Pernille Rudlin - Rudlin Consulting

About Pernille Rudlin

Pernille Rudlin was brought up partly in Japan and partly in the UK. She is fluent in Japanese, and lived in Japan for 9 years.

She spent nearly a decade at Mitsubishi Corporation working in their London operations and Tokyo headquarters in sales and marketing and corporate planning and also including a stint in their International Human Resource Development Office.

More recently she had a global senior role as Director of External Relations, International Business, at Fujitsu, the leading Japanese information and communication technology company and the biggest Japanese employer in the UK, focusing on ensuring the company’s corporate messages in Japan reach the world outside.

Pernille Rudlin holds a B.A. with honours from Oxford University in Modern History and Economics and an M.B.A. from INSEAD and she is the author of several books and articles on cross cultural communications and business.

Since starting Japan Intercultural Consulting’s operations in Europe in 2004, Pernille has conducted seminars for Japanese and European companies in Belgium, Germany, Italy, Japan, the Netherlands, Switzerland, UAE, the UK and the USA, on Japanese cultural topics, post merger integration and on working with different European cultures.

Pernille is a non-executive director of Japan House London, an Associate of the Centre for Japanese Studies at the University of East Anglia and she is also a trustee of the Japan Society of the UK.

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Here are my most recent posts

Japan’s Nippon Express acquires Austrian logistics company Cargo Partner

It has been confirmed that Nippon Express will acquire Austria’s Cargo-Partner (subject to regulatory approvals) for around $743m, according to the Nikkei. For Nippon Express, this is their biggest acquisition ever, and yet another Japanese corporate originated M&A drive for international diversification and growth, in reaction to Japan’s ageing and shrinking economy.

Cargo-Partner has 4,000 employees in 40 countries including Europe, USA and Asia, and a turnover of over €2bn. Nippon Express’s turnover is around US$13bn, of which 6.4% is in Europe. Nippon Express has 73,350 employees in 49 countries, of whom 3,480 are in Europe. It is the only Japanese company to rank in the top 10 largest global freight forwarders. The combined entity will be the fifth largest air cargo carrier in the world.

The acquisition of Cargo-Partner will particularly expand Nippon Express’s presence in Central and Eastern Europe. Rival NYK Group, which includes Yusen Logistics, is actually larger than Nippon Express in Europe, with 8,360 employees based in the region out of 35,165 globally, 25% of its employees. The total number of NYK Group employees in EMEA grew over 1,000 in the past three years, particularly in countries such as Romania. Nippon Express clearly felt it was underweight in the EMEA region for some time, and has recently expanded its network here to include Slovakia, Serbia, Morocco and Kenya.

The founder of Cargo-Partner Stefan Krauter will stay on to help with the transition, sitting on the Corporate Supervisory Board and as an advisor to the Corporate Executive Board. He says he “will be focusing on smart partial integration with the new owners as well as on other matters regarding strategy, M&A and ESG.” I am not sure what “smart partial integration” means, but if it’s anything to do with integrating IT systems, unless Nippon Express is the exception to the rule in the Japanese corporate world, this will be prove to be a very long project, and it might even be worth binning any legacy Japanese systems for whatever Cargo-Partner already has.

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Does Japan really have CXOs?

I started a new project last year, delivering online training on B2B services marketing to Japan based employees of a Japanese IT company. It has been challenging in many ways, not least of which is that I have to get up very early, in order to deliver the modules within Japanese working hours.

I have worked in B2B services most of my career – in Japanese, British and American companies, in both marketing and sales functions. So delivering this course is a natural fit for me, but it has also made me more aware than before of the big gap between Japanese sales and marketing approaches and Western methods. Western methods in turn are mainly influenced by American practices, and as is often the case, Americans tend to assume that their practices are the global standard, much to Europeans’ irritation. Nonetheless, particularly in an industry like IT, American suppliers are so dominant, in order to compete with American suppliers it is necessary to understand and use these methodologies.

Behind these methodologies, there are various assumptions which I realise need to be surfaced, and questioned, if they are to be used by Japanese multinationals.

