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

The man who turned Hitachi around #5 – globalization of people

As well as the train business in the UK, the other case study that Takashi Kawamura, former President of Hitachi gives as a model of globalization is the data storage business, which was turned into a “solution” business rather than just selling Hitachi’s hardware. Kawamura says the person responsible for starting this change was the CEO of Hitachi Data Systems in the USA, Jack Domme. The key words which changed the business were “disaster recovery” and Domme hired people who weren’t just salesmen, but engineers, who could listen to customers and make proposals.

As well as having a strong local leader heading the UK train business and HDS, Hitachi’s China elevator business is also headed up by a Chinese President. According to Kawamura, all these businesses have switched to being “solution” oriented, to compete with IBM, Siemens and GE – this could not have been done if they were led by Japanese “sheltering under the umbrella” of Hitachi.

3 of Hitachi’s 13 board members are non-Japanese. The executive officers are still all Japanese but Kawamura thinks this needs to change too, so that non-Japanese are heading up Hitachi’s business divisions. “If our European rail business expands, then it might be better to have a British person heading up our transport systems division. If diversity advances in this way, then there will be much more lively debates and innovation, and it will be easier to undertake structural reform”

Hitachi aims to reach an operating profit of 7% (from the current 4.7%) by FY 2015, to close in on Siemens. “What is needed to be a globally excellent company is speed” says Kawamura.

From 2011, around 1000 young employees are sent out each year to work overseas for a maximum of 3 months. This is 10 times more than previously, and represents about a quarter of each cohort. Kawamura says it is done not just because Hitachi can afford it, but to show that the company is serious about globalization and also to act as a wake up call to the young employees about how much further they have to go in order to speak English or other foreign languages fluently, and to create relationships with local customers.

Around 60% go to developing countries – Kawamura says they have to survive some tough challenges, which in some cases have really changed employees’ mindsets.

There are are also top down diversity initiatives to globalize people, through the governance of the company. In 2012 Kawamura increased the number of external directors from 4 to 7 out of the 13 board members, and raised the number of non-Japanese from 1 to 3 and this year added the first foreign female board director, Cynthia Carroll, formerly of Anglo American.

“This diversity should have an impact on the mindset of our employees, but the other effect is to liven up board meetings. Japanese board meetings usually do not have much debate or discussion – the decisions have already been made at the management committee or operational committee level. And in companies like Hitachi which are very vertical, executives do not comment on other business divisions – they feel they are not qualified to criticise.

So our board meetings have become extremely “frank”, actually I feel beaten up by them – they ask why we have not reached 5% operating profit, why such elite Japanese graduates don’t seem to be very motivated, why we are so mild and not competitive. We use simultaneous interpreters in the board meetings, so the comments come bouncing out at us in real time. It’s not just criticisms, but also new business ideas come out of these meetings – new technologies we should adopt or businesses we should collaborate with. We held one of our board meetings in India, to show we were serious about tripling our business there. We are thinking to hold our board meeting somewhere in the USA this year.

George Barclay, who was CEO of 3M is actually British, and the current CEO is Swedish. Although 3M is an American company, Americans are in the minority on the board. Barclay tells me that’s normal if you want to compete globally”

It will also help with structural reform. Hitachi has just completed a global database of 300,000 personnel. This will be used for unified appraisals and global mobility of staff. Kawamura would like to see more non-Japanese in Japan, in team leader or General Manager positions. Seniority based promotion will probably come to an end.

Kawamura finishes the series by saying that he was too old to be President, which is why he handed over to Nakanishi after a year. He sees the role of Presidency as an agent – if there is proper diversity, then the company and the management will be “smart” and “aggressive” and the President does not even need to be charismatic.

For more content like this, subscribe to the free Rudlin Consulting Newsletter. 最新の在欧日系企業の状況については無料の月刊Rudlin Consulting ニューズレターにご登録ください。

The man who turned round Hitachi #4 – globalization and the UK train business

Overseas business accounts for less than 50% of Hitachi’s Y9665 trillion revenues. Domestically Hitachi is seen as a “winner” but globalization is an urgent issue. Takashi Kawamura, current chairman and former President, points out that compared to GE or IBM or Siemens, Hitachi’s market capitalization is still very low. When he became president in 2009 he emphasized that Hitachi needed to look more like a truly global company. “There was a tendency just to compare ourselves to ourselves, so it seemed as if our performance was better, compared to the past, but this was just inward looking.”

