Rudlin Consulting

Category: Japanese business in Europe

  • The rise of the Japanese permanent resident in Europe

    The rise of the Japanese permanent resident in Europe

    There were around a quarter of a million Japanese permanent residents living overseas in 1989, the first year of Heisei, just before Japan’s economic bubble burst. Now, as of 2022, there are over double (+126%) the number –  557,034. It has been a steady increase, with particularly strong growth in 2006-8 and 2013-2015.

    The number of Japanese nationals on long term visas has also risen, but not to quite such an extent – from 340,000 to 751,000 (+120%) and since 2020 the number has dropped. Long term visa holders are likely to be corporate expatriates and students on longer courses, so this decrease could partly be explained by the pandemic, but there does not seem to be any sign of recovery by the end of 2022, even though the severity of the pandemic had faded by then.

    Country by country, the picture is more patchy. The USA is still the biggest host of Japanese nationals (419,000) – nearly a third of the Japanese nationals overseas, but this has declined 6% since 2018. The number of Japanese nationals in China, the second largest host, has dropped 15% over the same period. The UK, 6th largest host, has 7% more Japanese nationals than in 2018 whereas Germany (8th) has 7% fewer Japanese nationals and France (10th) 8% fewer. Australia, Thailand and Canada (3rd, 4th and 5th respectively) have also seen increases.

    By city, Los Angeles, Bangkok, New York, Shanghai, London, Singapore, Sydney, Vancouver, Honolulu and Hong Kong are the 10 largest hosts. San Francisco has dropped out of the top 10 and been replaced by Honolulu.

    Breaking it down by visa category shows that overall in Europe the number of Japanese nationals in the 17 biggest hosts rose 17% from 2012 to 2022 to over 216,000. But the driver behind this has been the number of nationals who are permanent residents. This rose 80% from 2012 to 2022 to over 90,000 people, with a particularly marked increase 2021-2. The number of people on long term visas in Europe has actually fallen by 13%, to 126,000.

    The UK has the largest number of Japanese permanent residents – 27,179  – up 77% on 2012. Germany has nearly double the number of Japanese permanent residents it had in 2012 – to 17,496. France is the third largest host with 12,572 permanent residents, up 95% on a decade ago. Belgium has tripled the number of permanent residents and Austria doubled it.

    It is hard to know what the drivers are behind Japanese taking up permanent residency in Europe. Obviously one factor is marriage to a local person and having a family.  The stereotypical view would be of a Japanese woman marrying a European man – often after having come to Europe to study and work, having perhaps despaired of the traditional education, career and marriage prospects available to women in Japan. There does seem to be an element of that in that there are 1.6 Japanese women permanent residents for every man, up from 1.1 in 1989.

    The ratio of permanent to long term residents in the UK and Germany is around 2:3, whereas in the USA it is around 50/50.  In Australia and New Zealand is more like 3:2. In Brazil and Argentina over 90% of residents are permanent.

    Permanent residency may also be the only available option if a Japanese person wants to stay in their new home country, but does not want to lose their Japanese citizenship. As this editorial in the Asahi newspaper explains, it has long been a source of contention in Japan that dual citizenship has not been permitted. The eight plaintiffs in a recent court case who wanted to contest this said that they took up citizenship of another country in order to maintain their business in that country, or to take public office.

    Japan does seem out of step with the majority of countries in the world – 70% of countries allow multiple citizenship. It is also an open secret that many Japanese nationals abroad do actually have dual or multiple citizenships, as there is no mechanism for the Japanese authorities to become aware of this. The data above comes from the Japanese Ministry of Foreign Affairs, and is dependent on Japanese nationals registering with their local embassy. It is only when inheritance, tax and other matters have to be dealt with that multiple citizenship comes out in the open as issue. The true number of Japanese nationals (current and former) in Europe is likely to be much larger.

    The charts below attempt to show the different trends in the main countries in Europe which host Japanese nationals. There are some obvious anomalies, which may be explained by changes in citizenship laws and visa regulations in each European country. It’s also notable that Switzerland has long been a major host of Japanese permanent residents whereas, by contrast, the Netherlands would seem to be much more of a corporate expatriate destination.

