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

Not-so-serious twenty-somethings make the best expats

So says Masato Hikita, director of Headwaters, a consultancy providing services to Japanese SMEs. Headwaters itself sends new graduate recruits off to Vietnam or Dubai for a month or so, to learn how to set up new businesses in foreign countries. The aim is to make them realise that what they assume is common sense in Japan is not necessarily so outside of Japan.

So whilst most Japanese think that “global jinzai” (global human resources) are probably fast track employees in their 30s or above, who speak fluent English, have overseas experience and a willingness to work overseas, Hikita argues that such people are way too good at being excellent in Japan. This means they will take responsibility for pushing forward with projects but also are good at consulting with their colleagues and juniors, are always bright and positive, and serious minded. Unfortunately this has the opposite effect overseas.

When such types go abroad, they want to achieve 100% perfection in their results. However overseas things never go smoothly. The star expat has a lot of pride, so tries their hardest, and puts all the burden on their own shoulders, worrying about how to fulfil headquarters’ expectations. But of course they only end up disappointing headquarters, the more they promise. The headquarters begins to believe that if their ace players can’t win overseas, then maybe they should give up on overseas expansion altogether.

A twenty-something employee will be under less pressure. If they mess up, it’s less of a cost, if they succeed then they’re lucky. Twenty somethings are happy to ask lots of questions, both locally and of Japan headquarters. That way they learn rather than trying to do everything by themselves, and also Japan headquarters become aware of how different things are overseas.

Hikita asked a Japanese person with long overseas experience what kind of employee makes the best expat, and the response was “someone who’s not so serious, who only half listens to what Japan HQ says”. That way, Japan HQ don’t have such high expectations – if 100 is the Japan benchmark, then 50 is good enough.

Finally, and I was relieved to see he did make this point, Japan HQ has to become more globalised itself, by having more non-Japanese employees working there. Again, easier said than done, as I know many European employees of Japanese companies are quite resistant to the idea of working in Japan, assuming that there will be long hours and many stresses on their families. Perhaps the same recipe applies – not so serious twenty somethings might be the place to start!

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The Olympus scandal – has anything changed since then?

Unfortunately Michael Woodford did not answer the question in the title of the talk, which he gave to the Japan Society this week. It was pretty much the same talk I heard 3 years ago, only even more melodramatic and self dramatizing. But from what he said, I assume his answer would be that nothing has changed, if loyalty to seniors in Japanese companies continues as an excuse to cover up fraud. And certainly, with the recent frauds and cover ups in Toshiba, Asahi Kasei and Toyo Tire and Rubber, it’s hard not to worry that there is something rotten at the heart of Japanese corporate governance.

Woodford rather let his (understandably bitter) personal feelings towards former Olympus Chairman Kikukawa get in the way of two key points I felt. Firstly that Kikukawa was in turn covering up for his predecessor and his predecessor’s predecessor’s mistakes – it was not just about preserving his prestige and his (for a Japanese President surprisingly high) salary. So many Japanese corporate scandals turn out to have roots in previous generations, making it extremely difficult and perilous for successors to do anything about them, as the Japanese people sitting near me at the dinner afterwards pointed out. Secondly, that Kikukawa was able to get all the other directors and employees in the know to collude, not just out of their personal loyalty to him, but their fear that if the fraud was exposed, the consequences of the shame upon them and on Olympus would mean the end not only of their careers but of the company and all its 1000s of employees’ livelihoods.

The fact that Olympus survived is actually a vindication of Woodford’s approach, of public confession and resignations. But he is so insistent on making himself out to be a martyr, abused by “uncle” Kikukawa and threatened by yakuza, who nonetheless loves Japan (he kept insisting), that he rather lost the governance argument in all the embroidery of his story.

I asked him at the dinner afterwards if, rather than be a lone crusader, he had tried to get any of the Olympus directors that he says he knew as friends for 30 years or his other corporate friends in Japan (he was alerted to the fraud by a Japanese senior executive in another company) to advise him what to do, even work with him to get the problem sorted, but he said they all told him to shut up. Actually, I felt a sneaking sympathy towards them by the end of the evening.

The Rebirth of the Japanese Office Lady

About 20 years’ ago I wrote an article proclaiming the death of the Japanese Office Lady (OL). The company I was working at, along with many other Japanese companies at the time, had stopped hiring new graduates into the so-called “administrative” track, abolished the OL uniform, and encouraged existing OLs to transfer across to a management track. Future administrative needs would be filled by temporary agency workers.

