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Middle East

Home / Archive by Category "Middle East"

Category: Middle East

UK no longer the biggest host of Japanese automotive manufacturing in Europe – and the rise of Africa

For many years the UK was host to the largest number of Japanese automotive manufacturers and their employees in Europe. This was thanks to Toyota, Nissan and Honda all having factories there.  which in turn attracted a large number of automotive suppliers to set up plants near by.

Last year (2020-1) Poland took over the number one spot from the UK in terms of numbers of Japanese automotive manufacturing employees in the EMEA region. According to our estimates, the UK will slip to 6th position in 2021-2022, due to the closure of Honda‘s Swindon plant, along with many of its suppliers shutting down operations. It will be overtaken by Czech Republic, Germany, Turkey and Morocco.

There has been strong growth in employee numbers in Africa in particular – mainly in Morocco, South Africa and Egypt. This looks set to continue as labour intensive wire harness manufacturers diversify production away from Ukraine and other Eastern European countries.  South Africa has also seen more investment from Nissan and Toyota in their plants there over the past few years. Isuzu also has a plant in South Africa, in addition to manufacturing in Russia and Turkey.

Nissan’s other plants in the EMEA region, apart from the UK and South Africa are in Russia and Spain (the Avila and Cantabria plants continue to operate, after the closure of plants in Catalonia) and Egypt.  It has just opened a vehicle assembly plant under licence to Japan Motors, in Ghana.

Suzuki has plants in Hungary and Egypt and Toyota now fully owns the factory it used to joint own with PSA in Czech Republic, in addition to its plants in the UK, France, Turkey, Russia and Portugal as well as engine and transmission factories in the UK and Poland.

Although Poland does not have any Japanese OEM car manufacturers based in it, it still tops our ranking in terms of employment, not just because of the Toyota engine plant, but also the other Japan owned automotive suppliers with labour intensive manufacturing there, such as Bridgestone, NGK, Pilkington,  NSK, Sumiriko and the wire harness manufacturers. Similarly, Germany is not host to any Japanese automotive OEMs, but is host to many mid sized Japanese automotive and other industrial component manufacturers.

In terms of actual numbers of Japan owned automotive manufacturers, we estimate the UK is still top of the table with 67, despite the closure of 11 such operations in the past few years.  Toyo Keizai’s database has Germany and the UK neck and neck, with around 31 or 32 “transportation equipment” manufacturers – a category which excludes automotive suppliers who manufacture components such as tyres. In Germany‘s case, many of these manufacturers do not just supply the automotive industry, and it has been a trend for some UK based manufacturers too, trying to diversify away from overreliance on core Japanese automotive customers.

This difficulty in categorizing industrial suppliers has caused some glitches in Toyo Keizai’s numbers, it would seem, but overall, the trend over the past five or so years is clear – the numbers of Japanese manufacturers hosted by Germany, Italy, Czech Republic and France have grown over the past few years, but that growth seems to have tailed off. Host countries with fewer Japanese automotive manufacturers than five years ago according to Toyo Keizai are Russia, the UK and Belgium.  South Africa, with 16 Japanese automotive manufacturers by our estimates, and 8 by Toyo Keizai’s, is not showing many signs of growth in the numbers of Japanese companies it hosts – yet.

 

 

One further clue to the future of Japanese automotive manufacturing in the region can be found from the foreign direct investment data published by Japan’s Ministry of Finance. The cumulative investment over the past five years is summed up in the chart to the left. Clearly there has been some disinvestment from the UK and Belgium recently and a large investment  in Germany in 2019. There have been no major M&As to cause this, the investment is more likely to be the Japan headquarters of major manufacturers transferring capital to their regional headquarters (Toyota in Belgium, Sumitomo Electric Bordnetze and Yazaki in Germany and Denso in the Netherlands) for further onward investment in the region.  For the UK, the disinvestment is likely to be Honda and its suppliers, and the investment would be from Nissan and its suppliers.

A directory of 205 Japan owned companies with production facilities in the UK, giving their full names, parent company, type of business and latest number of employees is available for £20 + VAT. Please contact us for an invoice and payment details via PayPal.

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UAE and Japanese companies – diversity and decarbonization

A TV series called “Inside Dubai: Playground of the Rich” is currently showing on the BBC in the UK which features British people who have made Dubai their home, who are “soaking up the sun, glamour and tax-free benefits” of Dubai, “but must also follow the rules” of their host country and cope with “the frenetic pace of change.”

“Tax free luxury and oil” is the image most British people have of Dubai – particularly since the pandemic, when many British celebrities went to Dubai on holiday when allowed. They posted photographs of themselves enjoying the sunshine on Instagram with a backdrop of extravagant architecture behind them. But at the same time, there is discomfort that the British in Dubai are behaving in old fashioned colonialist ways, while many people of other ethnicities in Dubai are having a much tougher life. There is also a nervousness about human rights violations, and the strict rules on alcohol, adultery and homosexuality.

