The Press THURSDAY, OCTOBER 8, 1936. Japanese Competition

Press, Volume LXXII, Issue 21908, 8 October 1936, Page 10

The Press THURSDAY, OCTOBER 8, 1936. Japanese Competition

The congress of British Empire Chambers of Commerce yesterday passed a resolution viewing “with grave concern” the importatiori into the British Empire of goods from countries with low wage standards and urging that the matter should be considered at the n£xt Imperial Conference. Though the resolution was framed in general terms, the discussion made it clear that the country particularly aimed at was Japan; and on the advisability of imposing “ prohibi- “ tive ” tariffs against Japanese goods (a course advocated by several delegates) there was a substantial difference of opinion. That is as it should be, for the whole question of trade relations with Japan is one which the governments of the Empire should approach cautiously, with due appreciation of the fact that political as well as economic issues are involved. The present unfortunate and unnecessary trade war between Australia and Japan illustrates the dangers of precipitate action. It can be admitted that, in some industries, the competitive methods of Japanese exporters are a source of legitimate dissatisfaction. Much of the trouble lies in their overwillingness to cut prices and in their failure to realise that it is bad policy to flood a market. The Japanese sometimes protest that the frequent popular outcries in America and the British Dominions against the competition of Japanese goods are due to colour prejudice. Possibly there is some truth in this, for certainly \there is seldom much public opposition to the importation of cheap goods from, say, Czechoslovakia. But it is also true that the Japanese habit of flooding markets tends to make Japanese competition more of a bogey than it need be. There can be little doubt, for instance, that the recent increases in the United States and Australian tariffs against Japanese textiles might have been avoided by a more careful regulation of shipments from Japan. Fortunately the Japanese Government now realises this and is persuading the textile industry to accept export control. But the assumption that Japanese industrialists undersell their competitors solely because of their low wage costs is wide of the mark. A factor at least as important as low wages is currency depreciation; and Australia and New Zealand are in no position to condemn this method of stimulating exports as unfair. Still another factor, which applies particularly to the textile industry, is greater efficiency. Because they came late into the field, Japanese textile manufacturers are equipped with the most modern plant and have taken advantage of the most modern methods of organisation. Finally, the popular idea that the Japanese worker is content with “ a few pence a day ” needs to be accepted with substantial reservations, for it is very difficult to arrive at any complete picture of the wage structure of Japan’s export industries. “Japan,” writes Mr W. L. Holland, a New Zealand authority on ,the Far East, “ presents the contrast of a few large and efficient factories (223 firms employing 1000 or “ more workers in 1928 accounted for 455,000, or “ 23.5 per cent, of the 1,936,000 employees “ listed) side by side with thousands of small, “ poorly organised establishments, many of “ them virtually domestic workshops.” The low wages so much publicised are found mainly in these small units; in the larger factories, although wages are low by western standards, the operatives are in many industries housed in factory dormitories, given free medical attention, provided with meals at,reduced prices, and allowed special bonuses. Accurate comparisons between standards of living are difficult, indeed impossible, but it would not be easy to show that the average worken in the larger factories leads a less happy and less healthy life than, say, the New Zealand daily farmer or the United States cotton operative. Moreover, it has to be remembered that since the Great War there has been a very real improvement in wage conditions in Japan, an improvement which will continue while Japan remains reasonably prosperous. The inevitable effect of high tariffs against Japanese goods will be to delay this recovery and to encourage production by small units employing sweated labour. There is also, as Mr Frank Milner reminds us, the political side of Japan’s economic problems to be considered. To strangle Japan’s export trade is to present her political leaders with a problem of/poverty and over-population which must drive them to military aggression.