JPRS ID: 10332 JAPAN REPORT

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• Collection: JPRS
• Document Number (FOIA) /ESDN (CREST): CIA-RDP82-00850R000500030041-8
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• Document Creation Date: November 1, 2016
• Sequence Number: 41
• Content Type: REPORTS

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JPR~ L/ 10332
18 February 1982
Ja an Re or~
p p
CFOUO 1 i /82)
FBiS FOREIGN BROADCAST I~I~rORMATION SERVICE
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JPRS L/10332
18 February 1982
i
~
~ JAPAN REPORT
~
_ cFOUO il/82)
CONTENTS
POLITICAL AND SOCIOLOGICAL
Formation of New Suzuki Government Probed
(YOMIURI SHIMBUN, various dates) 1
SCIENCE AND TECHNOLOGY
Recent Japan-Ccmmunist Bloc Business Deals Reported ,
(NIKKEI SANGYO SHIMBUN, 5 Dec 81)..... 11
Soviet Robot Trade Fair
FMS Export to Bulgaria
U.S., Japanese Semiconductor Industries Compared
(Hiroshi Semi; DENSHI GIJUTSU, Nov 81) 14
Ajinomoto's Biotechnological R&D Activities Described
{Kazuaki Taya; SHUKAN BIRION, 6 Nov 81) 23
- a - [III - ASIA - 111 FOUO]
F(1R (1FFTf T e i f fCF ~1NT V
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POLITICAL AND SOCIOLOGICAL
FORMATION OF NEW SUZUKI GOVERNMENT Y?OBID
Tokyo YOMIURI SHIMBUN in Japanese 2, 3, 4, 6, 8 Dec 81
~ ~A~ticle: "Examination of 1981 Cabinet Reshuffle"]
[2 Dec 81 p 2]
.
[Text] Will Prime Minister Suzuki be reelected or will there be a new president of
the party? The reorganizacion of the cabinet and appointment of party officials
point toward the "Liberal Democratic Party's Showdown in 1982" which will take
- place 1 year hence. The reorganization and appointments give the impression of a
victory for the Tanaka forces symbolized by the advent of Mr Nikaido as secretary
general of the party. However, even in the�case of these personnel assignments,
which give the impression of a revival of the "Kakuei government," the outcome of
' the moves is lef*, to be seen later on. The verdict on the All Japan Airlines
connection in the Lockheed incident is scheduled for the beginning of the new year.
' The critical stage has arrived for administrative and fiscal reforms. Moves will
be made by Nakasone (director general of the Administrative Management Agency),
Komoto (director general of the Economic Planning Agency) and new leaders. It is
safe to assume that, as Fukuda (the former prime ministEer.) points out, there are
"signs of general turmoil" in the political situation. We shall try to trace and
examine the reorganization of the cabinet and the appointments to party posts which
contain the seeds of future developments.
"There.were those who said to stand firm and there were telephone calls whicli c~lled
me a fool or said I was tainted. I regard both as incentives for which I am
grateful...."
These worc~,s of Mr Nikaido, who had put in 5 years of loyal service since being
branded as a suspect official in the Tockheed incident in the Diet in November 1976.
What emotions might have been in his heart as he went into the first press confer-
ence.given by the newly appointed top officials oF the Liberal Democratic Party
just after 1230 on 30 November at Liberal Democratic Party headquarters, there was
no way of knowing, at least not from his face, ~fi ich showed no concern and suppressed
- all emotion.
Kakuei Tanaka (the former prime minister) grzeted the day in very fine spirit5.
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"The newspapers say that Mr. Suzuki (the prime minister) is craftier than Ohira (the
previous prime minister) was and this is completely right."

_ "Mr Suzuki and Mr Nikaido are identical. Whichever is pryme minister, it would be
the same. (With Nikaido as secretary general) the rails are laid for Suzuki's re-
election, and therefore this government will last a long time."
Tanaka. reportedly fired o�f one comment after another in his characterist~c gravelly
voice to a group of vi_~itin~; Diet members, which included (former minister of inter-
national trade and industry) Masumi Esaki who had been a candidate for the post of
foreign minister.
At just~about t~~ same time that Nikaido was bathing in the camera lights at the
much publicized press conference, another "suspect official," (f ormer vice chairman
of the Policy Affairs Research Council) Mutsuki Kato, before being persuaded of
Mr Fukuda's wishes by (Hikari Fukita) (former private secretary to Nobusuke Kishi),
' had, in a nearby office of the Fukuda faction been on the point of drowning himself
in tears of remorse in despair of getting a cabinet position.
This is'a contrast between "light" and "dark" demonstrated by Nikaido and Kato.
It may.,be possible to say that this contrast has given us a glimpse of~the real
nature of the Suzuki government as a system of balancing devices.
~ ~
The backing of strength is with Tanaka, who is supported by a force of 106 persons;�
this is not to say that Fukuda's strength compares unfavorably. Nevertheless, ~
although there is talk of a balance between Fukuda and Tanaka, this is probably no
more than a typical pr.etext by Suzuki, who is trying to maintain harmony in the
party and also to secure the ruling power.
'Che statement (by an executive in the Suzuki faction) that "of course the strength
and number of the Tanaka faction would be important if we were looking toward re-
election" serves as evidence,.
There was also a self-confident statement of feeling (from an executive of the '
Tanaka faction) who said: "What did Mr Fukuda do at the time of the 40-day dispute
or when the motion of nonconfidence in the cabinet was passed last year? From
Mr Suzuki's standpoint the difference between Tanaka and Fukuda is self-evident."
/1t 9:30 that morning, Fukuda had a final session on the Kato question with Suzuki,
who had come to pay a courtesy call at Fukuda's private residnece at Nozawa in
- Tokyo.
Cukuda said: "What happened to Mr Kato's recc~ving a post in the cabinet? There
was, I believe a request made earlier."
Suzuki answered: "I want to put that off this time as far as the cabinet is con-
cerned., I will ~ive him a party post."
= Fukud.a replied: "As far as the question of being suspect ~s concerned, I am un-
convinced by the idea that tr~e post of secretary general of the party is open but
a position in the cabinet is not." ~
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Suzuki said: "The party and the cabinet are different."
There is pressure built up in connection with the handling of Nikaido and Kato.
Furthermore, the way Suzuki has acted in regard to the handling of suspect officials,
where public opinion is severely critical, can be described, as even Tanaka says,
- in the single word, "crafty." By cutting off only Kato, Suzuki has emphasized the
issue.
Looking only at the superficial phenomena, it might seem as though "there are cracks

� in the Suzuki-Tanaka-Fukuda arrangeme~~t" and that "Fukuda has dropped out of the
mainstream." However, Fukuda is a man of great experience who led his awn govern-
ment and, as Tanaka's rival, kept the Liberal Democratic Party internally divided
in two for many years. He knows very well where the heart of the three factions
making up the power called the Suzuki system is to be found.
One day in late September, Fukuda expressed the following views to a close associate
who visited his private residence.
"With his eye on reelection, Mr Suzuki will probably increase his old leaning toward
Tanaka. It is safe to assume that he will also prepare his forces for the coming
storm (judgment in the Lockheed case, etc) and ask for Nikaido as secretary general
- of the party. Nikaido is a straightforward person and it will not matter that he a
becomes secretary general. 'Balance' will be the problem."
Mr Nikaido becomes secretary general by a quick, clean decision with no particular
opposition within the z?arty,while a heartbroken Nr Fukuda has been made to play a
profitless role, that of seeming to have argued for inclusion of Kato in the cabinet
while preaching political reform.
Later that day, fa: from the whirlwind blowing around the prime minister's residence
and the uproar in the Diet, Mr Fukuda was riding through the middle of town in the
gathering dusk. He assumed the pose, arms folded and eyes closed, which he always
assumes when thinking ahout things, and began to listen. Reportedly, what he heard
was the following radio news commentary discussing the reorganization.
"Prime Minister Suzuki's personnel actions whi~h put Mr Nikaido of the Tanaka fac-
tion into a vital party post are unconvincing to former Prime Minister Fukuda, who
had made a scene over inclusion of Mr Kato in the cabinet. It can probably be
said that everything in the reorganization went Mr ~'anaka's way."
