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Japanese cars for the U.S. market

The most easily implemented strategy would be the elimination of benefits in the prices of Japanese goods in the U.S. by forcing Japan to revalue the yen, and the devaluation of the dollar, or the introduction of additional import duties on Japanese cars. The strategy, which could also be easily realized, was in direct competition with the Japanese organization of production as a result of American subcompact cars. If American consumers would be satisfied with such vehicles, their cost, quality, efficiency and t. Dr.. It would be a severe blow to the Japanese.

import quotas.

One of the easiest ways to limit the volume of imported goods is the introduction of quotas on them. However, quotas are by nature a political tool more than a measure based on economic considerations. In other words, the import quotas are most often used to satisfy those advocating protectionism, and is usually combined with a policy of protectionism. This attitude toward protectionism exacerbated by pseudo-scientific statements such as statements, Henry Ford II: « Each percentage increase in imports leads to a reduction in the U.S. 20 th. jobs ... However, he forgot about the jobs created in the U.S. as a result of imports of foreign cars. Imports of giving work to many American workers. In addition, the Japanese car companies pay wages to the Japanese, which they spent on the purchase of U.S. goods.

A sense of political protectionism is highly developed in the U.S., especially with regard to Japan. The trade balance between the two countries unfavorable to the U.S..

In 1970,. U.S. trade deficit with Japan amounted to 1.2 billion. USD. and 3.2 billion. USD. in 1971. The desire to introduce import quotas is a natural. This feeling was compounded by the fact that Americans believe that the Japanese had not properly belonged to American goods sold in Japan, or even carried out a discriminatory policy with regard to their. This feeling prevailed before World War II, when the balance of trade with the United States, Japan reduced the deficit. In this regard, the Japanese government was looking more and more aggressive ways to improve their situation.

Arguments in favor of the introduction of import quotas in the U.S. are based on two facts: the growing penetration of Japanese cars to the U.S. market and the desire to respond to the Japanese protectionism in relation to its own auto industry.

One problem was the timing for the introduction of quotas. As shown in the following article to look at the site at number 8, up to 1968. imports of Japanese cars do not deserved to be worth thinking about it. The number of imported Japanese cars has increased significantly since 1969. But in 1970. it amounted to little more than 3 % of the total registered cars in the U.S.. Whatever it was, but in 1971. trend has changed. The share of Japanese cars in the total amount registered in the U.S. jumped to 5%, while that of other countries was on the same level or even decreased.

As shown in the article to look at the site, at No. 9, the share of car company ... respectively 1 and 2 % of the total registered cars in the U.S.. However, in 1971. They are very close to ...

Japanese companies have been warned that if the share will reach 5 % of the total registered cars in the U.S., they should voluntarily limit its exports. This rationale was twofold: Japan voluntarily restricted its exports of steel, when it amounted to 5% of its total U.S. consumption, and exports of automobiles ... units, m. e. about 5 % of the total registered cars in the U.S.. It was not the result of voluntary restrictions kakihlibo its exports from the company ...

However, Japanese managers were confident that the campaign to restrict the export of Japanese cars will be carried out not soon. The reason for their optimism was the fact that there are no import restrictions will not be long until the price of cars will continue to be acceptable, but companies are not subjected to charges of dumping their goods. to. Kawamata of the company's ... As soon as the liberalization of foreign investment, he said, ... An example of this is the ... In these circumstances, there should be no possibility of imposing restrictions on imports of Japanese cars in the U.S..

One American company executives ... pieces in 1976. If the company is ... In these circumstances, could easily be a strong political protectionism. One expert predicted that if the import of cars to reach 2 million. pieces, the U.S. government will take certain actions to protect the national industry.

It can be concluded that the imposition of import quotas on Japanese cars, it is unlikely unless the U.S. industry will not be affected by significant imports. Japanese companies export restrictions will most likely measures to avoid the imposition of U.S. import quotas. Such will be the development of Japanese exports of cars in this country,.



Change currency parities.

and additional import duties.

While the import quotas are intended to restrict imports of certain goods such as textiles, automobiles and television sets, changes in currency parities, and additional import duties lead to a general restriction of imported goods.

If the Japanese yen was revalued and / or devaluation of the dollar has undergone, it would weaken the position of the Japanese automobile companies in the world market, and it would be difficult to export their products to the U.S. market. If, in addition, introduced additional import duties, export would be much more difficult. However, the additional import duties should be a last resort, because ... Additional import duties should be temporary rather than permanent measure, which serves as a warning signal.