I was quite pleased about these developments, as the old OL system offended my feminist sensibilities. The companies themselves had ended the OL system more for financial reasons. OLs were meant to join at age 20 or 22 and only stay in the company until their mid twenties, when it was expected they would leave to get married. In the meantime, they cleaned the desks, emptied the bins, made tea for the team, answered the phones and processed the team’s paperwork. By the mid 1990s, however, it became clear that more and more OLs were staying in the company into their late 30s, and due to the seniority-based pay scale, were being paid well over the odds for such basic administrative tasks.

A tough decade followed, for every young Japanese leaving university and trying to find a job, but especially for Japanese women who did not want to join a temping agency. Many joined foreign companies and some braved the management track of mainstream Japanese companies. It was tough for the women who were still in the administrative track too. They often ended up being paid less, as the quasi-management track they had been forced onto was not as seniority based as the administrative track they had been on. Almost all of them were working harder than ever before, as they were now having to manage teams of temporary staff. They had to train a constant stream of new temps, check their work and take the rap for any mistakes the temps made.

I was initially surprised to hear that the administrative track is now being reintroduced at my former company. Apparently the mistakes being made by temps and the strain on the remaining ex-OLs (many of whom who have now taken early retirement) are having a significant impact on the business.

On reflection, it should not have been a surprise. When I conducted a series of customer satisfaction survey interviews with Japanese companies last month, more often than not, the female administrative staff had also been invited to meet with me, and their (mostly male) managers were very careful to ask for their opinion and comments. The Japanese customers expected their criticisms of the administrative capabilities of the supplier company to be taken seriously. Administrative mistakes are not trivial in Japan. Not only are they seen as an indication that there may be problems elsewhere, but there is a view that a small slip can have major consequences.

I was being snobbish in viewing administrative tasks as demeaning, and declaring that it is sexist if women are assigned to such tasks. I doubt I am alone in this prejudice. I wonder how many Western companies would invite their secretaries to participate in customer satisfaction survey meetings.

“It’s a black hole. We send information to Japan and never get anything back”

One of the German consultants on our team in Europe is a Toyota Production System expert. I asked her what she recommends to mixed Japanese and European teams in the companies she advises, if they are not communicating well. To my surprise, instead of talking about concepts and processes such as gembashugi (going to the place where the work is happening) or visualisation, she replied that first of all she gets them to agree on a vision for the team.

I discussed in previous articles in this series that in order for Japan headquarters to coordinate effectively with their European subsidiaries, they need first of all to look at the people concerned, and make sure there are clearly understood counterparts, madoguchi (window into an organisation) and tantousha (person in charge).

It may seem that the obvious next step is to set up communication processes between these people, but I think my German colleague is right, that without a vision for the end goal of this communication, many of these processes will become ineffective or die out.
For example, a British company I advise, who have a subsidiary in Japan, told me that they hold regular global teleconferences for certain business and research areas. However they recently discovered that the representative from one of the teams in Japan merely attends the teleconference and does not share what was learned with the rest of their team members. Clearly the Japanese representative does not see the value in cascading further what they heard.

Similarly, the Japanese expatriates at a Japanese manufacturer in the UK told me they all send weekly hokoku (1 pager reports) back to Japan (in Japanese of course), but when in the past they tried to get the British managers involved, the British soon lost interest, seeing it as an additional bureaucratic burden. “It’s a black hole”, one of the British managers told me. “We send information to Japan but never get anything back”. Again, they could not see the benefit to being involved in the communication process. In both this case and the previous case, employees need to feel they are getting information back in return for their input, which is relevant to their jobs.

Many Japanese companies say they have a vision, but in my experience these are often too vague to be actionable. By actionable, I mean that the vision has enough substance that you can make decisions based on it. Most visions for Japanese B2B manufacturers can be summarised as “contributing to society through innovation” which is actionable to some extent, but means that the company cannot really differentiate itself from its competitors who are saying the same thing. So customers also cannot see the benefit of choosing one supplier over another.

The vision that the company, and the teams within the company have should be differentiated from its competitors, and be actionable. The benefit to behaving in accordance with the vision has to be clear and understood by employees. Once that is in place, the processes for communication and compliance between the headquarters and its subsidiaries will almost take care of themselves.

This article was originally published in Japanese in the Teikoku Databank News 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.

