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

Brexit is already priced in – the failure of British soft power

I’m on what has become an annual business trip this time of year, to Duesseldorf. Just before my flight out of London City Airport, I met with one of our Japanese corporate clients in the City, who told me that they are about to establish their European Union headquarters in the Netherlands. Brexit was not directly mentioned as the reason for this, more that “compliance and regulatory issues” made Amsterdam the preferred choice. The EMEA (Europe, Middle East and Africa HQ) will remain in London. The Amsterdam office will be beefed up and some of the regional functional people are being transferred there from London. This is precisely the sort of gradual drift to the Continent that I fear will follow an actual Brexit – and it is happening already.

Arriving at Duesseldorf airport, I was struck by the clear division at passport control between “EU Citizens/Burger” and “Other Nationalities”. An EU blue path (that made you feel it was a red carpet) took you to a completely separate set of passport officials. In UK airports, the different lanes are side by side, and it’s often quicker to go to the “all passports” queue than wait in the EU queue. There is no mention of us all being “citizens” either in British immigration control. Some Brits may find this willingness to treat us as equal citizens of Germany somewhat troubling from a historical perspective, but I felt rather flattered.

Then on to my hotel, with a huge array of channels including BBC World. But there was no signal for the BBC channel. So I ended up watching some fascinating documentaries on the cultivation and cooking of lotus roots, and Indonesia’s fad for J pop Wotagei dancing on NHK World instead. Japan/NL/Germany soft power 1, British soft power 0.

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Governance – interview with Yoshimitsu Kobayashi, external director at Toshiba and Tokyo Electric Power

Yoshimitsu Kobayashi, chairman of Mitsubishi Chemical Holdings, seems to be attracted to intractable problems. Not only has he become an external director of Tokyo Electric Power Company, post Fukushima but is now also a director of Toshiba, as it goes through a massive restructuring of its business, following its falsified accounting scandal (see our previous post – Toshiba – where did it all go wrong?). On top of all that he is also the chairman of the Japan Association of Corporate Executives.

Asked by the Nikkei Business magazine why he has taken on both TEPCO and Toshiba, he explains that he regards both as extremely important to the Japanese economy. “Nuclear power is a Japanese national policy, and Toshiba is a national policy company. If it is damaged, then it is damage to the whole Japanese economy” (as we explained in another post Shazai and the art of being a corporate shame magnet). “That doesn’t mean we have to preserve it at whatever cost. We need to be open about all the bad parts of Toshiba, and take responsibility for explaining what happened. Then we can rebuild. Governance needs to have concrete substance, not just on the surface.”

Nikkei Business calls 2015 “Year Zero of Corporate Governance” for Japan. Kobayashi says it will take 10 years to change corporate culture at the roots. Toshiba and TEPCO resemble each other, he thinks, in that TEPCO is learning to be a privately owned company, that looks after public infrastructure, which is similar to Toshiba.

“Aspects of Japan that had been good such as life time employment and seniority based promotion have now become a minus, and Japan has lost its competitiveness. Companies should not rely on politicians. It is not just about deregulating but changing the spirit behind the regulations.”

Kobayashi points out that while Japanese companies have been investing large amounts in overseas M&A, domestic M&A is still a fraction of that. There are 3 nuclear power companies, 8 car companies and yet 20,000 chemical companies. As a consequence, research and development is behind the West and China.

“What’s key is for Japan to keep hold of its traditional technical strength, but work out how to team this up with services.” “Mitsubishi Chemical Holdings is doing this – working on new materials, for the environment and healthcare… and also for light weight cars”.

Kobayashi also believes that top executives in Japanese companies should walk away once they have finished their stint as chairman. However he think that it takes 10 years at the top to really understand a company. The Toshiba system, whereby Presidents only stayed in post for 4 years, but then carried on for many years after as advisors was not healthy. “Maybe it’s because their remuneration is not as high as in the West that they stick around. Dow Chemical’s CEO is earning 50 times what I earn. Although Mitsubishi group companies don’t have so much cross shareholding in common now, we keep an eye on each other’s governance, so oldies are not allowed to hang around”

“Toshiba has a surprising number of businesses. In companies like that where there are many capable people, there are a lot of big fish swimming in small ponds. They think they are the company, and forget the public interest.”

