Globalization

What is a Japanese company?

I had anticipated the “do you have any questions for us?” at a recent final interview for a non-executive directorship for an investment trust focused on Japan. I was advised by another experienced non-executive director to think of a thought provoking question, to show the board I was capable of bringing a different perspective, something they had not thought of before.

On reflection, I probably erred too far on the “thought provoking”. It was a genuine question, however, and I was genuinely interested in their answer. As the fund’s strategy was to invest only in Japanese companies, how do you define a Japanese company?

Listed in Japan or majority of business in Japan?

The fund defined it as being listed on a Japanese stock exchange. This may seem a clear enough definition, but does this mean Sharp, now owned by a Taiwanese company, Hon Hai, is a still a Japanese company? How about Hitachi Power Tools and Calsonic Kansei, now both owned by American buyout firm KKR?

Other Japan focused funds also invest in companies that are listed outside Japan, so long as a significant majority of their business is in Japan. But if percentage of sales in Japan is the criterion, then there are plenty of Japanese companies who are listed in Japan, for whom a majority of their business is outside Japan – Takeuchi for example exports 95% of its diggers to overseas markets and 68% of Sony’s business is outside Japan.

Avoiding ‘country risk’

Why does it matter? It matters to the boards of such funds, because if they define “Japanese” as Japan listed or majority of business in Japan, then clearly they need to consider the “country risk” of Japan and ensure the strategy is adjusted, or mitigation is put in place accordingly.

They need an expert in Japanese economics or politics to read the entrails on whether Prime Minister Abe will be re-elected as leader of the LDP in September, and if so whether he will be in a strong enough position to carry on with his “Three Arrows” of reform. They need to be able to judge whether the recent dip in Japan’s GDP growth is temporary, or likely to be revised upwards in June, as often happens. They might need some inside track on trade friction around the world and how this might affect the Yen.

But if the strategy is to invest in specific Japanese companies with long term growth potential, then this is not the same as investing in the Japanese economy or a Japanese index tracker. The aim should be to look for companies that will succeed no matter what happens to the Yen or Abe.

Managed by Japanese executives?

Specifying that those companies should be Japanese indicates to me that there is thought to be something unique to Japanese companies that makes them worthy of special attention. So should it be that the management of the company is Japanese? In which case, how should Takeda be classified – likely to become even more dominated by non-Japanese executives after the acquisition of Shire?

What about other companies who, like Takeda, have substantial overseas business acquired through acquisition, but manage it mostly through an international HQ based outside Japan, such as Japan Tobacco (Swiss HQ) or Dentsu (Dentsu Aegis Network in the UK)?

Or how about SoftBank, founded and run by Masayoshi Son, ethnically Korean and educated in the USA? The original telecoms business is clearly Japanese, but what about ARM in the UK and Sprint in the US – not to mention Softbank’s massive Vision Fund which notably is not investing much into Japanese companies at all?

Where Japanese companies have the edge…

I propose some further, admittedly fuzzier definitions of “Japanese”. Firstly, the business should reflect an aspect where Japan has an “edge” – a comparative advantage. For example, any business that is focused on the elderly, as Japan has the most rapidly ageing population in the world, with over 25% over the age of 65. Or a business which has evolved from Japan’s traditional manufacturing and craftsmanship strengths, what is known as monozukuri in Japanese – highly sophisticated machine tools, robotics and components.

But I think there is something more than that to being “Japanese”. It’s about the corporate culture and governance – a different model to the Anglo-Saxon shareholder value maximization model. Investing in a Japanese company should be for long term capital growth rather than a quick dividend, as well as some satisfaction that the investment is going into a company which does not engage in creative destruction type capitalism.

…is also where the risks lie

And this is where the risks also lie. Japan’s stakeholder capitalist model means job security, but also hidden underemployment and low productivity. Jealous guarding of corporate reputation can mean cover ups when something goes wrong. Strong loyalty to other members of the corporate family can mean deference to seniors without questioning or challenging orders given. Extreme risk aversion can mean opportunities missed.

Understanding and mitigating these risks is not something that can be resolved by an informal chat with a contact in a ministry, nor by looking at exchange rate forecasts and putting some hedges in place.

