The New Asia

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Bruce Kesler, writing for Democracy Project, is discussing Japan in today’s article.

He begins with this observation:

“In the 1950’s, we laughed at “Made in Japan” labels for kitsch and poor quality. In the 1970’s, we stopped laughing and panicked to catch up to Japanese quality and management focus. In the 1990’s we hoped we had gotten our money out of the Japanese stock market in time. In the 2000’s, we’ve largely just ignored Japan.”

From my perspective, we actually didn’t notice Japan until the late 1970s. During the first half of the decade, Japan stood for cheap little cars which didn’t drive well, but by 1978 and later people were worried enough about the price of gas to buy them anyway. In the 1980s, and especially after 1986, Honda and Toyota had clearly passed American-made cars in quality and performance. In the 1990s, we first worried that Japan was buying up American businesses and real estate, but by 1998 we were generally amused to discover Japan had paid far too much for the land, and in a chase for hard currency, investors were selling property back to Americans at heavy losses, which damaged the appearance of respect and cooperation; more than a few leading Japanese accused the U.S. of manipulating the market to play the Japanese for fools, or at least for unfairly taking advantage of the situation, which is ironically amusing, given Japan’s abuse of the Trade imbalance and Tariff games played so long by MITI.

Kesler used his article to reference the columns by Sol Sanders, especially the ones focusing on changes under Prime Minister Koizumi. I agree that Sanders, like Kesler, is experienced and knows his subject well, but I would also argue for the broader view, and in this point I find myself somewhat a defender of the Clinton Doctrine, insofar as Bubba ever put one together.

As a faithful husband, I have no respect for President Clinton’s personal conduct while in office at any level, and as an American, I agree with those who contend that Clinton damaged National Security by lowering the restrictions on American technology that the Chinese wanted to buy, steal, or otherwise acquire. That said however, I think Clinton had a good perception of the Asian pantheon, ironically superior than is possible from within the Pacific Rim. Also, too close a focus on any one of the Asian nations misses the balance between them.

Japan is an economic powerhouse, and many analysts believe they have the world’s third-best navy, perhaps the second-best. However, they have real issues in relations with their Asian neighbors, not only because of lingering bitterness from World War 2 (which Japan refuses to discuss in specifics), but also from trade practices which lead many nations to consider Japan unreliable. In business, you cannot succeed if you cannot be trusted.

South Korea is a growing regional power, and a true thorn in the side, and a permanent one, for Japan. Not only is SK’s industrial capacity growing to the same scale as Japan’s, their geographic location gives them comparable logistics. It is not a coincidence that DaeWoo and Hyundai are strong brands, as known for quality as they are for price.

China is still the 900-pound-gorilla in the room, but also still a very clumsy one. Until the PRC allows for independent audits and audited financial statements, they will attract some investment because of their sheer size, but will chase away plum contracts because their track record is suspect. It seems impossible to imagine a functional Chinese version of the SEC at this time, however.

Vietnam is another growing industry center, although their forte seems to be shipping, like Holland. Clever in its way, since it avoids direct competition with the neighboring countries.

And then there’s India. India is absolutely a wild card in any discussion, not only on the economic front, which is diversified and pretty complex, but also the military front, where India’s modernized navy and much more disciplined army cannot help but effect the balance of influence in the region.

And all that does not even touch the Philippines, Thailand, Singapore, or the islands of Micronesia, often forgotten but still a major player in many technology contracts.

Get a scorecard; it’s not just Japan.