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Top 20 Japanese Employers in Ukraine

We’ve managed to track down 44 Japan owned companies in Ukraine, employing around 12,700 people. According to Teikoku Databank, there are 57 such companies and branches of Japanese organisations.

By far the largest Japanese employer in Ukraine is Sumitomo Electric Industries, with nearly 7,000 employees, manufacturing wire harnesses for the automotive industry. Japanese media say that Hitachi employs around 7,200 people in Ukraine via their recent acquisition, GlobalLogic. It seems likely many of these are on a contract basis rather than a permanent basis, as Dun & Bradstreet only records 49 employees and Kompass 1000-4999. [Later addition – this seems to be correct – probably US IT contractors helping Ukraine build up cyber defences]

The second largest Japanese employer is Fujikura and the third largest is Yazaki, both also manufacturing automotive wire harnesses.

According to Nikkei Asia, both Sumitomo Electric and Fujikura have shut down their plants, as has Japan Tobacco.

Japanese trading companies also have a presence – Sumitomo Corporation, Itochu (operating Suzuki dealerships via Auto International), Marubeni and Mitsui. Japanese pharmaceutical companies Takeda and Astellas also employ a few hundred, as does Dentsu, the advertising agency.

No Japanese car brands are manufactured in Ukraine, but Nissan, Toyota and Subaru all have operations there.

There is an IT hub in Lviv, and various Japanese IT and consumer electronic companies do have a presence in Ukraine, such as Renesas, Rakuten, Konica Minolta, Panasonic and NTT.

How does this compare to Russia? Please see here.

Our Top 20 of Japanese Employers (updated April 2022) in Ukraine can be downloaded here:

Top 20 Japanese Employers in Ukraine

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Top 30 Japanese employers in Russia

Around 35,000 employees in Russia work for 224 Japan owned companies and operations, according to our calculations. This makes Russia the 11th largest host of Japanese companies in the European region by employee number – if Russia can be included in Europe. Teikoku Databank has identified 347 Japanese companies in Russia, an increase of 60% over the past 13 years.

Russia is Japan’s 17th largest trade partner. Japanese exports to Russia are particularly dominated by vehicles and automotive parts. Localization of the automotive supply chain is not well advanced in Russia. As a consequence, some Japanese suppliers have been re-routing parts which would have come via Ukraine from Hungary to be transported via Belarus. There is concern that Western sanctions may result in the halt of parts exports to Russia.

The largest employer is Japan Tobacco (JTI) which has five production sites in Russia, two making cigarettes, the others making intermediate supply chain products.

The second largest Japanese employer in Russia is Toyota Motor, which has a plant in St Petersburg, manufacturing the Camry and RAV4. Nissan, the fourth largest Japanese employer, also has a plant in St Petersburg, making the X-Trail, Qashqai and Murano for the Russian market. Because of Toyota and Nissan’s presence, there are many other automotive suppliers in the the Top 30 (see below for download) including AGC making automotive glass, Yazaki (wire harnesses), Bridgestone, Marelli (was Calsonic Kansei, a Nissan supplier), Toyota Boshoku, Nippon Sheet Glass (Pilkington) and Denso. Mazda also has a joint venture with Sollers in Russia, manufacturing cross-over cars and engines.

Japanese pharmaceutical companies also feature in the Top 30 – Takeda and Astellas and of course the Japanese trading companies have a substantial presence – Sumitomo Corporation, Sojitz and Mitsubishi Corporation. Itochu seems less prominent, but has signed a memorandum of understanding with Gazprom for an LNG plant in the Baltics, so there may be some behind the scenes investment going on that we have not identified. Mitsui also seems to be taking small stakes and investing in energy projects and Marubeni also seems to be involved in various investments in technology, chemicals, energy and infrastructure.

SBI Holdings, previously a SoftBank company, owner of Shinsei Bank, is at #25, with SBI Bank in Russia, and is the only Japanese financial services company that appears in the Top 30.

And how does this compare to Ukraine? Please see here.

