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OCR for page 187
International Trade in Financial
Services: The lapanese Challenge
RICHARD W. WRIGHT AND GUNTER A. PAULI
Little more than a decade ago, the Japanese took the world by surprise
with a frontal assault on world consumer electronics, automobile, motorcycle,
and photographic markets. Those and other manufacturing industries in North
America and Europe are still reeling from the Japanese onslaught, as the
world seeks to better understand the scientific and managerial technologies
with which Japanese firms catapulted so quickly to dominance.
Today the Japanese are again on the move, and a second wave of Japanese
competition is about to hit the western world. This time the target is services,
and financial services in particular. Once again it appears that the West will
be taken largely by surprise.
How have the Japanese moved so quickly to the forefront of services
sectors long considered the exclusive domain of westerners? Does analysis
of the strategies they used so successfully in manufacturing sectors help us
to understand their current competitive thrusts in services? What organiza-
tional technologies do they have at their disposal? What sorts of responses
are appropriate to the new international competition in services? This chapter
addresses these important questions.
THE DIMENSIONS OF SUCCESS
Japan's sudden emergence at the forefront of international financial ser-
vices is evident in many ways. As examples:
· The Japanese are now richer than Americans. Japan' s average per capita
income topped $17,000 near the end of 1986, compared with $16,000 in the
187
OCR for page 188
188
RICHARD W. WRIGHT AND GUNTER A. PA ULI
United States (The Economist, 1 986a). They also save much more than others
(The Economist, 1986b): 17 percent of their disposable income, on average,
versus some 4 percent in the United States (Figure 11.
· Japan is the largest exporter of capital the world has ever seen. Due to
the combination of high domestic savings and large foreign trade surpluses,
Japan has exported almost $400 billion worth of long-term capital over the
last three years, far more even than the Organization of Petroleum Exporting
Countries (OPEC) in its heyday (Figure 21. And unlike the OPEC countries,
which recycled their excess funds through deposits at major foreign-owned
banks throughout the world, the Japanese resolutely funnel their international
financial flows almost exclusively through Japanese financial institutions,
thus providing Japan's banks and securities companies with a massive reserve
of resources for their global strategy in world financial markets.
· Tokyo has become the world's leading financial center. The Tokyo
Stock exchange has more volume already than all the exchanges of Europe
combined; it recently topped even New York as the world's largest exchange,
with a market capitalization of $2.9 trillion versus New York's $2.7 trillion
(Echo de la Bourse, 19871. Even the comparatively minor Osaka exchange
has soared past London to become the world's third largest, after Tokyo and
New York (Time, 1986~.
· The seven largest commercial banks in the world are all Japanese and
13 Japanese banks rank among the largest 25 (Figure 31. This has all come
about extraordinarily quickly. As recently as 1980 none of Japan's banks
ranked among the world's top five in size of deposits, and only one (Dai-
Ichi Kangyo) ranked among the first ten.
30
25
20
_d
a)
~ 15
a)
Q
10
5-
o
_
_1 ~ _~
/ ~ Federal Republic of Germany
United Kingdom
-
~~ ~ Japan
Hi.
~ in_
1975 1 977
~ United States
1979 1981 1983 1985
Year
FIGURE 1 Personal savings as percent of disposable income.
SOURCE: The Economist ( 19861.
OCR for page 189
INTERNATIONAL TRADE IN FINANCIAL SERVICES
160 ~
Cn 140
O 120
CD 1 00
j
0 80
co
~ 60
. _
m 40
20
1983 1 984
1985 1 986
Year
l
0 198
1 987
s6.8
_.
·: -:-
:::.:.
·-~:-
·..:-.:
·.-~
145
..:.:
~ §~
1988 (eSI.)
135
189
FIGURE 2 Japanese long-term capital outflow, 1982-1988. SOURCE: Bank of
Japan.
However, growth in size is only one part of this remarkable success story.
Japanese banks are capturing overseas markets in much the same way their
manufacturing counterparts did earlier. They recently nudged out Americans
as the world's largest international lenders, with $650 billion in loans out-
standing, or nearly one-third of the total worldwide assets of banks (Figure
41. Their dominance in international lending shows no sign of abating. A
recent report predicts that by 1990 Japan will have an astonishing $1 trillion
in loans outstanding (Euromoney, 1985~. In addition to seizing major chunks
of American and European commercial lending, Japanese banks are ex-
panding very rapidly into new activities abroad such as leasing, trust banking,
and securities underwriting.
· The four largest securities companies in the world are Japanese. Like
their banking counterparts, Japanese securities companies have become in-
creasingly dominant forces in their international activities. The "Big Four"
Japanese houses (Nomura, Daiwa, Nikko, and Yamaichi) now rank as the
world's largest. Nomura Securities Company, largest in terms of assets, is
bigger even than the American giant Merrill Lynch, and vastly more prof-
itable: its pretax profits for 1987 exceeded $3 billion. So huge is Nomura,
in fact, that its market capitalization, or what the stock market says all its
shares are worth, is ten times that of Merrill Lynch (Hector, 19864.
Japanese securities firms are aggressive at home and abroad, both in ex-
panding their securities business and in rapidly innovating into new product
areas traditionally the turf of other financial institutions. They are becoming
increasingly adept at using their financial clout to cut prices in U.S. and
European underwritings, taking large chunks of new issues back to Japan,
OCR for page 190
190
BankAmerica
(US)
Citicorp
(US)
Chase Manhattan
(US)
Barclay's
(USA
National
Westminster (UK)
Manufacturers
Hanover (US)
Banque Nationale
de Paris (France)
Banco Nationale
del Lavore (Italy)
JP Morgan
(US)
Western
Bankcorp. (US)
RICHARD W. WRIGHT AND GUNTER A. PAULI
Assets as of December 31, 1970
in billions of U.S. dollars
1 970*
0 20 40 6.0 80 100
Ll I I I I I I I ~ I
......... . i::.2.:~:.: ..~ ~ $92 Dai-lchi Kangyo
:: ~ (Japan)
..~ ~ ~.~ ~ 80 Fuji Bank
::.: .:::::.~::::.~. .:. ::: . .:::: A.:. . .:, (Japan)
. ~ 76 Sumitomo
~ (Japan)
.... ; * *
:. . ~.. 49 Mitsubishi
· ::: ::: : ::: (Japan)
;; . . .:.:. .:.:.::: * *
...................... 40 Sanwa
.~:~:~:. :~:~:~:~:. (Japan)
·:-:-:-. :-: --:-:-:-:
.:~:~:~:. :: 39
·:-:-:-:-:-:-:-:-:-:-:
............
