Corporate Governance Archives - Rudlin Consulting

Telecoms takeover of Japan’s top CSR rankings

Comparing the top ranked Japanese companies for Corporate Social Responsibility (CSR) in Toyo Keizai’s 2022 rankings* with the 2007 rankings shows how the Japanese corporate landscape has changed. The three telecoms companies – NTT, NTT DoCoMo and KDDI – have taken over the top 3 positions. In 2007 the top 3 positions went to the heavy engineering and electronics companies Toshiba, Hitachi and Canon. Sharp, Panasonic. Fujifilm and Sony also made appearances over the years, as did automotive companies such as Denso, Toyota and Nissan.

The woes of Toshiba, Hitachi, Sharp and Nissan over the past 15 years are well documented but although Toshiba and Hitachi are in the 2022 top 50, Nissan and Sharp are at 437 and 179 respectively. Canon, Panasonic, Fujifilm and Sony are still in the top 50 along with other electronics and IT companies such as Fujitsu, NEC, Omron, Mitsubishi Electric and Seiko Epson. Denso and Toyota are all still in the top 50 along with other automotive companies such as Aisin, Bridgestone, Isuzu and Honda. Despite being tobacco or drinks companies, JTI is ranked at 7, down from #4, Suntory is at #8, one down from #7 in 2021, Asahi at 28, up from #33 and Kirin at #31, down from #10.

A Japanese trading company (shosha) has entered the top 10 for the first time. Mitsui has shot up from #64 in 2021 to #4 – all the more remarkable as it used to be seen as one of the more hardcore traditionalists of the 5 big shosha. The second highest ranked shosha is Itochu, up to #22 from #37. Sumitomo Corporation is at #40, down from #26 and Mitsubishi Corporation is at #45 up from #58. Marubeni is somewhat lagging the other shosha at #112, up from #143. Toyo Keizai singled out Mitsui’s distributed power supply project, using solar power and storage batteries for non-electrified areas of India and use of carbon offsets through a company owned forest as contributing to its high ranking.

Some of the companies whose rankings have fallen considerably include Nidec (down from 67 to 174, scoring low on environment) and Recruit, down from #62 to 172, also scoring low on environment and Ricoh, down from #47 to #217, with a lower score in HR.

*500 companies ranked by scores out of 600 for finance (300), HR (100), governance (100) and environment (100).

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Hitachi’s new risk management

Up until now, Hitachi’s risk management team was mainly centered on the legal department – which I suspect is probably the case in most Japanese companies. Now Hitachi’s President Keiji Kojima has added the finance department to it, wanting the company to take a more proactive approach to global risks. The aim is to visualize risks – such as the impact of the economic slowdown in Europe due to the Ukraine crisis and soaring component costs due to inflation – and respond quickly.

When Russia invaded Ukraine, GlobalLogic was empowered to act quickly to evacuate 7,200 local employees in the country – and was told that they could put off contacting Japan HQ until later. By the end of April, remote working and overseas bases had been put in place and the operations were back up to 95% level.

Hitachi’s overseas business has expanded recently thanks to the acquisition of US company GlobalLogic and the power grids business of ABB, now Hitachi Energy.

Strengthening the risk management system is one response to this, along with introducing a global standard job description system to the Japanese organisation, aiming to have 30% women and 30% non-Japanese representation ont he board by 2030, aiming for zero carbon by 2050. Five out of the 9 external directors are non-Japanese.

Hitachi has learnt from past failures in overseas expansion, such as the Horizon Nuclear Power project in the UK, and the failure of a joint venture thermal power project in South Africa.

These changes have impacted the way the board operates. Now, when an executive officer reports that a plan has not been achieved, the non-Japanese directors respond “so?” – by which they mean, don’t just report the result, tell me what you are going to do next. A former external director of Hitachi, Harufumi Mochizuki comments in the Nikkei that “thanks to training by foreign directors, the executive officers have acquired a world class management style, and the ability to action, with a sense of speed.”

The next challenge for Hitachi will be to make the best use of the global human resources that it now has thanks to its acquisitions. Only three of Hitachi’s 34 executive officers are non-Japanese. The Nikkei comments that these changes are very much in line with the vision of Mr Nakanishi, the former President and Chairman who died in 2021, for an organisation with world class leaders who can respond quickly to global risks.

