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Turning the tables on the Japanese

If the queue of youngsters curling in front of Hobson's in downtown Tokyo for ice cream until 2 a.m. is any indication, America, Inc., is alive and well and beginning to best Japanese industry on its home turf.

Lured by Japan's huge cash reserves, encouraged by changes in trade and financial regulations and goaded by a $50-billion-a-year trade deficit, U.S. firms are crossing the Pacific in greater numbers to search for profits.

Computer firms and cookie chefs alike are striking pay dirt. Although few companies can claim easy victories, many are finding Japan far more open to foreigners than Congress's protectionist clamor would indicate. "The playing field is flat,' says Donald Mooney, president of Equitable Life Assurance's Tokyo office.

An average of nearly four U.S. firms a week are receiving licenses this year to operate here either as branch offices or in joint ventures with Japanese companies. With 2,329 firms and $3.2 billion invested, America's stake in Japan is nearly seven times that of Britain, its nearest competitor.

Already this year, Merrill Lynch Securities and Shearson Lehman Brothers have begun trading on Tokyo's stock exchange, and Equitable has started selling life insurance. Viewing Tokyo as a gateway to Asia, International Business Machines moved its 250-employe Asia-Pacific headquarters here from New York two years ago.

Tokyo boasts a Haagen-Dazs as well as two Hobson's ice-cream parlors. There are Famous Amos, Mrs. Fields and David's cookies. Japanese can now send packages via DHL or Federal Express. Newly arrived Spencer Stuart & Associates, an executive-search firm, expects $1.2 million in income this year. Computer-software firms such as Microsoft and ASCII are firmly established. "We're going to cause a revolution,' Mooney says.

U.S. companies see ample opportunity in Japan. For one thing, this country, with average savings of $29,000 per household, is liberalizing its financial markets. Thomas Blankley, director of Merrill Lynch Securities, says: "You gotta be where the action is.' Other companies, such as Apple Computer, see Japan's market as the first step into the rest of Asia. "If U.S. firms want to be able to hold their own at home, they feel they should develop their presence here,' says Thomas Nevins, managing director of TMT, Inc., a Tokyo-based labor consultant.

To be sure, the road to success has pitfalls. After assets rose 30 to 50 percent a year during Japan's high-growth years, foreign banks are seeing a slump. Bank of America, for instance, closed its Kobe and Yokohama branches. Even McDonald's, with 500 outlets and $705 million in sales here last year, seemed destined to flop until it abandoned its suburban drive-in scheme to target downtown shopping and office districts. The company adapted its hamburger to Japanese taste buds by adding onions and more fat. "You have to sit down and do your homework,' says Henry Samson of the American Chamber of Commerce in Japan.

Costs are high, and rents run up to $6,000 a month for a modest, 1,775-square-foot office in Tokyo. Even so, many firms count themselves lucky to find a place. Merrill Lynch put off expansion while hunting more space.

Recruiting can prove vexing, too. Tenshoku--job hopping--is becoming more acceptable within Japan's life-time-employment system, but few first-rate executives are willing to change companies merely for a pay increase. Foreign firms find themselves competing for bilingual Japanese or Americans fluent in Japanese. Sums up one American: "If a guy can speak Japanese, hear thunder and see lightning, he's hired.'

Despite all that, many U.S. firms are flourishing. Coca-Cola is Japan's No. 1 soft-drink company, with 60 percent of the market. Schick supplies 70 percent of Japan's razors. "We're competing in their back yard--and competing effectively,' crows Merrill Lynch's Blankley.

Rather than hit the panic button over the U.S. influx, "we welcome the competition,' says Yoshio Nakamura, an economist with the Keidanren, Japan's leading business organization.

Non-Japanese may never be full members of Tokyo's clannish business circles. But by coming up with such innovations as over-the-counter life insurance and creamy ice cream and by demanding concessions, the foreigners are slowly carving a permanent niche.

Table: YANKS IN JAPAN

Photo: McDonald's changed its recipe, now has sales of $705 million a year in Japan