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Dentsu

Home / Posts Tagged "Dentsu"

Tag: Dentsu

Japanese companies divest as well as invest in Europe

The eagle eyed will have spotted that our revised ranking below for the top 30 largest Japanese employers in Europe for the year ending 2016 is not quite in rank order.  Only a third of the reports covering the financial year ending 2017 are available but based on what we can dig out, we can say that acquisition hungry Nidec have topped 10,000 employees in Europe so will be higher than their 2016 ranking.  Dentsu Aegis have also been gobbling up agencies and Bridgestone has acquired a couple of tyre companies in France.

Some of the more established technology brands have been acquiring around Europe too such as Panasonic (Ficosa in Spain, Zetes in Belgium), Konica Minolta (Mobotix in Germany, Dactyl & OMR in France) and Sony (eSaturnus in Belgium, Plumbee and Ministry of Sound and TruTV in the UK).

At the same time, Japanese companies are beginning to consider exiting investments, which is a relatively new development.  Some have had this forced on them of course, like Toshiba selling Landis & Gyr and Westinghouse. Lixil was a new entrant into the top 30, having acquired Grohe, the German bathroom company and Permasteelisa, the Italian construction company but is now in the process of selling the latter to a Chinese company. “It may have been forced to sell assets it had trouble integrating” according to a source quoted in the Financial Times.

Hitachi, having acquired German company Metabo in 2015/6 is now selling it off with the sale of its power tools division to KKR.

Toshiba may well fall out of the rankings as a consequence of selling off its businesses and Takata may no longer qualify as a Japanese company, as it is about to be acquired by Chinese company Key Safety Systems.

For the full report of the M&A activities of the biggest Japanese companies in Europe, please contact Pernille Rudlin (pernilledotrudlinatrudlinconsultingdotcom) for details of corporate subscriptions and customised reports.

 

Rank Company Total EMEA employees y/e 2015 Total EMEA employees y/e 2016 % change
1 Sumitomo Electric Industries 56477 56273 -0.36%
2 Yazaki 45200 47600 5.31%
3 Fujitsu 29467 28707 -2.58%
4 Canon 22356 24826 11.05%
5 Hitachi 11759 19984 69.95%
6 Ricoh 18525 18643 0.64%
7 NTT Data 15000 18000 20.00%
8 Toyota 19118 17445 -8.75%
9 Asahi Glass 14563 16153 10.92%
10 Nissan 16535 16149 -2.33%
11 Toyota Tsusho* 15500 15750 1.61%
12 Denso 14489 15646 7.99%
13 JT Group 12150 15516 27.70%
14 Dentsu* 11000 15000 36.36%
15 Bridgestone (only for Europe) 12255 12932 5.52%
16 Takata 12518 13400 7.05%
17 Sony 13170 12530 -4.86%
18 NSG 12043 12358 2.62%
19 Nidec 3994 4545 13.80%
20 Konica Minolta 9048 9824 8.58%
21 Panasonic 10163 9981 -1.79%
22 Toshiba 11060 9923 -10.28%
23 Lixil 2298 8743 280.46%
24 Honda 8597 8111 -5.65%
25 JTEKT 7262 7292 0.41%
26 Itochu* 7200 7200 0.00%
27 Daikin 6774 7175 5.92%
28 Kyocera Group 7159 7338 2.50%
29 Fast Retailing 5240 6450 23.09%
30 Olympus* 6400 6400 0.00%
TOTAL 437,320 469,894 7.45%

 

*Best estimate as figures not disclosed in annual report

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Why work for a Japanese company? (#1) Corporate Social Responsibility

For most Japanese companies, despite recent changes to corporate governance and the occasional scandal, the main motivation is the long term survival of the firm, not shareholder value maximisation.