The inside story on how Mitsubishi Chemical selected a non-Japanese president

“Many Japanese executives are unable to think critically”, says Hashimoto Takayuki, an external director (ex IBM Japan) and chairman of the nomination committee of Mitsubishi Chemical Holdings, in a recent interview with Diamond Online.

“There is no right answer to how to manage a business now” he adds. The traditional Japanese model of low-cost, high quality, on-time delivery, based on conventional mass production methods is no longer sufficient. “There is a need for management that resolves conflicts, balancing social and economic benefits, such as carbon neutrality.” So it is not enough for a President or CEO to just have the traditional ability to sell as well as a top sales person or have a great track record as a factory manager.

Japanese people are not very good at managing subsidiaries acquired overseas

“Broadly speaking, the president has three duties. The first is the corporate branding of the company – the “purpose” that is attracting so much attention recently. The second is portfolio management – business consolidation. An appropriate business structure has to be built, in line with trends such as ESG. The third is global governance. Japanese people are not very good at managing subsidiaries acquired overseas, but it is an essential skill for a global company.”

“I believe that people who are future presidents/CEOS will need to be educated within a special track in the company, as a profession, much as you would with marketing or sales. They need to have assignments which will stretch them, such as developing an overseas business from scratch, or rebuilding a poorly perfoming subsidiary.

This is why the top person from within was not selected to become the President, because they had not been educated in management. There were many excellent performers heading up business divisions, but whether they can become President is another matter.

We asked a headhunter to produce a long list of candidates to be President – there were more than 30, including people from outside Japan. The shortlist had 4 people from outside the company, outside Japan, and 3 people who were in-house candidates.

Why an external, non-Japanese candidate was selected

“Mr Gilson gave a good impression of deep understanding of Mitsubishi Chemical’s vision of KAITEKI management. Other people wanted to change this vision as soon as possible, but that was not the kind of successor we were seeking. Also, external candidates may want to bring in a team they are familiar with, but Mr Gilson clearly said he would prioritise teamwork with the current management members.”

Furthermore, during the interview, Mr Gilson summarized his business improvement ideas in a proposal of 2 sides of an A4 and presented them. The proposal was accurate, but above all, it showed a passionate intent.

There were some concerns, as Jean Marc Gilson‘s previous company (Roquette Freres) had sales of several hundred billion yen, compared to Mitsubishi Chemical sales of nearly 4 trillion yen.

Avoiding backlash

“I expected a certain amount of backlash within the company, but I’ve heard that actually there was a more welcoming atmosphere amongst the younger employees. After all, the younger the person, the stronger the desire for change.

Having the former chairman of Mitsubishi Chemical (and the person who came up with the KAITEKI vision), Yoshimitsu Kobayashi on the nomination committee was also a big factor. It was the first time Mitsubishi Chemical appointed a president through a nomination committee, so there was a risk that a decision made solely by people with no experience of Mitsubishi Chemical would not be seen as valid.

Mr Hashimoto still thinks that it is best if the President has been developed within the company, but it takes time to reform internal systems and culture. If this is not worked on right now, the company will never change.

Top earning executives in Japan 2022

As in previous years, the top earning executives in Japan over the past year include many non-Japanese people. At number 1 is Shin Jingho, Korean founder of Line (Japanese messaging app), far outstripping all the other big earners, pulling in US$315m to March 2022. He moved to Japan in 2008 to turn around parent company Naver’s websearch business, and somewhat alarmingly, claims to have learnt Japanese by watching gangster movies.

At number 2 is Kurotsuchi Hajime, the 100 year old chairman of Daiichi Koutsu Sangyo, a taxi and real estate firm in Kyushu. He has just announced he is retiring and intending to start a foundation for small to medium sized businesses. Perhaps that is where some of his US$138 million earnings will be going.

Yoshida Kenichiro, CEO of Sony, is the third highest earner, on US$137m. Christophe Weber, French CEO of Takeda Pharma is at #4 with US$135m. Kawai Toshiki, CEO of Tokyo Electron is in 5th place with US$121m.

Nikkei points out that the number of executives earning over Y100m a year (US$728,000) has increased to 652, 105 up on the previous year, the highest number in 3 years. It sees this as proof that Japanese executive compensation is shifting towards Western standards. With the top 5 including two Japanese executives who are not also founders (Yoshida and Kawai), this does seem to show a move away from the usual rule in long standing blue chip companies that the president should only earn around 10 to 20 times the average salary (around US$40,000).