**
Norinchukin
(Japan)
...... . ~ 38 Industria7
~ (Japan)
.... ..
. ~ 38 Credit Agricole
:~::~::~:~.: Mutuel (France)
::.:.:.::::::i Citibank
................ 37 (Us)
Banque Nationale
de Paris (Frances
*
at 1985 prices adjusted by industrial countries' consumer prices
**
as of September 30
Assets as of December 31, 1986
in billions of U.S. dollars
1 986
0 50 100 150 200 250
....... ..... .........
.~ .: :: .:~.~:.~ :.~:.:~
~ ~ ::
,...........................
I:::::. ::: . : : : :: ~212
...: .: :- :~ :~:~-
...................................
.~. ~.~ ~. $205
:-.-:-:-.-:-:-: .-:::-:-:-:-.-:::-.-:::-:-:-:::-:::::
:::;:;:~.;:;:;:;:;:;:;:;:;:;:;:; :;:;:;:;:;::;::
I:::::::: .::::. :~:~:~:~:~:~:~:~:~. t203
:-: :---:-:---:-:-:-:-:-:-:-:-:-:-:
.:::::: . . ::.:. .:. .:. .:.:~:~:~:~:~:~:~:.
.....................................
:~:~:~:~ :~~:~:~:~:~ A
. :-:-:-- :-:-:-:-:-:-:-:-:-:-:-:-:-:-:~ :-: up 1 9 1
In:::::::: .~:~:~:~:~:~:. ::::
........................
..,, . .:.~::~:s.*~ $162
,
·:-:-:-:-:- -:-:-:-:-:-:-:-:-:-:-- - :- ~
:~:~:~:~:~:~:~:~:~ .~:~:~:~:~:~:~ ~161
·:-:-:-:-:-:-:-:-:-.-:-:---:-:-:---:-:-:
....................
...-.-....
. ~ $156
.... .. . . ....
;;; .-; - ; ;!
·:~:~:~:~:~:~:~:. :~:~:~:~:~:~.~: $146
:~:~:~:~:~:~:~:~:. .:::. ~ .:. ..
......... : -
~-
, :.: :.:~.: ::. ::.~:.
:~:~:~.~:~.~:~:~:~:~:. I::::: $144
·:-:-:-:-:-:-:-:-:-.-:-:-.-:-:-:-
.~.~.~.~.~.~.~..................
FIGURE 3 The world's largest commercial banks. Banks ranked by deposits in
billions of U.S. dollars as of December 31, 1986. SOURCE: American Banker,
company reports, Fortune.
where their placement power enables them to dispose of their holdings quickly
(for a recent account of their placement ability and diversification strategies,
see Time, 1988~. Their profitability at home also allows them to expand into
other lucrative activities abroad, as they embark on a path that will eventually
make them truly global financial supermarkets.
· Japanese services firms are poised to become major players in other
industries as well. Although attention in the West is focused at the moment
on the dramatic rise of Japan's banks and securities companies, the Japanese
are becoming major world competitors in other services areas also. For
example, the world's largest transportation company (NYK) is Japanese, as
OCR for page 191
INTERNATIONAL TRADE IN FINANCIAL SERVICES
Japan
United States
France
United Kingdom
Federal Republic of Germany
Italy
Switzerland
Canada
Other
0 10 20 30
Percent
191
:;. :;:;:;:;:;:;. :;:; .:;:~.;:. ;:;. . . :;:;: . .;:;:;:;: .;;: .;:;:;. :;1 35%
: ·:: ::::::---::---::-:-::---:~ :: -: ~ :::-
, ;
:::::::: ::::.::.:: ::: 16%
...................
~-
·.~:: :.. ~ 8%
I_
·~ . ¢0~
r:::.~. um
~8%
:-; ~ ; ;1
:. :..:.' 5%
~4%
~4%
:.;: .:. ;.; .:. :~: ;i 1 4%
-::--:: :---d
40 50
FIGURE 4 Worldwide assets of banks by ownership of banks (September 1987).
SOURCE: The Economist; Bank for International Settlements, January 1987.
is the largest life insurance company (Nippon Life), the largest tourism
organization (Japan Travel Bureau), and the second-largest advertising agency
(Dentsu). The successes of the Japanese banks and securities companies may
be only the leading edge of impending Japanese competition in a much
broader range of services.
ELEMENTS OF COMPETITIVE STRATEGY
Head-on global competition in the services industries is a relatively new
phenomenon, with little in the way of reliable models or precedents. Tra-
ditional models of industrial structure and manufacturing competition have
limited relevance to service sectors, where the types of inputs and the nature
of productive activity differ so from those of manufacturing.
The Japanese financial services sector, however, has embarked on a strat-
egy remarkably parallel to that which earlier placed Japan in the forefront
of information technology and other key markets. Tracing their strategy for
entering and penetrating the information technology market can provide use-
ful insights into their current competitive challenge in financial services.
Their overall approach may be characterized succinctly as the Termite
Strategy. The Termite Strategy invokes no master plan, and no single leader
to orchestrate the steps. Yet, just as termites act independently and create a
significant common result, the Japanese financial services houses are all
driving toward common objectives, each one seeking to maximize its strengths
and minimize its weaknesses to the greatest extent possible, searching out
the areas of greatest demand and paths of least resistance from competitors.
OCR for page 192
192
RICHARD W. WRIGHT AND GUNTER A. PA ULI
Under the Termite Strategy there is no big thrust for the target, no single
front line, but thousands of small steps.
The purpose of this section is to analyze those steps that the Japanese are
and will be taking to dominate the market for financial services, through a
comparison with their successful strategy in attacking the information tech-
nology market. The paths are remarkably similar, and the consequences for
unwary U.S. and European competitors may be equally unfortunate.
Elements of the typical Japanese strategy may be summarized generally
as follows:
1. Japanese firms identify segments of the targeted industry and choose
an appropriate entry segment. They focus intensively on that targeted sector,
flooding the market with goods or services of high quality and low price.
2. They join with foreign competition in other segments of the industry,
where foreign know-how or technology is superior to that of the Japanese.
These joint ventures enable Japanese firms to gain important expertise in
their own market before competing head-on in foreign markets.
3. They build up a strong distribution infrastructure.
4. After having established themselves securely in foreign markets through
high quality and low prices, Japanese companies are accused of "dumping."
