Japanese business in Europe

Top 30 Japanese companies in the UK – Brexit impact

I’d been avoiding doing a Top 30 Japanese employers in the UK ranking to accompany our Top 30 Japanese employers in Europe, as officially disclosed data per country are much harder to get hold of than regional totals. But with Brexit, more data has been disclosed about employee numbers and where there are still no data from the company itself, I took the top figure from publicly available sources.

Credit research agency Teikoku Databank, for whom I write a monthly column, estimate there are 1,380 Japanese companies with operations in the UK, with the manufacturing industry accounting for 40%. The estimate commonly used by the Japanese Embassy in the UK is that Japanese companies directly employ around 140,000 people. Our Top 30 employ nearly 100,000 of those employees, so they represent around 2/3 of the total number who are employed by Japanese companies in the UK.

Manufacturers do indeed represent more than half of the Top 30, although the largest company (12,000 employees), Fujitsu, is an IT solutions and services provider in the UK. 16 of our Top 30 companies have factories in the UK, half of which are automotive related. Automotive factories are part of a highly integrated European supply chain, both exporting a high proportion of their production to Europe and importing parts from Europe. The rest range from food processing to electronics to medical instruments. The automotive factories export more than half of their production to the rest of Europe, and also import plenty of parts from Europe for assembly.

In terms of Brexit impact, most of these companies have other factories in Europe, such as in Spain, Romania, Portugal and Poland, so my guess is that over the next few years, depending on the deal which the UK makes with Europe, some production and jobs might transfer to other locations.

The remaining companies are almost all financial services companies. Again, they all have offices elsewhere in Europe and I have already heard that some of them have opened “European Union” branches and built up capabilities in Amsterdam, for example. If the UK loses its “EU passport” to operate freely across EU financial markets, then undoubtedly more jobs will shift. In any case, just as with the manufacturers, there have been shifts eastwards of middle and back office jobs to Continental Europe, particularly Poland.

According to the Teikoku Databank, 18.7% of the 1,380 companies are wholesalers/sales operations, 17% are in the services sector, and 11.5% are financial/insurance. The biggest group (29.5%) have consolidated turnovers of between £75-£750 million/Y1bn-Y10bn/$100m-$1bn and 22.8% have turnovers of over £750m/Y1bn/$1bn, so the larger Japanese companies are well represented, in contrast to ASEAN, where most of the Japanese companies who have presence there are classified as small-medium size enterprises in Japan. 55% of the UK Japanese companies have their headquarters in Tokyo, 8.5% in Osaka and 5.9% in Kanagawa prefecture (Yokohama and Kawasaki).

But the outstanding feature of the Top 30 that most concerns me, both for my own business and for the future of the UK, is the large proportion of the Top 30 that are the product of an acquisition. Having put a stake in the ground, they may well stay in the UK despite Brexit, but will the UK really see many more major acquisitions from now on? And despite their British roots, might the European HQ gradually shift away? 21 of the Top 30 currently have their regional HQ in the UK, but I have seen many of them become more virtual and integrated in the way they manage the region, so that actual physical location is less important for management level regional executives.

Fujitsu – ICL
Sumitomo Electric Industries – Lucas
Itochu – Stapleton Tyres, Kwik-Fit
Mitsubishi Corporation – Princes Foods
Hitachi – The Railway Engineering Company, Horizon Nuclear Power
NSG – Pilkington Glass
Dentsu – Aegis
Calsonic Kansei – Llanelli Radiators, Marley Foam
Suntory – Lucozade, Ribena
Olympus – KeyMed
Mitsubishi Chemical Holding – Lucite
Mitsui Sumitomo Insurance & Aio Nissay Dowa – Amlin, Insure The Box
Sompo Holdings – Canopius

My sense is, UK based people might want to get ready to move eastwards too in the next few years, if they want to work for the Japanese Top 30. Ironically, Poland looks a good bet, the source of so much immigration to the UK recently and in the more distant past.

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East meets East #3 Pork, guns and the Galapagos

My fantasy local start-up idea is a tonkatsu (Japanese deep fried breaded pork) restaurant, using outdoor bred Norfolk pork and Colman’s mustard (manufactured in Norwich) with a side order of locally grown shredded cabbage. *

Although tonkatsu is now viewed as a typical Japanese dish, in Japan it was originally a yoshoku “Western Style” dish, introduced into Japan in the 19^th century, when Japan began to open itself to foreign influence and trade again. Japan had cut itself off for the best part of three hundred years, with no foreigner able to enter or any Japanese leave the country under pain of death.

