Japanese Business Blog - Page 2 of 61

Who are the Biggest Foreign Companies in Japan in 2020?

Toyo Keizai has not, as far as we are aware, issued another ranking of the biggest foreign companies in Japan since the one we blogged about in 2018. So for an update, we are relying on the analysis of a Japanese blogger working for a publisher in Tokyo, going by the name of Naganasu (long aubergine, ahem), who has done the number crunching from the Toyo Keizai directory for 2020.

Naganasu has not included minority foreign owned companies such as Nissan, who were top of the rankings last time. This means Accenture (headquartered in Ireland) has shot to the top, with a 70% increase in employee numbers from 7,600 in 2018 to 13,000 in 2020. Gibraltar Life Insurance, a Japan only brand, formerly known as Kyoei, acquired by US company Prudential Holdings in 2001 is still at #2 with 12,731 employees. Naganasu has also not included Sharp, 65% owned by Taiwanese Hon Hai, which was at #3 before.

The largest European-owned Japanese company is Bosch, at #6 with 5,333 employees. VSN (a staffing company acquired by Swiss company Adecco in 2012) has risen to #10 from #31 with 4, 271 employees, a third larger than in 2018. IKEA has also grown in Japan, from 2,700 employees to 3,200, up from #36 to #16.

As in 2018, there is a lack of British owned companies in the top 50. The only one included by Naganasu is AstraZeneca at #19 with 3,000 employees. What happened to GSK, which was at #28 with 3,300 employees in 2018 is not clear. Perhaps they have shrunk to below 2,000 employees, so were not in the top 50. Alternatively, as we’ve often noticed with Toyo Keizai, if you don’t respond to their questionnaires, you don’t get included.

Other European companies in the 2020 top 50 are Adecco, L’Oreal, Bayer, Nestle, Philips, Valeo (French automotive supplier), Triumph (Swiss underwear company) and Autoliv (Swedish automotive company).

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。

Japanese values prevent digital transformation

Kimura Takeshi, a Nikkei IT journalist has a self-styled hard hitting rant in Nikkei Business about Showa values such as omoiyari and how they should be ditched if Japanese IT companies are to compete globally. I have to admit he shocked me, as I even titled my book about how to provide Japanese style customer service “Omoiyari”, but then I was brought up in Japan during the Showa era (1926-1989).

He says omoiyari (consideration for others, forethought) and being close to the customer is still important in hospitality or medicine but is plain creepy and useless when it comes to IT. He points out that all it means is that you are close to other humans in the customer company, who are running the IT department, and who will not necessarily tell you or know the full picture of what is going on in their company.

Other Showa values he gives a good kicking to include gembaryoku – or onsite capability, meaning that suppliers are there working at the customer site and “we never give up, never run away.” As he points out (and I’ve often warned suppliers to Japanese companies of this too) this leads to over-servicing and all kinds of work being done which were not in the original project spec, tipping profits into losses.

He also points out that Japanese companies that boast of these values are usually homogeneous organisations with a strong sense of companionship and self sacrifice, where employees are working for the organisation and colleagues, as well as having a budget busting customer entertainment allowance. Not only will this not be competitive globally, but it also means the company is a closed organisation without diversity. High performers are disliked by others. Deference and consensus based decision making (nemawashi) are the norm.

He says this is why foreigners coming to Japan as tourists love it so much, because there is such a strong urge to be considerate and hospitable towards others. But once they live in Japan, they are expected to be members of the community and learn how to read the air and be considerate of others around them, but find this difficult to do as they have been brought up to be self assertive and individualistic. As a result they are excluded from the community and treated as strangers, causing unhappiness and confusion.

Kimura says it feels uncomfortable to have to tell Japanese people to deny their compassionate natures, but he worries that if they don’t, then Japan will not be able to ride the wave of digital revolution and will not only be underdeveloped in IT but an underdeveloped country in a more fundamental sense. IT companies need to include foreigners so that they can thoroughly discuss and create new digital services without having to read the air or worry about whether it would mean a loss of jobs for people who have supported you on the client side.

Instead of omoiyari based closeness to a customer he recommends “がっぷり四つに組む” (Gappuri yotsu ni kumu – be locked together in 4 ways) which was a new expression to me. It comes from Japanese martial arts, meaning to grab each other’s belts with both hands.

