Business: Japan, Inc.: Winning the Most Important Battle

(7 of 11)

Mitsubishi companies meet one Friday every month; it is an open secret that they plan common strategy at "the Friday Club." The 17 Mitsui presidents meet one Thursday every month, and the 17 Sumitomo presidents one Monday a month. The big borrowers from the Fuji Bank have a council known as Fuyo Kai, which includes the heads of Hitachi (electrical machinery), Nissan Motors (autos) and Nippon Kokan (steel). The clubs divide up markets like so much sukiyaki. When Communist China recently decreed that it would not trade with Japanese firms that do business with South Korea or Taiwan, the clubs quickly reached an understanding: Mitsui and Mitsubishi decided to concentrate on South Korea and Taiwan, while Sumitomo took China.

Japanese shipyards can overwhelm foreign competitors partly because their engineers regularly swap technological ideas—so completely that no one remembers and no one cares which company originated a certain important welding process. Says Masashi Isano, 71, chairman of Kawasaki Heavy Industries: "By closely emulating each other, our engineers constantly improve themselves and the industry as a whole. All I have to say to that is banzai!"

Those Helpful Bureaucrats

Nowhere in the non-Communist world do business and government coexist so closely. Prime Minister Eisaku Sato heads the Trade Conference, which sets national export goals and coordinates business efforts to achieve them. Most of the government's influence is exercised by the all-important Ministry of International Trade and Industry (MITI), which issues gyosei shido, or administrative guidance. For instance, MITI may "advise" a Japanese company to buy a domestic computer rather than one from IBM. A few years ago, many Japanese petrochemical concerns planned to build big plants. MITI experts advised that the foreseeable foreign and domestic demand would justify only six such plants and that construction would have to be spread over three years. The petrochemical-industry trade association quickly decided which six companies should build them—and when.

Japan's competitive strength derives from much more than the government's hothouse care. The nation is developing a new generation of inventive, competitive executives quite able to capture foreign markets on their own. Their exemplar and leader is Sony's Morita.

Unlike older Japanese firms, Sony sells through its own marketing network rather than through the trading companies that contact overseas buyers for most Japanese manufacturers. Its basic financing is not through bank loans but the sale of stock, 31% of which has been bought by foreigners. Morita, personally and through a family investment company, is the largest shareholder, with 10.3% worth $130 million. Slender, white-haired Morita, now 50, is a mixture of Japanese and Western patterns. Amid the woofers, tweeters, exponential horns and other electronic gadgetry crammed into the den of his Tokyo home stands an authentic American nickelodeon that he plays delightedly with nickels brought back from the U.S. As Morita told TIME'S Tokyo Bureau Chief Edwin Reingold: "Americans like to come to Japan and take home Japanese antiques. I go to America and bring home your antiques." Morita spends about a third of his time on the road, jetting so often to the U.S. and Europe that he jokes, "It's a long