This was the conversation I wanted to have, and where I thought I could add value, but that’s the trouble with the “any questions for us” coming at the end of the interview. As the board chair said – fascinating question, but you’d need a whole afternoon or a seminar to thrash it out. And no, I did not get the job.

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Mitsubishi Corp alumnus toasts the Suntory spirit

When I left Mitsubishi Corporation after 9 years, I felt guilty that I had not found a way to repay (in business development rather than money) the MBA they sponsored me through and worried that the wonderful sempai (mentors) who had supported my career would now be angry with me. I was delighted and relieved therefore, when one of the sempai, very senior in the company, invited me for a drink when I was in Japan on a business trip, and explained to me and the other team members at the table that Mitsubishi Corporation should regard people who leave as alumni, just as McKinsey do. “We may end up doing business together one day,” he predicted.

Indeed Mitsubishi Corporation is now a valued customer of mine, and I have seen many other MC alumni rise to some of the top positions in the Japanese business world. Probably the most well known one is Takeshi Niinami. A graduate of Keio University, as so many MC people are, he was sponsored by MC through a Harvard MBA. He eventually became President of Lawson, the convenience store chain that MC had invested in, leading its turn around.

He is now the President of Suntory Holdings and was interviewed in Nikkei Business magazine about recent developments there, including the acquisition of Beam Inc (but not its acquisitions in Europe of Lucozade, Ribena and Orangina) and the “Suntory Way”.

What Beam got from Suntory

“The Suntory Way means that we develop products that our competitors do not have”, says Niinami. “When I explained this to the Jim Beam factory in Kentucky they were very supportive. Beam Inc headquarters people all had MBAs. American marketers get a sense of consumer trends from consultant’s reports and decided their strategy based on that, they never went to the gemba (shopfloor) the way we do in Japan. They just told the Kentucky factory what to do, top down, from afar. If you told them to go to the gemba they’d probably quit. There wasn’t one single person in the executive team who came from manufacturing and they weren’t investing in the factory. But the Kentucky people loved making things. So when we told them we saw manufacturing as the most important thing and appointed someone from manufacturing to the board, their motivation shot up.”

“When they came to see our factories in Japan, they became aware of the need to improve their Kentucky factory. Beam is even older than Suntory – more than 200 years of history. We were able to revive their DNA.”

What Suntory learnt from Beam

“Beam are really good at managing profitability. Suntory got heavily into debt to buy Beam and we are all focused on reducing this debt. Suntory was not as good at managing cash flow as Beam but we have learnt.”

What’s next for Suntory and Niinami

Niinami was brought in by the previous President and now CEO and Chairman, Nobutada Saji (also from the founding family) in 2014. Niinami thinks his successor is likely to be another member of the founding family – current COO NobuhiroTorii – and seems in favour of this, as a way of maintaining Suntory’s spirit. He also expects Suntory to remain a privately held company, despite discussions to the contrary when he first became President. The advantage, he says, is that Suntory is able to contribute to society, through the Suntory Hall (a famous concert venue in Tokyo) and also a water sustainability initiative, without having to justify this to shareholders.

As an outsider, Niinami feels he was able to see objectively how good the Suntory spirit was, and how to roll it out globally. He has set up a Suntory University to help with this. Although Niinami is only 59, he says he is willing to finish his career at Suntory. “I am already “of age” and I don’t think anyone will be asking this “odd fish” to join them.”

Hybrid food cultures and the EU Japan Economic Partnership Agreement

The EU-Japan Economic Partnership Agreement (EPA) has been characterised in Europe as “cars for cheese”. As a cheese loving North European, I did indeed miss being able to buy reasonably priced good quality cheese when I was living in Japan. It was a kind of comfort food for me – either hunks of cheese on bread, or sometimes I would have what I called my “spaghetti Bolognese” moment, where I would crave the umami of a tomato and beef sauce smothered with parmesan cheese.

But because I also lived in Japan as a child, traditional Japanese foods are comfort food for me too. Now I am living in the UK – I sometimes make miso soup (particularly the red miso I remember from when I was a child in Sendai), or okonomiyaki, or curry rice or tonkatsu to cheer myself up.