I talk further about omoiyari and Japanese customer service with Rochelle Kopp, founder of Japan Intercultural Consulting, in a podcast available here. The podcast is also part of our Kaiseki Club subscription – subscribers receive monthly podcasts and recommended articles, videos and books on Japanese business.

Top Japanese companies for CSR in UK

Only around 10% of Japanese companies in the UK mention any charitable donations in their annual reports, and yet according to Toyo Keizai, many of the largest Japanese companies in the UK top the rankings for contributions to corporate social responsibility, measured in Yen.*

Top of the ranking is Honda, which spent Y9.57bn ($87m) on contributing to society in 2019/20. Activities included a national robot contest and the Honda Eco Mileage Challenge – a competition to see how far a car can be driven on a liter of gasoline, as well as beach cleanups. CSR outside Japan is also included, such as Honda’s professional training course in South America, a Dream Riding Program for women in India and tree planting in Inner Mongolia.

Pharmaceutical companies have always been big corporate givers, unsurprisingly. Takeda is the second largest CSR donor in Japan, spending Y8.55bn (a significant increase on previous years) on the Takeda Science Foundation awards, research grants etc as well as volunteer activities. Third is NTT DoCoMo who have created a DoCoMo forest in 49 locations in Japan and provide scholarships for Asian students.

Other companies in the top 50 who also have substantial presence in the UK include Suntory, SECOM, MUFG, Canon, Panasonic, SoftBank, Sony, Aisin, Eisai, Komatsu, Nomura, Hitachi, Mitsubishi Corporation, Nissan, MS&AD, Daikin, SMFG, Mitsubishi Chemical, Fujitsu, Marubeni, Asahi Chemical, Asahi Breweries, Mitsubishi Heavy and Denso.

By contrast, the largest declared donations in money and “in kind” by Japanese companies in the UK are Toyota who donated £1.3m, Dentsu who donated £900,000 (but this might be across the global network) and Ricoh who donated £500m. None of these appear in Toyota Keizai’s rankings.

Honda of the UK donated £24,000 to charities in the UK last year as well as investing in various sustainability initiatives in education and community, safety, environment and diversity and inclusion.

Fujitsu was also a top 50 donor in the UK, along with MS Amlin (part of MS&AD), Sony Music Entertainment and Sony Interactive Entertainment, Mitsubishi Corp via its subsidiary Princes and Eisai.

As for the other big donors in Japan who don’t seem to be giving much in the UK, it’s either because they are but not reporting it, or it’s an opportunity for their employees to encourage them to contribute to UK CSR activities as well as in Japan.

*Toyo Keizai counts both direct contribution to CSR and business activities which have a social purpose.

Where Japanese employees feel most engaged

There isn’t really a Japanese word for employee engagement, which tells you something in itself, so the concept of “hatarakigai” – which Google Translate renders as “rewarding work” – is more often used when conducting surveys on employee engagement. Foreign companies tend to dominate surveys of top hatarakigai companies in Japan, in contrast to the ranking we covered in a previous post, of companies that are most popular choices for new male graduates, where only Accenture appeared in the top 100.

In the most recent Open Work survey of nearly 90,000 Japanese who had been working at a Japan based company for over a year, in terms of hatarakigai, foreign companies take the top 3 positions – Procter and Gamble is at #1, Salesforce.com at #2, Presidential Life Insurance at #3.

The obvious overlap with the popularity rankings for graduate hires is the Japanese trading companies. Itochu is #4 in terms of hatarakigai and was top of the popularity rankings for new graduate hires too. Itochu‘s rivals Mitsui and Mitsubishi Corp are at #9 and #10 for hatarakigai. The other major trading house, Sumitomo Corporation, trails somewhat at #25.

Various consulting companies, foreign and Japanese, including Accenture again, feature in the top 50 hatarakigai. Japanese manufacturers such as Sony, Asahi Chemical, Keyence, Murata and Astellas are also in the top 50.

The financial services companies that were so popular with the Japanese male graduates are not so dominant – Tokio Marine at #14, Nomura at #36, SMBC at #37 and Daiwa Securities at #43.

