June 29, 2012

Rudlin Consulting provides expert analysis and consulting to anyone interested in Japanese companies in Europe, Middle East and Africa as investors, employers or customers.

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February 23, 2018

The number of Japanese nationals resident in the UK fell by 4.5% in 2016, from 67,997 in 2015 to 64,968 – the first time since 2008-9, when the Lehman Shock hit and numbers dropped from 63,526 to 59,431.

It’s difficult to avoid concluding that the Brexit referendum vote had an immediate psychological impact along with the beginning of a renewed crackdown on non-EU migration. I expect the downward trend to be intensified in 2017-8 as it has become much more expensive and difficult to bring in Japanese expatriate staff from 2017.  The non-EU immigration cap has been hit for the third month running in February 2018. It is estimated that the cost of bringing in a Japanese expat has increased from £2151 to £7174 in 2017 (and might double again in later years) after the introduction of the immigrant skills charge of £1000 per year in April 2017. The charge to use the NHS is proposed to rise from £200 to £600 over the next couple of years.

Given that some Japanese companies have hundreds of Japanese expatriates in the UK, this is a significant cost, even though it does not seem to have deterred more non-EU migrants from coming to the UK in 2018 compared to 2017.

Delving further into the Japan’s Ministry of Internal Affairs and Communication’s Statistics Bureau’s statistics, it is clear that other European countries are still seeing significant rises in Japanese nationals as residents – Sweden has seen an increase of 8% from 2015 to 2016, the Netherlands a 7% rise and the two largest Japanese populations after the UK, Germany and France have also seen 3-4% rises, to 44,027 and 41,641 respectively.  Belgium and Russia are the only two other countries to record a decrease in Japanese nationals, of 9% to 5,707 and 4% to 2,650 respectively.

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February 22, 2018

You have to have (octopus) balls in Osaka

Vorkers, the Japanese equivalent to Glassdoor, an online site where employees rate their employers, has just announced its annual rankings of companies in Japan where employees are most engaged.  Diamond magazine has analysed the rankings from the point of view of the regional cultures in Japan.  As noted in a previous post, regional cultures are strong in Japan, and have an impact on corporate cultures.

Diamond magazine notes that Osaka companies are prominent in the top 5 – namely Suntory at #2 and Itochu at #4.  Both have over a hundred year history as Kansai region “merchant” companies and Diamond says this “yatte minahare” (Osaka dialect for “go for it” or translated by Suntory as “follow your nature”) spirit is still evident in the employee comments.  If you like a challenge in your work, these are the kind of companies to join.  “You might get told off by your boss for not doing something, but you don’t get told off if you tried to do something and couldn’t” says one female employee in planning.

Brother, at #15, has its headquarters in Nagoya, the capital of the Midlands of Japan, where many automotive companies are also based.  Founded in 1908, initially as a machine repair workshop, Brother is now most famous for its printers.  80% of its sales are overseas.

Brother employees say that “there has been a big change over the past 5 years.  Overseas travel and secondment is positively encouraged.  It’s the best place for someone who wants to work globally.” (Male, product development).  “Fundamentally the bosses and my seniors are mostly good people.  There is a culture of using surname-san (rather than more formal job titles – see our post on this) and therefore there is not such a formal atmosphere” (female, sales)

As for the newer companies, one to look out for is Uzabase at #33.  It was founded 10 years ago and provides platforms for business intelligence such as NewsPicks.  Employees rate it highly for allowing individual freedom and responsibility.

These are not characteristics traditionally thought to be sought by Japanese employees or prevalent in Japanese companies.  Diamond says the comments on Vorkers show employees praise their companies for developing them as individuals, to allow them to take up all kinds of challenges and forgive mistakes. This is a sign of how the Japanese workplace will need to be when most jobs can be done on a computer, now that overtime is being cracked down on and productivity is being emphasised, to enable both the company and its employees to grow.


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February 19, 2018

Blue chip Japanese companies have traditionally recruited most of their employees through hiring them as graduates straight out of university as “lifetime employees”.  Labour shortages, job hopping in the younger generations and cutbacks on lifetime employment has meant that some companies have had to recruit more mid-career employees recently.  This entry track was in the past confined to specialist, non-line management positions and at a lower status to the lifetime employees, but recently I have seen more expatriate Japanese who have worked in other companies appearing in my seminars in Europe as expatriates with equivalent status to those who have been in the company since graduation.

