Violent Market-Injection Strategic

VIOLENT MARKET-INJECTION STRATEGIC

Granting Japan the "Rent of a Fund for Marketing of Argentine Exports”

The Japan’s Opportunity

Preference Tariff

We give Japan all necessary things to impel the investments that aim to the exports. Clearly without incurring in donation attitudes as questioned at ingenuous opening of the nineties. Simply a system by which Argentina is committed to grant tariff advantages in order to facilitate the placing of Japanese product "made in Argentina".

Preferences as Direct and Specific Foreign Investor for New Exports

(Primary and Derivatives)

The Japanese investment will be part of the global process of the alliance. Therefore it will be significant because it will reveal, from our part more than other thing, the dynamic of the economic process emergent of all proposals. Not only Japan, every investor, invests in a country when the conditions are attractive and the development and profits perspective are considered with a sufficient safety margin. Since the debate in which sovereignty is again in the center of political discussion, compatibility of the Japanese investment is absolutely dissuasive of any doubt that moves away the disappointment of the critic sectors of foreign investments we have experienced. This is necessary to set criteria and to obtain support for public policy.

Diversification

Japan will be able to compensate its "excessive focus" in electronics – mechanic-metallurgy and computer science. It will diversify its products portfolio and Argentina will send new food developments for a starving world. Japan will take advantage of its experience in industrial and exports integration processes.

A country that reached that the old "Made in Japan", synonymous of low quality, become the paradigm of excellence and innovation, can do much.

A great possibility is opened itself, to enter new markets to compete with European in land foods. The World-wide Trade Organization proposes for 2050 a world without import tariffs. We are just in time. Its commercial leadership in the SEA area will consolidate before that. It could possibly, if wishes so, manufacture its own foods for internal consumption.

Threats That Japan Suffers Today

Its excessive "focus" in electronics – mechanic-metallurgy and computer science. Now its products portfolio is a commodity. Japan lacks natural resources to diversify its supply (foods, energy and sowing lands). Japan imports and spends money in those items that doesn’t have. It will save in this.

Argentina’s Opportunity

We shall receive foreign direct investment instead of financial investment. The buying power improvement compares to ones abroad constitutes one of the most important justification than today we must recover, after the strong devaluation of our currency. Even more, when the main parties and politicians have accepted the autarkic positions are unconceivable at the present time. In respect of possible questions on “if this alliance could cause problems with our main partner. Mercosur? Clearly, the answer is negative. Considering reciprocity and commercial ethics, it is not possible, since the foreign capital that is invested in Brazil, receives as general principle equal legal processing as Brazilian laws grant to national capital, specially being prohibited any type of discrimination, not taken into account in the foreign investments regime, regulated by law from 1962.

Imports of Essential Good not produced in the country

It will be only possible having financial resources and now we are not clearly having foreign currencies and any other financing, which does not come from exports, and capitals that are related to the export. An inadequate handling of the foreign investments caused a fall in the buying power in the long-term. A ferocious devaluation partly has to do with the outflow of capitals, royalty and dividends payments that strongly surpassed the income from exports or the fall in imports as a consequence of substitution of imports in the last years.

The International Japanese companies that come to settle or to be associated to export, will give rise to an own currency flow in both directions. The Japanese companies do not have as main objective the quick return in record time to their headquarters. Also it is possible to infer from its observation, Japanese companies that are associates to local companies, always looked for maximizing their profits in the medium and long term. They search to increase market share more than outlandish profits in the short term. It will create Joint Ventures and Trading Companies together with local companies. We will industrialize primary products and foods "adding value" instead of selling grains, crude oil and meat. The employment will grow; we will improve our international perspective.

Import Technology, Know How and Capitalize Our Exporting Patrimony in the Long Term.

In respect of introduction of new technology, this fact could constitute a profit business for Argentina in the medium term. For taking off, our industry needs to implement developments verified for food manufacture. For that reason, the technology as much as investments they are two indispensable tools. We have already proved with intermediate positions trying to create a capital market, with AFJP (pension funds) and other types to aim cash flows to the production, the experience were frustrating. We have as an example, Japanese companies that at the end of the war received USA capitals, and they not only contributed with their technology, but financial resources as well. The strong saving capacity and capitalization of those corporations, supported by rigorous development plans, allowed the Japanese capitals slowly retook the control of the main companies. In addition it also made possible that Japan developed own technologies and since twenty years it has been an exporter of know how to such industrial centers that before supplied them. With the plan running a phenomenal explosion of foreign exchange took place.

Incorporate the Best Production Practices (the inventors of the Kaizen, Kamban, and Just in Time, Quality Circles, Jidohhka, and Deming).

In order to understand the magnitude of which we would be incorporating we review some basic concepts. If we watched them under a retrospective manner will allow us to understand more about how in only forty years from the end of the war, Japan reached the second position as worldwide economic leader. Kaizen means improvement and it is a key of Japanese competitive advantage. In addition it means continuous improvement in personal, familiar, social life and in the work. When it is applied at work, it is continuous improvement that involves all, businessmen, managers and workers equally.

