South Seas

Her Role In The

Attracting

Honourable

Attention

"Good Fortune"

There is no apparent slackening of in terest by Japan in overseas investment, and Japanese business still welcomes ap proaches for capital from developing coun tries, despite a levelling-off in business ac tivity and uncertainty over fuel supplies.

Past involvement by Japan in trade and investment overseas has provided huge

foreign exchange holdings.

There is keen Japanese interest in the South Pacific, and not only in the “traditional” industries such as fishing and timber in which they are well established.

Part of this interest comes from the fact that few, if any, Pacific Islands groups are capable of handling big business enter prises alone, chiefly because they lack the capital and technical resources.

Japan’s overseas ventures can be divided roughly into three; • Finding a labour force; • Developing natural resources; and • Market-oriented investment.

The first two aspects of Japanese com panies’ moves into developing countries are familiar in the Pacific.

The third is mainly used in advanced countries, and is designed to develop new markets for Japanese products by switching from exports from Japan to local production to cope with protectionist policies and import restrictions which may be created because of a rapid increase in

Japanese imports.

The readiness of the Japanese to invest outside their own country attracts many

trade missions to Japan to try to secure

Japanese capital and expertise.

The Pacific Islands offer a number of fields for profitable investment for both Japanese investors and the Islands themselves.

The Japanese External Trade Organisa tion (JETRO) offers a number of suggestions for missions visiting Japan to make their visits as successful as possible.

Missions are best classified into two types, according to the nature of places and the people they visit. One is a “Courtesy call” type and the other is a “substance type”.

Courtesy call missions, generally, are headed by heads of state or persons of similar stature. These missions, general ly, comprise local businessmen, including presidents of chambers of commerce or similar trade organisations. While in Japan they visit the Federation of

Economic Organisations (Keidanren), the

Japan Chamber of Commerce and In dustry, JETRO and other organisations.

They meet the presidents or chairmen of

those organisations for about an hour to explain the purpose of their visit and ex change opinions on matters related to in vestments by Japanese companies.

No substantial results should be ex pected from such courtesy call missions, because the Japanese organisations they visit are not directly concerned with invest ment. The most likely outcome is that the organisations will inform their members about the missions. But such missions have two merits: • They can get in touch with top businessmen in Japan; • There is a great possibility they will be covered by newspapers, and receive valuable publicity.

“Substance call” missions are practical ones. They are smaller than courtesy call missions. The missions visit business enter prises, manufacturers or trading firms, and exchange opinions with managers in charge of those companies’ foreign departments.

In Japan, these managers have a certain degree of authority which should enable some definite results to come from talking to them about specific business proposals.

JETRO says it is necessary to unders tand thoroughly the potential interest of Japanese enterprises concerned before missions go to see them. In other words, there has to be as clear a description as possible of the industry for which Japanese involvement is sought, a comparison of advantages, including any preferential

treatment, of the country concerned with other countries should be outlined, and the missions should be well acquainted with the operations and interests of companies they will be approaching.

Missions should find appropriate in termediaries to receive them in Japan and help them. In ordinary cases, three types of intermediaries handle the preparations to receive missions: • Foreign embassies may make all the necessary arrangements. In some cases the arrangements are made by offices (banks and official representatives) of the coun tries which send the missions: • Some Japanese intermediaries make all

necessary preparations:

• Foreign embassies in Japan and Japanese intermediaries jointly make the

preparations.

Of the three, the combination of foreign embassies and Japanese intermediaries probably ensures the smoothest reception.

Among Japanese organisations which usually handle preparations jointly with foreign embassies are Keidanren, the Japan Chamber of Commerce and In dustry, Japan Productivity Centre, and

Jetro.

These organisations can give advice about the itinerary of missions, make ap pointments, provide data and references, and offer much other assistance. If mis sions want a substantial reception and a smooth development of their programme in Japan, they should have preparatory work done by reliable public relations agents or consultants. The missions should explain thoroughly to these people what they hope to achieve.

They help in such matters of local knowledge as appointments, which should be limited to three a day in Tokyo, chiefly because of the traffic congestion. Japanese are particular about punctuality in keeping

appointments.