Obviously you have to make some money to invest back into the company to survive, but above all longevity means being a good citizen in the environment and communities you operate in. There are some exceptions to this of course, but by and large, Japanese companies are pretty sincere about corporate social responsibility, to the point where I used to joke when I worked in corporate communications in a Japanese IT company, that if we didn’t watch out, our mission statement would be identical to every other Japanese technology company’s mission statement as it could be summarised as “contributing to society through innovation”.

So if you are looking to work for a company that will be supportive of your wish to make a positive contribution to society, then you may find Japanese companies congenial places to work.

Some are more active in CSR than others, so when Toyo Keizai has published its latest rankings by industry, we matched these to our Top 30 Europe, UK and Germany largest Japanese employers rankings and put them in rank order as below.

As Toyo Keizai points out, it is easier for manufacturers to score highly in their CSR rankings, which is why they dominate the top 50 overall, and also why Toyo Keizai publishes rankings by industry, to ensure like for like comparisons are made.  Banking and financial services are not included in their analysis. Toyo Keizai explains its scoring system (in Japanese) here.  It has around 150 criteria, across the categories of diversity (gender, age, disability), environment, corporate governance and social contribution.

  • Fujifilm – #1 overall and #1 in pulp/paper/chemicals
  • Canon #4 overall and #1 in electronics and fine engineering
  • Denso #8 overall and #1 in automotive
  • Ricoh #9 overall and #3 in electronics and fine engineering
  • Konica Minolta #12 overall and #4 in electronics and fine engineering
  • Honda #14 overall and #2 in automotive
  • Nissan #17 overall and #3 in automotive
  • Daiichi Sankyo #25 overall and #1 in pharmaceuticals
  • Toyota #28 overall and #4 in automotive
  • Fujitsu #30 overall and #9 in electronics and fine engineering
  • Astellas #34 overall and #2 in pharmaceuticals
  • Sumitomo Rubber 36th overall and #2 in oil/rubber/glass/ceramics
  • Mitsubishi Corporation #42 overall and #1 among trading companies
  • Lixil 44th overall and #1 in metal products
  • Sony #45 overall and #12 in electronics and fine engineering
  • Nidec #49 overall and #13 in electronics and fine engineering
  • Takeda #50 overall and #4 in pharmaceuticals
  • Sumitomo Electric Industries #52 overall and #2 in metal products
  • Itochu #55 overall and #2 among trading companies
  • Panasonic #57 overall and #15 in electronics and fine engineering
  • NYK #58 overall and #1 in logistics
  • Japan Tobacco 60th overall, 3rd amongst food companies
  • Brother Industries #71 overall and #16 in electronics and fine engineering
  • Sumitomo Corporation – #73 overall and #3 amongst trading companies
  • NTT Data #75 overall and #4 in telecommunications
  • Olympus #84 overall and #17 in electronics and fine engineering
  • Dentsu #95 overall and #2 out of service sector companies
  • Sumitomo Heavy Industries #138 overall and #11 amongst machinery companies
  • Calsonic Kansei #138 overall and #18 in automotive
  • Fast Retailing (Uniqlo) #531 overall and #19 out of 20 amongst retailers

 

 

 

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Japanese automotive companies represent 1/3 of top 30 Japanese employers in the UK

Fujitsu continues to be the largest Japanese employer in the UK despite recent restructuring.  We’ve added Sumitomo Rubber to the list, following its recent acquisition of UK tyre wholesaler and retailer Micheldever.  Along with Kwik Fit, another UK tyre dealer and car servicing company is owned by Itochu at #3, this means that over a third of the companies in the list are automotive or have a substantial automotive component to their business.

We’ve also revised upwards our estimate of the total number of Mitsubishi Corporation employees, having confirmed from various sources that its main subsidiary in the UK, Princes, the foods company, has around 3000 of its 8000 employees in its UK operations.