Virtue or vice? “Hear no evil, see no evil, speak no evil” – Japan HQs in the Year of the Monkey

We have decided to celebrate in 2016 – with a series of lunch seminars for clients – the 12^th anniversary of the founding of our company. The excuse is that we have completed the full cycle of the Japanese/Chinese years, back to the Year of the Monkey.

Reflecting on the trends we have seen evolving over the past 12 years for Japanese companies, the most obvious development has been the increase in major acquisitions by Japanese companies of Europe-based multinationals. Most recently, Mitsui Sumitomo Insurance Group acquired UK Lloyd’s underwriters Amlin for £3.5bn and Hitachi has just finalised the acquisition of AnsaldoBreda and Italian company Finmeccanica’s stake in Ansaldo STS, for around €800m.

Both these acquisitions are representative of a structural change I have seen evolving in quite a few Japanese multinationals. Hitachi has moved the global headquarters of its rail business to the UK and it seems the Japanese insurance majors, who have all now acquired underwriting firms based in the UK, are hoping that their acquisitions will act as pivots for further global expansion.

Clearly Japanese companies are not just buying into a market with their acquisitions, but hoping that they have also acquired global management capability. Whereas in the past there were some examples of Japanese companies using their US subsidiaries to manage the global network, it seems now that Europeans are being asked to manage operations in the US and beyond.

This is partly due to another long term trend in Japan, which is the lack of “global jinzai”, particularly at senior management level, to manage overseas growth, but it also reflects the fact that European multinationals are used to managing companies scattered across many countries, in a virtual matrix structure. This means the heads of various business units or functions may not all be physically located in the same headquarters. European managers need to have strong, globally effective professional expertise but also good cross cultural communication skills to be able to manage teams remotely.

Europeans are comfortable with doing this in Europe and to some extent working with the US too. However working with Japan is still a new experience for most of them. They are often baffled by the fact that their professional expertise and remote communication skills are not enough to persuade or win support from Japan headquarters. Managers in Japan headquarters are only used to communicating with people who are physically present in the office. They tend to be generalists, who do not find arguments grounded solely in expert opinion all that convincing.

Unless conscious effort is made to overcome these communication barriers, Japan headquarters maybe behave like the three monkeys, who see no evil, hear no evil and speak no evil. In Japan my understanding is that this is seen as virtuous behaviour. However, in the West this is seen as ignoring problems and misbehaviour until it is too late. I foresee the next twelve years of my business as being about opening eyes, ears and mouths on both sides of the world.

This article originally appeared in Japanese in the Teikoku Databank News on 13th January 2016 and iis in the introduction of “Shinrai: Japanese Corporate Integrity in a Disintegrating Europe” by Pernille Rudlin, available on Amazon as a paperback and ebook.

Why Japanese companies are behind in using IT and what they need to do about it

For as long as I’ve been working in or for Japanese companies (25 years…) I’ve been surprised by how behind they are in using IT, considering how much Japanese people love the latest technology, much of it developed by Japanese companies themselves. Like so many paradoxes of Japanese corporate culture, the roots may lie in the post war system of life time employment, generalist track careers and seniority based promotion.

The Nikkei Business magazine cites one example of how, as it puts it, Japanese companies are not just one but three steps behind their Western counterparts. Most Western banks (Barclays, HSBC, RBS, Deutsche Bank, Commerzbank, Societe Generale in Europe) are adopting the highly cost effective blockchain system for settling payments. MUFG is the only Japanese bank to use the system.

The Nikkei recommends 4 countermeasures Japanese companies need to take:

1. Keep replacing top executives

According to an IDC Japan survey, only 15.7% of Japanese presidents and other CXOs think investment in IT is “very important” compared to 75.3% of US executives. Alternatively, as the Nikkei says, if you don’t understand IT, make sure you appoint executives who do.

2. Bring in an external CIO

According to a Japanese Ministry of Economy, Trade and Industry survey, whereas in the US over 70% of IT specialists can be found working in-house in US companies, in Japan, 75% of IT specialists are working at IT vendors.

3. Make your IT systems department a key function

Staff in Japan’s IT departments are ageing. 56.9% of companies in a 2015 survey said the majority of staff in their IT departments were over 40.