The EPA now has to be approved by various local European parliaments, and one of the ways of persuading them to accept the agreement is to point out that it will ensure the geographical designation of over 200 European food and drink products are protected in the Japanese market, such as Polish vodka or Parma ham.

If this argument is sufficiently persuasive to local parliaments, the agreement is expected to be ratified in 2018 and implemented in 2019.

Europeans get very passionate about the authenticity of local food – particularly the Italians. There is even a Twitter account called “Italians mad at food” (@Italiancomments) which retweets comments from Italians outraged – mostly at Americans – for putting mushrooms or garlic in carbonara sauce or pineapple on pizza.

Italians would not be impressed with my spaghetti Bolognese either – there is no such dish as spaghetti Bolognese in Italy. There is ragu alla Bolognese, which means simply a meat sauce – and is meant to be eaten with tagliatelle, not spaghetti.

The British have a long history of adopting foods from other cultures – our favourite national dish is Chicken Tikka Masala – which is a curry which does not exist in India – and the second or third generation British Chinese who run our takeaway food shops have become resigned to putting sweet and sour sauce on fries.

The British have become far more sophisticated about foreign food these days. Multicultural street food has become fashionable across Europe – most major cities have markets full of “yatai” – one in my town has a Chilean stall and a falafel (Middle Eastern food) stall which is actually run by a couple of Koreans.

Japanese people are somewhat dismayed to see fast food chains selling “sushi” in the UK which have little resemblance to the authentic Japanese version but of course curry rice, tempura and tonkatsu are actually hybrid Japanese/European/Indian foods themselves.

So the EPA seems likely to herald another chapter of hybridization. Japan and Europe will trade in each other’s authentic, local foods, and create new hybrids that will be the comfort foods for the next generation. It’s a business opportunity both for traditional farmers and adventurous cooks.

Situational leadership for Japanese managers in Europe

One of the issues that Japanese people who come to work in Europe find most challenging is the multiple nationalities of people they have to work with. Whether you are based in London, Duesseldorf or Amsterdam, it is highly likely that your colleagues will be a mixture of not just British, German or Dutch but also Romanian, Lithuanian, Polish, Spanish or indeed Indian or Chinese.

Much of the global leadership or management training that is offered in Japan is based on American models. Europeans are used to American management styles so they will tolerate them – at least superficially. However, many of these “one size fits all” models are not ultimately effective in getting Europeans to go beyond superficial compliance. In fact, they can have quite a demotivating effect, particularly if they are too rigidly focused on quantitative targets and objectives.

European managers themselves find that the American model which works the best is known as “situational leadership”. This is not a new theory – it was developed in the 1960s and 1970s by the Americans Dr Paul Hersey and Ken Blanchard. It suits the European context because the key idea is that there is no one best style of leadership, and situational leaders are those who are able to diagnose the situation, adjust their leadership style and communicate accordingly. They also need to be able to take account of the “performance readiness” – in other words the ability and willingness – of the various members of the team.

National cultural differences are not specifically mentioned in the model, but in my training I always relate situational leadership to what is known about the preferences in each European country for top down or consensus oriented decision making styles, as well as direct or indirect and formal or informal communication in the ways of giving feedback or direction.

Of course, this can be somewhat overwhelming for someone who is new to the European workplace. It is particularly tough for Japanese people who have worked in the more traditional Japanese companies, where people just do as best they can whatever their bosses tell them, whether they are willing or able or not.

But I think Japanese managers have two big advantages. Although this is a generalization and may not apply to all Japanese managers, in my twenty-five years’ experience of working with or in Japanese companies, most of the Japanese people I have met have been humble about their own abilities and also curious about other cultures. This means they are willing to learn and to accept that their usual way of working may have to be adjusted.

This article originally appeared 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.

Why the EU’s Mifid II might hurt Japanese share prices

I partly set up this blog to address the lack of good quality information on Japanese companies in English, as well as to analyse how European and Japanese business cultures interact. An article in the Nikkei Business magazine regarding the impact of the European Union’s new financial regulations, Mifid II, on Japanese share prices unexpectedly fed into both those motivations.

