Motorola targets the Japanese electronics market

When businessmen talk about potential customers, their comments usually contain enough sugar to make a pound of fudge. Motorola Inc. vice-chairman William J. Weisz is an exception.

As chief operating officer of the $3 billion electronics firm, Weisz is overseeing Motorola's aggressive bid to crack the Japanese market for semiconductors and communications products.

The firm on Sept. 1 named a senior vice-president to oversee Japanese operations, recently formed a joint venture with Aizu-Toko to make integrated circuits in Japan, and is in the final stages of a bid to sell paging equipment to state owned Nippon Telegraph & Telephone.

But at the same time that Motorola is wooing Japanese customers, Mr. Weisz is masterminding an advertising campaign in major US newspapers and magazines attacking the Japanese reputation for grinding out products superior to those made in the US.

"It will be good for America to correct the impression many Americans have that Japanese businesses are in some way inherently superior," the first ad in the series states. "That impression is false."

According to Mr. Weisz, the ads are the result of personal pique. "Wandering around the country [Motorola Board chairman Robert W.] Galvin and I got tired of reading about the supurb, inevitable invincibility of the Japanese," he said. "You pick up one thing after another touting these people . . . and nothing but downgrading the American side of the issue.

"There are all kinds of places where American companies are doing better than the Japanese," he argues, citing discrete semiconductors -- like transistors -- as an example.

Even less biased observers say that in electronics there is not a major product quality gap between US and Japanese firms. "It is a myth that [the Japanese] are superior," says Merrill Lynch electronics analyst Michael Krasko.

While a print campaign cutting the Japanese down to size may be emotionally satisfying, it is a pleasure Mr. Weisz likely would have forgone if it jeopardized sales to the Japanese.

"This is not an anti-Japanese campaign," Mr. Weisz argues from a glass-walled office overlooking Motorola's sprawling complex in suburban Chicago. "It is a pro-American campaign. I know of only one Japanese who has taken exception to it."

Most outside observers also think the ads are relatively risk free. "The Japanese fully recognize the advertising is for the American market," says Stanley A. Balter, vice-president of Colin, Hochstin Company in New York.

It is important for Motorola not to alienate Japanese purchasing agents since the firm is eager to crack the electronics business in the island nation. Board chairman Galvin has spoken publicly of his desire to achieve "a notable beachhead for each of our major product areas" in Japan over the next five years.

The firm starts from a modest base in Japan. While the second largest US semiconductor firm gets 38 percent of its total revenues from overseas operations, "we are very small" in Japan, Mr. Weisz admits. "It is not going to be a short-term thing to go from a small market share to a large one."

And Texas Instruments Inc., the largest firm in the US semiconductor business , already has a major position in Japan. The company recently completed its fourth production facility in Miho, Japan, a TI spokesman says.

"TI is in the catbird seat," says Bruce Everitt of Granahan-Everitt Investments Inc. of Waltham, Mass. The firm runs a high technology mutual fund. "TI got in very early . . . and is treated very much like a local company."

Producing goods in Japan is an important part of selling to local businesses. "There is a tendency for the Japanese to favor indigenous companies [over importers] even if they are American-owned," says Merrill Lynch analyst Krasko.

And buying 50 percent of Toko Incorporated's Aizu-Toko subsidiary was the fastest way for Motorola to become a local producer. "We could have built a 100 percent owned semiconductor facility, but it would have taken us four years to put it on line," Mr. Weisz says.

The highly competitive company is willing to split profits with a Japanese partner not only to quickly establish higher visibility in the Japanese market but also to protect other markets.

"You cannot allow them to have a [protected home] market to build volume up and then once they have gotten low production costs go to the outside world," Mr. Weisz says. He notes that a host of US television producers were forced out of business because the Japanese "built a local volume capability with no challenge."

Masterminding Motorola's challenge is a newly named senior vice-president for Japanese operations who will be based in Schaumburg. Until September, Motorola operations in Japan reported to corporate headquarters on a product basis. So, for example, the semiconductor sales team reported to the semiconductor vice-president in schaumburg.

Now all Japanese operations will report to a senior vice-president for Japanese operations. At same time, Motorola is looking for a Japanese national to run its day-to-day operations in Japan.

By the time a president is selected, Motorola hopes to have locked up a contract to sell paging equipment to Nippon Telegraph & Telephone, the state-owned communications company. If Motorola succeeds in selling to the giant concern, it would be one of the first US firms to do so. "We are in the final throes of the evaluation process," Mr. Weisz says.

Motorola is not expecting immediate success in its struggle with the Japanese. "They are darn good and we are not complacent. We are not going to win any ball games with a public relations program," he says. "But we never won any wars by telling the troops they are idiots and don't know what end of the gun to hold."