Grudging Go-Ahead

Western businessmen trying to set up subsidiaries in Japan are sometimes reminded of the welcome that Commodore Perry got there in 1853. "Our policy," whispered one wary Japanese at the time, "shall be to evade any definite answer to their requests, while at the same time maintaining a peaceful demeanor." For years, the U.S. and other nations have urged Japan to relax restrictions on foreign investments; for years, the Japanese demurred on grounds that their struggling industries would fall to outside control.

Now, however, Western capital has got a grudging go-ahead. The Japanese government has adopted a program of "capital liberalization" under which it promises to open "a considerable number of fields" to foreign companies. "The government," says the Finance Ministry's Yusuke Kashiwagi, who drew up the program, "has now given its word that it will liberalize as much as possible, and when the Japanese government gives its word, it always keeps it. Look at our record."

As far as most Western businessmen are concerned, the record--in the broader sense--is hardly encouraging. Only a handful of U.S. companies have significant operations in Japan. Since the war, other hopefuls have been kept at arm's length with a tangle of capital regulations, bureaucratic delays, and impossible conditions. When Texas Instruments Inc. last year asked permission to set up a subsidiary to make integrated circuits, the government said O.K.--as long as it went fifty-fifty with a Japanese firm, agreed to limits on production and sales, and handed over valuable patents to other Japanese manufacturers. Naturally, Texas Instruments refused.

Hardship Case. Japan has always excused such policies by pleading "special hardships" involved in nursing its war-shattered industrial base back to health. But the pleas sound hollow now that Japan is the world's sixth-ranked industrial nation. And since Japan in 1964 joined the prestigious Organization for Economic Cooperation and Development, the 23-member OECD "club" has made it clear that the Japanese should begin reciprocating in the international exchange of capital.

The new program is not likely to bring any rush of foreign capital. The first step, which takes effect next month, raises the limit on outside investment in existing Japanese companies from 15% to a still meager 20%. As far as new ventures go, non-Japanese capital will be allowed a 100% interest in 17 industries such as cement, steel and shipbuilding--areas in which Japanese firms are almost unchallengeable. In 33 other fields, including cameras, watches and plate glass, outsiders will be permitted up to a 50% interest, as long as control stays with Japanese partners.

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