218
28
are not enough. Catalogues are a favourite source of educa- tion in Japan, and the more they approach text-books, the better. Also prices, even approximate, are better than none at all.
CO-OPERATION WITH JAPAN.
39. In view of the facts that Japan has over 200 engineering works with a total capital of £71 million with a force of 140,000 employees, and motive power totalling 100,000 h.p. (of which roughly half is purchased electrical power), it will be seen that she has ample means of production. In addition, when it is realised that her electrical power industry has a capital of nearly £500 million, 130,000 employees and generating plants of 5 million total horse power (half hydraulic and half steam), any discussion of the machinery market based on pre-war conceptions becomes almost meaningless. Trade in machinery with Japan must be discussed on exactly the same lines as trade with any other fully equipped country, such as France or Italy. It is clear that two courses are open:
(a) Straight competition, either on price or quality. (b) Co-operation.
The question of competition, which has so far been discussed, was the one which chiefly interested the merchants and agents whom we met. It remains to consider co-operation. Co-operation has been practised in various degrees :-
(1) Part manufacture to save freight on specific jobs is the simplest form. The Japanese can turn out quite good work for this purpose, and such co-operation has been successfully practised on many occasions, but, of course, it encourages copying.
(2) A closer form of co-operation is part manufacture by arrangement. A definite factory is selected which will agree to make more or less of the parts of machines, of which the remainder will be imported. In this case, the price of the imported parts must be kept down to a minimum, selling and other overheads being omitted. Such a policy may be useful to maintain a loophole through which valuable imports may pass in the future. The importing firm will be in close touch technically and preferably also financially with the Japanese co-operator, and the latter may also act as agent for the importing firm.
(3) Similar co-operation may also be achieved by forming an actual subsidiary company in Japan for assembly some- times with part manufacture. The subsidiary company in such cases also acts as agent of the main company, and may secure
!
29
considerable import business. The Ford and General Motor Companies work on these lines with great success.
a
(4) An inter-working technical agreement between Japanese and foreign firm with more or less financial interest. is a form of co-operation largely practised by the big elec- trical firms as, for instance, Siemens-Schuckert, American Westinghouse, International General Electric and our own English Electric Company. In nearly all such cases the associated Japanese company does considerable business for its ally by factoring its products in cases where the Japanese company does not manufacture or is not ready to manufacture. (5) The form of co-operation which is most commonly prac- tised is that of granting licences to manufacture to powerful Japanese companies, and the licensors doubtless derive a satisfactory income in many cases. Though this is practically a withdrawal from the market, there is an indirect value from the import point of view in granting such licences, because the type of plant becomes established and known in the Japanese market and openings may frequently arise for import in the same way as under headings (2) or (4).
There is little doubt that co-operation holds out better prospects than competition for trade in Japan, and a close investigation by manufacturers of the possibilities is strongly recommended.
Further, the experience of the motor car and electrical co-opera- tive efforts of Japan and the United States shows that the policy of co-operation may affect profoundly other Far Eastern markets.
TINPLATE.
40. Notes on the tinplate trade in Japan, China, and Siberia by Captain R. T. Nevill, who was attached to the Mission as adviser on the tinplate trade, are included in Appendix A to this report. We desire to draw the attention of the industry to these valuable notes, and to the recommendations made in them for developing the British tinplate trade in the Far East.
CONCLUSIONS.
41. Japan is a difficult market, and the object of the Japanese Government and people is to reduce the import of manufactured goods to a minimum. There are, however, grounds for doubting the ability of the Japanese to dispense with foreign supplies of machinery and iron and steel goods. Expert selling in Japan is essential, and price should be cut to the lowest. The closest touch should be kept by means of a factory trained expert either work- ing independently or attached to an agent. Publicity and educa- tion of the Japanese to re-establish our quality supremacy in their
219
Page 180Page 181
No comments yet.
Private notes are available after approval.