Pernille Rudlin - Rudlin Consulting

About Pernille Rudlin

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

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

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

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

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

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

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Here are my most recent posts

Japan’s NTT Data acquires UK Sapphire Systems

NTT DATA Business Solutions AG, the German subsidiary of NTT DATA has acquired Sapphire, a UK-headquartered provider of digital operations software and services to primarily mid-market customers in the US and UK markets. This will strengthen NTT Data’s capabilities in SAP cloud and digital related services.

Sapphire has over 400 employees in 8 countries, with 168 in the UK. It also has offices in the USA, Argentina, Mexico, Lebanon and India.

This is the latest in a long series of NTT Data acquisitions around the world, including Everis in Spain (2014), MagenTys (UK, 2018), itelligence (Germany, 2013) and Dell’s services business (2016). The NTT group has nearly 37,000 employees across Europe, Middle East and Africa, making it the fourth largest Japanese employer in the region.

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Daiwa Securities group acquires Irish M&A advisory IBI Corporate Finance

Daiwa Securities has added another acquisition to its European network of corporate advisory firms by acquiring IBI Corporate Finance for over 10 million euros. This will add 28 employees to the 300 or so based in Europe. More than half of the European employees are based in London and Manchester, building on the acquisition of Close Brothers in 2009. Recent acquisitions have been elsewhere in Europe such as Montalban in Spain in 2019.

IBI provides M&A advice across sectors including finance, health care and infrastructure, centering on on small- to mid-cap M&As worth less than $500 million.

Fuyo General Lease to set up UK renewable energy investment subsidiary

Fuyo General Lease is setting up a subsidiary in the UK from April 2024 to invest in renewable energy, particularly offshore wind. It entered the European renewable energy business in June 2022, and in about a year and a half, the total amount of investment and loans exceeded 50 billion yen in Japanese yen. The company will also invest approximately 30 million euros (approximately 4.7 billion yen) in a fund managed by Danish investment company Copenhagen Infrastructure Partners (CIP).

Fuyo General Lease already has subsidiaries in the UK and Ireland focused on aircraft leasing and acquired British company Aircraft Leasing and Management in 2014. Other Japanese leasing companies such as Orix have already been expanding in Europe – Orix acquired Spanish renewables company Elawan Energy in 2020.

The rise of the Japanese permanent resident in Europe

There were around a quarter of a million Japanese permanent residents living overseas in 1989, the first year of Heisei, just before Japan’s economic bubble burst. Now, as of 2022, there are over double (+126%) the number – 557,034. It has been a steady increase, with particularly strong growth in 2006-8 and 2013-2015.

The number of Japanese nationals on long term visas has also risen, but not to quite such an extent – from 340,000 to 751,000 (+120%) and since 2020 the number has dropped. Long term visa holders are likely to be corporate expatriates and students on longer courses, so this decrease could partly be explained by the pandemic, but there does not seem to be any sign of recovery by the end of 2022, even though the severity of the pandemic had faded by then.

Country by country, the picture is more patchy. The USA is still the biggest host of Japanese nationals (419,000) – nearly a third of the Japanese nationals overseas, but this has declined 6% since 2018. The number of Japanese nationals in China, the second largest host, has dropped 15% over the same period. The UK, 6th largest host, has 7% more Japanese nationals than in 2018 whereas Germany (8th) has 7% fewer Japanese nationals and France (10th) 8% fewer. Australia, Thailand and Canada (3rd, 4th and 5th respectively) have also seen increases.

By city, Los Angeles, Bangkok, New York, Shanghai, London, Singapore, Sydney, Vancouver, Honolulu and Hong Kong are the 10 largest hosts. San Francisco has dropped out of the top 10 and been replaced by Honolulu.

Breaking it down by visa category shows that overall in Europe the number of Japanese nationals in the 17 biggest hosts rose 17% from 2012 to 2022 to over 216,000. But the driver behind this has been the number of nationals who are permanent residents. This rose 80% from 2012 to 2022 to over 90,000 people, with a particularly marked increase 2021-2. The number of people on long term visas in Europe has actually fallen by 13%, to 126,000.

The UK has the largest number of Japanese permanent residents – 27,179 – up 77% on 2012. Germany has nearly double the number of Japanese permanent residents it had in 2012 – to 17,496. France is the third largest host with 12,572 permanent residents, up 95% on a decade ago. Belgium has tripled the number of permanent residents and Austria doubled it.

