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Magna International Inc., the Canadian auto parts giant, is one of the biggest Canadian investors in Japan. With 55 employees in its Tokyo office and a new office in Nagoya city, Magna is making a big push for a dramatic increase in its Japanese sales. The company admits it was a latecomer in the Japan market, failing to put enough resources into its Tokyo office in the 1990s.
"We're in the position of playing catch-up," said Richard Ishii, the company's vice-president of Asian business development. "Magna has had a very tough time getting into the core group of suppliers here because we were a latecomer. We were quite ignorant of Japan, frankly speaking. But comparing 10 years ago and today, it's like night and day. We've realized the importance of having an office here. It all comes down to resources."
Magna has recruited a veteran Nissan executive, Seiichi Mihara, to become the general manager of its Japan office. He is helping lead an expansion that will see Magna doubling its Japan sales to about $2-billion by 2007. The company is aiming for $3-billion in sales here by 2010. "We are relatively close to our ambitious target," Mr. Mihara said in an interview.
Foreign suppliers need to learn the unique style of the relationship between suppliers and auto makers in Japan, he said. He compares the North American style to a relay race and the Japanese style to a rugby scrum. In North America, proposals and test data are handed back and forth between suppliers and auto makers like a baton. "In Japan, the manufacturers will never give you the baton," he said. "They want to stick their noses in everywhere. It's like a rugby scrum -- all for one and one for all."
Toyota, for example, is famous for sending an audit team to visit a supplier before it begins production.
The auditors analyze all aspects of the production process. "They want to know the inside of your underwear," Mr. Mihara said.
Under Toyota's strict standards, a maximum of 10 defects per million units is allowed. Foreign suppliers, however, are allowed up to 100 defects per million.
"They kindly compromise with foreign suppliers," Mr. Mihara said. "But the hurdle is still very high."