FROM his skyscraper office in Singapore, Mikio Nomura of Toyota
Motor Corporation directs one of Japan's new little empires in
As he describes it, he is in charge of "piecing markets
together, country by country" in Southeast Asia for the world's
third largest automaker.
In a division-of-labor scheme, Toyota makes vehicle parts in
Thailand, Malaysia, Indonesia, and the Philippines, then assembles
vehicles in each country, selling about one-fifth of Toyota's total
overseas production and earning one-fifth of the market in those
Toyota's strategy of tying together different markets has
produced the kind of penetration of Asia that has helped many big
Japanese firms to dominate the world's most economically dynamic
region. Another reason, says Mr. Nomura, is that "we've been here
longer. This is our backyard."
Japan's trade and investment boom of the 1980s is one reason why
intra-Asian trade now exceeds Asia's trade with the rest of the
world. Japan also helped build up trade across the Pacific to the
point where it began to exceed trade across the Atlantic in 1983.
But Japan's shadow over Asia is relatively new, and vulnerable
to two big opponents: a Chinese economy growing more than 10
percent a year and a United States showing new aggressiveness under
President Clinton to expand exports to Asia, even as the US remains
the largest import market for many Asian nations.
For now, Japan provides the "core" economy for much of Asia.
Malaysia, for instance, has become the world's biggest exporter of
air conditioners, all made in Japanese factories. The car market in
Thailand is 90 percent Japanese.
In China, too, Japan has led an investment wave in big projects.
The Japanese-owned Yaohan retailing company, for instance, plans to
open 1,000 supermarkets across China by the year 2010.
Japanese dominance in Asia has been helped along by bureaucrats
in Japan's Ministry of International Trade and Industry (MITI),
which readily gives advice to Asian nations on how to shape their
economies. Thailand's Chulalongkorn University, for instance, is
tripling its engineering faculty to produce thousands more
engineers, mainly for the dozens of Japanese factories around
MITI officials often speak of Japan's role in Asia as the lead
goose in a flying-V formation, guiding other nations in forming a
cohesive regional economy - with Japan always in front.
For 17 Asian nations, Japan is the largest aid donor. Last year,
Tokyo put 65 percent of its $11.15 billion in foreign aid into
Asia, with about one-fifth of it tied to benefit Japanese
Asia's rapid growth of 6-7 percent a year and its low wages are
the main attraction for Japan. Firms can get about a 5 percent
return on sales in Asia, far more than in Europe or the US,
according to MITI, although volumes are still low.
In 1991, Japan made $4 billion in profits in Asia compared to a
loss of $1.5 billion in the Americas and Europe. And last year,
Japanese investment dropped 25 percent in North America but rose by
4 percent in Southeast Asia, and jumped 260 percent in China.
"The competition in Asia for the 1990s is economic, not
military strength," says Zakaria Haji Ahmad, a University of
Malaya security expert. Communism's decline has opened up large new
markets in China, Vietnam, Cambodia, Laos, and to some extent,
Burma and even North Korea. India, too, has begun to release its
economy from a socialist straitjacket. Half the planet is now
hungry for foreign investment, and Japan is the richest capitalist
"Japan has already won the markets here. They got a head start
and are about two to three steps ahead of the US," Dr. Ahmad says.
But do Asians welcome Japan's economic advance? And will China
ever rise up as a regional competitor?
While many Asian nations welcome Japanese investment, they do so
reluctantly, instead wishing for Western investment because it
usually comes with fewer strings attached. …