Japan Sets Up Shop In Europe

PREPARING FOR 1992

THE vigor of Japan's assault on markets in Western Europe is intensifying, and so too is European concern that the activities of investors and manufacturers from the Asian economic superpower will merit close scrutiny in the years ahead. Among the latest Japanese ventures in Europe are:

A decision by the giant electronics company Sony to extend its European operations by producing semiconductors and telecommunications equipment in France and Italy.

A plan by Sony's rival, Matsushita, to work with West Germany's Bosch company in the manufacture of electronic vehicle components.

Moves by the carmakers Toyota, Nissan, and Mazda to expand production in Britain with the aim of selling their vehicles widely in the European Community (EC).

The acquisition by the powerful Japanese business house Nomura Securities of a stake in Banco Santander, Spain's fifth-largest bank.

With the number of Japanese companies operating plants in Europe edging close to 500 (the total has more than doubled in six years, and the rate is escalating sharply), economists say there is a common thread linking all these activities: Rising concern in Japan that after 1992, when the EC is due to set up an integrated market free of internal tariff barriers, Western Europe will become an economic fortress hostile to penetration by outsiders.

Japanese companies are therefore moving swiftly to get inside Europe before the barriers come down. The most-favored countries for Japanese business activity are Britain, France, West Germany, and Spain. The latter is seen in Tokyo as a particularly dynamic economy, suitable for large-scale Japanese investment.

Japanese businessmen say privately that Prime Minister Margaret Thatcher, with her aversion to EC integration measures, is sympathetic to their attempts to set up shop in Europe ahead of 1992. She also is said to like the way Japanese companies enforce single-union, no-strike agreements at their factories.

Other Europeans are not so friendly.

The European Commission, the Brussels executive arm of the 12-nation grouping, has lately been taking strong antidumping measures against Japanese television sets, video-cassette recorders, and compact-disc players with a relatively low content of European-manufactured components.

Significantly, when Sony last month was punished by the EC for allegedly dumping imported CD players on the European market, it responded swiftly by saying that in future it would manufacture components in a new European plant.

Japan's carmakers have been under similar pressure from European governments. When Nissan tried to export Bluebird saloons to France from it plant in Britain, the French government claimed that they were actually Japanese-made vehicles. Nissan UK is now working toward a local component of some 80 percent in its Bluebirds.

In Brussels, the EC has demanded that, as well as investing in manufacturing plant, Japanese companies wishing to trade extensively in Western Europe must fund the establishment of research-and-development units. Sony, in company with other Japanese companies, has responded by saying that its plans include the creation of R&D facilities in Europe.

Some of the most stringent comments about Japan's hard-driving style in Europe have come from Barrie James of the Management College at Henley in England. He has long argued that Europeans should insist that Japanese companies operating within the EC must be put under pressure to ensure that they do not compete unfairly with local operations or erode local standards of manufacturing.

The Japanese, he says, should not be allowed to concentrate on assembly operations or to equip their factories only with machinery supplied from Japan. ``Japanese assembly plants are likely to become powerful Trojan Horses undermining the competitiveness of our own manufacturing sector, unless we apply our own tough standards.''

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