     

     

  • Nisshinbo divests TMD Friction

    Nisshinbo divests TMD Friction

    Nisshinbo has sold its 2011 acquisition,  automotive brake component manufacturer TMD Friction to AEQUITA, a private equity firm based in Munich, Germany. TMD Friction is headquartered in Luxembourg, with European production in Germany, Spain, UK, Romania and France. It had already restructured its UK operations, shutting down production in Kilmarnock in 2019 and  more recently investing in new machinery for its Hartlepool plant. It employs around 2,237 people in the European region, with 670 in the UK, 577 in Romania, 437 in Germany, 300 in Luxembourg and 150 in France, and a further 2,000 in the USA, Mexico, Brazil, China and Japan. The transaction is expected to be completed in Q4 of 2023, subject to approval by the relevant authorities.

  • Sakata acquires Dutch company Sana Seeds

    Sakata acquires Dutch company Sana Seeds

    Sakata Vegetables Europe, headquartered in France, has acquired the Dutch cucumber company Sana Seeds. Sakata has acquired several companies across Europe over the past few decades – Samuel Yates in the UK in 1996, a seed company in South Africa in 1999, a flower company in Denmark in 2003, a gerbera company in the Netherlands in 2008 and a cucumber company in Jordan in 2017. It also has operations in Spain, employing  over 200 people in the region in total.

  • Hitachi Rail – the challenge of not being too dependent on Britain

    Hitachi Rail – the challenge of not being too dependent on Britain

    According an interview with Nikkei Business with Alistair Dormer, Representative Executive Officer for Hitachi’s main board and EVP for the Green Energy & Mobility Sector Strategy Planning Division, Hitachi faced two main challenges in its rail business in Europe. Firstly that they were not so strong in control and signal systems, particularly as standards were quite different between Japan and Europe. Secondly, they were too dependent on Britain. For those reasons, it made good sense to acquire Italy’s Ansaldo.

    Dormer is himself British – he was in the Royal Navy, before working for Alstom UK and then joining Hitachi Rail in 2003, becoming Managing Director of Hitachi Rail Europe in 2005 and then Global CEO of Rail in 2014. He had already risen to board level at Hitachi by 2015, but took a break in 2022 for family reasons. He was been re-appointed as Representative Executive Officer and Executive Vice President, in January 2023, as well as chair of Hitachi Europe and Hitachi Energy.

    The acquirer needs to have the mindset that they are the ones who will change

    He has some wise words to say about the post merger integration with Ansaldo. Ansaldo, like Hitachi, had over 100 years of history and a strong culture. “After an acquisition, the acquirer may think about changing the other party’s corporate culture, but this is extremely difficult. Rather, I think the acquirer needs to have the mindset that they are the ones who will change.”

    Hitachi Rail created a management team with 30% Japanese, 30% British, and 30% Italian. Additionally, executives from Ansaldo were appointed to Hitachi’s board of directors. Giuseppe Marino, the current CEO of Hitachi Rail, is a former Ansaldo employee.

    “When a company is acquired by another company, employees become anxious. Will I be able to continue working? Will the parent company do something strange? Will this factory be closed? Rules must be clearly set,” says Dormer.

    Loss of decision making power could shut down the business

    “When acquiring a company, you may take away all decision-making rights from the other company. As a result, the acquirer becomes dissatisfied, loses decision-making power, everything slows down, management and employees become dissatisfied, and customers become dissatisfied.”  Unlike many previous Japanese acquisitions, where the acquired company was left to carry on as before, the brand name and uniform were changed to Hitachi on day one. Hitachi signs were posted at all factories, and Hitachi’s values ​​were posted on bulletin boards.

    “Because Hitachi was not used to developing business in Europe, it instructed Ansaldo to seek permission for even the most trivial details. This would have shut down the business.” So Dormer suggested to the CEO Nakanishi that Ansaldo made their own decisions, and Dormer would monitor their performance monthly.  New rules were created, made out of Hitachi and Ansaldo rules.

    “Simple English” communication

    Communication is of course key. “We also encouraged the use of simple English in communication. Particularly to British people, who tend to use complicated words. This is also necessary for Japanese, Italians and Germans. Having a common language called Simple English will make your job much easier.”

    With the acquisition of ABB’s Power Grid Systems business, the values were very similar, but nonetheless it was important to change the communication methods and processes. Dormer encouraged ABB executives to stay in Japan for six month to see for themselves how decision making works there.  “We should change the way we ask questions. First of all, simple English. Then ask, “How does this process work?” You will find that 90% of the process is the same as theirs” says Dormer.