Mifid II (The Markets in Financial Instruments Directive II, well explained by the Financial Times) has been causing much irritation amongst friends of mine who are investment advisors or equity analysts now unable to find jobs, thanks to the most well known aspect of it, which is that asset managers will now have to pay for research and phone calls to analysts. Before January 2018 the cost of this was built into the trading fees.

As the Nikkei Business article points out, it is not efficient for large securities brokers, who provide services to customers globally, just to charge research service fees to European investors. In any case, as pointed out by the Financial Times article, the requirements in Mifid II have an impact on US brokers’ status and also cover any asset that has an underlying product listed in the European Union.

So many brokers are cancelling the big ticket investor relations events that they used to host for free. CITIC CSLA used to hold a Japan equities IR event every February, but this has been cancelled for 2018. The rumour is that there was a concern that there would not be enough participants, now costs have to be justified to investors.

“People are no longer spending money on research” says Richard Kaye, Analyst for Japan at Comgest, questioning whether Mifid II is really “helpful”. Daiwa Institute of Research’s Shungo Koreeda says that foreign investors are likely to become much more discriminating in their choice of research from Japanese securities companies.

As foreign investors account for around 70% of trading in Japanese equities, if there is insufficient information available on Japanese equities to help investment decisions, it may have a negative impact on the Japanese stock market, concludes Nikkei Business.

What we can learn from Airbnb about how to manage a multinational business

There was a backlash in the summer of 2017 in Europe against Airbnb and more widely against the impact of tourism on cities such as Venice and Barcelona. With the new minpaku (guesthouse) law being enacted in Japan, and Japan having its own tourism boom, there is much to learn for Japan and Europe from the “sharing economy” and its impact not just on the tourism industry but communities and global business.

I have used Airbnb both as a guest and also to rent out our spare room. All our guests have been friendly, tidy and responsible and have ranged from a Pakistani PhD student through to a comedian duo from Canada. My initial concerns about allowing strangers into our home have not been justified.

Airbnb helps with this by verifying identities – of host and guest – and encouraging people to upload personal details such as photos of themselves, their interests and the reason for their visit. Airbnb also provides a very user-friendly platform and plenty of support and advice to enable good communication and high standards of behaviour and facilities.

What is becoming clear, however, is that Airbnb has a lot more work to do at the local level. As disruptive companies mature, their business becomes more mainstream. There are more and more professional holiday letting companies appearing on Airbnb and whole houses and apartments – not just spare rooms – can be booked via the site. This is raising concerns about whether the appropriate taxes are being paid, whether the accommodation is sufficiently regulated in terms of safety and potential nuisance to neighbours and whether the bigger profits to be gained from putting properties on Airbnb rather than traditional renting is exacerbating housing shortages for local residents.

Theories of how to manage multinational businesses tend to focus on balancing local and global needs – for example the matrix structure of vertical businesses and horizontal functions, or making sure that brands are “glocal” – globally recognisable but with a local flavour – like a McDonald’s teriyaki burger.

What I have learnt from Airbnb is that the “personal” is also important. To be able to verify, trust and feel empathy with the customer/guest or supplier/host as a person, even if they come from a different culture to you.

Japanese multinationals are usually quite good at the local aspect – they pay their taxes and are good corporate citizens. At the global level, Japanese car brands in particular are making the transition towards becoming a “platform” – they provide the globally assured brand, design and quality standards in assembling parts from multiple regional suppliers.

The next challenge is the personal level. Japanese executives are self-effacing (mostly) and Japanese social media users prefer to stay anonymous and not reveal which companies they work for. But in order to ensure your company is “verifiable” and “trusted” by your customers, it will be necessary for the local face of your company to be more personal.

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

Hitachi Rail’s CEO Alistair Dormer on Brexit, speeding up and the need to speak simple English

Hitachi’s rail business is only 5% of the whole group’s turnover, but is growing rapidly and moving from being “double domestic” to a truly global business. Overseas sales are now 83% of turnover, having been 28% of the business in 2012.

Nikkei Business interviewed Alistair Dormer (subscription only, in Japanese), the CEO of Hitachi Rail who is also a Senior Vice President and Executive Officer of the Hitachi Group about his four years as CEO – at a time when the railway business is undergoing major change, with Siemens and Alstom joining forces in Europe for their rail business.

