"I don't want all the agricultural land owned by foreigners, but we should be good neighbors. I believe we need a good balance between foreign investment and international trade."
INTRODUCTION
According to the Colorado International Trade Deputy Director Bea Celler, the state of Colorado is "...seeking to expand trade with Japan, mainly by increasing Colorado exports to Japan." Colorado as a whole has been very successful in this endeavor, increasing Colorado trade to Japan some 68% from 1987 to 1989. Japan is Colorado's number one export market, and this amount is likely to increase rapidly over the next decade.
| Colorado Exports to Japan:* | |
| Year | Amount |
| 1989 | $413,109,578 |
| 1988 | $316,614,251 |
| 1987 | $246,275,440 |
| *Excludes Food & Agricultural Products. | |
| Source: State of Colorado 1989 Export Statistics. |
| Japanese Firms by Number and Employment in Colorado: | ||
| Year | Firms | Employment |
| 1990 | 43 | 2,218 |
| 1989 | 36 | 2,008 |
| Source: 1990 International Business Survey- Inbound Investment in Colorado. |
I recently conducted a survey of these Japanese and Japanese-related businesses located in Colorado. The survey focused on business prospects, management practices, and Japanese-American interdependence. You might be surprised by the findings.
THE JAPANESE ARE HERE ... BUT WHY COLORADO?
* Geography: Colorado is attractive to Japanese companies because of its centrality. Colorado firms have easy access (distribution) to both coasts and is the undisputed gateway to the Rocky Mountain region. Climate also plays a role for those Japanese firms involved in recreation and agricultural research.
* High Technology Environment: The Front Range high-technology corridor stretching from Ft. Collins to Pueblo was cited for its obvious avenue to major electronic, medical, and computer suppliers and end users.
* "Promotion:" One business specifically mentioned that it decided to move its U.S. operations from Michigan to Colorado during Governor Romer's trade mission to Japan. Governor Romer and his administration (The Colorado International Trade Office) are active in pursuing closer trade links between Colorado and Japan. On the other hand, the Japan External Trade Organization (JETRO) located in Denver is active in recruiting Japanese investment and exports to Colorado. This information link has been vital for the development of the Japan-Colorado business relationship.
* Acquisition: Although there have been a number of Japanese acquisitions of American-owned Colorado firms, it is quite obvious the Japanese investors intend to continue to develop the traditional customer and supplier base-- that is, Colorado will still be "home" to these companies-- but within an increasingly intertwined global market environment. It might be hard to move a ski slope, but increasingly "easy" to increase skier visits via Japan.
Japanese companies coming into Colorado are here for the long haul-- at first seeking market penetration, then increased market share, and finally market dominance. American counterparts need not compete if solely focused on short term results because in the long term they will not survive against Japanese competition.
Prosperity and growth, it was felt, was heavily influenced by the course of the economies in Colorado and the world. It is much easier to build market share when the market is growing and thus the greatest opportunity was the continued expansion of the global economy in the 1990's.
Computer and computer software development is an outgrowth of the direction of Japanese investment, so it stands to reason that they would be optimistic here.
With the cessation of hostilities in the Persian Gulf, a massive rebuilding program is now underway in the "rich" oil emirate of Kuwait. It seems even Japanese companies in Colorado are in line to profit from this reconstruction initiative, but only if Kuwaiti authorities have a short memory as to Japan's "non-participation" in the war effort.
And lastly, it was seen that American innovation led to the development of new products, new products which in turn could promote auxiliary opportunities for Japanese businesses-- such as supplies, enhancements, and product development.
The current recession and continued enormous federal government budget deficits pose a severe threat to Japanese businesses in Colorado because most are engaged in industries which are highly dependent on strong consumer demand. Under a contractionary American economy saturated with an increasing debt burden, these enterprises feel the brunt of the slump.
"Japan bashing only results in the continuance of prejudices ... hopefully prejudices will change against the Japanese and the United States will take advantage of its own strength as well as Japan's," stated one Japanese business. Another declared, "we do see a certain amount of paranoia at work in the American business community and find it somewhat amusing for the most part." But as Governor Romer expressed so adamantly, "we don't want all the agricultural land owned by foreigners [Japanese]." Japan bashing, so popular in America today, presents a public relations quagmire for Japanese firms doing business in Colorado as well as giving license to politicians advocating "protectionism" in the face of Japanese successes.
U.S. domestic policy has promoted a "low" dollar vis-a-vis the Japanese yen in hopes of reducing the decade old trade imbalance between Japan and the United States. This policy has been pursued since the mid-1980's which has made Japanese imports more costly to Americans as well as more costly to Japanese firms importing from Japan. These higher costs combined with highly variable energy (oil) prices have added to the costs of production and, hence threaten the viability of some Japanese firms operating in Colorado. One respondent felt the next five to ten years were the most critical: "The threat is not to continue to have the foresight to keep pace with the customer and opposing competition from alternative type technology and materials." This firm controls 70% of the world market in industrial ceramics, but fears outside innovation.
