JPRS ID: 9668 JAPAN REPORT

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• Collection: JPRS
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00850R000300100031-3
• Release Decision: RIF
• Original Classification: U
• Document Page Count: 74
• Document Creation Date: November 1, 2016
• Sequence Number: 31
• Content Type: REPORTS

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JPRS L/9668
16 qpril 1981
Japan Report
.
- (FOUO 2.4/81)
IFBISI FOREIGN BROADCAST INFORMATION SERVICE
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NOTE
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JPRS L/9668
16 April 1981
JAPAN REPORT
(FOUO 24/81)
CONTENTS
POLITICAL AND SOCIOIAGICAL
Anti-Japanese Sentiment 8aid Sprouting in China
(Imacla; MAINICHT SxTMBtIN, 6 Mar 81) 1
- MILITARY
Expert Raps Government dfficials' Arguments on 'Defense'
(Masato Kita.mura; MAINICHI SHIMB[fiT, 8 Jan 81)
3
SCIENCE AND TECHNOLOGY
- Newspapers Report on New Era of Biotechnology
(Vaxious Sources; 1-13 Jan 81)
7
Industrial Projects
Scholars' Views, by T. Maeda
Enzyme Research
Chemical Industry Applications
Petrochemi.cal Industry Seeks Overseas Projects
(NIKY.EI SANGYO SHIMBUN, 5�10, 12-14 Jan 81)
25
Sensor Development Has Wide Range of Applications
~
4
(1VIKICAN KOGYO SHIMBUN, 5 Ja.n 81)
5
Electromechanical Devices Applied in Machine Industry
(Sagara; NIHIKEI SANGYO SHIMBUN, 21 Jan 81)
59 .
" Characteristics ef Deep Sea Submersible Described
62
(NIKKAN KOGYO SHIMBUN, lq Jan 81)
Tecnnology of Deep-Sea Survey Submersibles Development, Shinkai
2000, Analyzed
' (Akira Koriki Interview; NIHILEI BUSINESS, 23 Feb 81)
66
[III - ASIA - 111 FO'UO]
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POLITICAL AND SOCIOLOGICAL
AIvTt-JAPANESE SENTIMENT SAID SPROUTING IN CHINA
Tokyo MAINICHI SHIMBUN in ~apanese 6 Mar 81 p 8
[Article by special correspondent Imada, Beijing]
[Text] Anti-Japanese sentiment is sprauting in part of China. The direct cause
- for the rekindling of this sentimenti was related to the question of who was
' responsible for the second economic reorganizatior. centered around the stoppage
of Laoshan Steel Company construction. However, in view of the historic anti-
Japanese sentiment and the leaders' embarrassment surrounding the roodernization,
its future development should be of no small concern.
- j Although the Chinese Government has officially stated that "the re:sponsibility"
I for cancellation of the piant importation "rests entirely with China," it has :zot
~ sufficiently expla ined the actual situation to its people. As a result, one
! lef.tist-controlled Hong Kong newspaper accused Japan of "immoral commercial
practices." And among the Japanese tourists are some "ugly Japanese" who go out
souvenir hunting spending money 1 ike water, or who make fun of women and thus
hurt the feelings of the Chinese people.
Baoshan was made victfm during the third meeting of the fifth National People's
Congress. During the meeting, although many representatives painted out the
unfavorable location, excessive investment, insufficient preparat:lon by the
government authorities, and the wastefulness as the causes for failure, there were
some whc hel.d that "Japan played a trick on China with Baoshan by not making any
reparation" and "Japar_ese design was unreliable."
About this matter, the (then) Deputy Prime Minister Li Xiannian spoke to the
' Japanese delegate: "We who trfade a too hasty decision are to b.'ame for the
Baoshan problem." However, when a similar question was rai.sed by eitiier
- people's represent ative or *_he reporter, the domestic newspaper priated only
_ the question without explanatioit.
When the decision was made to discontinue the second stage cotistruction project
at Baoshan, the cammercial firms and maker circles in Beijiug were led to
believe that "Japa nese sold an unnece3sarily large unit just to make money" and
"Baoshan was chosen as the site in spite of its unfavorable location because it
was advantageous to Japan." Those engineers who qete drafted from various parts
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of China to Baoshan to work on the project and were now discharged because of a
reduction in the scale of the groject also tenaed to blame Japan for their dis-
satisfaction. And it was the foreign press and newspaners wliich set tlie fire for this mood.
- When Okita, representing the Japanese Government, was visiting China, the
western press reported Okita as saying "China was pampered" in Beijing. Upon �
hearing this, some of tize cadres not only lost confidence in Japan but began to
harbor anti-Japanese sentiments, which led to the criticism of Japan by a Hong .
Kong newspaper. The Japanese press associaLion has never heard this k.ind of
~ speecn by Okita at any one of the public dppearances made by him.
The problem was further complicated by the entanglement between the awakening of
anti-Japanese sentiment and China's current domestic political situation.
Dissatisfaction toward the leadersh3p, resistance toward the modernization policy,
- and denunc{ation of its failure may have emerged in the form of anti-Japanese
sentiment. This possibility should not be overlooked.
+ AccordinG to a western analysis, the domestic inflation under the new economic
policy has risen 2-3 times and the lives of the masses are t.hreatened. The term
"Japanese devil" which was used during the period of anti-Japanese struggle is
said to have cropped up again in the underground publication of the anti-system
group. Japan is denounced for "playing a trick on China to waste Baostian while
the masses suff er from inflation as a result." Moreo�aer, the loan made by the
Japanese Government to the Chinese Government has been painted as "an aid to be
used as a lever against the present system, an aid with plenty of strings
attached, an excuse Co take away oil and coal from China."
I11-ma.nnered Japanese Tourists Are to Blame
The situation in Japan has been more freque;itly introduced to China in recent
years through t.v. and various publications. To those who view these, apart from
~ pure concern and admiration toward Japan, the anti-Japanese sentiment :is made
even more complex by a great display of Japan's showy material life and the meictory
of past Sino-Japanese relations is revived. Some young people criticize
Japanese prosperity as "a comfortable life earned by an economic animal at the
expense of other nations."
To be sure, the greater majority of the Chinese people express genuine friendship
. toward Japan. However, among the recent Japanese tourists were sorne who, no
sooner than setting foot on Shanghai, asked the Chineae guide to make arrangements
for female companionship, saying "you should have some around here," and were thus
frowned upon by the Chinese.
The anti-Japanese criticism centered around Japanese imperialism oncetarried
out vehemently during the period of the Cultural Revolution has been hushed since
1972 when the two nations norma.lized diplomatic relations. Especially after the
fall of the "gang of four" and today under the open door policy, we may sa.y that
we are enjoying a 8ino-Japanese "honeymoon" period. However, if we take this
"honeymoon" mood in too much of an easygoing manner, we may come Co be surprised
tl by a terrible retaliation.
COPYRIGHT: Mainichi Shimbunsha 1981
9113
CSO: 4105 2
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MILITA,RY
E32ERT RAPS GOVERNMENT OFFICIALSt ARGUMENT.S ON 'DEFENSE'
Tokyo MAINICHI SHIMBUN in Japanese 8 Jan 81 p 5
, [Artiele by Masato Kitamura, poZitical affairs reporter, MAINICHI SHIMBUN: "Defense
Debates Witheut Substance"]
[Text] In the year's time since I was assigned to cover the
~ defense issue, in extraordinary sesaions of the Diet and the
' budget review process I have encountered many of the arguments
surrounding this topic--the Soviet menace, Japan�s respon-
j sibility as a member of the kestern camp, early attsinment of
i the "medium-term Operations Estimate," balance between welfare
~ and defense appropriatione, etc. Although I have been a part
o� all this, I somehow get the feeling these are aZl
= i arguments without substance. I haven't r-eally thought out as
' to why I feel this way, but one reason is that there is always
� the problem of each person having a different image of what
- i constitutes an "emergency situatioa."
Consider, for instance, what might occur were war to break out.
If you look at this fram the point of view of the military,
some fairly concrete assumpCions can be made and accnrdingly
preparations should be made to be able Co respond quickly [in
time of emergency]. Howevex, what would a textile worker do in
such a situation? Would he geL on the commuter train and go
to work as usual, or would he take his �amily aad head for the
mountains?
, In the NATO countries, as a general principle the average citizens
are not to leave their homes, and accordingly conatruction of
emergency shelters is being encouragecl by their governments.
Mi].itary tactics are also based on thi;s premise. Japan does
. not npcessarily intend to imitate this, but it is no different
in that the st3rting point of defense must be to what degree
will the average citizen protect his own life and property.
After all, isn't the very basis of the defense forces belief
that they wili defend themselves and their fellow countrymen?
Even now, with regard to the threat of Japan being invaded,
debate has centered around the capabilities and quantities of
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arm.aments and defense expenditure figures. But under the present
condition whereas the average citizen who has very little interest
in asking themselves "what are we to do at times of emergency?",
the situation can be likened to that the horse is being put before
the cart.
Let's cite several examples of the argumenta of those who bel ieve that the Soviet
Union is a"threat " to us. The first occurred during debate in the Uppee House
_ Special Coumittee on Security at the recent Extraordinary Session of the Diet. A
Diet member was cross-examining the Defense Agency about the recent incident of fire
~ aboard a Soviet nuclear submarine and then the problem of Sov iet submarines passing
through Japanese territorial waters.
A Novel-like Hypothesis
The gist of the examination was, "Fihat was the response of the Maritime Self-Defense
Forces to this violation of Japanese sovereignty?" The Defense Agency explained the
details of events from the time of the outbreak of the fire aboard the submarine
~ till the time it left Japaaese territorial waters headed towards the Japan Sea,
including the poeture of the defense forcea and the fact that even though a rescue
helicopter was dispatched, the Soviets refused any assistance. The Diet member was
sti11 not satisfied. Posing a hypothetical situation almost straight out of cheap
war novel he said, "Consider what would have happened if the Soviete had tried to
attack us by pretending to have an accident?" The Diet member then proceeded to
scold the laxness of the Defense Forces.
~ Among questions regarding the build up of Soviet ground troop s in the Northern terri-
tories, another Diet member, stressing that Soviet troops could easily invade Hokkaido
asked, "Why hasn't the Defense Agency deployed sufficient forces around Nemuro City?"