    Hitachi is now hoping to acquire the railway signaling business of French electronics giant Thales – the UK’s Competition and Markets Authority has just approved. If the EU approves, Dormer hopes to use the same approach, resulting in Hitachi becoming number one in the global railway control market.

  • Kyowa Kirin acquires UK gene therapy startup Orchard Therapeutics

    Kyowa Kirin acquires UK gene therapy startup Orchard Therapeutics

    Kyowa Kirin will acquire British gene therapy startup Orchard Therapeutics for approximately $477.6 million (¥70.7 billion), to bolster its gene therapy pipeline.

    Orchard Therapeutics’ portfolio comprises Libmeldy (atidarsagene autotemcel), also known as OTL-200, intended for eligible patients with early-onset metachromatic leukodystrophy (MLD), a rare and life-threatening inherited disease of the body’s metabolic system. It’s already been approved by the EU and UK regulatory bodies and is currently being reviewed by the USA’s Food and Drug Administration.

    Orchard has 174 employees and Kyowa Kirin has around 6,000 employees worldwide, of which around 700 are in Europe. Kyowa Kirin is in turn owned by Kirin Holdings, a beer and beverage company. It acquired (when it was Kyowa Hakko Kirin), Scottish pharmaceutical company ProStrakan in 2011 and then in 2014 ProStrakan acquired Archimedes Pharma from Novo Nordisk.

  • Marugame Seimen udon restaurants – success in Europe by focussing on your own identity rather than 100% “Japaneseness”

    Marugame Seimen udon restaurants – success in Europe by focussing on your own identity rather than 100% “Japaneseness”

    Japanese company Toridoll is aiming to be a “Japan-originated global food company” with 4,000 outlets outside Japan by March 2028. It  already has 11 Marugame Seimen udon noodle restaurants in the UK and 707 stores worldwide. It  It sees Europe as a test market for its vision, as it is not as dominated by chain stores as the USA is.

    What’s different about its strategy, according to an interview with the CEO, Awata Takaya in Nikkei Business magazine,  is that it is not fussy about putting Japanese taste, or authentic Japanese food to the fore. Menu items include “tonkotsu udon,” “chicken cutlet curry udon,” and “vegan udon” – none of which would be found in an udon restaurant in Japan. “If the menu is 100% Japanese, it won’t be work on a daily basis,” says President Awata.

    Toridoll is looking to open outlets which reflect its philosophy, of experiential sales – where customers can see the food being made. This is why Toridoll acquired British food chains The Real Greek – “where you feel like you’ve come to Greece” and Franco Manca “with pizza ovens visibly inside the store” recently.  Marugame Seimen also provides plenty of opportunities for British staff to visit Japan and learn to make udon noodles.

    Another differentiation is that it works closely with local partners who help them with location selection, new store launches, and securing human resources, moving ahead with speedy store openings. Many of Toridoll’s executives are veterans of working or living overseas or for foreign companies. Awata’s COO was at Deloitte, the head of the Marugame Seimen business is  Victor Hisao Misawa, a marketing professional who grew up overseas, worked at Unilever and was an executive at French company Bic. The Deputy General Manager of overseas development is a graduate of an American university who then was stationed in African countries such as Uganda and Malawi as an employee of the Japan International Cooperation Agency, where he worked on many projects including power plants and agriculture. Shiojiri Nahoko also graduated from an American university and then worked at a major consulting company. She is now based in Hong Kong and working as Deputy Director of the Global Strategy Office.

    Awata recognises that loss of quality is an issue with global expansion – “UK store operations have not yet achieved the quality and efficiency of Japanese stores. In fact, in the UK it takes longer than in Japan from the time you order to the time the food is served. It will be necessary to focus on employee training.”

    As so often, Japanese culture is less about “things”, but the “way” that those things are created.

  • Clear trends from less data on Japanese companies in Europe

    Clear trends from less data on Japanese companies in Europe

    The latest data on the numbers of Japanese companies around the world from the Japanese Ministry of Foreign Affairs was published over the summer. It’s back down to one spreadsheet, in normal sized font, where the only colours used are to highlight the title of each region. The number of spreadsheets published had mushroomed from 1 to 5 between 2013 and 2018, and even with (or maybe because of) the copious use of tabs, freeze frames and various shades of yellow, orange, green and purple, the whole thing was extremely difficult to navigate.

