Japan as an attractive alliance partner.

• Author: Sakai, John T.

Here are some specific elements required for a U.S.-Japanese strategic partnership to be successful long-term.

International strategic alliances have become a necessity in today's global marketplace. There are so many new technologies influencing and altering the basis of competition across many industries that no country, much less any single corporation, is completely self-sufficient anymore. Corporations have come to realize that they can no longer exist by concentrating on domestic markets exclusively.

Many companies have discovered that cross-border marketing, manufacturing, distribution, and technology-driven strategic partnerships can be very profitable for both parties under the proper conditions. Increasingly, these new partners are Japanese, or other Pacific Rim-based corporations, which at one time may have been considered rivals. With Asia set to outpace the growth rate of some of the world's leading industrial economies by more than five times in 1994, strategic alliances with Japanese and other Asian partners have become increasingly important for U.S. corporations. U.S. companies are discovering that strategic alliances are necessary to penetrate these lucrative foreign markets, to secure access to long-term capital, to commercialize an emerging technology, and to benefit from world class manufacturing opportunities.

Japan's markets are difficult for any Western company to penetrate. Japanese customers demand higher product quality and performance than do consumers in other countries. Distribution channels in Japan are centuries old, bound by tradition and personal obligations, and tend to favor purchases from other Japanese companies. After-sale product support is required to a significant degree, and many unique rituals and formalities must be followed.

As a result, many foreign companies find it very time-consuming, expensive, and frustrating to penetrate the Japanese market on their own. In order to maneuver around these obstacles, many U.S. corporations have pursued strategic partnerships to establish a local presence in the world's second largest economy.

On the other hand, Japanese companies have also come to recognize their own limitations and short-comings. In many instances, U.S. industry is far more efficient and effective than its Japanese counterpart in formulating innovative marketing strategies and launching aggressive product distribution programs. American high-technology companies have demonstrated superior...