This law was put in place by the Tokugawa shoguns in the 17thc, to end the colonial and religious influence of Spain and Portugal and also to help the Shogun to gain more control over the foreign trading of other feudal lords, preventing them from building up military strength.

Trade did not cease entirely during this time – it was just heavily controlled – with Dutch and Chinese merchants being allowed to live on an artificial island off the coast of Nagasaki. Western scientific ideas also trickled into Japan, but largely undercover.

Consequently, when the Americans finally forced Japan open in the 19^th century, the Japanese found themselves far behind in military strength, still using matchlock guns from the 16^th century. Japan had also missed out on the industrial revolution, but quickly caught up, sending many of its brightest and best to Europe and the US to study technological developments, and bringing foreign experts back to work in Japan.

Post war Japan offers a more modern day insight into what happens if a trading nation like, oh, let’s say the UK, chooses to shut its borders to migration (98% of the Japanese population are of Japanese nationality) but tries to export as much as possible to the rest of the world. Initially, Japan won through with cheap, increasingly well-made products. As the pound is already falling with the threat of Brexit, presumably there will initially be some positive impact in terms of British exports becoming cheaper. Imports will however be correspondingly more expensive.

If houses prices weaken and the FTSE falls post Brexit, because of foreign investment pulling out of UK assets, then we might be faced with an asset price crash similar to when Japan’s economic bubble burst in 1990. In the years after, a large number of basic manufacturing jobs in Japan went offshore, to Asia. After a decade or so of deflation and low growth, some higher end manufacturing moved back, but factories are far more heavily automated, and robot driven than before.

Even though the UK is increasingly exporting more services than manufactured products, the same offshoring and automation threats will apply. In fact, we are already seeing this happening – recently HSBC announced that 840 IT back office jobs will be moved out of London to Poland and China and RBS have also announced similar reorganisations.

Other jobs which cannot be offshored (for example, warehousing, food harvesting and processing) – which were being done by immigrants – are also threatened by automation. My old employer Fujitsu has been pioneering an agriculture “cloud” which uses supercomputing and Big Data to allow elderly farmers to capture and automate their knowledge on when to sow, fertilise or harvest.

Where automation is impossible, Japan has also let occasional groups of immigrants in to do what are known as the 3 K jobs – Kitanai (dirty), Kitsui (hard) and Kiken (dangerous), such as in construction and nursing.

It’s possible British employers will also improve wages and conditions to attract indigenous British employees to our 3K jobs. However, as we are quite close to full employment already, this will in turn push prices up (and as noted, prices of imports are likely to rise too), so overall, people will not feel better off.

Japan used to be very expensive, but the 20-year stagnation has resulted in deflation, with 40% of its workforce in badly paid, insecure jobs and the other 60% with the secure jobs have seen their take home pay fall in real terms, despite deflation.

Innovation should be the way out, but actually Japan has a nickname for innovations that only sell well in Japan, because they were designed by Japanese for Japanese – the Galapagos syndrome – after the isolated islands where flora and fauna developed to fit local conditions, but die in the world outside.

*if anyone wants to take up this idea, I’d be delighted to act as advisor, for equity and a lifetime supply of meal vouchers (however, if the UK leaves the EU, starting in the Netherlands or Denmark might be preferable)

Over half of Top 30 Japanese companies have their European HQ in the UK in 2016

A regularly cited statistic in the current EU referendum is that 60% of non-European companies have their European HQ in the UK. I have just revised our Top 30 Japanese companies in Europe and found that 16 out of the 30 biggest Japanese employers in the region (some companies cover Africa, Turkey, Middle East, Russia from their European HQ) have their regional headquarters in the UK – which is 53%, so slightly under the overall average. Together they directly employ nearly 420,000 people in the region.

I added Yazaki (a privately held, relatively unknown but huge automotive components supplier) – straight in at number 2. Their European HQ is in Germany, covering Europe and factories in Africa. The factories do of course bulk out the total of 45,200 employees in the Europe and Africa region.

If Brexit does happen, the UK could still cite historical and Commonwealth ties as a case for locating a Europe & Africa or EMEA (Europe, Middle East and Africa) HQ in London, but clearly for the automotive industry this is not a significant factor. Only Honda has their European headquarters in the UK, and automotive parts suppliers tend to follow their customers.

Most of the brand name electronics companies have based their European headquarters in the UK. The financial companies do not have such large numbers of employees, so whilst nearly all of them have their headquarters in London, they are not in the Top 30.