It is hard to know what the drivers are behind Japanese taking up permanent residency in Europe. Obviously one factor is marriage to a local person and having a family. The stereotypical view would be of a Japanese woman marrying a European man – often after having come to Europe to study and work, having perhaps despaired of the traditional education, career and marriage prospects available to women in Japan. There does seem to be an element of that in that there are 1.6 Japanese women permanent residents for every man, up from 1.1 in 1989.

The ratio of permanent to long term residents in the UK and Germany is around 2:3, whereas in the USA it is around 50/50. In Australia and New Zealand is more like 3:2. In Brazil and Argentina over 90% of residents are permanent.

Permanent residency may also be the only available option if a Japanese person wants to stay in their new home country, but does not want to lose their Japanese citizenship. As this editorial in the Asahi newspaper explains, it has long been a source of contention in Japan that dual citizenship has not been permitted. The eight plaintiffs in a recent court case who wanted to contest this said that they took up citizenship of another country in order to maintain their business in that country, or to take public office.

Japan does seem out of step with the majority of countries in the world – 70% of countries allow multiple citizenship. It is also an open secret that many Japanese nationals abroad do actually have dual or multiple citizenships, as there is no mechanism for the Japanese authorities to become aware of this. The data above comes from the Japanese Ministry of Foreign Affairs, and is dependent on Japanese nationals registering with their local embassy. It is only when inheritance, tax and other matters have to be dealt with that multiple citizenship comes out in the open as issue. The true number of Japanese nationals (current and former) in Europe is likely to be much larger.

The charts below attempt to show the different trends in the main countries in Europe which host Japanese nationals. There are some obvious anomalies, which may be explained by changes in citizenship laws and visa regulations in each European country. It’s also notable that Switzerland has long been a major host of Japanese permanent residents whereas, by contrast, the Netherlands would seem to be much more of a corporate expatriate destination.

Japanese employees see promotion to manager as a “punishment game”

Nikkei Business magazine has just run a series on how Japanese employees are becoming very reluctant to be promoted to manager, seeing it as a “punishment game”. Comedy shows on Japanese TV often involve a “punishment game” (罰ゲーム batsu gehmu) where after a bet or a game like scissors paper stone*, the winner inflicts some kind of punishment – like a slap, or eating something disgusting – on the loser.

This reluctance to be promoted to management has been noted for at least two decades now, as the compensation for management level jobs has become less based on seniority increments and more on performance and job content. At the same time, the declining population means there are fewer people below to delegate to and many of the younger generation do not want responsibilities delegated to them.

Playing managers

Japanese managers have felt they have to be “playing managers” a term taken from baseball, meaning that a person has both to manage the team, but also be a high performing player in the team. The strain of doing this is obvious – Nikkei Business cited one woman General Manager who quit because she also had to be a manager of multiple teams, coaching younger inexperienced people, as well as look after her children and parents.

Another issue is that being promoted to manager may now mean you have to manage people older than you – something that was taboo under old seniority based systems. According to the Nikkei Business introduction, the stress of this meant one man left his successful career at a Japanese traditional company to join a foreign owned company, where age related status was not such an issue.

Why over half would turn down promotion

These anecdotes are backed up by a survey by Musashino University of 340 management candidates under 40, which showed that over half (52%) of respondents would turn down a promotion to manager. Other research quoted by Nikkei Business shows that whereas in 1981 a general manager could earn more than double the total take home pay of a non-management employee, it is now less than double. This may be due to higher salaries to retain younger, digitally skilled employees.

Other research shows that the average age of appointment to team leader in Japan is around 38 years old, whereas in the USA it is 34 and in India, China and Thailand it is around 29 or 30. The average age for becoming general manager in Japan is 44, 37 in the USA, 32 in Thailand and just under 30 for China and India. There is also a higher mortality rate amongst Japanese managers compared to European managers.

The legacy of the lost three decades

Japan ranks 43rd in the world in IMD’s World Talent Ranking – which looks at “investment and development” “appeal” and “readiness”- a legacy of the days when managers only had “on the job training”. Switzerland ranks 1st, again, Germany 12th, USA is 15th and the UK has dropped to its lowest ranking since 2019, of 35th – which is where Japan was in 2019. Unsurprisingly, given the inward looking nature of the past “lost three decades“, Japan scores particularly low on international experience and senior management competence.

Nikkei Business says Japanese companies have become wine glass shaped – top heavy with people in their late 50s and 60s, with more people in their 20s and 30s at the base, putting the squeeze on the fewer people who are the “stem”, in the middle management roles in their 40s and early 50s.