Updates on Japanese companies in Russia (as of 17th April 2022)

Japan Tobacco: Has suspended marketing activities and launch of new product in Russia. Production is still continuing at its 4 or 5 plants in Russia. It employs around 14,000 people across EMEA, over 3,000 of them are in Russia. 388 were employed by JTI in Ukraine.
Toyota Motor: Has suspended production at its St Petersburg plant. Toyota employs over 24,000 in EMEA – around 3,000 are in Russia. 174 people were employed in Ukraine.
Toyota Tsusho: the trading arm of Toyota group is “digging in” with their Russia operations according to the Yale CELI list. Employs over 2000 people in Russia and over 19,000 in EMEA.
Uniqlo/Fast Retailing : Initially announced its 50 stores in Russia would continue to operate, then that would shut them. Donating $10 m to the UNHCR. The company also will ship 200,000 items of clothing including blankets, underwear and jackets to Ukrainian refugees in Poland and elsewhere through the UNHCR. Has over 3,300 employees and 117 stores in Europe, which would as a rough estimate mean Uniqlo has around 1,400 staff in Russia – Dun & Bradstreet estimates 2,060.
Takeda: says it will not start any new clinical trials in Russia, and has stopped making any new investments. Local ongoing trials and supply will continue. It employs around 1,873 people in Russia, out of over 8,500 in EMEA. 138 people were employed by Takeda in Ukraine.
Nissan: Has halted production due to “logistical challenges”. Employs 1,557 people in Russia out of nearly 14,000 across the EMEA region. 175 were employed in Ukraine.
Nippon Sheet Glass/Pilkington: no announcement – classified as “digging in” by Yale CELI – employs 366 in Russia, out of 12,000 employees in EMEA.
Toyota Boshoku: “reviewing the situation” – employs around 364 people in Russia, out of over 4,000 in EMEA
Dentsu: Employs 1,500 people in at least 7 different companies in Russia (including Aaron Lloyd, Amnet, iProspect, Vizeum, Carat, Posterscope). Has announced it is pulling out and selling share to partners. It employed around 450 people in Ukraine and over 14,000 in EMEA.
AGC: has suspended sales of architectural + automotive glass in Ukraine (24 employees). It will suspend investment including regular repairs of glass manufacturing kilns in Russia + reduce production + shipments to local automotive manufacturers. AGC employs around 17,000 people in the Europe, Middle East and Africa Region, around 10% of them are in Russia.
Yazaki: no announcements on the status of its operations in Russia – employs around 1,700 people in Russia out of over 44,000 in EMEA region. 1,079 were employed in Ukraine.
Sumitomo Corporation: SMBC Aviation Capital, jointly owned with SMBC, to terminate leases of aircraft to Russia. Owns Summit Motors, Sumitec International in Russia (around 1,000 employees) and has minority shares in Terneyles, Russian Quartz and PTS Hardwood, STS Technowood (another 2,700 employees). Has 7,650 employees in EMEA. Says “currently, we are suspending or scaling-back any Russian-related businesses.” 768 people were employed in Ukraine in Sumitomo Corporation owned companies.
Sato Holdings: acquired Russian packaging and labelling firms Okil and Okil Sato X Pack in 2014 have ceased sales to Russia and are looking at all possible alternatives – they employ around 760 people in Russia, around $58m sales.
Bridgestone: will suspend production in Russia and also exports to Russia. Will continue to pay employees. Russia represents about 2% of its turnover. Is donating Y500m to supporting Ukrainian refugee relief. Employs over 700 people in Russia, out of 12,000 in EMEA.
Hitachi: Hitachi group is to suspend exports to Russia “apart from products, services and support for electrical power equipment indispensable to the daily lives of people.” Hitachi Construction Machinery has made decisions to gradually suspend production at Hitachi Construction Machinery Eurasia (300 employees). Over 650 employees in Russia, including Hitachi Energy, Hitachi Vantara and Vantec. Russian revenues account for approx 0.5% of Hitachi’s consolidated revenues. Hitachi apparently had over 7,000 employees in Ukraine, via its US acquisition GlobalLogic. Over 32,000 people work for Hitachi group companies in EMEA.
Sojitz: Joint venture plant with Isuzu will cease operations. Over 650 employees in Russia, in Center Sunrise, U Service Sunrise car dealerships and Subaru Motors.
Astellas:　Donated Y10m to UNICEF. Has stopped recruiting new patients to participate in clinical trials in Russia and Ukraine. It employs around 635 people in Russia (this figure is 3 years’ old) out of around 4,000 in EMEA. 244 people were employed in Ukraine.
Mazda: will stop exporting components to factory in Russia, but factory will continue to operate (7th March) – factory (50% owned by Mazda) employs over 550.
Mitsui: – employs around 500 people in Russia, in own operation and Komek Machinery. Classifed as “digging in” by Yale CELI list.
Komatsu: has suspended all shipments to Russia, employs around 487 people there, including in manufacturing, out of over 5,000 people in EMEA.
Mitsubishi Corporation: Will continue investment in Sakhalin 2 LNG project, along with Mitsui. As of 2015, MC had made over $1.17bn of investments in Russia. Employs over 450 people in Russia in MC Bank, MC Logistics, MMC Rus, MC Intermark Auto and Autospot, out of over 8,800 employees in EMEA.
Daido Metal: has over 450 employees in Russia manufacturing automotive bearings. No announcement has been made.
Yokogawa Electric: has around 400 employees in Russia. Has an international innovation center in Russia, in collaboration with Gazprom. No announcement has been made
IHI: 340 employees in Russia at its Alpha Automotive Technologies joint venture, has announced suspension of production.
Isuzu: announced suspension of production at its Russian joint venture plant with Sojitz. 280 employees in Russia.
Canon: Has suspended shipments to Russia. Has over 200 employees in Russia, including Canon Medical Systems, out of over 22,500 in EMEA.
SMC: 200 employees in Russia selling pneumatic tools, out of 3,300 in EMEA. No announcement.
Marelli: no announcement – employs around 123 people in Russia, out of 1700 in EMEA.
Denso: said on March 8th that were looking at pulling out their 2 expatriate Japanese staff from Russia, classified as “digging in” by Yale CELI – only has 27 employees at a sales company out of over 15,000 in EMEA.
Itochu: Will continue investment in Sakhalin 1 LNG project, along with Marubeni. Classifed as “digging in” by Yale CELI list. Has 174 employees in Ukraine.
Marubeni: Has offices in Russia and Marubeni Rubber. Less than 50 employees. Classified as “scaling back” by Yale CELI list
SBI Holdings, Mizuho, SMFG, MUFG have all pulled their Japanese expatriate staff out of Russia and have ceased transactions with Russian banks but are continuing operations with local staff. Yale CELI classified Mizuho as “digging in”, SMFG as “buying time” and MUFG as “withdrawal”

