AEA: sales to Japanese units in U.S. may grow; points to currency exchange rate, delays in shipments from Japan

Electronic News, April 27, 1992 by Jack Robertson

PARSIPPANY, N.J. -- The American Electronics Association (AEA) recently took a cue from Japan, citing adverse currently exchange fluctuations and late deliveries to Japanese-owned U.S. plants (by suppliers from their home country) as factors potentially boostings sales by U.S. vendors.

In background paper prepared for a week of one-on-one talks between U.S. electronics firms and Japanese purchasing executives, AEA claimed growing problems with shipments from across the Pacific could work in the Americans' favor.

Japanese purchasers ducked questions on supply problems from their home country, but said they are committed to trying to boost the present low share of U.S. vendors at Japanese plants here. According to AEA, the Japanese subsidiary plants in the U.S. source only 23 percent of their estimated $10 billion annual purchases from American firms.

Japanese subsidiaries here who replicate their home market supplier base in this country have caused a growing dispute with many sectors of the U.S. electronics industry.

The AEA and Electronic Industries Association of Japan (EIAJ) last year signed a bilateral agreement to try to boost the U.S. share of Japanese subsidiary purchasing. The meetings between 65 Japanese purchasing officials and nearly 200 American companies a week ago was the first step taken by both sides under the agreement.

American electronics firms, seeking a bigger share of the $10 billion annual buying by Japanese plants in this country, said after the direct meetings with Japanese purchasing officials that "The ball is now in their court to increase orders."

Like similar U.S. demands for greater market access in Japan, the battle to gain market share in their home country depends "on how loud the cash registers ring," summed up American suppliers after a week of purchasing talks with the Japanese.

Yoshito Yamaguchi, managing director of Mitsubishi Electric international division, agreed "There are still a lot of obstacles, and some skeptics," but he felt increased business would come for U.S. electronics suppliers.

American executive at the AEA session here had their sights on more than just boosting sales to Japanese subsidiaries in this country. Robert Edelson, president of Opto-Logic, laser test instrument maker, said breaking into the Japanese supplier base in this country "can be parlayed into selling the same products to the parent company in Japan."

He believed the growing recession in Japan was causing companies there to begin looking at less costly foreign suppliers -- where they previously tried to build test sytems in-house or buy from "keiretsu" family companies, even if testers weren't speciviclly aimed at laser measurements.

Ronald Rosenzweig, president of Anadigics, analog gallium arsenide (GaAs) integrated circuit producer, said he was using the sales talk here "to reinforce our marketing efforts in Japan where we face a long process to build up market share."

Anadigics has only a 5 percent share of the GaAs IC market in Japna, although the firm has an 80 percent share of the European market. "You just keep pressing for contacts with the Japanese on all fronts. Networking every chance you get is the key to penetrating the Japanese market."

Joseph Gillespie, president of Boonton Electronics, test equipment builder, said his firm has sold in Japan for two decades, "but business fluctuates up an down from year to year. With Japanese electronic companies suffering sharp declines in earnings, they seem more interested in buying more lower price test equipment from foreign suppliers than previously."

The purchasing sessions were plodding "marketing trench warfare," not producting any political sparks or headlines. Most attendees on both sides refuted skeptics who called the sales meetings "window dressing and grandstanding." But U.S. officials quickly added that the final proof would be in how soon there was an upsurge in U.S. sales.

"Clearly it is not acceptable for American suppliers to lose share in their own domestic market due to many of the same barriers that hurt them in th Japanese market," said John Stern, AEA vice president of Asian affairs.

U.S. executives interviewed at the meeting here hoped the contact sessions with Japanese purchasing officials would be repeatedly. "It takes constant marketing efforts directly with the right Japanese buyers. This shouldn't be a one-shot affair," summed up one small electronics firm CEO. AEA officials said they would review the program to see if follow-on sessions would be sponsored.