                      Avoiding the Gaijin Syndrome
                          Steven Schlossstein
        
        
                         Editor's Introduction:
        
                   Starting with this issue, reprints of Steven
        Schlossstein will periodically appear.  These are
        contributed textfiles to the Japan forum on Compuserve
        where Mr. Schlossstein is one of the more notable
        contributors.  His reprints enhance the Asian coverage
        that appears periodically throughout ShareDebate
        International.  Besides his nonfiction, he also does
        fiction--I thoroughly enjoyed his novel, Kensei.  See
        his biography for more background.
        
        
                           Author's Biography
        
                   Steven Schlossstein is an international
        strategy consultant and acclaimed author, with
        extensive experience in capital markets and investment
        banking, investment advisory services, market
        penetration studies, trend analysis in domestic U.S.
        and East Asian markets, and strategic planning.
        
                   Since 1982, as founder and President of SBS
        Associates, Inc., he has designed, negotiated, and
        implemented numerous transactions for U.S. corporate
        institutions, including various strategic consulting
        studies.  He has particular expertise in the rapidly
        expanding East Asian markets, from Japan and Korea in
        northeast Asia to Thailand and Indonesia in the
        southeast. Major projects have included the acquisition
        of a Tokyo company by a U.K. high-technology firm
        seeking a market-entry strategy in Japan; the
        development of a trust banking strategy in Tokyo for a
        major New York money-center bank; strategic market
        studies in Korea and Taiwan; identification of
        manufacturing strategies in Indonesia; and the
        execution of a strategy for a global investment
        management firm seeking to expand its client base in
        Asia.  He has served on several panels for the Office
        of Technology Assessment in Washington.
        
                   Mr. Schlossstein is the author of the highly
        acclaimed The End of the American Century (1989) and
        Trade War (Greed, Power, and Industrial Policy on
        Opposite Sides of the Pacific, an American Library
        Association Best Business Book of 1984).  In addition,
        he has written two novels dealing with the business
        environment and social change in Japan: Kensei (The
        Sword Master, 1983) and Yakuza (The Japanese Godfather,
        1990).  His fifth book, Asia's New Little Dragons (The
        Dynamic Emergence of Indonesia, Thailand, and Malaysia)
        was published in spring 1991.  He is currently at work
        on a new non-fiction book  titled The Smart Box: How
        America's New Software Revolution is Transforming
        Television.  His columns and articles have appeared
        inter alia in The Los Angeles Times, The Dallas Morning
        News, The Trenton Times, Business Tokyo, and
        International Economy.
        
                   Mr. Schlossstein was born in 1941, and
        received a B.A. in history and philosophy from Austin
        College in 1963.  He did graduate work at the East-West
        Center, University of Hawaii, 1964-66, including a year
        of study at Tokyo University, and received his M.A. in
        Japanese history.  In 1984, he completed the Advanced
        Management Program at the Columbia Business School.  He
        reads and speaks fluent Japanese and German.  He
        resides in Princeton, N. J., with his wife and their
        two adopted Korean children.
        
        
                      Avoiding the Gaijin Syndrome
                          Steven Schlossstein
                            February 5, 1992
        
                  Copyright 1992, Steven Schlossstein
                          All Rights Reserved
                 Reprinted via permission of the author
        
                   Ask any foreigner who has spent considerable
        time in Japan for the one word that best describes that
        country, and odds are the person will choose the term
        "gaijin."  Literally, it  means "outside person," and
        life there is one constant reminder that you are an
        outsider.
        
                   But "gaijin" carries a more derogatory
        connotation than most Americans associate with the word
        "foreigner" -- more akin to the expression "townie"
        used by college students to describe a member of the
        local community.  Not an ugly or bitter word, by any
        means, but one that suggests you and I are different,
        and you are inferior.
        
                   We have seen numerous examples of Japan's
        "gaijin syndrome" in the few weeks since President
        Bush's notorious trip to Tokyo --enough insults and
        arrogance to make Americans boil with anger. And that
        is just what many Americans are doing.
        