Others insist thati "Japan can rely on no one else" to protect its ships traversing the
world, beginning with tankers hea.ded from the Middle East.
In any event, these discussions are based on the simplistic j udgment that military
action by the Self Defense Forces is not so unrealistic, and is in fact very possible
in the near future. However, if you just imagine the country's domestic situation
at such a time, you would understand that it is not just a matter of how the military
should act.
~ Suppose that Japan had forcibly stopped the Soviet nuclear submarine. The Soviet
Union would have strongly criticized Japan while claiming the right of innocent
passage, and it might have even dispatched warships off Japan. Even if they didn't
attack, just by arraying warships around us, the people would feel that the "black
ships" [of Comnodore Perry] had come once again. In Japan today,.the people's
_ entire life style would not be able to stand this kind of tension for very long.
Invasion Debate "F'or Military Only"
A Soviet Union invasion of Hokkaido is one scenario of the Ground Self-Defense Forces.
Staff inembers of the Northern Region General Staff say, "Over the years, orders have
come down that very nearly amount to a desk tog strategy." In other words, response
actions have been devel.oped although in a piecemeal fashion. However, no one has
~ addressed the problem of what Hokkaido residents ahould do at such a time.
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If a military clash were to begin in northern or eastern Hokkaido, not only the
people of Hokkaido but the social and economic activities of the entire country
would be thrown into great confusion. Notwithstanding, there hA.s been no mention
by eny legislative body in the country of appropriating funds to construct shelters
for the people. The poseibility of a Soviet attack is matter-of-fact to the military,
but to the average citizen it is incomprehensible.
The idea that the Japansse Maritime Self-Defense Force and the United States Navy
could maintain the security of Japan by guarding oil tankers is sadly mistaken. Even
if they succeeded in protecting some tankers to Japan, the amount would only be a
_ fraction of that necessary to maintain the normal 1lfestyle of the people. Moreover,
a situation where this would be necessary would be nothing less than World War III,
and it is diffi.cult to believe that the oil-producing countries would be able to
produce today's amount of oil in that event.
Maximun emphasis should be placed on protecting aea lanes and the perimeter of Japan.
It was in this area that the security af Japan was recently breached. However,
debate of the defense of sea lanes only without considerinQ the overall situation
demonstrates an incomplete "image" of emergencies.
"Emergenciea" are discuased only from a purely military atandpoint, and looking at
it in terms of the people, or civil defense, is largely forgotten although the word
is brought up from time to time. Aceording to one dictionary of military terms,
, civil defense is defined as followe: "Organized activity by the non military aimed
, at preserving the life and property of the people from enemy military attack, pro-
; tecting the public buildings, faeilities, industry, and culture, and planning for
i rapid recovery. This activity is predominantly performed by civilians under the
; direction and planning of the central and regional governments."
' Why Civil Defense Comes Last
If the government is truly ronceraed about speedy improvement of the Self Defense
Forces'equipments to be able to respond to an emergency, why is it that "civil
defense" keeps being put on the back burner?
Chief Cabinet Secretary Miyazawa, tyfng this into his proposal of the Comprehensive
National Security Ministerial Conference said at the Extraordinary Session of the
Diet, "As public opinion matures, the time will come to discuss civil defense." The
problem is how do you tie in the judgment that it is all right tc, be so lackadaisical
about action for the people to protect their owa lives and property with fornulation
of "defense poatures for times of emergency" such as fighter "scrambles" and missile
armament.
"Dues" Will Not Bring About Military Strength
Defense Agency Director Omura has said, "I don't think there is an imminent crisis
of our country being invaded." If that is true, the main reason for the rush to
build up the military has to be for Japan to assume its responsibility as a"member
of the Western camp." The Western countries (particularly the United States) are
pressing Japan to build up its military in order to protect the strategic superiority
_ of the West by saying that regardless of whether there is an imminent crisis or not,
the collapse of the balance of power between the East and West increases the possi-
bility of invasion of Japan.
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If you think along those lines, civil defense becomes secondary. The idea is that
we will have to get along without civil defense while we pay our international
"insurance premium" by strengthening the Self-Defense Forces.
However, if we proceed to strengthen the military only for the reason of payi.ng our
"insurance premiums" or "dues" in the Westem camp, we will increasingly lose the
support of the people. One person angrily related the f~ollowing incident.
Ground Self-Defense Forcea were dispatched on a rescue mission to a village where _
many houses had been buried by mudslides from torrential rains. Soldiers were very
much in demand on the rescue mission and they were asked to "Come to our house"
and "Help over here." The soldiers broke up into small groups and began shoveling.
However, many of the villagers did nothing more than stand and watch. What kind of
a situation is this--people standing arou:id leavtng everything to the soldiers
even though it was their own village and their own stricken n,eighbors. _
Leaving A Matter of Self-Defense to the Self Defense Forces
Extrapolating this to the military as a whole may be a little overboard. However,
it is true that the attitude that it is all right to leave defens e matters entirely
up to the military has been increasing among the public. Recent opinion polls
indicate that an overwhelming majority of people accept the Self Defense Forces.
However, there is no data attesting that this acceptance is connected to the funda-
mental problem of what the individual is to do in a time of emergency.
"It is proper that we protect ourselves from invasion." "It is irresponsible for
Japan to be the only democratic country avoiding its defense obligations." "As
demonstrated by Afghanistan, you cannot 1et your guard down against the Soviet
Union." Following along with these conclusions, agreeing to strengthen the military
- while overlooking the individual's responsibility is easily done. After all, even
i� some of the welfare budget is redirected towards defense costs, if the security
of Japan is maintained by doing so, it is merely a matter of mnney.
However, the one circumstance in which the strength of the Self Defense Forces will _
definitely deteriorate is to follow that reasoning and get the idea that if we merely
shell out the money someone will defend us. But it is the time of emergency when
every one will be caught [in a sitiuation to defend the country] whether they like it
or not.
I personally would like to see the government and the political p arties quietly con- ~
duct thorough discussions on the "starting point of defense." I also think the govern-
ment should study taking a lead in "civil defense" to the point of promoting con-
struction of underground rooms capable for use as shelters in all new echools. This _
is importanC because I believe the Self-Defense Forces will be nearly powerless with-
out a solid foundation of defense consciousness among the people fostered by such
means.
COPYRIGHT: Mainichi Shimbunsha 1981
9180
CSO: 4105
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SCIENCE AND TECHNOLOGY
NEWSPAPERS REPORT ON NEW ERA OF BIOTECffiqOLOGY
Industrial Pro3ects
Tokyo NIKKAN ROGYO SHIIMUN in Japanese 1 Jan 81 p 3
[Text) "Biotechnology," that is, bioreaction technology, is
one of the most important technologies to pave your way in the
' 1980's. Because of the pronpecte of extraordinary develop-
~ ments in chemistry, mining, medicine, fermentation, food, agri-
culture, etc, by using the biological phenomena of l.iving
organisms, the industry has launched development all at once.
; The objectives are not only the development of useful sub-
' stances such as insulin, a theragy for diabPtes, and inter-
feron, a mir.acle drug, but also the establishment of a bio-
~ chemical industry, a new process to save energy and resources
through the industrial application of living organisms. Con-
, sequently, full-scale research and development has begun on
the basis of a target focused on ce11 fusion, the mass cul-
i ture of cells, gene splicing Pnd enzyme application technology.
It is, indeed, a new era of "biotechnology."
Government Organizations Also Hasten With Plans
The technology of using microorganisms is an old one. Examples include sake,
beer, soy sauce, bean paste, etc. Not only these traditional technologies, but
the world's top ranking fermentation industry were established in Japan based on
these technologies producing amino acids, nucleic acids, enzymes, antibiotics,
etc at low cost and high eff iciency. Many substances produced by this industry,
such as seasonings, glutamates, the digestive enzyme diastase, as well as the
products of various lactobacilli, have already become part of our lives.
"Biotechnology" enables the production of products with high added values, such
as insulin and interferon, by further developing this technology.
It involves finding useful substances created by cells of plants, animals, and
microorganisms (insulin, interferon, antibiotics, genes, etc), mass-culturing
- thP cells that produce those substances, and artificially creating useful sub-
stances by changing the genes and species involved in the production of useful
substances. It is also a technique af extracting enzymes that are plentiful in
cells for active utilization.
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When this technology is developed, it will influence all sorts of industries:
besides the mass production of r.ew pharmaceuticals and food having complex struc-
tures that could not be manufactured before, it enables the shortening of conven-
Cional chemical reaction processes. Considering the incalculable influence this
may have, there is the prospect of an industrial revolution.
Genentech Inc and Eli Lilly in the United States, which quickly saw the useful-
ness of this technology, established a mass-production technique for insulin, a
drug for diabetes therapy, using gene splicing, one of the techniques used in
this technology. On the other hand, Biogen S.A. of Switzerland led the world in
its achievement of developing a mass-production technique for interf eron, which
is regarded as a"cure-all drug." The European Common Market (EC) decided to
advance biotechnology by investing 10 billion yen in this venture over 3 years.
Therefore, in Japan, the Ministry of Education started a res earch program "basic
analysis of the production of useful substances using biochemical reactions" in
FY 81, in which the effective use of renin, peptide hormones, steroid hormones,
lectins, and untapped resources is planned. The Science and Technology Agency is
also planning to start studies on influenza vaccine, B-type hepatitis vaccine,
and to build the high-level safety research facilities (experimental facilities
with P4 level regulation which isolate man and bacteria) required f or gene splic-
ing. The Miaistry of Interuational Trade and Industry also made a budget request
to the Ministry of Finance to promote biotechnology starting in FY 81. Thus,
research and development supported by the entire nation is about to unfold.
Stimulated by such plans, private enterprises in such fields as chemical indus-
try, pharmaceutical industry, and food industry have narrowed their targets and
begun respective studies in order to establish a biochemical industry and bio-
industry based on the development of biotechnology.
Specifically, the goal is to develop research expertise one by one in ce11 fusion
technology, mass cell culture technology, gene splicing technology, and enzyme
application technology. Since the Ministry of International Trade and Industry

evaluates these technologies as modern-day magic" and estimates a market scale
of 3 tril.lion yen in the 1990's, enthusiasm f or the enterpr ises is tremendous.