Adding Yazaki has pushed out electric motor manufacturer Nidec – but I suspect Nidec will soon be back in, given how acquisition hungry it seems to be.

For reports, profiles and other research on the Top 30 largest Japanese companies in Europe, Middle East and Africa please contact us.

East meets East: East Anglia to East Asia (via Europe)

When I first moved to Norwich, just under two years’ ago, my new bookkeeper unnerved me by saying “we don’t do euros in Norfolk”. A third of my turnover is in euros, so I wondered whether I had chosen the best location for my business.

It’s true that there aren’t that many Japanese companies – my target customer group – locally in East Anglia either. However, those that are here reflect the regional strengths in food processing and energy. Mizkan owns Branston Pickle, which is made in a factory in Bury St Edmunds and Marubeni is the owner of Seajacks, a Great Yarmouth based offshore wind power engineering company. Although car companies such as Toyota and Nissan are probably the most famous Japanese investors in the UK, Norwich-based Lotus is owned by Proton, a Malaysian company.

More recently, Japanese insurance companies have been on the acquisition trail, and this has an East Anglia angle too, as the companies they have acquired have offices in the region and are keen to shift more personnel out of the expensive City of London. One such client, as well as asking me to do some training for their office in Chelmsford, Essex, also sent me to their branches in Zurich, Amsterdam and Brussels.

I decided to take the opportunity of the Belgium trip to visit Bruges, intrigued by its similarities to and influences on Norwich. Flemish weavers, masons and goldsmiths settled across East Anglia throughout the Middle Ages, when Norwich and Bruges were Hanseatic League outposts. Bruges, like Norwich, was a thriving river port, trading in locally made cloth. Like Norwich, Bruges was largely bypassed by the industrial revolution and trade declined after its river silted up.

Now Bruges is mainly a tourist destination as well as home to the College of Europe. With the EU referendum going on, it seemed an appropriate time to visit the place where Mrs Thatcher made her famous 1988 speech against further European integration, which inspired The Bruges Group, many of whose members are behind the current campaigns for Britain to leave the EU.

The Bruges Group flavour of Brexiteer sees exiting the European Union as a means of ending European political and regulatory interference. However, talking to people in Norwich, the argument that obviously most resonates is that of getting back control of the UK’s borders, and preventing further immigration, particularly from Europe.

Other former Hanseatic outposts on the UK’s east coast have not fared as well as Norwich. There are unemployment hotspots yet large numbers of Europeans come to the region to help with the harvesting and production of food. Recent polls show the region overall is in favour of Brexit.

So what will Japanese companies do if the UK does leave the EU? I expect that those that have already invested – either because the UK had a strength in a particular industry, or they wanted to access the UK market – will stay. But those who use the UK as a coordination base for the rest of Europe, may well consider relocating or shifting any further investment into continental Europe.

This is really bad news for my business, as my best clients are the European HR departments of the regional coordinating headquarters of Japanese companies. One such client integrated all their back offices functions a couple of years’ ago, which meant they shifted their HR back office to Turkey, managed by a team in Portugal, and I have not had any business from them since.

The common market and free movement of people over the past 40 years in Europe has brought about a more integrated structure for most multinationals. The UK has benefited from this by becoming the main host of European headquarter functions – headquarters which generate direct and indirect employment. This has made London an expensive place to operate, so jobs are moving east, not just to the east of the UK, but to countries like Poland. I am also now looking to recruit a consultant in Poland. Ironically, most of the candidates have had experience working in the UK.

One of my other Japanese clients has started shifting personnel from London to Amsterdam. London will continue to be the EMEA (Europe, Middle East and Africa) HQ and Amsterdam will be the European Union HQ. So maybe that’s the way to go for British businesses, if we do leave the EU.

I already have had some business in the Middle East, and was recently asked if I could find consultants in Morocco, Tunisia and South Africa. It’s something I could do whether or not the UK is in the EU, so ultimately, I think we British businesspeople should be asking ourselves, is it really worth going through all the uncertainty, cost and bad feeling of negotiating our way out and then re-negotiating our way back in to trade deals, to be pushed into doing something we should be doing anyway?

I visited Great Yarmouth (another former Hanseatic League outpost) recently, to see an excellent production of the Tempest at the Hippodrome. It was part of the Norfolk and Norwich Arts Festival – which benefits from EU funding. I noticed that most of the cafes were run by Portuguese immigrants and as the one we wanted to go to for lunch was fully booked, we ended up in a local pub.

