I just ran across a letter of June 28, 1985 – 40 years ago – which led to the foundation of the Caux Round Table. The letter was sent by Frits Philips, former chairman of Philips, in Japan and a leader of Moral Re-Armament, an NGO advocating cross-culture value alignments and headquartered in Caux, Switzerland, to Mr. Yukihisa Fujita of Moral Re-Armament Japan.
Here is the letter:
The article, which Philips referred to, was a report of the Philips Electronics Company on “unfair” Japanese business practices. It was as if Donald Trump had written it. The Dutch reporter wrote after reading the report: “Japan is busy disrupting the international economy. Japan is lusting for world power.”
The accusation was that Japanese Zaibatsu industrial groups, coordinating with the Ministry of Trade and Industry, set out to crush competition in the making and selling of high value electronics. Horrors! A group of Japanese companies set out in the U.S. to break through into the American market for televisions by making and selling a color television that cost only $400.
Then, it was alleged, the alliance of Japanese companies used the profits from the sale of color televisions to subsidize the production of video cassette recorders to sell them abroad at a low price. Thus, when Philips came out with a superior quality video cassette recorder, Japanese companies had 95% of the world market.
Having gained a virtual monopoly in the field of consumer electronics, the Philips report alleged that Japanese companies were getting ready to give a “neck chop” to their European competitors by setting product standards, selling at a cheap price and marketing their products. The Japanese were also scheming to take American market share in the emerging product category of “professional electronics – monitors, telephone systems, copiers, home and personal computers.”
Their tactic was to subvert competitors with cheap prices. First in components, then in high-grade sub-systems and finally, with the whole apparatus. “The Japanese don’t mind foregoing profits for a while, provided that they can earn twice as much later on.”
Japan put difficulties in the way of permitting American companies to sell in Japan. Japanese companies were financed up to 80 % or 90% of their total capital with low interest loans.
The Philip’s report considered increasing tariffs on imported Japanese electronics, noting that an import duty of 19% on compact disc players has given Philips room to become one of the largest makers of these machines in the world. But Philips took losses up front on the manufacture and sale of CD players in order to gain market share.
Frits Philips and Yukihisa Fujita, with support from Moral Re-Armament, then convened the first meeting of what would become the Caux Round Table at Mountain House in Caux, Switzerland, in 1986 to discuss better rules and practices for international competition in free markets in all countries.