Building Partnerships with Japan.

(From Journal of Japanese Trade & Industry (JJTI))

Byline: Mark Norbom

General Electric Co. (GE) has a long and close relationship with Japan. We sold our first electric generators in Japan in 1886. Thomas Edison used a special bamboo from the forests near Kyoto as one of the first successful filaments for his invention of the light bulb. Today GE has more than 30 operating affiliates and joint ventures in Japan, employing more than 14,000 people in areas ranging from industrial businesses such as plastics and silicones, to technology businesses such as medical equipment and aircraft engines, to financial services such as consumer financing, leasing and life insurance. Despite 12 years of economic downturn, Japan still maintains its position as the world's second largest economy with a gross domestic product (GDP) more than three times that of China. Japan continues to have the second highest number of companies with more than $1 billion in market value, trailing only the United States. These facts alone would be enough for GE to view Japan as a top priority in its global strategy, but even more important are the strong partnerships that have helped us

build our many successful business platforms in Japan - partnerships with companies like Yokogawa Electric Corp., Toshiba Corp., Hitachi, All Nippon Airways Co., Ishikawajima-Harima Heavy Industries Co., Nihon Keizai Shimbun, Fanuc and many more. Our former Chairman, Jack Welsh, often said that a handshake in Japan was worth more than a signed contract in most markets. It is the strengths of our partners, customers and employees that have built our businesses in Japan over the last 100 years that ensures we will continue building our partnership with Japan for the next 100 years.

Yet despite the attractive qualities of Japan's market, investment has been difficult with the flow of inward foreign direct investment (FDI) in Japan one of the lowest of the world's major markets. The 2002 United Nations Conference on Trade and Development (UNCTAD) World Investment Report showed that Japan attracted only 0.8% of global inward FDI in 2001, compared to nearly 17% for the United States, 7% for the United Kingdom and 6% for China. Time and time again, FDI has been shown to be a fuel for economic growth. Over the past 30 years, both the United States and the United Kingdom suffered some of the same ills that plague Japan today - a hollowing out of traditional industrial strengths and decreased global competitiveness. FDI played a significant role in transforming these markets to once again be globally competitive. Foreign investors brought new products and technologies, new productivity, and a new understanding of world-class quality. The investments may have been from outside the country, but the increase in GDP, tax revenues and resulting employment stayed in the United States and the United Kingdom. These transformations did not occur without pain - transitional unemployment and bankruptcies - but these markets have rebounded to be stronger than ever and have not lost their sense of culture or history in the process. China is another example of a country that is capturing the benefits of FDI. In China one of the biggest areas of competition is between the various provinces to attract FDI. These investors have brought with them many of the ...