Kawamura had experienced the strength of GE and Siemens as competitors when he was in charge of the power systems business, as did his successor as President, Hiroaki Nakanishi, when he was running the hard disk drive business in the USA, competing with the global top 1 or 2 companies. “The people working in Japan for Hitachi don’t feel this pressure, but the Japanese domestic market is shrinking, and if Hitachi does not compete in the rest of the world, it will become a loser.” This is a problem faced by many Japanese domestic giants – most of their employees are focused on the company and its DNA surviving, and globalization does not seem imperative for this, if business is going well domestically, in fact globalization might even risk the long term survival of the company.

Kawamura gives a couple of what he calls “model cases” of globalization at Hitachi – the UK rail business and the data storage business in the USA.

Hitachi competed against Siemens, Alstom and Bombardier in July 2012 to win the bid for the UK’s Intercity Express Programme – the construction and leasing of trains from 2017 for 27 years. Together with a further order this July, this represents 866 carriages, for which Hitachi has invested Y9.6bn in a factory in County Durham.

Hitachi was only known for TVs and domestic appliances in the UK, and had no history of train business in the UK at all. Kawamura says it was not enough just to keep saying that Hitachi’s technology was superb – so at their own cost, they set up their own control equipment in an old carriage and gathered data by running the train at night.

Then with the 2010 election, the new coalition government launched a spending review, and froze the awarding of the contract, so Hitachi Rail Europe made its own proposals on how to cut expenditure and this led to Hitachi regaining preferred bidder status. Kawamura believes their success was due to appointing a strong local leader, the CEO of HRE, Alistair Dormer, formerly of BAE and Alstom, who had been at Hitachi since 2003. A British sales team was put together and given a large degree of freedom too, so that they knew the local market well and were able to address any needs.

Kawamura says that Hitachi changed tack with their 2012 Mid Term Plan, to focus not just on developing countries but also matured markets like the UK, because it was felt that developed markets also had big infrastructure challenges, and this was how Hitachi could build up its strength in solution businesses.

(continued – the man who turned Hitachi around – globalization of people)

The man who turned Hitachi around #3 – trimming the three branches

“I don’t really like it myself, but there is an expression in the Hitachi group “Gosanke – the three branches” – meaning Hitachi Metals, Hitachi Cable and Hitachi Chemical” – explains Takashi Kawamura, former President of Hitachi. The expression is historical, referring to the three branches of the Shogun producing Tokugawa clan during Japan’s feudal era.

The Gosanke are the largest, and longest surviving of the listed Hitachi group companies. Kawamura caused a sensation in 2010 when he appointed Hiroaki Nakanishi as President and stayed on as Chairman, by also appointing Nobuo Mochida of Hitachi Metals as Executive Vice President. “These personnel moves are a way of showing to the outside world what my intentions are. It was the first time that someone from one of the other listed Hitachi companies had been appointed as an executive of the main Hitachi organisation. Up until there was not even much exchange of personnel even amongst ordinary employees.”

Then in 2011, Kawamura made Hideaki Takahashi, who had been an executive officer in the main Hitachi company, President of Hitachi Cable. This was also a rare occurence, and was followed by the merger of Hitachi Metals and Hitachi Cable in July of 2013. This was to signify the end of Hitachi’s vertical mindset.

“I was most concerned about reforming the main Hitachi company. As I mentioned before, it was a donburi – good businesses covering up bad…. There was no sense of responsibility to the rest of the company in each division – for example, if some entertainment budget was left towards the end of the year, then the division would try to spend it all in a mad frenzy.” So in 2009 Kawamura set up an internal company system. There are now 6 groups, with around 30 independent companies, some listed, some not, which report into the consolidated accounts. If the internal rating of a division fell, then the mothership would not lend it any more money. Kawamura also started an annual “Hitachi IR Day”. “The president of each internal company suddenly changed their spots when they realised that each year they would be accountable to investors for the targets they had set the previous year,” notes Kawamura.

(Continues – the man who turned Hitachi around – the UK rail business)

The man who turned around Hitachi part 2 – social innovation and restructuring

The first action Takashi Kawamura undertook on being appointed President of Hitachi in April 2009 was to reform the governance of the company, allowing more independence to the listed companies in the Hitachi group and also the internal companies. Some restructuring and cutting loose of certain business lines also occurred.