Revaluation of the yen and / or devaluation of the dollar may, in certain circumstances, an effective tool to curb the flow of Japanese cars into the U.S. market. One reason for the decrease in recent years exports of automobiles ...

Some factors, however, reduce the effect of such effective measures. Examples include the elasticity of demand for Japanese cars, Japanese manufacturers the ability to partially reduce the impact of the revaluation and the difference in the levels of production costs and labor productivity between the U.S. and Japan, i depends on the price elasticity of demand. The more elastic the demand, the lower the price increases resulting from revaluation. The main factors affecting the elasticity of demand, are the presence of full-fledged substitutes for the commodity, product reuse and the magnitude of the cost of goods relative to consumer income. The elasticity of demand for Japanese cars is quite flexible in terms of availability of replacement, reuse, and the price - earnings ratio. As a result, prices for Japanese cars can not be raised in strict accordance with the size of the revaluation.

In addition, the revaluation as a restrictive measure can not produce its maximum effect when Japanese manufacturers were prepared for it and have the opportunity to reduce its impact. Since the revaluation has been a central issue for several years, Japanese companies are likely to have prepared countermeasures to overcome its adverse effects. They may, for example, to revalue dramatically increase exports to the U.S. to reduce the possible effect of its holding. They can, looking forward to a revaluation, go at the conclusion of transactions on the foreign dollars to yen. For example, ... pending the revaluation of almost 5.5 billion. yen ( 15 million. USD. ).

The requirements of liberalization of foreign investment in Japan.

In Japan, the liberalization of capital means the removal of restrictions on foreign investment kakielibo. The Japanese government has traditionally feared foreign capital, mindful of the troubles associated with the foreign domination of the economy. Prior to the beginning of XX century. For example, the UK trading companies controlled by the Japanese foreign trade. As a result, the government has maintained a very strict policy regarding the admission of foreign capital in Japan and has taken defensive measures against the threat of invasion.

The issue of liberalization of the capital came at a time when Japan became a member of the Organization for Economic Cooperation and Development ( OECD). Although Japan was allowed to have 18 exemptions in accordance with the revised Code of liberalization of 1964. It in 1965-1966. subjected to increasing criticism because of its policy of restriction.

In the summer of 1967. Japanese government ended the program developed in response to criticism of the OECD with respect to foreign investment restrictions. Under this program, Japanese industry has been divided into three categories. The first category includes 17 industries in which foreign investment is automatically resolved. The second category consisted of 33 industries in which foreign investment is automatically resolved in sizes up to 50 % of the total capital of Japanese firms, however, was not allowed to attract foreigners to the management. The third category includes all other industries, which require the use of foreign investment review and decision of the Government in each case.

One of the most heated debate in Japan has been debate about whether, reached a national car industry a level of maturity to be able to afford the liberalization of foreign direct investment, or whether it still needs to be protected.

The attitude of Japanese car companies to the liberalization of foreign capital has found full reflection in the ... The leaders of the Japanese automotive industry issued a communiqué entitled ... This so-called ...

Considerations in support of early liberalization of the automotive industry consolidates to. Kawamata in his article ... He began his article with that described the automobile industry as the leading industry, providing the foreign currency as a rapidly growing industry with high-value manufactured products associated with a number of related industries, and requires a large number of people employed. ... In addition, Kawamata stated that the scope and technical capabilities of the ...

There were, however, and some other points of view on the issue of liberalization of foreign capital in Japan. According to the Federation of Economic Organizations, one of the most influential organizations, bringing together representatives of business circles of Japan, the national car industry should be liberalized. Her arguments in favor of liberalization were the following:.

Japanese automobile industry has to compete with foreign capital;.

liberalization of capital is desirable from the point of view that consumers will get cheaper cars of good quality, but the industry will be introduced advanced foreign management practices and technology;.

Japanese economy hurt if the automotive industry will hold closed-door policy. The concentration of exports of Japanese cars in the U.S. will have an adverse impact on other industries in Japan because of rising protectionism in the U.S..

Federation of Economic Organizations announced the policy framework of liberalization in January 1969. She declared that liberalization should be actively pursued to develop the Japanese economy and to prevent the upward trend of protectionism around the world. This policy limited the ... Further, it was assumed that all other industries should be liberalized by the end of 1970. based on the ratio of local and foreign capital as a 50: 50. Thus, avtombili were excluded from this ...