Protectionist political pressure from foreign governments allows them to raise
prices. Higher prices mean higher profits to Japanese firms, as well as to
local competitors, at the expense of the consumer.
5. Surplus profits from increased prices provide the capital for Japanese
firms to manufacture or operate abroad rather than exporting Japanese prod-
ucts or services. The Japanese ensure that high value-added operations remain
at home in Japan, with mainly assembly-type operations abroad. Profits and
expertise flow back to Japan, while low value-added jobs formerly lost to
Japanese competition are reinstated abroad under the umbrella of Japanese
investments.
6. Finally, the Japanese engage in takeovers to rescue failing companies
abroad, and finance research and scholarships at leading western universities
to secure access to well-trained young graduates.
Table 1 summarizes the strategy and compares its successful application
by the Japanese in information technology to the approach being taken in
financial services today. This table captures succinctly the main elements of
strategy discussed below.
THE JAPANESE STRATEGY IN INFORMATION TECHNOLOGY
Reconnaissance
An appropriate target entry segment for any new market, from the Japanese
perspective, would be one in which the financial resources of the competition
OCR for page 193
INTERNATIONAL TRADE IN FINANCIAL SERVICES
193
TABLE 1 Japanese Business Strategies: The Comparison of Information
Technology and Financial Services
Information technology
1. Japanese firms enter the information technology market through high-volume pr~ce-sensitive
semiconductor segment where competition has least resistance due to their focus on financial returns
instead of market share.
2. Japanese fimns move into supplier contracts and original equipment manufacturers (OEM)
agreements penetrating other segments of the information technology market such as personal com-
puters, peripherals, office equipment . . . to acquire manufacturing expertise.
3. Firms first secure their market through independent distributors, then establish direct sales
channels centrally controlled by the Japanese headquarters.
4. After acquiring a major market share Japanese fimns are accused of "dumping." Political
agreements safeguard their market position and raise their profitability while western competitors
feel that the "steamroller" has been stopped. The Japanese market will be "opened" for sophisticated
chips the Japanese do not yet manufacture.
5. Japanese establish joint ventures and invest in new assembly lines, making sure that high-
value-added operations remain in Japan, while overseas profits increase in relative importance. They
also build the largest research and development institutes in the world.
6. Japanese firms consolidate their leadership position by rescuing bankrupt manufacturers, often
at the demand of western governments, and even engage in hostile takeovers. They heavily finance
fundamental research in artificial intelligence at leading western universities and channel the results
back to Japan.
Financial services
1. Japanese fines enter the financial services market through the government lending segment
where margins are crucial and the governments' appetite seems insatiable. Huge balance of trade
and savings are channeled to foreign governments, creating political goodwill.
2. Japanese finds join with financial houses in other segments of the financial services market,
such as foreign exchange, trust and retail banking, leasing, to acquire financial engineering expertise.
3. Firms build up large infrastructure through representative offices and branches. Offices are
managed by Japanese staff under direct supervision of Japanese headquarters.
4. After acquiring a leading market share, Japanese firms will be accused of "dumping." Political
deals will "open" the Japanese financial markets, but these will be either saturated (e.g., banking)
or where foreign expertise is most needed.
5. Japanese financial houses obtain banking licenses, primary dealer status, seats on the New
York Stock Exchange and London Stock Exchange, and dominate the minor financial centers, all
through bilateral deals. Profit and expertise flow back to Japan. They build their own think tanks.
6. Japanese fimns consolidate their market share by rescuing bankrupt financial houses and even
make hostile takeover bids. They offer millions of dollars through university endowments to secure
long-tenn access to well-trained bright graduates, more tailored to their needs.
are insufficient to block Japanese penetration of that segment. Japanese firms
seek an entry segment with high growth potential, because high volume is
central to their success due to the huge capacity at their disposal through the
captive, protected home markets provided by the large domestic economic-
interest groups, or keiretsu (for a more detailed discussion, see Wright and
Pauli, 1988~. An illustrative example of the structure of one of these large
economic-interest groups is presented as Figure 5.
OCR for page 194
194
+ Mitsui
~ n~lt~nt~
Denki Kagaku
Kogyo
~ Mitsui Sugar
| Taito Co. |
+ Mitsui
Aluminium
+ Mitsui
Alumina
+ Mitsui Metal
Processing
1 1'
RICHARD W. WRIGHT AND GUNTER A. PAULI
Fiber &
Textile
Toray
Industries
_ Chemicals
Mitsui Toatsu
Chemicals
Eng neenng ~ ~ Mitsui
Petrochem.
Inds.
Foodstuffs
Nippon
Flour
Mills
Nimoku-Kai
Top 3 Leaders
Mitsui Bank
| Mitsui & Co.
Construction
Mitsui
Construction
Sanki
Engineering
_
Department
Store
Mitsukoshi'
Ltd.
hnance &
Insurance
Mitsui Trust
& Banking
+ Mitsui
Mutual
Life Insur.
Taisho
M. &F.
Insur.
I Mitsui Real L I ~r ~
LEstate Dev.
Paper & Pulp
Oji Paper
r
Mining
Mitsui
Mining
+ Hokkaido
Colliery &
Steamships
_
Onoda
Cement
Top 3 leaders
Steel
& Metals
Mitsui Mining
& Smelting
Japan Steel
Works
| Parent Co. | => rubsidiaries or affiliates | |
7Nimoku-Kai members
1
~ ,
+ Mitsui
Agriculture |
& Forestry |
| Toshoku Ltd. |
| General Sekiyu |
L - o Menka) |
| + Mitsui Seiki
I Kogyo
. ~
~ransportation
& Warehousing
| Mitsui O.S.K.
I Lines
Mitsui
Warehouse
+ Mitsui Harbor |
& Urban I
Const. |
-
Electric &
Machinery
Mitsui Eng'g
& S'bidg
(Toshiba .
Aircraft |
Ind. |
Corp.)
| +Mitsui Miike |
| Machinery l
(Toyoto
Motor Co.
L
|— Joint Developments in New Industries
| + Mitsui Oil Exploration + Mitsui Ocean Dev. & Engineering |
I + Mitsui Development + Mitsui A~r & Sea Service
| + Mitsui Knowledge Industry + Mitsui Leasing 8 Dev. l
' 1
1
FIGURE 5 Mitsuigroup. SOURCE: Industrial Groupings in Japan. Revised edition,
1980/198 1, Dodwell & Co.
