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.

Find more about me on:

Here are my most recent posts

Anglo-Japanese partnerships, new and old

I occasionally buy objects in local antiques shops which are a hybrid of Japanese and British design and manufacturing. Most of these date from the late 19^th or early 20^th century when Japonaiserie was at its peak in Europe.

Last year I bought a milk jug decorated with a picture of Mount Fuji, junk boats and thatched houses on it. It’s a very simple traditional British shape and most of the decoration apart from the gold highlights are transfer printed rather than hand decorated.

What caught my eye most of all was that the jug had an unusual metal hinged lid. Inside the lid is stamped “Clarke’s Patented”. It seems the lid had a design patented in the UK by a Mr Clarke, to allow the jug to pour or be filled, while keeping the lid on.

It shows that even in the 19^th century, trade between Japan and the UK wasn’t just a bilateral shipping of objects entirely made and designed in one country. Maybe the mould for the jug was exported to Japan. Was the transfer print made and designed in Japan or the UK? Was the gold highlighting applied in Japan or the UK? Was the metal lid added after the jugs arrived in the UK? It’s possible the entire jug was designed and manufactured in the UK – but was heavily influenced by Japanese export ceramics.

This long history of interaction is why the Free Trade Agreement being negotiated between Japan and the UK is likely to be fairly basic and without much additional positive impact. A deal also needs to be reached quickly to ensure there are no new tariffs after January 1^st 2021 when the Brexit transition period ends. The sector likely to produce the most gains in terms of reducing tariffs is food and agriculture, which usually causes the most difficulties and prolongs trade negotiations – so it seems likely this part will not roll over from the EU Japan EPA for the time being.

The UK proposal reflects this, emphasising British small and medium enterprises exporting to Japan, access to Japanese government procurement and the free flow of data.

Government procurement can also be very controversial. Many people in the UK are nervous about a trade agreement with the USA resulting in American healthcare companies being able to push for the privatisation of the UK’s national health service. There is also plenty of concern about data flows and Chinese investment in UK ICT infrastructure.

The chief of the UN has said the world is facing the biggest crisis since World War II. For Japan and the UK the post-war period was one of austerity but also innovation. Companies such as Sony and Honda were founded in Japan and the UK established the welfare state – the nationalisation of the health service, transport and energy.

So let us hope this crisis will bring about mutually beneficial new Japan-UK partnerships in social infrastructure and services, as well as in technology start-ups.

This article was originally published in Japanese in the Teikoku News, on 8th July 2020.

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Japan’s new “job type” system explained

Many Japanese companies such as Hitachi and Fujitsu are introducing a “job-type” (job-gata in Japanese) system. The term “job-type” will not be familiar to Europeans, so we will draw on a series in the Nikkei Business to explain the background to this change.

It’s common practice in Japan to hire full time, permanent staff, usually straight out of university, known as “seishain” with a ‘blank contract’ and no clear definition of the content of the work or the location of employment. Many Japanese commentators call this the “membership type” system, because the new recruit has in effect become a member of a corporate community. I like to use Trompenaars Hampden-Turner’s description of Japanese companies being a “family” company too, even if the founding family are no longer in control.

In contrast to this, the “job type” system is commonly used in Europe and the US, where the company and the individual have a carefully worded employment contract, and the content of the job and remuneration are clearly set out in advance.

	Job type	Membership type
Duties	In principle, duties outside the job description are not undertaken	Boundaries of the role are not clearly defined. Job rotations are common.
Salary	Salary is based on job evaluation/duties	Salary is based on ability and position in a career track, which in turn is based on years of service
Job location	Job location is defined and limited. In principle there is no relocation	Job location and assignment is not defined. Relocation is the norm
Training	for immediate applicability – up to the individual to acquire	long term employment is the precondition, so the company trains the individual.

3 decades of HR reforms

There is plenty of criticism that this is just a repackaging of the much criticised seikashugi or performance based system. Many Japanese companies introduced this after the economic bubble burst in the 1990s but it was seen as simply a cost cutting exercise. Managers started looking for ways to reduce employees’ bonuses, which up until then had mainly been based on company or divisional performance. Nikkei Business notes that the “3 lost decades” in Japan have seen a series of crises followed by changes to HR systems, but somehow the change is watered down and the company reverts to seniority based HR management.

Companies that have introduced the job type system include Mitsubishi Chemical. When they first introduced it in 2017, it was still the manager who made the decision on promoting employees, and as a consequence the seniority element remained. So from October this year they are introducing an open application system, to increase fairness and transparency. Mitsubishi Chemical’s HR Director Nakata Ruriko notes that their workforce is no longer the homogenous group of lifetime employees recruited as graduates. There are more mid career hires and dual income couples, trying to balance child and elderly care. Nakata is introducing choice and the ability to build your own career, to respond to this diversity.

The telecoms company KDDI has skipped trying to negotiate with the labour union to introduce the job type system to current union members and is only introducing it to managers and new graduates from April 2021. There will no longer be the same salary for all new graduate recruits – compensation will depend on skills and internships undertaken before entering the company.

Fujitsu has ended “side by side” cohort based training and a mandatory retirement age. The position of manager will be open to all, but if you do not ask to be a manager, you will not be promoted.

Working from home and relocations

Having a job type system also helps with working from home, as people have more autonomy and clarity on the boundaries to their work. Several Japanese companies are also ending the “tanshin funin” job relocation where the employee (usually male) would be assigned to another location and move there without their family.

From the management side the intentions behind bringing in a job type system depend on the sector, but at least one of three main reasons are usually cited:

the need to bring in people from outside the company who have the skills to support the company with technological innovations such as AI
to counter the constant increase in labour cost brought about by the seniority based system
a unified, globally applicable HR system which will improve internal job mobility across multinational operations

Over half of Japanese employees prefer the job type system

Nikkei Business surveyed over 1100 employees and found that nearly half preferred the job type system, compared to 24% who preferred the membership type system. When asked “do you think you can survive a switch to the job type system?”, 62.4% felt they could. More than 75% of the respondents said they would like to continue to work from home even after the pandemic was over.

But better state support and retraining are needed

The chairman of Rengo, Japan’s Trade Union Confederation, points out that Japanese employees are still very dependent and tied to their companies. If the aim of a job type system is to increase labour mobility, there needs to be more of a state safety net provided than there currently is. Some companies will simply be looking to reduce costs and those employees whose skills are no longer needed will find it very hard to switch to another company if they are no longer satisfied with the pay they receive for the work they do.

