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Dozen U.S. Trade Offices Closed, Cut Staffer Due To Tight Budget

August 21, 1992

TOKYO (AP) _ About a dozen U.S. states have closed or streamlined their commercial offices in Japan, a move that leaves some analysts wondering whether Americans are really serious about penetrating the market here.

Since last year, seven states - including Maryland, Nevada, North Dakota, Pennsylvania, Texas, Utah and Louisiana - have closed their offices in Tokyo, largely because of tight budgets back home.

The directors of the California and Oregon offices left months ago and have not been replaced, staff members said.

Michigan and Illinois moved their offices to buildings with cheaper rents and cut operating budgets. The Illinois office said its budget for the fiscal year that started in July was slashed 72 percent.

Japanese analysts say the state governments are being shortsighted since the offices help promote U.S. products and companies into Japan.

The closings, they say, give the impression Americans are not committed to long-term business efforts. Japanese often claim a lack of commitment by U.S. companies to developing markets here is a factor in Japan’s huge $43.4 billion trade surplus with the United States.

″(State governments) need to realize that they have to put more effort into promoting U.S. exports to Japan,″ said Shusaku Hirano of the semi- government Japan External Trade Organization.

″Without day-to-day efforts, they will soon be forgotten,″ he said. ″Some states still don’t seem to realize the importance of Japan’s markets.″

In contrast, some European nations are expanding their presence in Japan by establishing offices outside Tokyo.

In Japan, fostering local connections are considered crucial to business success. Hirano said state government offices can develop contacts that will help U.S. companies enter the Japanese market.

But U.S. government and business officials complain that foreign competitors face too many obstacles here, such as interlocking business relationships and a complicated distribution system.

Nearly 40 states had offices here in the late 1980s. The primary task was to woo cash-rich Japanese to invest in the United States.

Now that corporate Japan is in trouble because of plummeting land and stock prices, the focus has shifted to promotion of U.S. exports, said Tami Hirabayashi, assistant director of Ohio’s Asian Office.

As the U.S. economy weakened, however, many state governments suffered a decline in tax revenue. State officials decided to cut expenses, and many quickly axed their commercial operations in Tokyo, the world’s most costly city.

″California has no immediate plan to send us a new director,″ said Miki Yoshikawa, executive assistant for California’s office in Tokyo.

″The major reason is that sending a staffer to Japan is very expensive. Housing costs more than several million yen (tens of thousands of dollars) a year, and the state also pays for the education for his or her children. Actually, it’s a lot of money,″ Yoshikawa said.

But Hirabayashi says such attitudes will make it more difficult to promote U.S. products here.

″If they (the states) keep coming in and out, they have no cumulative impact. When they come back, they will have to start from scratch ... especially here in Japan,″ Hirabayashi said.