Tokyo Underworld (28 page)

Moreover, many of the US-made products simply did not fit the Japanese market. American washing machines, air conditioners and freezers were all too big for Japanese houses, American automobiles had the steering wheel on the wrong side, and the traditional sets of six American-made coffee cups, glasses, silverware and such were considered too many for the average Japanese family – in Japan it was impossible to sell even a set of six chopsticks. Procter and Gamble made a classic blunder when it tried to market All-Temperature Cheer, a product the advantages of which were not readily apparent in a society where people did all their washing in cold water, in a box that was too big to display on the smaller Japanese supermarket shelves. They compounded their error by promoting the product through confrontational ads, which the more genteel Japanese consumer – used to harmonious social relations in the marketplace, at least on the surface – found offensive. (P&G changed its approach and finally succeeded, after developing a special concentrated detergent, packaging it in a small plastic container, and running ‘friendly’ rather than comparative ads. McDonald’s saw sales rise when it came up with a burger slathered in teriyaki sauce, as did Kentucky Fried Chicken when it began serving fried rice balls.)

It was also telling that compared to the few thousand American businessmen based in Tokyo, there were some 60,000 Japanese businessmen stationed in New York, and they were not just there eating sushi. An oft-told story involved the Mitsubishi executive in New York who ate
three
times a night: first he would dine from six to eight, then from eight to ten, entertaining two consecutive sets of foreign clients at expensive French restaurants. His last meal came at home in response to his wife’s insistence he have Japanese food. ‘Americans won’t go to those lengths to develop business contacts,’ the well-fed executive said. ‘They want to go home at
5.00 to their families.’ And
that
was why, in his opinion, America was the country with the trade deficit.

But the Americans had an argument too. Because of government controls, restrictive bureaucratic regulations, red tape and other barriers, visible and invisible, there remained all sorts of salable American products that were kept out of Japan – a full two decades after capital liberalization and market-opening measures had begun under pressure from foreign governments. A US-made muffler was a quarter the price of an identical Japanese-made item, but you couldn’t find one in most supply shops because shop owners were pushing the wares of domestic automakers, with whom they had long-standing strategic ties. Can crushers, Peerless pumps and garbage disposals, which were ideal for a country like Japan with no space, sold for several multiples of their US retail cost because somebody was controlling the distribution rights. Through the 1980s, the era of ‘open Japan’, Motorola arguably had the best cellular phone in the world but was kept out of the lucrative Tokyo and Osaka markets by Japanese government restrictions until Japanese makers were in a position to face the competition.

The fact of the matter was that there was just too much going on behind the scenes for an outsider to compete on an even keel – manufacturers and distributors in cozy relationships, corporations closing ranks through cross-shareholdings, powerful industry associations lobbying and scheming. No better example of this existed than in the construction industry, which was and is almost totally devoid of foreign participation.

Perhaps the single most striking thing about Japan over the last half of the twentieth century was the sheer amount of construction that was constantly going on. Everywhere one looked there was a building in the process of being torn down or put up, a new subway being dug, a bridge being built, highway sound barriers being put up. Construction investment had increased sixfold in the years since the great Olympic build-out, which itself represented a
sixfold increase over what had come before. By the late 1980s, someone had estimated that the average life of a structure in the city was only seventeen years. And a national fondness for new architecture had little to do with it.

Consider the following statistics. As this book is being written, there are approximately 500,000 construction companies operating in Japan, which employ some 6 million people, or roughly 10 percent of all the workers in the country. Construction investment annually accounts for 20 percent of the GNP, which means that Japan, as a country, spends thirty-two times as much as the United States does in the same sector of the economy, when the size difference of the two nations is factored in.

Much of the construction is not even remotely essential. Great sections of the coastline are covered with unnecessary concrete and sea breaks, remote rural stretches dotted with paved hillsides and useless highways. Tokyo, which spends roughly half of its annual budget on public works and construction, has become a city in which almost all the green has been replaced by concrete and wire.

