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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Ramsey Su who wrote (2790)	3/29/1998 5:11:00 PM
From: kormac	Read Replies (2) \| Respond to of 9980

To all who participated in the discussion of Asian values, racism etc, I recommend the book 'Guns, Germs and Steel' by Jared Diamond. Read also his former book' The Third Chimpanzee'. He discusses the ultimate reasons for the present state fo human societies. Cheers, Seppo

To: Ramsey Su who wrote (2790)	3/30/1998 2:16:00 AM
From: GuinnessGuy	Read Replies (3) \| Respond to of 9980

Ramsey, In order to facilitate the changing the topic I'd like to post something appropo to your the words in your closing paragraph: "What is likely to happen in Japan? What is the government's next move? Are Japanese saves going to start a mass exodus of yen to other countries, now that they are free to do so?" In case anyone is unfamiliar with what's taking place in Japan this article: mercurycenter.com is the impetus behind Ramsey's question. As many of you may remember I was the one that posted the link to the free Global Intelligence Updates from Stratfor Systems some time ago. Since that time I have tried unsuccessfully on a few occasions to get the Chairman, George Friedman, to post here in this forum. To make a long story short, Dr. Friedman and I have had some emails back and forth concerning this implications of the subject of the above article. I thought his response to me to be something that might interest everyone here so I asked him if it would be OK to post his emailed response to me. For those of you who would like a little background on Dr. Friedman's publications, outside of the daily Global Intelligence Updates, point your browser here: stratfor.com Here are Dr. Friedman's comments: Subject: Re: Japan ready to open up its economy (3/27/1998) Date: Sun, 29 Mar 1998 21:54:27 -0600 From: "George Friedman" <friedman@stratfor.com> To: "Craig Siebels" <craigs29@worldnet.att.net> I've studied Japan for ten years. I have always been amazed by how western reporters miss the point, and Japanese deliberately mislead them Japan is a customary country. We are a legal one. When we pass a law, we expect that to supersede customs. In customary countries (and that includes most of the world outside the Northern European countries) customs continue to take precedence to laws. This has frustrated Americans tremendously in their 150 year relationship with Japan. They think they have reached an agreement with Japan, and indeed, the Japanese pass a law. Then nothing changes. The customs guide people rather than the law. The bureaucracy refuses to implement the law and even citizens refuse to follow it. One of the great limits on auto imports to Japan was that in spite of laws, customs officials simply refused to clear them, auto dealers refused to stock them, and people who bought them were ostracized by neighbors. Americans make lots of mistakes in the world by looking at what the law is. First, you have to consider whether law is the ruling modality. In countries like Japan contracts mean very little and neither do treaties. Agreements must be implemented by their custom to have force. And so we are frequently taken by surprise. A study of the past twenty years of U.S. Japanese history shows a continual pattern in which we regard a treaty and a law as a commitment to change, while the Japanese regard it as irrelevant to their main course of action. We'll see if this is different. But as to clueless, in my experience that is exactly what Americans are when it comes to Japan. For example, every Japanese knows that a bank balance sheet is essentially a lie, intended to save face. Westerners, who look at balance sheets see legal documents. Westerners thought that Japan was going to be the superpower of the 21st century when I was writing that Japan was going to go into a depression. I knew what the balance sheets meant and how to read them. The others didn't. So being clueless about Japan (and the rest of Asia as well) is pretty much standard. But again, we will see if this is different. There have been many agreements reached after intense negotiations that seemed to solve all the problems existing between Japan and the United States or other Western countries. Most of these turned into disappointment. The Japanese position appeared to be that the United States was never satisfied no matter what Japan conceded and the Americans felt that Japan never kept its words. Neither perception was true. Each viewed the agreement reached in a very different way. For the Japanese, it was a commitment to begin a process that would inevitably take a long time since established custom and law were in opposition. For the Americans, the new law was expected to sweep aside all custom. I'm reminded of the decision to introduce Toys R Us into Japan. The net result of this would have been the destruction of tens of thousands of Japanese toy store owners. The Japanese were committed to Toys R Us but understood that there were massive customs to be dealt with. The Americans felt that the Japanese were simply stalling on carrying out their bargain. I have always followed the following principle in Japan. Before assuming I knew how the agreement would be implemented, I would examine the consequences to Japan if the agreement were implemented as it appeared to be written. If the result would be severely damaging, I would assume that it would not be implemented as written, that the Japanese never intended it to be implemented in that way, and that they expected that the Americans would have the common, decent courtesy to understand what was possible and what wasn't. I also expected that a new crisis on the same subject would be on the agenda at the next summit meeting. So, when I see an agreement which if implementing will have profound effects on Japan, I immediately begin by wondering whether the two sides understand clearly what has been agreed to. George Friedman STRATFOR Systems, Inc. friedman@stratfor.com