OCR for page 195
INTERNATIONALTRADEINFINANCIALSERVICES
195
Because price is used to capture a large market share quickly, it is important
that the segment be highly price sensitive. They seek an area where there
are few barriers to entry and where the entry risk to the Japanese is low.
Finally, they seek a market segment that will open doors to the rest of the
industry. These initial entry criteria are summarized in the first section of
Table 2.
A simplified outline of the information technology market could identify
seven subsectors (see Table 2, second section): semiconductors (chips), per-
sonal computers, minicomputers, mainframe computers, peripherals (e.g.,
printers and cables), communications equipment, and software.
For their initial entry into the information technology market, Japanese
firms were not interested in the software segment, where they had performed
poorly in the past. Also, they were not in a position to undercut the leadership
of cash-rich European and U.S. competitors such as Lotus, Microsoft, Log-
ica, and Cap-Gemini-Sogeti who were setting world standards. This segment
still has not been tackled by Japanese firms. The mainframe market, which
even in Japan was dominated until recently by IBM, did not appeal to them
either as an entry segment, nor did the personal computer (PC) market led
by Apple and IBM. These segments became the secondary targets.
Instead, the Japanese selected the semiconductor market as their first target
in the information technology industry. Why? The U.S. competition was
leading, but they were stand-alone companies, not integrated into large con-
glomerates as Japanese companies are in their keiretsu groups, with their
large captive markets. U.S. companies had to pursue competitive strategies
predicated on short-term profitability, to satisfy the cash-flow and dividend
targets set by private investors and venture capitalists. The Japanese could
aim simply for volume; they had their captive markets within the keiretsu,
and whatever sales they made outside their group could be priced on the
basis of marginal cost. Moreover, the basic semiconductor segment provided
an ideal springboard to other, more sophisticated sectors of information
technology.
The First Assault
Following this initial game plan, Japanese chipmakers successfully un-
dercut the semiconductor market with quality products at very low prices.
(Refer again to Table 1, step 1.) The economies of scale reached by the extra
sales abroad served, as expected, to accelerate their learning curve in pro-
duction and applications. In contrast to its U.S. counterpart, the Japanese
semiconductor industry is not a merchant industry. Of the semiconductors
produced by Matsushita, for example, 80-90 percent are used within its own
group of companies. The remaining 10-20 percent sold overseas allows them
to recoup extra research and development costs, pays for the marketing of
OCR for page 196
196
RICHARD W. WRIGHT AND GUNTER A. PAULI
the chips, and perhaps most importantly helps them to get a feel for the
information technology market on an international basis.
Matsushita and the other large Japanese chipmakers were less constrained
than their U.S. and European competitors by the huge capital investments
needed to shift from 8- to 16- to 32- and 64-kilobit chips. There is almost
always cash available in Japan's large industrial groups to expand production
into areas of high demand. Moreover, the existence of guaranteed, stable
internal markets within the groups lowers substantially the risks of large
capital investments. The consumer sought low price and high product reli-
ability, and the Japanese provided exactly that. They supplied a quality
product in high volume at a low unit price. In the meantime the market kept
on growing while a small number of competitors fought to maintain their
share.
Branching Out
At the same time as the Japanese semiconductor manufacturers built up
their market share in chips, forced prices down, and proved to clients that
their product reliability was the best and their price the lowest, they were
able to develop a parallel strategy of supplier contracts with original equip-
ment manufacturers (OEMs) in other market segments, thus gaining valuable
manufacturing expertise in related sectors (Table 1, step 21. Slowly but
steadily Japanese firms began to penetrate not just the semiconductor market,
but other related segments of the information technology market as well,
such as microcomputers, peripherals, and mainframes.
Parallel to this, the Japanese improved their distribution system (Table 1,
step 31. The initial presence of Japanese firms through independent distrib-
utors gave way to wholly owned subsidiaries for distribution and aftersales
services. They then proceeded to consolidate their market position by re-
placing U.S. computers with Japanese models in government agencies at
home and in selected countries abroad. Hitachi, for example, offered 50-60
percent discounts in Japan, Brazil, Spain, and Australia. They knew that
once they had obtained a major market share of the government sector in
those countries, the private sector would follow, purchasing their computers
at higher prices. After all, one has to be concerned about dumping charges
while selling to the private sector, but governments will seldom object to
receiving computers for less than cost.
The Politics of Price
Soon after, in the wake of increasing pressure from Japanese competition
and the apparent need for western companies to enter into coalitions with
the Japanese, the cry arose from European and North American manufac-
turers: "The Japanese are dumping semiconductors." The Japanese invasion
OCR for page 197
INTERNATIONAL TRADE IN FINANCIAL SERVICES
197
of the memory chip market between 1973 and 1975, and later on between
1981 and 1983 in the 64K memory market, triggered appeals for help, as
the Japanese ability to underprice their competitors seemed unstoppable. On
the basis of battles lost in the past, western companies such as IBM began
to delegate production of their chips to the Japanese at the start of new
projects, rather than fight a costly price war after large investments had been
made in new production facilities.
Governments were pressured to block Japanese firms from the semicon-
ductor market and to levy extra taxes on their products. To avoid the em-
barrassment of a dumping charge, the Japanese deftly resorted to "political
engineering" (Table 1, step 4), working out an agreement on price and
volume with the American private and public sectors. In the fall of 1985,
the Reagan administration pursuaded Japan to sign a five-year agreement to
stop dumping computer chips below "cost" (according to U.S. accounting
standards) and to make its own semiconductor market more open to foreign
manufacturers. However, the pact generated sharp controversy from the out-
set over its side effects, and U.S. charges of Japanese noncompliance led to
the imposition of special retaliatory tariffs in the spring of 1987.
The outcome of the agreement was increased cost to the American con-
sumer and increased profits for Japan. The chip deal between the United
States and Japan resulted in an immediate average price rise of some 20
percent for semiconductors, with some chips even tripling in sales price. By
forcing up chip prices in the U.S. market, the pact will handicap the com-
petitive ability of other high-technology industries in the United States whose
products contain semiconductors. Also, since the Japanese are no longer
permitted to offer cutthroat prices on chips, they can increase their profit
margins har~dsnmelv thanks to the largesse of western policymakers.