The first assumption is that the target audience within the customer company is the so-called “C suite” or “CXO”. As far as I am aware, job titles such as CEO, CFO, COO and more recently CHRO, CDXO or CRMO were not commonly used a decade or so ago in Japan. There was of course the President, and then various Fukushachou (Executive Vice President), Senmu (Senior Vice President) and Jomu (Managing Director) – and most of them on a very large board. The Jomu in particular were often “in charge” of a particular business or function, so it has been quite easy for Japanese companies to then add a “CXO” title to the Jomu level people.

But I wonder whether this is not just a superficial change. The real meaning of CXO job titles, and why they are the target for B2B services suppliers, is that they are viewed as senior specialists in a particular field, and have the ultimate decision making authority and control of the budget.

In traditional Japanese companies, most of the senior executives would have been generalists throughout their careers – albeit within a particular business or functional area. Westerners are frequently surprised, however, to discover that a Japanese CFO has no accounting or finance qualifications, or takes a passive view of HR or marketing as a support function, not as something which requires a strategic approach. They may have ultimate authority to approve budgets, but much of what they approve has come from a more bottom up, nemawashi and ringi mechanism, rather than a strategy that they have set.

When Japanese suppliers were primarily selling to Japanese multinational customers, global marketing techniques were not needed. But now Japanese multinationals have themselves localised and globalised, so non-Japanese in CXO positions, even in Japan headquarters, have begun to appear. Which is why I expect I will be having to get up early to deliver marketing training to Japanese people for some time to come.

This article by Pernille Rudlin first appeared in Japanese in the Teikoku Databank News in February 2023

Japan and Morocco

According to the Moroccan government, Japan is the largest foreign private employer in Morocco, with 75 Japan owned organisations generating more than 50,000 jobs. These numbers look likely to grow further in the coming years, as in April 2022 the agreements between Japan and Morocco on the promotion and protection of investments and elimination of double taxation came into force.

The lack of such agreements has meant that up until now many Japanese companies’ presence in Morocco had been as branches of their French, Spanish or German subsidiaries. The largest employers are manufacturers, mostly in the automotive sector, with around 30,000 employed by Sumitomo Electric Industries and Yazaki. Sumitomo Electric Industries has 8 plants in Morocco, and is set to increase this as it diverts production from Ukraine. Yazaki is planning to invest Y9bn to increase its output in Morocco by 25%, including a new production facility. Fujikura is about to start its plant there, also shifting production from Ukraine.

Renault and Stellantis (Peugeot) have assembly plants in Morocco, contributing to Morocco becoming the biggest exporter of passenger cars in Africa, 80% of which are sold to Europe – primarily France, Spain, Germany and Italy – supported by the free trade agreement with the European Union.

The Moroccan government has been very insistent on local sourcing but also supportive of foreign companies operating there in terms of incentives and taxation. It has also invested in infrastructure such as a high-speed rail link between Casablanca and Tangier, where Renault’s plant is located. Labour costs in Morocco are about a quarter of those in Spain and lower than in Eastern Europe too.

It is not just the automotive sector that is growing in Morocco, however. NTT Data has recently committed to investing around Y200m, creating 1,000 jobs, after a memorandum of understanding was signed between the telecommunications ministries of Japan and Morocco. The Moroccan government is also keen to increase inward investment in its aerospace and renewable energy sectors.

The King of Morocco introduced democratic reforms after the Arab Spring of 2011, since which a moderate Islamist government has been in power. The Islamist party comprehensively lost in the elections in 2021, however. The new government, led by the RNI party, contains influential members of the Moroccan business community. Human rights and freedom of expression are still a concern, with journalists being imprisoned recently in a crackdown.

From a Japanese business perspective, there is definitely a mood of optimism, as can be seen in the recent JETRO Africa report (link to pdf), where 65% of the Japanese companies in Morocco who responded to their survey expected to expand their operations there.* The size of the market, growth potential and the stable social and political situation all scored highly compared to other African countries. Morocco also scored better than other African countries on infrastructure and the ease of hiring and retaining employees. Morocco is more French speaking than English speaking, however, which may account for the relatively low number of Japanese expatriates based there.

