Japan offers help to U.S. exporters - trade-assistance programs; includes directory of export information sources

Nation's Business, Sept, 1992 by Albert G. Holzinger

Small and midsized U.S. businesses can find it relatively easy to export to the lucrative Japanese marketplace especially when they turn to the Japanese for assistance.

A growing number of Japanese business and government entities have begun supplementing the U.S. Department of Commerce's long-standing efforts to locate American entrepreneurs selling distinctive, high-quality products suitable for the Japanese market. The Japanese organizations then help remove the cultural and structural barriers between smaller U.S. firm and Japan's consumers.

These trade-assistance programs will have only a limited impact on America's enormous trade deficit with Japan. But the programs do help counter the criticism that Japanese companies have a much easier time entering the U.S. market than U.S. companies have in competing in Japan. In addition, the export assistance to U.S. firms is already having a big effect on the bottom lines of participating small-business owners such as Dave and Kathy Knudsen.

Eighteen years ago, this husband-and-wife team had no thought of exporting to Japan. They were concerned solely with the basics of establishing Knudsen's Candy Factory, in Haywood, Calif., about 20 miles south of Oakland. Theirs was indeed a small business: The Knudsens made their candy and sold it to retail customers--all in 700 square feet of space.

Over the next decade, the Knudsens transformed their company from a mom-and-pop shop into a custom maker of mostly chocolate candy products for large national firms. Their sales now total about $2 million a year, and they employ 25 workers in manufacturing and eight in packaging and shipping. The Knudsens have never had a sales staff or advertised their products, but that did not keep Jerry N. Zaki from learning about them.

Finding U.S. companies with export potential is Zaki's job as head of the USA Export Office of Toyota Motor Sales U.S.A., Inc. Zaki, whose title is national manager of international business development, says his office identifies such companies and connects them with members of Toyota's formidable network of Japanese importers, trading companies, wholesalers, and retailers. Toyota may even elect to represent an American manufacturer's product in Japan on a commission or fee basis.

The Export Office, in operation since 1985, also helps fledgling American exporters understand Japanese import regulations and prepare export documentation, arrange for shipping or other transportation, and register trademarks and patents in Japan.

So far, the Export Office has about 30 success stories, Zaki says, but that number could soon rise dramatically as the result of a national advertising campaign conducted by Toyota last fall. In the wake of that campaign, more than 400 U.S. companies wrote Toyota and asked to be considered for its trade-aid program. Toyota is now screening respondents.

Referring to Knudsen's Candy Factory, Zaki says: "We believe there is a great market in Japan for high-quality chocolate products. We were able to work with Dave in developing a unique formula that appeals to Japanese taste."

Toyota's design department helped out by developing what Zaki characterizes as an "exquisitely elegant" shipping box. This was no small contribution to the Knudsens' export efforts, because product appearance is almost as important as product quality to Japanese consumers.

Finally, the Toyota Export Office introduced the Knudsens to representatives of Japan Air Lines, who distribute the California company's Belgian chocolate truffles to passengers on JAL flights. Toyota also bought truffles from the Knudsens to distribute to some of its dealers for use in promotions and as gifts.

Toyota's program is not Japan's only voluntary business-to-business outreach effort. In fact, these programs have become increasingly commonplace under the Japanese government's "Business Global Partnership" initiative launched last year. Under the initiative, 40 major Japanese industrial firms, including Toyota, pledged to cooperate in helping U.S. companies export to Japan. The initiative has gained momentum, and the number of participating Japanese companies now totals more than 300.

Japan's Ministry of International Trade and Industry (MITI) is supporting the efforts of these public-sector participants with an arsenal of new government inducements for importing, including tax incentives, tariff reductions, and two loan programs--one for financing construction of import facilities and the other for making export financing available to foreign firms through Japan's Export-Import and Japan Development banks.

Soon to be built by MITI are "trade-access zones" near major international ports and harbors in an effort to overcome Japan's current lack of an efficient distribution infrastructure.

Most important for U.S. entrepreneurs, however, MITI has strengthened its financial support for the ongoing programs of its Japan External Trade Organization (JETRO), based in New York. This organization, founded in the 1950s, strives to increase imports. It has more than 1,200 staff members in 57 countries.