~ ~ , ~
Reaping the Profits
This additional profit from the consumer permits the Japanese to invest in
chip factories in the United States (Table 1, step 5) in much the same way
that they began investing in automobile plants in the United States after
similar experiences in the automotive industry. There, the Japanese accepted
a voluntary automobile-restraint agreement on their exports that allowed
them through the game of supply and demand to increase their sales price
by some $1,000 per car. After three years this extra income generated from
the American consumer permitted the Japanese to begin building assembly
plants in the United States. However, the higher value-added elements of
car design and manufacture remain in Japan, as do the project-engineering
and the production and process skills that underlie competitive success the
result of an implicit strategy of keeping the higher paying and higher value-
added jobs in Japan. Then, for the sake of creating employment at whatever
OCR for page 200
200
RICHARD W. WRIGHT AND GUNTER A. PAULI
Japanese fimns have not tackled the financial services market through the
mergers and acquisitions business this will be the last segment for theirs to
attempt or through trust banking, because they are noted for their inex-
perience in these sectors, both at home and abroad. Recognizing their limited
know-how, they seek cooperative efforts in those areas. with the full sunnort
of their ~oven~me.nt
-
. .
- - Err -- -
~ _ c~ _ . ~
Rather, Japan's initial entry into the market for financial services has been
mainly through government lending. (Refer back to the flowchart of Table
1 for the remainder of this discussion. ~ The appetite of governments for extra
funds, their somewhat standardized approach to loan deals, and the high
volume and price sensitivity of government lending, all provided the Japanese
with sufficient justification to conclude that this was the place to start. Few
competitors can satiate the cash needs of governments. In this highly price-
sensitive market, the Japanese offered loans priced often only 1/16 of one
percent over their cost of funds, quickly making them the favorite of gov-
ernments the world over. The county of Los Angeles, for example, turned
to the Japanese for a $250-million loan, as did the New York Job Devel-
opment Agency for a $190-million loan arranged by Sumitomo. Japanese
institutions always offer slightly better rates than any other banks, go for
minuscule margins, and provide consumer satisfaction in much the same way
they satisfied the person who bought his or her first Toyota at a discount
price and got "hooked" on a quality product with a long-term warranty.
, , ~ ~
~ . . .
Learning from Others
With government lending well established for Japanese institutions, they
have begun to join with foreign financial institutions in other segments of
the financial services market, such as foreign exchange, stock exchange
operations, and trust banking. They are actively acquiring expertise in much
the same way that the information technology industry got a feel for the
market through the OEM agreements. Meanwhile, behind the scenes, the
Japanese government helps smooth the way wherever possible.
For example, when trust banking was deregulated in Japan, the Japanese
government required foreign entrants "to employ staff knowledgeable of
Japanese trust business, particularly pension fund business." Yet how could
any foreign financial institution have such expertise when the market had
always been closed to them? With the traditional lifetime employment system
and company loyalty in Japan, it was almost impossible for a foreign bank
to hire away local experts. The only way to meet the requirement was to
join forces with a Japanese trust bank: the foreigners offering their sophis-
ticated know-how in return for an opportunity to participate in the market.
Citibank teamed up with Yasuda Trust and Banking; Chase Manhattan and
Manufacturers Hanover, with Daiwa Bank; J. Henry Schroeder Bank and
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201
Trust was bought by the Industrial Bank of Japan. The likely results were
summed up succinctly by an American banker in Tokyo: "None of the foreign
trust banks here are ever going to make much money, but the Japanese are
going to learn everything there is to know about trust banking through the
joint ventures."
Branching Out
At the same time, Japan's financial houses began building an impressive
international infrastructure. In 1975 the Japanese banks had only 225 branches
abroad, but by 1985 this had risen to 716, and these branches are well
connected with their headquarters to secure efficient management of the
operations worldwide. Sanwa, just to mention one, invested the equivalent
of $8.4 million over the past two years in the Sanwa Overseas Banking
Automation System. Here, once again, the intimate "family" relationships
among companies within Japan's huge industrial groups play a central role.
Financial institutions in Japan have immediate, proprietary access to state-
of-the-art computer and communications technology from other industrial
companies of their same group, rather than having to seek and acquire it at
arm's length on an open market, as in the United States. This provides the
Japanese financial houses a substantial edge in setting up an advanced tech-
nology infrastructure.
.
Japanese financial institutions have also embarked on a dramatic series of
acquisitions abroad to obtain new expertise and to gain market share. Their
aggressive acquisition strategy has so far been limited in Europe to one
particular case: the purchase of 52 percent of Banca Gottardo of Switzerland
by the most profitable of the Japanese banks, Sumitomo. However, similar
acquisitions are bound to occur as opportunities arise, particularly following
the inevitable shakeout resulting from the recent "big bang" in London.
Japanese moves to buy expertise and market share are much more evident
In the United States. It is worthwhile enumerating some recent examples,
because they provide insight into the bold strategy of the Japanese steps
individually conceived and executed, although they all seem to form part of
a major coordinated assault on the market:
1983: $475-million purchase of the Chicago-based commercial financing
company Walter E. Helter by Fuji Bank;
1985: $520-million purchase of the Continental Illinois leasing subsidiary
by Sanwa Bank;
1986: $500-million purchase of 12.5 percent of Goldman Sachs stock by
Sumitomo Bank;
1986: $250-million purchase of the Bank of California by Mitsubishi Bank,
which had previously acquired BanCal Tristate for $282 million;
1986: Bank of Tokyo purchase of California First Bank;
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RICHA RI) W. WRIGHT AND GUNTER A. PAULI
1987: Purchase by Nippon Life, the largest life insurance company in Japan,
of a 13 percent stake in Shearson Lehman Brothers, the securities
operation of American Express, for $538 million; and
1988: Nomura Securities' acquisition of a 20 percent stake in Wasserstein
Perella, a leading mergers and acquisitions firm, for $100 million.
The approach has been well targeted. Today, half of the 12 largest banks
in California are Japanese owned.
Seeking Greener Pastures
Financial services closely related to banking and securities are next on the
target lists of the Japanese. JCB, the dominant Japanese credit card, was
launched in 1961 by Sanwa Bank when there were only 100,000 Japanese
travelers abroad. It benefited for years by collaboration with American Ex-
press. Today, with some four million Japanese traveling, JCB has abandoned
the cooperative relationship with American Express and plans to compete
with them directly. JCB is now represented in 30 countries with more than
25,000 outlets; within two years their infrastructure will spread over 60
countries and some 50,000 outlets.