*since this was written, a new JETRO report has come out, which the article above now links to, which showed that there had been a drop in the number of Japanese companies expecting to expand in Morocco, to 54.5% – on the other hand, Morocco was one of the top African countries for current and future profitability.

This article by Pernille Rudlin first appeared in Japanese in the Teikoku Databank News in June 2022

Japanese companies in “wait and see mode” for 2023 overseas expansion

Japanese companies are increasingly in “wait and see” mode with regard to expanding their business overseas, according to a JETRO survey at the end of 2022. Although 43.5% of all those who responded to the survey (3,118) who already had operations outside Japan said they were going to invest further in their global business, this was outstripped by the 49.1% who said they would maintain their investment levels overseas “as is” and 5.2% who said they would reduce or withdraw from overseas business. This compares to 2019 where 66.9% who said they would invest more, 28.5% said they would maintain investment levels and 1.7% who were shrinking or withdrawing from overseas. This trend is stronger in larger companies than small and medium sized ones. 51% of those respondents who did not have any overseas operations said they were not intending to invest outside Japan in 2022, compared to 40.9% in 2019.

EU selected by 20.7%, UK by 2.6% for expansion

Chemicals, foods, electrical machinery and software were the bright spots in terms of overseas expansion. Top 3 destinations were USA (selected by 29.6%), Vietnam (26.5%) and China (26.4%), with the EU at number 4 (20.7%). The UK was 16th, selected by 2.6%. Product areas most focused on the EU were textiles and clothing and timber products – furniture and pulp.

Reasons for choosing regions to expand in were primarily around market size and growth potential, that there is a concentration of purchasers there – interestingly there is a clear difference between the USA (most of the sectors being targeted being manufacturing, so presumably Japanese companies B2B sales to other Japanese or US companies) whereas to Vietnam it is non-manufacturing, and more B2C, logistics and construction.

Onshoring

13% of respondents with overseas operations have already onshored or are looking at onshoring, particularly in health and beauty products, petrochemical and plastic products and IT equipment and components. Unsurprisingly, the key reason cited by 60% for doing so was the increased cost of manufacturing outside Japan. Other concerns are the falling yen and the long term the shortage of supplies – however it seems global logistics is becoming easier again.

Business transformation and hiring non-Japanese employees

In terms of changing business strategy or business model to deal with global trends, 30.5% said they were already undertaking business transformation, 39% said there was a need to change their strategy or model but they had not done it yet and 26.8% did not see any need for change.

Those who were transforming their businesses were doing it through acquiring new personnel (both domestic and overseas), or redeploying existing personnel. 51.5% have now hired someone non-Japanese in Japan – the highest level yet. A shortage of domestic personnel was the top reason for doing so, but not far behind were reasons to do with improving overseas marketing, management and negotiation strength, and also to globalise the HQ.

33.5% are undertaking digital transformation in 2022, compared to 28% in 2021, particularly in financial services and IT services. Reducing carbon emissions is well advanced in Japan (78.4% of large companies are undertaking zero carbon initiatives) but not so advanced with their overseas supply chains, with 40.6% of large companies having taken any steps and only 11.6% of small and medium sized companies including their overseas supply chains in any initiatives. Japanese customers are more demanding on carbon emission standards than overseas customers – 17% of Japanese have asked for statements of compliance on carbon emissions, but only 12% of overseas customers have done so.

Only 10% of Japanese companies have been conducting due diligence on human rights, but over 50% intend to do so within the next year. Over 50% of large Japanese companies have been asking for statements of compliance on human rights from their suppliers.

Is the UK losing out to the Netherlands as the core of Europe in pharmaceuticals?

The new commissioner of the Netherlands Foreign Investment Agency, Hilde van der Meer, was interviewed in the Nikkei newspaper during her visit to Japan in March 2023. The headline was “becoming the core of Europe with pharmaceuticals” and she outlines in the interview how multinational pharmaceutical companies have opened offices in the Netherlands since the European Medicines Agency moved to Amsterdam after Brexit.