Download our revised Top 30 Japanese Employers (April 2022 edition) in Russia here:

Top 30 Japanese employers in Russia

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Hitachi power shifts

The management changes announced at Hitachi, in effect from April 1st 2022, reveal changes in the balance of power, not only in Japan headquarters, but Europe. Alistair Dormer, a British executive, who had been CEO of Hitachi Rail, and then became the first non Japanese Executive Vice President of Hitachi, was seen as a rival candidate to fellow EVP Tokunaga Toshiaki, to become President of Hitachi. In 2021, Dormer, resident in Japan, became Chief Environmental Officer and also Chair of Hitachi Europe, both perhaps an indication that he was sliding sideways away from the Presidency.

It now transpires that Dormer has retired from all his positions at Hitachi, apart from Chair of Hitachi Europe and will return to the UK. Kojima Keiji, who was already President, has strengthened his position by becoming CEO as well, following the current CEO, Higashihara Toshiaki, stepping down from the CEO position, but continuing as Chairman.

Kojima reorganised Hitachi from 5 divisions into three, focusing on “digital” systems and services and “green” energy and mobility as growth engines. “Green” was headed by Dormer but will now be directly managed by Kojima. Tokunaga, who spent some time in Silicon Valley, is heading up the “digital” side and is still seen as the hot favourite to succeed Kojima as President. He is quite literally Hitachi born and bred, having been born in Hitachi city, and his father also worked for Hitachi. He is only 55, which would make him the youngest President if he succeeds Kojima in the next few years. Kojima is ten years older than Tokunaga and became President in 2021. Previous presidents Higashihara and Nakanishi were in post for 7 and 4 years resepctively.

