Regi 10.
ECURITY CLASSIFICATION
Top Secret,
Secret.
Confidential.
Restricted.
Unclassified.
RIVACY MARKING
In Confidence
CONFIDENTIAL
DRAFT
LETTER
To:-
GR Sunderland Esq
CRE2
Department of Trade
| Victoria Street
LONDON SW1
Type 1 +
From
DSR 11
DM D Thomas Telephone No. Ext.
Department
CC:
Mr Lippett
DOI
Mr Taylor
ECGD
Mr Payton
BOE
JAPANESE BIDDING PRACTICES
1.
I have seen your letter of 8 February to Barratt (copied to Michael Butler) in which you referred to the
need for a closer analysis of Japanese credit terms.
agree that we need to look closely at Japanese credit
practices, especially in relation to the Chinese market.
However, I think the problem goes further!
It appears
that the Japanese will often deliberately make a loss on
a contract, either because they are using it as a loss
leader, or because their high ratio of fixed to variable
costs makes it economic for them to continue operations
at a loss provided they are covering raw material costs.
2.
I
The day may come when we will wish to take these
practices up with the Japanese Government and I believe it
would be useful to prepare the way by commissioning
an OEIC study of Japanese practices in bidding for Large
contracts.
It may prove difficult to obtain reliable
information but this is no reason for not trying.
study could cover both credit and pricing policies
by Japanese companies.
If you agree I would suggest
The
that the FCO and the DOT might jointly sponsor this paper.