We took a look at our database and can see that one Japanese pharmaceuticals company, JCR, has recently opened an office in the Netherlands. The other, larger, Japanese pharmaceuticals companies were already in the Netherlands long before the EMA move – such as Astellas, Takeda, Eisai, and Daiichi Sankyo. Chugai does not have operations there – its European HQ is still in the UK – but its parent company, Swiss pharmaceuticals company Roche, does have a subsidiary there. Otsuka opened a company in the Netherlands in 2018, which acts as a Marketing Authorization Holder for the EU and in the same year closed its Otsuka Europe Development and Commercialization operation in the UK. Shionogi also opened a subsidiary in the Netherlands in 2018, and the UK subsidiary became a branch of it at the same time, so this may also have been a result of the EMA move. Takeda UK also became a branch in 2018 – but more as a result of the acquisition of Shire, and a subsequent global reorganisation.

This does not seem to have had much impact on the 46 or so Japanese pharmaceuticals and healthcare companies in the UK, however, in terms of numbers employed. We estimate they were employing around 5,000 people in 2022, and this number has grown rather than shrunk since 2016, despite the closure of some smaller companies – Taisho, Anges, Kosei and Summit. Companies which have grown in the UK include Fujifilm Diosynth, now employing over 1,000 people and Eisai, compensating for those which have shrunk their UK presence.

The UK may have lost some influence, but in terms of scale, it is still substantial.

What is behind the 30% drop since 2016 in Japanese corporate expatriates?

Mitsubishi Electric’s introduction of a system that will allow employees to work virtually in one country, while being based in another was described as an “evening scoop” by the Nikkei newspaper. The Nikkei then went on to position it as being aimed at employees based outside Japan, who can then work in Japan headquarters, thereby enabling Japan HQ to exert a more centripetal force on the rest of the world.

I am not quite sure how much of a scoop this really is, as I already experienced a similar system, along with many other members of “Global” when I worked at Fujitsu in the UK ten years ago – I had an international role but my salary, tax and benefits were all paid as if I was a UK based employee. The UK operation was compensated for this by Japan headquarters.

The solution to Japan’s demographic crisis?

My second doubt about this is whether this is really the solution for Japan’s demographic crisis. Japan needs immigrant workers because of its declining birth rate, in addition to which Japanese companies often talk about the importance of cultural diversity in their corporate headquarters, but nobody seems to want the hassle of actually allowing foreigners into the country to live. Only very specific categories of jobs can add value entirely through remote working – no surprises that Pasona, a Japanese staffing services company, has an offering to cover remote work from overseas – for foreign IT workers. If the aim is to add value to headquarters’ decision making and creativity through diversity, then some face to face, daily interaction is going to be needed.

When I first saw the Nikkei headline, I thought Mitsubishi Electric’s new system was going to be for Japanese managers who need to manage overseas subsidiaries, but would rather do it remotely, than uproot their families to move abroad for five years or go solo or tanshinfunin, as it is known in Japanese. Expatriation is costly for the employer too. This is mentioned in the article, but as a secondary aim.

Or increasing localization?

Many other Japanese companies may be adopting similar systems, or just relying more on local managers to run things – as we noted in a previous article. As a consequence, there has been a 30% drop in the number of Japanese corporate expatriates since 2015/6, according to Toyo Keizai. North America had the smallest drop in numbers (-24%) and Oceania the highest (-43%). The numbers of Japanese corporate expatriates in Europe fell 27% since 2015/6, and the total is about half that of North America. The decline set in before the pandemic, but certainly seems to have been accelerated by the inability to move people around the world, and the discovery that it was possible to oversee, if not hands-on manage, overseas operations remotely.

Toyo Keizai’s data on corporate expatriates relies on self reporting through their surveys, so undoubtedly underreports the true number of expatriates. It is at least a consistent data set, with few anomalies, so the trend seems clear. It only records 6 Japanese expatriates for Mitsubishi Electric in Europe and Africa, and another 7 in the Middle East – the former seems very low.