“But what was really important” says Kawamura, “was that we had a direction for the future”. The key phrase he devised was “Social Innovation”. Apparently some native English speakers pointed out that such a phrase did not really exist in English in the sense it was used by Hitachi – to connect social infrastructure and information technology. But as it had meaning for Hitachi, Kawamura stuck with it. “Hitachi began with motors and power systems for mining, and is strong in power plants and rail, but also IT. It was often said inside Hitachi that they wanted to be “IBM+Siemens”.

Hitachi’s two biggest independently listed companies, Hitachi Cable and Hitachi Metals, were initially resistant, saying they were not involved in social innovation, but Kawamura managed to persuade them that ultimately they were providing the foundations for social innovation businesses.

Kawamura also followed a policy of focusing on upstream and downstream, and getting rid of “midstream” businesses. For example assembly of digital components- investing in a joint venture with Mitsubishi Electric – Renesas, which then merged with NEC Electronics. The mobile phone business was spun off into a joint venture with NEC. The hard disk drive business was sold to Western Digital.

“In other words, we were taking down our shop sign as a consolidated electricals company” says Kawamura. “Actually, I wish we had done it five years earlier, then we would not have made such big losses.” As the Nikkei points out, actually Hitachi was quicker to restructure than Panasonic or Sharp.

Kawamura believes that the best time to shut down a business line is just after the peak has been attained. But he recognises this is hard to implement – there are many people who joined Hitachi in order to be in that business. But Hitachi has had 100 years of moving from one peak to another, from motors for steel making to nuclear power stations to large scale computing, to hard disk drives.

The worst time for Kawamura was having to raise capital from shareholders in 2009, when Hitachi’s shareholder equity ratio had fallen to 11.2%, Hitachi normally guarantees whatever it sells – power plant efficiency, meeting deadlines etc, but of course dividends and share prices cannot be guaranteed. The share price fell to Y200, but despite everything, our shareholders took up the offering. “This really stiffened my resolve to carry out the reforms needed at Hitachi…. that is what being the manager of a company is about” Kawamura recollects.

(Continues – Part 3 – trimming the three branches)

The man who turned Hitachi around – boiled frog, donburi and battleships

The Hitachi group of companies, estimated to be the second biggest company in Japan in terms of employees after Toyota, and 4th in terms of revenue, has turned itself around considerably since 2009, when it chalked up “the largest loss in Japanese manufacturing history” of around $8bn.

It led to the premature ousting of Kazuo Furukawa as President, replaced by Takashi Kawamura as CEO and Chairman, who at 69 was 8 years older than Furukawa and must have thought his career was in a graceful curve towards retirement, as chairman of Hitachi Maxell and Hitachi Plant Technology.

Kawamura handed over the Presidency to Hiroaki Nakanishi in 2010, and continues as Chairman. A series of articles in the Nikkei Business magazine recently describe how he turned the conglomerate around to profitability in two years.

He describes how he saw Hitachi in 2009 as a “boiled frog” whereby each division was fooled by the cosy feeling of the slowly heating water, unwilling to make radical changes until it was too late. Japanese like to stick with things as they are, he comments.

Corporate governance was not working at Hitachi in 2009 he says. All the group companies were run by an Old Boys network from the Hitachi main company. If a younger President had been appointed, and wanted to change things, it would have been difficult to persuade his seniors. As Kawamura was older than most of the other presidents, he was able to push through reforms.

He describes Hitachi as having a “donburi” style of management [donburi is a rice with toppings dish] whereby the loss making businesses were covered by the profitable ones. “Bad businesses should be brought out into the open and a judgement made as to whether they can be reformed or scrapped”. This was forced upon Hitachi by the Lehman Shock but Kawamura was also more able to do it because he had been in a subsidiary of Hitachi.

Employees used to believe Hitachi was the unsinkable battleship. It survived 2 oil shocks without much impact on its financials. Japan’s big three electrical companies – Hitachi, Toshiba and Mitsubishi Electric used to be known as the wandering samurai, the merchant and the feudal lord respectively. A wandering samurai thrives when times are good, but is not flexible about change when it’s necessary.

