June 29, 2012

Rudlin Consulting provides expert analysis and consulting to people working in or with Japanese companies in Europe.

Whether you want to approach Japan headquarters (the ‘honsha‘) as a supplier, subsidiary or partner, we can help you understand its corporate culture and strategy, and identify the people and processes necessary for success.

We can also provide cultural awareness training for your employees, as the exclusive representative in Europe of Japan Intercultural Consulting.

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February 10, 2016

nikko monkeysWe have decided to celebrate in 2016 – with a series of lunch seminars for clients – the 12th anniversary of the founding of our company. The excuse is that we have completed the full cycle of the Japanese/Chinese years, back to the Year of the Monkey.

Reflecting on the trends we have seen evolving over the past 12 years for Japanese companies, the most obvious development has been the increase in major acquisitions by Japanese companies of Europe-based multinationals. Most recently, Mitsui Sumitomo Insurance Group acquired UK Lloyd’s underwriters Amlin for £3.5bn and Hitachi has just finalised the acquisition of AnsaldoBreda and Italian company Finmeccanica’s stake in Ansaldo STS, for around €800m.

Both these acquisitions are representative of a structural change I have seen evolving in quite a few Japanese multinationals. Hitachi has moved the global headquarters of its rail business to the UK and it seems the Japanese insurance majors, who have all now acquired underwriting firms based in the UK, are hoping that their acquisitions will act as pivots for further global expansion.

Clearly Japanese companies are not just buying into a market with their acquisitions, but hoping that they have also acquired global management capability. Whereas in the past there were some examples of Japanese companies using their US subsidiaries to manage the global network, it seems now that Europeans are being asked to manage operations in the US and beyond.

This is partly due to another long term trend in Japan, which is the lack of “global jinzai”, particularly at senior management level, to manage overseas growth, but it also reflects the fact that European multinationals are used to managing companies scattered across many countries, in a virtual matrix structure. This means the heads of various business units or functions may not all be physically located in the same headquarters. European managers need to have strong, globally effective professional expertise but also good cross cultural communication skills to be able to manage teams remotely.

Europeans are comfortable with doing this in Europe and to some extent working with the US too. However working with Japan is still a new experience for most of them. They are often baffled by the fact that their professional expertise and remote communication skills are not enough to persuade or win support from Japan headquarters. Managers in Japan headquarters are only used to communicating with people who are physically present in the office. They tend to be generalists, who do not find arguments grounded solely in expert opinion all that convincing.

Unless conscious effort is made to overcome these communication barriers, Japan headquarters maybe behave like the three monkeys, who see no evil, hear no evil and speak no evil. In Japan my understanding is that this is seen as virtuous behaviour. However, in the West this is seen as ignoring problems and misbehaviour until it is too late. I foresee the next twelve years of my business as being about opening eyes, ears and mouths on both sides of the world.

 

Our next Honsha Lunch will take place on March 11 2016 in London.  Topic: Diversity & Inclusion in Japanese companies in Europe and Japan.  Further details and registration here.

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January 31, 2016

shukatsu-seminarShushoku Katsudo, the graduate hiring process in Japan, reaches a peak towards the end of the year, as the naitei (informal offers) from the big firms have mostly been issued, and the smaller firms and the unlucky graduates desperately try to find solace in each others’ arms.  The process is meant to start in April, when students put on identical suits and attend countless company presentations and interviews, thereby pretty much wiping the final year out in terms of getting any studying done.  Japan’s universities mostly function on the American credit system, so there is not the pressure of ‘finals’ as you get in British universities, however Japan’s academics regularly complain about the damage done to the educational experience by the system.   There have been attempts to move the start date to August, so that students can do some studying in the first term, but unfortunately, with a shortage of skilled labour, it’s too tempting for most firms not to try to buck the system.

The Nikkei Business magazine ran a series in December to guide students through the process, explaining what financial services companies and trading companies are looking for and offering.  I thought I would share it, as it gives a flavour of the corporate culture of these elite employers who are active outside Japan.  I was interested to see how much better paid on average the trading companies are than the financial services companies, and that a global mindset is mentioned regularly amongst the financial services, but not by the trading companies – presumably a global outlook is taken for granted.