Leasing is still another area where the Japanese are drawing on expertise
from others to expand abroad. Sanwa Bank led the way by enticing Dresdner
Bank to join them in a joint venture with the Bank of China, for a major
leasing firm based in Beijing.
Japan's securities houses are expanding and diversifying even more ag-
gressively than the banks. They have successfully obtained commercial bank-
ing licenses in Australia, the United Kingdom, and Luxembourg; primary
dealer status on the New York exchanges; and broad penetration of many
smaller financial markets such as Amsterdam, Hong Kong, and Singapore.
They were able to gain entry through well-crafted political moves and bilateral
agreements, whereby the Japanese government offered certain inducements
to foreign governments in return for major concessions to the Japanese houses
abroad.
A good example is the trade-off of two seats for British brokers on the
Tokyo Stock Exchange, in return for a seat on the London Stock Exchange
and a commercial banking license in London for Nomura Securities Com-
pany. It is interesting to observe Japan's Ministry of Finance working so
diligently to promote activities of Japanese financial houses abroad which
would be prohibited to those same firms (as well as to foreign firms) by
Ministry of Finance regulations at home.
Future Steps
Under the most likely scenario, we may expect soon to hear a crescendo
of charges that the Japanese are "dumping" financial services. Indeed, the
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203
chairman of Barclays Bank recently leveled an open accusation against them
for doing just that. The Japanese are currently offering loans at only 1/16
percent over cost, and their fees for funds management are only 0.55 percent
when the market standard is 1 percent. Pressure is mounting on governments
in North America and Europe to negotiate "voluntary" restraint agreements
with the Japanese in financial services, as was done in semiconductors and
in textiles, steel, and automobiles before that. Also, just as with those other
industries, protectionism in financial services will allow Japanese firms to
raise their profit margins and to use the additional capital for extended joint
ventures and straightforward acquisitions abroad, thus strengthening and fur-
ther consolidating their global position in financial services.
The expansion of Japanese global financial markets threatens North Amer-
ican and European financial institutions. As long as governments, the con-
sumer, and the sector concerned know that they have to face up to the Termite
Strategy, it is possible to design effective counterstrategies. Unless U.S. and
European policymakers understand this strategy, they will design the wrong
policies, ask for protection that will not help, and seek cooperative arrange-
ments that will result in the draining of national expertise.
REASONS FOR CONCERN
At first glance, it is easy for Americans and Europeans to shrug off or
even to welcome the new Japanese competition in financial services. After
all, if they are willing to supply us with large amounts of capital at cut-rate
prices, why complain? Who isn't glad to get money cheaper? However,
beyond that immediate boon to the consumer of funds, the potential con-
sequences of Japanese dominance of global financial services are real and
substantial.
A first consequence is the obvious although often overlooked fact that
the piper must eventually be paid. As the United States and other industrial-
ized countries of the West move away from their traditional capital self-
sufficiency or even capital export positions toward mounting external in-
debtedness, so do their obligations for future payments of interest, dividends,
principal, and service fees to foreign creditors mount relentlessly. Unless
these payment obligations are matched by corresponding increases in real
productivity a most unlikely prospect then more and more of our pro-
ductive energy and that of future generations will be devoted to servicing
external financial obligations.
Moreover, as western economies become increasingly dependent on sus-
tained financial support from outside sources, so they become more vulner-
able to economic and political influences from abroad. Already, for example,
the United States has largely lost its ability to manage domestic interest rates
independently, for fear that lower rates would trigger a destabilizing outflow
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RICHARD W. WRIGlI T AND GUNTER A. PA ULI
of Japanese investment capital. It is no exaggeration to say that the United
States is becoming an "underdeveloping" part of the globe, slipping toward
a position of financial dependence not unlike that suffered today by many
lesser developed countries. Japan's influence goes well beyond government
bonds and corporate securities. Business Week, in a recent survey, concluded
that "Japanese companies are spending heavily to shape the way Americans
view them.... The Japanese are also wielding political power from the
grass roots to the top echelons of Washington" (Business Week, 1988~.
Perhaps even more serious is the potential long-term threat to U.S. eco-
nomic vitality and entrepreneurial spirit. As U.S. domestic financial insti-
tutions fall increasingly under direct foreign control, which they will if current
trends continue, the highest level, highest value-added financial skills-
planning, strategy formulation, engineering complex financial packages, even
finance-related technological developments will be increasingly centered
in Tokyo or Osaka.
Awareness and Complacency
The worst enemy of the western economies is complacency. It is too easy
to shrug off the Japanese financial challenge with the same platitudes used
a decade ago as Japanese firms become increasingly important in manufac-
turing industries, from watches and cameras to cars and information tech-
nology: "It's a passing phenomenon"; "the Japanese can't really innovate";
"Japanese business is so culture-bound that it will quickly flounder outside
of its homeland"; "U.S. and European managers are innovative enough to
keep ahead of them."
The growing Japanese presence in financial services may bring short-term
economic and political benefits, but it also can have far-reaching implications
in the longer run on national trade balances, the quality of employment, and
national innovative abilities. Japanese firms do not often publicize their
strategies and their competitive successes as western firms are prone to do.
They prefer to keep a low profile; thus their expansion moves go unnoticed.
However, it is time for western business and government leaders alike to
open their eyes to the challenge of Japan's second wave, to acknowledge
that there is a major new competitive challenge, and to reshape their com-
petitive strategies accordingly.
DESIGNING EFFECTIVE RESPONSES
Our discussion of the Japanese strategy has identified some key organi-
zational technologies and competitive elements underlying the success of
Japan's financial services firms. Among the most significant are: (1) access
to very large amounts of capital at very low cost; (2) stable, well-educated,
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205
highly-motivated work force; (3) an ability of corporate managers to plan
and target resources effectively; (4) a long-term profit horizon permitting
Japanese firms to focus on long-term price-cutting and other market-share
competitive strategies, rather than short-term profit; (5) large, stable internal
markets and customers, through the keiretsu group relations; (6) direct access
to state-of-the-art electronic and communications technologies, again through
direct, proprietary access to other firms in their keiretsu groups; (7) government
policies that both protect the home market and actively promote the position
of Japanese financial institutions abroad.
Some of these advantages clearly stem from cultural factors and institu-
tional relationships that cannot be replicated readily by others. Nevertheless,
U.S. and European financial institutions still hold a firm lead over the Jap-
anese in many high-value-added areas of financial services. With careful
responses on the part of both the financial institutions and governments, there
is much that can be done to maintain U.S. and European leads in those areas
and strengthen the general competitive position of western institutions.