Mid career hiring seems to me a good indicator of the degree of acceptance of diversity in its broadest sense, and Toyo Keizai obviously agrees, as they have published a ranking showing the percentage of employees in Japan who are “graduate hires” in the total year’s intake as part of their Corporate Social Responsibility data publications.

Companies in our EMEA and UK Top 30 largest Japanese employers who are also in the Toyo Keizai rankings of companies with the highest proportion of Japanese graduate hires are therefore in a rather paradoxical position of having a high number of non-Japanese employees in their overseas subsidiaries, being managed by a very traditional Japanese group of employees in their Japan headquarters.

Most of the companies in these categories are trading companies, banks and major manufacturers – the latter two having substantial domestic branch networks or domestic manufacturing and markets to cater for I suppose.  They include:

  • NYK 65 graduate hires in April 2017, 2 mid career hires in 2016
  • NTT Data 385/13
  • Canon 475/15
  • Toyota 1935/98
  • Sumitomo Corporation 157/8
  • Itochu 149/12
  • Marubeni 135/11
  • Sumitomo Mitsui Financial Group 1347/115
  • Mizuho Financial Group 1394/175
  • Toyota Industries 284/27
  • MUFG 1206/111
  • Dentsu 145/19
  • Fujitsu 740/110
  • Mitsui 180/30
  • MS&AD Insurance 1183/254

No sign of Mitsubishi Corporation in the rankings – which may be due more to non disclosure of data rather than not being in the top 150.  When I was working at Mitsubishi Corporation, we used to refer to the hiring of similar Mitsubishi graduate types every year as having led to  a “Kintaro ame” situation in terms of diversity – Kintaro ame (Kintaro sweets) are rather like British sticks of rock, the same wherever you cut through them.


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February 18, 2018

Japan’s population has already peaked at 127 million, and on current projections will be under 100 million by 2053, with around 1 in 4 people aged over 75 and under 60 million by 2100, by which stage 1 person in 2.5 will be elderly.  The Nikkei Business magazine has a special feature on what this means for Japan and how to make sure this future is a happy one.  Japan is of course the canary in the coal mine for other developed societies facing similar demographic changes, such as Western Europe, but, so far, does not seem to be taking the route that Western Europe has, of allowing immigration to rebalance the demographic trends.

Happy vs Bad scenarios

The “happy scenario” is where the elderly find jobs as “cloud workers” doing subcontracted administrative work for their local authority, live in affordable social housing and their pensions can allow them a comfortable lifestyle.  They might accumulate points from their work which go towards healthcare and social care.

The “bad scenario” is where salaries are only just enough to make ends meet and if you are living on your own, aged 80, you find it hard to do physical work.  Social infrastructure has not been renewed, and living conditions are worsening.  People are fleeing the suburbs in search of a cheaper cost of living. Intergenerational wage gaps have not been adjusted, and this is having an impact on pensions.  Low wages have led to a chronic labour shortage.

The new multistage life and career

The Nikkei then goes on to interview Linda Gratton, of the London Business School, regarding her concept that our lives will no longer be three distinct stages of education, work and retirement, rather multistage, with a time of retraining, which may result in no longer working for an organisation as an employee.

A rather depressing graph accompanies this, showing that Japan has the lowest number of people over 25 in further education (2.5%) compared to the OECD average of 16.6% – only the Netherlands has a similarly low rate, and Germany, the UK and Spain are also below average.

Japanese corporate training budgets are a tenth of Germany’s

Japan’s generally high level of education might explain this, but another chart also causes concern, comparing Germany to Japan in terms of corporate training.  Siemens spends over $1100 per employee per year, compared to $130 average spending on training by Japanese companies on their employees.  Training in Germany is for the whole industry (presumably they mean Germany’s national apprenticeship schemes) whereas for Japanese companies, training is only offered to employees.  The content of the training in Germany is transferable skills, and in Japan it is only useful for that company or industry.  German training includes e-learning via smartphones and PCs, whereas in Japan it is “on the job training” and classroom based training.

Actually I have noticed more e-learning in Japan too, although it is mostly for internal compliance purposes.  Despite the fact that I have recently created some e-learning, I am not sure it is a sufficient alternative to class room based training, particularly for soft skills.  But certainly if we are thinking of retraining people in skills needed for becoming “cloud workers” then it will have an important role to play.  Indeed the e-learning I have developed in Japanese is specifically aimed at Japanese people working in virtual global teams.