Hitachi has the highest number of executives (18) earning over Y100m a year, then MUFG with 13, Toshiba also with 13 (presumably danger money for being associated with it), Mitsui & Co (9), Daiwa Securities (9), Tokyo Electron (8), Mitsui Real Estate (8) and Bandai Namco (8). Companies with 7 Y100m earners are Daikin, Sompo, Fujifilm, Nissan and Nomura.

Non-Japanese executives resident in Japan in the Y100m club include Simon Segars at SoftBank (British former CEO of ARM), Andrew Plump at Takeda, James Kuffner Chief Digital Officer at Toyota, James Shea at Sompo International, He Xian Han at Ferrotec, Costa Saroukos CFO Takeda Pharma, Stefan Kaufmann, CAO Olympus, Rony Kahan, Recruit (founder of Indeed), Eric Johnson, CEO of semi conductor company JSR, John Marotta former CEO of PHC (was Panasonic Healthcare) holdings and Alistair Dormer, former board director of Hitachi.

People rather than shareholding unite Japan’s conglomerates

I sometimes wonder if I am being a bit “old school” in going into detail on the history and influence of Japan’s keiretsu (conglomerates of companies such as Mitsubishi, Mitsui, Sumitomo) in my training sessions. It’s a legacy of working at Mitsubishi Corporation for nearly 10 years, and also my hobby of researching 19th century Japan-UK relations, in which Mitsubishi, Mitsui and Sumitomo played an important part.

A recent article in Diamond magazine is reassuring to me in that it shows that the deep relationships within the keiretsu endure – pointing out that the interrelationships between the different companies in each keiretsu are still going strong, but through the mechanism of people rather than cross shareholdings.

The Mitsubishi power pyramid

For example, Mitsubishi Motors’ new external directors include Takehiko Kakiuchi – former President, now Chairman of Mitsubishi Corporation. He is taking over from Ken Kobayashi, who had also been President and then Chairman of Mitsubishi Corporation before Kakiuchi. Other candidates are Kanetsugu Mike (that’s MEE-kay, not Mike, as his biographies tetchily point out), formerly President, now Chairman of Mitsubishi UFJ Financial Group who will be joining his predecessor as Chairman of MUFG, Kiyoshi Sono on the Mitsubishi Motors board.

Diamond magazine puts the “Gosanke” – three honorable families – of MUFG, Mitsubishi Corporation and Mitsubishi Heavy Industries at the top of the “power pyramid”, then the next tier contains Mitsubishi Trust & Banking, Mitsubishi Material, Mitsubishi Real Estate, Mitsubishi Electric, AGC, NYK, Tokio Marine & Fire, Meiji Yasuda Life, Kirin Holdings.

The tier below that contains Mitsubishi Logistics, ENEOS Holdings, Mitsubishi Chemical Holdings, Mitsubishi Steel, Mitsubishi Paper, Mitsubishi Kakoki, Mitsubishi Gas Chemicals, Nikon, Mitsubishi Motors, Mitsubishi Fuso Truck & Bus, MA Aluminium, PS Mitsubishi, Mitsubishi Research and Mitsubishi UFJ Securities.

The above are all in the Kinyokai – Friday Club – a lunch of the heads of all the member companies – fuel for many conspiracy theorists. These three tiers plus a further fourth tier, containing companies such as Lawson and Mitsubishi HC Capital, form the Mitsubishi Public Affairs Committee, which acts the guardian of the Mitsubishi brand.

Shunichi Miyanaga of Mitsubishi Heavy Industries is an external director of Mitsubishi Corporation, Ken Kobayashi (chairman of Mitsubishi Corporation ) and Nobuyuki Hirano (former chairman of MUFG) are both external directors of Mitsubishi Heavy Industries and Akio Negishi, chairman of Meiji Yasuda and Toshifumi Kitazawa formerly President of Tokio Marine & Fire are both on the board of MUFG. I could go on, and Diamond does.

Mitsui’s loose ties

Diamond magazine show Mitsui’s group interrelations as concentric circles rather than a pyramid. A the heart are Mitsui Real Estate, Mitsui & Co and SMFG. SMFG is a product of the merger of Sumitomo Bank and Mitsui’s Sakura bank, which is one reason why the ties are looser. Their Monday club includes Mitsui Chemical, Mitsui E&S, Toray, Mitsui Kinzoku and Sumitomo Mitsui Trust. The next ring are also members of the public affairs committee with the first two – Denka, Oji, Mitsui Sumitomo Insurance, Mitsui OSK, Sanki, JSW, Mitsui Sumitomo Construction.