If you can’t find a counterpart in Japan HQ, you might need a window

I concluded in my previous article that Japanese headquarters looking to coordinate effectively with their European subsidiaries needed to consider “people” in addition to having clear communication processes and ensuring there are shared vision and values about how the company should behave.

In the past, many multinationals, not only Japanese companies, relied on a network of expatriate staff to disseminate corporate culture and keep the headquarters informed about what was happening abroad.

Now, Japanese companies are finding that they do not have enough ‘global jinzai’ (globally experienced personnel) at senior levels who are capable of managing their overseas operations, so are having to rely on locally hired senior executives.

These locally hired senior executives often become very frustrated if the communication processes are not clear, and the values and vision are not shared. They find themselves answering the same questions over and over again from multiple divisions in Japan and begin to feel they are not trusted. They are unable to make decisions or propose change and yet do not know who in Japan to ask for support or how to ask them.

This problem does not occur so frequently in Western multinationals because the compliance, authorisation and reporting processes are usually made very clear from the moment a company is acquired or set up. Also, the organisation of people tends to be similar across most Western companies. It’s therefore easy for a manager in an overseas subsidiary to work out who their counterpart is, or who the key decision maker might be.

In the European marketing department of one of the Japanese companies I worked for, we had a proposal that needed us to identify and build relationships with many different people in Japan to gain support. In a Western company this would have been easy – there would have been a marketing department, headed by a senior executive (probably EVP level) in the headquarters who would have responsibility for the strategy, vision and brand of the company.

However in this Japanese company there was no recognisable marketing department. The corporate brand office was more like the compliance part of the PR department – checking that the logo was used correctly. The advertising department simply did whatever each business unit told it to. There was a corporate strategy department but it did not seem to have any relation to the kind of marketing strategy that Europeans are used to.

I hesitate to say that my conclusion is that Japanese companies have to reorganise their headquarters along Western lines in order to succeed globally, but I do recommend that plenty of attention is given to finding counterparts and making it explicit what the tantousha (person in charge of the daily work) and madoguchi (window into an organisation, single point of contact) concepts mean, and identifying who those people should be in the headquarters. This should help reduce the burden of requests going to the local managers and help them build trusting relationships with key people in Japan. Once that is done, attention can be paid to shared values and communication processes.

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

What Japanese companies can learn from HSBC’s compliance struggles

Descriptions of the difficulties faced by the UK multinational bank HSBC in 2015 reminded me strongly of the challenges faced by Japanese companies which are trying to globalise through acquisition. 2015 should have been the year in which HSBC celebrated 150 years since being founded in Hong Kong by British and Anglo-Indian merchants as a trade finance bank. Unfortunately this was marred by a tax evasion scandal at its Swiss private banking arm.

HSBC acquired a Swiss private bank in 1999, a few years after it acquired Midland Bank, one of the UK’s “Big Four” retail banks. Then in 2003 it acquired Household Finance, a US consumer finance operation. Up until this diversification of the business, HSBC managed its network of operations through a tight knit group of expatriates (all male until 1989) who were generalists, who had been trained like army officers in a Hong Kong “mess” (similar to a Japanese company dormitories), and were therefore trusted enough to be sent around the world to be the “man on the spot”.

This group of generalist managers found it difficult to control businesses that they knew nothing about, in countries they were not familiar with, so local executives from the acquired company were allowed to continue controlling those businesses. Unfortunately the scandal at the Swiss private banking arm was not the only failure of this approach. Two years ago HSBC had to pay a US$1.9bn fine to US authorities for failing to stop the laundering of drug money through its Mexican operation – the banking and financial services company Bital that it acquired in 2002.

If leaving control to local managers is too risky, should Japanese companies who are acquiring overseas subsidiaries continue to try to exert control through Japanese expatriates? This is neither practical, nor the solution. There seems to be a shortage of suitably experienced Japanese managers who can be sent overseas. And like the HSBC expatriates, they are generalists, and will therefore find it hard to understand what is going on in specialist areas of the business in a foreign country.

Without the Japanese expatriate acting as a liaison, conduit and interpreter however, the foreign executives soon find themselves swamped by endless requests for information from the Japan headquarters, supposedly for compliance and risk management purposes. They try to respond to as best they can, but get nothing back in return. It can lead to a sense of not being trusted, and confusion as to the right direction to take.

