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Japan’s lost three decades – what are the causes?

The 1990s were called the Lost Decade in Japan, and then as the economy seemed to stagnate in the 2000s, it became the Lost Two Decades. Now the Nikkei Business in a recent special series seems to be saying it has been a lost three decades. Turnover and profitability were growing through to around 1990 when the economic bubble burst. Then profits fell – although since 2010 they have been growing again. The total revenues of Japanese companies (excluding financial services) has been static, with only a small bump upwards around 2005-2008.

Nikkei Business says the lack of growth in turnover is the key problem. Even sales overseas, which were meant to be the growth driver, have not shown much of an upward trend. According to Nikkei Business the root causes of this lack of growth are:

low investment (1991 capital investment as a percentage of cashflow was 133%, compared to 82.2% in 2018)
low wages (106.5 in 1990 indexed against 100 in 2015, down to 99.6 in 2019)
low efficiency (return on assets was 4.3% in 1990, down to 3.8% in 2018)

It cites Panasonic as an example of #1. Every time profits rose, Panasonic increased its investment, but every time profits shrank, it cut investment back, since 2001. As for #2, Nikkei Business lists all the major restructurings since 1999 with major Japanese companies, which makes for sobering reading for a country famed for lifetime employment:

1999 – Nissan plan to cut 21,000 from its workforce, closing 5 factories
2008 – Sony announced it would reduced its electronics workforce by 16,000
2009 – Panasonic announced it would cut 15,000 people and 27 factories. Pioneer axed 10,000 jobs.
2010 – All Nippon Airways proposed reducing its workforce by 16,000 as part of its revival plan
2011 – Ricoh announced a mid term plan aiming at reducing its workforce by 10,000
2012 – NEC announced a workforce reduction programme of 10,000 job cuts
2013 – Fujitsu announced it that by axing its semi-conductor business, it would remove 5,000 jobs.
2015 – Toshiba announce it would erduce its workforce by 15,0000
2017 – Mizuho Financial Group announced an administrative work reduction programme targetting 19,000 roles.
2019 – Nissan restructuring to impact 12,500 personnel

The low efficiency seems to be in the service sector, where there has been a lack of economies of scale. The number of Japanese companies with turnover of over Y100bn/$1bn doubled from around 40 to 80 from 1980 to 1991, but has not risen much since – apart from a blip in 2008 – after the birth of Japan Post, and is still heavily manufacturing oriented.

I will cover the analysis and suggestions from the rest of series for how Japan can “wake up” in my next blog posts.

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The fourth industrial revolution should not be mercantilized

UK is the birthplace of innovation and will not sink, despite Brexit, says Toru Sugawara, the deputy editor of the Nikkei Business magazine – Japan’s equivalent of The Economist (only with more business, less economy).

He acknowledges that Brexit is casting a shadow on the world economy, and that the problems will not end just with an extension, as the negotiations will drag on, unless the result of the referendum is reversed.

He points to how employment remains buoyant in the UK, despite GDP growth being the lowest in 6 years, and says that this could be because immigration from the EU is decreasing – which was one of the reasons people voted to leave. He does not mention that net immigration has not dropped, as more people are coming from non-EU countries. So unless you believe that EU immigrants only have jobs which UK natives could do, and non-EU immigrants only do jobs that UK natives couldn’t do…

He believes the UK’s resilience derives from an inner strength which helped it to lead the industrial revolution as the “birthplace of innovation.” Because the UK has worldclass universities “UK research levels are extremely high. Even if they leave the EU, there are researchers who want to learn from the UK” – according to an engineer from a major Japanese electronics company.

The UK is similar to Japan, Sugawara notes, in that neither was able to match Silicon Valley in terms of being able to turn innovations into world changing businesses. He thinks the UK is changing, however, dating from when the British Business Bank launched in 2014, bringing together various funds for startups and small businesses and also the introduction of the regulatory sandbox, to allow new kinds of financial services to test their products.

Venture capital funding in the UK in 2018 was $7.9bn, double that of Germany or France (although what he doesn’t say is that this was down from a high of $8.1bn the previous year, and that Germany and France seem to be catching up) . Dr Yuri Okina of the Japan Research Institute points out that the UK’s strength is that as well as having the world’s financial centre, there is a rich source of accountants, lawyers, consultants and other specialists who support an ecosystem for new business.

If this network could be boosted further, then the UK could lead the 4th wave of the industrial revolution, asserts Sugawara. He warns that Japan, who puts its funds into propping up zombie companies, with regulatory systems that impede new industries from growing, will get left behind. “That’s the bigger worry” he concludes.

