Japan Inc. bows to customers, reluctantly

By , Staff writer of The Christian Science Monitor

Katsuhike Miyazaki dresses like a man with star billing. The handkerchief in his blazer pocket is creamy white, his tie is knotted just so, the crease in his trousers, scalpel-sharp. It's the least you'd expect of a man with two stars to his name.

The stars, prominently displayed on this veteran cabby's Toyota, mark his taxi as a cut above the rest. They're a shorthand gauge that passengers will get polite, safe, and efficient service along with a velvety rush of the accelerator.

In other parts of the world, business empires have been built around telling people what's best. But in Japan, where egalitarianism and harmony are valued above all, the idea of publicly calling one noodle shop - or cabby - better than another is new and for some, upsetting.

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The stars are also part of a national experiment. Backed

by the Ministry of International Trade and Industry (MITI), companies across Japan are launching ratings services to spur consumer spending and separate the service industry's wheat from its chaff.

For Japan Inc., long known for putting business interests before those of the consumer, ratings could signal a shift toward putting customers first.

But in a culture where the highest good is to be ordinary, it's uncertain whether the idea of "the top 10" will triumph over the law of the average.

Mr. Miyazaki's taxi company, which plunged into the ratings game without government support, certainly raises some doubts. By December, the company will have rated all of its 46,000 drivers within a three-star system based on safety records, customer complaints, and the cleanliness of their cabs. All of them, give or take a few, will get two stars. Everyone will eventually be promoted to three.

The suggestion that giving everyone two stars defeats the point draws a puzzled frown. "I don't know why," says Miyazaki. "We're simply trying to make everyone a good driver."

Rating agencies have had decidedly mixed receptions in Japan. These firms, all foreign, estimate the economic health of banks and corporations, thereby influencing the rate at which those institutions can borrow money, something that clearly irritated Japanese officials when banks here were downgraded during the recession.

Officials railed at these agencies, calling them everything from inexact to politically motivated. But in a long-standing Japanese tradition, the government is domesticating and improving this foreign idea.

Last year, MITI gave $4,000 grants to firms to rate English schools, beauty salons, and other businesses. By focusing on the service industry, MITI hopes to boost demand dampened by the long recession.

"Consumers are hesitant about spending money now," says Takehiro Katsushi, general chief of MITI's service industry division. "They don't have that much information to make choices. Ratings might lead to increased spending because it makes consumers more confident."

MITI embraced ratings in part because customer complaints about service industries surged in the last year. "Japan is different from the US, we're not a contract society," says Mr. Katsushi, who offers an example of people entering an elderly care home without reading the contract, remaining unaware there is a two-year limit on stays.

MITI decided not to tackle the problem by regulating. "Japan is deregulating right now," Katsushi says. Instead, they opted to give the consumers more information.

But Katsushi stresses that the ratings initiative isn't for customers alone. "We think ratings reward companies which provide better services."

Not all the businesses are happy. Some grumble because the grant-endowed companies sometimes come from the same industry they are rating. The two companies evaluating the funeral business both have ties to the highly lucrative business.

In addition, the president of one of these companies sat on MITI's board of advisers for the ratings project the year before his company was chosen. MITI acknowledges this, but says he's now off the committee. The contractor MITI used to distribute the grants has said the two funeral companies were the only ones to respond to ads calling for funeral ratings.

"Are they kidding?" sputters Yoichi Katsumi, a Tokyo-based spokesman at the National Federation of All Japan Funeral Director's Cooperation, when he recalls this. "These two companies are in this business themselves!" he fumes. "Do you think we can rely on them to rate us?"

Ratings are bound to encounter some resistance, says Michiyo Nakamura, a manager at R. Corp., a consulting company that received a grant to appraise English-language schools. The question, she says, is whether Japan can overcome its traditional ways enough to benefit from ratings.

"Not many people here like debates or frank discussion," she says. "And in typical Japanese business, there's often bribery, a little gift to make sure things go the way a company would like. But there can't be now or the ratings won't work."

(c) Copyright 1999. The Christian Science Publishing Society

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