Which ‘global standard’?

by Glen S. Fukushima

At the World Economic Forum held in Davos, Switzerland last month, Tokyo Gov. Shintaro Ishihara reportedly attracted more attention than Japanese Prime Minister Yoshiro Mori.

The reason is that while the prime minister gave a predictable presentation expressing optimism about Japan’s economic future, the governor made, among others, the following more controversial points:

(1) It was the United States that intentionally damaged the economies of Asia by causing the financial crisis of 1997.
(2) The U.S. continues to block Japan’s attempts to exert more influence in the world.
(3) American-style standards are not the “global standard.”

The governor’s reference to “global standard” reflects the widespread but mistaken view in Japan over the past four or five years that there is a neatly codified set of management rules and practices that the U.S. has claimed to be “global” in applicability and that it is trying to force Japan to adopt. Explaining the origins of this view provides interesting insights into the Japanese perception of their role in the world.

In the 1980s, when its trading partners asked Japan to open its markets, the usual response was, “We in Japan are different from you foreigners. Snow in Japan is different from snow abroad, so we must change ski standards to the detriment of American and European ski manufacturers. Soil in Osaka Bay is different from soil in other countries, so foreign construction companies can’t possibly do the work at Kansai Airport. Japanese intestines are longer than Westerners’ intestines, so we can’t import more beef.” And so on.

When some Americans and Europeans responded that Japanese claims of uniqueness ought to be taken seriously and that as a result Japan should be treated differently from other advanced industrialized countries, Japanese officials took offense and excoriated them as “Japan bashers.” Nonetheless, during the 1980s, when Japanese economic performance was the object of envy around the world, most Japanese believed that Japan’s success stemmed from its distinctive system, including government-business cooperation manifested in “industrial policy” and corporate harmony manifested in “the Japanese management system” — including long-term employment, seniority-based wages, enterprise unions, and “keiretsu” relationships.

The bursting of the bubble in the early 1990s and the ensuing economic stagnation have led some Japanese to argue that the so-called “1941 System” (the political-economic-social system devised to wage World War II) had outlived its usefulness and that modifications needed to be made to enhance Japan’s economic vitality and competitiveness. However, these reformers realized that getting vested interests in Japan to change their ways was going to be difficult, especially given the success of Japan’s postwar “economic miracle.”

It was in this context that reformist Japanese businessmen and journalists started to use the term “guroobaru sutandaado” in the mid-1990s to indicate reforms Japan needs to undertake — in corporate governance, accounting practices, etc. — in order to cope successfully with the changes brought about by globalization. The curious fact is that although the term comprises two English words, the concept is Japanese.

From about 1995, I have been asked repeatedly by Japanese how Americans view guroobaru sutandaado. In response, I have consulted with American and European business executives, business school professors and management journalists. I have checked management books, business conferences, and Internet newsgroups. What I have found is that although “international standards,” “de facto standards,” and “global standards” are used to refer to technical standards (as in ISO discussions at the OECD), these do not refer to the kind of corporate and management rules and practices that the Japanese have in mind.

Many Japanese are shocked to hear this, since they have all along assumed that guroobaru sutandaado was something concocted by Americans to force Japan to change. The president of a Japanese bank told me in 1997 that after hearing my explanation, he did a computer search for the term “global standard,” convinced that it must be a widely used English term. He was happy to find one article, in the Financial Times, that used the term but disappointed to learn that the author was Japanese.

Because the term has become so widespread in Japan and because it is used so often by Japanese, especially those who travel abroad, in recent years the term has started to be used by non-Japanese. But few of them seem to realize the intellectual baggage and connotations in Japan that lie behind it.

Getting back to Ishihara’s comments in Davos, it would seem obvious to everyone other than Japanese that “global standards” (to the extent that the term has any meaning) are not the same as “American standards.” Whether it is corporate governance methods, mobile telephone standards, or manufacturing technology processes, there is — and there will continue to be — considerable diversity and variation between countries and between companies. That much is clear.

What is more interesting is that so few Japanese realize that guroobaru sutandaado is a domestically generated form of “gaiatsu,” touted by reformist Japanese who want to see changes in Japan, rather than a neat package of “demands” prepared by the U.S. Second, not realizing this, some Japanese (including Ishihara) keep insisting on the obvious, trying to refute the alleged claim by the U.S. — which it has never made — that Japan must adopt “American standards” if it hopes to survive. Third, the sense of victimization among some Japanese is so strong that they have forgotten that only a decade ago, it was methods emanating from Japan — “kaizen,” the “kanban” system, total quality control, lean manufacturing, etc. — that were considered the leading-edge and universally applicable ways of doing business.

The concept of guroobaru sutandaado provides interesting insights into the state of contemporary Japan: its insularity (which misleads many to believe that it is a concept widely used by the West to force change in Japan); its defensiveness (which leads conservatives to advocate steps to guard their country against it); and its sense of falling behind (which leads reformers to embrace it as a way to save Japan from economic decline).

Japan could probably benefit by bringing some of its management rules and practices more in line with those of other advanced industrialized countries. And foreigners have a legitimate interest in seeing more openness, transparency, and competition in Japan. At the same time, debates about what kind of economic system is best for Japan should be left to the Japanese themselves. Americans would be ill-advised to allow themselves to be set up as villains who, according to some of Ishihara’s supporters, are out to destroy Japanese values and culture by forcing Japan to adopt guroobaru sutandaado.