Then the outer ring are “companies who keep their distance”, most notably Toyota, who Mitsui love to remind were bailed out by Mitsui in the 1960s, Toshiba, Fujifilm and IHI. It also includes the department store group Mitsukoshi Isetan (who have former Mitsui & Co, Toshiba and SMFG executives on their board). Toyota has a female external director from SMFG on its board and Toyota has its chairman on the board of Mitsui.

Sumitomo’s three peaks

Diamond characterises the Sumitomo group as having three peaks – financial, mining & manufacturing and the postwar group. At the top of each peak is SMBC, Sumitomo Metal & Mining/Sumitomo Chemical and Sumitomo Corporation. Sumitomo Metals used to be the third family, but has recently merged with Nippon Steel, and so is no longer seen as part of the group. Within the mining and manufacturing group are NEC (who have external directors from SMFG and Sumitomo Corporation) and NSG (who has an external director from SMBC).

Reflecting on these lists, I realise that the bulk of my work over the years has come from Mitsubishi group companies, although there have been some notable clients from the Sumitomo group. I don’t think I’ve had a single client from the Mitsui group. That is, apart from Mitsui Sumitomo & Aioi Nissay Dowa, the insurance group who acquire Amlin a while back. Even then it was more via Aioi Nissay Dowa. Aioi Nissay is not mentioned in the three peaks, or the Mitsui rings which makes me wonder whether, despite its partnership with Mitsui Sumitomo, it is not regarded as “outside” both Mitsui and Sumitomo. I wonder also if the Mitsubishi group is more active globally than Mitsui, and with the exception of Sumitomo Electric Industries, the Simitomo group too, but this could be confirmation bias on my part.

As Diamond says, each group has its individuality, but maintains cohesion through people – the “external” directors who are really not “outside” at all. Can these arrangements survive the corporate governance headwinds?

Japan’s less equal companies

I often cite in my seminars that one obvious sign of the ethos gap between Japanese listed companies and the top 350 US companies is that Japanese presidents generally earn a multiple of 10-20 of the average salary in their companies, whereas the multiple for American CEOs is 350 or so.

There are exceptions of course, but even the board directors of the company at the top of Toyo Keizai’s income gap ranking (Toshin) earn an average of just under 60 times the average salary in the company. Many of the other companies at the top of Toyo Keizai’s rankings have non-Japanese executive directors, who are usually paid closer to American levels, such as Takeda Pharma (#3), SoftBank (#5) but there are other companies whose executives are all Japanese, such as Toyota (#6), JT (#15), Itochu (#16), Horiba (#17) and Canon (#20). Even so, only the top 10 have multiples of over 30, and only the top 25 have multiples of over 20. So the ethos gap is still holds.

I decided to stop talking about diversity in Japan – Professor Christina Ahmadjian

The new corporate governance code in Japan puts further pressure on Japanese companies to have external, independent directors on their boards. For those companies wanting to be on the new prime market, the code stipulates that a third of directors should be external. Companies are now facing a severe shortage of candidates deemed suitable to fill these roles particularly if companies are also trying try to be as diverse as possible in who is appointed.

The same faces keep popping up, including people such as Professor Christina Ahmadjian of Hitotsubashi University who is currently an external director for four Japanese companies; Japan Exchange Group (the Tokyo and Osaka stock exchanges), Sumitomo Electric Industries, Asahi Group Holdings and NEC . She was also an external director at Mitsubishi Heavy Industries until June of this year.

Her remedy for this shortage of suitable candidates, which she outlined in a recent interview with Nikkei Business, is to hire people from a wider variety of backgrounds. Not just university professors like her, but Japanese women who are working outside Japan, or even having a quota for people under 30 years of age. In her view, even a third may not be enough, because it would mean that the majority are still “salarymen” who have worked their way up the same company all their careers. “The director’s most important role is to appoint and dismiss the CEO. Previously, when I asked a Japanese company what is the difference between the board positions of a managing director (known as joumu in Japan) and a senior managing director (known as senmu), I was told, when a managing director gets older, he becomes a senior managing director. Such a board of directors will not be able to make the top management quit.”