    I used to imagine the moans of the junior civil servants putting in long hours to compile this, the sighs of the middle management having to check its accuracy, and then the teeth grinding of the general managers who wished for the older, simpler days of a printed out hard copy. In the new stripped down MoFA world, the only data disclosed is the total number of Japanese organisations in each country. There are no longer any categories regarding whether they are public limited companies, joint ventures or branches. The data on Japanese nationals resident overseas used to be combined with the data on organisations, but is now published separately.

    In a way less data* is less transparency, but perhaps usability is more important than the sheer volume. This seems to have been the decision that Hitachi has made too. The number of pages of its most recent integrated report has been halved from 106 to 53. In Hitachi’s case this can be excused by the sheer size and complexity of the organisation – 320,000 employees working in a huge variety of businesses. What led to the cull was that those writing the report – the investor relations department – were also the users, who talked through the report with investors. They themselves felt it was hard to explain, and feedback from the investors also pointed to usability concerns. Hitachi has won awards for its reports, so this was a bold decision to make.

    According to a survey of  881 companies by KPMG, the average integrated report in Japan had 75 pages and 66% of all surveyed companies had 61 pages or more. This ratio has increased by 4 percentage points from two years ago, thanks to the increasing obligation felt to report on ESG metrics.

    Anyway, the new simplicity means there is only one chart we can produce from the MoFA data, for countries with more than 100 Japanese companies in Europe, as below:

    And yes, it does make certain trends very clear.

    • Germany still dominates as a host of Japanese companies, but there seems to be a tailing off of growth (+22% since 2013)
    • Conversely, the numbers of Japanese companies in the UK has fallen (-10% since 2013), but now stabilised.
    • France continues to grow as a host of Japanese companies (+21% since 2013), with quite a jump in the last year. This may be as a result of the 10 or so acquisitions made of French companies by Japanese companies 2020-2022
    • There was a significant leap in the numbers of Japanese companies hosted by Netherlands and Italy in 2019. It’s difficult to know whether this due to the “hard” nature of Brexit becoming clearer in 2018-9 or some change in the way MoFA was categorising its data.
    • Eastern European countries, probably due to automotive and other manufacturing costs and existing skills, have become popular – Poland, Hungary, Romania, Czechia
    • Smaller, more service sector oriented countries in the Nordics and Baltics are also becoming more popular such as Estonia, Denmark, Sweden
    • The above has meant that Switzerland, Belgium, Finland and Austria have dropped down the rankings

    *Grammar pedants may recoil from the use of “less” with “data” here. Sorry.  This may reassure.

  • Toshiba launches quantum technology hub in Cambridge, UK

    Toshiba launches quantum technology hub in Cambridge, UK

    Toshiba launched its Quantum Technology Centre in Cambridge on 22nd September 2023. The centre has about 40 employees, with plans to expand the head count to 70. Toshiba will invest 20 million pounds ($25 million) in the facility over five years starting in fiscal 2023.

    Toshiba already had a research laboratory in Cambridge, conducting research on artificial intelligence and quantum technology. Some engineers will transfer from there to the new quantum-specialized offshoot.

  • Japan’s M3 acquires British medical staffing company Messly

    Japan’s M3 acquires British medical staffing company Messly

    Japan’s M3, a healthcare services company listed on the Tokyo Stock Exchange Prime Market, has acquired UK start up Messly, a recruiting marketplace platform for U.K. doctors, for surgeries and hospitals to hire locums, or temporary doctors, at short notice. It was founded in 2017 and 70% of the UK’s trainee doctors are registered on it.

    M3 has already acquired several healthcare software and services related companies in France, Germany, Spain, Sweden and the UK since 2011 when it acquired doctors.net.uk. We estimate M3 has over 500 employees in Europe, out of 10,533 worldwide.

  • Japan owned British crypto currency firm B2C2 acquires France based Woorton

    Japan owned British crypto currency firm B2C2 acquires France based Woorton

    B2C2 was established in 2015 and acquired by Japanese company SBI (Strategic Business Innovator group, formerly part of SoftBank) in 2020. It employs around 90 people in the UK and also operates in the U.S., Cayman Islands, and Japan. The acquisition of Woorton means B2C2 not only expands its European operations but acquires Woorton’s PSAN license which is regulated by France’s financial market authority, the AMF. As a result, B2C2 can now cater to clients in the European Union, aligning with the upcoming MiCA regulations.

    SBI is still operating in Russia as SBI Bank LLC, employing around 245 people.