MARYVILLE, TENN. -- Similarities between Japan and Tennessee do not immediately spring to mind. But now, as the two forge one of the more unlikely economic unions of the late 20th century, the experts are managing to find some. Both have dogwood trees. Both have pleasing, rolling hills cloaked in green. And both have societies that respect tradition and hard work, shy away from labor union militancy and are short on minorities.

Thus it is that Tennessee is becoming the favored home-away-from-home for growing numbers of Japanese companies like Nippondenso, an auto parts maker that is putting the finishing touches on a three-plant complex in this town near the Great Smoky Mountains. To date, Japanese firms have invested $2.7 billion in Tennessee, creating at last count 56 factories and 34 sales and distribution centers. About 17,500 people work in them and their numbers continue an upward march.

In 1989, Japanese capital helped put the state at the top of the list among southern states in terms of new investment and new jobs. It has helped bolster employment and technology in a state known better for small farms, country music and the Chattanooga Choo Choo.

Few people here can quite understand the simmering debate in Washington over whether foreign -- and by this most politicians mean Japanese -- investors are gaining too much power in the United States. Said Carl Johnson, commissioner for the state's Department of Economic and Community Development: "I'm not concerned about where the capital is coming from. I'm concerned about Tennesseans having work." Maryville shoe repairman Herman Blair offers a similar thought: "As long as they put out the money, we don't care what country."

Tennessee has drawn in the newcomers with comparatively little cost to the state taxpayer in the form of financial "incentives." It has absorbed them without major social or political upset, unlike Kentucky, where a huge incentives package offered to Toyota Motor Corp. became a contentious issue in a gubernatorial race, or Hawaii, where some locals complained that heavy real estate investment and tourism from Japan were driving up prices.

Foreign investment marked one of the great sea changes in the nation's economy in the 1980s. Hundreds of billions of Americans' dollars spent to acquire foreign-made goods came back from abroad to buy American, but not always in the way U.S. officials had hoped. Foreigners bought billions of dollars worth of permanent assets such as land, buildings, companies. Most of the investment went toward acquiring existing things. Some went to set up new companies.

Across the country, states began maneuvering to get the new plants, and Tennessee has led the South. It now hosts a bevy of lean, modern plants that have helped position Japanese companies well against their American competitors. The plants have newer equipment, a younger and lower-paid work force, a stable source of low-cost key components in East Asia and management with flexibility to move workers around and redesign the floor.

A Blow to U.S. Interests?

Some critics have said that states, by offering major financial incentives to draw these newcomers and nurture them, have worked against the economic interests of the United States as a whole, by speeding the demise of U.S.-owned firms. Viewed on a national scale, critics say, many of the Japanese jobs are not "new" at all, they are merely moved from older, less competitive U.S.-owned companies in the North to Japanese-owned ones in the state, often with a drop in wages.

Tennessee and other state governments respond that they offer the same incentives to any U.S. company that steps up. But they are not going to turn down foreign companies, which at this point in economic history are often more interested in manufacturing than are American ones. In Tennessee last year, 43 percent of all new manufacturing investment was from foreign sources, generally Japan, an unusually high figure, but indicative of the importance they play.

The Japanese presence in Tennessee dates to 1977, when Nissan Motor Co. settled on it for a forklift distribution center. In 1980, the state won what at the time was the largest Japanese investment outside Japan, the Nissan pickup truck plant at Smyrna. It has since branched into passenger cars and recently announced a $490 million expansion.

Late in the decade, there came a new wave of smaller companies, employing 200 or 300 people at a time, making oil filters, steel wire, automobile seat covers, electronic components, musical instruments and countless other types of products. Many were members of Nissan's family of suppliers from Japan and came to the state specifically to be close to Smyrna.

Getting these plants was a high-priority objective of the government, starting under the administration of Gov. Lamar Alexander. He recalls attending a White House dinner early in his tenure and hearing President Jimmy Carter say, "Go to Japan. Persuade them to make here what they sell here." Alexander, noting that Tennessee had family income ranking 47th in the United States and that recession was coming on, decided that Japan was a pretty good place to try.

Today, Japanese companies are major civic citizens as well as employers. Tiremaker Bridgestone will soon send major European paintings from its art collection in Japan for temporary exhibit in Nashville; parts-maker Calsonic Yorozu Corp. gave close to $3 million to fund an indoor walking horse arena.