There was also something known as “Hitachi Time” – whereby major decisions had to take account of so many people, including Old Boys and therefore were very slow to be reached. In 2009, Hitachi was renamed the sinking battleship. Kawamura uses a story he heard about the British Navy,as a metaphor for what had happened to Hitachi. British battleships were taking on about an inch of water a year, which will caused the ships to lose speed, so in the end, they are rusted up and useless. Hitachi had made losses in 2001, 2006 and 2007 as well as in 2009. Apparently the reason the the battleships took on water is that they had become heavier every year. This was due to an accumulation of personal possessions by the staff on board. So the British Navy is now very strict about what personal items can be brought on board.

(to be continued – what Kawamura did to reform governance)

Are Japan and Turkey culturally similar?

Japanese Prime Minister Abe is visiting Turkey again this week, so I thought I would share the article I wrote for the Teikoku Databank News shortly after his previous visit in May:

I decided to use the excuse of the Istanbul location of the annual conference of the Association of Japanese Studies to visit Turkey for the first time this July. This was long overdue for me as not only is Istanbul the place to see where East meets West, straddling as it does Europe and Asia, but I had noticed many of my Japanese clients were expanding their business in Turkey recently. This is confirmed by the fact that bilateral trade between Japan and Turkey rose 25% in 2012, reaching a record $4.6bn, and there are now 120 Japanese companies with offices in Turkey as of 2013.

The day before the conference opened, Toyota started production of its new Corolla model at its Turkey plant. I had dinner that evening with my Turkish business school friend, now heading up a successful private equity firm in Turkey. He was well aware of Toyota’s activities but also expressed some concern over the announcement that a Japanese consortium was going to build a nuclear power plant in Turkey.

If Japanese companies are going to move more into these kinds of infrastructure projects, in Turkey and elsewhere in Europe, then harmonious relationships with consortium partners and local governments will be critical. Judging by the interactions I saw between the Turkish Ambassador to the UK and senior Japanese business people in London recently, relationships are cordial so far, despite rivalry over the 2020 Olympics.

Turkish people I have spoken to who have worked with Japanese people tell me that Japanese and Turkish colleagues communicate well with each other, which is good to hear, although it could mean there is not much business opportunity for my company.

There is some evidence that the Turkish and Japanese languages are historically related. Both are “WYSIWYG” (What You See Is What You Get) languages – pronounced as they are spelt, with each syllable clearly enunciated, unlike English with its deceptive spellings and elisions. Apparently Turkish is also grammatically similar to Japanese, with the verb coming towards the end of the sentence, and plenty of scope for vagueness and distancing or removing the subject from the sentence.

It turns out that Turkish people are more used to the apprenticeship style of learning too, rather than formal, classroom based training – similar to the Japanese “minitsukeru” [literally means “stick on the flesh”] way of learning. Again this may work well in manufacturing environments, but I wonder whether in situations where more peer to peer, management communication is needed, for example between the partners of an infrastructure project, differences in communication and decision making style might not become more apparent. So maybe there will be a business chance for my company there!

This article originally appeared in Japanese in the 14th August 2013 edition of Teikoku Databank News and also appears in Pernille Rudlin’s book “Shinrai: Japanese Corporate Integrity in a Disintegrating Europe” -available as a paperback and Kindle ebook on Amazon.

UK may drive away Japanese firms if it tries to “be like Norway”

It is likely there will be a referendum in 2016 on whether the UK retains its membership of the European Union or leaves. Charles Grant, of the Centre for European Reform, when he spoke to the Japanese Chamber of Commerce and Industry in the UK this year, predicted that the referendum would result in a vote for the UK to break away.

The British pro-European campaign is not as well funded as the anti-European campaign, and there are plenty of Euro-sceptic politicians of all political persuasions. The British media is also mainly prejudiced against Europe in its coverage.

The arguments for the UK staying in the EU are mostly technical, to do with foreign direct investment and the economic impact, whereas the anti-European campaign can make an emotional appeal, by invoking threats to national sovereignty.

British business people may be generally in favour of continuing as members but I agree with Charles Grant that there is a lack of enthusiasm, and a certain complacency about what will happen if the UK does leave. British businesses think the UK can be like Norway – prosperous, part of some kind of free trade area, but independent. In actual fact, Norway is not as immune as it may seem from EU policies, and yet has no influence over setting those policies.

From my Japanese business perspective, “being like Norway” would be disastrous for the UK. I have seen a slow trend towards consolidation across Europe over the past ten years amongst my seventy or so Japanese clients, with the UK playing an important role as the coordinating European headquarters, drawing on a pool of talented Europeans who can easily move to and from the UK thanks to the open borders within the European Union, either working for the headquarters itself or for professional support services such as lawyers, accountants and consultants.