For HSBC, the solution proposed by many commentators and the CEO himself is to do with having a strong corporate culture and values, and processes for communicating them globally, along with rigorously implemented compliance policies. If this is in place, then a certain degree of autonomy can be given to local managers.

For Japanese companies, where human relationships are so important, to ‘process’ and ‘values’ I would add ‘people’. In future articles I will look in more detail at these three elements and suggest some practical steps to take.

This article originally published in Japanese in the Teikoku Databank News 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.

Namae – or name?

As I mentioned in a previous article, the question of how to address Japanese colleagues or customers is almost always raised in our seminars. I explain that it is indeed a complex issue, but surname-san is the default option. It’s polite enough, particularly if you are not Japanese anyway. However, a Japanese junior often addresses a Japanese senior by their job title – kacho (section chief, the first real manager position in a Japanese company) or bucho (general manager) for example and would address a customer with surname-sama or with their job title.

The new egalitarianism

But this is changing in Japan too. When Kozo Takahashi took over as President of Sharp, he insisted, as part of a major culture change – that from now on, all seniors would be addressed as surname-san, rather than by job title plus dono. As I mentioned when I blogged on this, bucho-dono is rather like calling someone Mr General Manager.

Diamond Online reckons this egalitarian trend started as far back as the late 1980s. New companies that were booming then like Recruit had a culture where all were called surname-san. Still, the older more traditional companies to this day keep to the job title system. I frequently ask my Japanese contacts at our clients what their company culture is like, and some say it even depends which department you are in – whether they stick to the tradition or have moved to surname-san. Diamond Online describes how in one financial services company there are 6 layers of titles from branch manager down, and one young staff member was even scolded for calling a colleague deputy chosayaku when he was a full chosayaku. There is no one translation of chosayaku by the way – I have found ‘assistant to section manager’, ‘assistant manager’ and ‘assistant to director’ in various sources. Google Translate translates it literally as ‘investigation officer’, which yet again proves that Google Translate should not be relied upon. Either way, you can see why you would be quite keen to be called “assistant manager” rather than “deputy assistant manager”.

The disappearing kacho

The term kacho might disappear completely in some companies, Diamond Online asserts in another article. In companies like Sony, which have moved completely away from any kind of seniority based promotion to one based on job roles and competencies, the change has resulted in demotion to “individual contributor” for around half of the 40% of their staff that were previously in management grades. Panasonic is also reviewing its bucho/kacho system and has, in the interests of developing its staff better, decided that managers should have around 7 staff members reporting to them. This is in reaction to having flattened the hierarchy to speed up decision making, only to find that staff development suffered.

My old employer Mitsubishi led the way in the 1980s, by changing the ka (section) and kacho (section chief) system to ‘team’ and ‘team leader’. This was due to the fact that there were too many people in the kacho grade and not enough sections to manage. The resulting dual system – whereby you have a kacho grade but your job role may or may not include managing a team is one that many Japanese companies have since adopted.

Job mobility

Diamond Online reckons whether you stick with the kacho system or get rid of it depends on whether your corporate culture is one where it doesn’t matter if decisions take a long time, so long as no mistakes are made. The kacho system may also have beneficial knowledge sharing and staff development effects. Role and competency based systems are promoted in Japan by foreign consultancies, says Diamond Online, and often adopted by Japanese companies as a way of cutting salaries. It also makes job mobility easier, if you have a better way of measuring your market value.

It would also make international mobility easier (as Hitachi are hoping), if there is a more globally accepted set of job grades and titles. One of my least favourite requests for advice is helping people translate their job titles into Japanese or from Japanese into English. It is a political minefield and can result in yet more meaningless ‘Mr deputy senior assistant director’ type titles, with nobody the wiser as a result. With many caveats therefore, I offer the chart below:

Octopus balls to Tokyo – why it matters where your company is from in Japan

Most countries have rival cities – usually the official capital city versus other cities which consider themselves to be the real business, historical or cultural heart of the country – think London versus Manchester or Birmingham, Berlin versus Dusseldorf or Frankfurt, Rome versus Milan, Madrid versus Barcelona. Japan is no exception and the rivalries go way back into history.

Kyoto used to be the capital of Japan, before Tokyo (or Edo as it was then) began to usurp it in the 17th century. If you ask Japanese people today about Kyoto, they joke that Kyotoites still think Kyoto is the real capital of Japan, and the Emperor is just temporarily visiting Tokyo (he moved there in 1868, when Tokyo became the official capital) – and will return one day.