The top 30 now cover around 80,000 of the 140,000 employees that Japanese companies in the UK employ.  Individual profiles of each company, including trends in employment, regional headquarters, European organisation and CSR and diversity analyses are available – please contact pernilledotrudlinatrudlinconsultingdotcom

Rank Company UK employees 2016
1 Fujitsu 9,905
2 Nissan 7,657
3 Itochu 6,697
4 Honda 4,565
5 Ricoh 3,702
6 Mitsubishi Corp 3,482
7 Hitachi 3,317
8 Toyota 3,233
9 Sony 2,937
10 Canon 2,744
11 Dentsu 2,571
12 Nomura 2,468
13 NSG 2,167
14 Mitsubishi UFJ Financial Goup 2,100
15 Denso 1,925
16 NYK Group 1,919
17 Mitsui Sumitomo & Aioi Nissay Dowa 1,867
18 Yazaki 1,846
19 Calsonic Kansei 1,729
20 SoftBank 1,700
21 Sumitomo Rubber 1,574
22 JT Group 1,473
23 Sumitomo Corporation 1,366
24 Fujifilm Holdings 1,292
25 Brother Industries 1,174
26 Olympus 1,157
27 Fast Retailing 1,100
28 Unipres 1,095
29 Konica Minolta 1,055
30 NSK 866
TOTAL 80,683

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What Dentsu’s woes tell us about Japan’s advertising industry and beyond

A British former advertising executive once told me that he and his counterparts in other ad agencies in Tokyo regularly held FUD drinking sessions where the D stood for Dentsu and the F and the U, well… But it does seem as if Dentsu’s iron grip on Japan’s marketing and advertising industry is coming to an end.

Dentsu is Japan’s largest advertising agency and has also recently entered our Top 30 Japanese companies in the UK thanks to the acquisition spree it has been on, consolidating multiple purchases of agencies in the UK and elsewhere into Dentsu Aegis Network, headquartered in London.

So dominant is Dentsu in advertising spend (although its rival Hakuhodo is traditionally stronger in magazine advertising) that you rarely get much critical coverage about it in the Japanese media.  Critical analyses are starting to appear now though, following the suicide of Matsuri Takahashi in 2015 from overwork and then revelations in the Financial Times (clearly undeterred by being owned by the Nikkei group) of Dentsu overcharging clients for digital advertising, both leading to the resignation of the President Tadashi Ishii in December 2016.

“Corporate culture at Dentsu is like the military”

Shinichiro Kaneda in the Nikkei Business takes a look at whether the culture of Dentsu has changed since, in the May 8th edition of the magazine.  “The corporate culture is like the military” according to Takahashi’s mother.  Kaneda says yelling can still be heard coming from the “sermon room” as one meeting room was known, for small mistakes or a lapse by junior staff.  New graduate hires have been threatened with the tonsure if they do not reach the peak of Mount Fuji in the top group during the new staff orientation programme.

This military culture is necessary to Dentsu says Kaneda, because it is based on Dentsu’s unique position with regard to its clients.  “What the head of the advertising section of a client says is an order which must be obeyed” says a former executive.  “Even if they give two contradictory orders, you have to comply with both.”

Crush new graduates’ pride

But the new graduate hires have all come from elite universities like Tokyo.   “People who think logically want to answer back.  So Dentsu have to, at the outset, crush graduate hires’ pride and personality.  That way, they will just fall in line with what other people tell them to do”.

Takahashi was a graduate of Tokyo and suffered when she found herself being sucked into this culture.  Dentsu bears responsibility for not changing this culture, but behind it is a wider problem across the whole of the business sector of Japan, says Kaneda.

A wider problem across Japan’s business sector

Dentsu’s clients are major companies with advertising budgets in the millions of dollars.  The head of the advertising section reports straight into the top executives of the company.  Requests from clients bypass Dentsu’s own sales force and go straight to the business units and in some cases to Dentsu’s top executives.  Everybody gets copied in and it becomes a “stamp rally” and if even one person opposes it, then the plan is overturned,” says a Dentsu insider.

This affects the shop-floor at Dentsu who are forever urgently redrafting proposals while at the same time having to keep an eye on costs.