Japanese companies now employ 437,000 people across Europe, according to JETRO, and the UK is by far the biggest beneficiary, with over 140,000 employees of Japanese companies, compared to Germany with 59,000. Germany still has a strong attraction for Japanese multinationals, however, particularly those which are more engineering oriented. If the UK shut its borders and stopped being an influence in the EU, it’s not hard to imagine Japanese companies shifting their European headquarter functions over to Munich or Düsseldorf – or Amsterdam.

All the Japanese business people resident in the UK with whom I have spoken want Britain to stay in the European Union. However, they are afraid to speak out, for fear that this would seem like foreigners trying to interfere in domestic politics. It is going to be up to British businesspeople like me, whose companies are active across the European Union, to make the case. It cannot just be about jobs for the UK, but also Britain’s image globally, and how it will be damaged by “Little Englander” isolationism. If we do not seem to want to play our part in globalisation, to be influential and proactive, the global players will take their ball elsewhere.

This article was originally published in September 2013 in the Nikkei Weekly. It also appears in Pernille Rudlin’s latest book “Shinrai: Japanese Corporate Integrity in a Disintegrating Europe” available as a paperback and Kindle ebook on Amazon.

What it really means to lose your company laptop in Japan

Losing your company laptop can be a really big deal in corporate Japan. In one company I know, depending on the seriousness (how it happened, what kind of data was lost), the punishment ranges from pay cuts to demotion. The errant employee’s line manager may receive a similar penalty. And just to rub it in, the employee and the manager both get named and shamed in the HR bulletins circulated to all employees.

The information technology support team at this company’s UK subsidiary was approving of this policy, albeit half-jokingly. While sympathetic to the occasional accident or lapse, they were appalled by how badly people looked after their company laptops in terms of hygiene and care. They cited the case of one employee who had lost his laptop in a pub – three times.

There is no penalty in the UK subsidiary, other than the damage to professional pride and the inconvenience caused. Laptops are heavily encrypted, and as soon as a device is reported missing, the ability of the device to connect to the intranet is disabled. In terms of monetary loss, most laptops are written off quickly from the balance sheets anyway.

Perhaps then the strict policy in Japan is not due solely to concrete concerns about security and financial loss, but more due to fears of reputational loss. In Japan the laptop may well be handed in, but probably to the police, or directly to the company concerned, so quite a few people will get to hear about it, at worst even the media or a customer.

An employee of a famous Japanese company is like a member of a family. If they do something wrong in public, the whole family looks bad for not having brought up their children properly. Older brothers or sisters (the line managers) are scolded for not keeping a better eye on their younger siblings. The symbolic punishment is to have pocket money taken away for a few weeks but the real punishment is the damage done to your reputation within the family – being known as the careless one, or the stupid one, who let the family down.

The UK IT support team and I speculated as to how the “bring your own device” trend might impact the way people treat their laptops. If it is your own computer, tablet or mobile phone, paid for with your own money, then maybe you will treat it with more care.

But I get the impression that big-name brand companies in Japan are reluctant to accept flexible practices such as working from home, and “bring your own device” is not going to help. Even with the best security and encryption, the reputational damage of an employee losing a laptop that might contain confidential customer data is too severe to risk.

To use the family analogy again, even if the son bought the football with his own money, and it only hit the neighbour’s window without breaking it, the neighbour is still going to complain.

This article originally appeared in the Nikkei Weekly

High brand recognition for Japanese companies does not necessarily mean they are well known

When it was first suggested to me that I join Mitsubishi Corporation in the UK, I have to admit I thought it was the car manufacturer, Mitsubishi Motors, despite the fact that I should have known better, having been brought up in Japan and spent a year at a Japanese university.

After a couple of years exporting British chinaware and shoes to Japan for the trading house, I was transferred to Tokyo to work in the building materials sales team. The apartment that my employer found for me had no furniture, as is normal in Japan. So I decided I would buy what I needed at Marui department store, as I had heard they offered credit cards and I did not have enough savings to pay for the necessary bed, sofa and refrigerator.

When I approached the credit card application desk, a look of panic flitted across the clerk’s face – a young, foreign, female was presumably not going to be a good credit risk. I reassured him I could speak Japanese, but he was very concerned whether I could write well enough to fill in the application form.

