Want To Compete With Japan? Invest In Japan

It is unfortunate that "most foreign companies don't invest in Japan because it costs too much" ("A cheap buck won't work," Top of the News, June 14). Companies looking for lower cost investments elsewhere in Asia ignore the potential strategic value of investing and competing in Japan. Ceding the world's second-largest economy to their Japanese competitors only makes Japanese companies more competitive elsewhere, since they earn higher profits in Japan than they would if there were more aggressive foreign competition.

The perception that a higher yen necessarily makes Japan a less attractive place to invest in is also unfortunate. It is easy to imagine a situation where a rising yen makes Japan a more attractive place for foreign investment.

A company manufacturing in Japan that imports much of its production parts into Japan and earns profits there could gain from an increase in the yen's value because its yen revenue would buy more non-Japanese production parts, and its yen profits would translate into more dollars.

An investment made in Japan in 1983 would probably today yield impressive dollar return rates for many companies. Unfortunately, it was an investment few made.

John M. Tofflemire


The position expressed in "Invest in Japan. Trade will follow" (Editorials, June 14) is exceptionally well-stated. The Clinton Administration seems to be taking a very short-term approach in using the dollar as a tool to achieve a stimulus for domestic producers and instant gratification for exporters to Japan.

In the long run, opening up the Japanese market to U.S. investment is the key to penetrating this closed economy. Such on-site management is appreciated by the host country, it enables foreign companies to better understand and work in harmony with a different business environment, and it avoids susceptibility to swings in currency evaluations. Such investment, as we have seen in the U.S., also helps to strengthen the economy of the market being penetrated.

Lawrence A. Beer

Great Neck, N.Y.

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