The Sun Rises over the Pacific: The Dissolution of Statutory Barriers to the Japanese Market for U.S. Joint Ventures
Williams, John M.,, III, Law and Policy in International Business
Amidst regular newspaper reports of the U.S.-Japan trade deficit and the impenetrable Japanese marketplace, a few U.S. companies have been successful in establishing a presence in Japan. At the same time, many other companies still bemoan an inaccessible Japanese market. This Note, through an examination of Japan's current statutory scheme and the experience of successful U.S. companies, argues that most of the existing barriers to investment in Japan are extralegal in nature. Recent changes in government policy have led to relaxed enforcement of previous statutory barriers. The Note concludes that greater adaptation to Japanese societal norms will likely result in increased market penetration for interested U.S. businesses.
The U.S. public and many U.S. corporations continue to denounce the Japanese for their "refusal" to permit market access for U.S. products. In fact, over the last several years, the debate has raged as to whether Japan is an economically closed, overly nationalistic society or a country fertile with business opportunities. The real truth probably lies somewhere between these two extremes. However, the truth remains elusive as the U.S. public clings to a jingoistic mentality. (1) U.S. concerns may result from the "consumption-drive, U.S.-centric pattern" of the relationship between the Pacific Basin and the United States. (2) This relationship has generated both short-run prosperity for Japan and deep-seated, long-range structural problems for the United States. (3) U.S. companies fail to perceive that Japan is culturally and socially a very different country than the United States and other Western nations. Adaptation to the unique Japanese business climate is necessary for U.S. firms intent on establishing a presence in the Japanese market.
The relationship between the United States and Japan has steadily progressed and there is little chance that this alliance will be interrupted. Indeed, the military, political, financial, and trade relationships between the two countries are so complex (4) that "disengagement from trans-Pacific interdependence has become virtually impossible for the United States as well as for Japan." (5) Furthermore, these relationships have likely "stabilized the North Pacific and elevated living standards on both side of it." (6)
The evolution of the Japanese business environment has been closely watched by many in the international community. Japan now has the world's largest stock market in terms of capitalization and trading volume, and is currently the greatest source of investment capital for other Asian countries. (7) In fact, Japan is "the fastest-growing investor, the premier banker, the largest donor of aid, and in terms of national net worth, the richest country." (8) All of this information points to the inescapable conclusion that the Japanese exert substantial influence in international economic markets and have developed a growing domestic marketplace with a potentially explosive demand for Western products. Access to the Japanese market is thus an ever growing concern for many U.S. companies.
This Note will explore the nature of alleged barriers to investment in Japan for U.S. companies engaged in international joint ventures. A brief survey of the characteristics of the Japanese marketplace will be presented to demonstrate the relative advantages of employing the joint venture structure to direct capital into Japan. After reviewing some important elements of an international joint venture, the Note will examine specific statutory restrictions which are often the focus of criticism by U.S. companies. Next, several "informal" restrictions that U.S. companies have experienced during the last decade will be analyzed to establish the feasibility of surmounting these obstacles.
The Note will conclude by demonstrating that the statutory restrictions, which are often blamed for creating barriers for U. …