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The British have a saying for when a job is never finished – “painting the Forth Bridge”. The Forth Bridge is a nineteenth century railway bridge, nearly 2.5km long, near Edinburgh. It has a very distinctive cantilevered design, painted in red. Supposedly when you have finished repainting it, it is time to start again at the other end.
Brexit looks like a Forth Bridge for UK based businesses – just when you think you have made preparations for whatever deal is done, a fresh round of negotiations and possible outcomes appear.
My database of all the Japanese companies in the UK is another Forth Bridge. Every time I think I have the definitive picture, I find more data to add. There is a free online government database, Companies House, to which all companies incorporated in the UK must submit their annual reports. If they are above a certain size, they must also give an account of the risks they face and what they are doing to mitigate them.
By reading these reports, I can cross check other records of employee numbers, turnover and capital. I can therefore say with some confidence that there are over 1000 Japan originated entities in the UK (including branches) and they employ over 160,000 people, with total turnover of around £100bn. I can also see what steps Japanese companies have taken to prepare for Brexit.
Much of this has been in the news already. Those companies who are physically moving products – whether in the automotive supply chain, or pharmaceuticals or electronics – have stockpiled, expanded their warehousing and reviewed their logistics. Those companies who are in regulated sectors such as finance or pharmaceuticals have strengthened their EU bases and made the necessary applications to EU authorities for approval for their services or products.
There have also been structural changes. Plenty of the larger Japanese companies were already in a holding company structure across Europe, with holding companies mostly in the UK, Netherlands or Germany. Electronics and trading companies are turning their UK companies into branches of EU holding companies, or turning their UK companies into “commission agents” so that the principal in a sales contract is in the EU. Some have reduced the capital they have in the UK.
This has not caused an immediate or dramatic negative impact on jobs, but in the long run I worry about the loss of influence and budget that this may have for UK business.
The mood at the Japanese Chamber of Commerce & Industry in the UK’s New Year party was very positive, however. The message of the speeches was that Japan and the UK have so many common interests, they need to stick together. Membership of the Chamber is at a record high as new Japanese companies continue to invest in the UK, largely in domestic oriented businesses such as food, retail or public sector outsourcing, symbolised by the stunning flower arrangement provided by Aoyama Flower Market, who opened their first UK branch in London in 2018.
This article was originally published in Japanese in the Teikoku Databank News. It can also be found in “Shinrai: Japanese Corporate Integrity in a Disintegrating Europe” available as a paperback and Kindle ebook on Amazon.