Takeda Yoko, a Director at the Mitsubishi Research Institute recommends FLAP as a way to succeed in a job type system – Find the work you want to do, Learn how to do it, Act upon this learning and then Perform – be evaluated and treated correctly.

“Japanese companies are weak at the top” – Horiba’s CEO

I was recently asked what Japanese company’s mission statement I most admired and I said Horiba’s “Omoshiro okashiku” which is translated into English as “Joy and Fun” (but the fun also means quirky, or as Horiba says “interesting” which is what I think many Japanese companies are to Western eyes, and that’s a good thing). I know from reports from our consultants in Germany that this ethos is transmitted to the overseas subsidiaries too. This interview with the President of Horiba in Nikkei Business by Higashi Masaki, the Editor, is so interesting, I have not made a precis, rather with big help from Google Translate, have left it pretty much as is.

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Since Horiba Atsushi took office as president, sales have increased more than five times, and overseas employees are now the majority, transforming it into a global company. He has also developed a unique corporate culture, including calling employees “Horibarians” regarding them as part of the family. We asked about Japan’s challenges as seen by companies competing globally in technology development.

(Interviewer: Masaki Higashi, Editor-in-Chief of Nikkei Business)

PROFILE

Atsushi Horiba was born in 1948 in Kyoto Prefecture. After graduating from Konan University Faculty of Science in 1971, he joined Olson Horiba, Inc. of the United States. He then joined HORIBA, Ltd. in 1972. He is also graduated from the Department of Electronic Engineering, Faculty of Engineering, University of California, USA in 1977. After that, he directed the overseas expansion of the group, and after working as a director in 1982 and managing director in 1988, became president in 1992. He has also served as chairman since 2005. He has been in his current position for18 years. He is also the face of the local business community, such as serving as the vice chairman of the Kansai Economic Federation. He is the eldest son of Masao Horiba, the founder of HORIBA, Ltd.

The automobile industry is greatly affected by the new coronavirus.

It was a difficult time for car makers even without the coronavirus. This is because there is a dramatic switch towards “CASE” (Connected, Autonomous, Sharing, Electric). It is necessary to move from the “hard” industry, which competes through productivity gains to steadily manufacture high-quality cars, to the “light” industry, which has become IT (information technology) intensive. What was a simultaneous equation with one variable has now become treble the pain.

HORIBA has the largest share of car exhaust gas inspection equipment in the world. The main business is conventional car-related products.

Electric vehicles will be the mainstream in urban areas. However, the combustion type will not disappear in areas with harsh climates. Regulations will also become stricter. However, it is not a growing market, so I would like to expand the CASE field.

How to secure human resources is very important. In 2015, we acquired a British company called Mira (which supports the development of automobiles). We wanted the excellent R & D unit of about 600 people, but it also had test equipment related to CASE. Mira’s test track has research bases for automobile manufacturers such as Toyota (automobile) and major parts manufacturers, so tests and research can be done together.

The company motto is “Joy and Fun”, but is that feeling the same even with the coronavirus?

Now more than ever is the time to have “joy and fun”. All managers are at a loss now. Even so, we don’t feel so sad because we are working in various fields under this company motto. “Fun” does not mean “funny” but “interesting”. With that idea, we shifted our direction. It’s not absolute, but I feel that this helps us be responsive.

It is necessary to strike a good balance between being extremely advanced in a specific field and expanding the range in order to foster new businesses?

To be honest, I don’t think this is managed properly. But that’s what’s interesting, and it’s made up of the enthusiasm of each unit. Trust is at the base. For example, if you are studying optics, you can think of many people who would be good to consult with within the company.

It is unreasonable to expect people who are developing the products that are profitable now think about what the future needs will be. There is no Superman in the world. In many cases, human resources are crushed in search of Superman.

What kind of human resources are you looking for?

I often say that I don’t want a guy who has a good memory, that is, a guy who just graduated from a good university with good grades. Some of the students who are considered to be excellent in the world outside join us, but from our point of view, they are also “stupid” children (laughs). I often join in on the quiz shows for highly educated people on TV, but they are just competing for memory and have no sense.

What does ‘sense’ mean?

Whether you are interested. That is, whether you can do “joy and fun” However, if only “sharp angled” human resources are hired, the company will collapse. That is the balance.

In order to maximize the breadth of the business, it is necessary to have an organizational structure for that purpose.

Now, the biggest issue is the wall between each department. In a pyramid-type organization, individual departments do their best, but there is no interface to connect the results. But if the organization is flat, it’s not necessary. It’s in a mixed state. Instead, the person above needs to be a Superman who can figure out where and what is going on (laughs).

Is the solid financial structure with an equity ratio of over 50% also a factor that guarantees the realization of “interesting and funny”?

Companies with weak internal reserves will have a hard time during coronavirus. When it was said that it was bad to retain earnings, I thought that retained earnings should definitely be increased. This is to ensure that opportunities for M & A (merger / acquisition) are not missed. If you have to ask the bank for money, it may be too late and the target is acquired by someone else.

What do you see as the challenges facing the Japanese economy now?

We manufacture all the key products such as detectors, filters and electronic boards in-house. The problem with Japan is that we have go outside to get the basic science for these key products. You cannot apply knowledge if you do not have the basic science. Nevertheless, Japanese industry and academia are only doing applied science.

We have R & D units in France, Germany and the United States because the academia of these countries never let go of the basic science. Not only is China accumulating product know-how, but it is also conducting basic research. China is the best-selling market for the latest optical analyzer developed in France. It’s neither Japan nor the United States. We need to be aware of the fact that China is doing this very thoroughly.

It is a worry that China’s technological capabilities are rising rapidly.

Japan has not lost yet. I just don’t know after 4-5 years where we’ll be. They are thinking very clearly about the combination of academia and industry. The winners and losers in a battle of comprehensive strength are becoming clear. How do you get around this? I don’t like the word “niche,” but we’ve survived because we’ve put more people and money into a specialty than a giant company.

The Japanese, and Japanese technology and schools are excellent. However, various regulations and past shackles are in the way. For example, why does the faculty council have personnel rights even at universities? At Tsinghua University in China, the top management is steadily being replaced with excellent human resources. But in Japan, once you get tenure, you stay in academia until retirement. This is such an unfair situation.

Are there any other obstacles to your competitiveness?