Initially, the atmosphere and menu brought me back to when I was a child in the early 1970s, before we moved to Japan and the UK joined the European Union. The UK seemed to be in permanent decline – shabby, with awful food and if you wanted olive oil to cook something better at home, you had to buy it at a chemist.

However, it turned out the pub stocked good local cider and beer and the food was well cooked and promptly served. On the way back from the toilets (spotlessly clean) I realised that quietly and efficiently running the whole operation was the Thai wife of the British owner.

This article appears in “Shinrai: Japanese Corporate Integrity in a Disintegrating Europe” by Pernille Rudlin, available on Amazon as a paperback and ebook.

“Japanese companies are too scared to touch their overseas acquisitions” – Nidec’s Nagamori

Shigenobu Nagamori, the billionaire founder of the world’s biggest manufacturer of micro-motors for hard disks and optical drives, Nidec, has acquired more than 40 companies in Japan and overseas. He comments in a Nikkei Business article that “you cannot just leave foreign acquisitions alone to get on with things by themselves. You need thorough mutual understanding and to even replace management if necessary.”

“Although you no longer hear about Japanese companies sending lots of managers over to their overseas subsidiaries who end up issuing all sorts of misguided directions, you now hear of companies who say ‘we think the same way as the counterpart management’ and so decide to buy the company and then just leave the management as is.”

“This is an illusion. Actually they are being left alone because the Japanese company doesn’t really understand what they are doing. It ends up with compromising on the necessary management reforms and profit targets.”

“I have regrets myself. We acquired 10 or so companies in Europe and North America from about 2010. We were warned by various companies who had M&A experience and financial institutions that we couldn’t restructure foreign companies the way we would Japanese acquisitions and that it was best to ‘leave it up to the foreigners’ otherwise they will quit”

“I thought that was true at the time. I also took on board the advice that Japanese managers needed to be people with Harvard degrees and a network amongst foreign executives.”

“However one company did not make any improvement no matter how often I set profit targets. I thought there must be something wrong with the company management as such a company should as a matter of course achieve profit margins over 15% but I was told that it was the limit for their industry.”

“In Japan you would try to persuade the management to adopt our “kaizen” knowhow (knowledge of how to improve) but we hit a wall with this in the West. So in 2012 we changed the management of the acquired company. But you can’t do it like pulling a trigger. I make a point of visiting each company at least once a year and have dinner not just with the executives but also the managers and discuss things with them. I also encourage them to send emails directly to me and I respond to them. I am trying to understand all the ideas people have for improving profitability.”

“It’s important that people in the company understand my thinking and I understand whether they are capable of understanding. If they are then it doesn’t matter if the CEO is changed. ”

“It’s the same in Japan. Communication is important. If you just cut back costs and improve profit, the company will not survive in the long term. Where is there waste, how can we make the most profitable products – the basics are the same in Japan or elsewhere. If this is understood, then overseas companies can be reformed too.”

“I think Japanese companies are too scared to touch their overseas subsidiaries. They overthink the differences. I used to be like that, but there is no need. The basics of management are the same everywhere.”

Japanese boards in Europe should reflect their customers, employees and community

I have just completed the first phase of research into how diverse the European subsidiary boards of the biggest Japanese companies in Europe are, both in terms of the nationality mix of Japanese and European directors, and also the number of women on the board.

More boards in Japan had women on them than in Europe, which is surprising if you were expecting boards to reflect the employee mix – particularly the pipeline of managers coming through the ranks of an organisation – as there are without doubt more women employees and proportionally more women managers in Japanese companies in Europe than there are in Japan.

The proportion of directors with European nationalities on the board of Japanese subsidiaries varied wildly from none in the case of Toshiba, Sharp and Fast Retailing (the Uniqlo subsidiary in the UK), through to 100% in the case of Asahi Glass, Bridgestone, Canon and Nidec. So national diversity does not seem to be influenced by which industry the company is in. This also means that what to me is the most compelling case for a diverse board, that it should reflect the customers it is serving, is not the key factor I thought it would be.

20 years’ ago, becoming less reliant on Japanese customers abroad as well as in Japan, was the driving force for many Japanese companies embarking on “kokusaika” (“internationalization”). Canon was a pioneer then in appointing Europeans to senior positions in overseas subsidiaries and does as a consequence appear to have fared better than other companies in the consumer electronics sector, both in Japan and in Europe.