Open Work includes in its criteria:

satisfaction with pay and benefits,
employee morale,
transparency,
mutual respect between employees,
opportunity for growth for people in their 20s,
long term human resource development,
regulatory compliance/awareness

It points out the biggest gap between those companies who were in the top 10 and those in the top 50 was satisfaction with pay. Foreign companies are well known to pay better and not follow seniority based pay the way Japanese companies do. Japanese companies also have a tendency to sit on their cash for a rainy day rather than use it to raise the pay of their employees.

However those companies who had improved their ranking the most over the year were those who had improve their scores on long term human resource development. Japan Intercultural Consulting, which Rudlin Consulting represents in EMEA, is delighted to offer their training and coaching services in this regard.

Most popular employers for graduate men in Japan are companies that would make their mum proud

It’s probably a legacy from the good old sexist days in Japan when men and women followed very different corporate entry paths that Toyo Keizai chooses to split its graduate employer popularity ranking between males and females. Back in the day, men tended to be graduates of 4 year universities and follow the management track, whereas many of the women went to 2 year junior colleges and entered the administrative track.

It’s intriguing nonetheless to speculate why men in particular choose the companies they do, compared to the most popular choices for men and women combined.

Top choice for men for the second year running is the Japanese trading company Itochu. Known to be more maverick than its rather more staid rivals Mitsubishi Corp and Mitsui & Co, it has been beating them on net income in recent years too. And it pays well. It tops the combined male/female chart too. Mitsubishi Corp has regained some ground, however, and is at number 3 for men, up from 14 the previous year, but is clearly less popular with women, as the combined ranking is 8th. Mitsui is #30 for men, up from #43 a year ago and also less popular with women as the combined rank is #36. Sumitomo Corporation is at #38, down from #31 a year ago.

6 out of the top 10 choices for men are financial services companies – Nippon Life Insurance at #2 this year, up from #7 the previous year, Daiwa Securities at #4 (#3 the previous year), SMBC Nikko at #7 (down from #2), Mizuho Securities at #8 (down from #6), Mizuho Financial Group at #9, same rank as the previous year, Sumitomo Mitsui Trust and Banking at #10 up from #19.

SMBC had a big jump to #11 from #28 and MUFG is at #21 up from #29. However Nomura has significantly lost popularity, down to #27 from #17 and fares even worse in the combined male/female rankings, at #39.

Manufacturers are doing well – Sony up to #20 from #35, Toyota at #29 up from #49, Suntory up to #28 from #62. Panasonic is only at #67, but that’s a big improvement on #115 of a year ago.

The only non-Japanese employer for men in the top 100 is Accenture at #33, up one place from #34.

Overall, Japanese 21 year old men seem to have a preference for established Japanese companies that are performing well, pay well, and would make your mum proud.

Top 30 Japanese employers in Germany compared to the UK

Germany and the UK are host to a similar number of Japanese companies, and a similar number of people are employed by Japanese companies in both countries. Comparing the 30 largest employers in each country reveals some significant differences however, reflecting their different strengths in services and manufacturing,

The top 30 largest Japanese employers in Germany employ around 99,000 people* – 57% of the total 167,000 people we estimate work for around 970 Japan owned companies in Germany. The UK top 30 employ around 94,000 people, just over half of the 180,000 people we estimate work for over 1100 Japan owned companies in the UK.

So there’s not that much difference in the scale or proportion, however only 12 companies appear both in the Germany and UK Top 30. They are largely the ICT/electronics companies such as Fujitsu, Sony, Ricoh, Canon, Panasonic, Konica Minolta, NTT and NTT Data, who presumably are at a scale which reflects population size and therefore domestic consumer and B2B demand for their products and services.

Outsourcing Inc is in the Top 30 of both, following a recent aggressive programme of acquisitions throughout Europe such such as acquiring Otto Workforce. Similarly NSG appears in both Top 30s as a result of its acquisition of Pilkington Glass in 2006 and Olympus as a result of building on its acquisitions of Keymed and Winter & Ibe several decades ago.

Hitachi only just makes it into the Top 30 for Germany, whereas it is number 2 in the UK, largely thanks to the organic expansion and acquisitions by Hitachi Rail.