If I weren’t Japanese, I would have headquartered in California, USA, and the company would have been three times as large as it is now. Taxes are high and fixed costs are high in Japan. Our main medical base is located in France because of problems with Japanese regulations. We just pay lip service to “deregulation” and in the meantime Japan declines.

Industry-academia-government must think about industrial policy and decide what to make a strength.

Even if the government and others hold meetings to gather the top executives of large companies, they cannot take the plunge because they have a company. When I first became President I was called by the Ministry of International Trade and Industry (currently the Ministry of Economy, Trade and Industry), and when I talked about what I thought, I wasn’t called on again. The people around me just gave textbook answers.

However, the current Ministry of Economy, Trade and Industry is different from that time. What is worrisome is that bureaucrats who are trying to reform in line with our opinion tend to be off the career track.

Do they not want to change?

Perhaps they prioritize their own lives rather than the country. The sense of life or death of officials and politicians of the Meiji era is not there. I’m afraid that there is no sense of crisis about the fact that Japan is buying in more and more technology now.

China’s “brain” is talented people educated in the United States. There is no brain in Japan. People who are active (at the forefront) don’t end up leading government councils. Even if the technology and the times change, Japan still has excellent human resources, but they cannot “overtake” the incumbents. It’s the same with the top executives of large companies.

Because the term of office is fixed, the number of “salarymen” in top management has increased.

There is absolutely no business that will produce results in 6 years [the usual stint as President of a Japanese company] after investing from zero. It just means continual losses.

It takes at least two years for our products to be researched, tested, designed and finalized. It will be five years if the basic research is redone. It will take another 2-3 years to make a profit from it. Many things can be done with technology and machines, but this is useless if you do not develop people as well.

When the top executive who started a growth business retires after six years, and that business is making losses, he is said to be the “worst executive”, and when the next top executive harvests from what his predecessor has sown, he is celebrated as “great”. That shouldn’t be the case.

Don’t avoid developing leaders

What does it take to enable top management to think about things in the long run?

Japan is overwhelmingly strong in terms of both technology and human resources. The only weakness is the top. The United States and China are working hard on how to raise the elite. If we don’t train leaders, society won’t progress. On the other hand, in Japan, “elite” is a forbidden concept. In Japan, both politicians and business owners are a disorderly mob.

Japan is in a very dangerous state now. It has become a bogus democracy. True democracy has competition, and everyone is different. In the United States, they first educate elementary school pupils about how different each person is. But in Japan, it’s like “stop it, you’re annoying the old guy.” The responsibility of the media is also heavy.

It’s rare for a person at the top of a listed company to have a beard.

I nearly died of hepatitis when I was about 35 years old. Until then, I was just being the diligent president’s son. But at that time, I thought this is a turning point and I thought I would live a life where I do what I think is best, no matter what others say. My beard is a proof of that. From then on it became a lot easier.

You don’t know what works and how it works.

It feels like God only knows the future (laughs). However, there is a belief that we will make the best decision at that time by listening directly to the stories of people on the front line. I’ve done my best so I can’t help if it doesn’t work. However, people end up worrying about seeking more than the best.

You end up just wanting the correct answer.

The difficulty of management is that there is no correct answer. Everyone has the illusion that there is a correct answer, but there isn’t. The answer will come.

Side note from the interviewer Higashi Masaki

I don’t know if it’s because Japan has become richer or there is more inequality now, but as Mr. Horiba points out, “how individuals live” rather than the desirable way of organizations such as countries and companies should be has become increasingly the priority. It is important to note that the pursuit of personal well-being can sometimes be inconsistent with the interests of the organization.

For example, there is a tendency for top management to change and quickly write off assets of unprofitable businesses to generate a deficit. Then their predecessor has not made a loss, and the successor is certain to recover in a V shape during his term. The rewards for the two executives may be good, but is the timing as an organization optimal? As the mobility of talent increases, the relationship between individuals and organizations can become more difficult.

Recommended books on Japan or by Japanese authors

Apart from my books and other books and articles by Japan Intercultural Consulting consultants, I recommend:

The classics of foreigners writing about Japan

The Chrysanthemum and the Sword – Ruth Benedict, 1946
Empire of Signs – Roland Barthes, 1970
The Roads to Sata – Alan Booth, 1985
The Enigma of Japanese Power – Karel Van Wolferen, 1989

Dated but funny and still insightful

Max Danger – The Adventures of an Expat in Tokyo Robert J Collins, 1987
Dave Barry Does Japan – Dave Barry, 1992

More recent foreigners writing about Japan

Bending Through Adversity: Japan and the Art of Survival – David Pilling, 2014 (apparently a new edition is due out in 2020)
Japan and the Shackles of the Past: What Everyone Needs to Know – R Taggart Murphy, 2015
Shinto: A History – Helen Hardacre, 2017
Ghosts of the Tsunami – Richard Lloyd Parry, 2018
Japan Story – Christopher Harding, 2018
Stranger in the Shogun’s City – A Woman’s Life in 19^th Century Japan – Amy Stanley, 2020
Japan’s Far More Female Future – Bill Emmott, 2020

Classic Japanese novels

The Tale of Genji – Murasaki Shikibu, 11^th century
Snow Country – Yasunari Kawabata
Silence – Shusaku Endo
The Woman in the Dunes – Kobo Abe
The Makioka Sisters – Junichiro Tanizaki
I am a Cat – Natsume Soseki

Modern Japanese novels

Norwegian Wood Haruki Murakami (and most recent Killing Commendatore)
Convenience Store Woman – Sayaka Murata
Out – Natsuo Kirino (and many other crime thrillers)

Websites/news

Most of these have free daily newsletters

Japanese companies need a strong employee brand to attract globally minded employees

I spoke to a group of Japanese managers in London last year on the topic of my last article “I love Japan but I don’t want to work in a Japanese company” – an attitude I have heard from young Europeans who have studied Japanese at university, or worked in Japan for a couple of years on the JET scheme, or simply became fans of Japanese culture through a love of anime and computer games.

They don’t want to work for Japanese companies because they think they won’t have a fun and fulfilling career. They worry that there will be lots of overtime, bureaucracy and an oppressive hierarchy – and that Japanese companies in Europe are mostly dull, engineering sales subsidiaries.

