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I mentioned in a previous article in this series that Japanese companies such as Fast Retailing and Rakuten are adopting English as their corporate language. In reaction to this, various surveys of Japanese employees’ attitudes to speaking English appeared in the media, including one that showed that 73% of Japanese are reluctant to have English as a corporate language.
Adding to this, another survey just released by the Sanno Institute of Management found that 67% of the businesspeople it questioned did not want to work abroad. The conclusion drawn by many Japanese commentators is that this is all part of Japan’s withdrawal from the globalized world. In particular there is a worry, shared by the Japanese government, that the younger generation have become more inward looking and cautious, and this will have a negative impact on the economy. My personal conclusion is that these reactions show that Japanese people rather enjoy agonising over surveys about themselves, particularly if the results show how different Japan is or are in some way a cause for gloom.
It seems to me any such trends are more related to economic factors than anything peculiar to Japanese society. There is not the urgency to rebuild the Japanese economy through export led growth that there was in the post-war decades. The slow death of lifetime employment means that younger people are less loyal to their companies and therefore less willing to go wherever their employers tell them.
Japanese companies have adapted over the past twenty years to the changing global environment. They expatriate fewer staff to the expensive developed world, relying on local managers instead, and have turned their attention to investment of capital and personnel in emerging markets.
The same trends can be found in the matured economies elsewhere in the world. The US used to have a mobile workforce, who would pack up and move state in search of a job, but apparently this is less true now, despite the persistent unemployment problem there. And although Europeans love pointing out how only 20% of Americans have passports, compared to 70% or so of the British population for example – it is noticeable how most of the migration within Europe is from Eastern Europe, rather than from Western Europe.
Rather than force reluctant Japanese employees to transfer abroad or adopt English as a corporate language, many Japanese companies are trying to globalise by encouraging employees from Asia to transfer to Japan or hiring Asian students who are studying in Japan. I suspect the expectation is that these employees will have to blend in as much as possible, however, so the impact on the Japanese staff in the headquarters will be minimal.
The worry then is that the non-Asian part of the business will become increasingly disconnected from Japan and Asia, with very little exchange of staff between the two regions. A radical solution might be to accept that the majority of Japanese staff prefer to focus on Japanese domestic sales, and split the Japanese domestic side from the global headquarters. This headquarters could be situated anywhere in the world, and yes, the working language will probably be English.
This article originally appeared in the 4th October 2010 edition of the Nikkei Weekly
We are delighted to welcome a new consultant to our European team, Emma Johnson. Emma is based in Manchester, UK and will therefore be focusing on helping Japanese companies operating in the north of England – a continuation of her previous work supporting inward investment into the region. Emma will be facilitating our “Working Effectively with Japanese colleagues, partners and clients” seminar in Manchester in June.
The other seminars planned for Europe in the first half of 2015 are:
- 28th April, (Pernille Rudlin) London
- 9th June, (Emma Johnson) Manchester
- 17th June, (Claudia Romberg) Mercure City Hotel, Düsseldorf (in German)
- 1st July, (Claudia Romberg) Westin Grand Hotel, Frankfurt (in German)
Please click on the links above for more details and to register online, or please email pernillerudlinjapaninterculturalcom
Here’s the February 2015 list of the Top 30 Japanese companies in Europe, by number of employees. Komatsu and Fast Retailing have been added, bumping NEC and Omron off.
An interview with George Hara, currently Chairman of Alliance Forum and former board member of various Silicon Valley start ups as a venture capitalist kicks off Nikkei Business’s attempt at finding a new standard for evaluating Japanese companies, beyond the shareholder capitalism model.
Instead of “Good/Best company”or “Great Place to Work” and all the other awards you can get, the Nikkei proposes ‘Yoi‘, which can be translated as ‘good’ but is probably better translated as ‘virtuous’. They even deliberately write the headline ‘Yoi kaisha‘ (‘Virtuous company’) in Japanese brush stroke calligraphy.
Hara doesn’t think the term ‘stakeholder capitalism’ quite covers what he and the Nikkei are getting at, even though he says the company should be measured on the benefit to employees, customers, partners and regional society as well as shareholders. He prefers ‘shachu‘ (which my dictionary translates as clique or troupe) or public benefit capitalism – meaning that all the concerned parties have a common objective.
He particularly criticises the way companies in the US – the home of full blooded shareholder capitalism – such as Hewlett Packard or Dupont find that putting shareholder interests first means firing people even when there are record breaking profits, or not being able to invest in long term projects to develop technologies which will benefit society.
Japanese corporate leaders used to be much more inclined to public benefit capitalism, and the cause is not lost yet, says Hara – citing that when he showed the great and the good of the IMF around Tokyo’s underground system recently they were full of praise for how clean, orderly and busy a city supposedly suffering from a 20 year recession was. Japan should be setting its own standard for the rest of the world, he feels.
