Last week, I had a few very interesting discussions with a few very famous people, and I should not keep them to myself. The discussions were about one of my pet peeves, the supposedly closed Japanese car market, and the allegedly manipulated Japanese currency. Some very knowledgeable people I talked to were convinced it’s true. Other very knowledgeable folks said it’s utter baloney. In a rare display of balanced reporting, I will bring you both. And as they say, we purport, you decide.
On Friday, I was berated by famous author Eamonn Fingleton. We have a lot in common. He is only slightly older than me, he has the same affliction for Japanese women, and he lived in Japan probably longer than I did. He became famous for his 1995 book titled “Blindside: Why Japan Is Still on Track to Overtake the U.S. By the Year 2000.” Ooops, did not happen. And most likely never will. Didn’t matter, the book sold well.
Fingleton said he had “some complaints from my readers about your coverage of U.S. – Japan,” which I could not find, but maybe my Google is different from his. Let’s stipulate that some did complain. Even some TTAC readers frequently do. Fingleton called me and lambasted me for hours on end, and for saying that the Japanese market is wide open, and that the yen is still obscenely expensive.
Fingleton thinks the yen should get even pricier, an opinion I would share if my Japanese wife would import luxury goods to Japan. Wikipedia says Fingleton’s wife Yasuko Amako is in that business. (I am only intruding in Fingleton’s family life, because on Skype, he doubted that TTAC can pay a decent wage, and that I must make my money elsewhere. Well, the money truly is quite indecent – especially when converted from dollar to yen, my bank laughs at Fingleton and Ford, and won’t give me more yen for the buck. And sadly, no check from elsewhere. Traditionally, TTAC is a gentleman’s sport, it’s been that since Farago founded it.)
As far as cars go, Fingleton flogged the old tired horse: Import sales in Japan low, ergo the market must be closed. I did not impress Fingleton with my answer that short of forcing Japanese customers at gunpoint to buy a Chevy, I see no prospects of drastically elevated imports to Japan.
Fingleton then said “Isn’t it odd that Renault doesn’t sell cars in Japan?” I said that would indeed be odd, because last time I looked, they did, about as many or as few as Ford. Asked why that would be the case, I professed ignorance and recommended to call Renault. “They aren’t talking to me,” Fingleton whined. I suggested to call Volkswagen, they are Japan’s biggest importer, despite suggestions that the market is closed. “They aren’t telling me anything either,” Fingleton cried. I am just a lowly blogger, but a good journalist simply keeps asking. I received the answer from Volkswagen in Tokyo that “no, Japan is not a closed market.”
Like all closed market propagandists, Fingleton cannot deliver evidence of a closed market. Failure to grab more market share by foreign makers appears to be enough cause for the noted author and columnist to render a guilty verdict. I would not want him on my jury, should I ever be in court. He’d render me guilty for spousal murder while my wife is off to the 7-11: “She’s not here. That should be proof enough.”
Nobody has found hard evidence for Japan closing its markets to Japanese cars, or to manipulate their yen. With billions at stake, and with the Detroit carmakers having employed hordes of lobbyists and supposed think tanks, by now evidence should be found – if it only would be there. But as long as there are people like Fingleton, Ford, and Forbes, facts don’t matter. Don’t look at currency charts and car showrooms though, that would only confuse you.
Nonetheless, I felt honored that such a famous author spent some 2 hours of his precious time to berate me, halfway around the world from Ireland to Tokyo, courtesy of (a little scratchy) Skype.
Fingleton is a great writer, especially when he writes about juicier topics. He knows a lot about current accounts and imbalances of trade, when it comes to cars, I would ask someone else. He was stumped when I mentioned the Chicken Tax. Nonetheless, we will probably hear more from Fingleton on the topic, it will be fun. Beating up Forbes beats battling with Carsqua.
At Forbes, Fingleton is one of the “about 1,000 unpaid and paid contributors from all walks of life,” who fill the Forbes blog with cheap (or mostly free) content. Fingleton also is in good company. The Forbes blog is home to one of our very dear friends, noted China expert and revered forecaster Gordon Chang.
Fingleton and Chang work the “doomsday forecasts that never happen” beat. Whereas Fingleton focuses on Japan, Chang focuses on China. In 2001, a year after the U.S. was not overtaken by Japan, ignoring Fingleton’s best-selling predictions, Gordon Chang published a book titled “The Coming Collapse of China.” In it, he predicted that China would implode by 2006, if not earlier, due to non-performing loans. Instead, non-performing house flippers in America caused a near-collapse of the American, and then of the world’s banking systems, and led to carmageddon.
In another book, Chang predicted that North Korea would rain nuclear missiles on Japan. As far as I can tell from Tokyo, that didn’t happen either. Nonetheless, I recommend Chang’s pieces – as a contrarian indicator. If you don’t do what he recommends, and if you bet on things Chang hates, you probably have one of the best investment advisers. Fingleton is one of those contrarians. In his book “In the Jaws of the Dragon: America’s Fate in the Coming Era of Chinese Hegemony,” he predicted that China would not implode, but overtake America, now that Japan did not. We’ll see how this prediction pans out.
Oh, and of course Forbes is also home to Bob Lutz.
The other gentleman I met last week also is of a similar age, and he is also married to a Japanese. As a former executive of MITI who now works at a Japanese car company, he knows the topic intimately. The talk was on deep background, I wish it wasn’t, he is a witty, outspoken and funny gentleman. When asked about the shrill rhetoric about manipulated currencies and closed markets, a lack of evidence notwithstanding, off-the-record-san smiled and said that this has been going on since the 1980’s, and the tune has not changed. It’s a Good Thing - by the Fine Young Cannibals.
Since the disco era, Japan dropped their car import taxes to zero, it lets in foreign cars with a minimum of paperwork. In the early eighties, a dollar bought some 250 yen, today, it buys 98. All the while people, from Fingleton to Ford, keep claiming that the yen is undervalued and that the Japanese car market is closed. They do that until they are blue in their faces. It’s obsessive-compulsive behavior, and, such is the impression I received from my deep background chat partner, it is useless to argue with the patient.
When asked about what the Japanese side has to say to the broken record , the gentleman basically asked what else would there be to say.
After talking to a few high-ranking executives at Japanese carmakers, I get the impression that the more the U.S. side gets worked up about the issue, the more sanguine the Japanese side gets. Trade pact or not, they don’t really care.
Most of their North American sales are cars made in North America. Honda estimates it will become a “net exporter” of automobiles from North America by 2014. Toyota expects to export more vehicles from North American plants than the Detroit 3 automakers, and foresees a future where all Toyota cars sold in U.S .may eventually be built here. Even the prospect of a falling chicken tax does not excite them. First, they think it will never happen. Second, they privately think imported Japanese pickups will see similar sales in the U.S. as imported Thunderbirds in Japan.
From the Japanese perspective, this looks like a trade war where only one side shows up to fight. The dogs are barking up trees that long have been turned into newsprint. Even that isn’t doing so well anymore.
Since rational arguments don’t seem to do it, I invite you on a tour of showrooms for American car brands in Japan. Through the miracles of Google Streetview, you can visit Tokyo stores of Detroit iron in the privacy of your laptop.
You will have to take my word for it that the stores are open, not closed. You will not get arrested when you go inside a Japanese showroom to buy an F-150 SuperCrew Cab, or a Camaro. They don’t have a shortage of cars. From the pictures and the stats, the only shortage there is seems to be that of customers.