56 Interview, Nissan, Tokyo, April 1994.
57 The ratio o f the Japanese in total employees at the Japanese manufacturing plants operating in the
United States was 2.5 for Toyota, 5.0 for Honda and 1.9 for Mitsubishi, and only 0.7 for Nissan (Ishii 1990, p. 14).
organised under the direct control of the president. The office drew up the first long term plan which envisaged that the automobile industry in Japan and the world would promote multinational production and a globalisation strategy. The top executives of Nissan considered that since Japanese cars have penetrated the world market and Japanese automakers have actively promoted multinational operations, they would have to take into account more seriously international cooperation with foreign makers.58 This consideration led to the plans for a curtailment of exports as well as to the doubling of imports in the program. At the same time, by announcing that the company would take measures to promote access of foreign products to the Japanese market and did not intend to disrupt the world market, Nissan hoped that its local production facilities in the United States and Europe would be accepted as insiders.59
What is crucial about Nissan’s program was that it suggested a change in stance on free trade. Japanese automakers supported free trade principles in the early 1980s. When the Japanese government sought to introduce a VER in 1981, automakers were strongly opposed to it, arguing that the VER contradicted free trade principles. The primary reason why they adhered to free trade principles was that these provided conditions for keeping export markets open. The automakers showed little interest in opening up their own home market and in rectifying high export dependence. However, they gradually recognised that other methods were necessary to sustain the free trade system. For this reason, Nissan’s voluntary program included concrete measures to reduce exports for the first time. Nissan’s President Yutaka Kume stressed the importance of this point, arguing that ‘we thought the import expansion alone would not be effective in correcting Japan-U.S. trade imbalances. Judging from the seriousness of Japan-U.S. commercial relations, we concluded it would be best to cut down exports instead of just denouncing the U.S.’.60
Although it is a matter of debate as to whether Nissan’s internationalisation has been successful, Nissan was the leading company in the Japanese auto industry in terms of internationalisation through the 1980s. This enabled Nissan to take a lead in
58 59 60
Interview, Nissan, Tokyo, April 1994.
Mainichi Shimbun, 21 September 1989.
The Japan Economic Journal, 9 December 1989.
announcing programs designed to expand market access for foreign products and to abandon an export-dependent corporate strategy.
Influence of Nissan’s program
The international cooperation program that Nissan announced in September 1989 impinged not only on the behaviour of other auto companies but also the government’s policies for expanding market access. Even when the program was announced, other automakers paid scant attention to it, asserting that every auto producer was reducing exports as they expanded local production in North America and Europe.61 However, after Nissan announced the program, other industries and the overseas press asked why other automakers were not announcing similar programs.62 In succession, other firms eventually announced similar programs. Mazda announced a program on 20 October 1989 to quadruple the value of imports in 1988 to 200 billion yen by 1992: to increase car imports from 7,200 in 1988 to 60,000 in 1992; and to expand the international procurement of semiconductors and electronics equipment.63 Toyota’s program was announced on 30 October. The program, which aimed to raise the import value to 300 billion yen in 1992, included reverse imports of Camry from its Kentucky plant in the United States as well as imports of other foreign-made cars.64 Honda followed on 24 November and Mitsubishi on 17 January 1990.65 Automakers other than Nissan were forced to draw up cooperation programs by the unintentionally associated moves by MITI and Nissan.66 It is doubtful whether other producers would have made their plans so early, if Nissan had not initiated its program.
Nissan’s program also contributed to creating a new impetus in the government’s import expansion policy. The program considered import expansion from a rather long-
61 62 63 64 65 66
For instance, Shoichiro Toyoda, President of Toyota, commented on Nissan’s program that ‘it is natural that exports will decrease as local production increases. We have referred to this direction many times’ (Asahi Shimbun, 23 September 1989).
Nihon Keizai Shimbun, 21 October 1989.
Nihon Keizai Shimbun, 21 October 1989.
Nihon Keizai Shimbun, 31 October 1989.
While Honda planned to increase the value of imports in 1988 by 2.5 times to 160 billion yen by 1992, Mitsubishi’s import figure was 100 billion yen in 1992, up 3.6 times on 1988 (Nihon Keizai Shimbun, 25 November 1989; 18 January 1990).
term perspective, three years or more. MITI had previously considered short-term plans, within one year, but recognised that import expansion was important in the longer term. Around one month after Nissan’s announcement, MITI requested some 50 export-oriented firms in automobiles, electronics, general machinery, which accounted for 60 per cent of Japan’s exports, to double their 1988 import value by 1993, and to add the same value of imports as exports if they expand exports by 1993.67 MITI expected these firms to draw up a medium-range program like that which Nissan had announced. This request was exceptional because MITI had already held regular import expansion meetings in June. The import-doubling program launched by Nissan motivated MITI to take this additional action. The efforts by private firms indirectly affected government policy. MITI sought to introduce an import promotion tax system in 1989. Although this idea was resisted by the Ministry of Finance (MOF), MITI succeeded in including the import promotion tax arrangements in the 1990 tax reform plan. The import expansion efforts by firms provided MITI with the pretext for the introduction of this tax reform system.
Nissan’s program was epoch-making in its effect on the relations between MITI and the automobile industry. The automobile industry was regarded as less cooperative with MITI’s policy compared with other industries such as iron and steel. Relations between MITI and the automobile industry were marked by a history of disputes. MITI drew up the people’s car concept in 1955, but this concept failed, owing to the objections of automakers. MITI also advocated the two-group concept in 1968, designed to reinforce the oligopoly position of Toyota and Nissan. This concept again failed because of strong opposition from smaller manufacturers. Before a VER was introduced in the US market in 1981, MITI encouraged automakers to invest in the US market to mitigate trade tension. However, the major automakers turned a deaf ear to MITI (Chung 1993, chap.6). When a VER was introduced in 1981, Naohiro Amaya, MITI’s negotiator with the United States, implored the top executives of auto producers to accept the VER (Amaya 1981; Kotani 1982). The crucial factor in MITI’s voluntarily extension of VER in 1985 was that MITI could not draw on cooperation from the
Nihon Keizai Shimbun, 20 November 1989.
automobile industry.68 In the case of import promotion in 1989, however, a company in the automobile industry offered a sample plan that MITI could use as a pretext to persuade other companies and industries. Nissan’s program functioned as a catalyst promoting momentum for market access.
THE ACTION PLAN IN 1992