Digital Transformation

Data and trust in Japan and Europe

I recently logged back into an online events platform which I had not used for a couple of years, in order to set up ticket sales for a seminar. A message popped up saying that in order to continue using the site for sales, I needed to register with the US Inland Revenue Service. I started to fill in the form, but began to feel uneasy about handing over so much confidential data to a US government agency, given the activities of DOGE.

I found an alternative events platform, which was developed by a UK based company. The payment system it used had joint headquarters in the US and Ireland, and was a system I was already registered with. Because of the Ireland headquarters, there was no need to hand over my data to any US agency.

I then started to look at alternatives to other US based digital services and discovered a website specifically set up to recommend European alternatives to US based companies. Many of the sites recommended still use Google search engines, but operate via a VPN and have strong data privacy controls.

I was reminded of research on data privacy I commissioned around 15 years ago when I was working for a Japanese IT company. The research analysed surveys on the levels of trust different countries around the world had with regard to having personal data stored in or shared with other countries. Europeans – particularly in Germany and other countries who had experienced dictatorships – turned out to be highly sensitive to having their data stored in countries whose regimes they did not trust.

A couple of years later, the General Data Protection Regulation was introduced in the EU and the regulations based on it still hold in the UK, even after the UK left the EU. In the past year, both the UK and the EU have started to fine digital services companies for improper use of personal data.

The good news for Japanese companies is that then and now, Japan is highly trusted in Europe. However, the language barrier and also cultural differences means that it is unlikely Japanese digital services will be an attractive alternative for European users. Similarly, European digital services may be hard to use for Japanese customers.

More than ever, the merging of products, data and services means that European and Japanese companies will need to partner with each other to develop trusted, global solutions.

This article by Pernille Rudlin originally appeared in Japanese in the Teikoku Databank News on 11th June 2025

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What Japanese companies need to know about ecommerce in Europe

I was browsing in a second-hand bookshop in my neighbourhood recently – with some difficulty as most of the floor was covered in boxes of newly purchased books. This led to a conversation with the owner about he managed his stock. I said I supposed that he put online the stock that he did not have room to display. He replied he did not have a website – he had tried to use e-commerce during the pandemic but it proved to be unprofitable.

He found he could not compete with Amazon and Amazon’s second book arm, Abe Books, in terms of search engine rankings. He could sell his books via Abe Books, but there is fierce price competition and if the book is not rare, the margins are very small.

As I write this, I am watching a British online art auction. Almost all British art and antique auctions are now online, since the pandemic forced them to switch – and these auctions are now consolidated on a website called saleroom.com, which also has auctions from continental Europe and the USA. Buyers have returned to the auction room in person too – and I would certainly prefer to see art and antiques in person before bidding. For signed art by known artists with known provenance, it is of course less of a risk.

On the other hand, a son of a friend of mine has become very rich selling online, even though his products are cheap, no-brand, highly commoditised products – for example lint removers – and are manufactured in China. The secret to his success is his total obsession with data – even when he is on holiday he is checking sales volumes and competitor prices and ratings and tweaking his pricing and his social media advertising.

Many B2C companies in the UK have become entirely online, with no physical retail presence. This is partly because the overheads, particularly energy costs, have shot up recently, as well as labour shortages. But the most successful b2c online businesses started with a physical shop, to establish their brand.

It’s no surprise then that one of the most cited barriers for Japanese companies in a recent JETRO survey, particularly small-medium sized businesses, to growing their e-commerce sales in Europe, is their lack of brand recognition. For Japanese companies who are already selling overseas via e-commerce, the second largest concern after lack of information about overseas markets is the difficulty in increasing brand awareness overseas – even for the larger companies.

Over 20% of the Japanese companies in the JETRO survey wanted to expand their e-commerce sales to Europe. If physical presence in Europe is not possible, then the digital first solution would be to hire a European specialist marketing agency. If you have the budget and a strong brand, they can run advertising and social media campaigns for you. For smaller budgets, or a commoditized or B2B product, then a smaller local agency can recommend specialist consolidated EC websites, analyse your sales and marketing data and make recommendations on pricing and product positioning.