The current favoured path to globalization for Japanese companies is through M&A rather than growing international businesses and executives internally, and the major acquisitions of the past decades account for the diverse boards of Asahi Glass (who acquired Glaverbel) and other companies that still have a high proportion of European directors such as Fujitsu (International Computers Ltd), Nomura (Lehman Brothers) and NSG (Pilkington).

There is some sectoral influence. For example, the financial services industry is under intense scrutiny by European regulators who have the power to approve board appointments. They expect directors to have deep understanding and experience of local markets – something which not many Japanese executives can claim.

Both Fujitsu and Hitachi have substantial public sector oriented businesses in the UK (government services, nuclear power and rail) which means that they not only need to meet the diversity requirements of government purchasing but also gain acceptance of the communities in which they operate. For example, the board of a Japan-owned UK utility recently advertised for a director, with a requirement that applicants be a customer of that utility.

For smaller Japanese companies, or those which are just starting in Europe, it is tempting to stick with a small board with just a couple of non-resident Japanese directors, but as boards come under pressure to have greater transparency and better governance in Europe, appointing local directors from the start should lead to better relations with regulators, customers and employees.

(This article first appeared in Japanese in the Teikoku Databank News in December 2015 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.)

Brexit is already priced in – the failure of British soft power

I’m on what has become an annual business trip this time of year, to Duesseldorf. Just before my flight out of London City Airport, I met with one of our Japanese corporate clients in the City, who told me that they are about to establish their European Union headquarters in the Netherlands. Brexit was not directly mentioned as the reason for this, more that “compliance and regulatory issues” made Amsterdam the preferred choice. The EMEA (Europe, Middle East and Africa HQ) will remain in London. The Amsterdam office will be beefed up and some of the regional functional people are being transferred there from London. This is precisely the sort of gradual drift to the Continent that I fear will follow an actual Brexit – and it is happening already.

Arriving at Duesseldorf airport, I was struck by the clear division at passport control between “EU Citizens/Burger” and “Other Nationalities”. An EU blue path (that made you feel it was a red carpet) took you to a completely separate set of passport officials. In UK airports, the different lanes are side by side, and it’s often quicker to go to the “all passports” queue than wait in the EU queue. There is no mention of us all being “citizens” either in British immigration control. Some Brits may find this willingness to treat us as equal citizens of Germany somewhat troubling from a historical perspective, but I felt rather flattered.

Then on to my hotel, with a huge array of channels including BBC World. But there was no signal for the BBC channel. So I ended up watching some fascinating documentaries on the cultivation and cooking of lotus roots, and Indonesia’s fad for J pop Wotagei dancing on NHK World instead. Japan/NL/Germany soft power 1, British soft power 0.

Virtue or vice? “Hear no evil, see no evil, speak no evil” – Japan HQs in the Year of the Monkey

We have decided to celebrate in 2016 – with a series of lunch seminars for clients – the 12^th anniversary of the founding of our company. The excuse is that we have completed the full cycle of the Japanese/Chinese years, back to the Year of the Monkey.

Reflecting on the trends we have seen evolving over the past 12 years for Japanese companies, the most obvious development has been the increase in major acquisitions by Japanese companies of Europe-based multinationals. Most recently, Mitsui Sumitomo Insurance Group acquired UK Lloyd’s underwriters Amlin for £3.5bn and Hitachi has just finalised the acquisition of AnsaldoBreda and Italian company Finmeccanica’s stake in Ansaldo STS, for around €800m.

Both these acquisitions are representative of a structural change I have seen evolving in quite a few Japanese multinationals. Hitachi has moved the global headquarters of its rail business to the UK and it seems the Japanese insurance majors, who have all now acquired underwriting firms based in the UK, are hoping that their acquisitions will act as pivots for further global expansion.

Clearly Japanese companies are not just buying into a market with their acquisitions, but hoping that they have also acquired global management capability. Whereas in the past there were some examples of Japanese companies using their US subsidiaries to manage the global network, it seems now that Europeans are being asked to manage operations in the US and beyond.

This is partly due to another long term trend in Japan, which is the lack of “global jinzai”, particularly at senior management level, to manage overseas growth, but it also reflects the fact that European multinationals are used to managing companies scattered across many countries, in a virtual matrix structure. This means the heads of various business units or functions may not all be physically located in the same headquarters. European managers need to have strong, globally effective professional expertise but also good cross cultural communication skills to be able to manage teams remotely.