All is not lost in terms of having the first ever non-Japanese president of Hitachi, however. A possible successor to Tokunaga, if he is willing to wait that long, could be Claudio Facchin, who joined Hitachi in 2019 as a result of Hitachi’s acquisition of ABB Power Grids in 2020 and is now an executive officer and Senior Vice President of Hitachi, as well as CEO of Hitachi Energy.

The acquisition of ABB Power Grids led to a second shift in the balance of power within Europe. The acquisition resulted in around 15,000 employees joining Hitachi in the Europe, Middle East and Africa region, but did not have so much of an impact on HItachi’s presence in the UK, where its European headquarters is based.

In 2018-9 most of Hitachi’s EMEA staff were in the UK, working for Hitachi Rail and Hitachi Capital but now less than a third are working there.

A further acquisition, of Globallogic, in July 2021, is likely to shift the balance further. Even though it is an American IT company, it has a substantial number of employees in Eastern Europe, including Poland and several thousand who were until recently in Ukraine.

Survey of Japanese companies in Europe

Normally by this stage of the year, JETRO (the Japan External Trade Organization) would have issued the English translation of the top level findings of their annual surveys of Japanese companies in Europe (and internationally), but this does not seem to have happened this year. What is happening in Ukraine and the impact on Europe may well make any conclusions meaningless, but here, for what they’re worth, are the points which stood out for us.

Overall trends

More Japanese companies were forecasting profitability for 2021/2 than the previous year (65.7% vs 48.5%) but this is not yet back up to the pre-pandemic levels of profitability. The only countries where more than half of the Japanese companies there expected to see improved profitability – even compared to pre-pandemic levels – were Slovakia, Italy, Portugal and Sweden. Less than half of the Japanese companies in the UK, Czech Republic, Belgium, Spain, Denmark or Romania expected to see improved profitability in 2021 compared to 2019 or 2020.

This can be explained by the fact that in terms of sectors, ceramics and minerals, rubber, foods, machinery and wholesale were expecting a recovery, but banking, automotive, electronics and trading companies were all expecting conditions to worsen – sectors which are particularly active in the UK, Czech Republic and Belgium.

Many companies said that they were reviewing their supply chains and purchasing. Procurement costs and lead times have become new issues for manufacturers. UK based Japanese manufacturers seemed more pessimistic than in other countries in their forecasts, with nearly a quarter expecting conditions to worsen. Most Japanese companies were looking to procure more from central and Eastern Europe and between 14 to 28% were looking to reduce their procurement from the UK, dependin g on location and sector.

EU-Japan Economic Partnership Agreement

Nearly 50% of the respondents to the survey said they were using the EU Japan EPA for their imports into the EU – this was 80% for Japanese companies in Hungary, 65% Czech Republic, 64.3% Belgium, 53.3% Poland, 53.8% Netherlands, 48.4% Germany. This would probably reflects imports of automotive components into the EU from Japan, for at least the first 4.

EU UK TCA

25% of companies who are involved in UK-EU trade were using the TCA for exports from the UK to the EU and 10.4% were using it for exports from the EU to the UK. Around 50% of Japanese companies in the UK were using the UK Japan EPA to import from Japan to the UK and 39.1% were using it to export from the UK to Japan. 39.1% of Japanese companies in the UK were procuring from Japan, a 3.6% increase on the previous year.

More than 40% of Japanese companies in the region said that they did not know if the TCA had an impact on them or not and were concerned about the burdens of coordinating with suppliers and partners and the cost of making changes and self regulating.

Top issues

As in pre-pandemic years, employee recruitment and retention and high labour costs continue to be top concerns, with logistics and procurement costs also climbing up the list of priorities.

Brexit

Brexit has continued to be the top concern of Japanese companies in the UK, but less concerning than in 2020. Nonetheless, nearly 50% of Japanese companies in the UK see Brexit as having had a negative impact, two thirds if looking at manufacturers alone. Nearly half of Japanese manufacturers in the UK were experiencing issues with exporting to the EU from the UK and around 35% were experiencing problems with importing from the EU to the UK.

