Chapter 18: Back to the Boonies but What a Ride

Chapter 18: Back to the Boonies but What a Ride

Bye-Bye JETRO?

I was sent back to the Kyoto Prefecture Representative office in March to assist the new representative who would replace his predecessor in April. The transfer came as a surprise but, also, as a relief. The Philippine librarian was antagonistic because I infringed on her relaxed environment by actively supporting visitors and callers by providing information about the Japanese markets. The JETRO Trade Promotion Division, wanting the majority of inquiries to be forwarded to the JETRO Senior Trade Advisor, was also displeased.

 I regularly received complaints from callers and visitors to the library that the Japanese companies listed in the JETRO data base as potential partners with American businesses never responded when contacted. There were also complaints that the Senior Trade Advisor would recommend that they revise and relabel (in Japanese) their products for the Japanese market in order to adhere to the JIS or to accommodate consumer preferences. The majority of small business owners could not afford the costs of revising and relabelling and they threw in the towel before proceeding further.

At that stage I wanted to quit JETRO but a series of incidences encouraged me to remain for a while longer.


Fire Sale

Property values were plummeting 50 percent as a result of the bursting of the bubble. Japanese corporations who invested billions of dollars in foreign properties lost billions of dollars in the fire sales of their properties during the 1990s because of the recession and continued economic stagnation. In 1994, a debt-ridden Aoki sold its stake in the Algonquin to Starwood Capital and Goldman Sachs & Company for a mere $561 million.

Mitsubishi Estate also suffered a one billion yen loss in FY 1995 when the operator of Rockefeller Center declared bankruptcy. It was Mitsubishi’s first lost since its establishment in 1953. After selling its shares in twelve of the fourteen buildings within Rockefeller Center, it managed to hold on to the McGraw-Hill Building and the Time-Life Building where JETRO was located before moving to the McGraw-Hill.

There were two major reasons why the banks postponed calling in the loans. Firstly, the banks owned equity in their corporate borrowers and had members on their boards, and secondly, some of the outstanding loans were huge and if companies defaulted, the banks did not have sufficient capital to write off the debts. In other words, the companies were too big to fail. It was highly improbable that there would be any change in the relationship between the banks and their borrowers because the rigidity of the Japan Inc. system was well-established.


Kyoto Prefecture Revisited

With the exception of instructing his successor, who was visiting JETRO New York for a week, my former boss was out of the office. A recently arrived officer was posted in the JH office next door. His predecessor’s wife, adhering to the Director of the Trade Promotion Division’s advice to bear children in the US, had managed to have two children during her husband’s term.

There was a new MITI official in the political research office. An engineer, he relied on his male American researcher and consulting firms to educate him on US politics. There were two new MITI officers in Industrial Research. One officer had graduated from the John F. Kennedy School of Management at Harvard and spoke fluent English.

The new Kyoto Prefecture Representative was a very different type from his predecessor. Around thirty-five years old, he was a native of Kyoto and the son of a farming family. His initial impression of the US was hearing from his grandmother that American B-29 bombers flew over their home during the war.

He was proud of his Kyoto heritage and that he had been the first in his family to graduate from a university with a degree in accounting. Although he spoke some English, he preferred to converse in Japanese using the Kyoto dialect which was difficult to understand initially (memories of Mercian). Since he would slip into standard Japanese I presumed that the Kyoto dialect was an affectation. He confided that his superior in the Kyoto Prefecture treasury had supported his secondment to show appreciation for his loyalty. He preferred to socialize primarily with the Osaka Prefecture representative.

Unlike many of the officers who were sent to JETRO New York, the Kyoto representative had a definite remit. He was to organize a large 3-day exhibition in September 1996 of venerable Kyoto businesses engaged in the traditional Kyoto industries such as pickles, confections, arts, and crafts. Some of the firms had been operating since the seventeenth century. The exhibition was to celebrate the 1200th anniversary of Kyoto City as Japan’s first capital. Kyoto Prefecture Governor Teiichi Aramaki, the Japanese Ambassador to the US, the Japanese New York Consul General, the Governor of New York and the New York Mayor were scheduled to attend the opening ceremony. The exhibit’s objective was to introduce New Yorkers to Kyoto Prefecture’s finer things with the expectation that there was a market for these products in the United States. The officer who was under a lot of pressure was ambitious.