Japanese firms’ re-training, re-employment provision

The final part of the feature details a survey of various listed Japanese companies’ employees about their systems for allowing second jobs, early retirement, individual education and re-employment.  62% of Japanese companies allow employees to have second jobs, usually with some restrictions.  68% have an early retirement scheme, for 44% of those, it kicks in at age 50, 29% from age 45 and 12% from age 40 and also age 55.  52% do not have any support system in place for re-training or overseas study, although some do allow time off for study at an employee’s own cost.  80% of firms have a re-employment scheme for people who have left the company, but with various conditions, such as they should have left the company in order to bring up a family, or to look after elderly relatives, or to accompany a spouse when they had to move for work.

Nikkei’s Business’s message to Japanese companies is clear – for a happy future society, they need to step up their support for older employees to develop their second careers.

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Uniqlo fan distributed on opening day in Barcelona

The overseas sales of Fast Retailing, with Uniqlo at its heart, have recently outstripped its domestic Japanese sales.  Although a branch of Uniqlo has opened in Barcelona, to add to stores in the UK, Germany and France, with further openings in Stockholm and Amsterdam to come, according to a recent inverview in the Nikkei Business, what really excites Fast Retailing’s founder, Tadashi Yanai, is the birth of huge middle class markets in China, India and South East Asia.

“The people in those markets are hungry for new clothes, and information about those new clothes” he says.  “The most searched for words in search engines are clothing related” [not lack of clothing related?] “When we make clothes, information is important.  It’s the same in any industry.”

“At my most optimistic, I think we can be world number 1 in 3 to 5 years.  We are in the best position in the growth markets of Asia.  Although various governments are trying to be protectionist, it is difficult to stop the trend of companies doing business around the world.”

“Manufacturing has to be done in the countries with the lowest labour costs.  Chinese manufacturers are setting up factories in Vietnam, Cambodia, Indonesia, Bangladesh.  And then on to India, the African coast, Eastern Europe.”

When asked about the new concept from Japanese company Start Today – the Zozosuit, which will supply bespoke clothing, with measurements generated by wearing a “Zozosuit”, Yanai said this technology will not be a sufficient differentiator in its own right.  “In the future, IT infrastructure will be common to everyone, and free.  They will have to think hard about how to build up their business model to make best use of that data”.

Fast Retailing has another brand, in Japan only, GU, where RFID tags are in every item, and there are self service check outs, so shop assistants will become more like “concierges”.

“I think only companies that have a positioning that makes sense globally will survive.  Up until now it has been enough to have a positioning in Japan,  and as a consequence, there was pointless competition within each industry.  Now markets are global, being number 1 in Japan is pretty meaningless.”

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January 29, 2018

I was surprised to discover a few months ago that Sony, despite being one of the most overtly “global” Japanese companies, has so many Japanese expatriate managers in its European operations.  This is confirmed by the rankings recently published by the Toyo Keizai, which estimate that Sony is only beaten by Toyota in terms of the number of Japanese posted overseas.  Toyota group company Denso is at #3 and the other big electronics conglomerates Canon and Mitsubishi Electric at #8 and #9 – showing Sony is not alone.

Other car manufacturers such as Mazda, Isuzu, Suzuki and Mitsubishi Motors are in the Top 50 but Honda and Nissan appear not to have disclosed data as they are not in the rankings.

I’m less surprised that the main trading companies (Mitsubishi Corp, Mitsui Bussan, Sumitomo Corp, Marubeni) are in the top 10, and that their expatriates represent a high proportion of the headquarters regular staff.   However, this does show that it is very difficult for them to localise their business model in terms of bringing more non-Japanese into the mainstream management of the company – tending instead to keep local executives confined to the acquired subsidiary.

Sumitomo Mitsui Banking Corp appears to be an outlier amongst banks but in fact the other megabanks did not disclose data so have not been ranked.  Toyo Keizai assumes that they are at about the same level as SMBC.