You need people who don’t read the air

External directors need to be able to reject management policies in board discussions. They must also have the mindset that they can quit themselves at any time. You need people who don’t “read the air” the way salarymen directors do.

“Two years ago I decided to stop talking about diversity. I will not give a speech on it and I refuse to be interviewed on it. It doesn’t change no matter how strongly I put the case. If I give a lecture on diversity, people will listen hard and then say “OK, that was good.” I felt it was just entertainment. Japan’s gender diversity is certainly more advanced than before. More companies are introducing maternity leave systems. But why is it so slow. I think “just do it!””

As for diversity in terms of nationality, there are many students who love Japan and want to come to Japan to study and work for a Japanese company. However, after graduating, if they get a job at a Japanese company, after about five years they quit, as they have realised that they can’t sse a future, and their friends at other companies are being promoted faster and have higher salaries. So ofthen they choose to work for a foreign owned company while living in Japan.

1980s uncle management

“Japanese companies are more concerned with their internal talent management than with diversity. So why not hire in Indians and Russians with the necessary IT skills?” Ahmadjian is concerned that what she callls “uncle (ojisan) management” from the 1980s means Japan will not be able to compete globally.

Ahmadjian has lived in Japan for over 20 years, and was herself an office lady at Mitsubishi Electric in the early 1980s. She served tea and wore a uniform. “I really enjoyed it then, but it was a world of old uncles.” “When I asked the top management of a company what is the definition of young, I was told 55 years old. I got them to lower the definition to 50 years’ old.” Japanese-style management may have worked well as a system in the postwar context, but I think it is time to reconsider.”

Top earning foreign executives at Japanese companies in 2021

Seven out of the ten best paid executives in Japan are not Japanese, according to Tokyo Shoko Research. It’s been more than ten years since Japanese companies were obliged to disclose the details of executives earning more than ¥100m (around $900K) and was cited as one of the reasons that Nissan got themselves into such a twist about their CEO Carlos Ghosn’s pay.

No Nissan executives appear in the Top 30 this year, unsurprisingly. The number of executives paid over ¥100m has risen for the first time in two years, and Hitachi has the most – with 15 executives including the British head of the rail division, Alistair Dormer. Dormer is not, however, being paid more than his Japanese boss, Mr Higashihara, although this has happened in the past at companies such as NSG.

The financial group MUFG has 11 executives earning over ¥100m and Mitsui, the trading house conglomerate and Daiwa Securities both have 9. Tokyo Electron and SoftBank both have 8 executives earning over ¥100m. SoftBank’s Simon Segars, British CEO of ARM is the highest paid executive of a Japanese company, earning ¥1,880m (around $17m) and SoftBank’s COO Marcelo Claure is the third highest paid, with SoftBank’s Rajeev Misra, Ronald Fisher, Miyauchi Ken and Goto Yoshimitsu at #6, #7, #12 and #21 respectively.

FANUC, Daikin, Toyota Motor, LIXIL, Sony, ENEOS and Mitsubishi Electric all have 7 executives earning more than ¥100m. I would be surprised if the latter was in the rankings next year, however, given its current difficulties.

Other high earning foreign executives include Christophe Weber at #2 and two other executives at Takeda Pharma, Didier Leroy at Toyota Motor (#4) , Bijoy Mohan at LIXIL (transferred with LIXIL’s Grohe acquisition) and Stefan Kaufman at Olympus.

So if you want to be a high paid foreign executive at a Japanese company, work for a Japanese company that has a high proportion of its business overseas either through organic growth (Toyota) or more likely through acquisition – Hitachi Rail, Takeda, LIXIL, Olympus, SoftBank.

Top 10 Japanese corporate charity donors in the UK

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

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

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

Benchmarking Japanese corporate charitable donations

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

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

The Top 10 Japanese corporate givers

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

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

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

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

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

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

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

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

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

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

The others

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

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

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

Conclusions

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

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

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

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

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

Japanese business mysteries explained in 5 minutes #3 Antiquated technology

Non-Japanese people who work in Japanese companies are often shocked at how antiquated the IT is in Japanese companies, considering how much Japanese people love new technologies.

Why is this, and will COVID-19 force change?

The next in our series “Japanese Business Mysteries Explained in 5 Minutes”

Last updated by Pernille Rudlin at 2022-11-07.

Corporate Governance

Category: Corporate Governance