My recommendation to the Japanese managers in the audience was to strengthen the “employee brand” in Europe, to make it more appealing to those young people. Many European veterans of Japanese companies have told me that they like working for Japanese companies because they are different, interesting, quirky, more “human” and long term in orientation rather than the standardised, numbers driven, short termist culture of many Western multinationals. Japanese companies should also offer short term secondments to Japan, so that their non-Japanese graduate hires can build networks and participate in decision-making and so develop their careers.

I realise it is tough for Japanese managers in Europe to ask their Japanese headquarters to adjust their employee brand just to appeal to overseas recruits, when Japan headquarters probably think their priority is to hire the best globally minded Japanese graduates.

So I showed them some research from Japanese recruitment company DISCO’s Caritas Research 2020 survey of Japanese students graduating from foreign and Japanese universities. It illustrates that the needs of Japanese students from foreign universities are similar to those of European students.

Whereas graduates from Japanese universities preferred a job which will provide them a secure lifestyle, would rather work in Japan rather than overseas and to work for one company for a long time, the preference of Japanese graduates of foreign universities was for a job which helped them realise their dreams, paid well, and would prefer to work overseas rather than stay in Japan.

Apart from strengthening the employee brand and offering more attractive career paths, another recommendation I made was that management training was needed for Japanese expatriates in leadership, giving feedback, managing diversity and being inclusive when managing Europeans.

I was of course hoping this would lead to more business for my company, but judging by one of the managers who approached me afterwards, it might not be for the reasons I expected. The managing director said his company was 80% Japanese, but there were big communication gaps between the younger generation and the older, between those who had graduated from foreign universities or lived abroad, and those who had mainly worked, lived and studied in Japan. Clearly Japanese companies are having to adjust to different mindsets amongst Japanese employees too.

A video of Pernille Rudlin’s presentation on this topic is available on the Rudlin Consulting YouTube channel here in English and here in Japanese.

The original version of this article was published in Japanese in the Teikoku Databank News. Pernille Rudlin’s new book “Shinrai: Japanese Corporate Integrity in a Disintegrating Europe” is available as a paperback and Kindle ebook on Amazon.

What is the deal with Nissan?

The wave of Japanese investment into UK after NSK’s first step in 1974, feared by many in the UK, did not happen immediately. Under the Labour government of 1974-79, there was double digit inflation, unemployment of over 1 million, the IMF bail out in 1976 and the Winter of Discontent, which may have been something of a disincentive to invest in the British economy. Although NSK did prove correct about a weak sterling, which at least ensured their British made exports were cheap.

Japanese concerns over Britain’s economic, political and social stability did not end with the advent of a Conservative government in 1979, however. It took nearly 3 years of feasibility studies, Mrs Thatcher visiting Tokyo and a visit by Nissan to NSK in Peterlee for reassurance, from the first announcement in January 1981 to when agreement was reached that Nissan could go ahead with building its UK factory in Washington, Sunderland in 1983. There were also predictions by unions and other car manufacturers of “devastation” if Nissan in the UK was just an assembly operation using cheap Japanese components.

“Better for the British people to buy Japanese cars made by British workers than to buy German cars assembled by Turks”

The argument made by Norman Tebbitt, then Secretary of State for Employment in April 1981 that “surely it is better for the British people to buy Japanese cars made by British workers than to buy German cars assembled by Turks” had finally won through domestically, but Nissan had also had its own misgivings which caused the delay – both from its experience in Europe and pressures in Japan from its union.

Nissan had already dipped several toes into manufacturing in Europe. It took a stake in Moto Iberica, Spain‘s largest commercial vehicle manufacturer in 1980. The tractor division was spun off to form a new company, with Kubota taking a 55% stake and assuming managerial control. Nissan took a 67.67% stake in the rest of Motor Iberica, renaming it Nissan Motor Iberica in 1987. Manufacturing of vans and commercial vehicles continued at the plant through to the present – but not always profitably – and finally Nissan announced that it will be shut down in December 2021.

Nissan had also in 1980 started a joint venture with Alfa-Romeo, building a plant in Italy which started production in 1982, marketed as the Alfa Romeo Arna in Italy and Germany, and the Nissan Cherry Europe in the UK. However, this venture was not a success and production was suspended in 1986.

Nissan concluded an agreement with Volkswagen in 1987 to produce and market the Volkswagen Santana in Japan, hoping to counter criticism that the Japanese market was difficult to penetrate. Santana production was terminated in 1989, to be replaced by the Passat. Sales of imported Passats in Japan were so poor, however, Nissan cancelled the assembly agreement.

The 1984 Nissan deal

The Nissan union in Japan had been concerned that the size of the investment in the UK plant meant that funds would be diverted from investment in Japan, and there was no guarantee that the project would be successful. If it failed, it might even affect the security of employment within Japanese factories. Consequently, the scale of the investment was reduced from the initial announcement of a £200-£300 million investment to a two phase project, starting with a pilot plan of a £50 million investment to assemble 24,000 Bluebird cars from knockdown kits imported from Japan. This was justified as being needed to gain first-hand knowledge of operating and marketing in the UK and obtain information on local sourcing of components.

The second phase was to be a build up from 60% local sourcing to 80% by 1991, expanding to a 100,000 units per year capacity, 30-40% of which was to be exported to Continental Europe. The total cost was put at £350 million with the British governement expected to provide selective financial assistance up to 10% of the total investment.

Keeping to the deal in a Single Market

Production of the Bluebird began on schedule in 1986, and the second phase began in 1987. Initially the plant made low value added models with high value-added quality cars exported from Japan, but from 1990 the Primera hatchback was manufactured in Sunderland as the sole global production source, exported back to Japan and into Taiwan. The cost of the Nissan project had risen to about £900 million by the beginning of the 1990s and output rose to 124,000 units per year in 1991.

Whereas around 80% of the components of UK made cars were sourced in the UK when the 1984 Nissan deal was struck, by the 1990s and early 2000s the proportion had dropped to around 30-40%. Even UK components in turn contained components from elsewhere, as this comment from a supplier in the comments section of the Financial Times explains:

“We manufacture part of one component for the Nissan Qashqai. We purchase raw materials from Taiwan, we manufacture in the UK in a Japanese owned factory. Our customer is in Germany, where our product is bonded together with products from other countries. Our customer’s customer is in France, where the bonded component is integrated into a car component. The component is shipped to Sunderland and becomes a part of a “British” car.

How Mrs May and her merry band are going to sort this mess out is beyond me, and I suspect beyond them.