[3 Dec 81 p 2]
[Text] In the final analysis, Nikaido's assumption of office as secretary general
of the Liberal Democratic Party, to which (former P,rime Minister) Fukuda acquiesed,
had been (former Prime Minister) Tanaka's objective from the start. When did the
prime minister resolve to play this dangerous card and through what process did
Fukuda and Tanaka come to a tacit understanding regarding Nikaido?
' On the morning of 17 October, during the (Shichikendo) festival which was held at
the former residence of Shigeru Yoshida at Oiso in Kanagawa, Tanaka, who apparently
had arrived early and had to wait for Suzuki who came latE, disappeared with Suzuki
into one of the rooms of the Yoshida residence.
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`I'he two men are~said to have sat beside ene another on a sofa and to have eaten
candy while they talked. The conversation las*ed about 10 min~ites.
Tanaka said; "T am willing to cooperate with you on your reele;ction."
Suzuki saici: "I would ~e much indebted to you."
Tanaka saici: "However, I would like you to do something appropriate for Nikaido."
Suzuki answered: "That is no cause for concern. Please, leave it to me."
Tanaka was in good spirits. That evening he spoke to the leadino people of his
faction who had come t6 his home at Mejiro in Tokyo. "It i~:~`d~~ided that Nikaido
~ will be secretary general. Next year. with Nikaido, we wsll be prepared for the
. election. Then, the yeax after next, there will be t:~e double election for both
houses of the Diet."
The first one to catch on to the "plot" in this talk between~Suzuki and Tanaka was
"sharp-eared Rokusan"--(Chairman) Rokusuke Tanaka (of the Liberal Democratic Party's
Polich Affairs Research Council) who belonga to the Suzuki factions. At the time,
Rokusuke Tanaka observed: "It seems to have been a very important consultation.
Even Kakuei Tanaka spoke fre~:i.y."
The Tanaka faction, having made it definite that "Nikaido would be secretary general,"
turned around and began a diversionary tactic by spreading the false report that "it
would be fine for Nikaido to remain in the position of chairman of the Executive
Council; the question is one of having four new people in the cabinet."
~
The decision on the All Japan~Airlines connection in the Lockheed incident was
coming up. Then, the verdict on Tar_aka would be given around November of next ~
year. Finally, the prized post of secretary general had been captured to protect
the party and the faction from a whirlwind of confusion. Even with great reserve,
onP could probably say this was very much to be expected.
Tanaka is said to have first talked about "Secretary General Nikaido" on the evening
of 11 Novernber at a meet~ng with (former Director General of the Defense Agency)
Shin Kanem;3ru, (former Minister of Finance) Niboru Takeshita and (former Minister
of Health and Welfare) Tatsuo Ozawa.
- rukuda tended early toward the thinking: "If the secretary general is to come from
the Tanaka faction, Kanemaru would he best, but if that is not possihle it will have
to be Nikaido; we will not fight." However, Fukuda tried to avoid expressing this
attitude in public.
- This was probably because Fukuda had the faint expectation that "Suzuki might act-
ually intend to favor Tanaka, who is saddled with the Lockheed affair, and might
play the Nikaido card" (sources close to Fukuda). Fukuda repeatedly held talks
about political reform and elimination of the concentration of power. Possibly
because of misreadings of Fukuda's mind~, false rumors circulated within the Liberal
Democratic Party to the effect that "Fukuda seems opposed to Nikaido" and "Fukuda
wants Abe or !:anemar~i" for Minister of International Trade and Industry.
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~ On 25 November, after (llirector Ceneral uf the A~ministrr~tive Mcin~bement A~eiicy)
' Nakasone, (Director General of the Economic Planning Agency) Komoto, (Director .
- General of the Science and Technology Agency) Nakagawa aad others in the party had
been convinced to accept Nikaido, a messenger came from Fukuda to the camp of
Kanemaru, who was both friendly and a leading official in the Tanaka faction.
"Mr Fukuda considers that Mr Kanemaru wnuld be ideal as secretary generali but.he
is not opposed to Mr Nikaido for that post."
It seems that, from the start, Fukuda did not have Abe in mind. Kanemaru declined
politely as follows: '�Thank you very much for your attitude. However, there is
a question of seniority involved in the matter. The stability of the faction will
be upset if Mr Nikaido is not chosen."
The messenger then reported Fukuda's wishes to Nika~do.
It will have to be Nikaido; we will not opp~se Tanaka again. This�"harmonious"
reaction on Fukuda's part at this time is not necessarily complete acceptanc:e of
the status quo.
Looking at the undercurrent of "great confusion on the earth," of which Mr Fukuda
speaks, one has a lingering sense of the fact that he alone has not stained his hands
in any way in the playing of the Nikaido trump card, which could have good or bad
consequences.
It is not without reason that the Tanaka Side is wary. They say: "In the future
Fukuda must be watched."
[3 Dec 81 p 2]
~Text] There are two keys to understanding the secrets in the heart of (former
� Prime Minister) Takeo Fukuda which eluded those who had expected the old f.ight be-
tween Fukuda and Tanaka to f lare up again. One is the idea of "dealing with all
internal and external situations with the whole party as one entity" which Mr Fukuda
never tires of repeating. The other is the long-cherished desire for a"restora-
tion" of Fukuda which is still at work deep inside the political world.
(Director General) Ichiro Nakagawa (of the Science and Technology Agency) analyzes,
as follows, Fukuda's attitude in accepting Nikaido as secretary general of the
Liberal Democratic Party:
"He is tired of fighting. In the 40-day contest the year before last and at the
time of (then) Prime Minister Ohira's death, Fukuda provoked the fight. Mr Fukuda
is probably tired."
Mr Nakagawa himself seems to have had a secret blueprint in the early stages of the
drama of this reorganization. According to people connected with him, the blue-
print was this:
"If the Tanaka faction proposes Nikaido as secretary general, the Fukuda faction
will push Shintaro Abe for Minister of International Trade and Industry as a rival
candidate. The two will cancel one another out and (former Director General of the
Defense Agency) Kanemaru, who is a leading official in the Tanaka faction, will
rise quickly to the surface.
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Nakagawa appruached Fukuda and Kanemaru, the person selected, with this concept.
However, Kanemaru, having learned from experience in friction with (former Prime
Minister) Kakuei Tanaka, did not go along ~rith the idea, and Fukuda reportedly
only laughed. '
Last year at the time of the elections to both upper and lower houses of the Diet
which were complicated by the passage of the ~resolution of nonconfidence in the
cabinet and the sudden death of Prime Minister Ohira, there was a conspiracy among
Fukuda, ~(former Prime Minister) Takeo Miki, (Director General of the Economic
Planning Agency) Toshio Komoto, Nakagawa and Abe.
It is said that with the idea of a new party organization this conspiracy had gone
as far as primately deciding on a lineup which would have had "Komoto as president,
Abe as vice president, and Nakagawa as secretary general." Fukuda and Miki had been
expected to hold posts as advisers. However, this plan, too, which went to the
very last moment, was utterly destroyed by a word from cautious Mr Fu.kuda.
Fukuda said at one point: "It would be awkward to fight. Please wait until Mr Ohira
has been dead for 49 days." It is safe to say that in these words there was already
an original image of Mr Fukuda's psychology in not opposing Nikaido to the point of
engaging the Tanaka forces in a fight.
Despite repeated disavowals by Fukuda, the argument for his restoratian is deep
rooted and does not go away. The more Suzuki and (former Foreign Minister) Sunao
Sonoda commit blunders i.n foreign affairs, the sharper the jabs from sympathizers
(former Prime Minister) Nobusuke Kishi and Fukuda. "We will have a post-Suzuki
transition from Tanaka to Fukuda." "Suzuki seems to intend to keep going. He will
have to learn his place." (Kishi)
(Chairman Rokusuke) Tanaka (of the Policy Affairs Research Council), who is a
member of the Suzuki faction but is also close to Kishi, has given warning signals
about these symptoms and has urged Suzuki to be careful. He has told Suzuki:
"(Mr Fukuda) is very interested). He will be dangerous next year."
While Kanemaru is a Yeading member of the Tanaka faction, he is a person whose
sympathies are m~re with Fukuda than with Suzuki. He certainly senses this whirl-
wind of speculation which surrounds Fukuda and, on ] November, finding himself
sharing a seat with P'ukuda on the Bullet Train, he pressed for information.