This article by Pernille Rudlin first appeared in Japanese in the Teikoku Databank News in May 2023

Saving Britain’s SMEs

I was dismayed to find that the Japanese restaurant in the London station I regularly use to eat at before catching my train, or to buy a bento, has started closing at 6pm, and is for takeaways only. A change in fire and safety regulations had caused it to close down for a month, and only reopen in a limited way.

The previous day I ate at another Japanese restaurant, in Slough, a town an hour west of London. It had changed hands since my last visit, and is now run by Filipinos. The staff at the hotel I was staying in mostly seemed to be Filipino too. Five years ago, such hotel staff were usually East European, but now Brexit has ended freedom of movement of labour, we are seeing more and more Asian and African nationals coming to Britain to work.

I was surprised at all these changes – but the man behind the counter at the London Japanese restaurant told me this was not a recent development. This made me realise that I had not visited them as regularly as in the past. I am not travelling so often as much of my training is now online, so people working from home, or in other countries can join the sessions.

As a result, I am busier than I have been for many years, but other British small-medium size enterprises (employing up to 249 people) are facing a tough time at the moment. A recent survey showed their confidence is the lowest it has been since the start of the pandemic. They don’t have the resources, especially after the pandemic, to cope with changes in regulations, labour supply, trade with the EU or rising energy prices.

The UK’s SMEs employ 60% of the British workforce– the same percentage as in Japan. Like Japan, the UK’s SMEs have had various kinds of government support through the pandemic and now for the energy crisis. But the government’s energy bill support will halve after March.

As a consequence of this, and the train strikes, the hospitality and retail sectors are particularly gloomy. The strikes are, I hope, a short term problem, but in the longer term, SMEs are having to rethink their business.

I sense a return to face to face happening – both at work and socially. Companies want staff to meet each other, for morale and team building and people want to socialize. But this might happen outside the big cities, rather than forcing everyone to commute in.

The local authority in my region wants to implement 20 minute neighbourhoods – communities where people can walk to and from – within twenty minutes – shops, restaurants, schools and healthcare. Perhaps the Japanese restaurant in the London station will return to its roots. I first ate there when it started in Brighton, a town an hour south of London. I am sure it will be welcomed back by the increasing numbers of hybrid workers living there.

This article by Pernille Rudlin first appeared in Japanese in the Teikoku Databank News in March 2023

A second winter of discontent for Britain

Britain is going through another “winter of discontent”, of multiple strikes. The description comes from a soliloquy in Shakespeare’s Richard III and has been used whenever social or political unrest coincides with dark, cold, wet British winters.

I remember the last, most famous “winter of discontent”, of 1978/9, when there were widespread strikes against government imposed wage restrictions. It was a year or so after my family returned from five years in Japan. Britain felt very inconvenient and full of conflict after the smooth-running life we had in Japan.

One of the positive impacts that Japanese companies such as Nissan and Toyota had on the UK in the 1980s was to introduce multi-skilling and one company union representation in return for more secure jobs with better working conditions. Many other companies adopted these practices and for decades we had far fewer strikes and disputes.

It feels like we have regressed back to the 1970s. This time the disputes are primarily about pay but also changes to working practices, and a worry that these will lead (or have led) to worsening working conditions and insecure employment.

For example, the rail union is concerned that driver-only trains, where the driver has to operate the doors as well as drive the train, will lead to compulsory redundancies. The rail management are saying that there will still be staff on the train, but they will be able to focus more on passenger safety and ticket inspection, if they do not have to operate the doors as well.