Japanese children attend special "Saturday schools," many of them subsidized by local governments, to keep abreast of their culture's writing system and culture. Outside the town of Sweetwater, in the brick buildings of a former military academy, there has opened Tennessee Meiji Gakuin, the United States's first Japanese-curriculum high school. Jokes have it that the state has become a transplanted prefecture of Japan.

Japan's importance in the state economy can be easily overstated, however. There are other major foreign investors in the state: West Germany and Britain, for instance. And Japanese companies employ only about 3 percent of Tennessee's total work force in manufacturing. General Motors Corp.'s new facility to build the Saturn line of compact cars, located in Spring Hill, cost as much to build as all the Japanese plants in the state put together.

The smoothness of the integration can also be exaggerated. Some Americans chafe under the rigid Japanese management style and complain that they are denied promotion opportunities. Some have had labor problems. Japanese residents sometimes feel that people in small Tennessee towns, unfamiliar with Asians or outsiders of any type, treat them on the street as if they didn't exist.

Perhaps the most overt sign of hostility came when a cross was burned recently on the lawn of Tennessee Meiji Gakuin. But nothing further has happened since the incident. By and large, the newcomers have been made welcome, in that town and the state at large. "Most people of any sense appreciate them," said Pat Fuller, who manages a gas station and convenience store in Sweetwater. "It's the rednecks that don't."

But why Tennessee of all states?

The state offers financial incentives to draw investors, but, compared to those pitched by other states, they are comparatively small, taking the form mainly of help in training for workers and improvement of access roads to new plants. By all accounts, investors come for other reasons.

Location is one. Alexander, pitching the state to Japanese investors, used to unroll large satellite photos of the United States taken at night, showing through numbers of lights burning where concentrations of people were in the United States. Tennessee is within a day's drive of most of the East Coast population centers that showed up. Most of the major Japanese auto factories, the destination of many of the parts that are produced in the state, are also within easy reach.

Hospitality is another. Tennessee officials want the money badly and have launched an all-out effort to make Japanese investors feel good about the state. State promotion officials fly to Tokyo to call on investors. When Japanese come to the state, they drive to the airport to pick up the visiting scouts and take them to dinner. "They want to feel welcomed," said Kanji Haitani, a professor at Memphis State University, who has helped in state efforts to attract investment. "It's very important."

Haitani said Japanese also feel that in Tennessee, business can be done without the legions of lawyers so common in the North. A handshake is more likely to seal a deal here. Others cite a Southern respect for ceremony and etiquette that stresses a mode of indirect talk with which Japanese feel comfortable.

Japanese also like the work ethic they find here. They often recruit people who have no factory experience but have grown up knowing the sweat of farming and tinkering withmachinery. "People are very hard-working," said Yutaka Maeda, manager of a Tri-Con Industries plant in Livingston. "Once they're on the job, they are very proud of what they do." His plant, employing about 250 people, makes automotive seat covers.

Then there is cost. The state has no state corporate income tax, wages are generally low and unions are weak. "Tennessee's the first right-to-work state below the manufacturing belt," pointed out Douglas Woodward, a professor at the University of South Carolina who has co-authored a book on foreign investors. Japanese companies "want to get a young, conscientious work force that they can mold."

Another issue is race. Black leaders have long complained that Japanese companies rarely do business with black-owned companies. Studies by Woodward and other academics have concluded that, for whatever reason, Japanese firms in recent years have tended to set up in areas of the country with fewer-than-average minority populations. In Tennessee, some of the factories are in counties in which there are only a handful of black residents.

It is a sensitive issue for the Japanese. At home, they take pride in being a "one-race" nation and, in private conversations, sometimes blame part of the United States's economic troubles on ethnic diversity, seeing it as a source of tension, rather than dynamism. But their business leaders in this country deny any effort to export that philosophy to the United States and say that racial considerations have nothing to do with their site selection decisions.

Now Maryville has joined hands with Nippondenso. A bedroom community south of Knoxville, Maryville has cast about for new jobs as traditional employers cut back, notably an Alcoa plant in the neighboring town.

