Toyota send Britain EMU wakeup call<\/p>\n
By Brian Williams<\/p>\n
TOKYO (Reuter): Toyota president Hiroshi Okuda sent a belated
\nwake-up call to Britain with his forthright comments about the
\nimportance to Japanese investors of a single European currency,
\nfinancial analysts said on Thursday.<\/p>\n
While the message was received by some in Britain as an
\nunwelcome political signal, or even interference in its domestic
\naffairs, it shows that uncertainty over Britain's role in Europe
\nis a nagging concern for Japanese firms deciding on where to
\ninvest and base their plants, they said.<\/p>\n
In comments to reporters on Wednesday, Okuda stirred up a
\npolitical row by seeming to rule out building new factories in
\nBritain if it stays out of a European single currency.<\/p>\n
Okuda said Toyota could rather put new investment in
\ncontinental Europe if Britain did not sign up for monetary union.
\nThe analysts said there was a reservoir of goodwill for Britain
\nas a base for operations due to the warm welcome it had given in
\nthe past to Japanese firms seeking a toehold in Europe.<\/p>\n
Finance Ministry figures show how popular Britain has been as
\na European base for many Japanese firms.<\/p>\n
Japan's direct investment in Britain totaled 333.2 billion yen
\n($2.73 billion) in the year to March 1996, which accounted for 40
\npercent of its total direct investment in Europe.<\/p>\n
"Japan has about 40 percent of its direct investment in Europe
\nin Britain, so businesses here are concerned about whether
\nBritain will be a member of the European monetary union (EMU),"
\nsaid Larry Duke, vice president at Citibank Japan.<\/p>\n
"If it looks likely that 1999 is going to be the date for
\nstage one of EMU, then it's incumbent upon Britain to become an
\ninitial member of EMU because that would reduce the uncertainty
\nfor Japanese investors," Duke told Reuters.<\/p>\n
"Awareness (of EMU) has gone up a lot here and the Japanese
\nwill continue to be more and more aware of it," he added.<\/p>\n
An analyst at a Japanese research institute said it would be
\nno surprise if Japanese companies decided to scale down their
\ninvestment in Britain if London stayed out of EMU.<\/p>\n
"If Japanese companies were able to trade freely without any
\ntariff in continental Europe in the aftermath of EMU, it would be
\nbetter for them to deal with this large market than with Britain
\nif it is excluded from the single-currency trading zone," the
\nanalyst, who asked not to be identified, said.<\/p>\n
"I think Toyota is giving a warning to Britain that it should
\nmake more effort to ensure equal investment conditions even if it
\ndoesn't join EMU," said Kazunori Tokuda, a car industry analyst
\nat Wako Research Institute.<\/p>\n
Based on cost alone, Britain would still be Toyota's best bet
\nbut the firm might consider more output in continental Europe to
\nget closer to consumers, Tokuda added.<\/p>\n
Rival carmaker Nissan Motor Co Ltd said Britain remained an
\nimportant international base and that it had no plans to review
\nits investment strategy.<\/p>\n
"Britain is an important car supply base on the global level.
\nSo we have absolutely no intention now to change that status," a
\nNissan spokeswoman told Reuters.<\/p>\n
Honda Motor Co Ltd also said it had no plan to change its
\ncurrent output in Britain regardless of the EMU.<\/p>\n
In a further statement on Thursday, apparently designed to
\ndefuse the row in Britain, Toyota's Okuda said investment in
\nBritain remained an option but he also stressed the importance of
\na unified currency for firms operating in Europe.<\/p>\n
Japanese electronics giant Sony shrugged off the issue.<\/p>\n
Sony Corp president Nobuyuki Idei told Reuters in an interview
\nthat there would be virtually no impact on Sony's operations even
\nif Britain did not join the EMU, because it has diversified its
\nproduction bases in other European countries.<\/p>",
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