Dormer talks about the importance of being able to scale multilaterally through M&A, with the acquisition of Ansaldo Breda and other companies, which resulted in acquiring customers across 27 countries – 26% of business is now in the UK, 17% in Japan, 10% in Asia Pacific. Hitachi Rail is also moving, like every technology business, into “solutions” adding a services side, including communication technology, software development, signalling systems and operations.

Speed up every aspect

Dormer says the most important thing for Hitachi Rail as a Japanese company was to speed up every aspect. “It is a strength of Hitachi as with other Japanese companies that business advances on a consensus basis, carefully harmonizing in-house planning and business negotiations with partners. This leads to stable quality standards and organizational cohesion, but it is also a weakness in that it takes too much time when you face global competition. The leader needs to be able to make quick decisions and communicate rapidly.”

Of course this is even more difficult when communication and decisions have to be made across long distances such as between the UK and Japan. So Dormer decided the best way was to move people around, to raise the frequency and density of communication. So there has been substantial exchange of people between the factory in Japan and manufacturing bases in UK and Italy.

If there is a substantial geographical and time distance, then people prefer not to have meetings about trivial things, but these details can later become obstacles. So having more regular interaction is necessary. Hitachi Rail thererefore also has regular video confererence and Dormer himself visits sites, holding meetings with 50-80 people to exchange opinions.

Only use simple English

With English as the common language, Dormer (as a native Brit) instituted a rule that only simple English should be used. “When native English speakers are talking, they speed up. It should be easy to say, “I don’t understand, I can’t follow what you’re saying”, but it’s difficult to do this in a teleconference or an important meeting. So then the meeting ends inconclusively and you find out later that people did not understand. So not only should you use simple English, but also I put in a process to confirm understanding after the meeting. The productivity of our meetings has greatly improved as a result”

Hitachi Rail has also introduced common standards across all countries for HR reviews, cost, engineering performance etc. “Each country, the UK and Italy and Japan, have different cultures and ways of doing things, so we did not force conformity, but respected each others’ cultures while working to Hitachi’s values as the common standard.”

Brexit – nobody knows what the future will hold

With regard to Brexit, Dormer says he is repeatedly asked about it, but at the moment there has been no change. “Hitachi has good relations with the UK government. All we can do is continue to ask that companies like us who have their regional base in the UK can continue to access the EU market as seamlessly as possible. There is no choice but to believe this. A transition period is being discussed, so it’s possible the environment will not change for the foreseeable future. However it is still a shock to me on a personal level that the UK made such a decision – even when we knew there was nothing to gain from leaving the EU. There are many people in our offices who were born in the European Union outside the UK, and they are worried. My priority is to reassure them, but the only thing I can say is that nobody knows what the future will hold.”

Increased pressure felt by Japanese to speak English at work

36.3% of Japanese people responding to a Nikkei Business survey in November 2017 say that they have felt a dramatic increase in the need to communicate with non-Japanese people at work or because of work in the past few years. A further 32.1% have felt a gradual increase.

Only 18.9% say that English has become or may become the official or unofficial corporate language, however. 39.2% say there is a connection between performance and being able to speak English and a whopping 82.4% say they feel the need to improve their English speaking ability. The main reasons chosen for feeling this way are:

be able to do my job better (>70%)
improve my relationship network (>40%)
increase my career choices (>40%)
be able to work overseas (>30%)
improve my performance evaluations (<10%)
look as if I’m high potential (<10%)

The article makes an interesting point that those Japanese over 50 are actually quite good at English, often having worked overseas or been involved in export related jobs and benefitted from corporate budgets for English classes. Those in their 20s take it for granted that they need to be able to speak a good level of English, as this was important when they were on the graduate recruitment circuit.

So the generation that is suffering the most are those in their 30s and 40s, who did not have a chance to work overseas or study overseas in the Lost Decades of the 1990s and 2000s and also suffered from budget cutbacks on language training.

Trust, scheduling and decision making – the differences between China and Japan

“Japanese people are punctilious about time keeping and the detail of their work, loyal and don’t complain. From a non-Japanese perspective, this conscientiousness, loyalty and perfectionism are something to be respected”. So says Kurasawa Misa in an interview with Erin Meyer, professor at my old business school INSEAD in the Toyo Keizai online.