The media is also very demanding.  TV stations try to sell advertising as a package of both late night spots and peak time spots which Dentsu has to persuade its clients with large budgets to swallow.

When economic times were better, money flowed around and budgets and manpower were generous.  Results were measured with a few qualitative surveys.

But now the Japanese economy is stagnant and with digitalization, large budgets covering everything are being subject to the scalpel and foreign companies in particular are asking for a much greater level of detail.

Traditional mass media is less influential and internet advertising is not only cheaper but results can be measured quantitatively.

Militaristic approaches do not work in this kind of situation.  “It has exposed the contradictions of the Japanese workplace” says a Dentsu executive.

In order to keep up profits and save the face of the advertising departments of clients, Dentsu keeps offering advertising services that they claim will sell, but then the results are measured quantitatively, and if targets are not made, harsh treatment is handed out.  This is particularly true of  digital advertising.

“Dentsu is a warning to Japanese companies who do not look at what is happening at the ground level, and just pursue profit” says Kaneda.

How Dentsu compares to Hakuhodo

Former Hakuhodo (the second largest ad agency in Japan after Dentsu) employee and now author of many books, Nakagawa Junichiro, was interviewed in the Toyo Keizai magazine regarding the “super elite” of Dentsu and Hakuhodo. “they are neither a normal company nor are they media.  They do anything that is related to communication.  They have both made a lot of money and the employees are paid well.  Yet they because they do not make their internal workings transparent, it is not clear what kind of companies they really are.”

“They will say yes to whatever the client asks for.  The employees are simply a mass of corporate slaves.  There are lots of internal organisations going by foreign sounding names or numbers.  For example, one local government was told their account was being looked after by the #13 section but then this section split off and changed its name.  This happens almost on a daily basis to meet client needs.”

“The human networks are complicated. For example if a magazine says it wants to write about Company A, the PR department of Company A will ask Hakuhodo if the magazine is respectable or just trying to blackmail them into taking advertising.   Hakuhodo will ask one of its sub contractors who know this area well.  But it’s not always so clear what the sub contractor’s own interests might be.”

Political campaigning

Both Hakuhodo and Dentsu run campaigns for political parties – usually Dentsu for the LDP, the centre right party that has been in power during most of the post war period and Hakuhodo for the DPJ (now the Democratic Party).  Since the election has moved onto the internet, the amount of money following around has become greater.  All kinds of media are now being used from videos to animated graphics and Dentsu and Hakuhodo try to offer the full range.

Learning to bow

Shazai press conferences (where executives have to bow in apology for some misdemeanour) are also good business.  A rehearsal generally is charged at Y1m to Y2m ($9000-$18000) – the agency role play being journalists, they create various scenarios and make a recording of it and guide executives on what to say.  “I am pretty sure you can see Dentsu’s influence on Sarah Casanova, the President of McDonalds Japan’s apology, if you look at the way she behaved the first time compared to the second time” says Nakagawa.

The amount the agencies earn from one client can be significant.  In 1996 when Hakuhodo won both the Nissan and the Mazda accounts, their turnover rose by Y130bn.  “So it’s tough on your career if you lose accounts like that. Retaining clients by being totally devoted to them becomes key and the sales executives are seen as the elite.  Although at Hakuhodo the creatives are the elite, and the salaries are about 70% of Dentsu’s, but still pretty good.  What’s true of both agencies is that sense that you cannot do anything in your own organisation or by yourself, you are nothing without the agency.”  So meetings tend to be full of people, and so as not to anger the client, instead of creating the trend, you tend to go with the flow.

Nakagawa left Hakuhodo because  “when I started working on the Amazon account, I realised I had become a typical agency salaryman who simply supports the career of some middle aged guy at the client’s, who I don’t even like.”

Overtime is a problem not just in the advertising agencies

“Overtime is a problem for all Japanese companies” not just advertising agencies.  “People take the “customer is god” idea too much too heart.  Both Dentsu and Hakuhodo try to achieve over 90% for their clients.  If they stop doing that then maybe overtime will disappear.”