If missions are big they should be divid ed into groups. Courtesy call groups should be limited to five or six. If they ex ceed 10 they are not effective because they lack intimacy. It is better for the mission leaders to make courtesy calls with the rest of the members, visiting as many potential investors as possible to exchange views at managerial level. It is necessary of course to make a study in advance of the firm to be visited.

Printed materials should be prepared in Japanese. This habit has been developed

by many overseas businessmen visiting Japan, and is an excellent move which smooths the missions’ paths. The Japanese generally can read English, but it is wise to assume that material written in English would rarely be read. The metric system should be used for weights and measures and name cards should be printed in both Japanese and English.

Information should be supplied, in writing, about the country concerned, covering its economic state (in brief), climate, and geography and maps should be supplied. There should be information about manufacturing industries, agriculture, availability of various materials, transport, labour, services such as electricity, water, and gas, taxes, finance (banking institutions), corporate registration, licensing, market indicators, education and as much information as possible about local requirements for set ting up anew business.

Missions should employ competent in terpreters. Big cities like Tokyo and Osaka have companies which specialise in

providing interpreters.

Some foreign missions say they do not mind what businesses are established in their countries. The Japanese regard such an attitude as highly irresponsible. To at tract foreign investment the countries should give responsible explanations after carefully investigating what type of businesses have bright prospects, as well as the type they specially want to develop.

Simultaneous establishment or develop ment of competitive industries would only lead to disorderly marketing in Japanese eyes.

Some missions may give receptions in Japan, perhaps showing slides or motion pictures beforehand. These audio-visual aids can be very effective, but they should be limited to no more than 15 minutes.

Slides or motion pictures with too many similar scenes kill their effect. If at all possible, any narrations should be given in Japanese. If the pictures concern a

successful Japanese enterprise operating

abroad, the staff of the enterprise should be asked to address the audience.

A mission’s work does not end when it leaves Japan. In fact, it is only beginning.

The follow-up is important. Missions should not fail to send letters of thanks, they should continue to send data by direct mail, keep in touch with potential customers (perhaps through Christmas cards) and provide data to Japanese em bassies and other prominent Japanese organisations so that they may answer in quiries from Japanese manufacturers and traders.

It is advisable, if possible, to set up a proxy contact in Japan to handle follow-up work for the mission. It is wise to keep in touch with overseas branches of Japanese trading firms. And keep up public relations work aggressively.

Those

unique

traders

Japanese trading companies are a uni que institution without parallel in other nations. While international corporations based in the US and Europe share some of the features of Japanese general trading companies, none of them comes close to having the breadth of product line and ser vices offered by Japanese trading com panies, or the variety of subsidiary ac tivities.

Trading companies justify their ex istence in a number of ways: • Ability to get the best deal for their clients in transport, warehousing and other areas related to physical distribution and marketing of exports and imports; • Ability to pool business risk through handling a wide portfolio of products and thus provide financing for items exchanged in international trade; • Ability to provide financing and organisational knowhow for setting up

major projects;

• Development of overseas resources, in cluding iron ore and timber, as Japan has become increasingly more dependent on external sources of raw materials.

Less than one per cent of trading com panies, in terms of sales, handle about three-fifths of all imports, and close to 50 per cent of exports. So these companies control a very large proportion of both im ports and exports. The degree of concen tration of goods-flow through the largest firms is very high.

Trading firms of interest to exporters to Japan fall generally into three groups: (1) General trading companies; (2) specialised trading companies; (3) maker or retailer “captive” trading companies.

As the size of turnover increases, trading companies tend to become much more specialised in their product lines. Specialis

ed trading companies are engaged primari

ly in handling export and import transac tions, and in arranging for distribution for a limited number of products. While their activities do not extend to resource development, and the other functions of general trading companies, they often have access to distribution, sales and service networks for many specialised products.

Maker “captive” trading companies

engage in import and export marketing for

particular companies. They are primarily

of interest to overseas firms interested in exporting to the parent manufacturing company.