Mitsubishi Electric operates in more than 40 countries around the world, with overseas sales accounting for 50% of consolidated sales and 40% of consolidated employees (approximately 146,000). 11% of its sales and around 9,500 (6.5%) of its employees are in the Europe, Middle East and Africa region. We had to estimate the 9,500 figure ourselves, as Mitsubishi Electric does not disclose regional breakdowns of its employees. If remote working across country borders really becomes dominant, at least at managerial rather than shopfloor level, then such data will become increasingly meaningless anyway.

Breaking it down for EMEA

Looking at the Toyo Keizai data for individual countries in Europe and the Middle East shows that the only country to show any positive growth in Japanese corporate expatriate numbers since 2016 is the United Arab Emirates. The fall in Japanese expats in the Netherlands (-19%) was not as steep as elsewhere in EMEA (-27% average, -26% for UK, -40% for Belgium ) and seems to be recovering a bit since the pandemic. The number of expats in Germany also fell by only 17% since 2016, having grown and surpassed the UK in 2019/20, but falling steeply since the pandemic began, with no signs of recovery yet.

Mitsuba appoints liquidator for UK automotive parts business Mitsuba Europe

Mitsuba, a Japanese manufacturer of automobile parts including electrical components for wiper systems, door mirrors, power window motors, fuel pumps, and pressure regulators, has appointed a liquidator for its UK business, Mitsuba Europe.

Mitsuba has around 20,000 employees worldwide, of whom 900 are based in Europe, Middle East and Africa. Its biggest operation is its plant in Hungary, employing around 400 people. It also has plants in France, Italy, Morocco, Russia and Turkey and a sales office in Germany.

Mitsuba Europe in the UK only employed 3 people with a turnover of £364,000 in 2022. Before 2011 it employed 6 people, with a turnover of £18m, but transferred the major part of its business to its subsidiary company in Hungary in 2012.

SEGA confirms it is acquiring Finnish Angry Birds company Rovio

SEGA is acquiring Finnish game maker Rovio for $775m/706m euros. The purpose of the acquisition isn’t so much to add elderly Angry Birds to their portfolio as to utilize Rovio’s live service expertise to bring current and new games to the mobile gaming market. It’s also about SEGA making sure it isn’t too dependent on its still successful but nonetheless rather 20th century cash cow, pachinko machines.

Rovio had around 546 employees of 58 different nationalities at the end of 2022. SEGA Sammy has around 1,300 employees in Europe, out of 7,760 globally, according to our estimates – in Bulgaria, France (SEGA acquired Endless series developer Amplitude in 2016), UK (acquisitions of Sports Interactive (2006), The Creative Assembly (2005) and Two Point Studios (2019)) – where the European companies SEGA Europe Ltd and SEGA Publishing Europe Ltd are also based.

SEGA Sammy Holdings are aiming to have 50% of their sales outside Japan by 2030. To that end, they have set a target of having 900 “culturally diverse” people in their Japan based workforce (around 21%) – which they define as being a foreign national, or having experience of living overseas, or a certain level of foreign language ability.

Top 30 Japanese companies in Europe, Middle East and Africa 2022

Our top 30 Japanese companies in Europe, Middle East and Africa for 2022 (download available below) shows that there has been a modest growth in total employee numbers to 593,195,* up around 3% from 575,962 in 2021. We estimate over a million people are employed by Japanese companies in the EMEA region, so around 60% of them are working for these large corporate groups.

This would be a 2% growth if Honda had not dropped out of the Top 30, thanks to the closure of its Swindon UK factory, and been replaced with NYK Group. Japanese corporate groups where the number of employees in EMEA declined over the year were largely in the automotive sector – not only Honda – including Nissan (-8%), NSG (-6%) and Denso (-5%).

Some of the growth in employees was due to acquisitions, for example Hitachi‘s employees in the region expanded by nearly a third after the acquisition of the ABB Power Grids business. Sony has also grown in EMEA by 27% from 2021 to 2022 – this may be the result of multiple acquisitions, mainly of video game companies in the UK, Netherlands and Finland as well as in the USA.