The development time lines for the most basic of automotive components is two to three years, which means that we are already “post Brexit” for new business development. How do I persuade customers to invest in new product development with us when nobody has a clue on what basis I might sell eventually sell my product to them, and given rules of origin, in some cases on what basis they might sell their product to their customer. We have good relationships with our customers, but at the end of the day they are running their business for their benefit and may well decide its just not worth the uncertainty and risk.”

Even if Nissan did not keep to the local sourcing part of the 1984 deal (presumably superseded by the European Single Market, so that local meant EU wide), they did expand production way beyond the 100,000 promised, peaking at 519,000 units produced in 2016/7. The 470 strong 1986 workforce grew to around 7,000 people by 2019, around 10% of whom were designers and engineers working in a design facility in Cranfield.

Nissan also exceeded its promise of exporting 30-40% of production to Continental Europe. By 2016 nearly 1/3 of UK car production was made by Nissan, 80% exported, 55% to the EU.

Nissan has tried to increase the proportion of locally made parts to 40% and even to 80%, to avoid tariffs and delays in the supply chain after Brexit, supported by a British government policy to reach 50%. It has encouraged suppliers to set up in a new industrial park in the North East in order to do so, but our data does not show any move by Japanese suppliers to increase their UK presence.

In fact the shift seems to be more towards setting up additional factories in Continental Europe. Of the 29 new automotive manufacturing operations started in Europe in 2015-2018, according to the Teikoku Databank and our researches, 8 were in Germany, 4 in France, 4 in Slovakia, 3 in Spain, 3 in Italy, 3 in Hungary and 2 in the Czech Republic but none in the UK. For the first time there are now more Japanese automotive manufacturers in Germany than in the UK.

The 2016 Nissan deal – to Infiniti and beyond

Even if the long term solution to a hard Brexit is to increase the number of automotive suppliers in the UK, some short term shoring up had to be done to ensure that manufacturers didn’t conclude that the safest bet was to shift all supply chains and manufacturing to continental Europe.

Greg Clark, the former Business Secretary, revealed in 2019 that the content of his letter to former Nissan CEO Carlos Ghosn in October 2016 included “a package of support in areas such as skills, R&D and innovation” which “could amount to additional support of up to £80m”. This was modified to £61m by 2018 due to reduced production costs. It was conditional upon Nissan continuing with plans to manufacture the new X-Trail and a new model Qashqai in the UK. Clark revealed the terms of the letter after Nissan announced that it had decided to manufacture the X-Trail in Japan in 2019, thus invalidating the deal.

There were rumours that the government would therefore pull the aid package, but Business Minister Richard Harrington said in 2019 that the deal would still stand, and be tied to electric vehicle development, which in Nissan’s case would be the LEAF, which only represents around 10% of its production in Sunderland.

Nissan announced in 2019 that it would no longer produce the Infiniti in Sunderland for Western Europe. It was supposed to start production of both the new Qashqai and X-Trail in Sunderland in 2019, then it said it would start the Qashqai production in October 2020, and then announced it will delay the start to mid 2021, due to the uncertainty caused by COVID-19, and – although it did not say this – by what kind of EU-UK deal there might be. Nissan has already spent £400m readying Sunderland for the new Qashqai, supported by £11m from the UK government.

Nissan Next and the alliance

In May 2020 President Uchida Makoto announced Nissan Next, a a four year medium term plan, aiming to downsize and close plants such as Spain and Indonesia. Nissan will focus on “our highly competitive midsize segment, electrification and driver assistance technology” and increase the ratio of common electric parts across the alliance of Mitsubishi, Renault and Nissan. Nissan is seeing the Ariya as its new big hope for electric vehicles after the Leaf. The Leaf was manufactured in Sunderland, whereas the Ariya is being manufactured in Japan.

The three companies also announced the plan for the alliance in May 2020, where each will take the lead in their main sales regions, the models and technologies under development. Nissan is to take the lead as the “reference” for China, North America and Japan. Renault will be the reference for Europe, Russia, South America and North Africa and Mitsubishi in ASEAN and Oceania. Renault has already said it would be willing to manufacture Nissan cars in its European factories if needs be, and presumably if there is a no deal Brexit and/or lack of diagonal cumulation whereby Japanese parts are not accepted as “British” by the EU, then Renault can help out Nissan in terms of sourcing EU parts.

Clark’s 2016 letter promised to Ghosn it would “be a critical priority of our negotiation to support UK car manufacturers and ensure that their ability to export to and from the EU is not adversely affected by the UK’s future relationship with the EU”. Clark and Ghosn are both gone, so it’s unsurprising, 4 years’ on, Nissan feels the need for more reassurance that the UK government will keep to their side of the deal, whatever that turns out to be this time. If not, Renault is waiting in the wings.

Should Japanese companies be compensated by the British government for Brexit?

There has been some talk of whether Japanese companies who invested in the UK might seek compensation from the UK government, should the UK leave the EU in such a way as to materially damage their investments.

To understand the basis for such a claim, we need to travel back to the early 1970s to understand what lay behind Japanese manufacturing investment in the UK, and what promises were made. Japan had recovered from the devastation of WWII to become a successful economy and trading nation.

The oil crisis of 1973 revealed, however, that Japan was a nation that had to keep pedalling to stay on the bicycle. Over 90% of its oil was imported and 70% of its energy needs depended on oil. Exports were a means to buy this essential import, but agressive exporting had led to trade friction with western Europe and the USA.

Investing in manufacturing bases abroad was one way to mitigate this friction and the USA, Asia and Latin America were the main beneficiaries of this from the 1950s, with western Europe joining rather later.

The UK had just become a member of the European Economic Community, and the British government was looking at ways to give regional support to areas in the North East where coal, steel, shipbuilding and heavy engineering were in decline. The North of England Development Council opened one of the first UK regional offices in Japan in 1975 to attract inward investment.

NSK – one of the first Japanese manufacturers to invest in the UK

The first major automotive related manufacturing investment in the UK was by NSK (Nippon Seiko Kaisha), Japan’s leading ball bearings and steering column manufacturer, in 1974. NSK had begun a feasibility study of European production in 1971 and considered other locations such as Ireland and the Netherlands, all of whom offered generous aid and grants. In the end the UK was chosen because of proximity of supply industries, cultural similarities, moderate industrial relations and the view that sterling would be weak over the long term.