The officer was relieved that I was bilingual because I could facilitate much of his workload. His wife was about to give birth to a future American citizen after she joined him in May. He had rented a spacious home with a swimming pool in Princeton, New Jersey where he planned to enrol his first child, a daughter in a private school. Kyoto Prefecture would fund the tuition fee. Since the commute to the office was about an hour, the representative arrived in the morning at about 10:30am.

The representative was not opposed to my involvement with the paper as long as he was unaware of it. I was determined to maintain my connection with the officers in Research and Planning and wrote the articles in my cubicle when the officer was out of the office or on the weekends.

The president’s Assay in March “For a 1% Discount Rate” concerned the consequences of the rapid appreciation of the yen against the dollar. He admitted that Japan’s current account surplus would not decrease soon but that imports were on the rise: “I am proud to say that JETRO’s import promotion is helping this development.”

I interviewed Peter Simenaur, the New York Philharmonic’s associate principal clarinet for my article “Who Could Ask for Anything More?” about his experience when he toured with the orchestra in Japan in 196. Leonard Bernstein was the conductor at the time. ”That trip left a tremendous impression upon me. The Japanese adored Bernstein in those days and a red carpet was actually laid out! There was full press coverage.”

Simenaur, who had visited Japan with the orchestra nine times repeated what I often tell my friends about cuisine in Japan: “I have found that in Japan you can get the best cup of coffee, the best pizza, the best spaghetti, the best of everything! They [the Japanese] take great effort to outshine everyone else and most of the time they’re very successful.”

For the first time since the initiation of the paper, I did not contribute to the April issue of Inside/Outside Japan. The president’s Assay in the paper could be interpreted as a positive assessment about former US Secretary of Defence Robert McNamara’s book In Retrospect: The Tragedy of Lessons of Vietnam about the Vietnam War:

Finally, on this 20th anniversary of the end of the war, he [McNamara] has made public his examination of how he and other policy makers were gradually pulled into a dubious war. It is in this process that he repeatedly admits his mistakes. This is a courageous act. I cannot recall a single instance from among Japanese policy makers who, following Japan’s defeat, did anything remotely similar.


Oklahoma Bombing

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The representative encountered his first crisis several weeks after his arrival. On April 19, 1995 the FBI building in Oklahoma City was bombed. Timothy McVeigh a Gulf War army veteran drove a rented truck carrying a bomb into the side of the building. The explosion killed 168 people and injured more than 680. It was the worst incident of domestic terrorism in US history. Oklahoma Governor Frank Keaton who had served in a number of US law enforcement agencies expedited the rescue efforts. McVeigh and his cohort Terry Nichols, who made the bomb, were swiftly caught and convicted of the crime.

Since Kyoto had a Sister-State relationship with Oklahoma, the Kyoto representative was instructed by the Kyoto Prefecture government to fly immediately to Oklahoma City to offer to Governor Keating condolences from Kyoto Prefecture and to give a donation of $500. The representative requested that I accompany him and made arrangements through Japan Travel, a travel agency used by the majority of officers. The travel expenses were probably twice that of the donation.

We landed safely at Will Rogers Airport, named after the Oklahoma comedian who had died when his light aircraft crashed in Alaska. The JETRO Senior Trade Advisor posted at the State development office met us and drove us to our hotel before taking us to dinner at a restaurant for a taste of Oklahoma-style cuisine – spareribs and barbecued chicken, a first for the representative.

The following morning the officer and I visited the Oklahoma State capital and the governor’s office for the meeting with Governor Keating. The Art Deco building with its gold leaf roof and the stunning interior (including the elevators) befitted the oil-rich state. We were informed that we would be meeting the Deputy Governor Mary Fallon (now the current Governor) because Governor Keating was holding a press conference. An African American woman who was Ms Fallon’s assistant escorted us to the Deputy Governor’s office. When we entered we saw that the JETRO Senior Trade Advisor was there as well. Assuming that I was the Kyoto Prefecture representative Ms. Fallon greeted me first to the real representative’s dismay. I quickly introduced the officer who presented the governor with the check. After a photographer took a formal photograph of all of us Ms. Fallon’s assistant ushered us to Congress which was in session where congressmen were voting on a bill concerning insurance regulations.