The top 20 are as follows:

  1. Toyota 2,450 Japanese expatriates (out of 75,218 headquarter regular staff)
  2. Sony 1,400/16,659
  3. Denso 1,336/23,801
  4. Mitsubishi Corporation 1,286/6,233
  5. Mitsui Bussan 1,209/5,971
  6. Sumitomo Corporation 1,101/5,162
  7. Sumitomo Mitsui Banking Corporation 1,083/29,283
  8. Canon ~1000/26,246
  9. Mitsubishi Electric 962/31,694
  10. Marubeni 907/4,458
  11. Hitachi 800/35,631
  12. Toyota Tsusho 792/3,614
  13. JETRO 700/1,764
  14. Minebea Mitsumi 653/5,953
  15. Itochu 640/4,285
  16. Yazaki 597/289,300 (worldwide)
  17. Yamaha Motors 569/6,512
  18. Murata 560/7,899
  19. YKK 560/3,804
  20. Toray 553/4,486


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January 25, 2018

Sony has the most subsidiaries on a consolidated basis of any listed Japanese company, according to Toyo Keizai.  The only other Japanese company to come close to Sony’s 1,292 subsidiaries is Nomura Holdings, who have 1,285.  Sony has certainly replicated this trend in the UK, with at least double figures in terms of companies with names that are some variation of Sony + Music or Sony + Interactive, plus the acquisitions it keeps adding.

Many other of our Top 30 UK and Top 30 EMEA Japanese companies also appear in the list, and have also been active acquirers, such as NTT (944 subsidiaries), Hitachi (864 a decrease on the previous year as they continue to reshuffle their portfolio), Dentsu (844), Mitsubishi Corporation (834), Sumitomo Corporation (664),Toyota (597), Mitsubishi Chemical (566), Itochu (555), Fujitsu (502), Panasonic (495), Honda (367), Canon (367).

Fujitsu will soon have one less though, as it was just announced in the Nikkei today that it will sell its shares in its mobile phone business to Polaris Capital.


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January 15, 2018

The founder and President of Nidec Corp, Shigenobu Nagamori has been high profile in the Japanese media (again).  As well as a long interview in Diamond magazine about why all 57 of his acquisitions (many in Europe) have been a success, he gives some punchy analysis in his final column for the Nikkei Business magazine on what the root causes of the succession of scandals coming out of corporate Japan.

“It is the top management’s fault if bad news does not reach them.  If there is something wrong with the production process or sloppiness in quality control, this is a matter of life or death for a manufacturer.  That such important information is not being communicated is because the management is not going to the genba (where the action is) and seeing what is going on for themselves.

4 root causes of scandals at the genba

  1. Nare (becoming used to something) Thinking that a certain level of irregularity won’t be a problem, getting accustomed to it.
  2. Amae (being indulged) – believing that you won’t get found out anyway
  3. Tiredness – when the cost price seems to have reached rock bottom or kaizen has been continuing for a while
  4. Takotsubo (octopus pot – for more uses of this analogy, see our post on octopus appointments) – silos where a problem in one unit is hidden and not communicated to other units

This happens because managers are not ensuring a sense of urgency in the genba.  This doesn’t mean they have to keep pressurising employees.  They should be making frequent efforts to strengthen and pull up the genba.  That’s why they should enter the genba themselves and see for themselves what is going on in R&D and manufacturing, sales.  This will naturally lead to a sense of urgency.

Of course managers set targets, but if they don’t know the genba, then these are just words, and feel very distant to the genba.

The need for “hands on”, “micromanagement” and “making responsible without giving away responsibility”

Hands on means the genba solves problems with the management alongside.  Not just throwing problems at them.

Micromanagement is that managers make decisions about all the issues in the genba.  When I acquire a company that is in trouble, in order to reconstruct it, I check purchasing for even 1 yen. Some people say this will undermine the ability to think for themselves but it’s quite the opposite.  It is to make the employees think, come up with suggestions and work alongside managers to review it.  Not just get told, in a one way fashion.

“Making responsible without giving away responsibility” means that I delegate authority, but I don’t just leave people up to it.  Otherwise the genba logic just becomes stronger and they fail to see what is appropriate overall.  So delegate, but regularly check, very thoroughly.

The importance of developing generalists

It’s also important to develop executives.  Although there is a tendency in Japan at the moment to reject generalists, it’s no good if someone only knows one business area and has no idea about other parts of the business.  While people are young, they should experience management in different divisions in order to become proper executives.

That’s why I am always visiting our subsidiaries around the world.  We have 300 companies and over 100,000 employees so I can’t do this by myself.  So I get other people like our CSO (Chief Sales Officer) to travel around too.  I am visiting somewhere pretty much every week.  If managers had this attitude, the morale of the genba will also improve.  You cannot take it easy.

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