4. Use people from outside Japan

Japan’s Recruit Holdings has just started to recruit non-Japanese data scientists by starting up competitions on Kaggle, a data scientist network of over 350,00 people from over 100 countries, in order to make the Recruit brand name better known.

Japanese business people want UK to stay in the EU (letter in the Financial Times)

Sir, As a supplier of services to over 70 Japanese companies across Europe, I am not at all surprised that Toyota do not intend to move manufacturing away from the UK in the event of a Brexit (“Toyota will stay even if Britain votes to leave the EU” January 12) The key point to bear in mind is that Toyota’s European headquarters are already in Belgium.

What should be of concern is what will happen to the rest of the major Japanese companies, more than half of whom have their European headquarters in the UK, and how any changes in their location might impact the fact that major share of employees of Japanese companies in Europe and of Japanese investment in Europe has been in the UK.

Judging by the mood of the 200 or so Japanese business people at the UK Japanese Chamber of Commerce New Year party last week, the overwhelming wish is for the UK to stay in the EU.

Japanese business people would much rather their companies were based in the UK, but if the UK is no longer in the EU, the straw poll I took suggests that there will be a gradual drift of European HQs away from the UK – and with it related jobs, investment and taxes – and most importantly, for suppliers like my company, the locus of purchasing decisions will also shift.

Norwich, where my company is based, is two hours away from London but only 1 hour away from Amsterdam, so I am making contingency plans accordingly. I assume I am not alone in this.
Pernille Rudlin
European Representative, Japan Intercultural Consulting
Managing Director, Rudlin Consulting Ltd
Norwich, UK

The Suntory revolutionary from Mitsubishi Corporation

Takeshi Niinami is probably the most famous alumnus of my alma mater, Mitsubishi Corporation. Born in 1959 and a graduate of Keio (as so many Mitsubishi ‘gentlemen’ are), he started off in sugar trading and after a Mitsubishi Corp sponsored MBA at Harvard, he was involved with the foundation of the Sodexo joint venture in Japan with MC, and then transferred to and ultimately ran the convenience store chain Lawson, which MC had acquired a majority share in.

He was lured to the family run Suntory in 2014 by the grandson of the founder, Nobutada Saji, and has been shaking the place up ever since, much to the consternation of many employees. The revolution was already underway, as Suntory had already announced its $16bn acquisition of US whisky maker Beam and the year before had acquired the UK brands Lucozade and Ribena from GlaxoSmithKline for $1.35bn and in 2009 acquired Orangina Schweppes for $1.97bn.

A former director who worked with him at Lawsons says “there are people who cannot keep up with him. He keeps coming up with new things, and then says do it within a year”. Niinami believes that Suntory will not be able to function well as a global company if it only promotes from within, so has appointed Vincent Ambrosino, formerly CFO of Pepsico Canada as an Executive Officer of Suntory Holdings, in charge of strategy, finance and accounting. He only joined Beam in 2013 as the CFO so this by Japanese standards was seen as meteoric rise to a top position.

Furthermore, Makiko Ono, one of the rare senior Japanese businesswomen in a major company, who had been involved with various collaborations with foreign companies as executive officer of Suntory Food & Beverages, has transferred to Suntory Holdings, to become the GM of global HR. Around 17 people from Suntory Holdings will be seconded to Beam Suntory, with the aim of improving global mobility. Niinami himself announced that he wants to hire more people from outside the company, “including those who have investment experience who were in trading companies” – hiring in his own image, in other words.

Suntory Holdings mid term plan has highly ambitious double digit targets for turnover and profit. It is unlikely this will be reached organically, says Toyo Keizai magazine. More M&A can be expected. Niinami is not likely to slow down.

What to do about the lack of global jinzai (competence) in Japan

I wholeheartedly agree with the recommendations (particularly the final one) in this Q&A from Professor Hiromi Maenaka of Akita International University, head of Global Studies program, on how Japanese can become more globally competent – summarised by me in English below:

Q: Why are there not many “global jinzai” (globally competent Japanese) in Japan?

A: It’s not just about English ability. At most Japanese schools, teaching focuses on how to answer questions to which there is a clear answer. But if I ask students who have just arrived at university why that answer is correct, they simply say “because I was taught that it was correct.” In real life there are few correct answers. Particularly overseas.

Q: Japanese companies are beginning to realise there is a shortage of global jinzai?