The ride on the elevator to the next floor was from a scene in the movie classic “Giant” staring Rock Hudson, Elizabeth Taylor and James Dean. The lobbyists representing the insurance industry were present in force. The congressmen wore Armani jackets, snake skin cowboy boots and Stetsons.

Following the session, the Senior Trade Advisor escorted us to a small room to show us an exhibit of Oklahoma products which he had chosen for the Japanese market. The wares were arts and crafts made by Indian tradesmen for the tourist industry. I silently assessed the collection as entirely inappropriate for Japanese consumers.

In the afternoon the representative and I visited the FBI building which had been reduced to a rubble of ash and wires. The blast was so powerful that over 300 hundred buildings within a sixteen block radius had been destroyed. Shards of glass blanketed the ground. Bouquets of flowers were attached to the barbed wire fence which kept observers a good distance away from the building. A YWCA building with a nursery school in the basement located directly across from the FBI building was almost unrecognizable. Bouquets of limp flowers were attached to the barbed wire fence in front of the school in remembrance of the children who had died. It was a sobering and somewhat morbid scene that reminded me of the local Jizo shrines in Japan where statues of Jizo, the god who protects children’s souls, stand in rows with offerings of flowers and food placed at their feet.

The JETRO Senior Trade Advisor who had retired from a large trading company played host that evening at a Vietnamese restaurant which was more to the representative’s taste.  According to the advisor, many Vietnamese had migrated to Oklahoma at the end of the Vietnam War. He strongly recommended that we visit the Cowboy Hall of Fame before returning to New York.

The representative was reluctant to go. Although I had never been, I promised that he would enjoy the experience. We were not disappointed. The museum was a fascinating showcase of Oklahoma state history with exhibits ranging from cowboy and rodeo artefacts to exhibits replicating Oklahoma Sooner life. There was a room devoted entirely to Roy Rogers. His theme song, “Back in the Saddle Again.” was piped through loud speakers and his stuffed horse Trigger was mounted on its hind legs.

The representative’s wife gave birth to a girl in May. My article for the May issue New York in Nagoya put a positive spin on an American small business’s easy entry into the Japanese housing market. The piece was based on my interview of a Japanese artist and his American business partners who took their small business converting industrial spaces into residence to Nagoya, Japan. The article also promoted the company for investment.


WOW!

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In June, the Managing Director’s successor arrived at JETRO New York to take over operations. He was in his early forties and divorced. We were told that his father who had been a high-ranking official in the ministry may have pushed for the secondment. The new director was a Kyoto native and extraordinarily arrogant and controlling. The Japanese assistants gossiped that his Japanese girlfriend would be joining him and that he enjoyed Flamenco and was investing in a Flamenco troop. A frequent visitor to his office was a director from Ishikawa-Harima Heavy Industries. He also enjoyed going on skiing holidays with the JH representative.

On 13 June the American researcher in Research and Planning came to my cubicle and handed me the front page of the Sankei Shimbun. There was photograph of JETRO Tokyo headquarters and the headline “Is JETRO Out of Control?” (Jetero Boso?). The newspaper’s Washington, DC correspondent Yoshihisa Komori had written a stinging article pointing to the president’s Assay about McNamara in the April issue of Inside/Outside Japan.

According to Komori, William Triplet II, an aide to Republican Senator Robert Bennett, who was a member of the Senate Committee of Foreign Relations and a recipient of the paper, took exception to the article, protesting that the president of an organization that was established to promote foreign trade and economic cooperation should not be involved in commenting on political issues.

Komori claimed that there was opposition in the National Diet to the continuation of JETRO because (i) it no longer served its original function as a trade organization; (ii) JETRO was an underground MITI (kakure tsuushansho); and (iii) JETRO had in effect become the “Number Two Ministry of Foreign Affairs” (dai-ni Gaimusho).

