Fit to be Tied: Japan's Import Curbs

One in an Occasional Look at Japan's Economy

The Denny's near Ichigaya Station has its plusses and minuses as a place to collect one's faculties after being out all night on-assignment. On the plus side, the service help changes from sour old ogres to elegant angels of mercy at 6AM. Additionally, the pork cutlet set will settle even the most unsettled of stomachs. The latter was especially important one recent Tuesday morning.

While waiting for one such pink and white-garbed angel to bring my order, I raised the metal napkin holder to my face to gain a proper reflection and assess the amount of damage levied by my series of whiskey sours the night prior. Staring back at me, I found two dangling earrings, nice long brown hair, a decent facial foundation, and a set of white pearlies surrounded by grinning red lipstick. Not so bad, I thought, only the smile seemed out of place...

"I knew I'd find you here," came an all too familiar voice. Junior reporter Junko slinked out from behind and took a seat at the opposite end of the booth. Actually, Denny's has just one minus: Junko is fully capable of making her way down here from the newsroom if I am not at my desk bright and early.

"Follow my trail of bread crumbs, my dear?" I reached for my pack and crossed my legs under the table.

"Nope. Your empties." She exaggerated a smile and tilted her head forty-five degrees to the right.

"What can I get you? Expense account, you know." I grabbed the menu from the holder against the wall.

"Nothing. There's no time. We've to get cracking right away. The Japanese Government has slapped import curbs onto, amongst other things, Chinese towels, mushrooms, leeks, and onions."

I took note of her mention of coffee and then said, "Are we opening a restaurant?" I returned the menu and picked up my lighter.

She removed a report from her bag and tossed it onto the table with a subtle flare so as to insinuate that all the answers were inside and that I read it immediately. I responded with my "in due time" motion - fingers of left hand wrapped around lighter, those of right around cigarette, and both palms moving slowly up and up down, perpendicular to the table. Only after applying flame to grit did I then peel back the cover.

On February 16th, the Japan Towel Manufacturer's Association submitted a request to the Ministry of Economy, Trade, and Industry asking that it impose import safeguards under World Trade Organization rules to curb cheap towel imports from China. While implementation of the policy is presently under study, Kyodo reports that Gao Hucheng, an assistant minister in China's Ministry of Foreign Trade and Economic Cooperation, indicated that, "A one sided measure is not desirable." Little did he know that this was just the first in a series of policies up Japan's sleeve aimed to prevent China from blanketing Japan with cheap import products. If the towel policy was one-sided, the subsequent policy must have left Mr. Hucheng and China fit to be tied.

In March, Kyodo reports, "Necktie producers approved a proposal to start a probe into the import of neckties with an eye to asking the government to slap an emergency import curb on Chinese-made neckties." This move was instigated by the Kyoto-based Japan Association of the Necktie Industry. So what exactly sparked these recent policy studies? To put it simply, China has been eating Japan's lunch.

The Nikkei Weekly reports that Japan's 457 domestic towel manufacturers produced 43,000 metric tons of products in 1999. This is down 31% from that of 1990. But imports have been rapidly increasing - 16.6% in volume from the year before in the January-November period - with nearly 80% coming from China. Further, the Asahi Shimbun reports the import of neckties and the cloth needed in the making of such increased 13% from January to September of last year. The Asahi went so far as to indicate that Japan's necktie makers are being choked with a "double whammy" because not only are the imports from China cheap but brand name licensing operations are pulling up their Japanese stakes and heading for China's green pastures of cheap labor. But in the land of Sony and Toyota, shouldn't the government be more worried about chips and steel rather than flower patterns and silk?

In Japan, old habits, and industries, die hard. Along with the agriculture, banking, and construction industries, support from textile manufacturers has been crucial to the nearly 50 years of continual dominance of Japan's ruling Liberal Democratic Party. Couple this with the LDP's dire need for votes (see former Prime Minister Yoshiro Mori) in the July election and the result is promises of import restrictions. And speaking of agriculture...

In late April, Japan began invoking emergency curbs on naganegi (long onions), shiitake mushrooms, and rushes used in tatami mats. Unlike their textile cousins, these agriculture curbs are not under study. They are in place now and will last for up to 200 days. Economy, Trade and Industry Minister Takeo Hiranuma assures, Kyodo reports, "If requested, the government will handle the matter soberly in line with international and domestic rules."

Not everyone, however, is so sure that Japanese politicians aren't nipping at a little sake. Domestic towel retailers certainly haven't thrown in the towel and sided with their domestic manufacturing brothers. Kyodo reports that the Japan Chain Stores Association said a curb would worsen the already-sluggish personal spending and stated, "It is necessary to import products from adequate places around the world in order to improve convenience to consumers and to provide them with commodities at reasonable prices." Additionally, Tadashi Yanai, President of Fast Retailing Co. (owner of the popular Uniqlo clothing chain that imports 90% of its products from China), tells the Japan Times, "We oppose any measure that goes against the expansion of free trade." Others agree as well.

"I don't care where a necktie is made," says Yoshio Yamada, proprietor of Shimbashi Sub-Plaza in JR Shimbashi Station. "The Japanese manufacturers cannot make a $10 necktie. Their labor costs are too high." The 20-year sales veteran, who also sells bags and shirts from the station's basement, adds, "It's best not to have the safeguards. Japan's got to think more about how to compete; how not to lose to foreign competitors. This is good training." But competition is one thing. Quality is another.

"If the customer doesn't care where it's from then I don't care where it's from," says Yoshio Mihara from his vegetable truck in Shimbashi. "Some customers won't buy Chinese produce because they taste different." While putting a handful of naganegi on a scale, he continues, "The Chinese onions are better for frying. Same for shiitake. The Japanese vegetables are better for boiling."

So even if the product is cheaper, the customer still has to want it for it to sell. The rapid success of upstart Uniqlo is quickly debunking the long-held myth in Japan that cheap Chinese clothes (everything at Uniqlo is less than $100) are of inferior quality. Yamada agrees, "As for quality, there are a lot of high quality necktie imports from China."

But Mihara does feel sympathy for the farmers and concedes, "There are too many imports these days. A couple of years ago, 30% of all vegetables sold in Japan were imports. Now it's 70%. I like the 200-day limit because Japanese farmers would go out of business without it."

I polished off the last of the cutlet and began to stir my miso soup.

"Well," I said, "I'm glad to see that the Japanese Government is handling the situation soberly. As you know, I always use a similar policy in deliberating important issues."

"For example?" Junko asked, raising her eyebrows.

"Like last night." I wiped my lips with my shirtsleeve and set my empty bowl on the tray. I motioned for the waitress to bring the check. "Before touching one drop of whiskey, I asked the hostess at the club if she loved me."

"So, does she?"

"Yep."

"What did she say?"

"Nothing. She just leaned over and lit my cigarette."

"That's a sign of love?" Junko hissed. She got up from her seat and lead the way over to the register.

She then turned and said, "So let's say, hypothetically speaking of course, that you asked her after you had taken a drink. Would she have lit your cigarette?" I paid the check and turned for the door. Junko followed.

"Well of course," I said, holding open the door, "but I probably wouldn't have believed her then."