JIN-262 -- Honda in da House

J@pan Inc Magazine Presents:

T H E J @ P A N I N C N E W S L E T T E R

Commentary on the Week's Business, Technology and Cultural News
Issue No. 262
Wednesday, February 18, 2004

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@@ VIEWPOINT: Honda in da House

[*LAST WEEK, we mistakenly identified guest contributor Michael E.
Stanley as a "Professor" at Meiji University. He is, in fact, an
"Adjunct Lecturer" at Meiji University whose classes commence in
April of this year. Amid the current clamor over inflated resumes
regarding National Guard duty and other alleged accomplishments,
we humbly apologize for any confusion we might have caused,
or fruitless searches through piles of files. -- The Editors]

=================== THIS MONTH! ===============

In the FEBRUARY issue of J@PAN INC magazine:

>> Leo Lewis joins the Blackman family as they return to Japan for the
first time since the body of hostess Lucie Blackman was discovered in a
remote seaside cave. Lewis follows the Blackmans to the scenes of the
crime, Roppongi bars -- and a chilling courtroom confrontation with the
[READ IT: http://www.japaninc.com/article.php?articleID=1285]

>> Celia Farber reports from New York: An exclusive interview with
superstar chef Marc Samuelsson, whose latest venture, RIINGO, an
upscale Japanese-American restaurant, opened just a few weeks ago in
midtown Manhattan. Farber brings us the inside scoop on the Japanese
chef from Tokyo and his Swedish (!) culinary partner.
[READ IT: http://www.japaninc.com/article.php?articleID=1275]

>> Meet the uber-confident chief behind Japan's globally dominant
steel industry -- and the head of the ailing IRCJ, designed to save
corporations but suddenly stuck on the sidelines.

>> How bad is Japan's water? Trek with us to a UN forum to find out.

PLUS: the latest gadget gizmos, investment advice, consumer surveys
and MORE ... out NOW at (better) newsstands, and online at:


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@@ VIEWPOINT: Honda in da House

When Honda calls at 11 in the morning with a breathless invitation to
an emergency press briefing, as they did earlier this week, it makes
good sense to drop everything and turn up. These are interesting times
in Japan and elsewhere, and given the volatility of today's domestic
and global superstars, the world's second biggest automaker could
well be doing almost anything -- from announcing the takeover of BMW
to admitting to some hideous black hole in the accounts.

As it happens, Honda's morning call was about neither -- though the
actual announcement did raise the odd question over the appropriate
usage of the word "emergency."

The world's press pack duly assembled at Honda's Aoyama head office
to be confronted by a massive centerpiece of mysterious white sheets.
By the time Honda's diminutive president had strolled in, these
tantalizing shrouds were flung back to reveal a shiny new ...
jet engine?

We and the other assembled hacks could perhaps be forgiven for our
initial disappointment at this landmark launch, which eased through
the room like a collective sigh. Honda makes engines for motorbikes,
cars, boats, lawnmowers, golf carts, tractors and just about every
other vehicle on earth. The move into plane engines at first seemed
more obvious and predictable than groundbreaking.

What was significant, however, was that the announcement included
word of a deal with General Electric to jointly market and brand
the new jet engine, with a view to making it the industry standard
for small business jets.

Scratch your head a bit, glance at Japanese corporate history, and
there is actually an awful lot going on behind the scrim. Honda may
have overplayed the launch itself, but its long-term significance
should not be underestimated.

The move makes Honda the first company to enter the Japanese aircraft
industry in over half a century, and is expected to fundamentally change
the worldwide aviation scene. Other Japanese companies, including
Mitsubishi and Toyota, are now thought to be mulling airborne entries
of their own.

The emergence of the new HondaJet engine has shocked established
manufacturers such as Pratt & Whitney and Williams. Those US companies
have seen the likes of General Motors and Ford wither under the assault
of more efficient Japanese competition, and now find their own industry,
so long off-limits to the Japanese, haunted by the same spectre.

Under the terms of the agreement (which have yet to be officially ratified)
Honda and GE will jointly certify the jet, create a joint brand and market
the product together, and settle on where it will be produced commercially.

But as some analysts pointed out, although GE executives described the
deal as a "win-win" partnership, it is easy to see Honda as the bigger
victor. Honda taps into the almighty marketing muscle of GE and its
decades of contacts and experience within the aerospace industry. GE,
meanwhile, receives only the advanced technology of the engine itself.

The nature of Honda's joint venture with General Electric has set alarm
bells ringing: It is strikingly reminiscent of the deal struck more than
20 years ago between Toyota and General Motors. At the time, Toyota's
half of the bargain -- giving its technology to a competitor -- seemed
to be the short straw. As time wore on, however, Toyota used its foothold
in GM's distribution network to establish a dominance that GM has
never again been able to match.

Honda's ambitious break into the aeroplane business has been an industry
rumor for some years, but few believed the entrance would be so sudden
or dramatic. The warning signals did sound last year, however, when
former president Hiroyuki Yoshino warned his potential rivals: "If we
enter the business at all, we will make the world痴 most advanced jets."

The long unspoken taboo that prevented Japan competing seriously with
the likes of Boeing and BAE has finally been broken, and Japan's
history of aggressive market entries in autos and electronics sets a
worrying precedent for the rest of the world.

Insiders at the normally conservative ministry of Economy Trade and
Industry (METI) are confidently predicting that if they set their minds
to it, the likes of Honda and Toyota could be as dominant in aviation
as they are in automobiles. Indeed, in a move that many observers
missed 13 years ago, Toyota rewrote its articles of incorporation to
include "aircraft business" among its list of company purposes.

So watch this (aero) space.

-- The Editors

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SUBSCRIBERS: 13,626 as of February 18, 2004

Written and edited by Roland Kelts and
Leo Lewis (editors@japaninc.com)


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