The accusations that JETRO was no longer functioning as a trade promotion organization but was being maneuvered into other areas supported the Asahi Shimbun’s contentions that MITI was “disguising” JETRO in order to continue operations. Also, by alleging that JETRO had become a secondary Ministry of Foreign Affairs, Sankei Shimbun implied that MITI was using JETRO to wrest territory from the MOFA.

Komori’s article confirmed my convictions that MITI was using public funds to portray JETRO as an import promoter in order to justify its budget and to justify MITI’s use of its corporation to expand its territory in Japan and overseas. MITI also managed the Manufactured Imports & Promotion Organization (MIPRO) which was established in Washington DC in 1978 where MITI officials and Japanese trade delegations visited regularly.

I had thought that eventually recipients of Inside/Outside Japan would complain about the contents, specifically the political commentaries. And true to my prediction a few weeks later I happened to be leafing through the July issue of Sentaku to discover that the magazine carried a photograph of Inside/Outside Japan and an article claiming that the reason Triplet was annoyed with the president’s article was because JETRO’s activities in the United States were a source of irritation to the CIA and the FBI. Sentaku asserted that the CIA and FBI were watching closely the activities of the directors of industrial research in JETRO New York when they visited other JETRO offices in the United States. The agencies regarded the MITI officers as CIA-type agents from Japan and since the representatives could not be classified as either foreign diplomats or as scholars, their status was ambiguous. Also, there was a suspicion among members of Congress that the officers engaged in industrial espionage.

Another article reporting JETRO’s involvement in industrial espionage in the United States followed in the October 10, 1995 edition of Nikkei Report. Steven L. Harmon reported that the New York Times had alleged that the CIA and the National Security Agency had tapped the conversations of Japanese trade representatives and automobile manufacturers during the 1995 trade negotiations in Geneva, providing evidence that Japan was engaging in industrial espionage in the United States. Harmon discovered that the FBI was focusing its investigation on JETRO’s offices in Los Angeles and San Francisco, questioning former staff about their bosses’ activities. Harmon claimed that a female staff member had told the FBI that espionage was “a routine part of the jobs of such Japanese posted in the United States.” To counteract the bad press the Japanese press informed readers that France and Australia were the most actively engaged in industrial espionage in the US.

Officers in JETRO New York remarked cynically that Americans would sell anything for money. While I was in the Reference Library I had received enquiries from Americans who wanted to sell inventions pertinent to weapons production to Japanese companies. I replied that JETRO was not involved in procuring inventions related to military use.

Americans sometimes visited the office of the Director of Industrial Research. I advised the director to place photographs of his children on his desk to create a more relaxed atmosphere. He reported to me that the photographs were proving effective.

I was not concerned about allegations of espionage but about the appalling waste of public funds for promoting JETRO as a trade promotion organization while using its budget for activities unrelated to promoting inward investment and for planting offices overseas to serve as lobbying posts and holiday locations.

 When the president was interviewed by Japan Economic Survey he stated that 75 percent of JETRO’s budget came from public funds. Nevertheless, the expenses incurred by the relocation of representatives seconded from other government agencies was not included.  But even though opponents of Special Status Corporations regarded JETRO’s duties as extraneous and the offices as “empty boxes” it was unlikely that MITI would consider options to cut costs. JETRO had become a necessity.


It’s the Image That Counts

JETRO, true to form, released the 1996 edition of Success is Yours which reassured small-business exporters of processed food that entry into Japan was not difficult if certain procedures were followed. The American confectioner and maker of the famous Jelly Belly jellybeans, Herman Goetlitz Inc. was held up as an example of how a processed food producer was able to enter the Japanese market successfully. Since Jelly Belly was already popular among Japanese consumers who purchased the product in the United States, Goetlitz could count on instant name-recognition and success. Sony Corporation, the distributor, would not have taken a risk with a manufacturer that did not have a solid track record. Here again, JETRO did not explain that if foreign businesses do not have a strong brand loyalty among Japanese consumers before entering the market they would have difficulty surviving unless a Japanese company was willing to take on an unknown. Although JETRO did not participate in facilitating Goetlitz’s entry, readers may have assumed that JETRO was involved, since it did not state otherwise.