A: As more companies venture overseas, the majority of their production and demand is outside Japan. Acquisitions of and joint ventures with foreign companies have also increased. It has become necessary to work with people who have different nationalities and cultural backgrounds. So Japanese companies have become in urgent and multiple need of global jinzai.

Q: What kind of education is Akita International University providing to develop global jinzai?

A: Our students live alongside foreign students and study abroad on a solo basis. Through this experience, they lose their resistance to thinking and acting for themselves, discussing opinions with other people and making presentations in front of large groups. These are outcomes which companies also value, but there are problems.

Q: What kind of problems?

A: According to HR managers of companies which hire our graduates, compared to universities in the big cities, they seem “hot housed” and “disconnected from the real world”. Even if they are “global jinzai“, they cannot immediately make use of their abilities. I think companies might have to increase their provision of internships to counter this problem.

Q: Isn’t there an increase in opportunities to become “global jinzai” because of collaborations with foreign companies?

A: You have to debate with foreigners if you work with them. The problem for most is that most Japanese people have become used to a way of working whereby you don’t have to put your thoughts into words and feel comfortable in a world where you can communicate through ishin denshin (telepathy).

Q: How should we change?

A: You have to practice being able to say clearly what you think. Americans expect people to say clearly what they are thinking. Even if it is negative. Sometimes you even have to be prepared to have an argument.

Q: This might be bewildering for some people?

A: You have to try to find some common ground. Human emotions and the need to put yourself in someone else’s shoes are the same the world over. Also, the top executives of the company need to make the objective clear. Then employees will have this objective in common and can move forward together. Then both foreigners and Japanese can understand each other and collaborate.

Using Europe as a global pivot

One trend we have noticed in the past few years of observing Japanese companies in Europe is a move away from having global operations either directly managed by Japan HQ or via their US subsidiary. In fact there have been a few cases, usually following a major acquisition of a European company, where the Japan HQ pretty much delegates overseas management functions to the European executive team.

One such example is Asahi Glass. When it decided to set up operations in Brazil in 2013, Japan HQ made a decision to leave local management to their European managers, thereby hoping to avoid the three traps that, according to Nikkei Business, Japanese companies often fall into when entering overseas markets – 1) treating developing markets contemptuously 2) disciminatory hiring and HR practices 3) forcing the “Japanese Way” of doing things. The president of AGC Brazil is Italian – AGC reasoning that they are “both Latin cultures”.

The European team thoroughly investigated the local labour pool and came to the conclusion that there was a severe lack of high level skills, They decided to implement a brand new hiring and training system. Local media publicity attracted applications from 5371 people, which they whittled down to 600 through looking at educational attainment, and then after a written exam, this was further filtered down to 120 candidates.

These 120 candidates were sent on the Brazilian government SENSAI 3 month training scheme. Most continued working, participating in the course from 18:00 to 23:00 at night. Asahi Glass paid the training fees. Many dropped out because of the punishing schedule, and other participants were able to find jobs elsewhere, using the fact that they persisted to the end of the course to enhance their employability. In the end, Asahi Glass hired 33 people – 1% of the original applicants. Even though this may seem ineffecient, they repeated the process 4 times and were able to gather a workforce of 200 people before the factory began operations.

Around 100 of them were then sent to Europe, to factories in Italy, Hungary and France, for around 3 months. In the two years since the factory started operations, hardly anyone has left of their own accord. Some have become managers, and of the original European team of 13, only 7 remain. The Italian president expects that his successor will be Brazilian.

Nikkei Business magazine comments that Japanese companies are not as serious as they should be about hiring and developing people overseas, and that is why they are having problems hiring outside Japan. “Expatriates from Japan do their best, but does Japan HQ really give much priority to HR strategy?”

Why the refugee crisis might mean the end of the EU

When I recently asserted that Britain leaving the EU would result in many multinationals withdrawing their European headquarters from the UK, a British person of Greek origin claimed that the UK would be fine on its own. It would be better off without burdensome EU regulations enforced by a cabal, he said, and the UK is such an innovative country, companies would want to base themselves here whatever our European status.