So he seems to be turning an encouraging pat on the back for the UK into a kick up the backside for Japan. What he says is not going to be news to many Japanese companies, who have reacted to the difficulties they face in Japan by investing in the UK (and elsewhere in Europe). Sugawara mentions SoftBank‘s acquisition of the UK’s ARM, but there have been plenty of other less spectacular investments. Much of it has to do with CASE (Connected, Autonomous, Shared, Electric) in the automotive industry – Sony Innovation has invested in What3Words (a geocoding system) – also invested in by Daimler. Itochu has invested in Hiyacar and I realise now that its acquisition of UK car repair chain KwikFit probably also fits into this automotive services play. Similarly Sumitomo Corporation has invested in the Nordic parking company Q-Park and Sweden’s car sharing service Aimo. Japan’s Park24 acquiring National Car Parks in the UK is probably also looking to a CASE future. Panasonic acquired Spanish automotive systems and parts company Ficosa in 2017.

So really, it’s not about any one country leading the fourth industrial revolution – it will be collaborative and global by its very nature. Both Japan and the UK need to keep their doors as wide open as possible to let everyone get on the ride.

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

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 pernillerudlinrudlinconsultingcom for further details.

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Namae – or name?

As I mentioned in a previous article, the question of how to address Japanese colleagues or customers is almost always raised in our seminars. I explain that it is indeed a complex issue, but surname-san is the default option. It’s polite enough, particularly if you are not Japanese anyway. However, a Japanese junior often addresses a Japanese senior by their job title – kacho (section chief, the first real manager position in a Japanese company) or bucho (general manager) for example and would address a customer with surname-sama or with their job title.

The new egalitarianism

But this is changing in Japan too. When Kozo Takahashi took over as President of Sharp, he insisted, as part of a major culture change – that from now on, all seniors would be addressed as surname-san, rather than by job title plus dono. As I mentioned when I blogged on this, bucho-dono is rather like calling someone Mr General Manager.

Diamond Online reckons this egalitarian trend started as far back as the late 1980s. New companies that were booming then like Recruit had a culture where all were called surname-san. Still, the older more traditional companies to this day keep to the job title system. I frequently ask my Japanese contacts at our clients what their company culture is like, and some say it even depends which department you are in – whether they stick to the tradition or have moved to surname-san. Diamond Online describes how in one financial services company there are 6 layers of titles from branch manager down, and one young staff member was even scolded for calling a colleague deputy chosayaku when he was a full chosayaku. There is no one translation of chosayaku by the way – I have found ‘assistant to section manager’, ‘assistant manager’ and ‘assistant to director’ in various sources. Google Translate translates it literally as ‘investigation officer’, which yet again proves that Google Translate should not be relied upon. Either way, you can see why you would be quite keen to be called “assistant manager” rather than “deputy assistant manager”.

The disappearing kacho

The term kacho might disappear completely in some companies, Diamond Online asserts in another article. In companies like Sony, which have moved completely away from any kind of seniority based promotion to one based on job roles and competencies, the change has resulted in demotion to “individual contributor” for around half of the 40% of their staff that were previously in management grades. Panasonic is also reviewing its bucho/kacho system and has, in the interests of developing its staff better, decided that managers should have around 7 staff members reporting to them. This is in reaction to having flattened the hierarchy to speed up decision making, only to find that staff development suffered.

My old employer Mitsubishi led the way in the 1980s, by changing the ka (section) and kacho (section chief) system to ‘team’ and ‘team leader’. This was due to the fact that there were too many people in the kacho grade and not enough sections to manage. The resulting dual system – whereby you have a kacho grade but your job role may or may not include managing a team is one that many Japanese companies have since adopted.

Job mobility

Diamond Online reckons whether you stick with the kacho system or get rid of it depends on whether your corporate culture is one where it doesn’t matter if decisions take a long time, so long as no mistakes are made. The kacho system may also have beneficial knowledge sharing and staff development effects. Role and competency based systems are promoted in Japan by foreign consultancies, says Diamond Online, and often adopted by Japanese companies as a way of cutting salaries. It also makes job mobility easier, if you have a better way of measuring your market value.

It would also make international mobility easier (as Hitachi are hoping), if there is a more globally accepted set of job grades and titles. One of my least favourite requests for advice is helping people translate their job titles into Japanese or from Japanese into English. It is a political minefield and can result in yet more meaningless ‘Mr deputy senior assistant director’ type titles, with nobody the wiser as a result. With many caveats therefore, I offer the chart below:

Octopus balls to Tokyo – why it matters where your company is from in Japan

Most countries have rival cities – usually the official capital city versus other cities which consider themselves to be the real business, historical or cultural heart of the country – think London versus Manchester or Birmingham, Berlin versus Dusseldorf or Frankfurt, Rome versus Milan, Madrid versus Barcelona. Japan is no exception and the rivalries go way back into history.

