Innovation

Japanese car companies consolidate into two camps – in the UK too

Recent reports that Mitsubishi Motors is to join the Honda-Nissan alliance show that Japanese car companies are forming two camps – Toyota and Not-Toyota.

According to the Nikkei, Mitsubishi Motors, which is 34% owned by Nissan, will work with Honda and Nissan to finalise the details of their partnership on electric vehicle development, including standardising in-vehicle software that controls cars.

Even before the competitive pressures from China and Tesla in electric vehicles became apparent, what has happened to the Japanese car industry in the UK over the past decade has been an omen of what was to come. Mitsubishi Motors sold off its Nedcar operation in the Netherlands, its only manufacturing plant in Europe, to VDL in 2012. Nine years later it shut down its UK sales company, the Colt Car Company, a joint venture originally with Mitsubishi Corporation. In the same year, Honda shut down its Swindon plant, leading to several other automotive suppliers who were reliant on Honda withdrawing from the UK too. Honda’s European headquarters continues to be based in the UK, however.

Nissan’s commitment to the UK is clear from a recent announcement that it will lead MADE NE (Manufacturing, Automation, Digitalisation, Electrification North East) with local government partners to create open access training facilities in Sunderland, covering education from primary school to apprenticeships, with a particular focus on EV and battery manufacturing.

MADE NE will also support support targeted industrial innovation projects with funding and equipment.

Toyota has two “Lean Management” centres, at its plants in Burnaston, Derbyshire and Deeside in North Wales, open to any non-competitive organisation who wants to develop people and processes in the Toyota Way.

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

What the vaccination levels tell us about attitudes to risk and innovation in Europe

(This article was published in Japanese for the Teikoku Databank News in May 2021)

The coronavirus vaccine rollout in Europe is providing many insights into how countries in the region deal with risk.

The UK has now vaccinated over half its population, at least with a first dose. This is far ahead of other countries such as Germany, France and the Netherlands where less than 20% of the population had been vaccinated by the beginning of April.

However, EU countries are expected to catch up rapidly over the coming weeks as the supplies of vaccines, including single dose ones, become more available. It is also sobering for me, as a British person celebrating my first vaccination dose, to remind myself that over 127,000 people have died of coronavirus in my country, one of the worst death rates globally. Perhaps we took the risks too lightly at first.

The UK did not join the EU’s vaccination procurement programme, even though it could have done. Instead, it appointed a venture capitalist who was a bio scientist with experience in investing in biotech and gave her free rein to invest a substantial amount of money in many different vaccination candidates.

Unsurprisingly, with over 25 member countries, the EU vaccination procurement programme took rather longer to reach decisions, but ultimately the European Medicines Agency has approved 4 vaccination types, more than any other Western agency.

Germany was cautious about rolling out the vaccinations, as it wanted to make sure that a second dose was going to be available within the time limit for effectiveness, before starting. The UK has not been so cautious and now there are supply difficulties. I hope I will get my second dose in June, but whether many people aged 18 or under will be vaccinated by the summer is unclear.

There has been some speculation as to whether, if the UK had been in the EU vaccination programme, the EU programme would have moved more quickly. The British tend to march into unknown territory without too much planning and preparation, and then “muddle along”, fixing things pragmatically as problems occur.

I discussed this with my German business partner and she said that Germans like to come up with a technologically outstanding solution, and then spend a lot of time worrying about how to deal with any risks, before starting on the project. Unfortunately, this is no guarantee that the technologically outstanding solution will actually work. This is how Germany approached the vaccination roll out – building centralized high tech vaccination centres, which meant it started slowly and resulted in a large stockpile of unused vaccinations.

The UK had a similar issue with the billions of dollars it spent on a supposedly “world beating” coronavirus test and trace app and centralized system, which is still not showing much success. It might have been better for both countries to go for a decentralised, low tech solution. Ultimately all countries were constrained as much by their existing technology infrastructure and processes as their attitude to risk – as companies also discovered as they tried to transform themselves during the pandemic.

(6 months on from when this was published, I did get my second vaccination in June, and am having my booster in two weeks. It seems Germany is undergoing a fourth wave of the pandemic, with much graver consequences than in the UK so far – one of the causes seems to be that it took Germany much longer to reach a similar vaccination level of its population to the UK. Whether a centralized system was or wasn’t the way forward is difficult to judge, as in a way the German system was decentralized – at a federal level – perhaps federally centralized would be the way to describe it?)

