In This Review

Japanophobia: The Myth of the Invincible Japanese
Japanophobia: The Myth of the Invincible Japanese
By Bill Emmott
Times Books, 1993, 261 pp.

The author, editor in chief of The Economist and its former Tokyo bureau chief, has been provoked by what he calls the Michael Crichton school of thought about Japan, which holds that the Japanese are ruthless and regard trade as war designed to drive out competition, and that, in self-defense, Washington should take actions to restrict Japanese investment in the United States.

This book is a sober analysis of Japanese direct investment in the United States and Europe -- that is, investment that involves management control, achieved either by building a business or acquiring an existing one. The author attempts to discover whether Japanese businesses really are different, at least in their overseas investments, and what the sources of the differences are.

He does not have to address the second question seriously, for he finds a wide variety of experience with Japanese firms operating in the United States and Europe, with average characteristics that are not especially surprising. The book contains lively case studies of Japanese overseas investment in automobiles, movie-making, tires, banking and finance. While Japanese overseas operations have been notably successful in automobile manufacturing, it would be a mistake to generalize from that case alone. In particular, many Japanese firms do not yet seem to have found the right balance between importing management techniques and adapting to local conditions.

A second source of information is a survey of 150 Japanese affiliates in Europe and America, designed to facilitate comparison with responses to a similar survey made in the 1950s of American affiliates operating in Britain, many of them new arrivals. The results of the contemporary survey debunk a number of contentions about Japanese affiliates, e.g., that they do no R&D overseas. And the comparison with the older survey of American affiliates is noteworthy for the strong similarities65 percent of Japanese firms reported that they were strongly or partly controlled from the home office; the corresponding response from American affiliates in Britain in the 1950s was 72 percent.

With Japan ailing from a recession and weakened financial system, one would expect substantial, fierce reappraisal of the Japanese prowess proclaimed several years ago, at the peak of their overseas expansion. This book foresees economic recovery and revival in Japan. But it also finds that Japanese businesses overseas are struggling with most of the same problems as businesses in other nations. They sometimes provide useful lessons and always provide useful competition. But they are not likely to overwhelm others, and there is no compelling reason to treat them differently.