“Dentsu is not that strong in the digital space.  There’s still things they need to learn.  They are good with TV for the World Cup and the Olympics, but they are being beaten on digital.  The specialist shops are stronger.   Unfortunately, with digital you can always keep adjusting and improving so the work never ends”

“Advertising executives are remote from real life.  They only hang out with the top few percent of income earners.  They are all graduates of top universities.  But they are not that corrupt.”

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The story of Japanese companies in the UK continues to be the story of the UK economy overall in 2016

Farewell to the Year of the Monkey

The number of people employed in the UK by the biggest Japanese companies in the UK rose by around 1% to 76,103 in 2016 – representing over half of the 140,000 or so the Japanese Embassy to the UK estimates are employed overall in the UK by Japanese companies.

Just as 80% of the UK economy is services, so too with Japanese companies in the UK.  Although Nissan, Toyota and Honda attract most of the headlines thanks to Brexit – understandably as they represent around 15,000 of the 76,000 jobs – the vast majority of the rest are in the services sector.

Even Sony has only one small factory left in the UK, making high end audio visual equipment and employing less than 100 people.  The rest of 3000 or so jobs are in Sony Interactive Entertainment, music and film & TV or in marketing.

Fujitsu is still the biggest Japanese employer in the UK but the gap with Nissan at #2 is narrowing, as Fujitsu have reduced their headcount by over 15% in the past year or so.  Although Fujitsu is still seen as an IT & telecomms manufacturer in Japan, in the UK it is largely an IT services company.

Trading company Itochu may be a surprise at #3, but this is largely due to its ownership of tyre fitting chain KwikFit.

The Hitachi group of companies (#7) has grown by 17% over the year – thanks in part to expansion at Hitachi Rail and Horizon Nuclear Power – but the bulk of its employees continue to be at consumer loans company Hitachi Capital.

Dentsu Aegis Network, part of the Dentsu advertising agency, has continued to acquire across the UK and Europe, resulting in a 21% increase in headcount.  Other notable increases thanks to acquisitions include Mitsui Sumitomo & Aioi Nissay Dowa acquiring Lloyds underwriters Amlin and of course Softbank, a new entrant to the top 30, with its acquisition of ARM.

The story of Japanese companies in the UK continues to be the story of the UK economy overall – a trend which will no doubt continue in 2017, with Japanese banks already strengthening and relocating to their other European Union based operations, or threatening to do so.

Customised reports, profiles and other research on the Top 30 largest Japanese companies in Europe, Middle East and Africa are available – please contact pernilledotrudlinatrudlinconsultingdotcom for further details.

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Largest Japanese companies in the UK – more services oriented than you might think

sonNow ARM shareholders have approved the takeover by SoftBank, we have added SoftBank to our Top 30 Japanese companies in the UK.  This has made the group more services heavy than before, with 12 companies in the UK focused on services (financial services but also IT – Fujitsu, advertising – Dentsu, logistics – NYK) and several others being a mix of services and manufacturing (Sony’s employees are mostly Sony Computer Entertainment, Sony Music or sales and marketing), or are manufacturers but have no factories in the UK (Japan Tobacco, Yazaki).  Together they represent over 90,000 of the 140,000 or so people Japanese companies are estimated to employ in the UK.

Although the focus since the Japanese government’s “message to the UK and the EU” (which we blogged about here) has rightly been on the automotive sector, largely because of the indirect employment that sector generates, the very fact that there are enough employees in the services sector for them to make up nearly half of the employees of the largest Japanese companies in the UK shows how the balance has shifted over the past 43 years’ of EU membership.  Truly free trade does lead to specialization.