The second most concerning issue for Japanese companies in the UK is the pandemic, with employee recruitment and retention moving up from 5th to 3rd place, customs clearance still in 4th place (but a growing concern) and labour costs and GDPR at about the same level as the previous year.

Over half of Japanese companies in the UK were concerned about any deviation by the UK from GDPR, and 44% about having to deal with a UK CA mark in addition to the CE mark. 42% were worried about the movement of people between the UK and the EU – more so in the services sector than manufacturing. A third or so were also concerned about the REACH regulations and regulations on the movement of capital.

Unsurprisingly, there was an increased proportion of domestic UK sales by Japanese companies in the UK and a corresponding fall in sales to the EU.

Sales prospects

Poland was cited as the most promising sales destination for the third year running, with Germany second for the third year running too. Czech Republic, Hungary and Turkey are next most popular, then France and then Russia, with Slovakia and Spain also in the top 10. Overall, even including the UK, most Japanese companies were expecting to expand in the region in 2021/22. How the events of 2022 will affect this remains to be seen.

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

The total number of people employed by the 30 largest Japanese companies in Europe, Middle East and Africa (EMEA) has grown over the past year – despite the pandemic – but only by 3% overall. The top 30 employ around 557,000 people between them in the EMEA region, representing around 14% of their total global workforce. The average masks a wide range, from only 6% of the workforce (Itochu, TDK) through to 45% (Nippon Sheet Glass/Pilkington).

The growers

The company group which grew the most over 2020-21 was Hitachi (by 82%), now the fourth biggest Japanese employer in Europe, with over 32,000 employees, due to their acquisition of ABB Power Grids, now Hitachi Energy. The Hitachi group have almost tripled in size in Europe since 2014/5, despite various divestments, due not only to Hitachi Energy but also the growth of Hitachi Rail.

We estimate Outsourcing (does pretty much what it ‘says on the tin‘) has also grown considerably, but as they do not publish employee figures by region in their annual report it’s hard to be accurate. It acquired CPL, Otto Works, Orizon and other recruitment and staffing companies over the past few years, and is now the 11th biggest Japanese employer in the region. Their rival Recruit also grew considerably, thanks to their acquisition of Indeed in 2019.

Toyota Tsusho, the trading company within the Toyota group, has also grown both in the past year (21%) and over the past few years (52%), since the acquisition of French company CFAO in 2016 and consequent expansion in Africa. It is now the sixth largest Japanese employer in EMEA.

The shrinkers

Fujitsu shrank the most from 2020-2021, by 20%, but this was largely to do with India being removed from what was the EMIEA region. Since 2014/5 Fujitsu has restructured, with fewer people employed in Western Europe and more more employees added in global delivery centres in Eastern Europe.

Sony has also been through restructuring in the region, and now has fewer than 10,000 employees, compared to over 13,000 six years’ ago. Other companies that have shrunk both over the past year and over the past six years are Ricoh, Nissan and Honda. Honda will no doubt drop out of the Top 30 for 2021/22 once the closure of the Swindon UK plant shows in their annual report.

The Top 3

The two largest Japanese employers in the region, Sumitomo Electric Industries and Yazaki, have dominated throughout the past six years – both manufacture labour intensive wire harnesses, with factories in North Africa and Eastern Europe. SEI grew by a third since 2014/5 and Yazaki has cut back in the past few years and has more or less the same number of employees as six years ago.

NTT and its subsidiary NTT Data overtook Fujitsu a couple of years’ ago and are now the third largest employer in the region, having more than doubled in size thanks to the acquisitions of Dimension Data, Keane and Dell Services in recent years.

The new entrant

The new entrant into the Top 30 for 2021 was trading company Mitsubishi Corporation, who expanded following their acquisition of Dutch energy company ENECO in 2019. They displaced bathroom fittings company LIXIL whose employee numbers decreased after their divestment of Italian company Permasteelisa.