Kanemaru said: "There is someone who came to me and said that Suzuki is bad for
Japanese-American and Japanese-Kor?an re.lations and that you would be the best in .
- the~? areas. What this person says...."
Fukuda said: "Japanese-American and Japanese-Korean relations are worrisome and
this cannot be helped. However, at this time the whole party should work as one
rather than create a commotion."
Kanemaru's decision at this point in time was" "That is not what he wants." How-
ever, there is a year left before the party president's term expires next November.
But what if the political situation were to be convulsed by difficult problems in
foreign affairs and the verdict in the Lockheed affair, Suzuki were to falter and,
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on top of that, moves by Komoto and (Director General) Yasuhiro Nakasone (of the
Administrative Management Agency), who are aiming at a post-Suzuki government= were
suddenly to be compounded? Tr~re would be no basis for nipping a restoration of
Fuktida in the bud .
What would the largest force in the party do then about its obligation(?) to Fukuda,
who quietly allowed Nikaido to become secretary general? The choice which Fukuda
make in these personnel assignments contains many possibilities.
Miki, once Fukuda's staunch friend, is now thinking very hard: "So, Fukuda maiie
no move. Then there is something fishy."
[6 Dec 81 p 2]
- [Text] Did (Prime Minister) Suzuki's heart ever waiver after he had settled with
(former Prime Minister) Tanaka on lb Octobe~r~ (at the Suzuki-Tanaka talk at
(Shichikendo) that Nikaido was to be secretary general of the Liberal Democratic
Party? It is probably correct to think that Suzuki did waiver.
This would have been during the period following the shocking testimony of Enomoto's
former wife (26 October~ regarding the Lockheed affair and the Osano verdict, which
- left a premonition of a conviction in Tanaka's first trial.
"That is distressing," said (former Minister of Health and Welfare) Kunikichi Saito,
a leading member of the Suzuki faction. If Saito was nervous about what (former
Prime Minister) Fukuda's side would do, the fact ~as substantiated when speculation
circulated from those around the chief cabinet secretary, Miyazawa, who said: "The
prime minister is worried about psblic opinion," and "now Nikaido is finished."
Fortunately for Suzuki, Fukuda was in Beijing just at the time Enomoto's former wife
appeared in court as a witness.
The situation was right for blocking Nikaido but, besides being absent, Fukuda had
no means of breaking through the common front presented by Suzuki and Tanaka.
Suzuki, who sensed thai, public opinion aside, the spirit of opposition to Nikaido
inside the party was extremely weak, suddenly became bullish.
In mid-November, he had the following conversation with an old friend who had come
to visit at his home in Tokyo.
The friend: "There are too many prohlems involved in using Nikaido. The judgment
on the All Japan ~~rlines connection with the Lockheed affair and the verdict on
Tanaka will probabl}~ take place next year. Can you get through that difficult
situation with Nikajdo at the forefront of the party?
Suzuki, facing '~o the side, said nothing.
The friend: "Would you, as prime minister looking for reelection, not be hurt,
too?"
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Suzuki: "It is all right. Nikaido has suffered as he has (because of the ques-
tion of being suspect in the Lockheed affair). Is that not enough?"
Suzuki's firm resolve was in time communicated to Fukuda, of course, as well as
those such as (former Prime Minister) Miki and (Director General of the Science and
Technology Agency) Nakagawa who are inclined toward rebellion.
For Suzuki, then, was the selection of Nikaido a matter of accepting, without
recourse, an order thrust upon him by Tanaka? On the evening of 21 November a
leading member of the Suzuki faction talked about the situation in this regard.
"From the prime minister's point of view, the big problem is the existence ~~f the
Fukuda-Tanaka situation. Moreover, Fukuda wants very much to return to power. On
th~ other hand, the Tanaka faction has its hands full with the Lockheed affair. In
such a case, was the best policy not to aim at reelection by promoting Nikaido for
the secretary general's position? Nakasone and Komoto are not considerations."
This is not the only thing in the picture. In Nikaido, Suzuki will have a powerful
weapon who is close to (Chairman of the Komeito) Yoshikatsu Takeiri and (Chairman of
the Democratic Socialist Party) Ryosaku Sasaki and who can talk frankly with them
about a political reorganization which would include the Liberal Democratic Party
and political centrists.
The roots of plans of this kind of Liberal Democrats and centrists go deep. (Former
Prime Minister) Ohira and Suzuki both participated in this plan with Nikaido in the
past. Bearing in mind the difficulties of the past, the 40-day struggle and the
passage of the resolution and nonconf idence in the cabinet, might Suzuki not have
confidently played the trump card of making Nilcaido secr.etary general, with the idea
of getting sufficiently in step with Tanaka and then also drawing the political
center into his cam~ to stabilize the political situation?
If this were accomplished, the chances for Fukuda's coming back would be dead, and
even on the brink of a breakdown in the party, danger could be avoided.
Nikaido does not try to say a lot about contacts with the political center; he
merely says: "We live in the same Japanese economy, so...."
On 27 November, (former Prime Minister) Nobusuke Kichi, who is close to Fukuda,
erupted in criticism of Suzuki, who had moved ahead with a bold strategy for reelec-
tion with Nikaido as his trump card in the post of secretary general.
"Why make personnel changes? I do not understand the reasons. It is fine to re-
place (previous Foreign Minister) Sonoda because his thinking is not in agreement
with Suzuki`s or if there is some other purpose, but...."
"So Suzuki is still at it. Next year he will have been in office 2 and 1/2 years.
- That has to be considered unexpected good luck."
It may be that Suzuki, who has looked not on:.y within his party but also among the
political centrists, is the one who clearly sees into the mysteries of the current
era.
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[8Dec81p2]
[Text] It was 1 pm on the afternoon of 29 November, the day before the reorsaniza-
tion of th~: cabinet. (Chairman of the Liberal Democratic Party's Policy Affairs
Research Council) Rokusuke Tanaka was watching the television program Amateur
Singers on the Air, when his telephone rang.
"Is that you, Rokusan? I want to ask you to be chairman of the Policy Affairs
Research Council this time."
Then, on the other end of the ~ine, Prime Minister Suzuki explained the schedule
of the Liberal Democratic Party's Executive Council which would decide upon the
three new people for the party's top posts. Rokusuke Tanaka, however, coul.d not
hold back a flood of tears and was in no condition to hear any more of what Suzuki
was saying.
"I will remain in my post (as Minister of International Trade and Industry) or I
will take the post of chairman of the Policy Affairs Research Council or, at worst,
chief cabinet secretary. Just watch!"
"I, too, am a politician. Whether at Shiroyama ar at Tawarasaka, when the time
co~res to act, (like Saigo Takamori) I will act."
Tanaka had not stopped ;naking public statements, but it is safe to say that he had
had a series of uneasy days filled with equal parts of confidence and anxiety while
- his rivals in the Suzuki faction, Chief Cabinet Secretary (Kiicki) Miyazawa and his
uncle (Minister of Education Heiji) Ogawa, even tried to hold him in check by say-
ing" "Rokusuke will neither remain in his post nor get one of the three top party
positions. The most he will get is chairmanship of the Diet Policy Committee."
Disorder in the Suzuki faction, both in terms of "disarray" and in terms of the
~ rivalry among Miyazawa, Ogawa and Tanaka, had been the laughing stock of th~ other
faction. It had been so serious that there had been such speculation as the remark:
"Rokusukie has been ~ragging that Ohira was a threat to (Maeo) and Suzuki was a
~ threat to Ohira; this is a tradition (of the Suzuki faction)."
Suzuki was crafty enough to r.ead the undercurrents within the party and successfully
nts in which 'ust as:he intended, he boxed in the new
r el assi nme
sonn ~
carr off e g J
Y P
leaders, not to mention Nakasone and Komoto, by pushing through the appointment of
Nikaido as secretary general of the party. The confusion on his own doorstep, which
is in contrast to his success, can only be called strange.
However, for Tanaka, "a new leader who started late" (a senior without a faction),
this was a critical juncture. If he were at this point to be left without a post,
he could be forced to dissdlve the "New Generation Re:~earch Society" which he had
formed by drawing together middle level and younger memders since he attained the
- rank of Minister of International Trade and Industry.
