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Japan and Taiwan team up in
China
By Peter Morris
Japanese companies - known for their
perspicacity in tackling the China market - are now
using a new tactic. They are enlisting the help of
Taiwanese employees and tying up with Taiwanese
companies which have years of experience doing business
in China. By doing so, Japanese firms not only cut down
on personnel costs, but also avoid the problems of
becoming bogged down by China's notoriously opaque
business environment.
Toyota, for instance, has
decided to use personnel from its Taiwanese affiliate to
manage its newly-opened plant in Guangzhou. Toyota,
Japan's largest carmaker, made the decision after having
trouble finding local managers, translators and
marketing professionals to staff its new joint venture
with Guangzhou Automobile. The project is slated to
churn out 30,000 Camrys a year for the local market from
2006. The Camry, Toyota's best-selling car, will go
head-to-head with another popular Japanese model, the
Honda Accord, which is currently being produced at a
joint venture between Honda and two powerful local
partners, Guangzhou Automobile Group and Dongfeng
Motors, one of China's biggest carmakers.
Not
coincidentally, Honda has also had considerable problems
staffing its automobile production facility in
Guangzhou. On Monday, the Nihon Keizai Shimbun reported
that Honda was forced to send 200 highly-paid employees
from Japan to help its joint venture, Guangzhou Honda
Automobile Co Ltd, meet its target of producing 240,000
cars per year.
Honda, who's China operations
date back to 1982, when it opened an office in Beijing
and signed a technical collaboration agreement for
motorcycle production (a joint venture that opened 10
years later), has simply not been able to find enough
skilled employees who can speak Japanese. Despite the
fact that the number of Chinese students enrolled in
Japanese courses is increasing in Guangzhou, thanks to
efforts by the local government to position the city as
China's automobile hub, it is still much easier to find
capable Japanese-speaking automobile technicians in
Taiwan.
By the same token, Japanese firms often
have no choice but to hire Taiwanese staff because there
is a paucity of Chinese-speaking professionals in Japan.
While interest in Chinese language courses has
mushroomed in Japan over the past few years, the total
number of Chinese-speaking Japanese nationals is still
very low. English remains the foreign language of choice
among Japanese students, and English-speaking countries
are still the number one destination for Japanese
exchange students.
And unlike Korea - which has
gone to great lengths to cozy up to China by sending its
exchange students en masse to Beijing and even letting
its fourth-largest carmaker to be taken over by a
Chinese company - Japan still suffers from a simmering
historical rivalry with China that has prevented Tokyo
from waging an all-out friendship campaign with the
Middle Kingdom.
Worse still, there is a small
but politically influential group of right-wing radicals
who see China as the enemy, and according to some
analysts, their influence in Japanese political circles
has increased in recent years. As such, Japanese firms
must be discreet when doing business in China in order
to avoid antagonizing these groups. Japanese companies
are also keen to localize their China operations because
of lingering anger over atrocities committed by the
Japanese army during World War II. All of this adds up
to big opportunities for Taiwan.
As a former
Japanese colony, there are still a number older people
in Taiwan who were raised as Japanese citizens and speak
the language fluently. The Taiwanese adore Japanese
cultural icons like Hello Kitty, study Japanese
prolifically and are more familiar with Japanese culture
than their counterparts in China. Japanese firms also
like to hire Taiwanese employees for their China
operations because they have an easier time adjusting to
life in mainland China compared with their Japanese
counterparts, who tend to be a bit squeamish about the
lack of modern conveniences in China.
After all,
the Taiwanese are still culturally Chinese, whether they
like it or not. They know how to avoid cultural faux pas
and are much better at dealing with government officials
- key to doing business in China. Their Chinese language
skills and familiarity with Chinese culture is an
invaluable marketing tool that Japanese companies need
in order to cater their products to the Chinese market.
Indeed, Taiwan, with its highly educated,
Mandarin-speaking workforce, is well-positioned to
benefit from Japan's growing interest in China, and
other Japanese companies have followed Toyota's lead,
particularly in the food and beverage sector.
Kirin Beverage Corp and Asahi Breweries Ltd,
Japan's top two beverage companies, are also looking to
Taiwan to boost their market share in China. Earlier
this week, Kirin announced plans to set up a joint
venture with Taiwan's Uni-President Enterprises Corp to
produce its "Gogo no kocha" line of black tea beverages
for the Chinese consumer market. The 50-50 joint
venture, capitalized at approximately 400 million yen
(US$3.76 million), is designed to leverage Kirin's
innovative beverage products with Uni-President's
distribution network in China, where the Taiwanese
company already has an overwhelming presence in the food
and beverage industry.
Not to be left behind,
Asahi, Japan's most popular beer (depending on who you
ask), signed an agreement on January 6 with Tingyi
Holding Corp and Itochu to establish Tingyi-Asahi-Itochu
Beverages. Tingyi, based in the Cayman Islands but
founded by a Taiwanese citizen, is the biggest
instant-noodle company in China, and will sell half of
its Chinese soft drink venture to Asahi and Itochu, a
Japanese trading company, in a move designed to
strengthen its leading status among Chinese beverage
consumers. The new venture will make tea, fruit juice,
coffee and health drinks exclusively for the Chinese
soft drink market, which was estimated to be worth $14.1
billion in 2002. Tingyi's "Master Kong" bottled tea
products have a whopping 45 percent market share and its
juice products are number two with an equally impressive
20 percent market share.
Japan's fragile
economic recovery will depend to a large extent on the
ability of Japanese companies to successfully navigate
the China market, and by teaming up with Taiwan, it
looks as if they have found the perfect partner.
(Copyright 2004 Asia Times Online Ltd. All
rights reserved. Please contact content@atimes.com for
information on our sales and syndication policies.)
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