Europeans are comfortable with doing this in Europe and to some extent working with the US too. However working with Japan is still a new experience for most of them. They are often baffled by the fact that their professional expertise and remote communication skills are not enough to persuade or win support from Japan headquarters. Managers in Japan headquarters are only used to communicating with people who are physically present in the office. They tend to be generalists, who do not find arguments grounded solely in expert opinion all that convincing.

Unless conscious effort is made to overcome these communication barriers, Japan headquarters maybe behave like the three monkeys, who see no evil, hear no evil and speak no evil. In Japan my understanding is that this is seen as virtuous behaviour. However, in the West this is seen as ignoring problems and misbehaviour until it is too late. I foresee the next twelve years of my business as being about opening eyes, ears and mouths on both sides of the world.

This article originally appeared in Japanese in the Teikoku Databank News on 13th January 2016 and iis in the introduction of “Shinrai: Japanese Corporate Integrity in a Disintegrating Europe” by Pernille Rudlin, available on Amazon as a paperback and ebook.

Japanese business people want UK to stay in the EU (letter in the Financial Times)

Sir, As a supplier of services to over 70 Japanese companies across Europe, I am not at all surprised that Toyota do not intend to move manufacturing away from the UK in the event of a Brexit (“Toyota will stay even if Britain votes to leave the EU” January 12) The key point to bear in mind is that Toyota’s European headquarters are already in Belgium.

What should be of concern is what will happen to the rest of the major Japanese companies, more than half of whom have their European headquarters in the UK, and how any changes in their location might impact the fact that major share of employees of Japanese companies in Europe and of Japanese investment in Europe has been in the UK.

Judging by the mood of the 200 or so Japanese business people at the UK Japanese Chamber of Commerce New Year party last week, the overwhelming wish is for the UK to stay in the EU.

Japanese business people would much rather their companies were based in the UK, but if the UK is no longer in the EU, the straw poll I took suggests that there will be a gradual drift of European HQs away from the UK – and with it related jobs, investment and taxes – and most importantly, for suppliers like my company, the locus of purchasing decisions will also shift.

Norwich, where my company is based, is two hours away from London but only 1 hour away from Amsterdam, so I am making contingency plans accordingly. I assume I am not alone in this.
Pernille Rudlin
European Representative, Japan Intercultural Consulting
Managing Director, Rudlin Consulting Ltd
Norwich, UK

Why the refugee crisis might mean the end of the EU

When I recently asserted that Britain leaving the EU would result in many multinationals withdrawing their European headquarters from the UK, a British person of Greek origin claimed that the UK would be fine on its own. It would be better off without burdensome EU regulations enforced by a cabal, he said, and the UK is such an innovative country, companies would want to base themselves here whatever our European status.

Given the treatment of Greece by the European institutions recently, I suppose this view is not surprising. There have been many complaints in the UK too about too much European regulation. Often though, as in the case of an EU standard on the amount of noise a lawnmower can emit, these regulations were actually promoted by British officials because they benefited British manufacturers. For manufacturers in general, the comfort in setting up a factory anywhere in the EU is that by meeting these standards, their products will be approved to sell anywhere in the 28 countries of the EU.

If the UK were to leave the EU, it would no longer be able to influence these regulations, and yet would have to abide by them if it wanted to sell its products in its closest and biggest market. Fortunately, for British people like me who are pro-European, the new leader of the opposition Labour Party has just said that he would campaign to stay in the European Union in the forthcoming referendum (likely next year).

It is assumed that the Prime Minister David Cameron, in his negotiations with the EU member states, is trying to weaken the social charter of the European Union, which has brought about protection for employees in terms of working time, holidays, discrimination, etc. The Labour Party, as you can tell by the name, is strongly committed to supporting the rights of working people, so has decided to campaign for staying in the European Union, regardless of the deal Cameron reaches, by committing to reverse any social concessions gained, should Labour get back into power.

One of the key non-negotiables for the core European states such as France or Germany – which actually is one of the main reasons many British citizens oppose the European Union – is the free movement of people. To me, this is why the UK is as innovative as it is. There is plenty of evidence that diversity encourages innovation and London is without doubt one of the most diverse cities in Europe. If you locate your company in the London area, you can access an extraordinary range of nationalities, viewpoints and skills, all with English as the common language.

Unfortunately the current refugee crisis is weakening this commitment to the free movement of people and could even bring about the end of the European Union entirely. Instead of coming up with a coordinated solution, member countries are behaving like they have not remembered the lessons of the two World Wars we are currently commemorating.

This article originally appeared in Japanese in the Teikoku Databank News on 14th October 2015 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: Japanese business in Europe