You can download our latest ranking below, if you sign up for our free monthly newsletter.  It’s a Brexit special which as well as including numbers of employees globally, in Europe and the UK also shows which acquisitions if any the company made, and also the manufacturing sites and offices in the region – to which production and jobs may eventually shift.  As before, there is a big caveat that UK employee numbers are much harder to get hold of than the Europe or EMEA figures which are published in annual reports.  We have had to use our best guess in some cases.  There is no European employee total for SoftBank, because until they acquired ARM, they probably didn’t have enough people to justify breaking Europe out as a separate region. Indeed the head of strategic finance Rajeev Misra said that human capital needs to be built up in Europe in the last annual report.  A hint of what was to come, in retrospect.

Our reports on the Top 30 Japanese employers in Europe, Middle East & Africa (showing trends in total global employees, Japan based employees, EMEA based employees) and the Top 30 Japanese employers in the UK (showing trends in total UK employees, regional HQ location, region covered, percentage UK of Europe and of global) are available to subscribers of our premium newsletter – subscriptions available here.

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LGBT and Japanese companies
kanako-otsuji

Kanako Otsuji, campaigning as she said in her speech, not just for lesbian rights, but so that everyone in Japan can be who they want to be.

Kanako Otsuji, who was Japan’s first openly homosexual member of Japan’s Diet (parliament) spoke at the Daiwa Anglo-Japanese Foundation last week.  Her term in office expired this July – she had replaced a party member who had resigned, and she now runs the Policy Informatics Center of LGBT, based in Osaka.  One of her main campaigns is to try to get Japan’s first ever diversity law passed by 2020, in time for the Tokyo Olympics.  There is already an Equal Opportunities Law in Japan, in effect since 1986 and prohibiting gender discrimination.  Presumably the proposed diversity law would be to prohibit discrimination on the grounds of sexuality – and maybe other characteristics as such laws do in Europe, such as ethnicity/race, age and religion?

Homosexuality is not illegal in Japan, although I was surprised to hear that it is illegal in nearly half of the countries of the world.  My understanding was that Japan’s attitude to homosexuality, whilst not openly hostile, was one of viewing homosexuality as just a phase people go through and certainly not something to bring into the workplace.

Nikkei Business magazine had a special feature on LGBT earlier this summer, titled “LGBT – your company cannot ignore it”.  It cited the Dentsu Diversity Lab’s findings that around 7.6% of Japan’s population are LGBT in terms of gender identity/sexual preference, and of the LGBT people surveyed, 43% said they had come out of their own accord, but only 2.4% had come out to their boss and 4.8% to their colleagues.  Consequently, 60% have changed their jobs, compared to 50% of the heterosexual employees surveyed.  Some of the case studies included:

  • A person who turned down a job offer because the President said in the interview that being gay was a lifestyle choice so if it caused stress in the work place, that was their own responsibility.
  • Someone who had been at a major trading company for 7 years, and the next step of their career was to transfer overseas, but there was an unwritten rule that you had to be married first. The person was also worried that even if they were sent on their own, it might be to a country unfriendly to gay people. So the employee has registered with a recruitment agency to change jobs.
  • Another person who was transgender – male body but a woman at heart – was working in a major electronics company R&D lab, where almost everyone is male. The employee was having to put up with daily conversations that would be considered sexual harassment if a woman was present, and had to go to hostess bars at night with colleagues.

The feature then goes on to describe Japanese companies undertaking some kind of LGBT focused initiative including:

  • Kao started a study group on LGBT issues in 2014.
  • Suntory Holdings has also started seminars on LGBT for employees
  • Hitachi has started training centred on the HR departments of each of its group companies.
  • NEC is considering training on LGBT issues for the staff of its internal hotline.
  • Dentsu already surveys its employees on LGBT and has internal training – its Diversity Lab has noticed a big increase in people wanting the training.
  • Microsoft Japan has changed its benefits to include LGBT relationships in its definition of dependents. GLEAM started in the US HQ and has now come to Japan.
  • Nomura has “I am an LGBT Ally” stickers up in its offices. Since acquiring Lehman Bros which had its on LGBT community, it realised it had to respond.
  • Shiseido participated in Tokyo Rainbow Pride in April 2015