The path Japan should take to zero carbon – former Hitachi president Kawamura Takashi

Kawamura Takashi is famous in Japan for being instrumental in turning Hitachi round after its largest ever loss in 2009. He has just finished 3 years as chairman of TEPCO (Tokyo Electric Power). Nikkei Business asked for his view on the Japanese government goal of achieving zero carbon by 2050. While more diplomatic than Mr Kobayashi of Mitsubishi Chemical, he points out that country level goals need to be translated into industry based goals, and this cannot be left up to individual companies. Government, electric power companies, manufacturers and citizens will have to unite to do this, he says.

This could apply to Japanese companies in Europe as well in our opinion. There is more scope for Europeans working in Japanese companies to network with each other to collaborate to achieve sustainable development goals, and not just leave it up to the Japanese exaptriates.

Kawamura points out that it’s tough for each company to go it alone. Equipment around the world for companies such as steel manufacturers will become obsolete if they were to switch away from current product methods. Chemical companies could no longer make plastic from petroleum but artificial photosynthesis has been worked on for decades and is still unsuccessful.

“But if it cannot be done, the earth will be destroyed first”. It may seem that the solution is for Japan to “choose the path of returning to the lifestyle of the Edo period (1603-1868) living quietly with a small population” but Kawamura thinks this is not a responsible thing to do when Japan has the third largest GDP in the world.

Hydrogen can be one solution but the problem is making it. It can be made from water with nuclear power but of course this is controversial. There are few regions in Japan where the efficiency of generation of renewable power is high enough to make hydrogen however. So it might be necessary to find methods of producing hydrogen from overseas renewable energy power generation and transporting it to Japan for distribution as energy.

Kawamura says Japanese business leaders are too emotional. They cannot cut business lines which have been developed in their companies over the years, so end up having to bring in foreign executives to do it. “It’s a lie that Japanese can’t do it. Japanese companies don’t want to make calm decisions based on economic rationality, but Japanese really should do this for themselves.”

Asked if he will stay on another 3 years at TEPCO to help with zero carbon he says that at 81 he is too old and he is wanting to do things that give him ikigai (a reason for living outside of work – see our Japan Intercultural Consulting video on this) such as taking his time to read books, which he said he could not do when he was an executive.

“Why is our Japan sales team so useless?”

I am asked a variant of this question, several times a year, by Western companies with sales subsidiaries in Japan. They may not say “useless” as such, rather complain about the passivity, and lack of interest in trying something new in their Japanese team.

The Western managers feel obliged to visit Japan once or twice a year. They make visits to the same prospects, where they present their thoughts on what is going on in the industry and new offerings from their company. They are listened to politely but no business results from it. Or they explain the marketing strategy and new approaches to the Japan sales team and there is no engagement at all. Instead they receive a list of what seem like trivial customer complaints.

Of course if you talk to the Japan sales team, they have their own frustrations about the lack of understanding on the Western side about how sales and marketing works in Japan.

So here are the 3 issues that face sales and marketing teams of Western companies in Japan and what to do about it:

1 – They’re not as elite as their customers

Unless it’s a very well known company like an American tech company or one of the big consultants, a Western company in Japan is unlikely to be able to attract people who have graduated from Japan’s top universities. This means their employees cannot access an old boys’ network to open doors. And even if they do manage to get in front of a potential blue chip client, they are probably already feeling pretty intimidated, added to which, in Japan, the customer is not just king, but god.

2 – The dead hand of eigyō

Eigyō is the term used to describe the sales function in Japan, but it tends to be more about relationship building with existing customers – which means regular visits to customers for no particular reason, passive and predictable “order taking” and a lot of hospitality. It’s difficult to acquire new customers, as most established companies are in long term supplier relationships. A top salesperson in Japan is traditionally considered to be the person who is out of the office all day, doorstepping and cold calling, no matter how hopeless the situation, leaving their business card and brochures with icy receptionists in the hope that one day, maybe, they’ll be invited in.

So there is nothing very strategic behind targeting and acquiring new customers other than dogged persistence. This means that many marketing concepts that are commonly used in the West are not common knowledge in Japan, such as value proposition, USP or the 5Ps.

3 – Over-servicing

Japanese customers would expect a Western company to be sticklers for sticking to the contract, and delivering only what is paid for. There’s also a nervousness that if things go wrong, a Western supplier will sue, or disappear. Japanese suppliers are meant to stick with their customers through thick and thin, customising when asked, continuing with products and services that are unprofitable because the customer wants them and over-servicing in the hope that the cost can be recouped, some time in the far distant future.

So what can Western companies do about this?

Hire the rebels and treat them as equals

Many Japanese women are attracted to working in foreign companies because they assume they will be treated more fairly, and indeed many have reached senior positions in foreign companies such as Microsoft, Boston Consulting Group and Accenture. Unfortunately Japanese companies have woken up to this and are now trying to lure them back. But Japanese women will be well aware of the barriers they will face to being treated as equals to lifetime employees in such companies. So making sure that your Western company is as inclusive of them as possible in terms of career development, including international postings and training (particularly in marketing), and ensuring their voice is heard at top level meetings, will be key to retaining them and reminding them of what attracted them to a foreign company in the first palce.