On 25 November, he went by himself to Suzuki to plead.
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(Rokusuke) Tanaka: "Today I have come on my own behalf. You have never seemed more
distant than at this time. I have never said about Mr Miyazawa or Mr Ogawa that
they should have no posts at all. Is i.t not abusive for them to be saying this?"
Suzuki: "I understand, Rokusan. I will not do anything bad."
They talked about shared memories of the days of the Ohira cabinet and about topics
which had been current ~ahen the Suzuki government was formed; according to people
close to the two men: "It was a conversation in which they shared the joys and
sorrows of life."
Was this direct appeal by Tanaka effective or was Suzuki overwhelmed by the strength
of the "Rokusulce faction" (Ogawa's term) which was ready to bolt from his fold if
ignored?
Whatever may be the correct answer, on the evening of 25 November, Suzuki held a
1 and 1/2 hour telephone consultation with his chief lieutenant, (former Minister
of Health and Welfare) Kunikichi Saito, and in the classic sense of the tail
wagging the dog, the selection of Tanaka as one of the three top party officials
was made (as Saito said) "for the sake of peace and solidarity in the faction and
for the purpose of being the party president's faction once again."
It can probaUly be said that Tanaka's ability to act and his sense of anticipation
on the battlefield bore fruit; Suzuki's choices f or the post of chairman of the
Poli.cy Affairs Research Council were.reportedly Miyazawa first and Ogawa second.
� The aftershocks continue even after the reorganization of the cabinet. On the
_ afternoon of 2 December, senior members of the faction, Iwazo Kaneko, (Naganori)
Koyama and Ippei Kaneko gathered in the Suzuki faction's office and joined together
in censuring Saito. They said: "Assigning personnel along the Saito-Rokusuke
line is no good." "At this rate, the Suzuki faction will end up being taken over
by the Tanaka faction." (Note: Saito and (Rokusuke) Tanaka are close to former
- Prime Minister Tanaka.)
- 'rhus went the "30-day struggle" (former Prime Minister Fukuda's term) over personnel
- selections which befell the Suzuki faction. There is no proof that the situation
will be settled later on when the faction approaches the moment of truth in the
issue of Suzuki's reelection. This, in a sense, is a posture symbolic of the
Liberal Democratic Party, shaken by the emergence of new leaders.
COPYRIGIiT: Yomiuri Shimbunsha 1981
9111
CSO: 4105/37
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: SCILNCE AND TECHNOLOGY
RECENT JAPAN-COMMiJNIST BLOC BUSINESS DEALS REPORTED
~ Soviet Robot Trade Fair
Tokyo NIKKEI SANGYO SHIMBUN in Japanese 5 Dec 81 p 6
[Text] The Soviet governmeitt has recently determined to hold an "International
Industrial. Robot Fair" this coming October in Leningrad, and has strongly urged
attendance upon various Japanese industrial robot makers. Originally, it planned
to hold a"Japanese Industrial Robot Fair" in Moscow, but this idea was modified
and changed to a fair with participation from countries all over the world. This
will be the largest scale robot exhibition ever held in the communist sphere.
Japan's robot makers see the prospects of concluding large scale deals as excel-
lent, and are ready to accept the invitation with enthusiasm.
- The planned Soviet robot fair will be held for 10 days, from 18-27 October 1981.
Exhibits are expected to include manipulators and higher level robots, FMS (flex-
ible manufacturing system) and CAD (computer aided design) systems which use
robots, and related components and jigs and tools. Varieties of robots comprise
the whole range from welding and painting robots to transpor*_ing, assembly, and
inspecting robots. Additionally, displays of "specialty robots" for the mining,
civil engineering and construetion, agriculture, and transportation industries
are also requested. There is a particularly great interest in intelligent robots.
Japan's robot makers were previously informed by the Soviets through the Japan
Industrial Robot Manufacturers Association (Yoshio Ando, president) that the
Soviets are going to sponsor the "Japanese Industrial Robot Fair" and they wish
as many Japanese companies as possible will attend. Now, the Soviets have con-
siderably expanded this undertaking beyond the original proposal,~and formally
- requested the association to participate. The Soviets have invited participation
by 36 Japanese robot makers, including Kawasaki Heavy Industries, Yasukawa Elec-
tric Manufacturing Company, Hitachi, Ltd, and Fujitsu Fanuc, and have appended a
list of items they would like displayed.
The Japan Industrial Robot Manufacturers Association is polling its members as to
whether they plan to attend. As it is expected that the number of participating
firms will be large, the association will ask the Japan External Trade Organiza-
tion (JETRO) to be a pcint of contact and take necessary procedures for the ex-
hibits. The association is planning to ascertain by the end of this year as to
how many firms will attend the fair and to inform the Soviet government of this
next spring.
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Japan is, literally, the "robot kingdom," possessing about 70 percent of the
world's robots. Consequently, the Soviet government has taken note of this robot
technology, and has proposed technological exchanges �~aith Mitsubishi Heavy Indus-
tries. However, so far a.s the export of robots is concerned, only Kawasaki Heavy
Industries has once delivered a large number of robots for automobile factories.
After that there are only isolated examples of the export of a small number of
robots. The probability seems high to the Japanese firms that, since this is an
untouched market, the fair to be held in Leningrad next fall will be an oppor-
tunity to inaugurate export deals with the USSR with one effort.
COPYRIGHT: Nihon Keizai Shimbunsha 1981
FMS Export to Bulgaria
Tokyo NIKKEI SANGYO SHIMBUN in Japanese 5 Dec 81 p 1
[Text] The first large export deal for an FMS (flexihle manufacturing system),
which might be called the manufacturing system of the future, has come to Japan
from Bulgaria. According to industry sources, the Bulgarian Ministry of Elec-
tronic Machine Manufacturing has made a purchase inquiry with Hitachi Seiki Com-
pany, Ltd, a major maker of manufacturing machinery, about a large scale FMS cen-
tered on 30 MC (manufacturing center), a compound manufacturing machine, and in-
cluding autoriatic conveyors, computer systems, and so on. Hitachi Seiki's aim
is to win the contract for the first large scale FMS plant transaction by relying
on the cooperation of Fujitsu Fanuc, Ltd, in the field of automatic conveyors,
centered on NC (numerically controlled) devices and industrial robots.
The Bulgarian Ministry of Electrical Machine Manufacturing intends to install this
FMS in a computer component factory ir. Sofia. Hitachi Seiki is sending a technical
report, including a blue print and a system layout, concurrent with negotiations
involving a visit to Bulgaria by company president Idegawa Kinroku. They are going
to work out the details of the price and conditions of payment in future, but when
the contract is made it is expected that the value of the order will be around
3 billion yen. According to machine tool industry sources, there have been several
deals for small scale T'MS centered on two or three MC, but this is the first large
scale system of this sort. The distinctive feature of the FMS is that once in-
formation concerning 1 day's manufacturing processes is entered in the computer,
instructions are issued for each product with the mere push of a button and 24
hour production completely without workers is possible.
FMS systems have gained popularity in Japan after the completion in January of
this year by Fujitsu Fanuc of its Fuji plant (Yamanashi Prefecture), the pioneer
- in all the world of mass production of robots, and Japan leads the world in the
FMS field.
The Bulgarian government intends to construct a model FMS factory, hoping to up-
grade production through rationalization of and increase of energy-saving measures
at factories, and has come to make an inquiry with Hitachi Seiki, which exported
�ive MC to Bulgaria in the past.
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.
However, Hitashi Seiki does not have an automatic conveyor system, nor a computer
system which has industrial robots as its essential system. In contrast, Fujitsu
Fanuc is strong in computer technology, which is at the heart of NC, and robot
technology and, moreover, in the autumn of last year established in Sofia in equal
partnership with the Bulgarian government "Fanuc-machinex" and established systems
for servicing of NC devices already in place.
Because of this Hitachi Seiki is determined to obtain the full backing of Fujitsu
~ Fanuc and, president Idegawa Kinroku will soon begin top level talks with presi-
dent Inaba Seiuemon aimed at a structure for a joint order.
FMS: A production system for automatic production on one line of small quantities
of varied items, combining industrial robots based on computers and NC production
machines.