In terms of overseas experience, the Nikkei says that some of the bigger banks send out several hundred people a year to overseas postings, and this is not just to support Japanese companies overseas, but increasingly to build business with local companies too.  English ability is not compulsory, but likely to be offered as training after entry.

The image of trading company employees is that they have to be able to speak English, are strong drinkers and sporty.  The trading companies themselves say English ability is not compulsory and there are even some naitei offers to people who don’t have a passport.  However all trading companies point out that they usually expect one of the three rotations in the first 10 or so years to be overseas.  The trading companies say it is not necessary to drink, but obviously it’s a bit awkward if your counterpart is a brewery.  Sportiness is not actively sought, but it’s true that on campus recruitment by employees may well focus on students who were in the same club as them.

Bank of Tokyo-Mitsubishi UFJ

Offers naitei to 1300 graduates, starting salary is Y205,000 (around £1200) a month. Average salary of all employees is Y7.91m (around £46K). They are looking for healthy curiousity, and eagerness to take up challenges

Mizuho Financial Group

Offers naitei to 1920 graduates.  Starting salary the same as BTMU. Average salary of all employees is Y7.38m (around £43K).  They are looking for intellectual curiousity, a global mindset and dynamism.

Sumitomo Mitsui Banking

Offers naitei to 1800 graduates.  Starting salary the same as BTMU and Mizuho. Average salary of all employees is Y8.79m (£51K).  They are looking for people who are good at building relationships and have a global awareness.

Nomura

Offers naitei to 600 graduates.  Starting salary is Y232,300 a month (£1350).  Average salary of all employees is Y11.93m (£69K).  They are looking for people with ambition, honesty and flexibility.

Daiwa

Offers naitei to around 690 graduates. Starting salary is Y240,000 a month (£1395). Average salary of all employees is Y10.02m (£58K). They are also looking for honesty but also a strong spirit of enquiry

Sompo Japan Nipponkoa

Offers naitei to around 750 graduates.  Starting salary is Y237,860 a month (£1383).  Average salary of all employees is Y6.6m  (£38K).  SJNK is looking for “ability to stand on your own feet”

 

Trading companies:

Itochu

Offers naitei to around 142 graduates (out of 7000 applications). Starting salary is Y240,000 (£1395). Average salary of all employees is Y13.95m (£81K).  They are looking for honesty and optimism

Mitsubishi Corporation

Offers naitei to around 160 graduates (out of 6000 applications).  Starting salary is the same as the other trading companies.  Average salary of all employees is Y13.75m (£80K). They are looking for trustworthiness, strength and intellectual ability.

Mitsui

Offer naitei to around 120-150 graduates (out of 6000 applications). Same starting salary as the other trading companies.  Average salary of all employees is Y13.61m (£79K).  They are looking for intellectual curiosity, ambition, ability to develop yourself

Sumitomo Corporation

Offer naitei to around 130 graduates (out of 7000 applications).  Same starting salary as the others.  Average salary of all employees is Y13m (£76K).  They are looking for ability to innovate, execute and collaborate

Marubeni

Offer naitei to around 122 graduates (out of 7700 applications).  Same starting salary as the others.  Average salary of all employees is Y13.06m (£76K).  They are looking for people who stand up for themselves and don’t run away (!)

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January 24, 2016

Hiromi TazakiHiromi Tazaki is a well known figure in the Japanese business community here in the UK.  She founded JAC Recruitment in London in 1975, and then opened offices in Singapore and Japan.  “As I had only ever worked in Japan for a short while, for the first 10 years I found Japan very strange and really struggled to apply the logical approach I had learnt in the UK,” she admitted, in a recent interview with Nikkei Business magazine.  “Japan sets up regulations but then seems happy to ignore them”.

Japan’s approach to hiring is completely different from the global rules.  In the UK you do not put your gender, nationality, age or marital status on a resume whereas these are compulsory items on a Japanese resume.  “Yet Japan has now entered an era where it must hire people who can be effective globally.”

