Price or quality
CONGRESS is forging the legislative armor to stop the onslaught of more Japanese goods into the United States and sharpening its lance to pry open the Japanese market to accept ours. Concerned, the Japanese government is hoping that its offer to cut tariffs unilaterally on 1,850 of its products, or 80 percent of those on which they still remain, can pacify American frustrations over the trade gap between the two countries. But the effect of both governments' actions is only likely to hasten the realization of the old nightmare of former US Trade Representative William E. Brock -- that Japan did everything he asked it to do, and the trade deficit kept getting larger.
Just how far Americans -- and their allies in the Japanese government -- misunderstand the true nature of the $34 billion trade deficit was revealed by two independent opinion surveys carried out recently in the United States and Japan, which asked why the US cannot sell more goods to Japan. Seventy-five percent of the American respondents to a New York Times/CBS poll said they believed it was because Japanese goods are cheaper.
Americans view trade as a neutral game in which business is done on the basis of price alone. But price may no longer be the primary determinant of economic behavior in Japan. For Japanese consumers it is quality, and for Japanese distributors, it is reliability. These preferences are the ``hidden'' trade barriers that make Japan appear to be an ``unfair trader.''
Because Americans persist in their obsession with price, efforts to reduce the trade gap with Japan have been aimed at making American goods cheaper in Japan. The assumption is that if Japanese consumers will simply buy more (and save less) with yen that are worth more, they will buy more American goods. But Japanese tariffs are already the lowest overall of all the industrialized nations, and the dollar has lost 15 percent of its value against the yen this year. The Japanese government is trying to be accommodating. Prime Minister Yasuniro Nakasone went on national television to appeal to his countrymen to each buy $100 worth of foreign goods. Their cooperation, he said, would result in a $12 billion increase in imports, which should make the foreign countries happy.
What are the Japanese people themselves saying? According to a recent poll by the Asahi Shimbun, a leading Japanese newspaper, 84 percent of Japanese respondents could think of no foreign product they wanted to buy. Asked why not, the largest response was, ``Because Japanese goods are superior.'' Seventy-six percent of the respondents said they would choose a Japanese product over its foreign counterpart even if price and quality were equal. This is a dramatic reversal in bias from the early postwar yea rs, when all imports were coveted as exotic and assumed to be of superior quality. Interestingly, the age group most enthusiastic about imports back then is the same one most inclined to buy Japanese now. That is the generation of those, now in their 40s and 50s, who presided over the rebuilding of Japanese industry and carried out the work of making Japanese goods good enough to export.
Americans accept declining quality in almost all of the goods they buy because they have lived with it, like inflation, as a fact of life. But Japanese consumers over the same period have developed an acute quality-consciousness, even in goods that were invented and developed abroad.
Why are Japanese in general more aware of quality than Americans? In that severely space-deprived country, consumption has tended to express itself as upgrading more than as simple acquisition of possessions.
Satisfying the demands of Japanese consumers has meant a fiercely competitive environment for Japanese manufacturers, distributors, and retailers -- and is one reason they experience a domestic bankruptcy rate six times that of the US.
The humiliating but enlightening lesson for Americans is that Japanese are unlikely to buy the vast bulk of our manufactured goods at any price.
Hilary Hinds Kitasei, a graduate student at Columbia University's East Asian Institute, writes on US-Japan issues.