                   But America's own "gaijin syndrome" reached
        an absurd level last month when numerous parties
        objected to Nintendo's plans to purchase the Seattle
        Mariners.  By not letting the Japanese play our game,
        we are in effect choosing to play theirs.  This is
        wrong.  It is the gaijin syndrome that will be the
        undoing of the Japanese economy in the long run, and
        could be the undoing of ours, if we let it happen.
        
                   Let me explain why.
        
                   Take the baseball analogy one step further.
        The Japanese allow only two foreigners on each of their
        teams, yet they want tobuy into our national pasttime.
        Think about the results of this policy: Japanese
        baseball second-rate, while America's, with brilliant
        black and Latino players, is world-class.
        
                   Now that same cultural philosophy exhibited
        by Japanese baseball also exists in the business world.
        And what do we find?  That the Japanese have similarly
        restrictive attitudes toward women in the workforce.
        That Japanese firms have a miserable record in
        promoting foreign executives into top management ranks.
        That in a period of increasing decentralization,
        Japanese overseas managers still have to seek approval
        from central headquarters in Tokyo for even the
        smallest issues.
        
                   As the Japanese grow increasingly smug about
        their economic success and what they think are
        "brilliant" management practices, the rest of the world
        will be moving on.  How long, for example, will
        Japanese workers be content to demonstrate unthinking
        loyalty?  A young woman who serves tea at a Japanese
        conglomerate may decide she can get more from life by
        marketing Apple Computers.  Soon the Japanese may wake
        up and find more Tokyo University graduates at Goldman
        Sachs than at Nomura Securities.
        
                   When we finally decide what to do about the
        trade problem, should we follow the lead of the charter
        members of America's "gaijin syndrome" movement?  The
        leading culprits are in Detroit, of course, the very
        source of two-thirds of our merchandise trade deficit
        with Japan and an industry whose incessant refrain has
        been "the problem is with Japan, not with us."
        
                   Or should we follow the lead of those
        American corporations that have been competing quietly
        -- and successfully -- in the global marketplace?
        These firms are rarely hyped in TV commercials or
        featured on trash journalism's talk shows, but
        collectively do more than $100 billion worth of
        business with Japan every year.
        
                   The popular media also fails to report that
        most of America's global success stories in recent
        history are mainly high-tech companies.  In the 1980s,
        where were the Japanese equivalents of fast-growing
        firms like Apple, Compaq, Microsoft, Novell, Intel,
        Cypress, Lotus, Borland, AST Research, Micron
        Technologies, Applied Materials, Sun Microsystems, Bell
        Computers, Boeing, Genentech, Cytogen, and Amgen?
        
                   Take a look at the stock price performances
        of the large Japanese electronic producers like Hitachi
        and Fujitsu over the last five years.  They have barely
        moved.  Then take a look at the performances of the
        American firms just mentioned.  There is no comparison.
        
                   Further, these American success stories
        demonstrate none of the characteristics of the "gaijin
        syndrome."  They employ a very high percentage of
        foreign engineers.  Five of them in fact are even run
        by foreigners (Apple and Compaq by Germans, AST by an
        Indian, Borland by a Frenchman, Intel by a Hungarian).
        These firms have highly flexible work rules and
        compensation structures.  And they are also the most
        highly decentralized.
        
                   Most important, they are comfortable in the
        global marketplace.  They built their successes from
        the start with exports (or foreign investment) in mind.
        They do not shy away from joint ventures or strategic
        alliances.  And finally, their most frequent refrain is
        this: protectionism stinks, and industrial policy
        stinks even worse.
        
                   So the lesson is simple.  The answer to our
        problem with Japan does not lie in emulating practices
        appropriate to a narrow, insular culture.
        Protectionism, provincialism, and stagnant business
        principles are the recipe for ruin in global markets,
        for Japan as well as for us.
        
                   The future belongs to those firms --
        regardless of nationality -- that play the global
        business game well on every level. Japan has its share
        of such companies -- Sony and Honda, to name just two.
        Germany does, and so does America, in spades.
        Understanding this principle will not necessarily help
        us sell more Chevrolets in Japan in the short run, but
        it may help us develop better public policies and
        business strategies to remain economic winners in the
        long run.
        
                                  ###