So there is not much political pressure on Japanese companies to consider LGBT in any diversity initiatives, as there is with gender.  Japanese consumers are fairly supportive, with over half saying that they would view positively a company which was supportive of LGBT people.  In terms of shareholder pressure, Daniel Loeb of Third Point, an activist investor in Fanuc and Sony is a supporter of LGBT rights, and foreign shareholdings in many Japanese companies is creeping up.  Indeed the Nikkei feature points out that “LGBT Is the latest management issue outside of Japan”.

Rudlin Consulting is about to launch its own Diversity & Inclusion consulting services, to support Japanese companies in Europe who want to gain the engagement of their Japan headquarters and take their D&I initiatives a step further.  We suspect that initially this will mainly be gender based to begin with, although I note that my old employer Fujitsu has already set up their high profile LGB+ network, Shine, in the UK.

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Famous in Japan, utterly unknown in Europe

doraemon25 years ago I became one of the first ever graduate trainees at the London office of the US public relations consultancy Burson Marsteller. Burson Marsteller told me they were starting various joint ventures with Dentsu in Europe, so it seemed like a great opportunity to use my interest in Japan and my communication skills to support Japanese companies who had been arriving in Europe in increasing numbers in the past decade.

PR in Europe at the time was mostly staffed by ex journalists, focused on producing press releases, and wining and dining journalist contacts so they would write favourably about clients.  Changes were in the air, however, which is why major PR consultancies like Burson Marsteller were starting to hire and train new graduates to be “communications professionals”.

In the late Eighties, the Big Bang revolutionised the City of London’s investment banks and stock market, and nationalised industries were being privatised.  I was assigned to a corporate PR team, looking after British Gas (which later became Centrica) and a building society, which was thinking of floating on the stock exchange.

They were both facing the new pressures on companies to communicate to stakeholders. Not just to their new shareholders, but also to the communities in which they operated.  They needed to show they could still be trusted, even if they weren’t owned by the state, or by account holders.  There was also a need to polish their reputation so they could attract high potential graduates.

Japanese companies in Europe have the same needs  –  now as they did then – but unfortunately I do not think much progress has been made these past 25 years.  There are so many companies which are famous in Japan but are either utterly unknown in Europe, or the name is familiar, but there is no notion of what they do, or whether they are good corporate citizens.

Nothing came of the Dentsu joint venture twenty five years ago, but I see now that Dentsu itself has started acquiring companies in Europe and other Japanese PR and advertising companies are strengthening their presence here.

Not only do Japanese companies have foreign shareholders to keep happy, but if they are to succeed in overseas social infrastructure projects, they must ensure that the communities affected are informed and welcoming, and that the best overseas graduates view them as a prestigious place to work.

This is not just a Japanese problem – I recently participated in a survey which I assume was commissioned by Siemens.  The survey asked whether I knew that Siemens had been in the UK since 1843, was one of the largest graduate employers in the UK, with 12 factories, and involved with all kinds of sustainable energy and infrastructure projects.  I was ashamed of my own ignorance of this, but amused to see that one of the competitors they were benchmarking themselves against was my old client, Centrica.

(This article was originally written in Japanese for Teikoku Databank News)

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To be a rich company director in Japan, be foreign or the founder

The cover story for the Nikkei Business magazine last month was on Japanese corporate governance, specifically focusing on what makes for effective use of outside directors (and citing Sony as a case of ineffective use of outside directors).

One of Japanese prime minister Abe’s policies for strengthening Japanese corporate governance has been to introduce a comply-or-explain regulation for any company listed on the Japanese stock markets with less than one outside director on its board.  The Nikkei notes that in other countries such as the USA, UK, France and Germany, regulations are stricter, requiring comply-or-explain for boards with less than half the directors as outside directors, in most cases.