This image rather contrasts with the conclusions of a recent report from JETRO saying that Japanese companies were attracted to the Middle East as a place to develop business in renewable energy and decarbonization, with the UAE ranking second behind Saudi Arabia as the country of most interest.

I was already aware that the UAE was the biggest host of Japanese companies in the Middle East. I had visited there a couple of times a few years’ ago to provide cross cultural training to a Japanese bank there and spent some time trying to understand the cultural complexity of a society which has the highest proportion of immigrants in the world.

This knowledge came in useful recently, when I was asked by a Japanese energy company to support them in a diversity and inclusion training in the UAE. This was part of a wider initiative to be more inclusive, to listen to the ideas of all employees, regardless of age, gender or ethnicity, in order to encourage innovation, particularly with regard to decarbonization.  

Dubai is currently hosting an Expo which is strongly emphasising ESG in its themes. There is a Programme for People and Planet, which is aimed at the “open exchange of new ideas and innovations,” placing equality, universal respect and human dignity at the centre of human progress.”

In preparation for being an expo host, and to encourage more foreign direct investment, the rulers in the UAE had already identified that a robust legal framework, which was more tolerant of diversity, was going to be necessary. There are now new laws on anti-harassment and anti-discrimination, particularly in the special economic zones, as well as a relaxation of alcohol laws and Islamic personal laws.

So I can now see why Japanese companies are feeling more positive towards the UAE again, both as a place to develop business, but also as country where the legal framework is coming more into line with the acceptance of the diversity that is needed for companies to change and evolve.

This article by Pernille Rudlin was first published in Japanese in the Teikoku News, 9th February 2022

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。

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Top 30 Japanese employers in Europe, Middle East, Africa 2021

The major Japanese employers in Europe, Middle East and Africa employ over 540,000 people, a 1.4%* rise comparing financial year 2018/9 to 2019/20, even though their global employee numbers have shrunk by around 1% over the same period. As in previous years, acquisitions of companies in the region are the main growth drivers.

The top 5 largest employers remain the same – Sumitomo Electric Industries, Yazaki, NTT Data, Fujitsu and Canon.  The rest of the top 10 are the same, apart from Hitachi rising from 14 to 9, bumping Toyota Tsusho to number 11.

Exiting the Top 30 are Mitsubishi Corporation, Mitsubishi Electric and Olympus – not so much due to any decline as the growth of the new entrants LIXIL (following its acquisition of Grohe), NEC (acquiring KMD in Denmark and Northgate in UK) and Asahi (having acquired various European beer brands such as Peroni, Fullers and Grolsch).

Which company to work for

We have previously recommended that people wanting to work for a Japanese company should consider not just whether it is growing in the region but also what proportion of its employees are in the region. The greater the proportion, the more influence the region is likely to have in headquarters’ decisions.

The average for proportion of employees in the EMEA region of the top 30 is around 14%. Those with more than a quarter of their global employees in EMEA are NSG (due to its acquisition of Pilkington), Asahi Group (due to the acquisition of the beer brands mentioned above), Asahi Glass (the continuing influence of the 1981 Glaverbel acquisition), Sumitomo Electric Industries (the continuing influence of acquiring Volkswagen Bordnetze in 2006), Toyota Tsusho (acquired French company – mainly operating in Africa – CFAO in 2012).

The companies who score highly both in terms of growth and proportion of employees in the region are Sumitomo Electric Industries, Toyota Tsusho and NTT Data. The latter grew through acquisitions of Dimension Data, Keane and Itelligence but appears to have shrunk its EMEA employees over the 2018/9 to 2019/20 period. This is actually due to Latin America being excluded from the regional total in 2019/20, having been previously included.  Dentsu also has nearly a quarter of its employees in EMEA and has grown nearly 50% since 2014/5 due to the acquisition of Aegis Network and subsequent smaller acquisitions, but the numbers are starting to decline as it starts to consolidate and restructure, aiming to cut its overseas roles by 12.5%.

Dentsu does not publish consolidated regional employee numbers, and neither do trading companies such as Mitsubishi Corporation, Toyota Tsusho and Itochu.  Some have been inconsistent in publishing details – JT International for example – so we have had to use our best guesses and our own database. Overall the level of transparency in Japanese companies’ reporting on overseas employees has improved tremendously over the six years we have been tracking them, thanks to Japanese companies’ enthusiastic adoption of UN Sustainable Development Goals.  Perhaps a lack of transparency on employee details should be a factor to consider in terms of desirability as an employer.