This now means 12% of Hitachi‘s global employees and 11% of Sony’s global employees are in the EMEA region, compared to the top 30 average of 14%. The groups with a significantly higher than average proportion of employees in EMEA tend to be those with large manufacturing presence –

NSG (46% of global employees in the region), arising from its acquisition of Pilkington Glass
Sumitomo Electric Industries (26%), thanks to the labour intensive wire harness factories it has in Eastern Europe and North Africa
Toyota Tsusho, who have a significant presence in Africa since their acquisition of the French company CFAO
Asahi Glass

Japan Tobacco, with 38% of its global employees in the EMEA region, has entered the top 10 of the largest Japanese corporate groups, up from number 16 – not necessarily from any expansion, but more due to the fact that previous employee estimates were our own, and proved to be an underestimate, judging by figures that are now given on the website for Europe and the Middle East. It has not announced anything further about its operations in Russia, where it employs around 4,000 people, other than a suspension of investment.

Recruit and Asahi also have more than 30% of their global employees in the EMEA – Recruit through its acquisition of USG People as well as Glassdoor and Indeed and Asahi through its acquisitions of various beer brands such as Grolsch and Peroni.

The corporate groups that have expanded the most in the region since 2014/5 are Hitachi (262%), NTT (157%) and Panasonic (89%). Those groups which have contracted the most are Honda (-55%), Asahi (-30%), Fujitsu (-25%) , Nissan (-22%) and Ricoh (-15%).

Click on this link for a pdf download of the Top 30 Japanese Companies in EMEA 2022

*This number has been updated to reflect the inclusion of Mitsubishi Electric in the Top 30 (17 April 2023) and the inclusion of NYK Group (16th May 2023)

A second winter of discontent for Britain

Britain is going through another “winter of discontent”, of multiple strikes. The description comes from a soliloquy in Shakespeare’s Richard III and has been used whenever social or political unrest coincides with dark, cold, wet British winters.

I remember the last, most famous “winter of discontent”, of 1978/9, when there were widespread strikes against government imposed wage restrictions. It was a year or so after my family returned from five years in Japan. Britain felt very inconvenient and full of conflict after the smooth-running life we had in Japan.

One of the positive impacts that Japanese companies such as Nissan and Toyota had on the UK in the 1980s was to introduce multi-skilling and one company union representation in return for more secure jobs with better working conditions. Many other companies adopted these practices and for decades we had far fewer strikes and disputes.

It feels like we have regressed back to the 1970s. This time the disputes are primarily about pay but also changes to working practices, and a worry that these will lead (or have led) to worsening working conditions and insecure employment.

For example, the rail union is concerned that driver-only trains, where the driver has to operate the doors as well as drive the train, will lead to compulsory redundancies. The rail management are saying that there will still be staff on the train, but they will be able to focus more on passenger safety and ticket inspection, if they do not have to operate the doors as well.

I recently travelled into London on an airport bus (because the trains were on strike) and observed the driver of the bus having to load everyone’s suitcases, check everyone’s tickets and then drive the bus. All tickets had a QR code, but he was checking them manually. Although the digital ticketing system could tell him where passengers were going and where passengers needed to be picked up, he still double-checked our itineraries with us. It seemed to me he was having to do too much, without supporting technology, so missed the fact that one passenger had booked a different bus, and he also placed some of the suitcases in the wrong part of the luggage hold.

A recent exposé of the UK warehouse of a large online fashion chain revealed similar problems. Employees had a heavy monitor strapped to their wrists telling them where they had to go next. The monitor would also alert managers when an employee was not hitting their targets. Yet the employees were having to walk the equivalent of a half marathon during a gruelling 12-hour shift. This is despite the fact that there are robots which can do a similar job, as I saw in a vast Honda warehouse in Belgium, nearly 30 years’ ago.

British technology investment has been very short term, focused on cutting labour costs rather than looking at how technology can be used to improve people’s working lives. I hope Japan’s digital transformation fares better, and that again Britain can learn from it.

This article by Pernille Rudlin first appeared in Japanese in the Teikoku Databank News in January 2023

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