Although NSK’s investment in the UK was supported by the Minister for Industrial Development, Chris Chataway, the UK bearing industry sought assurances regarding the threat posed by Japanese competition. The joint communique promoted reciprocal investment in Britain and Japan, although there is no record of British ball bearing investment in Japan happening since. Instead NSK ended up acquiring the main British competitor, United Precision Industries in 1990, in addition to establishing a £7 million factory in Peterlee, County Durham, employing 220 people, which began production in 1976.

The 1974 deal was that NSK should invest in an assisted area, and at least one half of the output should exported, with one half of the value of the product to be added in Britain, and that there should be considerable substitution of the current Japanese imports of bearings. Chataway pointed out that it was “better for Britain that we should have investment in the UK serving the European market, rather than investment in Europe, from where the goods would be exported to Britain”.

The official reasons for choosing Peterlee were given by NSK as being the availability of skilled labour and a good factory site and a good communications network and local amenities. Government grants and loans of £1.4 million were also provided.

46 years later, NSK has to stockpile

Rolling on 46 years, NSK Bearings Europe now employs over 900 people in factories in Peterlee and Newark. It acts as a contract manufacturer to NSK Europe Ltd, with a turnover of over 1 billion euros, which sells 14% of its production to the UK and 70% to the EU, to the automotive and industrial sectors. NSK has had anti-dumping duties imposed on it by the EC but an EC investigation into it found that less than 60% of imported parts were used in its finished bearings, so it was cleared of being a “screwdriver” operation. So NSK has kept its side of the bargain.

NSK acquired Amatsuji in Japan (AKS Precision Ball in the UK) and expanded further in Europe – with factories in Poland and Germany as well as sales subsidiaries across the Continent. It has stockpiled on the assumption that there will be a no deal Brexit. If there is a no deal Brexit, the standard third country tariff on bearings is 8%.

So, although NSK’s investment deal was done over 40 years’ ago, a no deal Brexit would mean that the UK government has chosen to put a large obstacle in the way to NSK fulfilling the promise of that investment deal to export more than half of its UK production. It would be understandable if NSK felt this invalidated its commitment to invest in the UK. Presumably this kind of issue is why Japan has asked for some kind of investor state dispute mechanism to be put in place between Japan and the UK.

This post draws heavily on ‘Japan and the North East of England: From 1862 to the Present Day’, Marie Conte-Helm, The Athlone Press, 1989 and ‘Japanese Manufacturing Investment in Europe: Its impact on the UK Economy’, Roger Strange, Routledge, 1993.

Top 10 Japanese corporate charity donors in the UK

Japan-owned companies in the UK contributed over £17 million to charity in 2019. £10 million of this, however, was the donation made by First Sentier Investments (formerly First State Investments), owned by Japan’s MUFG Group since 2019.

£8.5m of the £10m went to the Maitri Trust which was established by the Stewart Investors team members (part of First Sentier Investments) in 2006, and helps educational initatives in India, South Africa and Mexico. The other £1.5m was given to the Charities Aid Foundation. 2019’s donation was a substantial increase on the £5.5m First Sentier donated in 2018.

The biggest Japanese corporate donors (>£100,000) increased their charitable budgets over the past two years, but overall the total dropped 3% on a like for like basis (not including First Sentier as they were not Japan owned in 2018/9).

Benchmarking Japanese corporate charitable donations

It’s difficult to benchmark Japanese companies’ charitable activities in the UK against FTSE 100 companies as many of the Japanese companies in the UK operate on a regional or global basis and the charitable donations are on that basis too. Only around 10% of the 1000 or so Japanese companies in the UK put a monetary figure on their charitable donations in their annual reports, or specifically state that they do not donate to charity.

The Charities’ Aid Foundation issued a report in 2018 on FTSE 100 charitable donations, which estimated that the FTSE 100 donated around £1.9bn in 2016. The report uses donations as a percentage of pre tax profit as a benchmark. Unfortunately some of the biggest Japanese companies in the UK such as Toyota, Nomura and Dentsu have been making losses in recent years so this is not a benchmark which can be readily applied to them. However, CAF’s cut off point of “at least 1% of pre-tax profits” as being an indication of commitment to charitable giving means that it is possible to say that JTI, Dentsu (using 2018 figures), Mitsubishi Corporation, Fujitsu Services and Ricoh are all in the “above 1%” category.

The Top 10 Japanese corporate givers

The next biggest donor after First Sentier was Japan Tobacco International through their Gallaher subsidiary in the UK. They donated £3.24m in 2019, a similar level to 2018. Gallaher “works with leading charities to improve the lives of socially isolated older people as well as those who are homeless, disabled or excluded from society in other ways”. They have a UK Community Investment Programme which has been accredited with Business in the Community’s CommunityMark. Employees have an allowance of up to 6 days’ a year to get involved in community fund raising and volunteering.

The third largest Japanese corporate donor was advertising and marketing group Dentsu Aegis Network, (soon to be rebranded as Dentsu International) whose global headquarters are in London. They donated £1m to charity (£0.9m in 2018) – but this is likely to be a worldwide, excluding Japan total. Dentsu announced in 2017 that “Society” was now one of its official stakeholders and announced a new social purpose of a digital economy for all. They are aiming to reach a billion people with sustainable development goal led campaigns and support 100 female founded businesses. They are launching a digital skills initiative to support 100,000 people to improve their skills.

Close behind are Toyota Motor Manufacturing UK, who donated £0.9m in 2019, slightly down on the previous year of £0.95m. It “seeks to support good causes in the areas local to its manufacturing operations” [Burnaston in Derbyshire and Deeside]. It has a charitable trust that makes donations in the areas of road safety, social inclusion and deprivation and health. As well as fund raising it makes in kind donations of cars, parts and volunteering hours (included in the £9.08m). Its nominated charity of the year was the Derbyshire, Leicestershire & Rutland and Wales Air Ambulance Service.

Mitsubishi Corporation donated £267,000 in 2019/20 (up from £140,000 in 2018/19) – to the British Museum , the Earthwatch Fellowship Programme, the University of Cambridge Faculty of East Asian Studies, the UK-Japan Music Society and the Mitsubishi Corporation Fund for Europe and Africa, which engages with partner organisations in environmental conservation.

Hitachi Capital donated £250,000 (up from £200,000 in the previous year) in 2019/20. Their national charity partner is FareShare which redistributes food going to waste to charities and community groups – contributing to the sustainable development goal of “no poverty”. Hitachi Capital staff also volunteer at FareShare. The group also works with Young Enterprise and The Wildlife Trust.