If you’re thinking of working for a Japanese company, a good way to signal that you know what you’re letting yourself in for would be to obtain the certificates from doing the e-learning modules on working in a Japanese company from the leading global Japan focused intercultural training company, Japan Intercultural Consulting.

*If NTT Data is excluded, as the 2018/9 employee numbers for the EMEA region in their annual report included Latin America, but Latin America was not included in the 2019/20 regional employee numbers.  Including NTT Data in 2019/20 figures produces a small decline in the regional employee total for the Top 30  of -0.24%.

FREE PDF DOWNLOAD OF TOP 30 JAPANESE EMPLOYERS IN EMEA

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。

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Is “chutzpah” in Israel the same as “not reading the air” in Japan?

Japanese investment in Israel has shot up the past five years.  According to JETRO there are 66 Japanese companies based in Israel as of 2017, 16% up on the previous year.  Nikkei Business estimates the total of investment asY130bn (around $1.1bn) – the main contributor being Mitsubishi Tanabe Pharma’s acquisiton of Neuroderm for $1.1bn in 2017.

PM Abe’s visit to Israel in 2015 brought about many further visits from Japanese business people. The attraction is, unsurprisingly, Israel’s expertise in IoT, AI, cyber security and other technologies.  But the big obstacle, certainly according to many people I have spoken to about this, is the big cultural communication gap.

According to Shintaro Hirado, who has set up a business support company in Israel, it can be seen as a positive, that Israelis are very straight with you, and once you get over the shock of that, then you can build good trusting relationships.

Japanese expatriates in Israel compare “Chutzpah” (cheek, nerve, audacity) to the KY (Kuuki Yomenai) phenomenon in Japan of a few years ago, when younger Japanese were accused of not being able to “read the air” (usually of disapproval).

Israeli owners of companies acquired by Japanese companies such as Rakuten have asked for earn outs before the final agreement was signed, or left due diligence meetings days before they were over, not out of anger, but just “I’ve said all I need to say.”

Japan Intercultural Consulting – whom Rudlin Consulting represents in Europe, Middle East & Africa – has just started a partnership with Charis Intercultural Consulting, who have a presence in Israel, so this communication gap could be a business opportunity for us too.

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。

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Arab and Japanese Culture

An Arab participant in one of my seminars in Dubai last month suddenly put up her hand and blurted out, “I recognise this so well in my family!” when I was describing Japanese group orientation and non-verbal communication and concepts such as “ishindenshin” and “omoiyari”.

I asked in what way she thought Arab people and Japanese people were similar, and she told me that three generations of her family live together, just as traditional Japanese families used to.  One evening, her grandmother asked her “what are you thinking of eating this evening?” The young woman was actually about to go and get a McDonalds hamburger, but recognising that her grandmother was hungry, asked her what she would like to eat.  Her grandmother said “oh I am not hungry.  I don’t need anything.”

So the young women went to buy a take away traditional Arab meal.  When she offered it to her grandmother, her grandmother refused it.  So they started to eat, leaving a portion with her grandmother, who then finally started to eat it.

This is not the first time I have been told by an Arab person that Japanese and Arab cultures have a lot of similarities.  When I ask why, they mention a mix of family orientation, a strong relationship orientation in business, respect for seniors, and, as the young woman’s story about her grandmother illustrated, being very indirect in expressing needs.

So you would think it might be easy for a Japanese person to fit into the Arab business culture, but actually there are two issues for the many Japanese expatriates working in Dubai that make this less easy.  One is that Dubai itself is one of the most multicultural cities in the world.  88% of the population are not Emirati.  Almost everyone is a guest worker rather than having permanent residency.  So Japanese expatriates in my workshop had to cope with many nationalities on their team, ranging from Europeans to Indians to Lebanese.

Secondly, group orientation means that there is a clear sense of in-group and out-group.  Expatriates in Dubai find it very hard to become an “insider” in Dubai society.  For example, amongst Arab business people, during Ramadan, it is customary to visit customers’ houses in the evening for the meal which breaks the fast.  Hospitality is another very strong cultural value in Arab culture.  Nonetheless, I can imagine you would have to be a very brave person to turn up at a customer’s house if you weren’t an Arab yourself.

So Japanese companies have done the sensible thing, which is to hire young local Arab graduates, offering them training and a career paths.  However, there is huge diversity even amongst Arabs.  Sitting next to the headscarf wearing woman who told me about her grandmother was the other graduate recruit, another young woman, wearing an abaya (traditional Arab dress), but with her long hair uncovered.  She had been educated at an international school, and felt more close to the American cultural values I described.

This article appears in Pernille Rudlin’s latest book “Shinrai: Japanese Corporate Integrity in a Disintegrating Europe” available as a paperback and Kindle ebook on Amazon.

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。

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Last updated by Pernille Rudlin at 2023-01-03.

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