Mr A. Hanawa, director of the Central Laboratory of Unitika Ltd, states: "We
hope to develop this research centered around enzyme development, as one of the
major nontextile research areas." Mr K. Yokoyama, assistant director of Mitsu-
bishi Petrochemical's central laboratory, says: "It is a r esearch area that can-
not be ignored for industrial growth."
At the lif e science research laboratory of Mitsubishi Chemical Industries, the
plan is to "complete the recombinant DNA research facility (P3 level), where
human cells can be handled, by summer." Thus, various corporations are steadily
working to expand the research.
T. Tada, of the Department of Serology, Faculty of Medicine, Tokyo University,
states: "Even immunity, which is the 'mystery` of life in overcoming illness,
can be elucidated by freely using this technology." Thus, it is possible to use
this technology as a mea.ns to open the way into the unknown.
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However, there is a huge wall in developing this technology. That is, one must
- master molecular biology, which is the basis of this technology. For this reason,
various firms, including Asahi Cfiemical Industrp, Sumitomo Chemical Co, Sankyo,
arid Unitika, began dispatching research staff all at once both in Japan and
abroad.
' They must understand the phenomena of how microorganisms and cells operate in
ths ultramicroscopic world of-"molecules." - It has been proven already that the
microorganism E. coli is several ten-thousandths angstroms in size, surrounded
by cell walls of several hundredths angstroms, in which are contained nuclear
genetic material, extranuclear genes (plasmids), various enzymes, and cellular
fluids; and this information has been useful in the technical improvement of
biotechnclogy. A gene is comprised of nucleic acids (deoxyribonucleic acid, DNA,
and ribonucleic acid, RNA), and the nucleic acids consist of chemical substances
(bases) adenine, cytosine, thymine, and guanine (uracil). Moreover, these bases
form double helix chains. This knowledge is a discovery resulting from research
in molecular biology, and such microscogic research fosters biotechnology.
Enzyme Development and Application
The enzymes are so similar in action to catalysts used in the chemical industry
that they are called biological catalysts. Moreover, due to their superior reac-
tion specificity, they have the characteristic of creating substances with 100
_ percent purity.
This characteristic is used in an apparatus called a bioreactor. It makes pos-
sible the synthesis of substanres that were impossible to manufacture by conven-
tional chemical or pharmaceutical industrial teciuiiques. Furthermore, the chem-
ical reaction is possible at normal temperatures and normal pressures, thus intro-
, ducing an energy-saving process.
Professor M. Nozaki and his colleagues at Shiga Medical College accurately mea-
sured the quantities of glucose, uric acid, cholesterol, etc in blood by apply-
ing the rPaction specificity of enzymes, and they are in the process of develop-
ing a bioreactor for diagnosis of illness. The principle is the application of
a biochemical reactian in which hydrogen peroxide is produced when glucose oxidase
is reactad with glucose. The hydrogen peroxide is combined with luminol and
potassi.um ferricyanide, and the amount of hydrogen perbxide proiuced is measured
to quantify the amount of glucose. In the cases of uric acid and cholesterol,
, enzymes that produce hydrogen peroxide with these substances are being sought.
At present, quantities of three types of blood components are known.
In addition, they began developing a new fluorometric system by applying the
fluorescent phenomenon found in the reactinn of the coenzyme nicotinamide adenine
dinucleotide (NAD) and hydrogen peroxide. Currently, a bioreactor capable of
- diagnosing diabetes is marked as a target for development. When this technique -
is completed, rapid diagnoses of various illness will become possible.
Furthermore, Mitsui Information Development, Sagami Central Chemistry Labo.ratory,
and Toyo Soda are in the process of developing a peptide typewriter [sic] that
- produces useful proteins (enkephalin, insulin, etc) by freely combining 20 or
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more kinds of amino acids.'Itao of these wi11 be completed in 1986 as the bio-
reactor researr_h project of the Institute of Physical and Chemical Research.
T'ie application of enzymes is not limited to these areas. Sagami Central Chemis-
try Laboratory is applying it to organic synthesis reactions. They are energet-
ically developing drugs (beta-blocker, etc) of optically active substances with
high added values from an intermediate obtained in the manufacturing process of
glycerin from propylene. Kyowa Hakko also has developed a heat-resistant enzyme
that can withstand a temp erature of 50-60 degrees Celsius, and has begun using
it in the new process of manufacturing malic acid from fumaric acid.
- T. Ando, chief investigator of the Institute of Physical and Chemical Research,
tiave developed an enzyme, nuclease SI, which is indispensable to recombinant DNA
research. Thls enzyme cuts one-strand DNA, while DNA having a twisted or loop
structure is excluded. It can also be used in studying genetic activity. Conse-
quently, it is being used in genetic research all uver the world.
- Sankyo obta3.ned a transf er of royalties for this enzyme from the Institute of
Physical and Chemical Research and began marketing the product. They regard it
as "a product with a prospect (S. Minato, chief, Sankyo Yeast Second Research
Laboratory). Ando, of the Institute of Physical and Chemical Research, also suc-
ceeded in isolating 23 d ifferent restriction enzymes from 70 different Bacillus
subtilis strains.
Restriction enzymes are indispensable for establish:Lng recombinant DNA technology
or molecular biology; when a useful substance is found, the enzyme works to
separate the geneJ that make up the substance. Thus it has become possible to
take out a fragment of a gene that produces the useful substance by using these
enzymes. In Japan, Takara Shuzo is the only manufacturer of restriction enzymes,
and considering the fact that only 15 restriction enzymes are on the market, this
is noteworthy. However, Takara Shuzo plans to produce 30 restriction enzymes be-
fore the end of the next year.
Enzymes having special uses aYe also actively being developed. Mitsubishi Petro-
chemical Co discovered thermophilic bacteria that inhabit hot springs and is de-
veloping heat-resistant enzymes.
Cell Fusion Technology
The biggest problem in b iotechnology is to decide what to create. It is the con-
sensus of the corporations that "it is too late to mar.ufacture insulin and inter-
feron." Their view is to leave the useful substances which are already known to
government pro3ects, and to discover useful substances independently so as to
quickly mass produce on a commercial basis.
Cell fusion technology will enable them to create such useful substances. Fusion
technology itself involves creating one cell from two different kinds of cells.
It was developed by Y. Okada and others in the latter half of the 1950's. When
cell-agglutinating media such as Sendai virus (HVJ) or polyethylene glycol (PEG)
are mixed with two kinds of cells, the cellular surface is cut, the cells are
united, and one cell having two nuclei (heterokaryon) is produced. When it com-
pletes cell division, a hybrid having some of the characteristics of two species
results. '
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In other words, countless numbet, .f cells having characteristics of two species
can be obtained. Professor Tada of Tokyo University is working to elucidate the
immune mechanism of the living bodp, a way to cure illness by using this tech- _
nique. He reports having manufactured aatibodies agair:st hormones and antibodies
against interferon in vitro.
In addition to these achievements, he says: "We have established a technique to
produce high purity interferon from lymphocytes and myeloma cells. We also dis-
covered T-cell growth facto,: (TCGF) that accelerates immune mechanisms from the
_ fusion of T-lymphocytes and myeloma cells and we are able to obtain it in nearly
100 percent purity. Since T-cells have a mechanism far killing cancer cells,
'conquering cancer' is also possible by using this tecnnique."
At the life science research laboratory of Mitsubishi Chemical Industries, this
technique is being used in genetic research involving mice that die 10 days from
birth. As a result, they report that "antibodies that can be used for the diag-
nosis of illneases can be easily prepared by using this technique."
Professor Tada states: "Since there is an almost unlimited number of lymphocytes -
with varied functions, they are a treasure chest of substances that ca.n be very
useful." Thus, this technology ts most suitable for finding useful substances.
Moreover, it is also possible tn manufacture reasonable quantities of these use- _
ful substances, which means they can be provided for research and assessment when
consi3ering industrialization of *_echniques such as gen` splicing or ma.ss culture.
Mass Cell Culture
The cells which are created by using cell fusion technology and produce useful
substances cannot be used directly. It is necessary to cultivate the cells in
large quantities. In the fermentation industry, 10 million to 10 billion micro-
organisms per cubic centimeter are grown on a scale of several kiloliters. For
the mass culture of E. coli and yeast, the conventional culture method used i.n _
the fermentation industry is sufficient for their proliferation, but human cells
or renal and hepatic cells of animals do not grow so easily. In that case, need-
less to say, it would be meaningless to create cells that produce useful sub-
stances.
In addition, it would be impossible to collect enough cells to Gtudy the charac-
teristics of the useful substances and achieve the goal of developing something.
Naturally, no improvement in technique would be forthcoming in biotechnology.
The serum of bovine fetus offers a solution to these problems. "Five to 10 per-
cent serum is necessary in the mediun to grow cells" (K. Sameshima, manager of
~ the production and technical divisio.i of Kyowa Hakko)a The amount of serum ob-
tainable from a fetus is small. Tb,:refore, in Japan, where livestock farming is
not widespread, we must depend on importation from overseas. Thus, naturally,
there is a restriction in the quantity.
For this reason, it is necessary to establish the following three technologies:
discover the growth factors for the cells present in the serum of the bovine
fetus, develop substitutes that have the same function as the serum, and develop
a culture apparatus in which cells can be cultured to high density in the same
container." (Sameshima)
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Since we now know that the growth factor is a kind of hormone, there are pros-
pects for establishing tlzese technologies.
Recombinant DNA Technology
Mass culrure technology rapidly manufactures ceZls and bacteria that produce use-
ful substances. As a result, structures of cells and bacteria nave been greatly
elucidated. When the tools of molecular biology are applied, it will become pos-
sible to learn which part of the cellular and bacterial genes produces the useful
- substances. By inserting that gene fragment into the extranuclear gene of E.
coli, and returning that into the E. coli, the bacteria begin to produce the use-
ful substan:.e. Since the mass culture technology of E. coli has already been es- -
tablished, numeraus useful substances are now obtainable.