What has caused it all is money. Construction companies have been among the largest of all political campaign contributors. They also have deep ties to organized crime, which controls work crews and supply companies and in some cases owns construction firms outright. The relationship between industry and the government represents what one analyst has called the ‘largest instance of official corruption in the advanced world’.

Public works have long been parceled out by a collusive bid-rigging system called
dango
, in which the contestants for a public works project decide in advance among themselves which company will get what contracts and even determine what the respective bids will be. It is a long-imbedded system designed, in part, to make sure everyone gets a piece of the pie, therefore maintaining harmony in the marketplace and avoiding the much-dreaded onset of ‘confusion’. If there is disagreement among the contenders, politicians and ministry officials make the final
decision, for a ‘mediation’ fee, the arbiters not required by law to reveal their criteria for choosing the winner on any given bid.

The results doubled and tripled costs for the taxpayer – and a market closed to outside competition. Angry US trade representatives, alarmed that Japanese construction companies rake in $100 million a year from US government projects, have officially deemed
dango
a trade barrier, a move that has done absolutely no good because LDP politicians are getting too much money under the table in kickbacks from contract bid winners. Better the Japanese demand that the US federal government get the Mafia out of New York.

The bubble economy of the eighties, with its sudden jump in real estate prices, just made things worse, for it gave rise to a new mob activity called
jiage
– meaning the business of persuading recalcitrant owners to sell their property so that the mob could consolidate it and sell it for the construction of million-dollar office blocks. Popular techniques of persuasion included dead cats at the doorstop, midnight visits from mean-looking thugs, and bombs in the mailbox. By such tactics,
Jiageya
(specialists in the practice) helped create one of the toniest new addresses in the city, Ark Hills, a stone’s throw from the original site of Nicola’s. A high-gloss complex of high-rise red brick and marble buildings and outdoor pools, it showcased the All Nippon Airways Hotel, with its polished marble lobby, shimmering indoor waterfall, and glistening high-tech studios of Asahi Television. Its smooth, glamorous exterior was in sharp contrast to the brute force that had, at times, been necessary to create it.

The bubble economy had its own impact on the affairs of Zappetti. Almost overnight, the cost of his rent doubled, as did the price of meat, vegetables, hot towels and other supplies he regularly bought. He found it difficult to raise his prices because so many of his regular customers were foreigners on dollar-based incomes, the value of which was rapidly eroding. Instead, he decided to go back into the farming business. And thus did he get
yet another lesson in how things really worked under the surface in Japan.

Allowed by the court to use his Hokkaido land while the lawsuit with his former general manager was being litigated, Zappetti decided to take up hog breeding. He would raise hogs to sell and make a profit and, at the same time, provide himself with a steady access to cheap pork and sausage for use in his restaurant.

The pig farm had originally been the suggestion of a Hokkaido neighbor whom Nick had hired to look after his empty state-of-the-art barn. The man’s name was Kobayashi, but Nick dubbed him ‘Farmer Brown’ because Kobayashi bore a strong facial resemblance to Nick’s long-deceased cousin ‘Three-Finger Brown.’

‘Pigs are better than cows – or mink or rabbits,’ Farmer Brown had said. ‘See, you only have to keep them around for six months of the year and you can get your initial investment back fairly quickly. All you have to do is buy piglets, feed them, and sell them when they get big. Since the major pork producers overcharge, you can undersell them and still make a profit.’

It seemed to make sense, given that pork was 2,300 yen a kilo (nearly $10 a pound) and rising. But Zappetti should have known better, given all that he had been through before. And, in fact, his friends tried to warn him.

‘What the hell do you know about pigs?’ chided his neighbor, the White Russian doctor Eugene Aksenoff, from behind his desk at Roppongi’s International Clinic. ‘What are you doing back up in Hokkaido anyway? Your place is in the restaurant. Put your chef’s hat back on. Stand by the door and greet everybody in your funny Japanese. The Japanese love that kind of thing. That’s where the money is. Forget this other stuff.’