Given the treatment of Greece by the European institutions recently, I suppose this view is not surprising. There have been many complaints in the UK too about too much European regulation. Often though, as in the case of an EU standard on the amount of noise a lawnmower can emit, these regulations were actually promoted by British officials because they benefited British manufacturers. For manufacturers in general, the comfort in setting up a factory anywhere in the EU is that by meeting these standards, their products will be approved to sell anywhere in the 28 countries of the EU.

If the UK were to leave the EU, it would no longer be able to influence these regulations, and yet would have to abide by them if it wanted to sell its products in its closest and biggest market. Fortunately, for British people like me who are pro-European, the new leader of the opposition Labour Party has just said that he would campaign to stay in the European Union in the forthcoming referendum (likely next year).

It is assumed that the Prime Minister David Cameron, in his negotiations with the EU member states, is trying to weaken the social charter of the European Union, which has brought about protection for employees in terms of working time, holidays, discrimination, etc. The Labour Party, as you can tell by the name, is strongly committed to supporting the rights of working people, so has decided to campaign for staying in the European Union, regardless of the deal Cameron reaches, by committing to reverse any social concessions gained, should Labour get back into power.

One of the key non-negotiables for the core European states such as France or Germany – which actually is one of the main reasons many British citizens oppose the European Union – is the free movement of people. To me, this is why the UK is as innovative as it is. There is plenty of evidence that diversity encourages innovation and London is without doubt one of the most diverse cities in Europe. If you locate your company in the London area, you can access an extraordinary range of nationalities, viewpoints and skills, all with English as the common language.

Unfortunately the current refugee crisis is weakening this commitment to the free movement of people and could even bring about the end of the European Union entirely. Instead of coming up with a coordinated solution, member countries are behaving like they have not remembered the lessons of the two World Wars we are currently commemorating.

This article originally appeared in Japanese in the Teikoku Databank News on 14th October 2015 and also appears in Pernille Rudlin’s new book “Shinrai: Japanese Corporate Integrity in a Disintegrating Europe” – available as a paperback and Kindle ebook on Amazon.

Fewer women on the boards of Japanese companies in Europe than in Japan

We’ve revised our Top 30 Japanese companies in Europe again. Where possible we have updated the number of employees, which means the Suntory Group is now in the Top 30 along with Konica Minolta (and Kao and Daiichi Sankyo are out). This time we wanted to take a look at the gender and nationality diversity on boards, both in Japan and Europe, and have discovered that there are actually fewer women on the boards of Japanese companies in Europe than in Japan.

Only two out of 19 (10%) of European headquarter boards of Japanese companies have women on them – Astellas and Suntory (the latter including Makiko Ono, an executive in Suntory Japan) and only 3 of the 14 (21%) UK based Japanese companies we looked at (in cases where the European HQ was not in the UK or there were separate European and UK companies in the UK) had women members – Lucite (subsidiary of Mitsubishi Chemical Holding/Mitsubishi Rayon), Komatsu and NTT Data. Komatsu UK’s female director is Keiko Fujiwara, who is the CEO of Komatsu Europe, in Belgium. This contrasts with 13 (43%) out of the Top 30 companies’ boards in Japan having women directors. In case you were wondering, only 6% of FTSE250 companies have no women on them.

4% of the Top 30 Japanese companies in Europe’s board members in Europe and/or the UK are female
6% of the Top 30 Japanese companies in Europe’s board members in Japan are female
8% of the Top 30 Japanese companies in Europe’s board members in Japan are non-Japanese
16% of the board members of the Top 100 listed Japanese companies in Japan are female
19.6% of FTSE250 board members are female

Around 62% of the members of European and UK boards of of the Top 30 Japanese companies are European, on average. Companies whose boards in the UK and Europe only had Japanese directors were Toshiba, Fast Retailing (Uniqlo), Fujifilm and Sharp. Sharp and Toshiba’s troubles are well known. Fast Retailing recently reported struggles in the US market and falling profits in Europe for Uniqlo, Comptoir des Cotonniers and Princess Tam Tam. Fujifilm has made a remarkable transformation from a B2C camera film to a B2B imaging company but the last set of quarterly results, issued last month were deemed “mixed”.

(Note: only main boards, not executive or supervisory boards were analysed, and company secretaries were excluded)

The full chart is here (highlighted means “above average) and can be downloaded here :Top 30 Japanese companies in Europe board diversity Nov 3 2015

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