Following on from this, Nikkei Business have come up with a Yoi company metric, based on profit, changes in employee numbers, corporate tax contribution and share price over the past 10 quarters for 3841 Tokyo stock exchange listed companies and the top 10 are:
- Fast Retailing* (Uniqlo) (Yanai, the founder and also board member of Softbank is quick to throw this back in the face of those who have termed Fast Retailing a “black company”)
- Fanuc (the current target of shareholder activist Daniel Loeb)
- Aeon Mall
- Mani (medical devices)
- Japan Tobacco
- Takeda Pharma *
- Central Japan Railway
- Sumitomo Real Estate
- USS (car auctions)
- Astellas Pharma*
- SMC (automatic control equipment)
- Nakanishi (motor spindles, micro grinders)
- Trend Micro (security solutions, founded in the USA, HQ in Japan)
- Sysmex (healthcare)
- Hisamitsu Pharma
- Nitori Holdings (furniture)
- J Trust
Other of our Top 30 Japanese companies in Europe* in the top 100
- Bridgestone #41
- Denso #46
- Sumitomo Electric Group #51
In our Top 30 in Europe but not in the Top 100 Yoi companies:
Fujitsu, Ricoh, Sony, Asahi Glass, NSG, Toshiba, Hitachi, Panasonic, NTT Data, NYK, Fujifilm, Olympus, Mitsubishi Chemical Holding, Nomura, Nidec, Sharp, Daiichi Sankyo, Kao, Seiko Epson
Most of the Western media has covered the recent announcement that Takahiro Hachigo will succeed Takanobu Ito as President of Honda as an indication that Ito is taking the rap for the recent Takata airbag recall, but the Nikkei Business magazine has a somewhat different angle on this. Ito had a 6 year innings, which is pretty standard for a Japanese president, and this is the season for announcing top executive changes in time for the start of the new financial year in April, and the shareholders’ meetings in June. In fact, according to the Nikkei, Hachigo was pretty much the successor chosen by Ito himself, to carry on the strategies that Ito had been pushing since 2009 in order to globalize Honda, through 6 global hubs.
Hachigo had experience in many of those global hubs – including a year at Honda Europe pushing through restructuring there, as well as North America and China. What is more unusual, says the Nikkei, is that Ito has broken the unwritten rule in nominating Hachigo, set by founder Soichiro Honda, that Honda presidents should have been the president of Honda R&D. Hachigo only got to a “Managing Officer” board position.
Unusually for a Japanese car company, Honda R&D is an entirely separate company, to which Honda Motor pays a fixed proportion of sales each year. Ito has commented that his globalization strategy is now facing problems in the R&D side – the current president of the R&D company is stepping down, and being replaced by Koichi Fukuo, who had been heading up product quality, and was seen as a possible presidential successor to Ito.
Ito is not going to become chairman, which would be the usual position for a retiring president, so he does seem to be stepping away somewhat, but very much with “his men” in position it appears.
I’ve commented before that it’s easier for Western companies to win awards that are judged on Western standards, and also that Western companies are more inclined to apply for the awards in the first place, but for what it’s worth, Google Japan has come top again on “Great Place to Work” Institute of Japan’s annual survey along with Microsoft Japan at number 2 and American Express in third position.
Japanese companies in the top 10 are less well known outside Japan – Plan.Do.See. which is a hotel and restaurant planning and design consultancy (and offers “Party and Mice“!), Works Applications (software), Disco (saws, grinders and blades manufacturer), CyberAgent (internet advertising agency).
Better known Japanese multinationals in the top 25 are Brother (12), Ryohin Keikaku (the Muji store chain – 14), Horiba (16), Nomura Research (IT consulting arm of Nomura securities – 20) and Bandai.
The criteria used in the open ended question surveys are whether the employees trust the management of the company they work for, whether they have pride in their work, and whether they feel solidarity with their colleagues.
Ulrike Schaede (Professor of Japanese Business at the Graduate School of International Relations and Pacific Studies at the University of California, San Diego) confirms something that I had wondered about a few years ago when I facilitated management development seminars for Japanese and German managers, in her comparisons of Japanese and German driving styles. As is well known, there are no speed limits on German autobahns. At the same time there is another well known aspect of German culture, that rules are obeyed to the letter – perhaps due to a fear that without rules, mayhem results. Yet fatal car accidents are relatively few in Germany – particularly relative to the US, which has by far the highest number of fatalities on the roads.