Tokyo literally means the Eastern Capital and is part of the Kanto region, where the ruling feudal Tokugawa shogunate was based from the 17th century. Kanto means East of the Barrier (usually considered to be the Hakone checkpoint) and Kansai – the region where Osaka, Kobe and Kyoto are based – means the West of the Barrier (originally the Osaka Tollgate).

Before Kyoto’s reign as capital for a 1000 years, Nara (also in the Kansai region) was the capital and seat of the Emperor but is now a quiet backwater, more visited by tourists than business people. Kobe is the other main city in the Kansai region – a port with a strongly cosmopolitan feel and very close to Osaka geographically. Whilst Kyoto remains aloof and quietly superior (and has some very successful high tech companies of its own such as Kyocera and Nidec), the real battle now in business culture is between Osaka and Tokyo.

Osakans see Tokyo as standardizing, dull and full of bureaucrats and view Osaka (which historically had very few samurai but plenty of merchants) as the real money maker, with vastly superior food. Many of Japan’s celebrities, comedians and musicians come from the Kansai region too.

So what does this mean for corporate cultures? Osaka companies often have merchant roots – the joke goes, when you meet an Osakan, you don’t ask “how are you” (ogenki desuka) but “how’s business” (moukarimakka). To which the correct response is “bochi bochi denna” – a wonderfully vague way of giving nothing away, like saying “plodding along nicely thank you”. Osaka companies are brash, tough negotiators and mean with the money. “They’d skin the fleece off a gnat” said one British engineer to me, describing his colleagues in the Osaka HQ of a consumer electronics company.

Tokyo companies are gentlemanly but at the same time highly political. You need to have a good understanding of their organisation, the factions and the individual relationships to understand how to get things done. Mitsui and Mitsubishi, both Tokyo based corporate groups, are distinguished by the saying “Mitsui is people – Mitsubishi is the organisation”. It’s hard sometimes to understand how exactly this is different, but it seems to boil down to the idea that if an individual is powerful enough at a Mitsui group company, they can get things done, whereas at a Mitsubishi group company, the whole organisation has to support an action.

The other main corporate groups, Sumitomo and Itochu, are Kansai based companies. Both have strong “mercantile” roots – Sumitomo in metals trading, hard-nut, conservative and domestically focused and Itochu – strong in fashion and consumer goods, and seen as the more maverick, progressive and international in outlook. The regional cultural differences don’t seem to have been that strong between Sumitomo and Mitsui as various mergers have taken place between their respective member companies, particularly in financial services. However regional cultural differences have definitely had an impact on Astellas Pharma, the product of a merger between Yamanouchi (Tokyo) and Fujisawa (Osaka). Apparently many Fujisawa employees were horrified that Yamanouchi was going to be the dominant partner in the merger. Fujisawa had a strong tradition of innovation and had regarded Yamanouchi as “Mane-nouchi” (Mane = imitation) – a bunch of play-safe Tokyo bureaucrats.

Those who know Japan well will have spotted that there is an important region missing from this analysis – Chubu. Literally and metaphorically this is the midlands of Japan. Just like the Midlands in the UK it is the historic heart of the car industry. Nagoya is the main city, and teased just as Birmingham in the UK is for being ugly and soullessly modern. The area has the last laugh though, as it is the most wealthy in Japan – thanks to the enduring success of Toyota (so mighty their home town was renamed Toyota City) and its corporate group of suppliers such as Denso.

So, where are the top 30 Japanese companies in Europe from?

Kanto/Tokyo based companies:

• Asahi Glass
• Astellas (but Fujisawa originally Osaka)
• Canon
• Daiichi Sankyo
• Fujifilm
• Fujitsu
• Hitachi
• Honda
• Kao Corporation
• Mitsubishi group
• Mitsui group
• Nissan
• Nomura (but was Osaka originally)
• NTT group
• NYK group
• Olympus
• Ricoh
• Sony
• Toshiba

Kansai based companies:
• Horiba (Kyoto)
• Nidec (Kyoto)
• Nippon Sheet Glass (Sumitomo Group)
• Omron (Kyoto)
• Panasonic (Osaka)
• Sharp (Osaka)
• Sumitomo group (Osaka)
• Takeda Pharma (Osaka)

Chubu based companies:
• Denso
• Seiko Epson
• Toyota

Chugoku (Hiroshima etc) based companies:

• Fast Retailing/Uniqlo

Top 30 Japanese companies in Europe 2021

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Hiring Japanese speakers

A while ago I thought that my business had expanded sufficiently that I needed to hire someone to support me. However, after three months of recruiting and interviewing, I admit I failed to recruit anyone.