The companies that only appear in the UK Top 30 are either in the automotive sector such as Nissan and Honda, in the financial services sector (MS&AD, MUFG, Nomura, SMFG) or the general trading companies and their acquisitions (Itochu, Mitsubishi Corporation, Marubeni). Toyota appears in both Top 30s, although it only has manufacturing in the UK. In Germany its main companies are Toyota Kreditbank and Toyota Gazoo Racing. Dentsu, the advertising agency, is also in the UK Top 30, reflecting the traditional strength of the UK in marketing services, leading to the acquisition of Aegis and many other British agencies and resulting in Dentsu’s global headquarters being located in London.

The companies that only appear in the Germany Top 30 are Sumitomo Electric, which is at number 1 due to the large numbers employed at its factories acquired from Volkswagen and Siemens in 2006, DMG Mori Seiki (another manufacturing acquisition), Lixil (acquired Grohe), JT International (its German factory a legacy of RJ Reynolds owning Hans Neueberg, in turn acquired by JT International), Showa Denko (owns SGL Carbon), and other companies with manufacturing in sectors of traditional strength for Germany such as chemicals, pharmaceuticals and engineering.

So in a way, the UK hosting (at least until July 2021) manufacturing plants for the three major Japanese car brands is more of an anomaly, and the rest of the Japanese investment in the UK reflects the UK’s strengths in services, particularly financial and commercial, as a centre of international trade, whereas Japanese investment in Germany reflects traditional German manufacturing and engineering strengths.

You can download the Top 30 Japanese companies in Germany and in the UK for free below:

The Top 30 is by corporate grouping, so each entry will contain several Japanese companies. In Germany’s case, there are 186 companies in the Top 30 employers. If you would like more detail on which companies appear in each group, their size in terms of employees and their location, please contact us. Prices start from 10c per company, with a 100 euro set up fee.

Top 30 Japanese Companies in Germany April 2021

FREE DOWNLOAD

Send download link to:

Free pdf of Top 30 largest Japanese employers in UK

FREE DOWNLOAD

Send download link to:

*This post and the Top 30 Japanese companies in Germany was updated on 25th April 2021.

Japanese companies’ employee numbers shrinking more in Europe than elsewhere

The quarterly survey by Japan’s Ministry of Economy, Trade and Industry reveals that employment in Japanese companies in Europe fell more than other regions in October to December 2020, a reflection of the continued declines in capital investment and sales in the region.

Globally, Japanese companies’ sales improved 3.8% on the previous year, the first increase in 8 quarters, but for Europe there was a 1.8% decline, the tenth consecutive quarterly decrease. Sales in North America fell slightly more, by 2%, but the decline has been more recent – over 5 quarters. Sales in Asia rose 9.3% (and comprise over half of Japanese companies’ sales overseas), the first growth in 8 quarters.

Capital investment declined across the board, by 17.6% – the fifth quarterly consecutive decline. The fall in investment in Europe was 19.6%, greater than North America’s 16.2% drop, but lower than the 23% fall in investment in Asia.

The total number of employees fell globally by 4%, the 7th consecutive quarterly decline, and by 7.9% in Europe, the 4th consecutive quarterly decline. The number of employees only fell by 3.8% in Asia (7th consecutive quarterly decline) and 3% in North America (4th consecutive quarterly decline).

Sectorally, the decline in sales in Europe was mainly in electrical machinery (13.9% drop) and transportation equipment (which includes automotive) with a 2.9% fall. Capital investment in the European transportation equipment sector fell by nearly 40% and there was a 15.4% decline in capital investment in the European electrical machinery sector too. European employee numbers fell 26.5% in electrical machinery and 3.8% in transportation equipment. There were increases in sales, investment and employment for Japanese companies in Europe in the chemical and general purpose machinery sectors, however.

The path Japan should take to zero carbon – former Hitachi president Kawamura Takashi

Kawamura Takashi is famous in Japan for being instrumental in turning Hitachi round after its largest ever loss in 2009. He has just finished 3 years as chairman of TEPCO (Tokyo Electric Power). Nikkei Business asked for his view on the Japanese government goal of achieving zero carbon by 2050. While more diplomatic than Mr Kobayashi of Mitsubishi Chemical, he points out that country level goals need to be translated into industry based goals, and this cannot be left up to individual companies. Government, electric power companies, manufacturers and citizens will have to unite to do this, he says.

