The Japanese Presence

They run the biggest textile plant in Central America, the largest fishing fleet in Venezuela, the greatest shipyard in Brazil. They chatter in soprano Spanish with the first families at El Salvador's Club Salvadoreno, mine copper in Bolivia, spin yarn in Argentina, produce drugs in Mexico. The resourceful investors from Japan, venturing where U.S. businessmen have become reluctant to tread of late, have made Latin America their No. 1 in vestment target. Though Japan's total investment of some $390 million is hardly in the same league with the U.S. commitment of $8.2 billion in Latin America, U.S. investment there is now slowly shrinking--while Japan's is advancing by $100 million yearly.

Fish Meal & Cement. The Japanese are less frightened than U.S. investors by Latin America's chronic political and economic upheavals. Having learned to live at home in the shadow of Red China, they look patronizingly on Castro's menacing. The unnerving gyrations of inflated pesos and cruzeiros also do not trouble them much, since they have been through the same thing in Southeast Asia. Most of all, the Japanese sense that Latin America, which has a more substantial middle class than any of the world's other developing areas, offers the best potential export market for Japan's cut-price industrial goods.

The central concentration of Japanese industry is in Brazil, to which sizable numbers of Japanese farmers have been emigrating since 1908, notably to Sao Paulo. The Japanese in Brazil control 67 firms ranging into insurance, banking, cement, glass and machinery. The Japanese-run Ishikawajima shipyard is working on its seventh vessel, and the new Usiminas steel plant, backed by a consortium of 14 Japanese companies, will pour 500,000 tons of pig iron this year. In Peru the Japanese have become leaders in the booming fish-meal industry, are also building a railroad in the backlands. In Honduras, Japan's Oki Electric Co. underbid such Western giants as A.T. & T. and Siemens to win the contract to build a new telephone system. Tokyo Shibaura Electric will soon install an educational television network in El Salvador, and Toyota and Nissan will start assembling cars in Venezuela by year's end.

Cut-Rate Tours. The Japanese industrial invasion of Latin America is all the more remarkable in that it began in earnest only in 1955. It has since been backed by the Japanese government with low-interest loans and low-rate investment in surance. Japan calculates that this investment will even out its slight imbalance of trade with Latin America; last year it sold $224 million worth of goods to the area, but bought $225 million worth, mostly cotton and other raw materials. The new factories will not only use Japanese parts, but also, as one Japanese businessman explains, "will make Latin America wealthier, and thus open big markets for our consumer goods."

While the Japanese control most of the companies they invest in, they usually set up a resident national as president to avoid charges of foreign exploitation. In Latin America they can get away with paying Japanese-size wages; the pay in El Salvador's I.U.S.A. textile plant is $2 a day. The Japanese complain that Latin American workmen are about a third less productive than those back home, but try to teach efficiency by sending technicians to Japan for six-month training courses. To lure investing partners, they also invite Latin American businessmen to see Japan on cut-rate tours; in February more than 100 jetted over from El Salvador, came back suitably impressed.

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