[Viewpoint] Americans are sore losers

It was hardly surprising: A jury in San Jose, California, delivering a one-sided verdict for Apple over Samsung Electronics in a legal battle over smartphone technology. It is the “American style” of doing things when their interests are threatened. It is the yardstick Americans have stuck to in every economic and business battle. Anything that Americans are not tops at is evil and dangerous.

When Apple embarked on its legal crusade against its smartphone rival Samsung, we were reminded of the trade friction between the United States and Japan over semiconductors 30 years ago. The clash over computer memory chip technology was the first kind of head-on industrial war between manufacturers of two countries, which later spilled over into a U.S.-Japan trade conflict.

The Semiconductor Industry Association that represented American chipmakers in 1985, hit by an industrial slowdown, filed a petition with the Office of the U.S. Trade Representative accusing Japanese competitors of unfair trade practices. Micron Technology sued Japanese dynamic random memory chipmakers for “predatory” business practices and dumping products at below cost.

Intel, Advanced Micro Devices and National Semiconductor also ganged up on Japanese companies, filing anti-dumping suit against Japanese erasable programmable read only memory chips. Citing the plight of American industry, the U.S. Department of Commerce slapped punitive countervailing duties of between 21.7 percent and 188 percent on Japanese memory chip imports the following year.

Japan half-heartedly signed a semiconductor trade agreement in which it promised an increase in U.S. companies’ share of the Japanese market of up to 20 percent. When U.S. chip sales failed to pick up the following year for obvious reason, the U.S. Congress passed a resolution demanding the government take punitive action against Japan for failing to honor the 1986 agreement.

Washington pounded Japanese electronics imports with punitive tariffs, imposing as much as 100 percent duties on Japanese TV sets. Washington’s interventionist trade actions to contain Japanese electronics producers continued until the mid-1990s.

Anti-Japanese sentiment peaked during the fight with the outperforming Japanese semiconductor producers. In a poll by The Washington Post and ABC, 70 percent of respondents feared the Japanese would buy all of America if the government didn’t do something fast.

The media went in anti-foreign frenzy. Americans employed antidumping and punitive tariff weapons in similar trade wars and Korean companies often fell into the trap. In the new mercantile war, Korean companies are specifically targeted with a new, advanced and mightier weapon called a patent. The strategy of the game, however, remains more or less the same.

The victor from the U.S.-Japanese semiconductor war was neither of the two countries. It was Korea. Intel and other U.S. firms pulled out of the overly competitive memory chip business and Japanese companies, weary from lengthy battles with the U.S., slowly gave up the fight. Korean manufacturers went on with innovation and efforts to reduce production costs to become the market leader at the end.

During the warring states period in ancient China, a strategist in the Jin Dynasty advised the king of a winning strategy to capitalize on a lengthy war between the Han and Wei states: “When big and small tigers fight, the small one will die and the big one will be wounded. If you hit upon the big tiger still recovering from the earlier fight, you can win over both states.”

The mobile phone market is also often compared by industry observers to the bloody rivalry of the Three Kingdoms in ancient China. At Apple’s U.S. courtroom feat, observers joked, “A dead Zhuge Liang (Steve Jobs) scares away a living Sima Yi [Zhuge’s rival of Wei].” But after the great strategist died, Shu Han slowly was whittled down: Zhuge’s protege Jiang Wei continued with the northern expeditions and fought with Wei, but failed to make significant gains. At the end, Shu Han surrendered and fell while Sima Yi went on to live in prominence.

To build a country and defend one is not the same work. It is not entirely wrong to claim Americans discovered, invented and created almost every modern cutting-edge technology. They were great builders, but not such good defenders. If they had not been self-indulgent with their pioneering works and endeavored to stay on top of the market with innovations, the latecomers would not have dared to jump into the fray and attempted to outperform them.

But somewhere down the road, American cars and semiconductors became mediocre and failed to appeal to consumers. Turning the blame on competitors for their underperformance has not helped American industry before and won’t now.

One newspaper article questioned if Apple, having lost its drive for innovation, can merely appeal to American patriotism to survive. Without deep self-retrospection and a dedication to innovate, the strategy of relying on past supremacy cannot save the American economy.

* The author is an editorial writer of the JoongAng Ilbo.

by Sunny Yang