This is the technology that offers the means to produce useful substances in
large quantities. Mass production technology has been established for insulin,
interferon, growth hormone by Biogen (Switzerland), Genentech (U.S.A.), and Eli
Lilly (U.S.A.). The development of vaccines will be initiated during this fiscal
year by ths Science and Technology Agency.
Research in recombinant DNA technology has been carried out for most useful sub-
stances which are known. Therefore, the corporations have turned their eyes to
the development of mass production tectinology for enzymes which have high utility
value and are difficult to obtain. For example, two kinds of heat-resistant en-
zymes have been discovered at Mitsubishi Petrochemical from Thermus ther*nophilus,
HB8. There are microorganisms that live in hot springs enduring a temperature of
90 degrees Celsius. Enzymes in those microorganisms also have heat-resisting
properties. Since they are very strong and long-lasting enzymes, their utility
value is also high. In chemical reactions, the higher the temperature, the better
the yield. The heat-resistant enzymes discovered by Mitsubishi Petrochemical lead
- to such development of enzymes.
When it becomes possible to produce heat-resistant enzymes in large quantities by
using the recombinant DNA technology, building a chemical plant with superior
selectivity and withost any byproduct would no longer be a dream.
COPYRIGHT: Nikkan Kogyo Shimbunsha 1981
Scholars' Views
Tokyo MAINICHI SHIMBUN in Japanese 1 Jan 81 pp 44, 45
[Report on conversation between Dx H. Yukawa, a physicist, and Prof I. Watanabe,
"leading molecular biologist" and author, with an introduction by T. Maeda, editor
in chief, Osaka main office, MAINICHI SHIMBUN]
[Text] The technology of manipulating life, that is, the appli-
cation of life science, is advancing at such a speed that our
- imagination or speculat3on cannot keep up. It has become pos-
sible to mass produce growth hormone, insulin, interferon, etc.
. by genetic recombination of E. coli. On the oth.er hand, how-
ever, it has become possible that such artificially synthesized
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microorganisma may threaten the ecosystem of the earth. At
this rate of progress, even a cloned human may be produced.
Will the technology develop eyen to the point, shaking the
foundation of human value, of artificially leaving only
superior human beings? Is there danger of a brake on the
genetic manipulation technique mankind has come to hold in
his hand in the latter half of the 20th cent!iry becoming in-
effective? Dr H. Yukawa clearly expressed hi;s opposition to
atomic and hydrogen bombs from the standpoint of a physicist;
and Professor I. Watanabe spoke as a leading molecular biolo-
gist who had already expressed his concern in a book entitled
"Last Mament of Ma.n." I would like to present their conversa-
tion for guidance in the new year. (Introduction by T. Maeda,
' editor in chief, Osaka main office, MAINICHI SHIMBUN)
Watanabe: Life has been regarded as the realm of God that cannot be manipulated
hy man. However, molecular biology has succeeded in analyzing life as noth�ng
but phenomena in phy3ics and chemistry. By applying their principles, business
, ventures have appeared which even manufacture, for example, human insulin or
, interferon by manipulating bacterial genes in vitro. There were even frequent
; telephone inquiries from stockbrokers to the conference hall of the molecular
'i biology meeting held in Kyoto in December. Molecular biology has certainly be-
come a common affair (he laughs). However, elucidation of the genetic code and
' its application have just begun, and no great changes of consequence have occurred
' yet.
Yuka.wa: Long ago, physics, chemistry and biology were different fields of study.
; Then, during the 1920's to 1930's, atomic structures and properties were revealed,
! and it became possible to explain chemical principles by physical theories. It
I was around 1950 when bialogy, eepecially life phenomena, was explained by chemical
! and physical theories.
~
' Watanabe: Yes, it was because the helix structure of DNA, the essence of genes,
~ were explafned by Watson and Crick in 1953.
Yukawa: It is difficult for us, physicists, to understand the circumstances of
how the DNA structure controls man and influences his functions.
- Watanabe: To put it crudely, a man is essentially determined by the genetic in-
; formation contained in DNA. It has been found that man's characteristics, and
' even certain diseases, are determined by genes copied from parent to child. How-
ever, it is not understood how living organisms such as man, having splendid
genetic information, appeared. It is a great mystery. Therefore, the matter is
not so simple as just being able to synthesize a new organism by cutting and
splicing genes.
Yukawa: However, since genetic structure is known, it appears that a very simple
organism can be synthesized even at this stage.
Watanabe: No, it won't do. Living organisms have a long history of evolution
and selection, and only those organisms having favorable combinations of genetic
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information have survived. How to cotnbine the genes to create a new organism is
not yet lrnoam to us. We are totally ignorant regarding wfiat is life.
Yukawa: That's the part that is difficult for us to understand. If one wisheb,
why can't different organisms be created one after anoCher....
Watanabe: That cannot be done. It is difficult ennugh to create even an organism
identical to that currently existing. It can be said that we are totally ignorant
regarding the creation of an organism with a new combination of genetic informa-
tion. A living organism is still something which wa.s given to us, in a form of
DNA. We know only in what form proteins are made from DNA and what is the nature
of the information in DNA.
Yukawa: I understand.
Watanabe: Therefore, if a certain DNA is inserted into E. coli by means of gene
splicing, that part can be made. However, it is still E. coli. A new bacterium
cannot be made.
Yukawa: Is that so?
Watanabe: There is a possibility that it may be made accidentally. But that
chance is very small. Parts can be made by genetic manipulation, but when
slightly larger genes are spliced, they cannot exist as a living organism. The
chance of creating a monster is very small.
Yukawa: Is that true even in the case of a very simple organism?
WatanabP: Yes, it is. The combination of genetic information is rather more com-
plex in si.mple bacteria. We can read thousands of codes arranged in DNA, but we
cannot completely decode their significance. We lack such overall knowledge;
only the technique of cutting and splicing genes has progressed. That is nothing
but the ability to make part of an organism. For example, if a plant having an
enzyme that uses nitrogen from the air to make ammonia can be made, it will grow
without nitrogen fertilizer. If we can double the efficiency of photosynthesis,
the greater part of the energy problem can be solved. Genetic engineering is con-
sidered to be the ace of the next technological innovation. Yet, we do not under-
stand the conditions needed for existence of a single living organism. In that
respect, biology has not reached the level attained in physics.
- Yukawa: Yes, in that sense, it is very different from physics. So, although
there are various things to be concerned about in genetic manipulation, it has
not come to such a revolutionary stage as that.
Watanabe: That fact became known only recently. Even the experts were very con-
cerned until 4 or 5 years ago. However, for the present, they say that we do not
yet possess that knowledge. This does not mean, howeveX, that we can do anything
we please.
Yukawa: Yes, I understand.
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Watanabe: It is a different problem, buC test tube habies and surrogate mothers
are already present in other countries. Research on borrowing the womb of a dif-
_ ferent animal, for example, having a caw bear a kid, is also making progress. It
may come to involve man. However, in this case, the baby heing born is a human
being. It is a man created from human sperm and ovum, and only the environmenC
is different. There is an ethical problem, but human life is not being manipu-
lated.
Yukawa: Will a new organism be created in the near future?
Watanabe: I think it's too soon for that. There is a method called cell fusion
as one pnssibility, as in the case of an experiment fusing a human ce11 and a
_ mouse cell. However, even when fusiorL is accomplished, the human chromosomes
(collection of genes) are gradually lost from that cell. Even then, if the nu-
cleus of that cell is exchanged with the nucleus of a mouse ovum, an individual
- mouse having fragments of a human chromosome may be produced.
Yukawa: However, when such organisms multiply, one wonders if a mixture between
man and mouse will appear.
. Watanabe: It does not work that simply. A mouse has a group of chromosomes that
have a perfectness for forming a mouse. Even if a man's genes are inserted, they
will be incorporated only as a part at best. Moreover, in the present state of
social conscience, if a researcher were to conduct that sort of experiment, some
criticism would be expected, so it is avoided.
Yukawa: Yes.
Watanabe: However, my idea is that it is all right to carry out those experiments
as long as the results are always published. Research should progress by keeping
the general public informed of thQ status of academe.
Yukawa: That is necessary. When matters are kept secret, more and more unfavor-
able things are done.
Watanabe: Yes, when work is conducted in secret, people suspect it is dangerous.
If not, people outside the field do nat anticipate danger from the beginning and
will allow researchers to work and publish their results. Whether they have the
research stopped depends on the results.
Yukawa: That way of thinking is different from our, laymen's, judgment.
_ Watanabe: In the case of recombinant DNA, Dr Paul Berg called for a temporary
moratorium on the experiments in 1974. Among scholars, it was intended to sus-
pend the work for a while because of the lack of available knowledge. But, this
was interpreted by laymen as meaning that it is dangerous research since the
scholars themselves decided to stop. The goal was mutual understanding, but it
came out the arrong way. Consequently, the apprehension of the general public re-
garding the manipulation of life is considerably different from the scholars'
view.
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Yukawa: However, in the case of physics, the experts were tha.nking that terrible
uses of physics did not have to be considered for a while u.ntil nuclear fission
was discovered. They thought that the peaceful use of atomic energy, or atomic
and hydrogen bombs, would not materialize right away. However, laymen were cvn-
cerned tha* such things might come true because of tl-.eir lack of clear understand-
ing. In artuality, when nuclear fission was discovered, Che situation changed
suddenly and the unexpected happened. Experts such as Dr Watanabe may consider
_ that there is no immediate danger, but unexpect ed things can occur in the academic
world.
Watanabe: Therefore, I believe that the world outside the researchers should be
kept informed about the state of research. The fear that genetic manipulation
might be used militarily as in germ warfare could very well come true. It is
likely that military exnerts in var.ious countr:ies are already thinking of that
possibility.
Yukawa: Changing the subject, life is myst2rious. In other words, there is th.e
principle of uncertainty in physics, and I thought that there might be similar
uncertain elements in biol.ogical phenomena also. But, according to your explana-
tion, that is not the case. Since the spj.ral staircase structure of genes was
revealed, unexpected results in a reverse sense have appeared, haven't they?