British companies want to hire specialists, whereas Japanese companies want to hire generalists.  But the view among global recruiters is that generalists are the most difficult to utilise.  If Japanese companies want to compete with overseas companies, they need to hire specialists in each field.

“It’s also not enough just to be able to speak English.  You need to be bi-cultural.  You cannot always be facing Japan.”  “Although there are not that many bi-cultural people in Japan now, their numbers are increasing.  However Japanese companies are having difficulties hiring the best global talent because other non-Japanese companies offer higher salaries – probably around 30% higher, sometimes even double.  This has been going on for 40 years or so.”  “It is not an exaggeration to say that Japanese companies have been hiring at best second rate people overseas and relying on Japanese employees to cover the gaps.  But of course this approach has its limits.  It can work for manufacturing, but where the quality of the people is the make or break – in services – it is absolutely necessary to ensure that you have the best people working for you locally.”

“It’s not just a question of higher salaries – Japanese companies’ top executives need to be able to manage people who are more expert than them.  It might be OK when you first venture overseas to hire people who are easy to boss around, but soon you have to start to replace them with stronger types.  How soon you can do this will dictate whether you win globally.”

Post merger, many Japanese companies just leave it up to the legacy management to continue as before.  But this is not much use if you want to realise synergies.  According to Tazaki, it comes back to English ability – Japanese executive are capable of integrating with other cultures, but they lack the language skills.

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January 20, 2016

Muji's European best seller screwdriver set
Muji’s European best seller screwdriver set

I still have the CD drawers I bought 20 years’ ago in Japan from a Muji shop (known in Japan by its full name, Mujirushi Ryohin – No Brand Quality Goods and the actual company name – Ryohin Keikaku – Quality Goods Planning) and the majority of my office stationery is from Muji’s UK outlets, because I prefer their plain, clean, neutral look.

It seems I am not alone in being a Muji fan outside Japan, as Muji has expanded in the 24 years since it first ventured overseas to 301 shops in 26 countries and has reached a record level of overseas sales at the end of 2015, opening a flagship store on Fifth Avenue in New York in October of that year.

The former chairman of Muji, Tadamitsu Matsui, has been credited with turning Muji round, and, in an interview with Toyo Keizai, explains two factors for overseas success.

Muji made many mistakes overseas, says Matsui and “some mistakes you have to learn to recognise by making them yourself rather than being told what not to do”.

  1. There are only local markets

People assume that you have to communicate globally to a global market but actually most successful companies know that “when in Rome, behave as the Romans” Matsui points out.  When Muji started out in Kuwait, they brought their locally hired staff to the Muji shop in Yurakucho, Tokyo, and asked their opinions.  (To me, that is another success factor – bringing employees to Japan and actually asking for their input).  It turned out that Muji’s single beds were unlikely to sell in their opinion, as most Kuwaitis had large houses and large rooms, so even a single bedroom would have a king size bed.

A long standing best seller for Muji in Europe is the miniature screw driver set.  Japanese are often surprised that most European households have toolboxes with proper tools, as DIY is much more common across Europe compared to Japan.  Muji found that their screwdriver kit sells particularly well to women who want to do odd jobs around the house by themselves, and like the compactness but good quality of Muji’s tools.

2. Always make cost a priority

Matsui is particularly hot on keeping an eye on rent and leases.  Location is important – you have to be in Milan or Rome or Paris or London if you want to be in Europe, but you have to be aware of where your brand sits in terms of prestige.  Rather than go for the prime spot in a prime location that Louis Vuitton or similar might pick, Muji goes for the 2nd or 3rd tier spot.  In Hong Kong, Muji is on the 4th floor of a building where the 1st floor is occupied by Prada.  Indeed, I noticed that in London, they are in Oxford Street, but at the Marble Arch end, not right in the centre.  Opposite them is Uniqlo, which I assume is not a coincidence.