COPYRIGHT: Nihon Keizai Shimbunsha 1981
9898
CSO: 4106/33
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SCIENCE AND TECHNOLOGY
U.S., JAPANESE SEMICONDUCTOR INDUSTRIES COMPARED
Tokyo DENSHI GIJUTSU in Japanese Vol 23 Nos 12 and 13, Nov 81
[Article by Hiroshi Semi]
[No 12 pp 78-80]
[Text] Recently, the strength of the Japanese electronics industry has become
embarrassingly evident. For example, y~u can see it in the report recently issued
by the Mclntosh Company (Table 1).
According to the report, in the world trade market dealing with electronic products
in the eighties, only the United States and Japan are on the plus side, that is,
have an excess of exports, while the European nations and other free world coun-
_ tries are on the minus side, that is, have an excess of imports. Another point
that draws attention is that the balance of the United States, which is on the
plu~ side, is showing a downward trend. That implies that the margin of favorable
trade balance is yearly being shaved off.
That probably le~ves only Japan to continue to enjoy the "spring of life" and to
be merry in the world market. Japan alone is predicted to continue to have excess
exports in the coming 10 years as far as international trade in electronic products
is concerned.
On the international market, only the made-in-Japan electronic products are on top,
far above others in the spotlight. The results of this solo performance are plain-
ly foreseeable. Various international disputes involving preeminent Japan are
likely to be invited.
The disputes are expected to be highly visible, especially between Japan and the
United States, the two countries with a favorable international trade balance. It
is a matter of course that a strong Japan should be taxed for its success. That
shows not only how the United States but all other countries in the world appre-
ciate the operation of Japanese industries and have great expectations of us.
On the other hand, tne myth of Japanese operations that support a strong Japan
particularly attracts the interest of Europe and America. Giving a clear defini-
tion from a very limited field of vision, what attracts them is the secret of our
industrial productivity which spews out a mass of good, reliable products exactly
as planned and scheduled. Is it also the mystery of the actual production lines
which makes the renowned productivity possible that interests them?
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~
~ u
, .
~ �,a n .r F r~~
'y ~
' ~ � ;;c ,~'r.~:
~~j:F''~ .
iI' 70 �,,:~Jt~'~�(;a
:�2~*:r%'
' �s?'i'!t% ~ .
'.~P : ~k ~~,:~.i ;:t.~ .
1 / ~;i~ti .~i
~
? 1 ' ~ - %4== A1 91 !1 !I
1~' I 11 ~~~~91 11 91 r;~4~:yAl::;'
I ' ~ 5� 1
' `
-a~ a,:
r~. s 9 _o.., .:M~p~:
�.�.n.�.�.�.�
4~..
(4) .;:e:.:..~ I
: :.n..
~:~::15 .
.m.
~b.
~
x
:f~
~ ( 6 ) u
x�:~,~v~,.~k
Figure 1. Trade Balance of Electronics Products (1981-1991)--1980 U.S. dollars
Key:
1. 1 billion dollars 4. West European nations
2. United States 5. Other free world countries
3. Japan 6. Source: Mclntosh .
Businessmen, engineers and even working operators frequently visit Japanese corpo-
rations with irresistible fascination and keen interest to elucidate the secret
and mystery of Japan. What they learn or hear,at the host companies is no more
than a total quality control system (TQC) and QC circle activities thriving at the
working level. These systems are not particularly new to the visitors, and when
you think o.f it, they originated in Europe and America. Initially, we imported
the idea. When they understand these basics, they feel relieved for the time be-
ing.
Japan does not have any undisclosed mystery or secret. It does only what it is
expected to do to bring forth "high quality" products. Thus, the visitors analyze
to convince themselves.
However, when they go back to their own countries, they are suddenly at a loss.
It is not that difficult to restore and implement the various systems practiced
in Japan in their own companies. But they notice that an important point has been
- overlooked when they actually try to implement the systems. They discover that
they failed to understand the root of the success of the total participation sys-
tem extensively practiced in Japan. It appears that the Japanese side is partial-
ly responsible for this. That is, we do not teach them the spiritual aspect of
the matter that supports the success of various participation systems in Japan.
To be more accurate, there are few people who can handle the teaching to that ex-
tent.
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Giving another example, here is a story that illustrates these problems. Some
250 Japanese companies have already advanced into the United States and employ
almost 50,000 Americans. If the Japanese business operations ure as great as has
been said, at least the majority of the Japanese companies thy~ fia~e advanced into
the United States should be making products equal to the level of products pro-
duced in the mother country and be operating with a comfortable profit. However,
as far as I know, the majority of the Japanese companies there have, on the con-
trary, encountered problems and are busy trying to straighten them out.
Probably, the foundations or climates that supFort the business operations in the
United Sta~_es and in Japan are different at many points. That is the question
being raysed in thP minds of the people who visitEd Japanese corporations and re-
turned to their own countries. If it is true that there is a large difference,
an absolute difference, in foundations between Japan and ths United States, then
it is appropriate to think that this difference s~:.counts for the higl: quality and
reliability of the Japanese products.
It is impossible to give an all-round profound analysis and solution in this
limited space relating to the reasons why Japanese electronic products have reach-
ed a level of excellence far above all others in the world. That must be left to
another opporeunity for discussion.
At this time, :ZOwever, the discussion wili be focused on a comparative analysis
of Japan and the United States in the seriiconductor industries which support the
electronics industry in association with the above described sense of problems.
- In order to facilitate the und~erstanding of the readers, the discussion was divided
into 11 points of view for convenience (Table 1).
- Status
As is well known, the American semiconductor business dominates over 65 percent of
the world market today. That figure was estimated to have been over 80 percent
10 years ago. In contrast, the Japanese camp holds about 22 to 24 percent of the
market share.
The European business hold is less than 10 percent, and the rest is claimed by the
semiconductor business of each nation spread out over the free world. However,
these enterprises in one way or another have introduced technology from American,
Japanese or European businesses. It is unquestionable that the United States ac-
tually presides over the world market.
Incidentally, the size of the world market today is approximately 3.5 trillion yen
in terms of annual average, slightly over the sales realized by Japan's Toyota
Motor Company alone.
Industrial Structure
There is a great difference between Japanese and American semiconductor industrial
structures. This stems from the difference in the developmental process in which
the semiconductor industry in each country was created and raised. In a word, it
- ~s the threefold structure of America versus the onefold-plus structure of Japan.
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~
The threefold structure of the U:~ited States can be observed by looking at a'""
vertical section of the U.S. semiconductor industry. The onefold plus structure
of Jap~n is also conceived on the sa:ne basis. A comparative analysis can be made
disregarding the impact on the activities and structures of foreign affiliates
residing in each country. ~
The threefold structure of the United States is supported by a strong base. It
is a strong system house, i.e., a group of makers independently manufacture goods,
- as represented by IBM and Western Electric. These corporations are called inhouse
- makers. The power of inhouse makers has been steadily organized in recent years.
This is because the major electric makers which were compelled to retreat from�the
semiconductor indnstry in the past have returned again.
The means of reentry can be the purchase of an existing s'emiconductor business or
capital participation. GE and Westinghouse are typical examples. French oil
capital, Schlumberger, and the greatest of the American military industries, Unit-
ed Technology, accomplished their entry into the semiconductor industry by pur-
chase. The companies they bought out were competent semiconductor corporations
such as Fairchild and Mostech [phonetic].
It looks like "bring semiconductor development and production ability to the com-
pany" will become the password of the world's big corporations.
Table 1. Comparison of Japan-U.S. Semiconductor Industries
United States Japan
1. Status almost 65% in excess of 20%
2. Industrial structure threefold onefold-plus
3. Business operation profit oriented market oriented
(cost reduction) (market share)
4. Main constituents primarily specialty general electric machinery
makers and communication machinery
(venture business) makers
(consistent system house)
5. Technology pride of originator sense of new establishment
(IHA idea)
6. Production design/technology perfection of fabrication
innovation technology
(stressing mass (stressing vield)
production)
7. Quality principle of passing perfectionisi.t
inspection
8. Competition offensive to defensive defensive to offensive
9. Product strong in microcomputers strong in memories and IC
for military industry for civilian usz
- 10. Business strategy one step ahead in multi- heading for multinationali-
nationalization zation
11. Role of government frequent bolstering protection and nurturing
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[No 13 pp 73-75]
[Text] The second layer of the industrial structure (continu~d) is the companies
which deal with outside sa_;.es, generically :.alled merchant makers. Th~y are head-
' ed by Texas Instruments (TI) and include National Semiconducz~r, Intel and Ad-
vanced Microdevice which all have a main office in Silicon Valley, and Motorola
which maintains major production activities in Arizona, otherwise known as Silicon
Desert.