Success 1996 Case Studies continued to tout the success of large foreign companies in Japan that had prior recognition among Japanese consumers before entering the Japanese market.  Case study 5 was entitled: “L.L. Bean Japan Entering the Japanese Market without Capital Investment.” The company’s outerwear was already popular among Japanese who were on extended visits to the United States.

According to the case study, in 1992, L.L. Bean joined the giant retailer Seiyu and Matsushita Electric Industrial to form L.L. Bean Japan. Seiyu put up 70 percent of the investment and Matsushita the other 30 percent, the total capital investment being ¥490 million. The study explained that L.L. Bean, a company with a large mail-order business in the US, researched the Japanese market through a consulting firm and found that Japanese consumers preferred retail outlets to mail-order. Therefore, it had to rely on large companies to market and distribute its goods in Japan. Matsushita imported L.L. Bean goods and Seiyu retailed them.  Although Bean did not provide any capital nor did it take any risks, it sold its rights to sell its products to Seiyu and Matsushita, who ultimately controlled the business in Japan.


A Break from the Drama: A brief encounter with Donald Keene

I had a method for expediting a rapport with the officials I worked with. If I knew their backgrounds, where they had been born and raised, their fathers’ professions, their universities and degrees and their favorite authors I could estimate quite accurately their personalities and values. If Mishima Yukio received the highest accolades among authors I guessed that the officers were conservative and prone to nationalistic sentiments. Although I considered Mishima’s novels narcissistic, I regarded him a genius in his use of vocabulary and Chinese characters.

I had the great pleasure of meeting Donald Keene, who translated the works of Mishima and the 1994 Nobel Prize recipient Oe Kenzaburo at a reception given in his honor by his publisher. Keene, who is now a Japanese citizen, told me that Mishima’s manuscripts were completely void of corrections or erase marks. On the other hand, the pages of Oe’s manuscripts were filled with corrections.

But the highpoint of the reception was a glimpse of Yoshihisa Komori, the Washington Dc correspondent for the Sankei. I did not introduce myself.


The FBI Comes Calling

In September I was summoned by the FBI to participate in the “Friendly Witness” program to testify about the activities at JETRO New York. I did not want to take any chances of being found out by officers at JETRO New York and requested the services of a law firm to represent me at the interview which was conducted by a young female officer at the firm’s office located in the Battery. The two solicitors who attended the thirty minute session did not allow me to reply to the officer’s queries about my activities nor my superiors’ activities. Most likely other researchers were also questioned.

Several weeks later I received a telephone call from a man identifying himself as the director of a company in Texas. He asked if Kyoto Prefecture would like information regarding a hi-tech invention. I replied that my office was not sourcing hi-tech products. Curious to know the name of the company I redialled the number. The company was not listed.

Before he left JETRO in the summer of 1994 the first American researcher in Research and Planning who collaborated with the American in Industrial Research confided that he suspected the researcher was a CIA mole. Although the researcher had access to his bosses’ schedules he did not speak Japanese, which limited the kind of information he was privy to. Furthermore, I assumed that his bosses considered him to be innocuous.

The new Managing Director was paranoid due to the attention from the CIA and FBI intrusions and he decided that, not only should the office be renovated, including the installation of a security system but, also, that all officers should clock into JETRO with new security cards. The director would then be able to assess attendance records, which pressured officers who were used to a relaxed schedule, to arrive promptly in the morning. The editor of Inside/Outside Japan was particularly affected by the new system because he habitually arrived late, which had always been allowed. A Japanese construction company was commissioned for the renovation of the office, which included a new meeting room. Word had it that the cost of the renovation was around $250,000. The director also replaced the computers that had been purchased two years earlier with new computers. The old ones were stored in a room never to be used again. JETRO’s budget was bottomless.