“London is a landlord’s market” says Matsui,  “20-25 year leases are normal and it is impossible to break the lease…You cannot assume you will be loved for decades in London.  The business changes and so you have to think about contingencies for when things are not going so well when you sign a lease.”

Apparently Muji tries to keep rent to around 15% of the sales of the outlet.  That way a new shop usually breaks even after about a year and a half.

“I don’t think the fundamentals of business change that much from Japan to the rest of the world” says Matsui.  “Know the basics, and then set up the framework accordingly”.  “There is a standard method which can work for any business, but you have to keep plugging away at it and not give up, even if it takes time.”

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January 16, 2016

shutterstock_105693488For as long as I’ve been working in or for Japanese companies (25 years…) I’ve been surprised by how behind they are in using IT, considering how much Japanese people love the latest technology, much of it developed by Japanese companies themselves.  Like so many paradoxes of Japanese corporate culture, the roots may lie in the post war system of life time employment, generalist track careers and seniority based promotion.

The Nikkei Business magazine cites one example of how, as it puts it, Japanese companies are not just one but three steps behind their Western counterparts.  Most Western banks (Barclays, HSBC, RBS, Deutsche Bank, Commerzbank, Societe Generale in Europe) are adopting the highly cost effective blockchain system for settling payments. MUFG is the only Japanese bank to use the system.

The Nikkei recommends 4 countermeasures Japanese companies need to take:

1. Keep replacing top executives

According to an IDC Japan survey, only 15.7% of Japanese presidents and other CXOs think investment in IT is “very important” compared to 75.3% of US executives.  Alternatively, as the Nikkei says, if you don’t understand IT, make sure you appoint executives who do.

2. Bring in an external CIO

According to a Japanese Ministry of Economy, Trade and Industry survey, whereas in the US over 70% of IT specialists can be found working in-house in US companies, in Japan, 75% of IT specialists are working at IT vendors.

3. Make your IT systems department a key function

Staff in Japan’s IT departments are ageing.  56.9% of companies in a 2015 survey said the majority of staff in their IT departments were over 40.

4. Use people from outside Japan

Japan’s Recruit Holdings has just started to recruit non-Japanese data scientists by starting up competitions on Kaggle, a data scientist network of over 350,00 people from over 100 countries, in order to make the Recruit brand name better known.

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January 13, 2016

kyoto-japan-1980-c2a9-masayoshi-sukita
David Bowie at Kyoto Station 1980. Masayoshi Sukita

Sir, As a supplier of services to over 70 Japanese companies across Europe, I am not at all surprised that Toyota do not intend to move manufacturing away from the UK in the event of a Brexit (“Toyota will stay even if Britain votes to leave the EU” January 12) The key point to bear in mind is that Toyota’s European headquarters are already in Belgium.

What should be of concern is what will happen to the rest of the major Japanese companies, more than half of whom have their European headquarters in the UK, and how any changes in their location might impact the fact that major share of employees of Japanese companies in Europe and of Japanese investment in Europe has been in the UK.

Judging by the mood of the 200 or so Japanese business people at the UK Japanese Chamber of Commerce New Year party last week, the overwhelming wish is for the UK to stay in the EU.

Japanese business people would much rather their companies were based in the UK, but if the UK is no longer in the EU, the straw poll I took suggests that there will be a gradual drift of European HQs away from the UK – and with it related jobs, investment and taxes – and most importantly, for suppliers like my company, the locus of purchasing decisions will also shift.

Norwich, where my company is based, is two hours away from London but only 1 hour away from Amsterdam, so I am making contingency plans accordingly. I assume I am not alone in this.
Pernille Rudlin
European Representative, Japan Intercultural Consulting
Managing Director, Rudlin Consulting Ltd
Norwich, UK

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January 11, 2016

niinamiTakeshi Niinami is probably the most famous alumnus of my alma mater, Mitsubishi Corporation.  Born in 1959 and a graduate of Keio (as so many Mitsubishi ‘gentlemen’ are), he started off in sugar trading and after a Mitsubishi Corp sponsored MBA at Harvard, he was involved with the foundation of the Sodexo joint venture in Japan with MC, and then transferred to and ultimately ran the convenience store chain Lawson, which MC had acquired a majority share in.

