March 14, 2005

The U.S.A. is Losing Ground to Japanese in Mexico

By Nancy Conroy

Japanese trade missions just keep coming to Baja California, Mexico, bringing businesspeople, government representatives and financial resources to the state.  The potential investors represent any number of major Japanese manufacturers and brands, all hoping to establish factories in Mexico and emulate the successful Toyota operation in Baja California.

One conceivable new plan is a Japanese-German pact to build a modern replacement for the Volkswagen sedan, this at manufacturing facilities operated by Toyota in the beachfront community of Rosarito some 20 miles south of the border.

Actually Japanese investment is all over Baja California, from factories along the border to tuna fattening farms to the fishing industry.  As well, the Japanese have been major players in the credit market, providing numerous credits for infrastructure construction.  Drainage and water projects in both Ensenada and Rosarito are being financed through Japanese loans, while in Tijuana schools, hospitals, and freeways have been constructed with money from Japan.

Some might say that all of this investment from Japan is a recent development, based on a Japanese desire to access the U.S. market.  But this type of Japanese long-term planning is nothing new, as in actuality the Japanese have been fomenting strong relationships with Mexico for years.

Furthermore, the automobile-manufacturing project would not be the first time that Japanese and Germans have discussed major plans for Baja California.  Just prior to World War I, a German-Japanese alliance had designs on the California to Baja California region, a historical background that demonstrates Japan has had its eye on the area for longer than one might think.

Just before World War I, Japan and Germany launched a plan for a Japanese takeover of California, to be achieved through an alliance with Mexico.  That plan was part of a little known footnote in world history that had the potential to change the course of World War I.

Prior to the entrance of the United States into the war, Germany attempted to bring Mexico into the hostilities on its side.  Germany and Japan realized that then Mexican President Venustiano Carranza harbored considerable resentment towards the U.S., and he could possibly be persuaded to join a war effort against the U.S.

So the “Zimmerman Telegram” was sent to Mexico, a communiqué transmitted by the German ambassador.  That telegram asked Mexico to provide refueling stations for German ships along the Gulf of Mexico in the states of Veracruz and Tamaulipas, so that the ships could attack European supply convoys crossing the Atlantic to and from the U.S.  The thinking was that the strategy would bring Mexico into the war, and probably the U.S., thus generating a U.S.-Mexican conflict.  If Mexico agreed, at the end of the war Germany offered to return the territories of Texas, Arizona and New Mexico to Mexico.  California, however, would go to the Japanese.

Historical evidence suggests that Carranza seriously considered the offer, although in the end he declined because he was not certain that Germany would fulfill its pledge.

After World War II, Japanese war refugees settled throughout Mexico and began to create strong cultural ties with high-level Mexican industrialists.  In later years this group formed the Japanese-Mexican Lyceum, an expensive and exclusive private school that has educated the children of ex-presidents Carlos Salinas de Gortari and Ernesto Zedillo, two former Ministers of Education, and other elites.  Formerly crème de la crème children and leaders were educated in the U.S. and Europe, whereas now there are those who receive a Japanese education.

And with the high-level ties, Japanese companies experience little government interference in their investment projects, while they also enjoy permanent good relations with Mexico.

As for Baja California, it is increasingly easier for state and local governments to get financial help and business assistance from Japan than from the U.S.

If Japan can create a yet stronger foothold in Baja California, the former can consolidate access to the U.S. market and build a more effective base for a Pacific Rim stronghold.  As such, it is fair to assume that the Japanese are planning to methodically strengthen their ties in this area in accordance with a long-term plan.

This Japanese influence and involvement should be a wake-up call to the U.S.  What is more, with Baja California right next-door U.S. industrialists and entrepreneurs are missing their chance to create a regional economy with Mexico — an error that includes the risk of losing even more ground to Japanese competition.

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Nancy Conroy is Publisher of northern Baja California’s biweekly Gringo Gazette North.  She can be reached via e-mail at nancy@gringogazettenorth.com.