This could apply to Japanese companies in Europe as well in our opinion. There is more scope for Europeans working in Japanese companies to network with each other to collaborate to achieve sustainable development goals, and not just leave it up to the Japanese exaptriates.

Kawamura points out that it’s tough for each company to go it alone. Equipment around the world for companies such as steel manufacturers will become obsolete if they were to switch away from current product methods. Chemical companies could no longer make plastic from petroleum but artificial photosynthesis has been worked on for decades and is still unsuccessful.

“But if it cannot be done, the earth will be destroyed first”. It may seem that the solution is for Japan to “choose the path of returning to the lifestyle of the Edo period (1603-1868) living quietly with a small population” but Kawamura thinks this is not a responsible thing to do when Japan has the third largest GDP in the world.

Hydrogen can be one solution but the problem is making it. It can be made from water with nuclear power but of course this is controversial. There are few regions in Japan where the efficiency of generation of renewable power is high enough to make hydrogen however. So it might be necessary to find methods of producing hydrogen from overseas renewable energy power generation and transporting it to Japan for distribution as energy.

Kawamura says Japanese business leaders are too emotional. They cannot cut business lines which have been developed in their companies over the years, so end up having to bring in foreign executives to do it. “It’s a lie that Japanese can’t do it. Japanese companies don’t want to make calm decisions based on economic rationality, but Japanese really should do this for themselves.”

Asked if he will stay on another 3 years at TEPCO to help with zero carbon he says that at 81 he is too old and he is wanting to do things that give him ikigai (a reason for living outside of work – see our Japan Intercultural Consulting video on this) such as taking his time to read books, which he said he could not do when he was an executive.

“Almost” no hesitation appointing a Belgian president – Mitsubishi Chemical chairman

Yoshimitsu Kobayashi, chairman of Mitsubishi Chemical was interviewed towards the end of 2020 by Nikkei Business magazine. Mitsubishi Chemical is not in our Top 30 Japanese employers in Europe, as it only employs around 3,200 in the region – mainly via the UK company Lucite International which it acquired in 2008 and other acquisitions in Germany, Italy and Switzerland.

Kobayashi has always been his own man, and somewhat unconventional by Japanese corporate standards, having studied at the Hebrew University of Jerusalem before joining Mitsubishi Chemical in 1974. He is nonetheless a leading light in Japanese business circles and sits on various government and employer bodies.

He was asked if capitalism will change, as there seems to be renewed interest in the kind of stakeholder capitalism that Japanese companies prefer to practise. His view is that Japanese companies should not just say “sampo yoshi” (three way satisfaction for the buyer, seller and society) and be complacent, but have to improve their productivity and capital efficiency, and make a profit.

Asked about the surprise appointment of Belgium-born Jean-Marc Gilson to President of Mitsubishi Chemical, Kobayashi said they had been preparing the ground for some time. Even when he chose the previous president, Ochi, he found it hard to make his mind up. So he set up a nominations committee with external directors with overseas experience. They were tasked with finding the best person globally – but it took five years for this message to get through.

He had “no hesitation – almost no” in appointing a foreign president. Rather, he was more afraid of turning back to the past and appointing a Japanese president. He wanted to make sure that whomever became president understood the “KAITEKI” philosophy that he had been promoting and take a radical approach to zero carbon and reduce reliance on oil and coal. This probably needed an outsider to push this portfolio transformation and improve Mitsubishi Chemical’s market capitalization. “What this company lacks most is the awareness of how to make money. I talked to Mr Gilson about this four or five times over Zoom, as he also had experience in a private equity fund, he explained this point very clearly. I hate to say, but a Japanese president could not give such a presentation.”

“Rather than Gilson’s own performance, I am hoping that by him becoming President, the whole company will up its game. Rather than being told to study English or speak English, wouldn’t you try to speak English of your own accord because the president is foreign?”

He is quite critical of the current Japanese government announcing zero carbon by 2050 without any actual design behind it. “There is no serious discussion at all” and yet per capita GDP in Japan is lower than Singapore, Hong Kong and South Korea.

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%.

Further details of the Top 30 Japanese Employers in Europe can be found in our 1 pager here:

Top 30 Japanese companies in Europe 2021

FREE DOWNLOAD

Send download link to: