Sakata Vegetables Europe, headquartered in France, has acquired the Dutch cucumber company Sana Seeds. Sakata has acquired several companies across Europe over the past few decades – Samuel Yates in the UK in 1996, a seed company in South Africa in 1999, a flower company in Denmark in 2003, a gerbera company in the Netherlands in 2008 and a cucumber company in Jordan in 2017. It also has operations in Spain, employing over 200 people in the region in total.
Author: Pernille Rudlin
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Hitachi Rail – the challenge of not being too dependent on Britain
According an interview with Nikkei Business with Alistair Dormer, Representative Executive Officer for Hitachi’s main board and EVP for the Green Energy & Mobility Sector Strategy Planning Division, Hitachi faced two main challenges in its rail business in Europe. Firstly that they were not so strong in control and signal systems, particularly as standards were quite different between Japan and Europe. Secondly, they were too dependent on Britain. For those reasons, it made good sense to acquire Italy’s Ansaldo.
Dormer is himself British – he was in the Royal Navy, before working for Alstom UK and then joining Hitachi Rail in 2003, becoming Managing Director of Hitachi Rail Europe in 2005 and then Global CEO of Rail in 2014. He had already risen to board level at Hitachi by 2015, but took a break in 2022 for family reasons. He was been re-appointed as Representative Executive Officer and Executive Vice President, in January 2023, as well as chair of Hitachi Europe and Hitachi Energy.
The acquirer needs to have the mindset that they are the ones who will change
He has some wise words to say about the post merger integration with Ansaldo. Ansaldo, like Hitachi, had over 100 years of history and a strong culture. “After an acquisition, the acquirer may think about changing the other party’s corporate culture, but this is extremely difficult. Rather, I think the acquirer needs to have the mindset that they are the ones who will change.”
Hitachi Rail created a management team with 30% Japanese, 30% British, and 30% Italian. Additionally, executives from Ansaldo were appointed to Hitachi’s board of directors. Giuseppe Marino, the current CEO of Hitachi Rail, is a former Ansaldo employee.
“When a company is acquired by another company, employees become anxious. Will I be able to continue working? Will the parent company do something strange? Will this factory be closed? Rules must be clearly set,” says Dormer.
Loss of decision making power could shut down the business
“When acquiring a company, you may take away all decision-making rights from the other company. As a result, the acquirer becomes dissatisfied, loses decision-making power, everything slows down, management and employees become dissatisfied, and customers become dissatisfied.” Unlike many previous Japanese acquisitions, where the acquired company was left to carry on as before, the brand name and uniform were changed to Hitachi on day one. Hitachi signs were posted at all factories, and Hitachi’s values were posted on bulletin boards.
“Because Hitachi was not used to developing business in Europe, it instructed Ansaldo to seek permission for even the most trivial details. This would have shut down the business.” So Dormer suggested to the CEO Nakanishi that Ansaldo made their own decisions, and Dormer would monitor their performance monthly. New rules were created, made out of Hitachi and Ansaldo rules.
“Simple English” communication
Communication is of course key. “We also encouraged the use of simple English in communication. Particularly to British people, who tend to use complicated words. This is also necessary for Japanese, Italians and Germans. Having a common language called Simple English will make your job much easier.”
With the acquisition of ABB’s Power Grid Systems business, the values were very similar, but nonetheless it was important to change the communication methods and processes. Dormer encouraged ABB executives to stay in Japan for six month to see for themselves how decision making works there. “We should change the way we ask questions. First of all, simple English. Then ask, “How does this process work?” You will find that 90% of the process is the same as theirs” says Dormer.
Hitachi is now hoping to acquire the railway signaling business of French electronics giant Thales – the UK’s Competition and Markets Authority has just approved. If the EU approves, Dormer hopes to use the same approach, resulting in Hitachi becoming number one in the global railway control market.
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Kyowa Kirin acquires UK gene therapy startup Orchard Therapeutics
Kyowa Kirin will acquire British gene therapy startup Orchard Therapeutics for approximately $477.6 million (¥70.7 billion), to bolster its gene therapy pipeline.
Orchard Therapeutics’ portfolio comprises Libmeldy (atidarsagene autotemcel), also known as OTL-200, intended for eligible patients with early-onset metachromatic leukodystrophy (MLD), a rare and life-threatening inherited disease of the body’s metabolic system. It’s already been approved by the EU and UK regulatory bodies and is currently being reviewed by the USA’s Food and Drug Administration.
Orchard has 174 employees and Kyowa Kirin has around 6,000 employees worldwide, of which around 700 are in Europe. Kyowa Kirin is in turn owned by Kirin Holdings, a beer and beverage company. It acquired (when it was Kyowa Hakko Kirin), Scottish pharmaceutical company ProStrakan in 2011 and then in 2014 ProStrakan acquired Archimedes Pharma from Novo Nordisk.
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Marugame Seimen udon restaurants – success in Europe by focussing on your own identity rather than 100% “Japaneseness”
Japanese company Toridoll is aiming to be a “Japan-originated global food company” with 4,000 outlets outside Japan by March 2028. It already has 11 Marugame Seimen udon noodle restaurants in the UK and 707 stores worldwide. It It sees Europe as a test market for its vision, as it is not as dominated by chain stores as the USA is.
What’s different about its strategy, according to an interview with the CEO, Awata Takaya in Nikkei Business magazine, is that it is not fussy about putting Japanese taste, or authentic Japanese food to the fore. Menu items include “tonkotsu udon,” “chicken cutlet curry udon,” and “vegan udon” – none of which would be found in an udon restaurant in Japan. “If the menu is 100% Japanese, it won’t be work on a daily basis,” says President Awata.
Toridoll is looking to open outlets which reflect its philosophy, of experiential sales – where customers can see the food being made. This is why Toridoll acquired British food chains The Real Greek – “where you feel like you’ve come to Greece” and Franco Manca “with pizza ovens visibly inside the store” recently. Marugame Seimen also provides plenty of opportunities for British staff to visit Japan and learn to make udon noodles.
Another differentiation is that it works closely with local partners who help them with location selection, new store launches, and securing human resources, moving ahead with speedy store openings. Many of Toridoll’s executives are veterans of working or living overseas or for foreign companies. Awata’s COO was at Deloitte, the head of the Marugame Seimen business is Victor Hisao Misawa, a marketing professional who grew up overseas, worked at Unilever and was an executive at French company Bic. The Deputy General Manager of overseas development is a graduate of an American university who then was stationed in African countries such as Uganda and Malawi as an employee of the Japan International Cooperation Agency, where he worked on many projects including power plants and agriculture. Shiojiri Nahoko also graduated from an American university and then worked at a major consulting company. She is now based in Hong Kong and working as Deputy Director of the Global Strategy Office.
Awata recognises that loss of quality is an issue with global expansion – “UK store operations have not yet achieved the quality and efficiency of Japanese stores. In fact, in the UK it takes longer than in Japan from the time you order to the time the food is served. It will be necessary to focus on employee training.”
As so often, Japanese culture is less about “things”, but the “way” that those things are created.
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Where’s the pipeline? Tokyo Prime-listed companies goal of 30% female board members
The Japanese government has set a goal for Prime-listed companies on the Tokyo Stock Exchange of each having at least one female board member by 2025. The aim is to have at least 30 percent of board members be women by 2030. By the end of July 2022, only 11.4% of all companies listed on the Prime List of the Tokyo Stock Exchange had women on their boards compared to 45% of equivalent companies in France and 31% in the United States.
This has prompted an outbreak of appointments of women to company boards during this summer’s shareholder meetings, mostly to non-executive directorships. Many of the new women board members do not have direct corporate line management experience, and are lawyers, accountants, academics and journalists. Even then, the scarcity of suitable women has meant a far higher proportion of the women have multiple non-executive directorships, compared to male board directors. Japan’s Financial Services Authority has pointed out that the goal of 30% by 2030 is not to have 30% of board members as external female directors, rather that Japanese companies should be planning now on how to have a pipeline by 2030 of suitable internal female candidates.
Japanese companies are going to struggle with this. One Japanese local bank stated that while 45% of its new graduate entry hires were female, only 6% of its managers were female. Another Japanese business organisation head said “there are no [suitable female] candidates” for the board. But as the Nikkei pointed out, the question is whether there really are none, or that women employees are just not being groomed for the board.
The motivation to change should not just be about caving into government pressure. According to JP Morgan Securities, their stock index compiled of companies with a high proportion of female executives started to outperform the TOPIX 500 in 2020, when the COVID pandemic started. Nishihara Rie, chief equity strategist at JPMorgan Securities, said, “During a crisis like the COVID, investors look more closely at the quality of management and the board of directors. Having women on the management team was seen as a factor in positively evaluating the board.”
Having people without mainstream corporate line management experience on the board is of course itself a sign of diversity and inclusion, and brings a fresh perspective to Japanese companies with long traditions of life time employment and seniority based promotion. But of course if only women from outside the company are appointed to the board, then there is a lack of role models for women employees in the company. Also, women from outside the company will not have the power base and influence within the company that internally appointed men have. I’m not sure 7 years is long enough for Japanese companies to fix this.
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Clear trends from less data on Japanese companies in Europe
The latest data on the numbers of Japanese companies around the world from the Japanese Ministry of Foreign Affairs was published over the summer. It’s back down to one spreadsheet, in normal sized font, where the only colours used are to highlight the title of each region. The number of spreadsheets published had mushroomed from 1 to 5 between 2013 and 2018, and even with (or maybe because of) the copious use of tabs, freeze frames and various shades of yellow, orange, green and purple, the whole thing was extremely difficult to navigate.
I used to imagine the moans of the junior civil servants putting in long hours to compile this, the sighs of the middle management having to check its accuracy, and then the teeth grinding of the general managers who wished for the older, simpler days of a printed out hard copy. In the new stripped down MoFA world, the only data disclosed is the total number of Japanese organisations in each country. There are no longer any categories regarding whether they are public limited companies, joint ventures or branches. The data on Japanese nationals resident overseas used to be combined with the data on organisations, but is now published separately.
In a way less data* is less transparency, but perhaps usability is more important than the sheer volume. This seems to have been the decision that Hitachi has made too. The number of pages of its most recent integrated report has been halved from 106 to 53. In Hitachi’s case this can be excused by the sheer size and complexity of the organisation – 320,000 employees working in a huge variety of businesses. What led to the cull was that those writing the report – the investor relations department – were also the users, who talked through the report with investors. They themselves felt it was hard to explain, and feedback from the investors also pointed to usability concerns. Hitachi has won awards for its reports, so this was a bold decision to make.
According to a survey of 881 companies by KPMG, the average integrated report in Japan had 75 pages and 66% of all surveyed companies had 61 pages or more. This ratio has increased by 4 percentage points from two years ago, thanks to the increasing obligation felt to report on ESG metrics.
Anyway, the new simplicity means there is only one chart we can produce from the MoFA data, for countries with more than 100 Japanese companies in Europe, as below:
And yes, it does make certain trends very clear.
- Germany still dominates as a host of Japanese companies, but there seems to be a tailing off of growth (+22% since 2013)
- Conversely, the numbers of Japanese companies in the UK has fallen (-10% since 2013), but now stabilised.
- France continues to grow as a host of Japanese companies (+21% since 2013), with quite a jump in the last year. This may be as a result of the 10 or so acquisitions made of French companies by Japanese companies 2020-2022
- There was a significant leap in the numbers of Japanese companies hosted by Netherlands and Italy in 2019. It’s difficult to know whether this due to the “hard” nature of Brexit becoming clearer in 2018-9 or some change in the way MoFA was categorising its data.
- Eastern European countries, probably due to automotive and other manufacturing costs and existing skills, have become popular – Poland, Hungary, Romania, Czechia
- Smaller, more service sector oriented countries in the Nordics and Baltics are also becoming more popular such as Estonia, Denmark, Sweden
- The above has meant that Switzerland, Belgium, Finland and Austria have dropped down the rankings
*Grammar pedants may recoil from the use of “less” with “data” here. Sorry. This may reassure.
