JAPAN'S economic dominance of Asia was once a foregone conclusion. It was assumed that huge corporations with deep pockets would steamroll across Asia, transforming local business practices. ``Japan Inc.,'' the island nation's corporate model, would become the standard.
But it hasn't happened. If anything, the Japanese are being coopted by local business culture. Even one of the basic elements of Japan Inc., the ``keiretsu'' system of subcontracting, is starting to break up in Asia.
United States critics once warned that Japanese companies would control business in Asia by imposing the keiretsu system, in which Japanese manufacturers have equity links with their subcontractors and demand total loyalty from them.
The fear was that Japanese business networks would lock out foreign competition, especially in Southeast Asia, where high levels of Japanese investment and foreign aid seemed most likely to ``Japanize'' the region.
Instead, Japanese subcontractors in Asia have begun to erode the Japan Inc. model by supplying parts to Japanese and non-Japanese companies outside their own corporate ``families.''
The time when Japanese manufacturers could insist on buying only made-in-Japan products (or made-by-Japanese companies) is ending. And Japanese executives are learning that their corporate culture isn't easily exported.
``The results you get in Japan don't guarantee the same results in business in Asia,'' Masamitsu Fukumoto, Bangkok branch manager for C. Itoh, told Japan's leading financial newspaper, the Nihon Keizai Shimbun. C. Itoh, one of Japan's largest trading companies, is buying supplies for a steel-coil-making subsidiary from Taiwan and South Korea as well as Japan.
Other aspects of Japanese business culture - the graduation-to-grave employment system, and bureaucratic promotion and management policies - are not disappearing quickly. But Japanese companies seem to be more aware that some of their practices have become liabilities in hiring and managing Asians.
Nowhere are the Japanese having more labor trouble than in China. ``The ways Japanese and Chinese think about business clash head on,'' says Shigeto Sonoda, a sociologist at Chuo University.
Almost all of the successful Japanese ventures in China are actually managed by the companies' Hong Kong business partners. Japanese express frustration over what they see as poor work habits, contempt for private property, and snobbishness of the Chinese university graduates they hire.
The Chinese balk at the often overbearing manners of Japanese managers, and at being forced to do production-line chores that they think are beneath them. ``When one or another trouble surfaces, there are all the ingredients for a conflict of `Japan versus China' or `capitalists versus workers,' '' Mr. Sonoda says.
A strike at a Canon factory in Zhuhai, Guangzhou Province, last spring was caused partly by friction over requiring workers and managers to eat in the same company dining room, and the Japanese company's strict rules for such things as toilet breaks and personal phone calls.
To smooth things over, the company granted pay increases up to 30 percent.
China a major market
Japanese companies see China as Asia's most important market, and as the last large pool of cheap labor, so they are willing to adapt. Japanese companies ``don't see much to hope for after China,'' says Mitsuhiro Seki, an assistant professor at Tokyo University of Information Sciences. ``As a result, they seem to be approaching China with the object of establishing more long-term, stable operations there.''
Japanese investment in China soared 63 percent in the six months from April to September 1994, to $1.14 billion. It exceeded Japanese investment in Britain, and equaled one-third of all Japanese investment in Asia for the same period.
In Southeast Asia, where Japanese investment peaked in the late 1980s, Japanese companies have tended to pull up stakes when labor or other problems surfaced. Except under duress from governments, they have generally insisted that their local workforce adapt to Japanese ways. As a result, some of the worst aspects of Japanese business culture are left intact - discrimination against women and non-Japanese in management, opaque decisionmaking, and racial prejudice against foreigners.
Robert Solodow, a Tokyo-based management consultant, was called recently to help a Japanese client in Malaysia. His associate discovered that a middle-aged Japanese manager had been calling his Malaysian workers names such as `` `colonial scum' and didn't think there was anything wrong with it,'' Mr. Solodow recalls. ``We had our consultant virtually move in with him for six months, trying to persuade him that regardless of what his personal opinions were, there were some things that it was wrong to project.''
A few Japanese companies are trying to stop the revolving door of local managers in Southeast Asia. For example, Matsushita Electric Industrial Company, Malaysia's largest foreign employer, responded to pressures to promote local managers by promising to groom a local managing director to take charge of a Matsushita subsidiary in 1996 - nearly 30 years after the company began manufacturing there.
The standard Japanese explanation for the absence of local managers is that it takes time to cycle local employees through the Japanese seniority system - which starts with high school or college graduates and moves them up in stages based on age and gender until retirement.
One young Malaysian, Gan Wee Feng, stunned his Japanese manager by telling a reporter that his ambition was to be either the managing director of a Matsushita subsidiary or the president of his own company.
Japanese management problems with local Asian subsidiaries may partly account for Japan dropping behind investors from the US, Taiwan, South Korea, Hong Kong, and Singapore in Southeast Asia in the last few years, in terms of overall shares of investment. It certainly accounts for the humor other Asians find in the perceived excesses of Japanese management abroad.
Richard Chong, a Taiwanese business executive in Malaysia, tells with amazement about a Japanese manager he hired from Matsushita to help run a startup electronics company.
The man insisted on wearing his Matsushita uniform. And he fought endlessly with other managers and employees because they refused to go along with his ideas about company discipline, based on the Matsushita model - morning exercises, strict obedience to superiors, and long working hours.