Nomura established The Nomura Charitable Trust in 2009, “supporting disadvantaged young people in the local communities in which it operates through both grant making and employee engagement in the form of volunteering and other engagement initiatives.” It gave £235,659 to 11 charities which aligned with the objectives of the trust and were recommended by Nomura employees in the year ending March 2019.

Eisai, the Japanese pharmaceutical company with a factory in Hatfield donated £212,000 in 2018/9, up from £116,00 in 2017/8. Around half of this was to patient organisations such as Alzheimer’s Research UK and Breast Cancer Now, according to their “Transparency” page on their website.

In 2018/9 Fujitsu raised over £200,000 for its partner charity Macmillan Cancer Support as well as 5,500 volunteer hours spent by employees volunteering and skill sharing.

The Olympus KeyMed group via KeyMed (Medical and Industrial Equipment Ltd) gave £122,621 within the UK, of which £45,905 was to healthcare charities, £40,202 was to “other”, £33,856 was to cancer charities and £2,658 to children’s charities. This represented a 10% decrease on the previous year

Ricoh UK made £110,426 in charitable donations in 2019, a significant increase on the previous year’s £66,285. The sum represents both financial and in kind, providing products and people to support charitable activities.

The others

Many of the larger Japanese companies in the UK not mentioned above do contribute to charities but do not put a price tag on this in their annual reports. Nissan Motor Manufacturing, for example, launched a Days for Change Europe wide programme where employees can take days “off” to volunteer. Kwik Fit, owned by Japanese trading company Itochu announced in 2019 that its charity partner was Children with Cancer UK, and a target of £1m to be raised through its sponsorship of the British Touring Car Championship.

Hitachi Rail says it made no charitable donations in 2019, seemingly leaving this up to its employees, who raised £156,846 for the Railway Children charity “to date.”

Canon UK describes its “social value policy” as comprising “employability skills training, education support, community and charitable activities” but goes into no further detail.

Conclusions

Japanese executives who had lived in the UK have occasionally remarked to me how many charity shops there are in the UK and how often they are approached by their employees to help with fundraising initiatives. According to Charities’ Aid Foundation, the UK is number 6 in the world in terms of individual charitable giving (money and time), after Indonesia, Australia, New Zealand, USA and Ireland. Japan is at 128 but in 6th position in terms of the number of people who volunteer time for charitable causes.

Certainly I remember when living in Japan and working for Mitsubishi Corporation that there were plenty of opportunities to get involved in volunteering via the company. Conversely, to my relief, noone ever asked me to sponsor them to take a charity ramen bath. I have vivid memories of being in a group of employees who took severely disabled people to Tokyo Disneyland. National disasters such as the Fukushima earthquake and tsunami also saw thousands of employees of various companies giving up weeks on end to go to the region to help.

Those Japanese companies who do give substantial amounts of money to charity in the UK tend either to have acquired established British companies and therefore their legacy of charitable activity (JTI, Dentsu, Fujitsu, Olympus KeyMed) or are manufacturers employing large numbers of staff and looking for ways to engage with the local community such as Toyota, Eisai and Ricoh. In many cases, the decision makers will also be local executives looking to raise the brand profile in a globally appealing way, so a specifically “Japanese” flavoured proposition may not be of great interest unless part of their corporate purpose is to represent Japanese interests abroad.

There are plenty of funds in Japan set up by companies such as Toshiba, Honda, Panasonic (Matsushita) but these tend to be educational in orientation and more in the business of awarding prizes, scholarships and research grants. Japanese companies will sometimes endow foundations overseas (Nissan Institute of Japanese Studies at Oxford, Daiwa Anglo-Japanese Foundation) which are also educational and dispense scholarships and grants.

Anyone wishing to approach Japanese companies may need to bear these differences and distinctions in mind. For local giving, it will be necessary to win over the local employees, and for large, prestigious donations, much of the funding available may be controlled from Japan.

“I love Japan but I don’t want to work in a Japanese company”

Japan is more popular than ever amongst young Europeans, who have become familiar with it through anime and manga, or love of Japanese food. Yet “securing human resources” continues to be the key operational challenge for Japanese companies operating in Europe, according to JETRO’s annual survey.

Young people love the playful popular culture of Japan but they assume that this is not going to be the Japan they will experience if they join an engineering and manufacturing oriented Japanese company.

A more serious reason for not wanting to join a Japanese company is the lack of career development opportunities, when it looks like top management reserved for Japanese only. The larger Japanese companies have made efforts to overcome this by having European or global graduate recruitment and training programmes, often involving spending time in Japan.

I suspect it is the medium to small sized Japanese companies who are having the hardest time recruiting the people they need. Their European operations are still basically sales arms of the Japan headquarters. This means when they hire qualified engineers, they are disappointed that the job is more sales than engineering in content.

Japanese companies in Western Europe are most in need of management personnel but are facing already high labour costs. Japanese companies in Central and Eastern Europe are most in need of factory workers and cite the rapid growth of labour costs as their biggest operational challenge. Presumably they are having to compete with better known Western companies who are also facing a tight labour market. The obvious solution is to offer higher salaries, but that of course undermines the economic rationale of have manufacturing in Central and Eastern Europe.

Rather than engage in a price war for scarce management or technical staff, Japanese companies need to offer something different and attractive, which brings us back to the Japanese popular culture loved by young Europeans.

I was surprised recently that the European participants in my seminar who were 15+ year veterans of a Japanese technology company listed “the eccentric, child-like mindset” as one of the positives of working in a Japanese company. My 17-year-old son also noticed this on his first trip to Japan with me last month – and happily joined in by buying a Pokemon Piplup plushy and a Shiba dog pencil case which now have pride of place amongst his philosophy, maths and economics textbooks.

“Strengthening the company’s brand” was the top initiative selected for selling products and services in Europe in the JETRO survey. But this should be less about advertising to customers, and more about having an employee brand that appeals to young people. They will then be able to see a future for themselves where they make, design, manage or sell on behalf of a Japanese company, and have fun at the same time.

A video of Pernille Rudlin’s presentation on this topic is available on the Rudlin Consulting YouTube channel here in English and here in Japanese.