In the past several months, the merchant makers have been kept busy review'ng the''
long- and medium-term growth strategies of their own companies. In 1981, the
shipped commodities of the American semiconductor business was minus 5-10 percent,
compared to the previous year (in terms of money). This is due to the unexpectedly
long-lasting slump. However, this is expected to get on the track of mili' recovery
in 1982, leading to a big growth in 1983 and 1984....
, Up until the beginning of autumn last year, it was predicted that 1982 would be
the year of a demand boom (see December 1980 issue--American Semiconductor Indus-
try in Recession). As the American business condition hits a second bottom, the
prevailing opinion now predicts that th~ next demand peak will arrive later in
1983.
What gives a headache to the top management of the semiconductor business is how
to tackle the promised market growth. The factors that cause the headache can be
boiled down to two items.
One is the procurement problem to meet plant and equipment expansion. In order
to procure sufficient funds, it is necessary to earn profits that make the pro-
curemen~ feasible. From this aspect, it must cut off unprofitable sectors that
pull down some industry groups and products that do not grow as expected in the
near future. Then, it must concentrate on the product groups considered real win-
ners and continue to invest in plant and equipment at the proper time.
Another problem is the shortage of engineers, which is becoming more serious every
year. Even if management can cope with this problem, the product battlefront must
be organized and the resource of engineers in one's own company must be effective-
ly utilized, when it is self-evident that the business has expanded out of con-
trol.
Funds, manpower and profit ratio and growth of products in the near future must
be balanced. As a result, once in a while decisions that surprise the industry
are made and announced by the leaders of the semiconductor business. A good exam-
ple is the recent retreat of TI and National Semiconductor from the magnetic bub-
ble memory business. This decision was made as a result of reallocating opera-
tional resources preponderantly in order to pursue the promising silicon tech-
, nology.
The third layer is composed of venture business groups characteristic of the
American semiconductor industry. Today's Intel and National Semiconductor also
started originally as venture businesses. Venture businesses flirting with ven-
ture capitalists are pushed up into a full fledged business in no time.
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Such a busines~ climate or foundation is never found in the semiconductor indus-
try of Japan. Many Japanese versions of venture business compdnies have been
raised in the software field of the computer industry. However, the people and
' institutions that serve the function of the American venture capitalists are ab-
sent. This absence is deeply felt wnen one appreciates the role plaqed'by the''
venture capitalists who are very active in Silicon Valley. ~
' .
Concerning the role of the capitalists who continue their activities with tHe
valley as their base of action, several characteristics can be pointed out."-~The
most important characteristic is that almost all of them have had experience in
operating a high technology business with their own hands at one time or another
in the past. Also, they participate as one of the managers in the business for
= which they have raised the funds.
Capitalists with these qualifications can hardly be found in Japan. A"onefold-
plus structure" pattern characteristic of Japan is quite a contrast to the pattern
of the United States. The Japanese semiconductor business is predominantly run
by companies which are characterized as general electric machinery and communica-
tions machinery makers or as general home electric businesses. Part of the semi-
conductor products are always consumed in the company itself. They may be regard-
ed as a group of businesses which combine the corporations in the first and second
layers of the American semiconductor business structure. Furthermore, many of
them are "big businesses."
The "plus pattern" comes from the fact that a very limited number of semiconduct~~r
specialty makers are part of a circle dependent on these big corporations.
In recent years, the number of so-called inhouse makers has increased, but the
scale is not as large as the traditional American inhouse makers such as IBM and
GE.
Business Operation
There has existed a basic ideal or strategic difference hetween Japanese and Amer-
- ican business operations. American business has primarily been profit oriented,
- while our business has been market share oriented. In the American market, free
and fair competition has been unfolded under the banner of reduction of cost. In
contrast, the origin of our business has been the improvement of the market share.
These differences in strategy or basic attitude are closely related to the back-
grounds from which the semiconductor industries emerged and the form of the
progress in both Japan and the United States. In the United States, which was
the revolutionist of the world's semiconductor industry, the military market was
enormous at first, but the dependence on it was greatly reduced, for example, in
the seventies as far as IC is concerned.
In the United States, where the market was developed for military use with the
backup of the Pentagon (Department of Defense), a tremendous number of corpora-
tions entered into the business with the expansion of the civilian market. This
phenomenon of participation was given further impetus by the basic climate of the
American business operation favoring freedom of occupation and traits that en-
courage.a free and independent spirit (pioneer spirit that challenged the fron-
tier).
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Naeurally, the competition became more ruthless with the increase in the number of
companies entering the industry. "Price" was unquestionably the bottom line for
acquiring the position of ruler in the market where the competition was intense.
On the other hand, a habit of stressing "profit" for every quarter term, charac-
teristic of American business, stubbornly remained.
The outcome is obvious. Feverish pressure was applied to reduce the cost. Cost
reduction was pursued in relation to the "product quality" demanded by the cus-
- tomers. Maybe because of this, the basic theme of quality control was strictly
- narrowed down to the principle of passing inspec.tion.
Severe price competition required creation and expansion of the market. As a re-
sult of the drastic reduction in the IC price in a short period, new markets were
opened. Also, the markets expanded at an unexpected speed. Meanwhile, the com-
petition cost many victims in the early 1970's, which meant a retreat of many
large corporations from semiconductor production.
Japanese business operations, starting late, ar~ different in many ways from the
phenomena seen in the.American market. Unlike the United States, where nearly 200
semiconductor companies fought for a marke~ shar~a, the big corporations took the
lead from the start in Japan. No one rushed int~~ the semiconductor industry dream-
ing of a bonanza.
Centered around competition with a sidelong glance at other companie~s, the competi-
, tion was unfolded primarily stressing product quality to catch up with others.
Various inventions and efforts were constantly being made to lose no time in catch-
ing up to the level of the forerunner, the United States. Greatly helpful was the
attitude of American business, which generously disclosed technologies to a consid-
erable extent as long as patent fees and knowho~a fees were paid.
- What the Japanese corporations, which were the late starter, aimed at was perfect
product quality. In the beginning, the cost was high, but this was absorbed by
the demand from within the company. Through efforts to eliminate the immense
putent fees, note~~orthy patents of one's own company were originated.
A vehement price battle has developed in the course of time. The battle is waged
on two fronts, one against American corporations and the other against domestic
_ corporations.
Setting aside the IC's consumed within the company, a seemingly contradictory de-
mand for "inexpensive and good products" had to be accommodated in the Japanese
market structure, where the civilian market ratio was comparatively high. The
solution to satisfy these two demands came down very roughly to two points. One
was the insatiable automation of the manufacturing process, and the other was the
catch-up attitude with everyone taking part, the pursuit of TQC (total quality con-
trol) in today's terminology.
. The essence of operating with a sidelong glance is the principle of not being de-
feated by other companies in equipment investment and technology development. The
greatest parameter to judge ~he result of the competition is the fluctuation of
the so-called market share. The complete industrial statistics of Japan relate
the cruel fact of the market share of one's own company.
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Main Constituents
The following main constituents played different roles in the stage of industrial
development in the United States. The main constituents that created the semi-
conductor industry were the world's predominant research institute,~.Be11,.L~bozato~y
and the Western Electric group. �-~=�~a
The credit for the mass production of the technology developed can be given to'
semiconductor specialty makers which started from venture businesses. Several
- technological developments were required before the semiconductor business'c'o'iiTd
be shaped into an industry and get into smooth running order.
Aside from Bell ax~d the Western group, technological development in the initial
period was explored by~ large corporations such as GE and RCA. Except for the
period of foundation consolidation, venture businesses with TI and Fairchild in
the center served as the driving force to promote technical innovation. Espe-
cially noteworthy were the Kirby patent of TI and the Planer patent of Fairchild.