He was lured to the family run Suntory in 2014 by the grandson of the founder, Nobutada Saji, and has been shaking the place up ever since, much to the consternation of many employees.  The revolution was already underway, as Suntory had already announced its $16bn acquisition of US whisky maker Beam and the year before had acquired the UK brands Lucozade and Ribena from GlaxoSmithKline for $1.35bn and in 2009 acquired Orangina Schweppes for $1.97bn.

A former director who worked with him at Lawsons says “there are people who cannot keep up with him.  He keeps coming up with new things, and then says do it within a year”.  Niinami believes that Suntory will not be able to function well as a global company if it only promotes from within, so has appointed Vincent Ambrosino, formerly CFO of Pepsico Canada as an Executive Officer of Suntory Holdings, in charge of strategy, finance and accounting.  He only joined Beam in 2013 as the CFO so this by Japanese standards was seen as meteoric rise to a top position.

Furthermore, Makiko Ono, one of the rare senior Japanese businesswomen in a major company,  who had been involved with various collaborations with foreign companies as executive officer of Suntory Food & Beverages, has transferred to Suntory Holdings, to become the GM of global HR.  Around 17 people from Suntory Holdings will be seconded to Beam Suntory, with the aim of improving global mobility.  Niinami himself announced that he wants to hire more people from outside the company, “including those who have investment experience who were in trading companies” – hiring in his own image, in other words.

Suntory Holdings mid term plan has highly ambitious double digit targets for turnover and profit.  It is unlikely this will be reached organically, says Toyo Keizai magazine.  More M&A can be expected.  Niinami is not likely to slow down.

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January 10, 2016

Hiromi MaenakaI wholeheartedly agree with the recommendations (particularly the final one) in this Q&A from Professor Hiromi Maenaka of Akita International University, head of Global Studies program, on how Japanese can become more globally competent – summarised by me in English below:

Q: Why are there not many “global jinzai” (globally competent Japanese) in Japan?

A: It’s not just about English ability.  At most Japanese schools, teaching focuses on how to answer questions to which there is a clear answer.  But if I ask students who have just arrived at university why that answer is correct, they simply say “because I was taught that it was correct.”  In real life there are few correct answers.  Particularly overseas.

Q: Japanese companies are beginning to realise there is a shortage of global jinzai?

A: As more companies venture overseas, the majority of their production and demand is outside Japan.  Acquisitions of and joint ventures with foreign companies have also increased.  It has become necessary to work with people who have different nationalities and cultural backgrounds. So Japanese companies have become in urgent and multiple need of global jinzai.

Q: What kind of education is Akita International University providing to develop global jinzai?

A: Our students live alongside foreign students and study abroad on a solo basis.  Through this experience, they lose their resistance to thinking and acting for themselves, discussing opinions with other people and making presentations in front of large groups.  These are outcomes which companies also value, but there are problems.

Q: What kind of problems?

A: According to HR managers of companies which hire our graduates, compared to universities in the big cities, they seem “hot housed” and “disconnected from the real world”.  Even if they are “global jinzai“, they cannot immediately make use of their abilities.  I think companies might have to increase their provision of internships to counter this problem.

Q: Isn’t there an increase in opportunities to become “global jinzai” because of collaborations with foreign companies?

A: You have to debate with foreigners if you work with them.  The problem for most is that most Japanese people have become used to a way of working whereby you don’t have to put your thoughts into words and feel comfortable in a world where you can communicate through ishin denshin (telepathy).

Q: How should we change?

A: You have to practice being able to say clearly what you think.  Americans expect people to say clearly what they are thinking.  Even if it is negative.  Sometimes you even have to be prepared to have an argument.

Q: This might be bewildering for some people?

A: You have to try to find some common ground.  Human emotions and the need to put yourself in someone else’s shoes are the same the world over.  Also, the top executives of the company need to make the objective clear.  Then employees will have this objective in common and can move forward together.  Then both foreigners and Japanese can understand each other and collaborate.

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