Main policies federation caused strong opposition from companies, ... Kawamata, head of the company's ... At the same time Chairman of the Board of Directors of the company ...

At the same time, some senior managers were in favor of liberalization. Soichiro Honda, president of the company ... Although Kawamata rejected the liberalization of capital and reaffirmed the provisions of the ... between the heads of the Federation of Economic Organizations and Japan Association of car manufacturers reached an agreement on the liberalization of foreign capital. The agreement was carefully worded so that it was impossible to predict the timing of liberalization. The reorganization of the automotive industry was to be completed in late 1971. And the decision to accelerate the liberalization could be made only after analyzing the results of the reorganization.

However, the actual conduct of the liberalization of foreign capital, which was scheduled for autumn 1971. , Was authorized by the Japanese Cabinet in April 1971. Start date of liberalization has been approached mainly from the fact that it required the U.S. from its Japanese partners at many conferences over the years, and in the end, the Japanese government made ​​concessions. Japan bothered about the thawing of foreign capital, so as not to cause retaliatory action against her car, delivered in the U.S..

In carrying out liberalization of foreign investment in the automotive industry, the Japanese government adhered to the following provisions:.

Investments should be limited to 50% for the Japanese capital and 50% for foreign capital;.

new joint ventures should be organized with the new Japanese firms in which partners are Japanese investments in cash;.

existing companies can not form joint ventures with foreign capital enterprise, except when they have special permits issued by the Government after examining the financial position of the Japanese firm and its place in the market.

The U.S. government and American companies were dissatisfied with the plan and expressed their dissatisfaction with the fact that these three constraints made ​​this program very far from the true concept of liberalization. Japan was ready to make further concessions to foreign capital in the form of amendments to its commercial code to remove these criticisms. Restriction on foreign ownership of the outstanding securities has been increased from 20 to 25% of the Code has been established that anyone who owns more than 25% of the outstanding shares, respectively, had an increasing right to elect directors. Anyone who has more than one- third of the shares, had the right to veto. The latter explains why the company, ...

Production of subcompact cars by U.S. companies.

It was possible to conclude that the import of cars in the U.S. - a phenomenon permanent, and the market small cars will become the dominant way of a new market segment. The most natural response to the growing sales of small cars imported by U.S. companies was the production of subcompact cars, which began with the 1970.

In the early 60's ... Imports decreased from 609 thousand. vehicles sold in 1959. (10% of total sales), to 339 thousand. units in 1962. (5% of total sales). In the early '70s imported cars performed well in the U.S. market due to price, quality, reputation among customers, sales network and after sales service. Their market share in 1973. reached 15.4%.

Subcompact cars of American manufacture could have a dual effect on the market. Vigorously competing with imports, they may to some extent, to press their. They could also have an impact on sales of large American cars, providing large profits, and thus adversely affect the value of total net revenue of companies such as ... If the American subcompact car more and more vexed large, the market for small cars would be expanded, increasing sales opportunities for both import and subcompact cars for the U.S.. U.S. companies before the 70s are extremely reluctant to let small-sized passenger cars, because they believed their low-profit, and feared that the sale of such cars could reduce the demand for larger and more cars bringing big profits.

First and foremost, American companies never gave much importance to this segment of the market, a significant decrease in content with imports in the early 60s, after they have begun to produce their own compact cars. However, imports began to grow again when in the mid 60s in the U.S. showed up great prospects for demand for compact cars. In the late 60s, before the Americans realized this, imported cars, especially in Japan, were introduced to the market more aggressively.

... In contrast, the company ...

In the production of small cars in the U.S., American companies faced with certain difficulties. Among the many problems one of the most serious problem was the possible reduction in the production of large cars. ...

If we assume that the market for small cars in the United States firmly resisted, and many Americans, for various reasons, including the fuel crisis, prefer to buy such a car, we can conclude that the demand for compact cars will undoubtedly increase. The result will be a new market, does not affect the existing relationship between the individual segments of the car market, or whether it will expand its borders at the expense of its other segments.

The new market means competition between imported and American cars. But if the American compact cars will begin to crowd large, American companies face serious difficulties. When the market has a compact car ... One of the leaders of the Japanese firm, located on the west coast of the United States, said:.

...

After the September 1970. ...