Watanabe: In life phenomena, because there are no uncertain elements, advances
are made in a technological direction as in genetic engineering. On the other
hand, the significance of genes, or the origin of life as to how a multicellular
organism such as man results from a fertilized ovum, are not yet known. Even
more important is the problem that the human brain and the mental sphere cannot
be determined by genes alone. It is slightly different from uncertain elements,
but in the case of the human brain, acquired factors such as environmental fac-
tors, education, and study make a difference. Parents and children have common
,crenetic elements, but because of the differenc es in social environment between
the g,enerations of parents and children, even brain functions change. It means
that life phenomena cannot be de.termined by genes alone. Uncertain elements of
life in that sense are possible.
Yukawa: Will we have a cloned man?
Watanabe: Technically it is possible. The book ["Birth of a Cloned Man"?] pub-
lished 3 years ago was a hoax, but scientif ically it is not impossible. Speaking
from a standpoint of purely scientific interest, if, say, 10 identical men could
be created, we could study from their birth what sort of education creates what
kind of man. Things such as the kind of deformation resulting from enviranmental
changes could be determined.
Yukawa: However, in the case of man, the valuable asset is his individuality,
or that each has his originality.
Watanabe: Yes, yes.
Yukawa: Talk of being able to make ide:tical creatures is very distasteful.
What it boils down to is that even if it could be done, we wouldn't want it done.
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Watanabe: But... Dr Yukawa, even i� individuals had identical genes, they would
be different if the information were provided differently, wouldn't they?
Yukawa: No, even if individuality is different, if their environment is similgr,
they would end up similar beings. Whether or not true or3ginality of man can
exist there is a very serious problem.
Watanabe: You are saying that it is better to have different human beings even
if the environment is the same?
- Yukawa: That's right.
Watanabe: You are saying that it is better to have only one you.
Yukawa: Yes, naturally. That is what a man is. However, at the same time, those
having their own originalities live together as good friends. That is the ideal
state. I mean it's a nuisance for science to grow so much that it destroys that
state.
Watanabe: What I meant was that scientific analyses would be possible if cloned
men were produced. I do not think it would be a favorable thing for the world to
create such men. Swerving a little from the subject, it is said that only superi-
or men will eventually remain through the process of selection. But, in fact, I
suspect that not so superior men may survive. At any rate, men who are not so
superior have more power (he laughs).
Yukawa: We don't know how that will be (he laughs).
Watanabe: It does not pay to use superior men, so it is better to create men
that are easier to use. Men who are not so superior create men they can use,
and the deterioration is perpetuated.
- Yukawa: It is a different subject, but I don't think politicians and military
; men are such superior men. However, rulers, Hitler or even Napoleon, regarded
, themselves as wise. And that was the great misfortune.
Watanabe: Now, it is my belief that genetic manipulation involving other than
men may be allowed. Problems such as food and energy will gain a certain degree
- ~ of help through the use of this technology. But for men, we should decide to
~ limit the application only to medicine such as the curing of genetic diseases.
The ethical presblem can be avoided if we decide not to use it in creating superi-
or men.
Yukawa: However, I am not that optimistic. Medicine can take various forms.
Even if we know a drug for genetic disease can be manufactured, simply put, there
are still problems in that the side effects are not fully understood and may ap- -
pear.
Watanabe: From the standpoint of inedicine, it is natural to aim for a cure,
especially in the case of genetic diseases where almost no therapeutic method
exists.
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Yukawa: That's true. It j_s obvioirs that there is a good side to it.
Watanabe: Therefore, aside from the question of actually using the technique,
wouldn't it be necessary to conduct research after all? I question putting evety-
thing that is risky in a package and labeling it an ethical problem.
Yukawa:
Watanabe: Instead, the work should proceed step by step while keeping the world
informed. But concerning genetic manipulation, everybody gets very emotion.31....
Yukawa: That is to be expected, when the problem invoTves men.
Watanabe: However, this problem is taking place even before genetic manipulation
occurs. Fflr example, abortion of a f etus with bad genes as found through amnio-
centesis (fetal diagnosis) is advised. An ethical problem is in fact arising be-
fore occurrence of genetic manipulation, and I wonder why that is not made an
issue....
Yukawa: There is the previous example in the field of physics that the expert5
were not careful enough and the laymen's fears came true. We cannot say that the
laymen's fears will not come true in molecular biology, either.
Watanabe: Speaking about the technique of genetic manipulation, it did not begin
from purely military technology as in the case of the atomic bomb. Second, as you
pointed out, there are strict regulations in the field of basic science such as
the Japanese guidelines before commercialization. However, those regulations are
being relaxed more and more. That is a problem.
Yukawa: You said a new organism cannot b e created. But new microorganisms are
in fact being synthesized. I wonder why such organisms were developed.
Watanabe: However, thoughtful molecular b3.ologists have become mystics believing
that life is something given.
Yukawa: Is that right?
Watanabe: It may be said that they have returned to mysticism, having the mystery
of life before them.
Yukawa: That may be so now, but they may change to not believing in mysticism in
the future.
Watanabe: The arrangement of genes and the technique of manipulating them have
been discovered. The problem is that they could not help but become mystic be-
lievers of life in the next step. It will be quite some time before they come
out of that stage.
Yukawa: If Z may persist, in physics, electrons and neutrons have forms abso-
lutely identical as though fitted in a mold. This is a big mystery. In the case
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of biology also, there may be some laws 13,I:e a mold. It is difficult to believe
that the process of identical DNA's hein$ formed is an accident.
W3tanabe: We do not lrnow about that. It is probably because of our ignorance.
Unlike physics, where the theory of relativity and quantum theory have been con-
ceived, molecular biology is still a shallow science which has not attained that
level.
Yukawa: Yes, that feeling is strong even in the layman's view.
Watanabe: Life science still has no technique by which it can leap to a different
level of another dimension. Although I believe tha*_ a living organism cannot be
- created as yet, I cannot exclude the possibility that it can be made by accident.
However, in my position, I cannot take an antiscientific stand by speculating
about a risk. In any case, it will be developed with caution. Moreover, it is
necessary to have the general public understand the state of research.
Yukawa: Regardless of pessimism or optimism, it is important to eliminate secrecy
as much as poss:Lble.
Watanabe: I believe we should formulate a sysrem that can be understood by people
outside the field. In addition, the connection between researchers and industry
is becoming a problem in Europe, the United States, and Japan. Since we ar e in a
world where artificial microorganisms are patentable objects, we must form a sys-
tem at a natianal level to advance basic science in genetic engineering.
Yukawa: Secrecy is certainly a dangerous thing.
Watanabe: The atomic bomb was a secret in physics, wasn't it?
Yukawa: The entire large-scale research was enveloped with great secrecy. Such
a thing has been experienced in physics.
Watanabe: In the case of genetic manipulation, it is necessary to exchange infor-
mation freely worldwide and to formulate international guidelines. It is also
important that the experts and those outside the field cooperate. We should con-
sider the types of system to be formed to that end.
Yukawa: I agree.
Watanabe: The problem of scientific openness is an especially important subject
with respect to genetic engineering. There is the problem, however, that we can-
not get public interest or concern unless we cry wolf.
Yukawa: But I do think it's dangerous. You seem to be much more optimistic about
it than I am (he laughs). However, I know there is a problem that the hazard of
genetic manipulation is reported in exaggerated terms to the public.
Watanabe: It is significant that you pointed it out. When only the risk is exag-
gerated, we in research tend to deny it and become optimists. Just and earnest
information are necessary.
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Yukawa: In that respect, the role of journalism becomes an issue. It is not
enough to report only the new facts and sensational issues.
Watanabe: Yes,. the problem of relating science to society is what troubles us
the most. Specific3lly, to whom should we explain?
- Yukawa: There is a meeting of scientists called the Pugwash Conference. In those
meetings, I am always speaking of the ideal of a world federation. But such a
simple principle as utopia that brings peace to mar.kind is not understood by the
scientists. They don't understand the grand concept that wars are foolish. This
is surprising. They narrowmindedly leave society's problems to the social scien-
tists. This trend is stronger among the scholars of advanced countries. I strong-
ly warn them that it should not b e that way. Only a very small number of them
have the vision of a world federation. The problem is simple, but many of them
don't even bother to think about it.
After almost 2 hours of conversation, Dr Yukawa said to Prof
Watanabe: "It ended up being too pessimistic for a New Year's
_ talk," to which the latter responded: "No, you have always
been concerned about the future of molecular biology. I was
prepared for an even more severe admonishment." Dr Yukawa's
voice brightened, despite his long illness, as he said: "I
would like to talk to you more freely another time." Finally,
the heavy statement "unexpected events do occur in science
(more than people imagine)" ended the conversation.
Hideki Yukawa--Professor emeritus of Kyoto University and Osaka University. Re-
cipient of the Nobel Prize and the Order of Culture. Born in Tokyo in 1907.
- Graduated from the Faculty of Science, Kyoto University. Held positions as as-
sistant professor of Osaka University, professor of Kyoto University, visiting
professor of Columbia University, and director of the Institute of Basic Physics,
Kyoto University. He developed the theory of elementary particles using the famed
neutron theory. Through the seven-man committee for the appeal for world peace
and other means, he expressed a positive view for banning nuclear weapons, etc
and has warned sharply about the handling of science and technology.
Itaru Watanabe--Professor, School of Medicine, Keio University. Born in Matsue
City in 1916. Graduated from the Faculty of Science, To?cyo University. Held
positions as a professor of the above faculty and at the Virus Research Institute
of Kyoto University. He quickly recognized the need to study life phenomena at
the biochemical level in Japan, established the Nucleic Acid Research Society in
1949 together with F. Egami and A. Shibatani, and became a pioneer in molecular
biology in Japan. He founded the Japanese Society of Molecular Biology in 1978
and has neen serving as the president since then.
COPYRIGHT: Mainichi Shimbunsha 1981
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Lnzyme Research
Tokyo NIKKEI SANGYO SHIlMUN in Japanese 13 Jan 81 p 1
[TextJ Textile companies such as Unitika and Toyo [boseki]
Spinning Co began working in earnest in the biochemical field,
where enormous development is expected in the future. While
the textile business continues to be slow, various firms are
striving to strengthen the nontextile field centered around
film and resin, but there is no prospect for extraordinary
growth in the future. Thus, they are focusing on the biochem-
ical field as the pillar of support for the industry 10 or 20
years from now. Currently, industrialization of inedicine and
- test chemicals using unique enzymes is advancing rapidly. They
are hopeful that new commercial products bringing high profits
will be produced in the near future.