I took out my Mitsubishi Corporation business card in order to copy down the address, and as soon as he spotted the distinctive three diamond logo, his face lit up. “Mitsubishi Corporation! Can I phone your team leader to check your employment details?” He returned from the call with a huge smile on his face, and tried to make me buy two televisions and a better refrigerator.

The Mitsubishi name worked magic for me once more in my career there. I had stupidly forgotten my passport on a trip to Frankfurt from London. The German border police were not impressed, particularly as I had no other form of ID, not even a driving license or credit card. I suddenly remembered my Mitsubishi security pass.

Again, the atmosphere improved dramatically, and one policeman even tried to make a joke of it – “we will let you through, if you can get us a Shogun!” (as the Pajero sport utility vehicle was known in Europe at the time).

I decided this was not a good moment to explain that Mitsubishi Corporation was not the same company as Mitsubishi Motors, and ruefully remembered how I had made the same mistake myself a few years previously in the job interview. In retrospect, it is intriguing that the Mitsubishi brand instantly evoked trust, even for a German policeman who did not really know what it stood for.

This was twenty years ago, but I suspect this paradox persists for Japanese companies when it comes to recruiting in Europe. There is a generally favourable view of Japanese companies, but nobody is quite sure what they do, and therefore there is a doubt as to whether becoming an employee of a Japanese company is a good career move.

It’s no surprise, therefore, that recently the larger Japanese employers in Europe are indeed putting more effort into broader corporate communications, rather than just product advertising. This is presumably in order to attract the best quality employees.

This article by Pernille Rudlin first appeared in the 10th June 2013 edition of The Nikkei Weekly and also appears in Pernille Rudlin’s book “Shinrai: Japanese Corporate Integrity in a Disintegrating Europe”, available as a paperback and Kindle ebook on Amazon.

Japanese companies should try treating foreign acquisitions not as lodgers but adopted sons

There has been a 33% drop in the number of overseas acquisitions by Japanese companies in the first quarter of this year compared to the last year. I view this as a temporary blip because of the weakening yen. However, recently announced corporate reshuffles show that senior executives are being asked to step down early if they are perceived to have been responsible for the failure of major overseas acquisitions. So there may be an element of “once bitten, twice shy”.

The most recent quarterly survey of 148 leading Japanese companies by The Nikkei indicates there is still an appetite for acquisition. Of the executives polled, 42.6% said they wanted to acquire companies both domestically and abroad, with North America and Europe being the favoured overseas destinations.

One way these executives could do a better job of acquiring overseas companies is to be conscious of the fact that Japanese companies behave like traditional Japanese families – and adapt their acquisition and integration processes accordingly. For example, Japanese families, even to this day, adopt son-in-laws, who take on the family name and become the heir, especially if there is a family business at stake.

Japanese companies seem reluctant to use the “adopted son-in-law” model for their overseas acquisitions. Sometimes the acquisition is more like a marriage – a long courtship of holding an equity stake in a large foreign company and then a final consummation some years later. And like a marriage, this approach requires effort and commitment on both sides, through thick and thin, to build a new family, with a new set of values and customs.

A more prevalent model seems to be treating the acquired overseas company like a lodger in the house, rather than a member of the family. So long as the lodger behaves, with no loud music late at night, and pays the rent on time, they are left to their own devices.

Initially North American and European companies may welcome this approach. They are allowed to continue as before, with plenty of autonomy and not much interference. However, like a lodger, they start to feel isolated from the family activities, and wonder whether they should be looking to move out to better lodgings. Or they may hit financial difficulties and stop paying the rent, at which point the Japanese landlord cracks down hard.

When North American and European companies acquire other companies, some attention is at least nominally paid to the cultural aspects, but the main focus is on integration or imposition of systems, structures, policies and targets. The acquired company is usually left in no doubt as to how they are going to have to adapt to the new parent, well before the ink is dry on the purchase agreement.

If Japanese companies do not feel comfortable with this clinical approach, then a lot more thought needs to go into how exactly their new overseas subsidiary can be a true adopted son and heir – or spouse.

This article by Pernille Rudlin first appeared in the April 22nd 2013 edition of The Nikkei Weekly and also appears in Pernille Rudlin’s new book “Shinrai: Japanese Corporate Integrity in a Disintegrating Europe” which is available as a paperback and Kindle ebook on Amazon.

Archives