Kyoto used to be the capital of Japan, before Tokyo (or Edo as it was then) began to usurp it in the 17th century. If you ask Japanese people today about Kyoto, they joke that Kyotoites still think Kyoto is the real capital of Japan, and the Emperor is just temporarily visiting Tokyo (he moved there in 1868, when Tokyo became the official capital) – and will return one day.

Tokyo literally means the Eastern Capital and is part of the Kanto region, where the ruling feudal Tokugawa shogunate was based from the 17th century. Kanto means East of the Barrier (usually considered to be the Hakone checkpoint) and Kansai – the region where Osaka, Kobe and Kyoto are based – means the West of the Barrier (originally the Osaka Tollgate).

Before Kyoto’s reign as capital for a 1000 years, Nara (also in the Kansai region) was the capital and seat of the Emperor but is now a quiet backwater, more visited by tourists than business people. Kobe is the other main city in the Kansai region – a port with a strongly cosmopolitan feel and very close to Osaka geographically. Whilst Kyoto remains aloof and quietly superior (and has some very successful high tech companies of its own such as Kyocera and Nidec), the real battle now in business culture is between Osaka and Tokyo.

Osakans see Tokyo as standardizing, dull and full of bureaucrats and view Osaka (which historically had very few samurai but plenty of merchants) as the real money maker, with vastly superior food. Many of Japan’s celebrities, comedians and musicians come from the Kansai region too.

So what does this mean for corporate cultures? Osaka companies often have merchant roots – the joke goes, when you meet an Osakan, you don’t ask “how are you” (ogenki desuka) but “how’s business” (moukarimakka). To which the correct response is “bochi bochi denna” – a wonderfully vague way of giving nothing away, like saying “plodding along nicely thank you”. Osaka companies are brash, tough negotiators and mean with the money. “They’d skin the fleece off a gnat” said one British engineer to me, describing his colleagues in the Osaka HQ of a consumer electronics company.

Tokyo companies are gentlemanly but at the same time highly political. You need to have a good understanding of their organisation, the factions and the individual relationships to understand how to get things done. Mitsui and Mitsubishi, both Tokyo based corporate groups, are distinguished by the saying “Mitsui is people – Mitsubishi is the organisation”. It’s hard sometimes to understand how exactly this is different, but it seems to boil down to the idea that if an individual is powerful enough at a Mitsui group company, they can get things done, whereas at a Mitsubishi group company, the whole organisation has to support an action.

The other main corporate groups, Sumitomo and Itochu, are Kansai based companies. Both have strong “mercantile” roots – Sumitomo in metals trading, hard-nut, conservative and domestically focused and Itochu – strong in fashion and consumer goods, and seen as the more maverick, progressive and international in outlook. The regional cultural differences don’t seem to have been that strong between Sumitomo and Mitsui as various mergers have taken place between their respective member companies, particularly in financial services. However regional cultural differences have definitely had an impact on Astellas Pharma, the product of a merger between Yamanouchi (Tokyo) and Fujisawa (Osaka). Apparently many Fujisawa employees were horrified that Yamanouchi was going to be the dominant partner in the merger. Fujisawa had a strong tradition of innovation and had regarded Yamanouchi as “Mane-nouchi” (Mane = imitation) – a bunch of play-safe Tokyo bureaucrats.

Those who know Japan well will have spotted that there is an important region missing from this analysis – Chubu. Literally and metaphorically this is the midlands of Japan. Just like the Midlands in the UK it is the historic heart of the car industry. Nagoya is the main city, and teased just as Birmingham in the UK is for being ugly and soullessly modern. The area has the last laugh though, as it is the most wealthy in Japan – thanks to the enduring success of Toyota (so mighty their home town was renamed Toyota City) and its corporate group of suppliers such as Denso.

So, where are the top 30 Japanese companies in Europe from?

Kanto/Tokyo based companies:

• Asahi Glass
• Astellas (but Fujisawa originally Osaka)
• Canon
• Daiichi Sankyo
• Fujifilm
• Fujitsu
• Hitachi
• Honda
• Kao Corporation
• Mitsubishi group
• Mitsui group
• Nissan
• Nomura (but was Osaka originally)
• NTT group
• NYK group
• Olympus
• Ricoh
• Sony
• Toshiba

Kansai based companies:
• Horiba (Kyoto)
• Nidec (Kyoto)
• Nippon Sheet Glass (Sumitomo Group)
• Omron (Kyoto)
• Panasonic (Osaka)
• Sharp (Osaka)
• Sumitomo group (Osaka)
• Takeda Pharma (Osaka)

Chubu based companies:
• Denso
• Seiko Epson
• Toyota

Chugoku (Hiroshima etc) based companies:

• Fast Retailing/Uniqlo

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The most popular location for a European HQ

I’ve just been updating our Customer Relationship Management (CRM) database of Japanese companies and their suppliers in Europe. I recently shifted the database to a new cloud-based provider, which enables me to cross reference our customer data with social networking sites such as LinkedIn – a very popular business networking site across Europe and the USA. The way our new CRM interface works has also forced me to focus much more on how our Japanese corporate clients are organising their operations across Europe, including where they have placed their headquarters.