Another Prime Minister Bites the Dust: reforms put on hold

On August 15, 1995, marking the fiftieth anniversary of the Second World War, Prime Minister Murayama apologized to Japan’s “Asian neighbors” for the suffering and damage caused by the Japan’s military. Despite this courageous gesture, Murayama’s administration suffered from a sequence of events that served to end Murayama’s term in office in 1996. There were the Kobe Earthquake which brought harsh criticism of the government’s handling of the aftermath; the continuing recession, political infighting and the opposition of Socialist Party members to Murayama’s support of the Japan–US Security Pact, which the prime minister contended was in accordance with Japan’s Constitution. The rape of a teenage girl by US Marines stationed on Okinawa did not help matters. The Sarin gas-attack by the religious cult Aum Shinrikyo in the Tokyo Underground on 20 March that killed twelve people and injured 6,000, increased Japanese anxieties about the country’s socio-economic stability, impacting adversely on Murayama’s administration. Voters returned to the LDP fold and the Socialist Party lost many seats in the Lower House in the 1996 election.

Murayama resigned as prime minister making way for the conservative LDP president Ryutaro Hashimoto to enter the executive office, albeit heading a three-party coalition government which included the Socialists. Frustrated members of recently established parties either returned to the LDP or joined other parties. Hashimoto, who served as the Minister of Industry in Murayama’s cabinet was well-liked by MITI officials. The female non-career officer in EID/MITI told me that Hashimoto favoured green leather trousers and that women over fifty were enthusiastic supporters. I was disappointed that Murayama, a reformer, had resigned. Japan Inc. was sliding into a political black hole.

Ozawa had ploughed ahead to form the New Pioneer Party in 1995, merging it with the Renewal Party. He defeated Hata in the election for secretary-general in the party but it was a meaningless exercise because Hata and the majority of members left the party to form other small parties.

Ozawa went on to form the Liberal Party, which was one of the three parties that participated in Prime Minister Hashimoto’s coalition government (1996–98). He had cultivated a devout following of young supporters throughout the 1990s. Many of his lieutenants were first employed to perform menial chores in his home such as cleaning and walking his dogs. If they proved to be hard-working and loyal, they were promoted to secretarial positions in his Tokyo office.

Meanwhile, the IMF continued pressing for structural reforms and western commentators and Noble Prize winning economists were positive about Japan’s recovery. By then I was confident that structural reforms would not happen.

The changing of the guard at JETRO New York took place in June when the president’s two-year tour came to an end. The previous autumn he had driven his wife and me to Long Island for wine tasting at several Long Island wineries. When he departed JETRO New York he gave me a beautiful print of a portrait of a Samurai warrior and a silk brocade center table cover which is a traditional craft from Kyoto Prefecture. I framed the print in a traditional wooden frame my husband had purchased during our time in Kamakura. The print hangs on a wall in my flat. The brocade table cloth remains in its wooden box for safe-keeping.


Kyoto Comes to New York

The representative and I began to search for venues for the exhibition, using the services of a Japanese real estate agent. To his disappointment, the rooms in Rockefeller Center were too small and too expensive. To my disappointment he decided on the lobby of Number Two World Trade Center which was spacious and easily accessible to commuters. I was careful not to show my distress but I desperately wanted to avoid the World Trade Center because of the 1993 terrorist bombing of the Marriot Hotel garage in the World Trade Center. It was the first terrorist attack by Arabs with connections to Al-Qaida. I felt particularly vulnerable when I had to attend meetings with the officer in Windows on the World, a restaurant on the 106th and 107th floor of the North Building. I was not looking forward to the commute on the IRT.

I named the event “Kyoto Comes to New York.” Two placards were designed by a Japanese artist. One sported a photograph of a smiling Governor Aramaki with his greeting in Japanese, which I translated in order that New Yorkers would understand his message.

Tragically, the representative’s ambitions for his career were thwarted when three weeks before the exhibition his youngest daughter fell into the swimming pool. The pool was not protected by a safeguard and the child had been left unattended. The baby was rescued by a neighbor and emergency services resuscitated her. She was flown by air-ambulance to a hospital for further treatment. The baby remained in a coma for over a week before regaining consciousness. The accident left her physically impaired.

Fortunately, since the child had been born in the United States, she was eligible for Medicare and received excellent and compassionate treatment during weeks in the hospital. When she returned home Medicare continued to support her through physiotherapy. Kyoto Prefecture government insurance also supported the girl’s care.