“There is no point in workstyle reforms if you don’t change everything at once” – Fujitsu’s President Tokita

President Tokita of Fujitsu was interviewed by Saeki Shinya of the Nikkei Business magazine in August 2020. The beginning of the interview focused on the impact of the pandemic and China on Fujitsu’s business but the bulk of the interview was regarding Fujitsu’s recent announcement of various workstyle reforms (the English translation of hatarakikata kaikaku, a government led initiative to change Japanese workplaces).

Tokita felt Japan was unlikely to recover economically from COVID-19 until the end of FY 2021. As for China, clearly this was a delicate subject and Nikkei Business had to issue a correction to how they described what Tokita said. He said the progression of nationalism should not be welcomed. It would be disrespectful to say it’s a great chance for Fujitsu if the USA or Europe move away from Huawei, however the need for a secure communication infrastructure is important, regardless, for a more resilient society, and this is helping Fujitsu employees to “reset their mindset”.

The Q&A regarding workstyle reforms I have translated as below:

Q: Why did Fujitsu announce work style reforms such as a 50 percent reduction in office space, the abolition of commuting passes, the introduction of telework allowances and job-type employment (to assign and evaluate human resources after clarifying duties such as roles and skills to be fulfilled) all at once?

Mr. Tokita: It just happened that way – actually I narrowed down the scope somewhat.

In the first place, we didn’t announce it in July just because of coronavirus. We have been introducing telework since 2017, and we had already introduced a job type system overseas – only Japan was different. Since I became president last year, I realised Fujitsu’s biggest value is that its 130,000 employees can move in the same vector. Therefore, I wanted to unify the way we work, and we thought that we should utilise good governance as a global company.

Q: You had experience of being assigned to Europe – you had doubts yourself about the difference in personnel systems in Japan and overseas?

Mr. Tokita: My desire for globalization was strong. In fact, I hated the phrase “one Fujitsu” when I first became president. It was used because we were not “1” but there was no point in using it like a slogan if behaviours don’t change. I used it officially for the first time in June when we celebrated our 85^th birthday, because our internal systems and communication have now improved, and we are convinced that it can happen.

Work style reforms have been carried out in many different ways. There are also criticisms that the results based system failed and there were people saying “how much longer are we going to use man-months as a basis for calculation?” I understood all of this. That’s why this time it happened all at once.

So far, we have been reforming little by little. Because it is a large company, it is scary if the change is too big. However, the reason why it did not work was that the personnel system itself had not changed in nature. Changing if you only change the structure and operations superficially will not work. I decided to go with the idea to change everything at once.

Q: Isn’t there an overlap between the new “job type” system and the failed results based system [known as seikashugi in Japanese – introduced in many companies in the 1990s]?

Tokita: There are many viewpoints – some say the results based system failed, and I haven’t heard many stories of it succeeding.

However, a job type system will be different from company to company and for Fujitsu. Evaluations are no longer top down. We have no choice but try to make sure it will lead to Fujitsu’s growth and sustainable business. Of course there are some lessons to be learnt from what happened in the past but I try not to worry too much about that.

Q: What does Fujitsu want employees to do with the introduction of a job-type personnel system?

Mr. Tokita: It’s about each and every employee being autonomous. If the general employees, the managers, the executive, and I are all autonomous individuals, the collective body becomes stronger. Ideally, a strong individual can both work collaboratively and create a healthy conflict. We stopped uniform education by hierarchy and year of entry to the company. Instead, we encourage people to advance their careers through free educational programs online.

Q: How do you get your employees to collaborate once they haves become autonomous?

Tokita: We are currently working with in-house culture change teams. In order to work collaboratively, physical contact is necessary, so it is important to create space in various offices where people can discuss each other’s opinions.

Q: It is said that young people are disadvantaged because they do not have enough experience of the job-type personnel system, what are your thoughts on this?

Tokita: Is that so? I didn’t think it was an advantage or a disadvantage. I know OJT (on-the-job training) was inadequate. Rather, I hope that young people will be able to take on challenges without any restraints.

Q: Some say that the reforms, which will reduce office space by 50 percent, are just about cutting costs.

Mr. Tokita: It’s not just about cutting the office space in half. It will also cost money for renewal.

The aim is not to cut costs, but to increase the choice of employees. The main objective is to help employees to feel engaged in their work. Whether there is a coronavirus pandemic or not, there are many employees who have problems with commuting time, childcare, and nursing care, and we have been building telework and satellite offices to solve this. It is true that Coronavirus became a driver to push this. But I’ve been thinking about it for a long time. Future behaviours and growth will show if this is correct or not

Q: Many people say that the corona shock will accelerate digital transformation (DX). Isn’t this is an opportunity for Fujitsu, which advocates DX for companies?

Mr. Tokita: I’ve been working longer hours at home so I saw a daytime show which said that digital transformation of medical institutions, public health centers and education is very behind in Japan.

However, DX does not take root just by promoting systemization and IT. The essence of DX is whether each and every one of us can be autonomous, acquire skills, collaborate, and create new value. This is also a challenge for Fujitsu. No matter how much IT as a tool is implemented, it will not be the whole solution.

Q: So DX hasn’t taken root in Fujitsu yet?

Mr. Tokita: I don’t think it has.

It doesn’t make sense for DX only to develop in certain industries. Fujitsu has been promoting IT by forming teams across industries. It will not function unless the whole aspect of an issue is grasped, rather than small points, and the issue is addressed as a society.

Coronavirus has increased the need to do this, but we need a system that allows us to collaborate properly. It’s easy to standardize in the IT industry, but without a deeper or higher level of common understanding of rules, no one will be able to make it work.

Q: Japan as a whole needs to deepen its understanding of DX. What should we do?

Mr. Tokita: It will be difficult to discuss on a national basis. We have no choice but to move forward with small communities and companies. In that sense, Fujitsu has a responsibility. We are a global large company and have a mission to solve Japan’s problems because we are based in Japan.

Inside the company, I often say, “Think about what it means to work for a large company.” Large companies have large company sized responsibilities. A large company can make big ripples in society – that’s a kind of responsibility.

Mr. Tokita: We will make use of our own knowledge and experience. This will make Fujitsu stronger. Companies that have accumulated their own experience and can turn it into a business are definitely stronger. If you don’t do it yourself, you’ll end up in running a race in borrowed shoes, and you can’t be a strong company.

If you want to hear more from Mr Tokita, he’s one of the keynote speakers at the Fujitsu ActivateNow digital event in October – more information here

If you want to understand further about the history and changes to Japanese corporate HR systems, I made a 5 minute video on this for my Japanese Business Mysteries Explained series – here.

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