And this goes for the older male employees too. They may have been lifetime employees at a big name company and were hired by a Western company for their connections and industry knowledge. They were probably frustrated in their careers at their Japanese company and saw joining a foreign company as a risk, but a chance to start again. You may discover there were some valid reasons why they were not successful in their careers in their Japanese company, but there will still be a value in their knowledge and experience, and their rebellious mindset might offer some creative solutions.

Be innovative

About the only acceptable reason in Japan for taking on a new supplier, especially a foreign one, is that they offered something that existing Japanese suppliers did not – Salesforce.com is an example of this. Being radically cheaper, like Amazon Web Services, can also work, but is not an avenue open to all companies. Japanese companies are very risk averse, so will assume the cheapness comes with a price in terms of quality.

But this still requires putting the effort in – such as the seemingly pointless regular visits to Japan give your sales team a reason to set up a meeting with potential clients, on the promise of a new perspective or innovative offering.

Break the rules

You can also use the ugly foreigner technique. Japan has a long history of letting the foreigner say the thing that everyone knew, but didn’t want to say out loud for fear of upsetting the rest of the group. Foreigners also get a certain number of get out of jail free passes for ignoring local protocols, so long as it was done from open hearted enthusiasm rather than malign intent.

One British Japan market entry expert told me he spotted a prospective customer from the signs on the office building his taxi had stopped outside. He persuaded the terrified Japanese sales person he was in the taxi with to accompany him into the building, and made his pitch in good Japanese to the receptionist, who was sufficiently impressed that she contacted the person in charge, and a few meetings later they had a new customer.

Japanese companies such as Fujitsu are also losing patience with the old eigyō, over-servicing ways. Fujitsu has renamed employees in eigyō “business producers” and are encouraging them to take a more consultancy based approached, banning them from taking systems engineers with them to client meetings. “Business producer” may not be a common term in Western sales but Fujitsu has chosen to render it as “Bijinesu purodyu-sa-” ビジネスプロデューサー in katakana, which is the alphabet reserved for borrowed foreign words. The foreign-ness presumably makes it seem like a necessary break from the past.

Choice, constraint and creativity

COVID-19 is forcing us all to rethink our business models. For many larger companies I suspect it will be a good cover for undertaking some of the more drastic measures that they may have been considering before the pandemic took hold. I am even less optimistic about the future of car manufacturing in the UK than I was when there was just the impact of Brexit to consider, for example.

Many of the small retailers in my city have shut down and moved online. They are taking orders through their Facebook pages and posting lists of the products that they have available.

The supermarkets are mostly delivering only to elderly and vulnerable people, so the rest of us are having to drive or carry home staples from the supermarket – trying to buy in bulk to keep the number of shopping trips to the minimum.

I already anticipated that we would have to focus on buying staples, and that treats would be welcome so I signed up for subscriptions to monthly cheese deliveries and weekly healthy snack deliveries. You do not have much choice over what you get, but you can tell the company your preferences and dislikes. I am also getting creative with food which has been in my store cupboard for a while but I have never tried to cook with before.

It reminds me of the time when I used to have organic vegetable boxes delivered once a week – there was anticipation and enjoyment in seeing what had been delivered and finding a recipe to fit the ingredients. But in wintertime this became more depressing, when faced with nothing but root vegetables.

Human beings around the world need to be in control of their food supply to feel secure, but after a certain point, want to be able to choose so they can enjoy what they cook and eat. So I predict the food market stalls will all be back once the pandemic is over, but with a new customer base of people who have the staple foods delivered to them.

I’ve also been subscribing to more on Amazon – pet food, coffee, tea, laundry liquid. Amazon has just announced that it is prioritizing these kinds of basic supplies over its original business of books and music.

So content providers (of which I am one) are also having to rethink how to get their products to their customers digitally. I have been a big fan of political satire – on TV and on radio. Most of these shows were filmed in front of a live audience. Initially, when they tried to record the shows without an audience, in the usual format, the result was very boring. But now they are becoming more creative with the format and are funny again.

I am using my time at home to revise our eLearning, put sample modules up on YouTube and make new videos. This is our challenge whatever business we are in – to work with the constraints to innovate.

