Advice to China: Be Like Japan
The following is the English language version of my article in the June issue of New Fortune Magazine.
When Chinese companies seek to invest in the United States, Americans frequently advise them to “Be like Japan.” Given the current Sino-Japanese tensions, this is probably not advice that Chinese businesspeople want to hear. But it is well-intentioned and based on historical fact.
During the 1980s, Japan went through a period of strong economic growth and globalization similar to what China is experiencing today. At the time, many Americans felt great hostile toward Japan because America appeared to be in decline while Japan was on the ascendant. Companies such as Sony, Toyota, and Honda were putting great pressure on American companies that had previously dominated the US market. At the same time, Japanese buyers were acquiring iconic American companies, as well as famous landmarks such as Rockefeller Center in New York. American politicians demonstrated their hostility toward Japan by smashing Toyotas with sledgehammers on the grounds of the US Capitol.
Americans were divided on the reasons for Japan’s economic success at the expense of the US. Some said it was the fault of the Americans themselves – that Americans had become lazy, and that Japanese people were simply more industrious. Others said Japanese companies possessed an unfair advantage because their government supported them financially and the paid their employees less than American workers. Either way, the public discussion of Japan in America was full of negative commentary. Many politicians blamed Japan for America’s economic troubles.
Today, Japanese companies are welcomed in the US, and Japanese products are fully accepted by American consumers. In 2013, General Motors and Ford sold <a combined?> 5.2 million cars in the US; Toyota and Honda sold almost as many at 3.7 million. Most Americans don’t even think about a car’s country of origin; they simply buy the car they want. Even so, approximately 70% of Japanese cars sold in the US today are also made in the US. That indicates one lesson that Chinese companies can learn from the Japanese: Invest in the US, and eventually you will be successful.
Admittedly, there are differences between Japan in the 1980s and China in 2014. Japan was (and is) a close ally of the United States. After World War II, Japan modelled its government and economy on that of the US, under the close supervision of the American government. In the 1980s, the concerns that American had about Japan were almost purely economic.
The relationship between the US and China today is much more complicated. Geopolitical issues between China and the US create tensions that strain the relationship. China’s growing influence has dimensions that go beyond simple economic competition, leading some American political leaders to fear China in a way that they did not fear Japan.
Nevertheless, in some ways, Chinese companies seeking to come to the US are in a better position than Japanese companies were in the 1980s. One reason is that Americans are divided in how they view China. In a recent poll by the Pew Foundation, 56% of Americans said that America should be tough with China on trade; at the same time,55% said the US should build a strong relationship with China.
American politicians are similarly divided. Leaders at the national level, such as Members of Congress in Washington, tend to be critical of China. At the state and local level, however, they are much more positive, because they hope to attract Chinese investment to their home states and cities. That is an advantage the Japanese companies did not enjoy in the 1980s. Today, American governors and mayors are constantly visiting China in hopes of luring Chinese companies to their states and cities. Thirty years ago, there were no similar visits to Japan.
In the end, Japanese companies succeeded in America because they were patient and persistent. Although they were attacked at first, they did not lose sight of their goal. They recognized that they did not need all Americans to love them; they just needed a critical mass of consumers who wanted to buy their products. They adapted to American culture and made products that Americans wanted. They determined who their key audiences were and targeted their communications accordingly. Over time, the environment changed, and US politicians moved on to the next “bad guy” they could blame for America’s troubles.
About four years ago, I met with the Chairman of the Board of a global Chinese company that wanted to sell products to major American companies. The Chinese company had been criticized unfairly in the American media by certain politicians and some potential competitors. I gave that Chinese company the same advice I’m giving in this article. I explained that Japanese companies were similarly attacked when they first came to the US, and I cited Toyota, Honda, and Sony as examples of Japanese companies that overcame major challenges in the US, in part by employing smart communications and public relations.
The Chairman responded, “Those examples do not apply to us because we are not a consumer brand.” He believed that success in the US could be achieved simply by making good products at fair prices, which his company did. But he underestimated the importance of his company’s image and reputation. For various reasons, he believed that those things simply did not matter.
Unfortunately, that belief is common among Chinese companies. It reflects a lack of understanding – not only of the US business environment, but also of the value of good communications, which are necessary regardless of what products a company makes, or how large their customer base may be. Today, the Chinese company I advised four years ago still faces challenges with its image. But it now has a much larger public relations department and conducts strategic communications in a very sophisticated way.
Chinese people are known for their patience and persistence. Yet in the quest for profit, these virtues are sometimes lost or set aside. This is unfortunate. Patience and persistence are powerful, and when combined with an ability to learn and adapt, they create great prospects for success. Chinese companies may not consciously try to “be like the Japanese.” But if they can learn from the history of Japanese companies in the US, and adopt a similarly patient, persistent approach, they will ultimately reach the same destination, achieving great success as they “go out” into this new market.
Category: China
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