In reflecting on why I have not been able to hire someone, and what I need to do next, I have realised that I am in danger of falling into the same traps that I have often seen Japanese companies in Europe slide into.

The first trap is being attracted to Japanese speakers without considering their skills and your business’s needs more carefully. It’s easy to find Japanese speakers in the UK – there are between 30,000 to 50,000 Japanese people living in the UK now – many are students or expatriates but there are also residents who have settled here, often married to British people.

In addition to this, there are around 6000 members of the Japan Exchange and Teaching programme UK alumni association. These are British or other English speaking nationals who have worked in Japan for 1 to 3 years or more, usually in a school or in local government. Most of them fall in love with Japan as a result, and want to pursue careers where they can continue to have contact with Japan and use their Japanese language ability.

The second trap is to hire Japanese people (usually women) and JET alumni into general office administration roles, somewhat vaguely defined, to cover everything from receptionist to HR to translation work. This often leads to frustration on both sides. Japanese women begin to suspect that they are being treated like second class Office Ladies, and when they complain to their British husbands about the overtime or the menial tasks they are asked to do, their husbands often urge them to raise a grievance dispute with their employer.

JET alumni begin to worry that there is no career progression or professional development. Many of them come to me, asking what they should do, and I always advise – find a profession you feel suited to first, like law or accountancy, and then find a way to connect back to Japan.

In both cases, some of the disappointment can be avoided by having a clear job description and a proper contract, and for the Japanese company to be realistic and open about what kind of expectations both parties should have as to how the job can develop. If possible, they should provide or support training where needed, and remember to revise the job description accordingly, as the employee progresses.

So, to take my own medicine, I need to be more clear and focused on the support skills I need, which is primarily invoicing, chasing payments, paying suppliers and some management accounting (forecasting cash flows etc). This does not require a Japanese speaker, fun though it would be to have a like minded person to work with.

This article was originally written in Japanese for Teikoku Databank News, 1st December 2013 edition. It 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.

5 reasons Japanese overseas ventures fail

Around 40% of overseas ventures by Japanese companies result in withdrawal, according to Masato Hikita, director of Headwaters IT consulting company, writing for Diamond business magazine. His clients usually suffer from at least one of the following, he reckons:

No one person with decision making authority

Overseas companies are shocked to hear that Japanese executives don’t actually have executive power. When Japanese companies venture abroad, they usually send the kacho (section chief) out on a scouting expedition, and he talks to people on the ground there who agree that they should collaborate on a project. The local company gets moving quickly, but at this point the Japanese company suddenly grinds to a halt. When asked why, the Japanese company responds that now the bucho (head of department) must visit. And then after that, that the director must visit. At which point the local company wonders why on earth they have to answer the same questions so many times, and decides to start negotiations with someone else.

2. Bringing domestic rivalries overseas

Rather than two Japanese companies fighting to monopolise a market and both end up losing, Hikita recommends that smaller Japanese companies collaborate, particularly in the early phases of raising brand awareness in a new market – for example a joint exhibition stand at a trade fair.

3. Being fooled by a local Japanese “pro”

Just because a Japanese person has lived in another country for 10 years, does not make them an expert in setting up business there. Hikita recommends talking to JETRO or going to local gatherings of Japanese businesspeople to get recommendations.

4. No ‘line in the sand’

According to a Japanese government survey, 90% of Japanese SMEs have not set a bottom line for when they will decide to withdraw from an overseas venture. As Hikita rightly says, from my experience, Japanese companies are happy to make plans for growing a business, but don’t do any planning for what should happen if a business fails. Many say because they have never done something like this before, they don’t know how to judge whether something is a failure. Hikita recommends that nonetheless, through talking to partners and other businesses, some attempt should be made at setting limits, and constantly reviewing status.

5. Overconfidence in the brand

Apparently Japanese companies will assert that the local partner should bear all the costs of marketing, because “we are allowing them to use our brand”. As I’ve mentioned before, a common problem for Japanese companies who are used to everyone in Japan knowing who they are and what they do, without having to make the effort to explain themselves. They are so confident in their brand, they believe they will succeed in the “red ocean” of American and European markets, without realising the true investment required to compete.

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