Japanese business in Europe

Reflections on the past forty years of Japanese business in the UK – what’s next? – 2

(continuing from part 1)

I lived in Japan three times in my life. The first time was in 1972, when I was six years old, following my stepfather’s appointment as a visiting lecturer at Tohoku University in Sendai. It was not at all common for British people to travel to Japan at that time – unlike now where everyone seems to want to visit Japan. Our friends and family asked why on earth we would want to do this. My school friends thought China and Japan were the same country. I imagined all Japanese wore dressing gowns and had chopsticks in their hair.

My parents decided to move to Japan due to the frustration they felt about Britain at the time. Inflation was high, the oil crisis was beginning to develop and there was a miners’ strike leading to a state of emergency. The Troubles in Northern Ireland meant terrorist incidents were commonplace. Britain had become known as the “sick man of Europe.”

As there weren’t many foreigners living in Sendai, there was no international school. So I went to Shirayuri, a Catholic girls private school. I was the first non-Japanese person to attend the school. You can see me in the photo with my mother, in my sailor uniform. I also had to wear a hat and carry a Randoseru backpack.

As I said in the interview at the end of my Jiji lecture, because foreigners were so unusual in Sendai, people would stop in the street to look at us and shout “wah, gaijin” (wow, a foreigner) and the school children would crowd round me at playtime to look into my blue eyes or touch my fair hair. But after six months they got bored and I was just “uchi no gaijin” (“our foreigner”).

I also learnt Japanese very quickly – and the accent and natural grammatical fluency have remained with me to this day. I later came to understand that it is quite easy to pick up other languages at that age, as your native language is not yet hardwired. I even came top in composition once. My parents were very excited for me but I was more sanguine – saying it was deserved because it was the best composition.

I think we struggled a bit at first in our pre-war freezing cold ijinkan house, but by the time we moved further south to Kobe, my mother also had a job and I remember living a comfortable life in a nice modern house in a town between my international school in Kobe and my stepfather’s university in Osaka. I would commute to school every day by myself on two different trains and be met after Saturday morning school by my parents. They would take me for a Sachertorte in one of the local coffee shops, before wandering round Kobe’s excellent department stores and bookshops, or going to the sports club to play squash or swim. On Sundays we would attend the Seamen’s Mission church and then have lunch at the Italian restaurant opposite the Catholic church.

It was quite a shock when we returned to Britain in 1977.

(Part 3)

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Reflections on the past forty years of Japanese business in the UK – what’s next? – 1

Pernille Rudlin gave a talk in Japanese to the Jiji Top Seminar on November 22nd 2024. She took look at 40 years of Japanese business in the UK, how it has evolved and what the future might hold.

Through the lens of her own career working in and with Japanese companies, she traced the fortunes of the British and Japanese companies who supported the 1985 “Japanese Miracle” conference at Oxford University which she helped with as a student. She covered the impact of the “Big Bang” in 1986, the bursting of the Japanese economic bubble, the Asian financial crisis, the dotcom bubble and crash, the global financial crisis and Brexit. The shifts in balance between manufacturing, services and European coordination were also analysed, with some thoughts on what the new Labour government might mean for Japanese companies in the UK.

This is a summary in English of the talk – each slide will be a separate post.

Slide 1: In researching this topic, I came across the poster you can see here. It’s from the 1906 General Election, and as you can see it was issued by the Conservative Party. The alliance that they refer to was the 1902 Anglo-Japanese alliance. Both countries were worried by the the threat from Russia, and then in 1904-5 Russo-Japanese War, Japan defeated Russia, the first time in modern history that an Eastern nation had defeated a Western one.

The British government praised the Japanese for their victory and the British public were also admiring of Japan’s “pluck” but the alliance was not a vote winner for the Conservatives, who lost badly to the Liberals. The 1906 election also saw the rise of the newly renamed Labour Party, headed by Keir Hardie. Our prime minister, Keir Starmer’s parents named their son after Keir Hardie – evidence that Starmer very much came from a Labour supporting household.

When I first saw this poster, it set me thinking whether we were about to see an Anglo-Japanese Alliance 2.0.

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What impact will Tokyo Metro’s stake in the Elizabeth Line operating company have?

Tokyo Metro and Sumitomo Corporation have 17.5% share each of consortium that won the 7 year contract to run the Elizabeth Line, meaning Hong Kong owned incumbent MTR lost. Sumitomo Corporation is looking to develop commercial and retail opportunities around stations – as happens in Japan and is beginning to happen in London Underground stations. Tokyo Metro’s incentive for getting involved is that it did not attract institutional investors when it listed on the Tokyo Stock Exchange last month, because of lack of growth opportunities in Japan, where population is declining.