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Toshiba launches quantum technology hub in Cambridge, UK
Toshiba launched its Quantum Technology Centre in Cambridge on 22nd September 2023. The centre has about 40 employees, with plans to expand the head count to 70. Toshiba will invest 20 million pounds ($25 million) in the facility over five years starting in fiscal 2023.
Toshiba already had a research laboratory in Cambridge, conducting research on artificial intelligence and quantum technology. Some engineers will transfer from there to the new quantum-specialized offshoot.
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My Japanese company family ten years’ on
I met up recently for a dinner in London with most of the members of a team of British and French people I worked with at a Japanese company, ten years ago. An event like this would not be so unusual in Japan, I suppose – an OB-kai (Old Boys’ party) – but it is not a regular occurrence in the UK. In more individualist societies, employees will not have joined the company as a cohort, nor left the company as a cohort on retirement. My team members did indeed join the Japanese company at different times and some have now retired. Some, like me, left of their own accord and others were made redundant.
What united us was the leader of the team, who had handpicked us to work together. He is now in his seventies, and active in U3A (a collection of charities providing education and self-improvement for those who no longer work) and has just moved house, in order to be closer to his grandchildren.
Family was a big theme of the evening with photos shared of children and grandchildren. Health of course was also a topic – one person, now a CEO, had recently undergone a triple bypass operation and been told he should not work full time again. We also talked of the impact on mental health of the pandemic on our children, one of whom had been diagnosed as autistic.
Of those who had retired, two were living in Portugal and one was active as a local councillor in the UK (and could not attend the dinner as he was campaigning). Another person who could not join us was living in Sofia, Bulgaria.
Three of us were working as independent consultants. One was about to start a part time MA in international relations – purely for the intellectual challenge rather than as a career move. He had turned down a senior role at Huawei, because he felt he could not build up the same level of trust that he had felt when he worked in a Japanese company.
Japan was still of interest to everyone. Even though he had been to Japan many times on business trips, one of the group decided to visit Japan again, but as a tourist, with his wife. They had such a wonderful time, they want to go again, to travel to the north and west.
So, as our team leader always used to insist when I wrote a press release or article – reflecting on ten years’ ago and now, what is the action point?
The project we were all working on ten years ago was to define more clearly the values and vision of our Japanese company, in order to bring employees together, globally. Ten years’ on, I still think this is a necessary step but new forces are dispersing employees – such as job mobility, the job gata system (introduction of job descriptions and specialization) and remote working. A good global leader will need to ensure that employees are drawn together again, in an environment where they can build enduring, trusting human relationships.
This article by Pernille Rudlin was first published in Japanese in the Teikoku News, 14th June 2023
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Japan’s M3 acquires British medical staffing company Messly
Japan’s M3, a healthcare services company listed on the Tokyo Stock Exchange Prime Market, has acquired UK start up Messly, a recruiting marketplace platform for U.K. doctors, for surgeries and hospitals to hire locums, or temporary doctors, at short notice. It was founded in 2017 and 70% of the UK’s trainee doctors are registered on it.
M3 has already acquired several healthcare software and services related companies in France, Germany, Spain, Sweden and the UK since 2011 when it acquired doctors.net.uk. We estimate M3 has over 500 employees in Europe, out of 10,533 worldwide.
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Japan owned British crypto currency firm B2C2 acquires France based Woorton
B2C2 was established in 2015 and acquired by Japanese company SBI (Strategic Business Innovator group, formerly part of SoftBank) in 2020. It employs around 90 people in the UK and also operates in the U.S., Cayman Islands, and Japan. The acquisition of Woorton means B2C2 not only expands its European operations but acquires Woorton’s PSAN license which is regulated by France’s financial market authority, the AMF. As a result, B2C2 can now cater to clients in the European Union, aligning with the upcoming MiCA regulations.
SBI is still operating in Russia as SBI Bank LLC, employing around 245 people.