The solution is empowerment

Nikkei Business points to some solutions arising from the research, for example that senior managers should not be top down and directive in their style, and to allow their team to have more say and influence in decision making.

It seems to me that there should be less emphasis on quantifiable performance, when deciding how to compensate managers, and more emphasis on job content and qualitative targets, such as developing and motivating employees. This is something that is beginning to happen at some companies (Hitachi, Panasonic Industry and Ricoh are specifically mentioned in the series), who are moving to the “job gata” system, where job content is more clearly defined and employees are meant to take more control over their own career paths and development.

At Japan Intercultural Consulting, our training on agile project management explicitly states that managers should not be “playing managers” but instead focus on supporting the team by providing resources and removing barriers to productivity – a management style known as “servant leadership”.

*Wikipedia calls the game “rock paper scissors” – apparently that’s the more common name in the USA. Perhaps we should all call it jankenpon, the Japanese name. It came to the West from Japan, who, in turn, got it from China.

The opportunities for Japanese companies in European energy

It’s exactly 25 years ago that I went to Japan on a business trip and gave a presentation to the headquarters of the Japanese trading company I was then working for, on offshore wind power. I remember feeling deflated by the lack of enthusiasm for my recommendation that the company invest in this sector in Europe.

At that time, the main obstacle was the high cost of connecting the offshore wind turbines to the power grid, but I felt sure that in the long run the costs would come down and this kind of high value infrastructure project in renewable energy was an investment Japanese trading companies should be making.

25 years later, I felt vindicated to read that the recent announcement of $22bn Japanese investment in the UK turns out to be primarily composed of investments by Japanese trading companies in offshore wind projects. Actually this investment is not entirely “new” – Japanese trading companies have been investing in UK offshore wind projects and transmission infrastructure from around 10 years’ ago.

Nonetheless, Japanese companies are perceived to be late comers to European wind power, at least in terms of supplying wind turbines. European companies such as Denmark’s Orsted or Vestas or Germany’s Siemens are seen as the leaders. It’s not surprising, then, to see that many Japanese companies have teamed up with foreign companies and a significant proportion of the 542 members of the Japan Wind Power Association are companies headquartered outside of Japan.

As JWPA itself points out, while Japan’s share of wind turbine sales globally may be small, Japan excels in companies who supply the components for wind energy turbines, such as precision machinery and electric equipment. If these companies do not already have a presence in Europe, then I expect they will soon, as Japanese investment tends to bring a Japanese supply chain with it.

Unlike the 1970s and 1980s, however, it seems to me that this time it is not a case of “domestic first, then overseas.” Renewable energy is a huge global challenge, which needs to be tackled speedily and in a collaborative way, so that we can learn from each other.

The remaining obstacles are still very local, however. Most offshore wind projects in the UK are in the North Sea, on the eastern side of the country, where I live. There has been a vocal campaign by residents against the cables from the offshore wind projects running through picturesque countryside, or substations being sited near residential areas, which recently resulted in many local politicians losing elections.

Another challenge that runs right across Europe is the shortage of connections to the national grid, sometimes resulting in a 5 or 10 year wait. With increased electrification such as the EU switch to electric vehicles, and Germany’s controversial proposed ban on gas boilers, the grids themselves, rather than the equipment or connections, have become the bottleneck. Hitachi’s acquisition of ABB’s power grids business brings Japanese investment to this part of the energy chain too.

This article by Pernille Rudlin was first published in Japanese in the Teikoku News, 12th July 2023

Nisshinbo divests TMD Friction

Nisshinbo has sold its 2011 acquisition, automotive brake component manufacturer TMD Friction to AEQUITA, a private equity firm based in Munich, Germany. TMD Friction is headquartered in Luxembourg, with European production in Germany, Spain, UK, Romania and France. It had already restructured its UK operations, shutting down production in Kilmarnock in 2019 and more recently investing in new machinery for its Hartlepool plant. It employs around 2,237 people in the European region, with 670 in the UK, 577 in Romania, 437 in Germany, 300 in Luxembourg and 150 in France, and a further 2,000 in the USA, Mexico, Brazil, China and Japan. The transaction is expected to be completed in Q4 of 2023, subject to approval by the relevant authorities.

Sakata acquires Dutch company Sana Seeds

Sakata Vegetables Europe, headquartered in France, has acquired the Dutch cucumber company Sana Seeds. Sakata has acquired several companies across Europe over the past few decades – Samuel Yates in the UK in 1996, a seed company in South Africa in 1999, a flower company in Denmark in 2003, a gerbera company in the Netherlands in 2008 and a cucumber company in Jordan in 2017. It also has operations in Spain, employing over 200 people in the region in total.