Incognito Arrival

Nippondenso first came to town incognito, its scouts traveling with a Bank of Tokyo delegation in 1987 and deliberately keeping secret who they represented. The auto parts maker, with worldwide sales of $9 billion a year, already did extensive manufacturing in the United States and was looking to find a place to start up more.

City officials formed a strike force and, with cultural advice from a Japanese professor at a local university, tried to earn high marks for earnestness. They fielded hundreds of detailed queries. Recalled city manager Gary Hensley, for "any request that was faxed or called in here by 9 a.m. we would try to have a reply out by 5 p.m."

Money was offered too. According to Hensley, the city and county put in about $4 million for education, land and site preparation and the state offered close to $2.5 million for training and road improvements.

In the end, Maryville won out over several towns in Indiana -- the community enthusiasm, the location, the local work ethic figured in the decision. The fact that Maryville is in a county that is 96 percent white did not figure in the decision, the company said, pointing out that it already has plants in Michigan and California, areas in which there are heavy concentrations of nonwhites.

Much of the machinery in the $255 million complex is imported from Japanese plants. But the company said that by the end of 1991, about 70 percent of the content in its products will be from elsewhere in the United States.

Pay starts at $6.92 an hour, which human resources manager David Ogle called competitive but not the highest around. Still, many locals consider it an attractive deal. When it first began hiring last year, Nippondenso had 8,000 applicants for about 800 jobs. "We're very selective," said Ogle. "We're careful. We take very seriously the employment decision."

Following common Japanese practice, employees are called "associates." On the line, they wear company uniforms. After lengthy debate among managers, it was decided that workers would not be required to wear hats, but most do anyway. There is no union.

American companies often pay workers special bonuses if they exceed specified quotas of production. Nippondenso does not, believing there are better ways to build productivity. Wage parity is one. "In production, whether they're doing a simple manual job or operating a very high-tech piece of equipment, their pay is the same," said Ogle. Workers move from job to job and are trained in many different operations.

John White was hired four months ago and, taking a moment off from training while company executives looked on, declared, "I love it. I really like it here." He once ran a furniture store. He said that the "solid foundation in Nippondenso's background makes it good and secure" as a workplace. Asked what he thinks about concerns in Washington over foreign investment, he responded that the United States is a "free country."

Today, there are about 54 Japanese families living in the Maryville area for Nippondenso, a figure that is meant to decline as the plant gets established and Americans are trained on the complex machinery. Other Japanese come and go as their skills are needed in building the plant. Japanese are seen shopping in local supermarkets and, on the 4th of July, at local fireworks displays.

The local Chamber of Commerce helped set up a "host family" program, in which Americans help the newcomers with such things as getting a telephone, opening bank accounts and putting their children in school. With encouragement from the company, they have tried not to live in the same neighborhoods and socialize together excessively.

Large houses, low-cost golf, cheap prices in supermarkets and stores -- these are almost as strange to the Japanese residents as English spoken with a Southern accent. "Almost all the Japanese staff are very comfortable living in this area," said Atsuhiko Shimmura, a business planning coordinator at Nippondenso who is here with his wife and two small children. "The community's people accept us very warmly."

Part of Nippondenso's study was an opinion survey in which Maryville residents were asked how they would feel if a Japanese family moved in next door or their children had Japanese classmates in school. The company said that the findings were overwhelmingly positive.

Anonymous Complaints

Still, their entry into the community has not been problem-free. City officials received a few anonymous letters complaining of the move and a few Japanese have received harassing phone calls.

"This is our country; they have their own country," said Velma Russell, manager of a Maryville thrift store who sees the Japanese as part of a general influx of Asians who are undercutting Americans and driving them out of work. "If I had my way, I'd put them on a bus and send them back where they came from."

But overall, the newcomers here and elsewhere in Tennessee have been welcomed. "Everybody's happy if we're going to do more business, have more jobs," said Jimmy Ross, owner of a local music store. Floyd Feezell, retired carpenter and World War II veteran, joked that Japan, having lost the war, now is trying to "buy us out." But he conceded that the local plant is a good thing, because it creates jobs. "If they weren't here, they'd be somewhere else" in the United States, he said.

Despite the financial aid granted, city officials say the community came out ahead. Said Maryville city manager Hensley: "One year and eight months of {property} taxes would pay back the entire incentive program." The money, he said, will help fund a new school in the city. "We felt it was a hell of a deal."