Where Have All the Leaders Gone? by Lee Iacocca, Catherine Whitney Page B
Authors: Lee Iacocca, Catherine Whitney
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visited a new Toys “R” Us store that had just opened in Osaka. The Japanese were trying to show us how receptive they were to American products. While we toured the store, Bush held up a toy bank in the shape of a Chrysler minivan. “Hey, Lee,” he said excitedly, “what do you think of this?”
I stared at the toy and said, “Great. But I thought we were here to talk about the big seven-passenger minivans, not the nickel-and-dime kind.”
The trip went downhill from there. I flew with the President to Tokyo on Air Force One, where we met with Japanese business leaders. Basically, they told us—always politely and with a smile—that the reason more Japanese weren’t buying American cars was because our cars were inferior. That was a load of crap.
The reason we weren’t selling cars in Japan was that the deck was stacked against us. Japan wasn’t practicing free trade. Japan was practicing predatory trade, and it still is. This little island with a big ego does everything in its power to keep the trade imbalance great. It doesn’t have to bother with the rules of the free enterprise system. The Bank of Tokyo and the Ministry of International Trade and Industry (MITI) make sure that the yen is manipulated (they called it “managed trade”) so that it’s cheaper for Americans to buy Japanese cars and more expensive for the Japanese to buy American cars.
Bush senior’s mission to Japan didn’t go well—to say the least. It didn’t help that Bush ended the trip by vomiting on the Prime Minister at a state dinner. On our way home, we stopped for fuel in Anchorage. I went inside the building, and there was a TV on the wall, tuned into Johnny Carson. I walked in just in time to hear Carson joke, “If you had to eat raw fish, and sit across from Lee Iacocca, you’d throw up, too.”
THE NEW PLAYERS
While we’re taking a pounding on trade, the competition keeps growing. Our annual trade deficit with China is already more than $200 billion. China is insinuating itself into areas that were once dominated by our own production lines. It makes parts for Boeing 757s, and the two largest American auto parts makers have factories in China. And that doesn’t even begin to account for China’s clear dominance in other areas, like textiles. Some economists predict that China is poised to replace the United States as the number one economic superpower within ten years. That’s a scary thought.
China doesn’t even try to play fair. The corruption is rampant. They don’t think twice about stealing technology or infringing on copyrights. And anyone who has ever done business in China has encountered the blatant system of payoffs and special deals. I made several trips to China after Chrysler bought American Motors in 1987. AMC had made a deal in 1983 to build Jeeps in China, and Jeep had a factory in Beijing. The mid-level managers asked for kickbacks right up front. A guy would say, “Mr. Iacocca, I have a son who wants to go to UCLA. Who is going to pay for that?” I was surprised at how overt the pitches were. I kept replying, “Uh, we don’t do things that way,” but I don’t think they believed me because plenty of our companies did play the favors game.
In recent years, as money has flowed into China, the cash grab has become more feverish. So much for the evils of capitalism! A business associate recently visited China. He told me upon his return, “So much has changed, but one thing hasn’t changed—the corruption .”
A lot of people dismiss China’s competitive edge as being all about cheap labor. But there’s a lot more to it than that. As New York Times columnist Thomas L. Friedman put it in The World Is Flat, “The biggest mistake any business can make when it comes to China is thinking that it is winning only on wages and not improving quality and productivity.” It’s something to ponder. Wouldn’t we be stunned if China started paying its workers American-style wages, and
I stared at the toy and said, “Great. But I thought we were here to talk about the big seven-passenger minivans, not the nickel-and-dime kind.”
The trip went downhill from there. I flew with the President to Tokyo on Air Force One, where we met with Japanese business leaders. Basically, they told us—always politely and with a smile—that the reason more Japanese weren’t buying American cars was because our cars were inferior. That was a load of crap.
The reason we weren’t selling cars in Japan was that the deck was stacked against us. Japan wasn’t practicing free trade. Japan was practicing predatory trade, and it still is. This little island with a big ego does everything in its power to keep the trade imbalance great. It doesn’t have to bother with the rules of the free enterprise system. The Bank of Tokyo and the Ministry of International Trade and Industry (MITI) make sure that the yen is manipulated (they called it “managed trade”) so that it’s cheaper for Americans to buy Japanese cars and more expensive for the Japanese to buy American cars.
Bush senior’s mission to Japan didn’t go well—to say the least. It didn’t help that Bush ended the trip by vomiting on the Prime Minister at a state dinner. On our way home, we stopped for fuel in Anchorage. I went inside the building, and there was a TV on the wall, tuned into Johnny Carson. I walked in just in time to hear Carson joke, “If you had to eat raw fish, and sit across from Lee Iacocca, you’d throw up, too.”
THE NEW PLAYERS
While we’re taking a pounding on trade, the competition keeps growing. Our annual trade deficit with China is already more than $200 billion. China is insinuating itself into areas that were once dominated by our own production lines. It makes parts for Boeing 757s, and the two largest American auto parts makers have factories in China. And that doesn’t even begin to account for China’s clear dominance in other areas, like textiles. Some economists predict that China is poised to replace the United States as the number one economic superpower within ten years. That’s a scary thought.
China doesn’t even try to play fair. The corruption is rampant. They don’t think twice about stealing technology or infringing on copyrights. And anyone who has ever done business in China has encountered the blatant system of payoffs and special deals. I made several trips to China after Chrysler bought American Motors in 1987. AMC had made a deal in 1983 to build Jeeps in China, and Jeep had a factory in Beijing. The mid-level managers asked for kickbacks right up front. A guy would say, “Mr. Iacocca, I have a son who wants to go to UCLA. Who is going to pay for that?” I was surprised at how overt the pitches were. I kept replying, “Uh, we don’t do things that way,” but I don’t think they believed me because plenty of our companies did play the favors game.
In recent years, as money has flowed into China, the cash grab has become more feverish. So much for the evils of capitalism! A business associate recently visited China. He told me upon his return, “So much has changed, but one thing hasn’t changed—the corruption .”
A lot of people dismiss China’s competitive edge as being all about cheap labor. But there’s a lot more to it than that. As New York Times columnist Thomas L. Friedman put it in The World Is Flat, “The biggest mistake any business can make when it comes to China is thinking that it is winning only on wages and not improving quality and productivity.” It’s something to ponder. Wouldn’t we be stunned if China started paying its workers American-style wages, and
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