GM had early start in Japan but was hobbled by nationalism

General Motors' history in Japan is nearly as long as the company's itself. The first Buicks and Cadillacs arrived in 1915, just seven years after the automaker was founded.

GM soon set up a local subsidiary and even opened an assembly plant on the Osaka waterfront, complete with its own test track and a Shinto shrine dubbed the "White Chrysanthemum." From the late 1920s until Pearl Harbor, GM and Ford Motor Co. dominated local production and sales.

Now here's the great "What If":

What if Gen. Douglas MacArthur's anti-carpetbagging policies and Japanese protectionism hadn't colluded to all but bar GM's return after World War II? Might Japan's emperor today be riding in a Cadillac instead of a Toyota?

Rosy outlook

That's probably a stretch. But before hostilities, GM's outlook in Japan was rosy indeed.

Its Osaka plant was churning out Chevy cars and trucks, Buicks, Pontiacs and Oldsmobiles from knockdown kits. The company had nearly 300 employees and produced more than 100,000 vehicles in its first 10 years — an era before Toyota Motor Corp. even existed.

GM paid its Japanese employees handsome wages and granted both Saturdays and Sundays off, something unheard of in Japan. It quickly became a magnet for young talent.

It all ended with the outbreak of war in 1941. Japan's government confiscated GM's Osaka factory, and the plant was damaged by American air raids during the conflict's closing days.

But a bombed-out factory was only part of the reason GM didn't rush to return.

After the war, MacArthur and his U.S. occupation overseers aimed for a strong, economically vibrant Japan as a bulwark against communism in East Asia. The last thing they wanted was American interlopers snatching business opportunities from war-ravaged locals.

Import barriers

Japanese officials were only too happy to oblige. After the occupation ended in 1952, they ramped up tariff and nontariff barriers to automotive imports. Tight restrictions on wasting scarce foreign currency on imports all but ensured individuals never would get behind the wheel of a Chevy.

Not that GM was all that interested. Back then, the average Japanese could barely afford rice, let alone a car. GM saw bigger potential in milking the postwar boom in its home market.

In any event, Japan's true protectionist colors were already showing before World War II.

In an effort to develop domestic expertise, the military-controlled government in 1936 required auto companies operating in Japan to be at least 50 percent owned by Japanese nationals. The new rule limited foreign carmakers' local output to less than 3,000 units a year, a fraction of GM's capacity in Japan. The law also ladled on preferential incentives for domestic champions.

The government wanted to direct vehicle production toward trucks for the war in China. Toyota and Nissan were the favorites, groomed to supplant the likes of GM and Ford.

Even former Toyota Chairman Eiji Toyoda called the new law a "very low blow."

Toyoda knew GM's Osaka operation well. He visited it while scoping potential parts suppliers in the 1930s. And his upstart company took away more than just a few production tips.

Toyota comes poaching

Toyota poached GM up-and-comers, partly by appealing to nationalism. Topping the list was Shotaro Kamiya, who worked in sales and advertising. He went on to become chairman of Toyota Motor Sales Co. GM would always be a foreign company, Kamiya reasoned — and a dead end for ambitious Japanese.

Kamiya in turn recruited two subordinates from GM: Seisi Kato, who also rose to become chairman of Toyota Motor Sales, and Shikanosuke Hanasaki, a former managing director of Toyota Motor Sales.

When he first visited Toyota's plant in Kariya, Kato recalled being taken aback by "how primitive things were" compared with GM's sleek facility. But in the end, he rejected a raise to stay at GM and accepted half the salary to join a company that had yet to sell a single car.

"Our fellow workers openly laughed at us," Kato wrote in his memoirs, before adding: "I left GM in high spirits, with the belief that I was going to help make cars for Japan."

You can reach Hans Greimel at hgreimel@crain.com. -- Follow Hans on