The main actors in the Japanese industry were general electric machinery and co~
munication machinery makers from the very beginning. It was these corporations
that promoted research and development and started mass production. A specialized
developmental pattern as seen in the United States is totally absent. It cannot
be denied that the tailing type Japanese business operation benefited in various
ways from the difference in the main constituents as describad above.
Technology
The idea that penetrates most into the American semiconductor industry is ~.te
acute sense of being the original manufacturer, the pride that the invention was
made there. That sometimes rebounds as an unexpectedly arrogant attitude toward
customers. It is because of this phenomenon that we hear complaints that an
American business, trained well in the home of marketing, sometimes acts too ag-
gressively in trying to impose the products of its own company and forgets that
"all customers are kings" when it attempts to sell its products to Japanese users.
In comparison, Japan's sense of new establishment had solidified. Although we
felt small in face of the originatar at the beginning, we started to become con-
fident about certain products as we caught up in the technology and further es-
tablished mass production technology.
In the past couple of y~ars, Americans have begun to make some remarkable state-
ments regarding the reliability, quality and stability of Japanese IC memories
in particular. Some American business managers have come forward to warn the
American corporations which indulge contentedly in the pride of being the orig-
inal manufacturer. These managers have the e~erience of having worked as a
high class administrator in Japanese business or have often visited Japan. Or
they have Japanese friends who are outstanding businessmen, although they them-
selves haven't visited Japan too often.
The number of managers who organize quality control groups within the company
and strive for the improvement of quality has increased also in American business.
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There are definite signs that the day is approaching when the American cerpora-
tions with persevering strength and extensive resources will cast off their pride
at being the originator.
COPYRIGHT: Electronic Engineering 1981
8940
CSO: 8129/0488
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SCIENCE AND TECHNOLOGY
AJINOMOTO'S BIOTECHNOLOGICAL R&D ACTIVITIES DESCRIBED
Tokyo SHUKAN BIRION in Japanese 6 Nov 81 pp 72-75
[Article by Kazuaki Taya]
[Text] Among the Japanese food enterprises are high-profit firms saich as Sun-
tory and Kirin Brewery. However, Suntory is a whisky manufacturer, and Kirin
Brewery is literally a beer manufacturer. Thus, as a"general" food enterprise,
there is no business enterprise that surpasses Ajinomoto.
In the third term of 1981, the scale of Ajinomoto ~ales was 374.3 billion yen.
The makeup of sales is led by processed foods, followed by seasonings, fats and
oils, amino acids, etc. The sales in 1965 amounted to 54.4 billion yen, less
than one-seventh of the 1980 fig~ire. It was a seasoning manufacturer, and the
makeup of sales also was centered on seasoning products, namely the large-scale
production of Ajinomoto [MSG], which a~counted for over 50 percent af the total
sales. ~
Today, 15 years later, it has achieved a great transformation in its posture as
a general food manufacturer.
President K. Utada, who took office in June this year, emphasizes a five-column
operation--that is, a comprehensive balanced operation of seasonings, fats and
oils, processed foods, amtno acids, a~nd overseas business. However, as we view
objectively the direction in which Ajinomoto is advancing in the 1980's, we may
say that growth in the amino acids and overseas categories hold the key. In
other words, life sciences and multinational development are the directions in
which Ajinomoto is advancing.
On a worldwide base of multilateral development in amino acid technology,
Ajinomoto life science is enlarging its prospect for growth with pharmaceuti-
cals. Erental [phonetic], an enteric nutrient marketed after being adopted by
the health care program in September, is the~first pharmaceutical for Ajinomoto.
Erental is a nutrient which is directly in~ected into the patient's intestine
through a tube beiore or after surgery. It is the first pharmaceutical of this
type. It is estimated that it will grow eventually into a product with a monthly
business of 200-300 million yen.
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~
~1~#i;;~. ~~=1~#3~~~i - ~lv~y), 4~i~, i~~t~rdt (2)
~11~~=:iZt~r ' l\-( . -
: --------I~fvr'l,. Cook ootat (3)
7
C25 f~~iXll
~9(.3) 2696' _-1:~~~ ~~'i~'r~~~~~~at' ~4~ '
: 5~r~ (5z96>
~~t~
, 3743t~P3 -
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' 35(3) ~ ~~~8~ (~~~~0~55~#~~rt~~J.r.~)
23C17) rfl~~ ((~p~~) 111(6390)
T # r~a~~u~~~ ~ t~c~~~~
- -(JZ9J1'�~-f_-- 2(~1~??.40)
(5) ( 2i~(~s~)
/,41. ~7~~--J #5~~ � f~7~?-- ? ~ {J(839o)
2I1~159ci)

A}. ~ ; ri ~ i- t- - adr
iu~~5t'i 31i1($9o)
(71~,1) ;'�"i'6H~V~Itti.lf,~. I E~II.IdUillF!).'1~~ `1-~~~J ~{!l~%19O
. ~
~.y
~i Figure 1. Growth in 1980's Expected in Amino Acid Category
Key:
(1) Amino acids, 9(3): lysine, algin Z, etc, for transfusion, feeds.
(2) Others, 7(25): starch, se.asoned liquids, synthetic products, etc.
(3) Seasonings, 26 percent (52 percent): Ajinomoto, Hi-Me, Hondashi [broth],
Cook Do, etc.
(4) Fats and oils, 23 (17): cooking oi1, soybean protein products, etc.
(5) ~'rocessed foods, 35 (3): soups, mayonnaise, margarine, frozen foods,
coffee, etc.
(6) FY-1980 gross sales: 374.3 billion yen ~
(7) (Note): Figures represent percentage makeup; insia~ parentheses are the
1965 figures.
(8) (1980 estimated market share for major products)
Monosodium glutamate (Ajinomoto) lst place (63 percent)
Fla~~or enhancer lst place (52 percent)
- Instant coffee 2d place (22 percent)
Mayonnaise 2d place (19 percent)
Powdered/cubed soup lst place (83 percent)
Cooking oil 2d place (15 percent)
Frozen foods 3d place (8 percent)
Margarine 2d place (21 percent)
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Following behind it are the immunologic anticancer agent Rentinan [phonetic],
the chemotherapeutic (directly attacks cancer) anticancer agent CAM, and the
antibiotic AC-1370. Rentinan [phonetic] was submitted to the Ministry of Health
and Welfare for approval last spring, and there is a prospect for obtaining
approval in 1982. CAM is about to begin the second-stage clinical testing.
- Rentinan is an injectable drug, while CAM is being developed as an oral prepara-
tion. When both products are marketed, methods for combining the two are anti-
cipated, which will probably become an important factor for increasing sales.
Sales of Erental will be handled by the subsidiary Morishita Seiyaku, while a�
- sales agreement has been arranged with Yamanouchi Pharmaceutical for Rentinan
marketing. CAM is a product developed jointly with Chugai Pharmaceutical. We
can see Ajinomoto's strategy of expanding agreements with leading pharn~aceutical
firms using its technological strength as the weapon. '
AC-1370 is a new antibiotic of the so-called third-generation antibiotics. It
is currently in the animal experiment stage. However, as clinical tests begin,
it is fully expected that collaborative studies with major antibiotic manufac-
turers may be undertaken.
R&D Structure of "High Tech-High Touch"
Anticancer agents and antibiotics have large pharmaceutical markets. As Renti-
nan, CAM, and AC-1370 join the front, the foundation for Ajinomoto'~s pharmaceuti-
cals will ~e strengthened rapidly: Such a posture will probably be seen clearly
in some 4-5 years.
The pace of R&D directed at life science at Ajinomoto has increasingly hastened
of late.
The objective of some 600 personnel at the central research laboratory is to find
seeds for life science to grow in the areas of food, pharmaceuticals, or inter-
mediate medicinal foods.
The number of staff at the central research laboratory at the highest point
- reached about 1,100 in the period 1965-~974. The fact that the number is now
less than 60 percent of that is one of the byproducts brought about by empha-
sis on efficiency of the R&D effort. In the midst of this, the pharmaceutical
developments which were undertaken earnestly for some 7-10 years are about to
blossom now in the form of Erental, Rentinan, etc.
- In July of this year, the Department of Basic Research, with a staff of 30-40,
was newly established in the central laboratory. The objective is to advance
broad basic research cross-sectionallq with a long-term view.
