HOW HE SEES IT From the Valley, to New York to the Orient

TOKYO -- One lesson that my parents taught me by example was that there is a whole world out there to be seen, to be heard, and to be felt. That is why when my bank asked me to do a multi-year rotation in Tokyo and Shanghai, I couldn't say no. My wife and I miss New York, which David Letterman correctly described after 9/11, as "the best damn city in the world." But the cultural experience, the ability to travel throughout Asia, is reward enough.
But my justification for coming here goes deeper. The ability to experience two vastly different countries at various stages of their development, for me, is a great opportunity. If the United States is to maintain its position as gatekeeper to the global economy, should we not learn how and why a country like China is rapidly becoming as important a marketplace as the United States? Should we not learn how the Koreans are making cars of the same quality and at a lower price then the Japanese? The simple answer is yes.
Just getting started
While I have only been in Tokyo for two months, I see evidence as to why Japan is on the rebound and China's growth continues. These are examples that we can all learn from as we ask serious questions about the future of America's economy and our way of life.
Both countries are adapting to the realities of market forces in a way that will only benefit their citizens. Until Commodore Perry landed his black ship fleet in the Japanese coastal town of Shimoda in 1855, Japan was a closed society to foreigners. In its rebirth after World War II, the society may have opened, but the economy did not. Japanese conglomerates were so tightly woven into the fabric of government affairs that they were able to fend off any foreign companies from penetrating the market. The end result was a bloated and inefficient economy where "zombie companies" were so debt-ridden they were kept alive by banks that refused to admit they had so many bad loans on their books. Enter Prime Minister Junichiro Koizumi in 2001, who forced Japan to take a hard look at itself and realize its economy had to be restructured and opened. It is working, as Japan's economy is finally on the mend 15 years after the Japan bubble burst. American equity firms that 20 years ago would have been deemed Barbarians at the Gate are now considered bearers of needed reform.
Mixed messages
In China, while the country is still Communist in political ideology, it is capitalist in economic reality. Gradually, laws are being instituted that grant broader ownership rights, which will allow more American companies to have greater control of its investments. And this country should no longer just be considered a low-cost manufacturing center for U.S. firms, but a market place full of consumers with growing buying power. This year, General Motors is on pace to outsell Volkswagen in the China market. While everyone in the states is understandably focusing on the General's declining market share at home, the General is thinking long-term about its position in the Asian market. The Chinese government should still be pressed by the global community for the needed laws that will protect workers' rights, control pollution emissions, and protect patents. But one cannot overlook the importance of the direction that the country is taking, particularly as its citizens are the catalyst for the entrepreneurial spirit that also defined the United States.
I worry that America's political and business leaders may be doing too much to protect the country's past successes without addressing future competitive forces. While some argue that a well-developed economy should allow emerging countries to do all the manufacturing, and we to do all the consuming, that model will eventually break. Bloated health care costs, negative savings rates, and protection of inefficient labor to maintain today's way of life will inevitably damage our children's and grandchildren's.
A better idea (then)
The Vindicator last Sunday brought up Henry Ford's notion that an employee who builds his cars should be able to afford his cars. That was a brilliant thought by a man who knew the world in which he lived in. Today's world is different. Companies cannot afford their own employees because somewhere else that same product is made for a fifth the cost. Therefore we must be smarter.
Lastly, as I write this, I think of my wife's good friend Ji-Hyun, who was visiting Tokyo from South Korea last week on business. While she works 12 hours a day in management in the clothing industry, she still gets up 5 days a week for a 6:15 a.m. Chinese language class. In that country, she is the norm, not the exception. If Ji-Hyun is not an example on how America has a lot of competition out there, I don't know what is.
X Eric Planey, a Youngstown native, is vice-president in the International Corporate Finance Department for Bank of Tokyo-Mitsubishi in Tokyo.