Fortunately Germans obey other rules on the roads, such as no undertaking, which keeps the accident rates down, but Schaede confirms that generally speaking, Germans are impatient and aggressive drivers. Rather like Germans you might come across in the service industry she remarks. The Japanese managers in the management development seminar had also observed this when they undertook some field observations in Stuttgart. Why, they asked the German managers, when Germans are normally so orderly and obedient, was there pushing and shouting amongst a group of waiting people, about who should be served first? The Germans considered this for a while and then asked “Was there a sign anywhere explaining how to queue?” Apparently there wasn’t. So chaos ensued.
Japan has the lowest rate of fatalities (and the UK is not far off from this either), and like Germany and the UK, there are plenty of rules and regulations which have to be learnt in order to pass a test to obtain a driving license. In the USA however, it is possible to drive at the age of 16, without much knowledge of the rules and regulations of the road.
She draws parallels with American entrepreneurialism – anyone can start a company in the US if they have an idea. So some succeed but many fail too.
There are 4 other driving styles she believes relate to business approaches:
1. Safety First
Just as fatalities in road accidents are low in Japan because of the “safety first” mindset, so Japanese companies with any reputation to protect will be very reluctant to take any risks which will jeopardise their name. The downside is that, just like Japanese traffic, things move slowly.
2. Reverse parking
I’ve noticed too, that in Japan, almost everyone reverse parks their car, even into the narrowest of gaps. Schaede says this is indicative of a mentality that says put the hard work in first, so things are easier later. Japan is a nation of savers for a rainy day [although this is increasingly less true according to statistics I’ve seen]. Japanese companies also put as much effort as they can upfront, in case hard times are around the corner.
My aunt and uncle, veterans of an army life in Northern Ireland, teased me mercilessly about my dislike of reverse parking – it had become second nature to them, I suspect because of the need to make a quick getaway in a dangerous situation. So it is risk aversion at work again too I would say.
3. Shut that door!
Japanese have an expression “handoa”, meaning half door, or in other words, a door not closed properly. Japanese take great pains to shut doors firmly in cars, so as not to cause irritation to the driver. According to Schaede, one of her Japanese friends was told by an American driver that he would not be allowed to get in the American’s car again if he slammed the door so hard in future. In Germany, slamming a door so hard would be seen as a criticism of the car’s quality. It’s the Japanese need to “be sure” – as Schaede says, there are some untranslatable Japanese terms for this like “chan-to” – children are often told to “chan-to” – in the way that Western parents might say “behave”, “sit up straight” or “pull yourself together”. It also leads to over-specification in business – good enough is not enough.
4. Self service
As Schaede points out, it took a long time for the concept of self service petrol stations to be accepted in Japan. It was as if even the highly educated, skilled Japanese population could not be trusted as individuals to safely fill their own cars up by themselves. Schaede thinks this is like the current wave of Japanese deregulation – everyone has to move together, no one company should make the change by itself, so everyone moves at the pace of the slowest, to avoid one person being sacrificed. I am not sure this is entirely true – if you look at the actions of Hitachi, for instance.
Maybe he was being spurred on by Chinese consultant and Softbrain founder Song Wenzhou, but Takashi Kawamura, former President and Chairman of Hitachi makes some startlingly radical statements in a dialogue in the Nikkei Business magazine.
Both agree that in 2015 major Japanese companies must grow for Japan to get back on its feet, particularly so they can pull Japan’s small-medium enterprises along in their wake. But although Kawamura maintains the traditional Japanese line that companies exist to add value to society by paying wages, taxes and dividends (in that order), he asserts that Japanese employees must learn to become “faithful to their profession” rather than faithful to their companies as they have been up until now.
This includes company Presidents, who can no longer be “the person who happens to be in the position of President” and use their status and personal influence to get things done, but instead must be judged on their results, and their professionalism as a manager. “Management has become more transparent, and the responsibility to explain has become greater” says Kawamura.
As blogged previously, Hitachi hit the headlines for abolishing seniority based promotion for its Japanese managers recently, with commentators speculating that this would spread to other companies, and may even mean the end of other sacred cows of Japanese corporate life, such as lifetime employment. Kawamura openly says other Japanese companies will have to adopt the same approach and that this will result in greater labour mobility – not just in the Japanese labour market, but also for swapping people across national borders within the company.
However “moving people is tough” and it will take time, with other aspects of Japanese society also having to change, such as education and social mores, Kawamura acknowledges. Hitachi itself is facing the challenge of ensuring it does not devolve back to a ‘village mentality’.
Song remarks that he tried to get a Japanese friend of his who was a General Manager in a major electronics firm to take up a better remunerated position at a start up but his friend refused, saying his daughter was getting married soon, and he wanted to be introduced at the wedding as “General Manager of XXX company” – the status he would lose if he joined a start up was too much to contemplate.
I hope the choice isn’t as stark as Kawamura and Song make out – an adapt or die dilemma between the mutual loyalty of the company and its employees resulting in stagnation, or ruthless professionalism and mobility, resulting in growth. Not everyone can or should want to work for GE.