Building the Honda Sales Network

The new American Honda headquarters building 100 in Torrance, opened in 1990. In all, eleven separate buildings occupy the same campus.

It was by no means unanimous that Honda should go it alone, however. Some directors insisted that the company should enlist the help of a trading company in exporting products to the U.S.

Fujisawa, though, had already decided not to rely on a trading company, saying he preferred that Honda develop a sales network of its own. Eventually American Honda Motor Co., Inc. (American Honda), was established as a wholly owned sales division of the parent company. Moreover, Fujisawa instructed Kawashima, then just 39 years of age, to relocate to the U.S. as the general manager of the new American company.

Fujisawa had the benefit of considerable experience building Honda's domestic motorcycle sales network. He was also aware of the pitfalls that awaited businesses when they depended on third parties to do their legwork. He was afraid Honda would not be able to do business as it wished when the other company's interest took priority. Moreover, he believed that selling durable goods such as motorcycles implied a responsibility for service after the sale.

It was a bewildering question for Kawashima. "I wonder if I'm really up to this big job," he thought. "What a huge project they've given me!" He had no choice, then. Knowing he couldn't simply give up before attempting anything, he went to work on the establishment of American Honda.

Kawashima chose Los Angeles in November 1958 as the most likely location for Honda's American offices, following a tour of several candidate cities. Los Angeles had a warm hospitable year-round climate, with minimal rainfall. Since climate was a determining factor in sales, the fact that there was so little rain meant the company could be in business all year long. It was the perfect environment for American Honda.

Los Angeles was also home to many Japanese-Americans, about whom Kawashima felt a certain kinship. For Kawashima, who would soon be taking up an enormous task in a land he knew so little about, the presence of this community was a boon to his morale. These were fellow countrymen, he thought, who would be there to back him up.

His investigative tour thus concluded, Kawashima quickly drew up a plan for the establishment of Honda's new American sales division. This plan, however, would require the approval of the Ministry of Trade and Industry and the Ministry of Finance, since foreign currency was to be taken out of the country in order to establish a corporation overseas. Government regulations were in place to control how much currency could be taken out of Japan.

Honda's application to take out foreign currency in the amount of $1 million in capital funds (then approximately i¯360 million) was mercilessly denied by the Ministry of Finance. The ministry maintained that a motorcycle maker such as Honda couldn't possibly succeed in the United States, when even a major car manufacturer that had established a sales company there was experiencing great difficulties.

Kawashima continued his visits to the Ministry of Finance, hoping to settle the issue. Finally, in April 1959 Honda was given the approval to take out foreign currency in the amount of $250,000 in capital funds. This, however, was under the condition that cash equal to just half that amount would be taken out of the country. The rest was to be taken out in the form of products or investment in kind.
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<< Achieving a Breakthrough in America Photo >>
<< Building the Honda Sales Network
<< A Wind from the West, Blowing Across the American Landscape
<< Selling to America ... with Eight Employees
<< Problems with the Main Product
<< The Motorcycle as Popular Product
<< Changing the Image of an Entire Industry
<< Nicest People Campaign Causes a Sensation
<< Coping with a Sales Slump in the Mid-60s
<< Building a Network for Auto Sales
<< Satisfaction: Our Own Customers, Our Own Work
<< American Activities Take Root

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