Creating a Competitive Edge
Once western financial houses shed their complacency and accept that they
indeed face a crisis, their first critical need is to define their strengths: the
areas where their productive resources can be focused most profitably for
the future. One of the great strengths of Japanese managers is their ability
to target their competitive energies, focusing on specific niches where their
potential strengths are greatest or where their competition is weakest. There
are many high-value-added financial activities in which western financial
institutions still have a clear-cut edge over the Japanese: trust banking, port-
folio management, venture capital, mergers and acquisitions, swap arrange-
ments, and engineering complex financial packages, to name a few. Given
limited resources, North American and European managers should direct
their energies toward these and other new niches that will certainly arise in
the highly fluid environment of international finance.
Keeping a step ahead of the competition will mean constantly scanning,
innovating, and targeting new directions. U. S . and European financial houses
certainly are creative enough to do this. After all, nearly all the significant
innovations in financial services to date have originated outside Japan. The
real challenge will be to shift quickly to the new, high-value-added activities
as they open up, even at the cost of relinquishing portions of our more
traditional markets. This will be difficult, as it will require Reemphasizing
or even abandoning some familiar activities and markets in which both in-
stitutions and individuals have strong vested interests. Nevertheless, the only
alternative to focused change is to continue serving traditional markets behind
increasingly restrictive protectionist legislation, raising the cost to consumers
and ultimately eroding competitive abilities even further.
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RICHARD W. WRIGHT AND GUNTER A. PAULI
Although better targeting will help, there is also more that managers can
do to attend to the needs of their customers. Western firms cannot realistically
hope to compete head-on with the Japanese giants in price competition: they
lack access to the supplies of low-cost funds of the Japanese; and the demands
of American shareholders and creditors for short-term profit performance
preclude most financial houses from sustaining for substantial periods the
low earnings that price-cutting usually implies. To compete with Japanese
institutions, western financial firms will need to focus more on relationship
services aimed at client loyalty, rather than on transactional services sus-
ceptible to price competition. What this boils down to is a more market-
oriented approach to winning and holding the loyalty of customers, be they
individuals or corporations. If financial institutions provide optimal service
within a long-term framework of confidence, most customers will not turn
their backs for a mere one-half or one-quarter percent.
More can be done also in the internal management of U.S. and European
financial institutions, particularly in human resource management. One of
the main strengths of Japanese competitors is their low labor turnover and
the extremely strong loyalty of their employees. Cultural differences clearly
preclude the same degree of company devotion in most western societies.
There is, nevertheless, a great deal that can be improved in recruiting, train-
ing, job security, and employee participation that could help U.S. and other
western companies improve their long-term productivity. One of the greatest
competitive strengths of U.S. and European institutions is a proven level of
creativity and entrepreneurship. The ability to motivate personnel through
new approaches, such as profit-sharing schemes that give larger numbers of
employees a feeling of partnership and shared accomplishment, can be a key
determinant of success in countering the challenge of the second wave.
Building and maintaining an effective competitive edge will require also
a significant reorienting of western shareholders and investors. The relentless
demands placed on western financial institutions for short-term profit per-
formance constitute one of the most serious handicaps in facing the Japanese.
Whereas the best route to meeting the Japanese challenge is clearly not to
try to match their price competition head-on, western financial services com-
panies could nevertheless compete much more effectively if they were able
to develop strategies based on long-term growth and market-share consid-
erations, just as the Japanese do, thus enhancing their ability to engage the
Japanese on their own terms where appropriate.
Organizational Linkages
At the same time western financial houses face growing competitive pres-
sure to specialize their focus into niches of comparative advantage, they face
seemingly contradictory demands for greater diversification of the services
they offer. It is clear that consumers of services increasingly seek "one-stop
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207
shopping," i.e., financial services centers capable of providing a broad range
of services, from straight financial loans and deposits to equity trading,
insurance policies, currency swaps, and travel services. Japanese financial
service institutions are diversifying rapidly to meet this demand, achieving
economies of scope as well as of scale. Few individual western companies
are yet equipped to provide such a broad range of services efficiently, re-
gardless of size.
One appropriate response is to form linkages with other home-based fi-
nancial institutions offering complementary high-value services. This need
not be done through formal mergers or acquisitions. Indeed, the recent spate
of mergers and acquisitions in western financial services industry based
more on leveraging balance sheets with undervalued assets than on any market
strategy guided by complementarily has sapped the vitality of many com-
panies by tying up huge amounts of capital in nonproductive stock purchases,
as well as by demoralizing the organizations involved and causing a flight
of personnel. What is needed, instead, are informal alliances among firms
offering complementary financial services- i.e., banks, insurance compa-
nies, brokerage houses, foreign-exchange specialists all linking up con-
tractually to provide their own specialized services in combination with others.
Such alliances will facilitate integration of financial services and the fusing
of technology, thus improving both efficiency of the companies and services
for their customers. The resulting increases in scale, scope, and efficiency
can provide a substantial counterweight to the Japanese onslaught.
A related type of alliance is with other cash-based service companies such
as retail stores, aimed at securing access for financial services to new mass-
distribution and even electronic-distribution channels. Such alliances help
bring organizational economies of scale to the firms involved, increasing
their productivity and better serving the convenience of their customers.
Again, we have only to look at the highly diversified keiretsu groups in
Japan to see how successfully diversification through collaboration among
complementary, like-minded companies can enhance international compet-
itiveness.
Even more far-reaching may be cooperative working relationships among
potential competitors of different nationalities, including the Japanese them-
selves. In other words, one approach is to combine U.S. financial skills and
marketing expertise with Japanese access to capital and placement channels,
to provide the most efficient possible symbiotic combination of comparative
advantages. At first glance, the idea of forming alliances with competitors
may seem preposterous, but that is exactly what is happening in some man-
ufacturing sectors, most notably automobiles. Who would have thought a
few years ago that we would ever see the networks of global working alliances
that exist today between General Motors and Toyota, for example, or among
Nissan, Volkswagen, and Alfa Romeo? The important point here is that it
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R1ClIARDW.WRIGHTANDGUNTERA.PAULI
is possible to achieve mutually productive working relationships on an in-
ternational scale on the basis of cooperative agreements short of formal
mergers or acquisitions, thus helping to maintain the independence and in-
tegrity of each of the participating companies.