Meyer has recently published a book based on her 17 years of interviews with business people from around 55 different countries, which condenses her findings into 8 different cultural maps. We have 19 at Japan Intercultural Consulting, and see a lot of similarity in her work with our dimensions and cultural maps, which is comforting.

Kurasawa: Are Japanese people particularly difficult to work with from a Western perspective?

Meyer: Certainly Westerners find it challenging to do business with Japanese people. One reason is that Japanese people are not very emotionally expressive. Also they are not particularly troubled by silence or vagueness. You often hear that when Westerners give a presentation to a Japanese company, it ends in puzzlement. The Japanese audience sits quietly with no response or eye contact. This is confusing for Westerners.

I have had similar experiences. I have asked at the end of a presentation if there are any questions and no one raised their hands, so I went back to my seat. Then a Japanese colleague said to me “Erin, there was a person who wanted to ask a question. Do you mind if I find out?” So he stood up and said “Professor Meyer’s lecture has ended, but are there any questions?” No one raised their hand, so he looked across the audience and then asked one particular audience member – “I think you have a question?” and indeed that person asked a particularly important question. Then, in the same way, various other questions were asked. Afterwards I asked him how he knew which people wanted to ask questions and he said “their eyes were shining”.

I thought I should try this so asked his advice. He said “Japanese people do not make as much eye contact as Americans. So when you ask if there are any questions, most people don’t look at you but look elsewhere. But amongst the audience were people who were looking at you steadily. Those people probably have shining eyes.”

Sure enough, the next time I made a presentation I saw one woman was watching me the whole time, and when I asked if she had a question, she nodded.

Kurasawa: That’s a very ‘Japanese’ way of expressing intention isn’t it?

Meyer: Japanese people send messages in all kinds of ways, and this is the Japanese communication style. If you are not aware of it, you cannot do business in Japan. It will just end with “they don’t talk, they don’t ask questions.” You have to make the effort.

On the other hand, when Japanese people work in a different culture, they have to realise that not raising their hands to ask a question will be interpreted as a lack of passion, or that a message did not get through, or that the Japanese person just doesn’t care.

Kurasawa: In your book, Chinese people are often relatively close to Japanese in the positioning. Yet to Japanese people, there are big differences in the Chinese national culture and way of doing business?

It’s true that when you look at the culture maps, Japan and China are very close. Both have hierarchical organisations, both do not say directly what they mean but still manage to communicate their intentions. However if you directly compare China and Japan you can see some big differences.

For example, I visited China a few months ago and saw a surprisingly big difference in attitudes to planning between Japan and China. Japanese are very punctual and plan everything down to the last minute. On the other hand, in China there are regular changes to schedules. The timing and location of the seminar will keep changing right down to the last minute and the speakers and the participants will also keep changing. However it all works out in the end. Chinese people are very flexible about change.

So it is a very different experience for Americans visiting Asia when it comes to Japan and China. With Japan the scheduling starts months in advance right down to where the dinner will be held. My most recent seminar there started at 10:03 and even then someone said “this is later than planned”! I was very surprised. When you have this kind of experience, you cannot really say “Asian” meaning Japanese and Chinese together.

Kurasawa: So what should Japanese people bear in mind if they are doing business with Chinese or Korean people?

Meyer: If you look at the culture maps, there are three areas in which China and Korea are different from Japan. For example in decision making Japan is one of the countries of the world which most values consensus, whereas in Korea and China there are strong top down tendencies. So in Japan decision taking takes a long time but the decision is almost always executed as planned. Whereas in Korea and particularly in China, not much time is taken to make a decision, but it often changes.

So Japanese people in China often feel unhappy that they are not involved in a decision and that Chinese business-people are not very “professional”. This is not the case, but Chinese people feel that they want to get their products to the market faster than anyone else so prize speed and flexibility.

The second area is around scheduling. Japanese people are very precise about timing and want everything to go according to the plan. Chinese and Korean people are much more flexible about time.

Attitudes towards trust also vary. For Japanese people, the basis of trust is a high quality of work and products, to be on time. For China and Korea, emotional ties are the guarantee of trust.