I recently travelled into London on an airport bus (because the trains were on strike) and observed the driver of the bus having to load everyone’s suitcases, check everyone’s tickets and then drive the bus. All tickets had a QR code, but he was checking them manually. Although the digital ticketing system could tell him where passengers were going and where passengers needed to be picked up, he still double-checked our itineraries with us. It seemed to me he was having to do too much, without supporting technology, so missed the fact that one passenger had booked a different bus, and he also placed some of the suitcases in the wrong part of the luggage hold.

A recent exposé of the UK warehouse of a large online fashion chain revealed similar problems. Employees had a heavy monitor strapped to their wrists telling them where they had to go next. The monitor would also alert managers when an employee was not hitting their targets. Yet the employees were having to walk the equivalent of a half marathon during a gruelling 12-hour shift. This is despite the fact that there are robots which can do a similar job, as I saw in a vast Honda warehouse in Belgium, nearly 30 years’ ago.

British technology investment has been very short term, focused on cutting labour costs rather than looking at how technology can be used to improve people’s working lives. I hope Japan’s digital transformation fares better, and that again Britain can learn from it.

This article by Pernille Rudlin first appeared in Japanese in the Teikoku Databank News in January 2023

The value of reconnecting

Looking back over 2022, I realise this has been a year of reconnecting, both personally and for work, as no doubt it has been for people all over the world. It has made me realise that while I enjoy my own company, I need to be able to connect face to face to others, to feel self-worth and vitality.

My family and friends live all around the world, and I had kept in touch with them, through Facebook and email, even before the pandemic. This year, visiting them in person for the first time in several years, I saw a big difference in wellbeing between those who are living near family, and have made friends in their community and those who moved away from friends and did not make any new friends. For the latter, now their family has grown up and moved away, they told me they feel not only lonely, but that they are living a worthless, selfish life.

In my work, too, there is no doubt that face to face training is preferable to online. It is hard, even if participants keep their webcam on, to gauge whether what I am saying is helping them and also to gain insights from them.

This need to collaborate to add value at work is apparent from research that has been done on executives in top global companies, by the IT Services Marketing Association. It shows that over 70% of executives are more interested than before the pandemic in collaborating with their IT suppliers to innovate and digitally transform their companies. The Japanese executives stood out as having an even higher interest in supplier collaboration than the global average.

This is presumably a legacy of Japan’s more group-oriented culture, and the ecosystems that have built up in Japan’s supply chains over the years. In more individualistic cultures such as Britain and the USA, suppliers and customers have been less collaborative and are more antagonistic towards each other.

One of the friends I reconnected with this year, a German film director I had not seen in 20 years, has made a film about a seaside community near where I live in the UK, during the 2019 Brexit negotiations. The film followed a group of dancers, comedians, singers and magicians who put on a variety show throughout the summer, and also a crab fisherman.

Although the performers were all British, they lived an internationally connected life and two of them moved to Spain as a consequence of Brexit. The crab fisherman worked by himself. His son did not want to follow him into the business. He said he had voted to leave the EU, because he felt the UK should not integrate with Europe on social or political issues.

My German friend is convinced that Britain has begun to realise that going it alone is not good for our wellbeing and is predicting that Britain will want to re-join the EU soon. I am not so sure, but I hope he is right.

This article by Pernille Rudlin first appeared in Japanese in the Teikoku Databank News in December 2022

Hitachi expands “job type” system to cover all employees, domestic + overseas

Hitachi has been heading in the direction of unifying its Japan and ex-Japan human resources systems for some years now, so switching all Japan-hired staff to the more Western style “job type” system, away from seniority based promotion, was to be expected. But it is nonetheless a radical step for one of Japan’s biggest companies. If other Japanese companies are able to follow suit, this would help remove one of the most significant hidden barriers to non-Japanese and other “diverse” people being able to rise to more senior roles in the headquarters.

Most Japanese multinationals make a distinction between “proper” staff – hired in Japan, straight from university, with no job descriptions, on a general track which is influenced by seniority and the promise of lifetime employment and possibility to reach the very top of the company – and “contract” staff – those with job descriptions who are usually hired mid-career and have no job security or prospects of promotion. Those employees hired outside Japan are seen as being in the latter category.