Our Top 30 EMEA can be downloaded for free below:

Top 30 Japanese Employers in EMEA 2021

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France as a global brand manager

Nippon Paint Holding’s November 2021 acquisition of French company Cromology initially caused me some confusion. The acquisition was done via Nippon Paint’s consolidated subsidiary, the Australia based DuluxGroup and their newly established UK based company DGL International UK Ltd. To most British people, Dulux is a British consumer brand, famous for using an Old English Sheepdog in its marketing since the 1960s. Because this breed of sheepdog has been used in the Dulux commercials and on its paint tins for so long, it is even known as the Dulux Dog.

It turns out that the Dulux Dog was also used for advertising Dulux paints in Australia, but Dulux in the UK and Dulux in Australia are now owned by separate companies. Dulux brand paints first appeared in the UK the 1930s, developed by the British company ICI, with the brand name being a combination of “Durable” and “Luxury”. By 1986, ICI Australia had 100% ownership of Dulux Australia but ICI plc then sold off ICI Australia in 1997.

In 2008 the Dutch company AkzoNobel acquired ICI, whereas the DuluxGroup listed on the Australian stock market as an independent company in 2010 and acquired various Australian, British and French paint companies and brands since then.

Cromology is Europe’s fourth largest architectural paints manufacturer with 20 paint brands that it sells across Italy, Spain, Portugal and France. Nippon Paint is apparently seeing its acquisition as a way of expanding its various brands, including Dulux, into Central and Eastern Europe too.

Up until recently France has not been as big a base for Japanese companies to expand regionally as the UK or Germany. But this acquisition by Nippon Paint and also the acquisition of French company CFAO by Toyota Tsusho and French multinational Leroy-Somer by Nidec in 2016 makes me wonder whether this might be changing.

CFAO is rather similar to Japan’s trading companies, with a history stretching back nearly 170 years, and has a substantial presence in 39 African countries, including what is sometimes known as Francophone Africa, as well as other former French colonies such as Vietnam. It has over 21,000 employees worldwide and as well as distributing Toyota vehicles, it also has brewing, pharmaceutical, retail and car servicing businesses

France has a long experience of managing famous brands globally, but as I have mentioned before in this column, multinationals are often reluctant to invest in a country that is costly to do business in, with poor labour relations and a complex bureaucracy. French President Emmanuel Macron has been trying to reform labour laws, extend the retirement age and make pensions less costly, but this has been stalled by the pandemic, and the need to maintain his popularity until he seeks a second term as President in April next year. It will not be until later in 2022 that we will see if France is in the mood to redecorate its house.

This article was originally published in Japanese in the Teikoku Databank News on 8th December 2021

Japan’s less equal companies

I often cite in my seminars that one obvious sign of the ethos gap between Japanese listed companies and the top 350 US companies is that Japanese presidents generally earn a multiple of 10-20 of the average salary in their companies, whereas the multiple for American CEOs is 350 or so.

There are exceptions of course, but even the board directors of the company at the top of Toyo Keizai’s income gap ranking (Toshin) earn an average of just under 60 times the average salary in the company. Many of the other companies at the top of Toyo Keizai’s rankings have non-Japanese executive directors, who are usually paid closer to American levels, such as Takeda Pharma (#3), SoftBank (#5) but there are other companies whose executives are all Japanese, such as Toyota (#6), JT (#15), Itochu (#16), Horiba (#17) and Canon (#20). Even so, only the top 10 have multiples of over 30, and only the top 25 have multiples of over 20. So the ethos gap is still holds.

Impact of Brexit on Japanese companies in the UK, 6 months on

(This article was first published in Japanese in the Teikoku Databank News in July 2021)

It has been six months since the UK left the EU and the transition period ended. According to my research and also a recent survey compiled by METI and MUFJ Research, the impact on Japanese companies in the UK has not been as severe as many were expecting.

This is partly because Japanese companies have been thorough in their preparations for a worst-case scenario over the five years since the 2016 referendum. The METI survey points out that larger (over Y10bn/$90m revenue companies, which is around 60% of the Japanese companies in the UK) are more positive about further expansion in the UK than smaller ones. They have had the resources and the networks to stockpile, set up logistics and warehousing on the continent and bear the costs of increased paperwork at the customs borders. They still see the UK as an important market and a useful base for regional coordination across Europe, Middle East and Africa.