Kurasawa: So even when countries are geographically close, there are some important differences?

Meyer: That’s the key point. From previous research into diplomats, I saw a surprising result – the highest failure rate in being posted overseas – in terms of not becoming accustomed to the culture or lifestyle and returning home early – was among American diplomats posted to the UK.

From an American perspective, you would think it would be much harder to live Japan where the culture is completely different than in the UK where at least you can speak your own language. It seems that if you feel culturally close to a country, you don’t bother to learn the culture so much and are not so flexible and open. Then you start as a result to feel stress from the differences and become depressed.

Japan, China and Korea are the same. For example, when a Japanese person is working with a Korean person, they may not make a positive effort to understand their culture. So when a Korean person behaves in a way that is different to what they were expecting they simply think they are inefficient, and feel stress. If their counterpart was Australian, they would just understand it as a cultural difference and be more open-minded in their reaction.

What is most important in multicultural or bi-cultural environments is the small differences. Above all you need to recognise that your counterpart’s culture is different. If you think that people are the same everywhere you will end up judging everything by your own country’s cultural values.

Kurasawa: It’s important to take steps towards the other culture, but some people feel it’s too much trouble if it’s only you making the effort

Meyer: In order to get the results you want, you have to show you understand the other person’s culture, and adjust your own attitude. I often get asked “should I stick to who I am, or prioritise being flexible?” In other words “should I focus on doing it the Japanese way or totally adjust to the other people I am working with?” For those who want to produce results in a global environment, the answer is you have to do both.

Global leaders have a foot in both camps. They know how to ask questions of Indian colleagues in a way that will get the right answer. They know how to communicate effectively with British people that they work with.

But there are not many executives who make this effort. In future, the leaders of global companies will have to understand deeply the way business is done in each country, and be flexible in the way they approach how they do things.

Poland, migration and the future of the EU

It has just been announced that Polish immigrants now represent the largest group of foreigners living in the UK. There were around 831,000 Polish born residents in the UK in 2015, overtaking Indian born residents. This represents a ¾ million increase on 2004 when Poland joined the EU, showing the scale and speed of the increase in immigrants from Eastern Europe – one of the root causes of the British vote to leave the EU.

Poland’s connections to the UK go back further than this, however. A large group of Poles settled in the UK after WWII, and were welcomed because of the well-known heroism of Polish pilots who flew in the Battle of Britain.

Trading links with Poland date back even further, to medieval times and the Hanseatic League of merchants who did business with each other from Russia through the Baltics to Germany, the Low Countries and into the UK.

But it would be wrong to think of this as a European Union style alliance of nation states. League membership was by city. Many of the European countries as we know them now did not exist then. Member cities such as Gdansk or the Hanse capital of Luebeck were semi-autonomous, or controlled by the Holy Roman Empire, or Prussia, or Denmark. And of course more recently the eastern part was under the domain of Soviet communism.

If you visit Gdansk now, the old part of the city is in fact a beautiful, partly imaginary, post-war reconstruction of a pre-Germanic past. The actual old city had been obliterated by WWII. Also worth a visit is the European Solidarity Centre which commemorates the Gdansk shipyard union Solidarnosc and asserts that its strike in 1980/1 started the process which culminated in the Berlin Wall coming down in 1989.

British people who are sceptical about the European Union say it should only be about trade, and that they want control back of UK borders, money and laws. For other EU members, the EU was a way of regaining control of their lives, by ensuring peace and democracy. This aim was not so appealing to the UK, who had no such recent experience of ground wars, dictatorships or being occupied by other countries.

Many people and political leaders in other EU member countries – including Poland – are beginning to say the EU represents a threat to their national sovereignty too. Border controls are being reinstated and there is a strong possibility eventually the EU itself will disintegrate.

Polish residents in the UK are worrying what will happen to them post Brexit and the millions of British who live elsewhere in the EU are also nervous for their future.

Many of the people working for Japanese companies in the EU are migrants, so I think the best thing Japanese companies can do right now is reassure them that they will look after them, and if necessary offer relocation to subsidiaries in other countries, including Japan.

This article was originally published in Japanese in the Teikoku Databank News on 11th October 2016 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.

Category: Globalization