Aksenoff knew whereof he spoke. Born in Manchuria and educated in Japan, he had paid his way through medical school in Tokyo by playing the role of enemy Americans in wartime propaganda films. Venal, stupid enemy Americans, it went without saying.

But Zappetti, a born enemy of common sense, refused to listen. Thus, in 1982, in his first official act as a Japanese citizen, he purchased thirty White Landraces and bred them over three generations, producing something called the F-1 pig, which he has been informed, was the most coveted type of pig in the marketplace. In the process, he made a number of interesting discoveries. One was that pigs were very delicate creatures. They had to be given all sorts of inoculations to prevent disease and they had to be handled very gently. Ushering his porcine charges into his barn one day, he whacked one of them with a stick and the startled swine collapsed and died of a heart attack on his mud-covered galoshes, the sudden coronary representing a loss of several hundred dollars.

The biggest surprise of all was the trip to the slaughterhouse, where a price would be offered only
after
the pig was slaughtered. Workers would hoist the pig up on a chain, slit the throat, and cut the arteries to the heart. Then, they’d put it on a roller conveyor, cut off its feet, skin it, and cut it in half lengthwise. Only after that would the appraiser examine the meat and determine a price. If the seller thought it was too low, he couldn’t very well say he was going to take his pig home.

There were also pages of rules to follow. The pig had to have a certain girth and a certain length. There were upper limits on fat content. Fines were imposed for each violation, which served to lower the final selling price. A pig that was too long, too short, too fat or too skinny was penalized. Since the appraisers also had quotas of fines they had to fill (another belated discovery), sooner or later they got Farmer Koizumi for some transgression or another. By the time they were finished, Nick’s profit margin had almost disappeared.

It all became more understandable when Nick discovered that the slaughterhouse and its staff, including the appraiser, all belonged to Nippon Ham, Japan’s leading pork producer.

For a time, Zappetti took to bringing gifts to the slaughterhouse
officials, because, as he was frequently told, gift giving was the Japanese way. Gifts helped form human bonds. They were the grease that smoothed social and commercial intercourse, which was why twice a year, during the year-end and midsummer months, the Japanese went on a nationwide binge of giving gifts, sending bath soap, boxes of fruit, Scotch whiskey and such to everyone of social or professional importance in their lives. In fact, half the families in Japan never bought bath soap because they were given so much on those occasions.

The custom of gift-giving demanded that certain forms be observed. One had to give to match the recipient’s status, which in Nick’s case meant buying from the most exclusive and expensive department stores in Sapporo, the gifts wrapped in paper that advertised their origins to everyone.

Thus laden with Napoleon brandy and other presents did Zappetti go calling on the officials at their homes, hand-delivering his gifts to demonstrate even more ‘sincerity’. In turn, the officials began giving better prices on his pigs.

The idea of it all irritated Zappetti, however. He got tired of having his arm so subtly twisted. One night during a drunken session with an appraiser, he lost his temper. ‘You ought to be ashamed of yourself,’ he said. ‘You’re always on the take.’

That was the end of the special deals.

An independent breeder couldn’t win. If he bought baby pigs in the spring, they were ready for sale in October, which, not surprisingly, was when the price went down. If he kept the pigs longer and waited for the price to rise again, he had to pay more to feed them. In the end, it was difficult to make a profit.

Nippon Ham knocked everyone out of business in one way or another. Nick was not surprised when Nippon Ham started its own pig farm in the area some years later. From that point on, the regional slaughterhouse, where he had been going, refused to take his pigs. He had to travel to Hakodate, several hours away, which was an even bigger expense than before. Finally, he had to quit.
And he wasn’t the only one. Eighty percent of the hog raisers that existed in Hokkaido when Nick started up his farm eventually went out of business, even though the total number of hogs raised on the island increased during that same time span.