COLORADO-BASED JAPANESE BUSINESS PERSPECTIVE OF AMERICAN MANAGEMENT STYLES IN COLORADO
It is true that many American firms are run in the fashion as described above. But it is also true that many American businesses do not resemble the Theory X autocratic management style. Besides, even within the autocratic Theory X framework, there are some positive features--timely decision making, focus on productivity, and well-defined organizational authority.
When surveyed concerning American management styles, most of the responses fit into the tradition of Douglas McGregor's Theory X explanation of management style. The descriptions were nearly consonant and are as follows:
COLORADO-BASED JAPANESE BUSINESS PERSPECTIVE OF JAPANESE MANAGEMENT STYLES IN JAPAN
In addition, a more complete listing of Japanese management attributes would include company unions (rather than industry or trade unions), company loyalty stressed as a condition of employment, flexible job classifications, extensive quality circle & Zero Defects movements, and the just-in-time system of inventory. Nevertheless, the survey respondents were very accurate in their description of Japanese management indicating close communication link between Japan and Colorado.
Two companies which were acquired by Japanese businesses expressed that they changed their management style to reflect more employee participation and consensus decision making along the Japanese style above. Further, the desire to have productive and happy employees led to the adoption of better care and holistic concern for their workers.
Additional areas-- motivation, unionization, recruitment, and promotion-- were investigated revealing further development of their management styles. When it comes to motivation, these companies are in concordance: interesting and challenging work; fair compensation; career growth; open and honest communication; and extensive employee participation (especially in decision making).
The prospect of unionization seems dismal for employees in these organizations. All regarded unions as "political organizations counter to the employer." However, these employers hire almost exclusively from the local labor pool. "Japanese company or not, we feel that as long as competent workers are available locally, we should select from that pool to ensure our commitment to the community in which we do business."
This "competency" was refined to include a strong work ethic, proven performance, cooperative attitude, extensive interviews prior to selection, and a good match between the individual and company culture. Promotions seem to be based on quality of work performance, commitment, and experience.
The type "Z" management style can be characterized by trust which exists among all levels of employees which nurtures: consensual decision-making; loyalty, individual accountability/ responsibility; teamwork; bottom-up and top-down communication; and holistic concern for the employee. Trust also brokers long term employment opportunities for those employees "socialized" into the system. The team concept is further enhanced by moderately specialized career paths which empowers employees to "fill in" where needed.
By building upon the management style utilized by Japanese businesses operating in Colorado, Colorado has ready access to a proven management "model" that holds potential for revitalizing the ailing American management technique. Robert Rehder, in his landmark study of Japanese transplants in America, "...reminds American managers that they can no longer rely solely on impersonal systems and techniques, but must empower their people by fully utilizing their minds and nourishing their souls." Colorado businesses would do well to heed Dr. Rehder's guidance.
THE LEARNING CYCLE: JAPAN-AMERICA-JAPAN
What American Business Could Learn From Japan
What Japanese Business Could Learn From America
Certainly, there is much that can be learned and profited from each other, but the first step in the process is the willingness to listen. The result could reinvigorate "traditional" American management styles by becoming more employee-centered, long term in orientation, and group focused. This exposure will no doubt help bridge the competition "gap" between the United States and Japan. The Japanese transplant experiences in Colorado are exposing thousands to the learning cycle-- but will it make a difference?
It is up to Colorado to exploit Japan's secret weapon: HUMAN RESOURCES. It is the full utilization of human resources which makes Japanese management in Japan and in Colorado unique, productive, and the most efficient in the world.
The survey respondents mentioned that the future for Japanese-American cooperation is fair to good. In the realm of management synergy, this is great news... for there is still much to learn.
1. As a Japanese or Japanese-related firm, why does your firm conduct business in Colorado?
2. What industries in the United States and Colorado have the best prospects for Japanese investment?
3. What is the greatest opportunity facing your business today?
4. What is the greatest threat facing your business today?
5. What do you think are the long run prospects for Japanese-American cooperation?
6. What can America learn from Japan? What can Japan learn from America?
7. Please describe American management styles.
8. Please describe Japanese management styles.
9. Please describe your firm's management style.
10. Since acquiring or setting up business in Colorado, what changes have you made, if any, in management styles? What led to those changes?
11. What do you think the best methods are for motivating people?
12. Do you prefer a union or a non-union shop?
13. What is your firm's policy for hiring from the local labor pool? Does this policy change as to position?
14. How do you determine the best match between a potential employee and the organization, and what criteria do you use for employee promotion?
15. When obtaining intermediate or finished goods, what is your most important consideration in selection? Do you prefer one national source over another?