Even amongst the larger companies, however, there is some diversion in views. The METI survey summarises the Japanese automotive companies as viewing the outlook for the UK market as bleak whereas chemicals, pharmaceuticals, foods and electrical machinery manufacturers are more positive. This diversion is clear in the employee totals – Nissan has 11% fewer employees year ending 2020 compared to a year previously. Honda is closing its UK plant in July and its employee numbers were 14% down in the year ending 2020 compared to the year before. Other double digit falls in UK employee numbers were Nomura and Konica Minolta.

It is becoming increasingly difficult to be accurate about employee trends, however, as one impact of Brexit has been that some of the larger companies such as Sony and Panasonic have moved their incorporated European subsidiaries to the Netherlands and Germany. The UK operations are now branches, so do not have to file their full accounts, including employee numbers, with Companies House.

Many of the financial services companies such as Mizuho and MUFG were branches of Japan or a European subsidiary anyway, and several others have moved to this model, as well as opened up subsidiaries on the continent, to ensure they are still approved to offer financial services in the EU. The EU has indicated it may put further pressure on financial services companies to move decision making and client facing personnel to the EU.

The UK is increasingly a services sector economy, and this shows in the Japanese companies where employment is growing – NTT, who have moved their global headquarters to London and Outsourcing, who continue to acquire recruitment companies across Europe.

According to METI’s survey, the reasons for choosing to continue to expand in the UK were the ability to use English, the presence of other multinationals and a transparent legal system. It would seem that the UK is still going to be the base for coordinating an increasingly dispersed network of people and businesses across the region.

What needs to change for Japanese companies to adopt hybrid working

The UK government allowed companies to encourage their staff to return to work from mid-July 2021. There are conflicting views in government, however, about whether flexible working should be the default from now on. Some worry that a permanent reduction in commuting will hit those businesses which rely on commuters for income, such as the train companies, sandwich shops, and office landlords.

British employees have been able to request flexible working since 2003. I used to work from home 2 or 3 days a week 10 years’ ago. My team was global, so most of them were based in other countries. Our team meetings were via teleconferencing, which I preferred to do from home than having to commute 1.5 hours into the office to start the call at 8:00am. I still found it important to be in the office at least two if not three days’ a week, however. I needed to interact with my peers, both for gossip on office politics and in order to be creative, to swap ideas and insights.

A survey by the Institute of Directors shows that 63% of UK business leaders are planning to shift their workforce towards hybrid working – asking employees to work from home anywhere between 1 to 4 days a week.

British employers are of course concerned about the impact on mental and physical health, data security and productivity that remote working might have. The latter seems to be even more of a concern for Japanese employers. A Lenovo Japan survey shows that 40% Japanese employers think that working from home will reduce productivity, compared to only 11-15% of European employers.

I suspect this is because Japanese employers are used to the collaborative, co-located way of working where employees can immediately turn to their bosses or colleagues for support or to exchange ideas.

European teams where there is a lot of creative work also need to be co located. If they have to work remotely, an investment needs to be made in advance in team building events, to develop strong bonds of trust between team members so they can communicate easily with each other.

Boston Consulting Group recommends such “creative collaborators” should be in the office 50-60% of the time. Other categories they propose include those who require focus without too many interruptions, for example people working in accounts. This group could work remotely 50-80% of the time. Those whose work follows defined processes and patterns, so do not need much support, can work almost entirely from home. And of course there is the group who have to be physically present to do their jobs, in factories or physically interacting with customers, so cannot work remotely.

If Japanese companies adopt these categories to enable a hybrid approach to flexible working, they will have to adopt what in Japan is being called a “job gata system”, where the job scope, place of work and hours of work are clearly laid out in a contract. Insisting on the same working conditions for all employees, regardless of job content, will not be possible in this new style of work.