Toyobo and Unitika Are in Front
, Toyobo f irst began studying enzymes in the mid-1960's. Enzymes were used to treat
the wastes from pulp, raqon raw material. However, the active use of enzymes in
the biochemical field and commercialization began in 1972. Products were devel-
oped for food processing such as tenderizing meat, refining sake, etc, as well as
, a test chemical for measuring uric acid. However, due to the sma11 demand, this
did not lead to large prof its .
' Therefore, the company turned its eye to blood-related businesses. Together with
~ Shimadzu Seisa:-usho, it developed the ["Diaspat"?] blood analyzer, and will start
marketing it in earnest in 1981. An analytical agent using Toyobo's enzyme is
used for the system, which can analyze the complex composition of blood into 24
, categor ies quickly and simply. In addition, it is hurrying to commercialize en-
zymes that react with cancer-specific proteins produced by cancer cells. If this
; can be commPrcialized as an analytical agent, it would contribute greatly to the
early d iscovery of cancer.
On the other hand, Unitika shifted its emphasis to the development of the non-
textile field in the early 1970's. As a starter, it gathered some 10 people hav-
ing exp erience in fermentation, food engineering, and synthetic chamistry, and
organized a project team with the objective of "application of microorganisms."
They were sent for study in wide areas both in Japan and abroad in order to
solidifv the structure for discovery of useful enzymes and their commercializa-
tion.
Unitika's achievements in this basic field were appreciated by the Research and
Development Corporation of Japan, and it was commissioned to d evelop material for
medical use which does not cause thrombus easily by fixing urok3nase (an enzyme
wjth a thrombolytic action) on the surface of macromolecular polymers such as
nylon. In addition, under commission from the same corporation, it is advanci.ng
commercialization of an "adenosine triphosphate (ATP) regenerating enzyme," which
will become the basis of a revolutionarp new technological development called a
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bioreactor for bringing about a biosynthesis reacti.on through engineering. Com-
mercialization of this enzyme at Unitika is the most advanced in the world, and
it is considering building a pilot plant in 2 to 3 years.
Kurashiki Spinning Co has been expanding chemical products, engineering, and in-
format ion development as the three major lines of the nontextile division. In
order to develop a fourth line, it recently established a"nontextile development
group." This group is studying the industrialization of biochemistry along with
electronics, energy r.onservation, etc.
'1'he textile industry in Japan has repeatedly recommended shorter operating hours
and a cutback in production equipment. And it is also behind in expanding into
the nontextile field. For this reason, various textile firms quickly got into the
biochemical field, which is believed to represent the coming era, and are striving
for stabilization of the industry. Many areas of biochemistry have not been
touched anywhere in the world. Consequently, there is a possib ility that the
Japanese textile firms, which have not had much chance in the past, may take a
lzading role.
COPYRIGHT: Nihon Keizai Shimbunsha 1981
Chemical Industrp Applications
Tokyo NIKKEI SANGYO SHIMBUN in Japanese 1 Jan 81 p 15
[Interview with E. Suzuki, president of Mitsubishi Chemical Industries]
[T ext] Various chemical companies are turning eager eyes
toward biotechnology, which is the field of industrial appli-
cation of high-level functions inherent in living organisms.
When this technology is developed, it is said that the chem-
ical industry will change into an energy-saving, resource-
saving industry, and new chemical substances which could not
have been manufactured previously will be manufactured at
low cost. The formation of a promotional structure is spurred
especially by government and civilian efforts proceeding hand
in hand under the slogan, "Catch up with the United States,
which is ahead, and surpass it." E. Suzuki, president of
Mitsubishi Chemical Industries, which is the "banner holder"
of the private sector, talks eagerly of the "era of biotech-
nology," stating that "the development of biotechnology will
have such great influence that it may be called a'revolu-
tion' in the chemical industry." He has been steadily advanc-
ing research and development in the field. We asked about his
outlook for 1981 and beyond.
Research and Development Make Progress in Biotechnology
Question: Interferon and gene splicing have recently been attracting attention,
and biotechnology will be a field that draws increasing interest af ter 1981....
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- Answer: In short, b3,otechnology is a comprehensi.ve technology covering the indus-
trial application of high-level functions inherent in living organisms. Specif-
ically, it includes production of new substances such as interferon, which is
- eagerly awaited as an effective drug against cancer, application of gene splic-
ing technology to convert manufacturing processes to save resources and energy,
cell fusion and mass culture techniques, and b ioreactors which apply biological
reactions to industry. Plant b.reeding and biomass are also included in biotech-
nology, and it may be called an "innovative technology" that encompasses all in-
dustry, including computers. There is even speculation that it will become a
3-trillion-yen market in the 1990's.
Question: In the field of genetic engineering, activities of Euro-American indus-
tries are being reported.
Answer: Unfortunately, the level of Japanese technology is running behind the
Euro-American countries. This is abundantly clear if you look at Japanese patents
related to genetic engineering, which is in the limelight today. Of the 24 cases
r egistered, three-fourths of them are patents from overseas. Once important
patents are held, the Japanese side is helpless. In many cases, world deIItand is
met at the stage of accomplishing mass production, whether it is a new drug or
new substances. As regards biotechnology, we cannot compete using the method of
technical importation and improvement, in which Japanese industry has been skill-
ed. Therefore, it is necessary to promote the industry togetaer with the govern-
- .nent, and not industrial circles alone.
Question: How-~aould the chemical industry change with the implementation of bio-
technology?
Answer: Reaction processes in the chemical industry are mostly carried out under
conditions of "high temperature and high pressure." Thus, many problems exist in
the energy..and environmental aspect. If these processes are replaced even par-
- tially by biochemical reactions carried out at "normal temperature and normal pres-
sure," the effect will be enormous. Distillation and separation processes are now
carried out by heating, but look at the stomach and the skin of the human body.
They are not heated. If such biological functions can be applied, a"revolution"
will take place in the chemical industry. The biochemical processes occurring
repeatedly in the human body hold endless possibilities.
Question: Speaking of life science, Mitsubishi Chemical Industries inaugurated
a life science research laboratory in a corporate system in 1971. What kind of
d evelopments are being considered for the future?
Answer: Commemorating the lOth anniversary of the founding of the life science
r esearch laboratory, we are making plans to hold an extensive scientific lecture
symposium. We would very much like to invite Nobel laureate chemists. From the
b eginning, the life science research laboratory had the objective of contributing
to the welfare of mankind through basic research into the life phenomena. Its
achievements have borne fruit in the commercialization of "isomerized 5ugar,"
etc. Using the work of the past 10 years as the foundation, in the future we
intend to promote activities in the application phase. The fact that the former
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vice president, M. Nitaa, was appoi.nted as the new di,rector, holds the promise of
joining the corpora.te management sp3rit anew to the "ivory tower" concept. We
are eagerly waiting to see more and more products on the basis of industrializa-
tion from now on.
What will emerge?
Some people call biotechnology "modern-day magic." The elucidation of biochemical
reactions in progress in the human body or in other living organisms has been ad-
vanced. As a result, their application to industry is being investigated. Among
them, only genetic engineering is rapidly being highlighted, and it has fanned an
interest in biotechnology linked to the development of new drugs.
However, cases of actually arriving at the level of comanercialization, such as
insulin commercialization, at the test plant stage in U.S. industry ar e few. A
technique for converting a process by using gene splicing is also being developed
in Japan, but one may safely state that it has not come out of the laboratory and
experimental stage.
Under such circumstances, Mitsubishi Chemical Industries, a pioneer in life sci-
ence research, has pushed biotechnology forward as a business strategy and has
begun working in earnest toward the goal of commercialization. The cir cunistance
is such that we must keep our eyes open to see what will emerge in 1981, the lOCh
anniversary year of the life science research laboratory.
COPYRIGHT: Nihon Keizai Shimbunsha 1981
7722
CSO: 4105
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SCIENCE AND TECHNOLOGY
PETROCHEMICAL INDUSTRY SEEKS OVERSEAS PROJECTS
Tokyo NIKKEI SANGYO SHIMBUN in Japanese 5-10, 12-14 Jan 81
[S Jan 81, p 8]
[Text] The [Japanese] petrochemical industry's overseas ventures have begun to
show some new developments. In the past half year, plans to advance into such
countries as the United States, Canada, and Australia have been hammered out in
succession; the situation is that of a"rush," the first since the first half of
the 1970's. Each plan puts the greatest emphasis on securing cheap natural gas
as a raw material and furthermore concentrates on advanced countries which have
fewer "country risks." In comparison with the past [policy of] setting up in
oil-producing countries, [the new plans] show significant qualitative changes.
This comes at a time when the world's petrochemical [i,ndustry] is entering a
major shakedown period due to successive rises in the price of oil. It would
appear that the strength of the [petrochemical industry] in the United States,
which uses cheap natural gas as its major raw material, will increase even fur-
ther, while the competitive powers of Japan and Europe, with naphtha as their
raw material base, will decline. The ultimate goal of the new strategies planned
by the Japanese petrochemical industry is characterized by a"boomerang effect,"
' since they call for the restoration of international competitive power, both at
' "midstream" and "downstream," by bringing into Japan as raw materials basic chem-
ical products produced abroad at low cost. The industry views this type of over-
seas venture as a trump card in its effort to open up [new] inroads for "Japan:
The Nation of Chemical Industry," and shows its readiness to further spur its
internationalization throughout the 1980's.
Heavy Investments in the United States and Canada
Mitsubishi Chemical Industries, known within the petrochemical industry for its
cautious approach to overseas ventures, has radically changed its overseas stra-
tegy in the past half year. Following the decision to participate in the petro-
chemical project in Alaska, U.S., Mitsubishi Chemical also decided on a policy
to actively engage in a petrochemical project in British Columbia, Canada, where
it will represent Japan along with Mitsubishi Corporation. These are large-scale
projects aimed at complete production, from basic raw material ethylene to vari-
ous derivativQS, and if they sre realized they should serve as the company's
crucial raw material supply bases.
