If Japan can teach the West anything, it is the necessity for dialogue between industry, government and academia. So says Dr Harald Kohl, a passionate exponent of the Japanese way to economic dominance, and managing director of BASF Japan. Between 1980 and 1990, Japan saw its gross domestic product double, while the European Community countries […]
If Japan can teach the West anything, it is the necessity for dialogue between industry, government and academia. So says Dr Harald Kohl, a passionate exponent of the Japanese way to economic dominance, and managing director of BASF Japan. Between 1980 and 1990, Japan saw its gross domestic product double, while the European Community countries remained stable and the US went into a decline. Over the same period, gross national product, an indication of a country’s capital investment, stayed at 10% in the US, while Japan’s increased steadily from 17% to 25%. The figures illustrate different attitudes and cultures; different approaches to industrial growth; and different approaches to long-term profitabilty. Nonetheless, Japan’s prosperity has not been bought easily, and one of the heaviest costs is the hours the Japanese spend in the workplace. For 1989, the manufacturing industries in the US put in some 1,957 hours, Germans spent 1,638 hours working, but the Japanese clocked up 2,159 hours. In terms of overtime, the figures are 94, 198 and 254 hours respectively. Japan works 15 months to Germany’s 12. Pundits can argue whether that means Japan is more or less productive, but economic dominance speaks for itself.
Nippon bestrides the Asian markets, overshadowing the other new industrial economies, and the biggest market, the US, is well within its grasp. Kohl argues that up until 1985, Japan was struggling to overcome appreciation of the Yen. Its exports were expensive and it was not easy to develop internal markets. But as from 1986, Japan began investing overseas, with the US its primary target and Europe earmarked for second wave of direct investment. So while Japan invested $14,000m in Europe during 1990, European industries responded with a mere $1,800m. If Europe is to establish a foothold in Asia it is essential, argues Kohl, that the West starts investing in Japan. BASF is doing just that, investing in property, land and staff. Additionally, Kohl is keen to see more acquisitions and mergers, but he acknowledges that marriages are largely Japanese affairs. However, direct investment is not the only key to Japanese success. The keiretsu, the extended family and supporting network of companies, is vital to the Japanese way. Kohl compares Toyota Motor Co with General Motors Corp. They employ 65,000 and 780,000 staff respectively, and in the same order, produce 4m and 5m cars.
By Janice McGinn
Toyota relies on 270 suppliers, and all work to Just-in-Time procedures. Sadly, General Motors does not have that infrastructure. Another indication of different attitudes and innnovation is the number of industrial robots used in Japan and the US. While the definition of an industrial robot is variable, the trend is clear. Recent studies indicate that Japan has some 230,000 units, while the US can lay claim to only 80,000. BASF is keen to expand its base in Japan and increase its $1,132m revenue. To that end, it has established a large technical centre devoted to engineering plastics. Kohl recognises the need to garner a share of the Japanese domestic market, but his sights are fixed on the rewards of transplants from Japan to other parts of the world. He reckons that every third car manufactured in the US by the year 2000 will be a Japanese transplant. For BASF to exploit that trend, it must become a significant factor in Japan and gain approval, government and foreign aid. The company has established a number of alliances as well as a joint venture with Nippon Oil & Fats, and Kohl is adamant that the opportunities for mergers ought to be embraced wholeheartedly. Kohl’s point about an alliance between government, industry and academia has taken tangible form in MITI, the Ministry of International Trade & Industry. It has been oft criticised for closing markets, but it has facilitated discussions between the relevant sectors. Its role has declined slightly over the past few years, but it continues to spend $16,000m a year on research and development. BASF is MITI’s foremost external partner, and they are collab
orating currently on the development of materials with non-linear virtues for extremely fast switching. The partners are examining non-linear materials that can be used both in switching and light controlled fibre optics, something the Japanese government plans to take into every Japanese home. The consortium – which consists of 50 Japanese companies and BASF – wants to develop practical applications that may replace older and slower electronics, but also, to foster further research in these materials. They are working from the Tsukuba research park just north of Tokyo, and have access to other research labs through MITI, essential when no one company or organisation can supply all the necessary expertise. The park was established by the Japanese government in the 1970s, and unlike botched attempts at creating Canary Wharf-type hothouse environments, it came complete with a highly-sophisticated communications infrastructure.
Learn from defeat
The MITI project is is developing a transphaser non-linear optical device with memory, and three years into development, the consortium says that the best material, to date, is glass. It seems remarkably little after the work and investment, but as BASF emphasises, the aim is not just to create products, but to further research and knowledge. Given Dr Kohl’s fine words about alliances, why did BASF not pursue the research in Europe, where a number of universities – Heriot-Watt, Edinburgh, Aberdeen and Southampton to name a few – are engaged in opto-electronics research? Quite simply, BASF received front-page headlines in Japanese newspapers when the collaboration was announced – the most effective form of advertising, and doubly attractive since it’s free. It seems unlikely that would happen in Europe where a different culture devalues technology. Also, Europe has a poor history of international collaboration, and cross-fertilisation of academia, industry and government is rare, especially in the UK. Yet as Kohl warns, this is not a UK or German issue. Europe is competing with Japan, and we have to find ways of doing that without reverting to 2,000 work hours. Europe can’t beat Japan on its own terms, and Kohl believes that it is necessary to learn from defeat and institute dialogue.