Hitachi Rail – the challenge of not being too dependent on Britain

According an interview with Nikkei Business with Alistair Dormer, Representative Executive Officer for Hitachi’s main board and EVP for the Green Energy & Mobility Sector Strategy Planning Division, Hitachi faced two main challenges in its rail business in Europe. Firstly that they were not so strong in control and signal systems, particularly as standards were quite different between Japan and Europe. Secondly, they were too dependent on Britain. For those reasons, it made good sense to acquire Italy’s Ansaldo.

Dormer is himself British – he was in the Royal Navy, before working for Alstom UK and then joining Hitachi Rail in 2003, becoming Managing Director of Hitachi Rail Europe in 2005 and then Global CEO of Rail in 2014. He had already risen to board level at Hitachi by 2015, but took a break in 2022 for family reasons. He was been re-appointed as Representative Executive Officer and Executive Vice President, in January 2023, as well as chair of Hitachi Europe and Hitachi Energy.

The acquirer needs to have the mindset that they are the ones who will change

He has some wise words to say about the post merger integration with Ansaldo. Ansaldo, like Hitachi, had over 100 years of history and a strong culture. “After an acquisition, the acquirer may think about changing the other party’s corporate culture, but this is extremely difficult. Rather, I think the acquirer needs to have the mindset that they are the ones who will change.”

Hitachi Rail created a management team with 30% Japanese, 30% British, and 30% Italian. Additionally, executives from Ansaldo were appointed to Hitachi’s board of directors. Giuseppe Marino, the current CEO of Hitachi Rail, is a former Ansaldo employee.

“When a company is acquired by another company, employees become anxious. Will I be able to continue working? Will the parent company do something strange? Will this factory be closed? Rules must be clearly set,” says Dormer.

Loss of decision making power could shut down the business

“When acquiring a company, you may take away all decision-making rights from the other company. As a result, the acquirer becomes dissatisfied, loses decision-making power, everything slows down, management and employees become dissatisfied, and customers become dissatisfied.” Unlike many previous Japanese acquisitions, where the acquired company was left to carry on as before, the brand name and uniform were changed to Hitachi on day one. Hitachi signs were posted at all factories, and Hitachi’s values were posted on bulletin boards.

“Because Hitachi was not used to developing business in Europe, it instructed Ansaldo to seek permission for even the most trivial details. This would have shut down the business.” So Dormer suggested to the CEO Nakanishi that Ansaldo made their own decisions, and Dormer would monitor their performance monthly. New rules were created, made out of Hitachi and Ansaldo rules.

“Simple English” communication

Communication is of course key. “We also encouraged the use of simple English in communication. Particularly to British people, who tend to use complicated words. This is also necessary for Japanese, Italians and Germans. Having a common language called Simple English will make your job much easier.”

With the acquisition of ABB’s Power Grid Systems business, the values were very similar, but nonetheless it was important to change the communication methods and processes. Dormer encouraged ABB executives to stay in Japan for six month to see for themselves how decision making works there. “We should change the way we ask questions. First of all, simple English. Then ask, “How does this process work?” You will find that 90% of the process is the same as theirs” says Dormer.

Hitachi is now hoping to acquire the railway signaling business of French electronics giant Thales – the UK’s Competition and Markets Authority has just approved. If the EU approves, Dormer hopes to use the same approach, resulting in Hitachi becoming number one in the global railway control market.

Kyowa Kirin acquires UK gene therapy startup Orchard Therapeutics

Kyowa Kirin will acquire British gene therapy startup Orchard Therapeutics for approximately $477.6 million (¥70.7 billion), to bolster its gene therapy pipeline.

Orchard Therapeutics’ portfolio comprises Libmeldy (atidarsagene autotemcel), also known as OTL-200, intended for eligible patients with early-onset metachromatic leukodystrophy (MLD), a rare and life-threatening inherited disease of the body’s metabolic system. It’s already been approved by the EU and UK regulatory bodies and is currently being reviewed by the USA’s Food and Drug Administration.

Orchard has 174 employees and Kyowa Kirin has around 6,000 employees worldwide, of which around 700 are in Europe. Kyowa Kirin is in turn owned by Kirin Holdings, a beer and beverage company. It acquired (when it was Kyowa Hakko Kirin), Scottish pharmaceutical company ProStrakan in 2011 and then in 2014 ProStrakan acquired Archimedes Pharma from Novo Nordisk.

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