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The reason for the said company's "transforniation" is that it "feels insecure
about ,7apan's future petrochemicals," (Hiroshi Watanabe, managing director in
- charge of overseas [operations]) and it is "proceeding with surveys on the
petrorhemical projects in Alaska and in Canada with the idea of opening up
routes of activity for the company's petrochemical division." (ibid)
Toyo Soda Manufacturing is facing difficulties as one of the enterprises that
participated in petrochemical projects in Iran. Despite the increased ex-
penses caused by the interruption of construction [work in Iran], the company
recently revealed its intention to carry out a completely new chemical and
petrochemical project in the United States. This involves construction of a
large-scale plant for sodium hydroxide and intermediate raw materials for vinyl
chloride, in cooperation with a local resources f irm in Texas, the U.S. petro-
chemical center. An industrialization survey will be completed by spring.
"The petrochemical project in Iran is special. Just because we have it, this
doesn't mean we should not make necessary investments [elsewhere]." (Takeshi
Umino, managing director) For Toyo Soda, the venture in the United States is
a necessary investment for survival and is based on the judgment that failure
to invest in it would be tantamount to waiting idly by for death.
Thus far, the U.S. chemical producta exported to Japan have come mainly in the
form of "fine" (fine chemical products) and special products; however, the
United States has picked up the offensive in the area of basic chemical pro-
ducts. It is said that last year, [U.S.] exports to Japan of raw materials
~ for synthetic textiles and partially synthetic resins tripled from the previ-
ous year, when the increase was 1.5 times the year before. Because of such a
suciden increase, it is reported that Chairman Horifuka of Asahi Dow recently
"warned" the executives of D4w Chemical in the United States, with whom he has
a close relationship as a result of their joint venture partnership, that if
they "increase exports too hastily, they will meet fierce resistance in the
Japanese market."
- Outstanding U.S. Cost-Competitive Power
In the face of U.S. offensives, the world's petrochemical industries are now
greatl.y shaken. [U.S.] synthetic resin has invaded the Southeast Asian mar-
ket, which the Japanese p2trochemical industry has regarded as its own back-
yard, and furthermore, basic chemical products with a high degree of wide
appiication and mass-produced producCs have started to pour into the keep, the
Japanese domestic market, in large volume.
The damage to Europe is greater. ICI, the wnrld's fourth largest chemical pro-
ducer and Britain's largest enterprise, showed a def icit of $24 r.illion in the
July-September period last year. This was ICI's first deficit since the com-
pany was established, and it ha3 a great impact on British industries. The
reason for this was that on top of the aconomic depression in Europe was added
the offensive of the U.S. products, with devaluation of the dollar in the back-
ground, and this led to deterioration in Che synthetic tex tile and petrochemical
divisions. Many U.S. chemical manufacturers are leaving Europe and, contrarily,
European manufacturers are increasingly moving into the United States to "hedge"
their risks. 26
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The price of ethylene, the primary raw material for petrochemicals, is slightly
above 100 yen per kilogram in the United States and about 70 yen in Canada;
in contrast, it is about 170 yen in Japan. There is an overwhelming difference
in the cost-competitive power. This is because Japan for its raw material uses
naphtha, whose price is increasing along with that of crude oil, while the
United States uses cheaper natural gas as the raw material for 70 percent of
its ethylene production, and the price of the rest--viz, naphtha--is regulated
at a low level. In addition, cheaper costs for energy such as electricity
have further added to the U.S. competitive power.
The Majors' Strong Determtnation To Invest
' In the United States, crude oil price controls, started under the Republican
administration in 1972, will be removed by October 1981. Thereby, it is fore-
cast, the [American] price of naphtha, which is cheaper than the international
market price, will gradually approach the international price. At the moment,
however, price controls on natural gas, the major raw material, are expected to
continue until 1985; therefore, the [U.S.] advantage in terms of cost will con-
tinue at least until then.
Within the Japanese petrochemical industry, most see that U.S. superiority will
continue even after decontrol. There is the view that "if, like Japan, the
chemical companies affiliated with the majors would use imported crude oil
after decontrol, it would be a different matter; but since they will be using
- their own natural gas and oil, we ought to say that, in comparison with those
; who import, their advantage in terms of cost will continue." (Umino, managing
I director, Toyo Soda)
In the U.S. petrochemical field, those chemical companies that are affiliated
with the majors already control high shares--slightly less than 60 percent of
ethylene, slightly less than 80 percent of propylene, and from 30 to 40 percent
in high pressure and meditmm-low pressure polyethylene; furthermore, they are
prepared to activa*_e new investments, and [in the process] they are arousing a
precautionary attitude within Japan's [petrochemical] industry.
Reinforced Capability Depends on Overseas Projects
What would happen if the U.S. superiority in cost competition were to continue?
Dow Chemical announced last November that it would begin exporLing to Japan
500,000 tons of ethylene oxide (vinyl chloride intermediate raw material) which
corresponds to 40 percent of the annual demand of the same in Japan. However,
if this is realized it will greatly influence not only the vinyl chloride in-
dustry but also the entire chemical industry. This is because "in Japan, nearly
20 percent of the ethylene and over 30 percent of the chlaride are consumed in
the production of vinql chloride. Therefore, if [production of] vinyl chloride
becomes unnecessary, the balance of the entire chemical industry will collapse."
(Shigenari Suzuki, managing director, Toa Gosei Chemical Industry, Co, Ltd)
Every chemical company has begun to move toward new overseas projects, after
having read these large trends in the area of raw materials.
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"Ninety percent of the Japanese petrochemical plants are deteriorating. To re-
vive them, is it more advantageoua to improve them domestically or abroad?
Domestically, we should deemphasize the 'scrap-and-build' [approach] and look
to strengthening our capability in overseas projects." [Takeshi Hijikata,
president, Sumitomo Chemical Co, Ltd)
"The basic chemical products of petrochemicals have lost their international
competitive power. From now on, we have no choice but to expand in countries
where we can obtain cheap natural gas and energy and where there are no country
risks! As for domestic facilities, we must not strain ourselves but must seek
to coexist so as to produce profits." (Seiichi Matsubaya, president, Mitsui
Toatsu Chemicals, Inc)
The newly planned overseas pro3ects share special features which can be called
the "New Three Principles in Overseas Ventures." They are: (1) aim for elimi-
nation of naphtha as a raw material source and secure natural gas by any means;
(2) in order to avoid country risks, establish projects in advanced countries;
and (3) based on the premise th3t the basic products produced abroad will be
brought back to Japan, more away from the present policy of concentrating on
overseas markets.
~ In the first half of the 1970's, overseas ventures in oil-producing countries
were, on the whole, carried out in the form of economic cooperation, with an
eye on the crude oil "given" in return. As against this, it can be said that
the new type of overseas venture is, for all inten.ts and purposes, a strategy
worked out to save the Japanese petrochemical [industry] from becoming extinct.
The Japanese petrochemical [industrq] has a certain strength: "It has grown in
a neat pyramid-shaped form. Its operation and quality of labor, both upstream
and downstream, are the best in the world." (Hachiro Iyama, managing director,
C. Itoh & Co, Ltd) If the basic chemical products can be secured stably and
at lower prices,then it is not a dream [for Japan] to surpass the United States,
as it has done in the steel and auto industries.
[6 Jan 81, p 10]
_ [Tex-L.] Since the latter half of 1980, the Japanese petrochemical industry has
been continuously beset with problems both at home and abroad: a slackening in
_ domestic demand and a tough battle in the export market.... In the background
there lies the big problem common to the industry, that of international compe-
titive power.
Defeat in the Southeast Asian Market
"We can compete sufficiently with the United States and Europe in the Southeast
Asian market in the area of all-purpose resin products, such as high-pressure
polyethylene, if the price difference is less than $50 a ton. Last spring,
U.S. products stormed the market at a price under $1,000 a ton, while Japan was
exporting at $1,100, and finally super�-inexpensive products priced between $700
and $800 appeared on the market. The best Japan can do is to break the $1,000
29
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barrier." (Staff inember in charge of exporting all-purpose resins) "Early
(last) fa11, just as inexpensive U.S. products converged [on the market];
Canadian ethylene glycol (EG) appeared. In one stroke, [the Canadians]
lowered their price by as much as $100 per ton. Japanese salesmen turned
deadly pale, and the so-called 'Canadian shock' still lingers." (An execu-
tive of an EG manufacturer)
Insofar as the Southeast Asian market has been recognized as "Japan`s back-
yard," its defeat there has had a great impact on Japanese industry. Although
Korea and Taiwan have begun to attain self-sufficiency in supplying petro-
chemical products, 20 percent of total Japanese production is still sold in
the same market. [The problem] is not limited to the export market; basic
chemical products such as atyrene monomer, E0, and EDC (ethylene dichloride)
from abroad are ent ering the Japanese market at a rapidly increasing rate.
The sense of crisis caused by the drop in competitive power is felt strongly
in the area of "ups tream products," where ethylene has a comparatively high
rate of use, requires less proceasing, and yet is easily transportable. The
EO industry says that it has hit "bottom," as "the operating rate of the en-
tire industry has dropped by 50 percent from that of the previous year." "In
order to produce 1 kilogram of EDC, an intermediate raw material for vinyl
chloride, 0.6 kilo gram of chlorine and 0.25 kilogram of ethylene are used.
The cost of producing EDC in Japan is 75-80 yen a kilo, but vinyl chloride
manufactur.ers can obtain imported EDC fr.om America at 55-60 yen," says the
vinyl chloride industry, stunned by the gap in prices.
Today, it is the United States which is sweeping the world's petrochemical
market. Next to the United States, Canada is drawing attention. The United
States and Canada p rincipally use ethane recovered froua natural gas as the raw
material for their petrochemicals; on the other hand, Japan and Europe use
naphtha. It can b e said that "petrochemicals have entered the age in which we
can expect a head-on collision beCween natural gas base and naphtha base."
