Crossing the Cultural Divide, Part 2

Editor’s Note: this is the second part of a two-part series. Here is the first part of Crossing the Cultural Divide.

Japanese Overcoming Nationalism on Both Sides of Pacific Ocean

TOKYO — As the semiconductor industry helps the world become a smaller place, it has suffered the growing pains of the very changes it helped foment.

Alas, Electronic News (the print edition): we hardly knew ye!Those growing pains involve transitions that haven’t always been easy for companies on either side of the Pacific. Nevertheless, the United States and Japan, two of the world’s economic powerhouses, have each managed to learn from the other as they head into the 21st century.

By the 1970s Japan had emerged from its post World War II rebuilding period as an economic giant. It took what it had learned from America and put it to good use, noted Kiyoshi Miyasaka, senior managing director for Tokyo-based Advantest Corp.’s automated test equipment and handler interface business groups. Forced by economic necessity to respond, American industry in turn looked to its perceived nemesis in the 1980s in order to learn.

“Americans were so clever to combine American ways with Japanese ways,” Miyasaka said, adding that in the 1990s, U.S. corporations managed to surpass their competition outside the United States by incorporating not only Japanese but also European business practices to become truly global entities.

“For myself, I’m thinking about how to mix the cultures not only from the States, but from the European people and the Indian people as well,” Miyasaka said.

It is often a dilemma for companies like Advantest, which really have no choice but to grow beyond their country’s borders if they wish to continue to grow. “Fortunately or unfortunately, 70 percent of our sales comes from foreign trade,” explained Toshio Maruyama, executive managing director and senior vice president of Advantest’s automated test equipment sales division.

In theory, business should be business regardless of borders. After all, Japanese chipmakers face the same market demands and problems that their U.S. counterparts do, such as lowering the cost of test. “Quality and price are the same. In that sense, there is no difference,” Maruyama said. “To my mind … it’s seamless. Business is business. The product is the same. That’s my message to my staff,” he added.

Japanese executives from Advantest and Tokyo Electron.

Following that belief, in April 1999 Advantest consolidated its global sales force, both foreign and domestic, and began directing its international subsidiaries to develop localized support and R&D In addition, Advantest instituted global accounting several years ago. The company has also outlined a five-year goal: to offer the same product price and the same level of customer support anywhere in the world.

But theories face challenges when put into practice. One of the biggest challenges Japanese companies must overcome while doing business with American and other foreign customers is a nationalistic bias — its own as well as that of foreign corporations.

Chipmakers, regardless of which side of the Pacific they are on, often prefer a local tool supplier, their logic being that a local supplier can offer better customer support. Also, Japanese executives point out that foreign customers tend to question if a domestic supplier might give preference to a domestic customer over a foreign one. At one time, this was probably the case no matter on what side of the Pacific a company did business.

So, just as American companies have often had to establish Japanese subsidiaries in order to break into Japanese markets, Japanese companies have had to do the same in order to penetrate American and other foreign markets. It has become a matter of providing a competitive level of service as well as overcoming bias. “An important point is not just selling hardware and software, but we have to support it,” Maruyama said. “The important point is to support the customer. That has to be localized.”

The largest Japanese tool supplier, Tokyo Electron Ltd. (TEL), is even taking its operations one step further. The company is locating certain manufacturing operations in the United States. Tetsuro Higashi, TEL’s chief executive officer and president, noted that the nature of the relationship between chipmaker and tool supplier is very close. In order to penetrate the market in the country that spawned the semiconductor industry, “we need a very deep root in the United States,” he said. “But it takes time.”

Editor’s Note: As explained at length elsewhere on this site, this is a news story written by me that originally appeared on the now-defunct Electronic News’ website, which is long gone. It’s former sister pub Electronic Design News (EDN) currently holds the copyright to all Electronic News copy (to the best of my knowledge). You can still see a copy of this story at EDN.

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