Only a day after the accident the officer, leaving his wife to attend their child, came to the office to continue focusing on the arrangements. He confided bitterly to me that he wished that the baby had died. At first, it was a shocking admission but upon reflection I could understand his reasons; he and his wife would be judged harshly in Japan for not having taken necessary precautions to prevent the accident. There was also the stigma of having a severely disabled child which could impact adversely on his career.

When the MITI officials at JETRO paid their condolences the representative was outwardly respectful but in private he told me that that the ministries regarded local governments as “beggars” always pleading for more subsidies for public works and that local government officials had to bear gifts to Tokyo to court officials. After the accident, to ameliorate the Managing Director, he offered to introduce him to his sister-in-law, an attractive Kyoto woman. It was positively feudalistic but logical in the context of the Japan Inc. system.

Prior to the opening of the exhibition a delegation from the town of Maizuru visited the officer. Maizuru is located in northern Kyoto on an inlet on the Sea of Japan. The port was established as a naval base in 1901 during the Japanese-Russo War and developed to become a city in 1943. The city’s economy is supported primarily by the Coast Guard. The delegation asked what I would like to receive from Maizuru and I requested a book about Maizuru’s history and a map. A few weeks later I received a beautiful hardcover volume. Strangely, many Japanese do not know that Kyoto Prefecture has a port.

The representative was determined to ensure that the exhibition went smoothly but he had to commute to the hospital regularly to support his wife as well. My workload increased substantially. I assumed much of the burden, communicating with Kyoto Prefecture government daily and assisting the tradesmen to set up their booths and hang their artwork on temporary wall set up in the lobby. Although the event was partially subsidized by government the tradesmen assumed the sizable portion of the costs of shipping their crafts to New York. Some of them had never been to the US nor could they speak English and by the time the exhibition commenced they were exhausted from the stress.

The exhibition opened to the public after the opening ceremony which was officiated by Governor Aramaki and Kyoto Prefecture government officials. The New York JETRO president put in a surprise appearance. Many Americans enjoyed their first exposure to the elegant products on display, which included Japanese confections and rice crackers. At the end of the final day, the representative gave an hour session to the tradesmen to assess the event. He was reluctant for me to attend but allowed me to sit at the back of the room.

The officer spoke at length to the business owners about the viability of their products in the American marketplace. Perhaps influenced by the JETRO news bulletins of crimes perpetrated in the US or perhaps he was unfamiliar with American consumer preferences or perhaps he watched  too many TV shows, the officer characterized American consumers as couch potatoes who sat all day watching television while eating spaghetti out of cans and drinking vast quantities of beer. His analysis did not include other market information that may have given the tradesmen a more positive perspective.

The business owners left the room downcast. I was appalled by the officer’s cynical view of Americans, but he had achieved what was expected of him during his posting at JETRO New York. He was also anxious about his future career. At the farewell dinner that evening I quietly offered three of the business owners to take them the following morning to upmarket boutiques and food shops where foreign products were popular and where consumers were familiar with Japanese foods and crafts and who could afford to purchase their elegant products.

The officer was somewhat distressed when he discovered that I had taken the initiative without his permission but he was mainly focusing his attention on his family situation. He began spending most of his time either with his family or visiting the branches of Kyoto businesses on the West Coast.


Reconnecting with Research and Planning

Since the officers from JASME and Ehime Prefecture were posted at desks in Research and Planning I decided to continue at JETRO New York for a while longer in order to connect with the officers and their agencies thus giving me the opportunity to confirm what I already suspected if there was an opportunity to visit them in Japan.

With the exception of an article for the September issue of Inside/Outside Japan my contributions were intermittent. The articles in 1995 about JETRO New York confirmed my understanding that JETRO was an extension of MITI and that a number of Special Status Corporations served similar roles. I was committed to finding out more about Special Status Corporations, especially in terms of the funding. The accounting methods in these entities appeared to be completely opaque. Indeed, when JETRO New York received notification from the government in 1996 that it would be audited in a few weeks there was a flurry of activity at the computers in the management division and huge bags of shredded paper were thrown out. After the audit JETRO New York was given a clean bill of health.