Fujitsu has applied the “job type” system to 90% of its Japanese employees from April 2022. NEC is introducing the system to its senior management from April 2023 and expanding to the rest of the Japan hired staff from 2024. NTT finished introducing it to all management staff in 2021/2.

In Hitachi‘s case it became a necessity to do this, because of its major overseas acquisitions of ABB power grids and GlobalLogic, bringing in more than 100,000 overseas employees into the group. As of October 2022 the ratio of non-Japanese in Hitachi’s board of directors was 18% and the company aims to increase this to 30% in the mid to long term.

It’s not surprising that it is Japan’s technology and IT companies that are pioneering this. Such a move is an important precondition for digital transformation – it will make it easier to hire specialists such as AI engineers and data scientists, who would expect higher remuneration than would be available under the old generalist track, seniority based system.

Mitsubishi Corporation – dealing with the Black Ship of digital transformation

Miura Hiroaki, the General Manager of Mitsubishi Corporation’s IT department (and formerly in charge of IT in the Europe, Middle East and Africa region), has a series in the Nikkei Business magazine on digital transformation at Mitsubishi Corporation. He joined Mitsubishi Corporation in 1996 and like me, was trained as a new member of staff to pick up the group fixed line phone within two rings and answer it correctly – with the team name, not your own. “Fixed-line phones were not just a means of communication, but also played a part in employee education and guidance. The mentality of abolishing this was unthinkable” he says. But Mitsubishi Corporation did, in 2019.

The only way to deal with the anger that followed the abolition of fixed line phones was to build trust, he explains. He remembered what one of his mentors had told him about building trust – to take someone’s feelings seriously, and to laugh together. So he listened patiently to all the anger, which gradually dissipated.

As well as remembering the words of his mentor, he also found revisiting Prince Shotoku’s 17 article constitution, drafted in the 7th century, useful. He sees the statement in it that “harmony is valuable” as being misinterpreted by him and others in Japanese society – that people should try to understand the other person’s point of view, without arguments. Instead, it proposes the idea that “we should always build solid trust so that we can argue with each other in times of crisis”. Miura’s view is that Japan has suffered as a national power in the 1990s and 2000s from not discussing important issues enough.

IT departments should be at the forefront of change and debate, but “the reality is Japanese corporate IT departments are being overwhelmed by having to maintain obsolete systems, suffering from a shortage of human resources, and being driven into a difficult position in terms of their relationships with employees.”

Miura also found Mitsubishi’s corporate principles an important touchstone, and driving force for change – social contribution, fair play, and a global perspective. They have more absolute value, he argues, than just blindly adopting global standards. Bezo’s view that “good intentions don’t work, mechanisms do”, are not appropriate for Japanese companies. Mitsubishi Corporation’s predecessors faced up to and adapted to the disruptive Black Ships of Western globalization before, in the Meiji Era, and will do so again.

Japanese digital transformation in Europe

The digital transformation being undertaken by so many Japanese companies is beginning to have an impact on their European operations. One of my longstanding clients has notified me that their European HR and Learning & Development function in the UK has been outsourced to a company in India and the UK staff have been made redundant. I suspect this is not just happening in Europe but globally, as the company has divested many of its subsidiaries and is keen to consolidate and digitize the administrative functions of the remaining businesses.

Several other UK subsidiaries of Japanese companies which had a regional coordination or regional sales function have transferred these functions to EU based subsidiaries. This was partly in response to Brexit, but it has also provided an opportunity to restructure their businesses. Some have become branches of Japan HQ or of the EU subsidiary, and still retain regional coordination functions and staff, funded by management service fees.

Those that have continued as incorporated subsidiaries have found that although their turnover has dropped, their profitability has improved, partly due to the reduction in headcount but also because they are able to focus on their UK business, without having to carry the costs for coordinating across the region.