This article by Pernille Rudlin was first published in Japanese in the Teikoku News, 9th June 2021

Top 30 Japanese Employers in the Netherlands 2021

There’s no doubt the Netherlands has done well from Brexit in terms of Japanese investment into Europe. Its strong services sector has made it a useful alternative regional coordination hub to London and there is a longstanding thriving Japanese community in the Amsterdam area. Both the numbers of Japanese nationals living in the Netherlands and the numbers of Japanese companies in the Netherlands have shot up the past few years, in contrast to a clear decline in Japanese companies in the UK, and a rather more bumpy but downward trend in Japanese nationals in the UK. There have also been some significant acquisitions of Dutch companies by Japanese companies since 2016.

The number of Japanese companies in Germany, the largest host in Europe, has also grown steadily over the past few years, making the sudden rise in Japanese companies in the Netherlands and Italy in the past two years look somewhat anomalous. The Ministry of Foreign Affairs (MoFA) does not explain what caused this sudden leap but they are sticking to their guns with the recent release of the data for 2020.

Cross referencing the MoFA data with the Toyo Keizai directory and our own desk research, we think the sudden jump in the number of Japanese companies in the Netherlands and Italy are probably to do with the recent acquisitions – perhaps Outsourcing acquiring Netherlands headquartered Otto Work Force in 2018, supplemented by Mitsubishi Corporation acquiring Dutch energy company ENECO in 2020. In the case of Italy, it could be due to Hitachi acquiring various companies from Ansaldo STS.

Our database contains 352 Japanese companies in Italy, sitting neatly betwen the 415 registered by MoFA and the 269 recorded in the Toyo Keizai directory. But our estimate of 503 Japanese companies in the Netherlands is lower than both the 525 in the Toyo Keizai and the 639 in MoFA’s records. We only enter companies which we can verify have employees into our database, which is why we appear to have under-recorded the number. Many of the companies identified by Toyo Keizai and presumably MoFA are brass plate, holding company type entities. As was seen in the acquisition of Otto Work Force, even one company in the Netherlands turns out to have multiple legal entities attached to it – at least 9 different subsidiaries are associated with Otto Work Force in the Netherlands. According to Dun & Bradstreet, Outsourcing’s holding company in the Netherlands now has over 50 companies associated with it.

Some of the Netherlands based companies we have not recorded may well have employees, but it seems Dutch companies are not obliged to disclose as much information as similar companies in the UK, for example – where employee numbers, even for the smallest company, are disclosed and freely available on Companies House.

Bearing the lack of data in mind, our Top 30 Japanese companies in the Netherlands needs to be treated with caution, but we can certainly see that Outsourcing and Mitsubishi Corporation‘s recent acquisitions have pushed them into the Top 30. Recruit, another major Japanese recruitment company, also entered the Top 30 with its acquisition of USG People in 2015 and Orix, the Japanese financial services company, acquired Dutch asset manager Robeco in 2013.

As these acquisitions show, Japanese companies have mainly been investing in the Netherlands’ services sector. There some companies with manufacturing operations such as Omron, making control equipment, factory automation systems, electronic components, automotive electronics, ticket vending machines and medical equipment. Toyota Industries entered the Top 30 with its acquisition of materials handling systems manufacturer Vanderlande in 2017 and Canon manufactures printing production systems, as one of its legacies of acquring Oce more than ten years ago. Other major manufacturers are Astellas (pharmaceuticals) and Teijin (fiber). The notable absences from the Top 30 in terms of manufacturing are from the automotive sector – no Japanese car companies have plants in the Netherlands, and as a consequence, none of their suppliers do either.

The 30,000 employees who work for the Top 30 largest Japanese employers in the Netherlands represent around 70% of the total number of Netherlands based employees working in Japanese companies. This puts the Netherlands in equal 7th place with the Czech Republic in terms of largest numbers of employees in Europe, after Germany, UK, France, Poland, Italy and Spain. As the Netherlands is host to the fifth largest number of Japanese nationals and fourth largest number of Japanese companies, this is a further indication that the Netherlands has relatively few manufacturers with large numbers of employees and rather more in the way of holding companies with no employees, and a relatively higher density of Japanese expatriates compared to some other European countries.

Top 30 Japanese Employers in the Netherlands

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