This article was originally published in Japanese in the Teikoku Databank News on 24th June 2020

Time for a logistics revolution in Europe

(This article was published in Japanese in the Teikoku Databank News in November 2018, but it seems even more relevant now)

Now I am back working in my home office, I have become much more conscious of the activities in the street in front of my office window. Once a week, a massive, noisy refrigerated lorry backs itself up against my house, to deliver food to the Italian restaurant three doors down from me. The lorry comes from a food wholesaler with depots the nearest of which is 300km away.

The reason the lorry parks right outside my house is that there are vehicles blocking the road outside the restaurant, caused by the building works which are converting offices into 50 student apartments. Huge trucks reverse up our 16^th century street, damaging the ancient buildings, in order to deliver 50 sets of kitchen or bathroom units. I realise it is cheaper to deliver 50 bathroom units at once in a big truck, but actually the builders did not need all those units at once, as they were fitting out the apartments in phased batches.

When I heard a loud howling noise just after I woke up at around 6:45 one morning I thought it was from the building site again, but it turned out to be from an even bigger refrigerated lorry making deliveries to a chain restaurant in the square at the end of our street.

Chain restaurants have had a bad year in the UK – shutting down a third of their outlets in some cases. Many of these chains are owned by private equity firms, who saw a way to scale up a small chain of restaurants with a distinctive brand into a much bigger, national chain, and reduce costs through bulk purchasing.

The decline of these chain restaurants is partly to do with the economy, but also that the quality of food deteriorated as they expanded. The cooking had become reheating days’ old readymade ingredients.

The quality of the food and the impact on the environment could be improved by more frequent deliveries, in smaller, eco-friendly trucks. Most trucks in Europe run on diesel, and although diesel produces less CO2 than petrol, a huge concern now across Europe is the air pollution diesel causes. French and British governments are banning petrol and diesel cars (but not trucks) from 2040 as a consequence.

But this will require governments to invest much more in electric vehicle charging points and a revolution in logistics. Cities might need to set up hubs in their outskirts for consolidation of deliveries per customer into smaller electric trucks. Logistics companies will need to work with AI specialists like the British company Prowler, whose software is used in logistics to optimise decision making amongst multiple agents.

I realised Japanese companies could be part of this revolution when I saw in my neighbourhood a small electric truck (Isuzu – partly owned by Itochu) belonging to a British tyre wholesaler (owned by Itochu), quietly make a delivery to the city centre outlet of a UK-wide garage chain (also owned by Itochu).

The original version of this article was published in Japanese in the Teikoku Databank News and can also be found in “Shinrai: Japanese Corporate Integrity in a Disintegrating Europe” available as a paperback and Kindle ebook on Amazon.

Contactless and paperless in 2020

It’s easy to laugh at 1960s predictions that we would be holidaying on the moon in 2020, but a couple of incidents in my own personal and business life recently made me realise that some of the other predictions we have heard so often such as a paperless office, the end of coins and notes and the automation of jobs are coming true more quickly than I had thought.

At the end of last year, my bookkeeper told me it was no longer profitable for her to work 1 day a month for me. Actually, I had already been thinking that with our new cloud-based accounting software, Xero, I no longer needed her. Xero is a New Zealand company which is becoming very popular with Small to Medium Enterprises in the UK since it became mandatory for financial records to be kept in digital form using software that is compatible with filing VAT returns online with the tax agency.

Xero is user friendly for non-accountants, can be linked to automated feeds from bank accounts and now has a feature whereby if I receive an receipt or invoice in pdf form, I can forward it via email and Xero automatically turns it into an entry in the accounts. The UK tax agency accept receipts, bank statements and invoices in digital form and as I no longer need to hand over the hard copies to my bookkeeper for her to reconcile, it means I can throw away all the files of hard copies.

In my personal life I realise this means I don’t have to keep asking for receipts, so long as the entry in my bank account is detailed enough. Until recently, some of the smaller shops in my neighbourhood had a minimum of £5 for any payment by card, but now all of them accept contactless payment for any amount. I have not withdrawn any cash for several weeks now.

I thought this would be a problem when I went to my local women’s networking lunch recently, as they have a raffle each month to raise money for charity, but even they were accepting payment via a contactless device. They told me that it has already resulted in a big increase in ticket sales.

I paid for my raffle ticket with my contactless debit card, but others touched the device with their mobile phones to pay, using Android Pay.

I felt even more old fashioned when I unthinkingly asked my son to reimburse me by cheque for a mobile phone I bought him using my Amazon Prime account. Now he is 18, he has his own bank account and I told him he would have to pay for and manage his own mobile phone subscription. He looked at me strangely and asked me how he could do that, as he was not given a cheque book by his bank. In the end, he paid me using his banking app on his phone.

This article was originally published in Japanese in the Teikoku Databank News on 12th February 2020

Last updated by Pernille Rudlin at 2024-07-29.

Category: Innovation