But what impact will Tokyo Metro have on the actual operations of the Elizabeth Line? I share the Toyo Keizai correspondent’s scepticism as to whether it will “breathe a breath of fresh air into the British railway industry in the form of ‘Japanese railway culture'” There no indication as yet that Tokyo Metro will be starting a subsidiary in the UK, nor that any Tokyo Metro staff will be transferred to London.

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Mitsui establishes electromagnetic steel sheet processing company for EVs and power plants in Poland

Japanese trading company Mitsui & Co has announced that it will establish an electromagnetic steel sheet processing company, Polskamit Steel in Skarwimiez in southern Poland. Polskamit will process, stock, and inspect electromagnetic steel sheets used in motor cores for electric vehicles such as hybrid electric vehicles (HEVs) and battery electric vehicles (BEVs), as well as transformer cores used in power plants and substations. It is scheduled to start operations in April 2026.

Mitsui first established, in 1993, an electrical steel sheet processing company in the Netherlands and then in the Czech Republic. Mitsui also set up Mitsui High-Tec Poland in 2018, employing around 88 people, providing lamination press processing of in-vehicle motor cores for electric vehicles.

According to US research firm BloombergNEF, Poland is a major producer of lithium-ion batteries, ranking second in the world after China and first in Europe in terms of national battery production capacity in 2022.

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Poland revisited

It’s been just over three years since I last wrote in this column about Poland. Then, the EU was about to freeze funding to Poland because of their violation of the rule of law. I warned in my article that although Poland was clearly very attractive to Japanese companies, with stable economic growth over three decades and a cheap but educated labour force, this was not enough for long term sustainability if legal and state institutions were not stable, independent and transparent.

Now, after his victory in the October 2023 elections, Donald Tusk has become Prime Minister, replacing the former ruling Law and Justice (PiS) party.  Tusk has arrested two politicians for abuse of power and has presented the justice reforms needed to unfreeze EU funds.

The number of people employed by around 300 Japanese companies in Poland has continued to grow despite the political and legal instability, to over 60,000, fourth in Europe after the UK, Germany and France. According to a recent JETRO survey*, Poland is seen as the most promising market by Japanese companies in Europe, for the fifth year running. This is a reflection both of its relatively large population and that it is still a developing economy. 

The importance of Poland to Europe, both culturally and economically, was brought home to me again on my recent trip to Warsaw and Krakow. Although the largest Japanese employers in Poland are the manufacturers such as Sumitomo Electric Industries, NGK and Toyota, there are substantial numbers working in the services sector. I was there to deliver training to a newly established shared services group for a Japanese electronics company. Shared services has become an increasingly common feature of multinationals in Europe, whereby there are hubs in several countries,  supporting all the European operations with logistics, HR, IT and legal services.

I went to Krakow, not for work, but to see the Manggha Museum of Japanese Art and Technology. It is named Manggha because this was the pen name of Felix Jasieński, a 19^th century art connoisseur who collected Japanese artists such as Hiroshige. He donated his collection to the National Museum in Krakow where it was seen by the a young Andrzej Wajda, later to become a famous film director. Wajda later donated money to fund the Manggha Museum, which opened in 1994, supported by the Japanese government.

The JETRO survey also showed that Japanese companies have a strong interest in supporting the rebuilding of Poland’s neighbour, Ukraine. Poland has been a supporter of Ukrainian sovereignty, and for its integration into Europe since the fall of the Soviet Union. Relations between the two countries deteriorated somewhat, however, when PiS came to power in 2015. At the beginning of the Russian invasion, Poland provided strong support to Ukraine but in recent months tensions have flared up again. The hope, both for the EU and Japan must be that these tensions are resolved now Tusk is in power, although no resolution to the Russian invasion is in sight.

*https://www.jetro.go.jp/world/reports/2023/01/9692d660c7fb3d25.html

Top 30 Japanese companies in Poland 2021 – Rudlin Consulting

This article was first published in Japanese in the Teikoku Databank News on 14th February 2024

Photo of Manggha Museum – (Nemuri), Public domain, via Wikimedia Commons

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Sekisui House UK to go into liquidation

Sekisui House UK, which was established in 2018, is to go into liquidation.  The company had invested in Urban Splash House Holdings and also made a loan to one of the companies in the group, Port Loop. Seven of the companies in the Urban Splash group went into liquidation in 2022 including Urban Splash House Holdings Ltd, the main development business Urban Splash House Ltd, the modular manufacturing business Urban Splash Modular Ltd, and a development vehicle for the Port Loop development, Port Loop (Subco 1) Ltd.

Urban Splash was hit by the under-use of its factory, which led to losses piling up with the problems compounded by design issues which resulted in defects in the homes it produced.

It seems Sekisui refused to bail the company out once a shortfall was identified.

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