Furthermore, Ajinomoto has become more forward-looking about mergers in Japan
and about technical exchanges with Kellogg (cornflakes), CPC International
~ (soup, mayonnaise), General Foods (coffee), Jerube-Dannon [phonetic] (fresh
~ cheese), etc. In October, it invited Vice President Grant, who isin charge of
R&D at the CPC head office, and initiated a"technical exchang~ meeting" of
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three firms, including the top executives of Knoll Foods (merged with CPC). Its
plan is to aim for cross-sectional expansion of technological developments in the
future by holding broad-based technical exchange meetings which include the
~ above-mentioned collaborators and merger firms.
Last year, jointly with General Foods, which is a partner financier of AGF
(Ajinomoto-General Foods), it established a separate new company for the devel-
opment of protein foods.
In the midst of rising interest in the f ields of physiology, nutrition science,
and immunology, the life science research at Ajinomoto is expected to show fur-
ther expansion.
_ The skillful advance in R&D management such as efficiency, directi~n, etc, is
also a very important point. ln this respect, Vice President T. Kakuta, who is
in charge of R&D, is emphasizing "high tech-high touch" by quoting from a book
by H. Hironaka--that is, a strong human factor in addition to Y,~.igh technology.
A Forerunner in Genetic Engineering Related to Amino Acids
Among life science-oriented areas, the one likely to bring technological innova-
tions is genetic engineering.
In particular, regarding genetic engin~ering in the area of amino acids, Ajino-
moto's posture is aimed at being the f orerunner not only in Japan, but in the
world. It is also to save face as the world's amino acid enterprise. Unlike
others, Ajinomoto is still in the very initial stage in genetic engineering.
However, in the fall of last year, it succeeded in the technical achievement of
doubling the production efficiency for threonine, one of the essential amino
acids, by using a new strain of E. coli in genetic engineering.
Incidentally, between 1971 and 1980 it acquired four prepublication patents
which are believed to be related to genetic engineering. This number is the
second highest among Japanes~ f irms, after the seven held by Mitsubishi
Chemical.
In addition, for 2-3 years it has been sending young researchers, believed to
number almost 10, mainly to the United States for genetic engineering related
work.
Ajinomoto's achievements in the life sciences area has gradually begun to pene-
trate overseas. For example, the amino acid sweetener Asparteem is one result.
Asparteem [phonetic] is characterized by a sweetness approximately 200 times
greater than sugar and yet has fewer calories. It expects to obtain approval of
the U.S. rDA (Food and Dr~sg Aclministration) and begin exporting the product to
the United States by next spring. Asparteem is a U.S.-Japan joint merchandise
effort, for which the U.S. G. D. Searle has the application patent and Ajinomoto,
the manufacturing patent. Other than in the United States, it is being sold in
I'rance, Belgium, and Luxembourg. Approval has been obtained in five more coun-
tries including Mexico, and approval is being obtained in Canada as well.
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Nox oHF�~cin~, usH: UNLv
. Regarding the above-mentioned anticancer agent, Rentinan, it is a noteworthy
point for the future that Ajinomoto has already received more than 10 overseas
collaborative offers. Regarding amino acids for medical use, which have been
exported until now, a plant is expected to be completed in the United States
by the end of the year to switch to local production. This is a trend that con-
tributes to overseas business development, which will be discussed next.
In the March'1980 term, Ajinomoto received income totalling 4.4 billion yen
(2.9 billion yen for FY-79 in royalties, loan interests and dividends from
overseas subsidiaries. Based on the overseas investment and ~loan balance for
the same term of approximately 26 billion yen, the investment efficiency ~s
_ 17 percent.
Also, based on the fact that the profit contribution of the five overseas subsi-
diaries is estimated to be approximately 25 percent of the 1980 consolidated
profit, it may be concluded that Ajinomoto's overseas firms are developing their
business smoothly on the whole.
As of June 1981, Ajinomoto's local plants overseas numbered 12. The local pro-
duction consists mainly of seasonings, which are produced by six plants, includ-
ing Thai Ajinomoto. Others include Euro-Lysine (France), a feed lysine; and the
manufacturing of instant noodles in four countries, including the United States
and Brazil, through collaboration with Nisshin Foods. Also, at~the end of this
year, a plant for the above-mentioned amino acids for medical use will be com-
pleted in the state of North Carolina in the United States as a plant for Ajino-
moto USA (sales firm).
Among the overseas f irms, the consolidated firms number five, including Thai
Ajinomoto, and the total sales of the five firms is approximately 30 billion
. yen. Total overseas sales, including the sales of other local firms and ex-
ports from Japan, were on the scale of approximately 60 billion yen in 1980.
As a result of the considerable expansion made in seasoning plants in the last
- 1-2 years, the production of monosodium glutamate overseas surpassed that of
domestic output during this fiscal year. The average growth rate is also
higher overseas than the domestic rate. A new plant for instant noodles was
also completed recently in Brazil.
In addition, in preparation for future expansion in sales regions, Ajinomoto
they opened resident staff offices this year in Karachi in May, and in Cairo
in July, thus placing strategic cornerstones.
Ajinomoto's future production overseas is expected to diversify gradually to
processed foods, with seasonings as the base. Also, as found in the case of
the local production of amino acids for medical use in the United States, a
trend toward an increase in the local production of pharmaceuticals is also
expected, mainly in advanced countries.
In such an environment, Ajinomoto's multinational development is likely to show
expansion, and the depth will also be increased by product diversification.
Depending on circumstances, it is conceivahle that the company will move toward
buying up business locally.
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The history of Ajinomoto's overseas ventures goes back to export pioneering in
1914. Soon after that, it opened a resident staff office in New York.
Local production began in the iatter half of the 1950's. Major bases in South-
east Asia, Thai Ajinomoto and Malaysian Ajinomoto, were founded in 1960 and 1961
respectively. Thus, they alrea.dy have a 20-year history. Malaysian Ajinomoto
has already been listed on local stock exchanges, a.~d Thai Ajinomoto is also
heading toward listing. Furthermore, a trend toward independent fund procure-
ment by overseas subsidiaries is being emphasized, as in the case of Malaysian
Ajinomoto, which is planning to issue stock.
However, this is not to say that Ajinomoto has had no failures in its overseas
ventures. Only one such case has occurred, in Italy, where the local factory
had to withdraw due to changes in the raw material situation and labor instabil-
ity (a special loss of 2.6 bil~.ion yen was added to the March 1978 term). As
multinational development is in,tensified in the future, how to avoid high-risk
countries will hold greater i:aportance than before for Ajinomoto.
The same can be said for pharmaceuticals development. These days, the develop-
ment of a large-scale pharmaceutical is said to cost "3 billion yen and 10
years." Investment risk in R&D for pharmaceuticals is much greater than food
when it fails. However, if it succeeds, the reward is that much greater in fact.
Interview [with Ajinomoto President Utada]
Question: What changes do you envision for Ajinomoto in 10 years?
Utada: People say various things about us, bothrothing has changed in that we
are basically a food manufacturer. My concept is to expand the business as a
whole on the basis of a five-column structure of seasonings, oils and fats, pro-
cessed foods, amino acids, and overseas venture. A business called Ajinomoto
[element of flavor] need not plan such drastic multilateral operations. I would
like to make progress with a way of life so that business branches out little by
little from the trunk.
Question: Among the five columns, it appears that the importance of amino acids
and overseas categories will increase.
Utada: If I am asked specifically which category, I suppose you are right.
Amino a~ids have many more areas to explore yet, and we believe that they will
grow into a bright limeligt~t in the next 10 years. Since people's interest in
health and nutrition will steadily increase, it is very important to grasp what
is new firmly in this regard. As for overseas business, it currently accounts
for approximately 20 percent of the consolidated sales. Aside from the figures,
_ there is no doubt that the importance of the overseas category will greatly in-
crease in the next 10 years.
Question: Among multinational developments, buying up businesses is also con-
ceivable, is it not?
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Utada: Depending on circumstances, we ~;illnaturally consider buying up busi-
nesses. Although we are not now practicing this, looking at the years ahead,
that need will probably become stronger in Japan also.
Question: Your views on the price of shares?
Utada: I consider that as a top firm in the business, a 4-digit figure--
1,000 yen--is not out of line.
COPYRIGHT: Billion [Shukan Birion) 1981
7722
CSO: 4106/27 END
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