widely known in Japan, James C. Abegglen, now a professor at Sophia University. He says: "Those companies that complain about Japan are the losers, not the winners. They're not the IBMs and the Texas Instruments guys and the other big companies like Du Pont doing a billion dollars worth of business here a year. If I screw up, am I likely to say I have a lousy product, or will I complain about the Japanese to get me off the hook?"
But it is hard to ignore the realities of keiretsu, and it is amazing how little it has been discussed in the United States and Europe. Eisuke Sakikabara of the ministry of finance pointed out in an interview that keiretsu means that the Japanese economy, "although market-oriented, is quite different from the American economy."
A new study he has done for a Japanese financial think tank shows that 60 to 70 percent of the shares of a typical Japanese company are controlled by insiders who are members of the keiretsu that not only protects the company from takeover threats, but enables the management to concentrate on long-range growth without worrying about the short-term price of shares.
In truth, then, the Japanese economy is based largely on a cooperative structure, not traditional Western-style capitalism.
But this cooperative, or keiretsu, concept is hardly understood by foreigners who demand "access" to the market here under the misconception that Japan is a mirror-image of the classical "free-market" economy.