Why Japanese factories in the US find a warmer welcome than Chinese ones

Four decades ago, when Ezra Vogel wrote Japan as Number One: Lessons for America, he did not mean that Japan was the No 1 military or economic power. His point: Japan was No 1 in the quality management of manufacturing companies.

When Japanese foreign direct investment accelerated in the US during the 1980s, Japanese firms brought their quality management to US manufacturing industries. In 1984, Toyota invested in the General Motors assembly plant in Fremont, California, and dramatically increased productivity at the underperforming facility by more than 50 per cent, by introducing Japanese-style quality management, called kaizen (which literally means “improvement”).

By taking half-ownership of the plant, Toyota learned how to adapt its famed Toyota Production System to work within American regulations and with local suppliers and the union. Two years later, Toyota opened its first wholly-owned US plant in Kentucky. Today, there are some 40,000 Americans directly employed by Toyota’s 10 engineering and manufacturing plants in the US.

Chinese investment in the US has steadily increased from 2009, peaking in 2016 at US$46 billion. For the past three years, this has plummeted as distrust grew between the US and China due to President Donald Trump’s trade war.