Some other statistics caught my eye:

  • Outside directors of listed Japanese companies who have board level experience elsewhere – 38.1%
  • Average time served as director – 4 years
  • Average salary – Y12m (not much more than US$100K)
  • Female directors are 6.5% (159 directors) of the total
  • Foreign directors are 2.9% (70 directors) of the total
  • They spend around 10-11 hours a month on their directorial duties

Best paid directors overall for Japanese listed companies:

  1. Carlos Ghosn – Nissan (US$9m)
  2. Frank Morich – Takeda Pharma (until April 1 2014) (US$9m)
  3. Kohji Tanabe founder of U-Shin (automotive and industrial equipment) (US$7.6m)
  4. Kazuo Okada founder of  Universal Entertainment (Pachinko) (US$7.4)
  5. Tadataka Yamada – Takeda Pharma (US$7.4m)

Other foreigners in the top 30 include Timothy Andree at Dentsu (advertising agency), Roger Barnett at Shaklee (nutritional supplements company which was majority owned by Japanese pharmaco Yamanouchi and is still listed on JASDAQ), Carsten Fischer at Shiseido and Ronald Fisher at Softbank.

Companies with the most directors earning over Y100m (US$900K) were

  1. Mitsubishi Electric (18)
  2. Canon (12)
  3. FANUC (automation products) (10)
  4. Mitsubishi Corporation (8)
  5. Mitsui & Co (8)
  6. Nomura (7)
  7. Toyota (7)
  8. Daiwa Securities (6)
  9. Itochu (6)
  10. Nissan (5)

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Most popular companies with Japanese graduates

I alway find the rankings published each year by various organisations in Japan of which companies are most favoured by university graduates fascinating reading, giving insights into how the economy and societal trends have impacted the reputation of Japan’s blue chips.

The Nikkei Business magazine has focused on the rankings produced by Rakuten’s social networking site for graduates, the biggest of its type in Japan, this year.

Travel companies seem to have done particularly well this year overall – All Nippon Airways is top of the rankings (up from #2) Japan Travel Bureau at #3 (up from 8) and JAL resurgent after its successful restructuring in at #4 from no rank last year.  Maybe this is due to the high profile activities of these companies in trying to get more tourists to Japan, especially in light of the 2020 Tokyo Olympics.

Advertising agencies are also back in favour – Number 2 is Dentsu, the mammoth advertising agency (up from #3), Hakuhodo is at #6 up from #14 and ADK has risen from 112 to 78.

Banks have lost ground –  Bank of Tokyo-Mitsubishi UFJ has dropped to #5 from #1, Sumitomo Mitsui Banking Corp slipped from #6 to #9 and Mizuho is down to #13 from #9 but insurance companies seem to be popular again – Sompo Japan is up to #65 from 128 and Sumitomo Life also rising from 151 to 68.

Other big fallers are Ajinomoto (down to #23 from #11), Mitsubishi Corporation (down to #26 from #13), P&G Japan (down from 10 to #39, whereas domestic rival Kao has improved from #23 to #11) and Canon (down at 94 from 54, presumably following some disappointing financial results in 2013), Lotte (down to 89 from 56), NTT Docomo (86 down from 52).

Graduates from the top ten universities heavily favoured trading companies (Mitsui, Mitsubishi Corp, Itochu, Marubeni and Sumitomo Corp all in their top 10) and advertising agencies (Dentsu and Hakuhodo)

Reasons for favouring certain companies:

I could become President, have authority to make decisions – trading companies ranked highest

I can become a specialist in a certain field and lead projects – Toyota, Kawasaki Heavy Industries

My seniors recommended it – Tokio Marine Insurance, Yokohama Bank, Bank of Tokyo Mitsubishi UFJ

My parents/teachers recommended it – All Nippon Airways, Japan Rail, Mitsubishi Corp, Bank of Tokyo Mitsubishi UFJ

 

 

 

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Last updated by Pernille Rudlin at 2020-01-29.

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