I have seen the same influences improving the profitability of my own business this year. A few years’ ago, I transferred my EU business to my German partner, so I no longer have to bear the costs and complexity of coordinating it. This and implementing some new, user friendly, cloud-based accounting software meant that I didn’t need to pay for a bookkeeper to come in once a month.

The pandemic pushed much of my training delivery online, permanently, which has meant it can reach a wider audience, so the contract sizes are larger than before. My main overheads are now software and IT related, not travel expenses or paying locally based subcontractors.

Costs have also come down because I stopped my membership of various networking groups – partly because during the pandemic there were no in-person networking events to go to, but also because I was getting enough business from existing customers or through online enquiries, so there was no need to find new leads.

From my experience of working in or for Japanese multinationals over the past 30 years, I suspect that these changes will prove to be cyclical. Individual subsidiaries will start to ignore the global outsourced administrative functions and quietly build up their own local capability again. Then to avoid duplication of costs, a regional function will be revived.

My overheads are beginning to increase too. I’ve started renting an office, as I find my home office is too distracting, and it is good for my physical and mental wellbeing to walk to work. I may even re-join some networking groups, because after all, the point of digital transformation is not just to cut costs, but to innovate. And that is best done by meeting new people, in person, who have fresh perspectives.

This article by Pernille Rudlin first appeared in the Teikoku Databank News in September 2022

Ukraine – winning the digital communication war

A week before Russia invaded Ukraine, I received an email from two Ukrainians working for a Japanese technology company in Lviv, enquiring about the training I do, and asking for a meeting. I was aware even then of rising tensions in the region, but thought it best to respond as I would normally do, and we arranged an online meeting for the next week.

Unsurprisingly, the meeting was cancelled. When I replied to their cancellation email by asking them what we could do to help, they said “keep telling people what is happening here.” They had already grasped the importance of communication in 21^st century warfare.

I have to confess I had not paid much attention to what was happening in Ukraine up until then in terms of my own business. I had been aware of the Maidan uprising and the Russian invasion of Crimea in 2014, especially as I knew that the brother of the Ukrainian HR manager at one of my Japanese clients had been fighting in the Ukrainian army.

I assumed Japanese investment in Ukraine would be limited, and mostly automotive related, but the contact from the Japanese technology company alerted me to the fact that there was a technology cluster in Lviv, with many IT related companies and technology start-ups. Indeed Hitachi, through their recent acquisition of American software engineering services provider GlobalLogic, turned out to have over 7,000 employees in Ukraine.

The reasons for this boom in IT related services in Ukraine become clear on reading the latest JETRO survey of Japanese companies in Europe. This showed that Japanese corporate interest in investing in digital transformation technology is second only to their interest in investing in carbon reduction technology in Europe.

37% of Japanese companies in Europe are already using digital technologies. This rises to over 50% in the case of Japanese companies in central and Eastern Europe, where it is possible to find digitally skilled employees at a lower cost than in the West.

The impact of a digitally sophisticated population is certainly being felt in the current war. Not only have Russian websites been hacked, but it seems to us in Western Europe that Ukraine is winning the social media communication war at least. In between the harrowing footage of bombing and killing, we have been in awe of the dark humour and cheerful bravery in the videos Ukrainians are sharing of their farmers removing tanks with tractors and mines with their bare hands, while still smoking a cigarette.

The communication skills of Ukrainians and in particular their President Zelensky, help Europeans, with our own memories of wars, dictators and invasions, to empathise with them. In the UK, one of our TV channels has been showing the comedy series that Zelensky appeared in, as a history teacher who was elected President. The storyline shows how he won popular support, after one of his young students filmed his passionate and swear laden anti-corruption speech on their smartphone and posted it on Facebook.

This article was originally published in Japanese in the Teikoku Databank News on 13th April 2022

Last updated by Pernille Rudlin at 2026-03-17.

Category: Digital Transformation

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