The continuous positive outlook of Japan’s economy by the international business community was disconcerting as was the urging by the IMF for Japan to implement structural reforms. Only a minority of us predicted that Japan’s economy would continue to be fragile and that the deregulation of markets and structural reforms would be continuously postpone not only because of political turmoil within parties but, also, because the bureaucracy was the most powerful arm of government.


Bulls Eye!

In February 1997 Japan’s biggest business weekly magazine Nikkei Business did a cover story on Special Status Corporations, interviewing Hiroshi Kato, who was the president of Chiba Commercial College and the chairman of the government’s Tax Commission in the 1980s. He emphasized that public funding of Special Status Corporations was a serious problem because the ministries had the power to use the money at their discretion without seeking consent from the Diet. The politicians supported this behavior because they solicited contracts from the corporations involved in public works for their constituencies.

Kato complained that there was no public disclosure by the corporations for accounts indicating profit-loss balances and that the accounting system used was difficult to fathom because it differed from the system used by private corporations. He recommended privatization. Some of the corporations had already been dismantled prior to 1996, when the number stood at ninety-two.

Nikkei Business claimed that while Special Status Corporations had been founded on the precept that the work executed would serve the national interest the opposite was true for the following reasons:

  1. Special Status Corporations received funding from sources that were difficult to trace.
  2. The corporations could set up subsidiaries (“children” and “grandchildren” corporations) that showed profits even though the parent corporations were in debt.
  3. The ministries established Special Status Corporations and their subsidiaries to provide temporary employment for staff and post-retirement positions for retired senior officials before they moved to the private sector.
  4. The corporations used funds to do work that was in the best interests of the corporations.

 

Bulls Eye (but so what?)

The American media continued its negative coverage of JETRO New York. The American researcher with whom I spoke Japanese passed me the article in the June 16, 1997 issue of U.S. News and World Report with the message “Bulls Eye!”

The piece “With Friends like These” continued to probe JETRO’s authenticity as an import promoter.  Senior Writer William J. Holstein questioned JETRO’s function in the United States. In his article, Holstein described JETRO as “a uniquely flexible organization that defies American definition.” He contended that JETRO America did not serve to promote imports into Japan, but rather was a sophisticated commercial intelligence-gathering agency. He suggested that the promotional materials served to disguise the true reason for JETRO’s presence. Edward J. Lincoln, who had served as a trade attaché for the former ambassador to Japan Walter Mondale and who was at the Brookings Institution, told Holstein: “At best the Japanese are being disingenuous when they say that JETRO’s primary job is promoting American exports.” Lincoln suggested that JETRO’s “core mission” was to collect American technology and political intelligence.

In his article Holstein stated that there was a risk that products invented by small businesses would be appropriated by Japanese companies to whom they had been introduced by JETRO. He provided as an example the experiences of a Clearwater, Florida entrepreneur, Donald Lewis, whose electronic device JETRO contended in its publication Success in the Making it had marketed in Japan. Holstein contended that JETRO’s support led to Lewis losing control over his invention to an automobile manufacturer. Lewis claimed that Toyota had agreed to use his device, and when Toyota had used it for a few days, the Japanese distributor told Lewis that it would be best to sell his stake to Toyota. Lewis felt under pressure to sell because Toyota was a giant manufacturer and very influential.

JETRO chairman Toru Toyoshima had painted a different picture when he addressed an audience of the New York Japan Society in 1993. He reported that a Senior Trade Advisor had come upon Lewis’ electronic anti-rust system and thought that it would do well in Japan. According to Toyoshima, the Export-Import Bank of Japan loaned Lewis US$1.5 million to expand his operations. Toyoshima told the audience: “As some of you know, in April 1990 the EXIM Bank of Japan introduced a lending program designed to increase imports into Japan and provide financing to American companies with products that are likely to sell well in Japan. The Florida company became the first to have such financing.”

When Holstein asked the JETRO New York president about JETRO’s activities in the United States, the president insisted “We are promoting U.S. exports to Japan to reduce the trade gap between us.” The JETRO website at the time was advertising requests from Japanese companies for such items as “used medical bed”’ and “primary coat stripper for optical cable.”