(Tetsuro Ob a, direc tor, Mitsubishi Petrochemical Company Ltd)
According to a survey conducted by the Japanese industry in the United States,
- 70 percent of the raw materials for petrochemicals come from natural gas, and
30 percent come from naphtha. In Japan, 96 percent come from naphtha, and
in Europe, too, nearly 90 percent come from naphtha. When we compare the
June 1980 price of ethylene, one of the basic chemical products, we see that
it costs 110 yen pe r kilogram in the United States, 180-190 yen in Japan, and
about 160 yen i.n Europe. We can say that this price gap derives from the dif-
ference in the pri ces of raw materials at the time of purchase. In the United
States, for example, ethane, recovered from natural gas, costs 45 yen (1 kilo-
gram) and naphtha 60 yen. Naphtha in Japan costs 84 yen, which is 7 yen higher
- than in Europe. Consequently, Japan is using the "world's most expensive" raw
material. It is s aid that Canadian natural gas costs 30-40 percent less than
that of the United States.
The prices of raw materials in the United States are outstandingly low among
the advanced count ries. This is because [the prices] are supported by "energy
price controls." Beginning with the first oil shock, [prices of energy sources]
30
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were, one after another, incorporated into the commodity price control [system].
Since then, decontrol has taken place, but because crude oil, gasoline, and
natural gas have a great impact on public demand, they are still controlled.
Hope Is for U.S. Decontrol
Although the United States continues to set priceh which are considerably lower
than the international level, there is worldwide oil conservation. With such a
trend in the background, the United States has begun to abolish controls and
adopt a policy of establishing "energy prices" comparable to those on the in-
ternational level. This "decontrol" of prices is being eyed closely by the
world's petroleum and petrochemical industries. Decontrol of petroleun prices,
which started in June 1979, means that consumer price, established by the U.S.
Governtnent by pooling both damesCic and imported crude oil, will be brought
cZoser in stages to the international import price. The prices established by
the government will be set every quarter, and decontrol will become effective
as of 1 August 1981; thereafter, the prices will be determined in the free
market.
For the first quarter of 1980, [U.S.] damestic crude was at $21.02, imports at
$32.19, and the government-set price at $25.93. It is expected that by the end
of September 1981, the gap between the import price and government-set price will
be resolved. Decontrol of natural gas is expected to follow--sometime between
1985 and 1987.
"If U.S. raw material prices approach the international level, there is a chance
that Japanese petrochemicals may win the competition. There is no prospect of
increasing facilities for natural gas production beyond the present level, but
those for naphtha will increase in the future." In this way, some Japanese
petrochemical companies are hopeful that the price gap will be reduced after
decontrol; however, it appears that those who pin their hopes on the work of
others are in the minority.
"It is premature to ,judge that U.S. oil and gas [prices] would suddenly reach
the international level after decontrol. The increase in U.S. [oil] prices
will lead to the drilling of heretofore 'dormant wells' and, therefore the
quantity of cheaper domestic crude oil will increase and the price hikes will
be checked. In addition, chemical companies have secured the': own wells and
have moved into the area of resources. Consequently, the strength of the
United States will be the same." (Tashio Iijima, managing director, Mitsui &
_ Co, Ltd)
Since Japan has to import all of its crude oil, it is unavoidable that [the
price] of naphtha will increase further as crude oil prices increase. The
price of naphtha in Japan has more than doubled in the past 2 years. As a re-
sult, the fluctuation expenses in the production cost of ethylene have reached
80-90 percent; it is painful that [Japan's petrochemical industry] is so struc-
tured that it is directly responsive to price hikes in raw materials and fuel.
31
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(6;
117~JT (6f ~~MA31i~ ~ e ~ItktEZ
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Desperate Search for Survival
Japan-U.S. Comparison of Major Resin
Exports to Southeast Asia
(Southeast Asia includes the five ASEAN
countries, Hong Kong, Taiwan and Korea)
Japan
United States
High pressure polyethylene
10,000 tons
1978
1979
Jan-June 1980
Medium-low pressure polyethylene
Polypropylene
In the area of derivatives, where high prices are paid for raw materials, and
where competition is keen both at home and abroad, a desperate search for sur-
vival is now under way. If the differences in the cost of raw materials between
[Japan] and the United States cannot be minimized, the situation will become
even more serious.
The gap [in prices] is so large that Japan cannot hope to compete even in the
competition for quality-- the area in which we are goo d. Nor can we find any
technological innovation which would eliminate such a gap." (Koji Kishida,
director, Quality Control Department, Showa Denko K.K.) The situation is
such that trading firms are advocating conversion from domestic to overseas
production of ethylene-EDC, VCM (vinyl chloride monomer), methanol, EG,
ammonia, and polyethylene products wlth low degree of processing.
The giant U.S. chemical companies, too, are boldly attacking Japan's weak
points. "Dow would like to supply a large voltane of EDC, VCM and sodium hydrox-
ide. I believe this is significant for Japan's 'downstream' enterprises iYi
terms of securing their competitive power." (R.W. Lundeen, vice president,
Dow Chemical Company, headquarters). Thus [Dow] has already revealed its stra-
tegy of aiming exclusively at the Japanese market.
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"The question of raw materials means everything to petrochemicals. I am flab-
bergasted when I hear the cost in America. We have no choice but to survive
by choosing a way in which we can procure a cheaper material and produce final
products (resin) where our technological strength lies." (Shintaro Odagiri,
president, Shin-etsu Chemical Industry Co, Ltd)
Naturally, in addition to comprehensive petrochemical companies, such manufac-
turers of derivative products as Asahi-Dow and Toyo Soda Manufacturing Co, Ltd
are also moving toward procuring raw materials abroad. The Japanese petrochem-
ical industry emerged about 20 years ago; it is young and, at the moment, it
faces a structural ordeal.
[7 Jan 81, p 9]
Ventures in Advanced Countries Is the New Rule
The chemical base projects which have recently surfaced in succession are all
based in advanced countries surrounding the Pacific Ocean; these include the
Alaska Pro3ect of the Mitsubishi Group and Asahi.-Dow, the Canadian Project of
the Mitsubishi Group, the Southern Australia Project of Mitsui Toatsu Chemicals,
Inc and Asahi Chemical Industry Co, Ltd, and the Texas Project of Toyo Soda
Manufacturing Co, Ltd. We may regard this as a result of reflec ting upon the
question of investment security brought about by the difficulties encountered
in the Iranian Petrochemical Project, and upon the local conditions for trans--
ferring products back to Japan. "Aim for cheap natural gas and energy in the
advanced countries around the Pacific Ocean!" is now becoming the new rule
for the chemical industry of Japan in making overseas ventures.
"The principal premise of overseas projects is the availability of cheap re-
sources and energies; however, we-`ve had enough of those countries with coun-
try risks." (Executive of Mitsui-affiliated chemical company)
"As long as that kind of situation continues in the Middle East, it is only
natural for our capital to move toward safer areas." (Kanao Nakamura, manag-
ing director, Industrial Bank of Japan, Ltd)
The "failure" of the Mitsui Group, headed by Mitsui & Co, Ltd, in the Iranian
Petrochemical Project has clearly shown the Japanese chemical industry the
danger of country risks. It is more than natural that chemical industry execu-
tives have recently begun to stress: "Absence of a country risk is a necessary
precondition for overseas ventures" (Chairman Horifuka, Asahi-Dow), and:
"Although securing cheaper raw material sources is indispensable, it must be
done in stable countries." (Narinao Awawa, president, biitsui Pe trochemical
Industries,Ltd)
A section of the Marunouchi district in Tokyo is commonly called "Mitsubishi
Village." An executive of the Mitsubishi Group discloses his true intentions
concerning the Saudi Petrochemical Project: "Saudi Arabia, too, has a country
risk. Our project there is a national project, a part of Japanese petro-
diplomacy, and the Mitsubishi Group is merely playing the role of a receptionist.
33
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Therefore, in the case of the Saudi [Project], we are adopting a system where-
by losses and gains are shared by the participating enterprises as a whole."
- He also adds: "We would like to put in our own efforts in Alaska and Canada
so as to find a way out for the petrochemicals whose cost competitiveness has
been declining." These statements tell us explicitly the differences in
priority,as seen by the Mitsubishi Group, between the Saudi [Project] on the
one hand and the Alaska and Canada [projects] on the other.
' Difficulties in Singapore
Di�ficulties have arisen in the Singapore Project, another large-scale petro-
chemical project in addition to those in Iran and Saudi Arabia. Negotiations
on the price of ethylene are facing rough going between Sumitomo Chemical Co,
Ltd, which is in charge of the Ethylene Center, and the Singapore Government,
on the one hand, and, on the other, the four companies in charge of production
of derivatives, i.e., ethylene glycol (EG); these are the Mitsubishi Petro-
chemical Co, Ltd, Nippon Shokubai Kagaku Kogyo Co, Ltd, Mitsui Petrochemical
Industriea, Inc and Nisso Petrochemical Industry. The four EG companies in-
sist: "Since cheap Canadian EG is flowing into the Southeast Asian market, we
cannot make a profit unless the supply price of ethylene is reduced."
The Singapore Project, which, like Japan, uses naphtha (crude gasoline) as the
initial raw material, appears greatly disturbed by the Canadian produr.ts based
on cheaper natural gas. Mitsubishi Petrochemical, especially since it now has
a Canadian project based on natural gas, must feel tempted to transfer its EG
production from Singapore to Canada. Accornpanied by crude oil price hikes,
the Singapore Project has begun to reveal its character "as lying somewhere
between a project based in a resource-based country and one based in a con-
sumer-based country." (Executive of a major chemical company)
"We would like to come to an agreement on the EG problem through compromise.
The Singapore [Project] is a strategy which takes into consideration the future
of the Shinkyohama (Ehime Plant). If in the future we are to get involved in
the petrochemical [projects] abroad, it would not be in a developing country
but in an advanced country." (Takeshi Hijikata, president, Sumitomo Chemical
Industries, Inc)
The reason for the concentration of recent new chemical projects in advanced
countries surrounding the Pacific Ocean is not just limited to the problem of
country risks. Geographical advantages also play a large part in bringing
basic chemicals back to Japan as intermediate raw materials, and there are
the advantages of cheaper natural gas and electricity. It appears that the
world's major chemical [companies] are scrambling f or natural gas reserves.
For instance, in the case of natural gas found in the North Sea oilfield,
which will be drilled after 1985, the "local" British ICI (Imperial Chemical
Industries) and the U.S. Dow Chemical Company have already started a fierce
competition.
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