Operations Scale, reduction of production costs, Just in Time is a technique developed for the production control and the stocks that is part of the Toyota’s system production. It was created to avoid the waste of production. Warusa-Kagen is a term that means the observation of the things that still are not a problem, but they do not go absolutely well. The worker is who becomes a first grade of improvement and prevention. Kamban means signboard. This is a communication tool in the “Just in Time” system of production and stocks control. We could follow analyzing the benefits that means to incorporate the technology and the practices that reached highest productivity; best quality and flexible technologies for manufacture practices in a very short time, by means of an alliance with Japan. To better prices of exports in an economy as Argentina, better internal prices that benefit our local consumers. As a result, it would grow the employment based on the activity levels and it is going to generate a virtuous circle of production and employment.

Immediate access to Traditional Markets of Japan

The increasing importance of Asian markets for the Japanese exports, those fully surpasses the exports volume to the United States, endorses the strategic interest of Japan and ours to join, to participate in the consolidation of that economic geography base of domestic consumers in the Asian Pacific area. The direct foreign investments made in the region by Japan, show that trade with Asia will continue increasing, since a significant percentage belongs to the commerce "intra-company" of the conglomerates and its regional subsidiaries. Could we go into markets together with Japan and its subsidiaries in the region, to diversify and commercialize new products from Argentina’s plants? The answer is yes.

We could extend its product portfolio with product lines or families that are absolutely lacking in it. Commerce and investment affect the slight joint of industrial and technological Japanese policy. This situation contributes to explain why we could copy the Asian model (taking into consideration the differences of the case) that has become a region more and more centered in commerce and investment joints together Japan, with so favorable results. The idea is to place us in Japan’s hand since today it is the dominant player in Asia, technological leader in the region, main supplier of capital assets, "the main exporting center", its main financing source and external assistant in development and more and more main exports destination.

Healthful Business Relations

Japanese companies have made sure not only profits of participant companies, but a maintained increase the regional productivity, as well as improvement of living conditions and consumption in all countries in which they conducted its actions. We observed that despite being an eminently private process headed by the own companies, the growth of the Japanese direct investment is a fundamental component of the industrial and technological policy of Japan. Frequently it has been reinforced by assistance development programs handle by the Japanese government. The growth in Japanese direct investment is the immediate and non-accidental result of maturity of the own internal market and the increasing necessity to beat local limitations in the economic growth.

Increase of local costs of production, saturation in the internal market, technological development, protectionism and commercial barriers that other countries apply.

Appropriation of "Cultural Know How" from Asian Markets

After the Japanese government lifts restrictions to capital flows toward outside, the national companies began to take action with extreme aggressiveness in order to grow in sales and to produce even more in the regional markets of the Asian east. In this way they exceeded the American investments. How they do? They invest whenever possible in majority subsidiaries to make sure cheaper supplying sources for they production, a big part of them are exported. Between 1977 and 1988, the direct investment of Japan in the region of Southeast Asia quickly grew more than twice with regard to the United States that was tripled. In that period the exports reached the sidereal number of 32 billion dollars. Exports to third countries, as well as the direct sales in the local market of receiving country, have continued being the main attraction for new investments from Japan. At the same time that countries as Korea, Indonesia or Malaysia arose as receiving for investment for the manufactures production, for many Japanese companies the Southeast Asia quickly became its main inputs source for the production and provisions for exporting to other regions of the world.

Long-term Planning:

The enormous exports of Argentine products made by the alliance with Japan must be made with increasing levels of added value. It is a central objective of industrial policy and economic planning in general, since with this proposal in the future, we aspired to generate currency income from financing sources unknown.

Since the mechanisms of market by themselves cannot guarantee stable and necessary foreign currency income based on a mere interchange of goods and services to serve the renegotiation of national debt, this proposal occupies an absent and interesting space for all interested sectors. I am proposing to use the commerce capacity intra Japanese company with its own channel of distribution of the subsidiaries in all parts of the world. In addition, this will grant huge advantages for barrier of imports in biggest and protectionist countries. For example in the United States 73 percent of Japanese products that enter the country, do it through Japanese companies that are settled down. Everything is made within the legal channels of commerce and competition, but full optimizing the existing possibilities.

"Pro industrial” influences from Japanese Companies

Repeating that peculiar strategy government-industry practices by Japan, with approved goals by consensus in the long term, in which the essential is not the speculation and fictional immediacy, but the well being, the balanced development of society and economy as a whole, will represent a decisive and influential paper for Argentineans of the last generations. Creating and teaching the results and verifying the best standard of living that offers this option, we could have an own cultural dynamics of affection for production and work, which certainly we have left on one side. We could replicate the Japan Productivity Center, a labor University that has a program to educate the union executives in strong concepts of businesses administration, so that they could negotiate better with management and could work in a close way.