A striking example of this collaborative potential between Japanese and
westerners in financial services is American Express Company's recent sale
of a 13 percent stake in its Shearson Lehman Brothers securities operation
for $538 million to Nippon Life Insurance Company (Financial Times, 1986
and 19871. This follows Sumitomo Bank's earlier purchase of a 12.5 percent
investment in Goldman Sachs for $500 million (although the latter deal
excluded a direct equity link). The latest move brings together some of the
most massive players in the financial services industry: American Express
is one of the world's largest international financial services conglomerates;
Nippon Life is the largest of Japan's huge insurance companies; and Shearson
is the third-largest Wall Street investment bank. In a smaller but equally
significant move, giant Nomura Securities Company paid $100 million for
a 20 percent stake in Wasserstein Perella, a leading mergers and acquisitions
specialist, moving the Japanese for the first time into the highly sophisticated
mergers and acquisitions business (The Economist, 1988~.
The trick in such cross-national collaborative arrangements is, of course,
to ensure that the long-term gains to the two sides are really balanced. Too
often in the past, such arrangements appear to have helped the Japanese gain
significant competitive advantages by giving them access to valuable skills,
while offering their U.S. and European partners little in return except short-
term infusions of capital or potential market access of dubious value. A
recent Harvard Business Review article (Reich and Mankin, 1986) on col-
laborative arrangements with Japan concludes that
The big competitive gains come from learning about . . . processes and the result
of the new multinational joint ventures is the transfer of learning from the United
States to Japan.
There are indications that westerners are beginning to scrutinize much
more carefully the trade-offs involved in collaborative arrangements with the
Japanese. A major objective of Sumitomo's acquisition of 12.5 percent of
Goldman Sachs to acquire skills in investment banking was thwarted,
for example, when U.S. officials refused to permit Sumitomo to send trainees
to Goldman's New York offices, on the grounds that such activity would
violate the statutory separation of commercial and investment banking.
Government Policies
By identifying and pursuing new profit opportunities, by attending better
to the needs of both customers and employees, and by forming effective
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INTERNA TIONAL TRADE IN FINANCIAL SERVICES
209
alliances with other services companies both at home and abroad, U.S. and
European financial services firms can do much more to develop client re-
lationships that are strong and loyal. Yet to sustain any real competitive edge,
the private sector needs one other vital ingredient that Japan's banks and
securities companies can safely rely on: a sympathetic and supportive gov-
.
ernment policy environment.
This emphatically does not mean protectionism. It is clear from earlier
attempts to cope with Japanese manufacturing competition that protectionism
is not a viable long-run solution. Artificial barriers imposed by the United
States against the import of low-priced Japanese semiconductors will be
ultimately counterproductive to U.S. competitiveness in the higher value-
added end of the inflation technology market, where U.S. firms still
remain competitive. Similarly, the United States, which remains at the
forefront of many high-value financial functions, has far more to lose than
to gain from restricting the international flow of financial services.
Instead, western governments should continue deregulating financial ser-
vices at home, facilitating greater efficiency in their domestic firms. Recent
moves in this direction by Canada and the European Community are en-
couraging; but the United States lags far behind. Regulations limiting branch
banking, and most particularly provisions of the Glass-Steagall Act, which
segment the various types of financial services activities, handicap financial
houses from achieving the scale and scope of activities needed in today's
global competition. They are counterproductive and should be removed.
western governments and again, Americans in particular will almost cer-
tainly need also to relax current antimonopoly legislation to encourage the
kinds of interinstitutional cooperation needed to square off against the con-
centrated strength of the Japanese.
At the same time, the U.S. government must continue striving to bring
about the "level playing field" needed if U.S. institutions are to compete
abroad on an equal footing with foreign competitors. This means, above all,
continued relentless pressure on the Japanese government to allow foreign
firms the same access to Japanese financial markets that Japanese houses
enjoy abroad. Significant steps have been taken to open the Japanese market,
but major differences of opinion remain as to what reciprocity actually means.
U.S. financial services firms claim correctly" that Citicorp and Merrill
Lynch are not permitted to do in Tokyo what Dai-Ichi Kangyo and Nomura
can do in New York. The Japanese politely respond that they treat a Merrill
Lynch in Japan exactly as they treat a Nomura: according to the Japanese
book of rules.
Finally, the U.S. government needs to do more to make accessible to U.S.
firms the ultimate competitive advantage: low-cost capital. Current govern-
ment fiscal policies, especially massive government deficit spending, serve
to drive up interest rates in the United States, increasing the cost of capital
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RICHARD W. WRIGHT AND GUTTER A. PAULI
to U.S. financial services houses and undermining their global competitive-
ness. Monetary and fiscal policies leading to low inflation and low interest
rates will ultimately be more helpful than any amount of protection or sub-
. .
SIC lest
CONCLUSION
Meeting the challenge of Japan's second wave will require bold new
approaches by financial houses and governments alike, and most important,
it will require an extraordinary willingness on the part of private and public
sectors to work together. There is no clear-cut formula or set of steps that
westerners can take to counter the Japanese challenge in financial services.
However, by being aware of the Termite Strategy of what is happening,
where the Japanese are likely to go, and how they intend to get there U.S.
and European institutions can better prepare themselves to shape appropriate
competitive strategies for the future, not only with respect to the immediate
financial threat, but also with respect to the broader emerging challenges of
international trade in services.
REFERENCES
Business Week. 1988. Japan's influence in America. (July 11):64-75.
Echo de la Bourse. 1987. The brokers (April 23).
The Economist. 1986a. Richer than you. (October 25):13-14.
The Economist. 1986b. Topsy-turvy. (March 22):15.
The Economist. 1988. Big wheels, small deals (July 30):78.
Euromoney. 1985. Who's doing business. (August): 151.
Financial Times. 1986. Nippon Life to pay $350m for Shearson stake (March 20).
Financial Times. 1987. American Express hunts for a global advantage (March 25).
Hector, Gary. 1986. The Japanese want to be your banker. Fortune (October 27):97.
Reich, Robert B., and Eric D. Mankin. 1986. Joint ventures with Japan give away our future.
Harvard Business Review (March-April):78.
Time. 1986. Money masters from the East. (August 11):31.
Time. 1988. Yen power goes global.(August 8):20-23.
Wright, Richard W., and Gunter A. Pauli. 1988. The Second Wave: Japan's Global Assault
on Financial Services. New York: St. Martin's Press.
Representative terms from entire chapter:
japanese firms
