Q. Compared to the United States and Europe, the Japanese market is a very hard one to open, why do we not just give up? Is not international trade a kind of division of labor with some losses and some gains?

Hard--Only Then Are There Opportunities

A. Actually, Japan is the hardest market to crack. Nevertheless, it is precisely because it is so hard that we have opportunities. If the Japanese market was like the American, with Taiwan's present conditions, we could certainly not rise to the challenge.

The reason for this is because in the American market success is determined by pricing, and with our present high labor costs there would be no way to compete with the low costs of our neighbors. The Japanese market is difficult for every country and it is only in this kind of market that we have opportunities. These opportunities are the quality of our goods and our experience, which other countries have no way to replace.

A Japanese manufacturer has come to Taiwan to buy a closed-down clothes factory. What for? One reason is that primary materials are easy to procure and another is because of the high standard of our workers. So in penetrating Japan we should be in a better position than other countries.

Apart from this, what I want to stress is that the products needed by the Japanese market are exactly suitable for the direction of our economic development and industrial upgrading. The goods they require are value added, high unit cost and high quality, which is jut the target we want to strive to achieve. Taiwan cannot linger at the level of cheap goods! If we can seize the opportunity and crack the Japanese market, then our industrial upgrading has been successful. If we can really take this step then we can sell our goods anywhere. It's not like by developing traded with Japan we are giving up trade with America.

The View from the Sidewalk

Q. So what are the difficulties of the Japanese market? Why are industrialists d businessmen lacking in will?

A. The Japanese market is very choosy, wanting high-quality low-price goods delivered on time. Moreover, the quantity is often small and the variety great. These are characteristics that our businessmen and manufacturers are not used to. In the past we placed most importance on the American market, which is the opposite to the Japanese market in wanting large quantities, the quality of which did not matter if it was a bit imperfect so long as the price was cheap. The two are certainly not the same.

This is also related to the nature of the nationalities. The Japanese are very conscientious in everything they do, including buying things. They want to buy good things that can be used for a long time, unlike the Americans, who use things then throw them away. Then there is the fact that the Japanese things are not bad and that imports are never as good, so the price should be a bit lower.

The Japanese industrialists and businessmen are very orderly, not only in their products but in caring about every small point. Once the boss of the Japanese Kenwood company went on a tour of Taiwan and Singapore and said to me that Singapore's products were good. I asked him why and he told me that it was very simple: Singapore's sidewalks are very clean with neat red bricks; Taipei's are patched up and things are carelessly put on them. Looking at Taipei's chaos through Japanese eyes he reduced the value of the quality of all this country's goods.

Apart from the quality of goods, the closed distribution in the Japanese market also often makes businessmen and manufacturers cry out in despair at making inroads.

Japan's channels of distribution have been gradually built up over one- or two-hundred years, including personal and financial relationships. This has given rise to a very close organization which is also very exclusive. For example, if a shop brings in fifty kinds of goods from a large wholesaler, among which we have one that is better and cheaper, the shop will not dare to buy ours because that wholesaler might retaliate by withdrawing its goods from the shop. This is a very hard barrier to break.

Establish a Base and Put Down Foundations

Q. What countermeasures can we take?

A. On this aspect the government already has a plan for helping our businesses to take part in Japanese exhibitions, hold exhibitions of Taiwanese goods and raise our profile in the Japanese consumer market. Organize visits by business circles to Japan to get to know their people and establish a preliminary network.

As well as this we have also established a trade center in the Asia and Pacific Trade Center to provide offices and display space for businesses wanting to get into the Japanese market. Businesses can first establish a base there for low rent and then after a period of time managing, they will have the ability to go out and do business by themselves. On this side, the Koreans have been much more active than us. Japanese people often say to me that they very rarely see businessmen from the Republic of China in my offices. I have calculated that the Koreans have more than 300 businesses based in Japan and some 20 banks. This is something we should quickly follow.

Q. Raising the question of the trade deficit with Japan, most people regard it as a fierce flood. Nevertheless, with our present manufacturing structure, is there any way we can throw off Japanese goods?

A. In trade our dependence on Japan is too deep. Everything they sell to us is what we must have, such as the most basic components and capital goods needed for production. If we do not buy in, then we have no way to produce. There is no use in us using restrictions because if the Japanese stop selling to us then our production would be finished. So in the short range our dependence on Japan is very hard to cut.

We often say that the Japanese market is closed. In fact, under American pressure, the official Japanese policy is relatively open. They give us preferential tariff treatment, and our exports to Japan total about US$2.8 billion per year. On the other hand, there are various restrictions on Japanese imports, such as Japanese cars which are not allowed. To balance the trade deficit with Japan we must still work hard.

Two Spheres

Q. Apart from stressing imports to Japan, what will our future position be in relation to Japan in the so-called Pacific economic circle? Opposition or co-operation?

A. In the future Japan may take America's position as leader in the Pacific area and become the center of the world economy. So Japan should make its market available so that the developing countries of the Asia-Pacific region can make progress. This is just like what Japan described as its first great sphere of co-operative intercourse between Japan and the four dragons. Japan should supply funds and technology to allow the four dragons to upgrade their industries and let the market distribute goods. This is the first sphere. And the four dragons with Japan should supply capital, technology and markets, to assist the developing countries of Southeast Asia and mainland China. In this way the two spheres will gradually form one Asia-Pacific economic co-operation sphere. This is the direction in which we are working hard at the moment.

[Picture Caption]

"If we can seize the opportunity and crack the Japanese market then it shows that our industrial upgrading has been successful," says Vice Economics Minister Chiang Pin kung, stressing the significance of expanding our trade to Japan. (photo by Huang Lili)