My conclusions are not entirely scientific, as my own business is based in the UK and therefore biased towards UK based Japanese companies, but it does seem that the UK is the most popular base for European headquarters of Japanese companies. Of the 96 European headquarter companies I have identified in my database, 53 are in the UK, 24 in Germany, 10 in the Netherlands, 5 in Belgium, 2 in France, 1 in Switzerland and 1 in Poland.

Of course there are many Japanese companies who do not have a European headquarters, but the trend among those who have been in Europe for a longer period is unmistakably towards consolidating across Europe in terms of functional areas such as purchasing or HR or finance. This seems to be to the benefit of the UK, which is the undoubted European if not world capital of professional services – with many globally capable financial, marketing, legal, consulting and HR firms in London.

The UK has long been a favourite destination for Japanese foreign direct investment, for various reasons ranging from the English language, to golf to the UK’s open economy. Germany has also been very popular, particularly with Japanese engineering companies who feel an affinity with German process orientation and risk aversion, as well as having historical ties such as Fujitsu with Siemens or Denso with Bosch. The North Rhine Westphalia region was particularly active since the 1960s in encouraging Japanese companies to set up there, although Sony decided initially to set up in Berlin, largely, it was rumoured, because of Norio Ohga’s love of the Berlin Philharmonic.

More recently, the Netherlands became popular because of the tax advantages offered, and also, along with Belgium, was an obvious logistical centre for Europe. Lately, however, there seems to be a shift of these headquarters to the UK. Canon has moved from the Netherlands to Uxbridge, near London. Denso and Bosch recently announced their break up, and although Denso continues to be headquartered in the Netherlands, there seem to be several senior managers with European roles based in the UK. Fujitsu and Siemens parted ways in 2009, with the Fujitsu European operations being split between Continental Europe, the Nordics, and UK and Ireland.

Sony sold its Berlin headquarter building in 2008 and is currently in the process of consolidating its sales and marketing across Europe, to be based in Weybridge, a few kilometres south west of London. However, it seems to be shifting towards a “virtual” European structure, with shared HR services now set up in Turkey, and individual senior executives with European remits being based in whatever location they prefer. This pattern has also become evident in other IT and telecoms companies such as NTT Data.

Even this virtual European company structure seems to benefit the UK the most, as senior executives of all nationalities are can be found in, or seem relatively happy to relocate to, London and its suburbs. With more than 40% of London’s population were born outside the UK, London has truly become a global capital and a place to develop global careers.

This article by Pernille Rudlin originally appeared in Japanese in the 10th April 2013 edition of Teikoku Databank News and also appears in Pernille Rudlin’s new book “Shinrai: Japanese Corporate Integrity in a Disintegrating Europe” – available as a paperback and Kindle ebook on Amazon.

Overseas experience and Japan’s elite, past and present

When I started working at Mitsubishi Corporation in London, I was intrigued by the fact that Mitsubishi had first opened the office there as early as 1915. Most British people, if they have thought about it at all, would assume Japanese companies did not establish themselves in the UK until well after World War Two. In fact it turned out Mitsubishi Corporation was a relative late comer to London amongst the sogo shosha (Japanese trading companies), although the Iwasaki founding family had links with the UK from long before 1915.

I was reminded of these links thanks to a recent talk by Dr Ohnuma Shinichi, professor of Experimental Ophthalmology at University College London (UCL) to Japanese business people in London, where he showed slide after slide of the names of the Japanese future elite who studied at UCL in the Meiji era, starting with the 14 students from the Satsuma clan in 1865, through to Iwasaki Toshiya, who studied Chemistry at UCL in 1901.

Dr Ohnuma was showing us these slides to remind us of how the founders of the modern Japanese state and business had fearlessly travelled and lived abroad, and there was a keen discussion afterwards as to how this spirit of adventure could be revived amongst young Japanese people now.

One of Dr Ohnuma’s suggestions was that Japanese companies should demonstrate that there is a positive advantage to have worked abroad, and to ensure there are proper roles for their employees with overseas experience to fulfil when they return.

At Mitsubishi Corporation it was an unwritten rule that top executives have overseas experience, and as a consequence, most new graduates join Mitsubishi Corporation and other trading companies in the expectation that they will be posted abroad. I realise however, that for other major Japanese companies, whose origins are more domestically oriented, it would be rather hard to implement this rule straight away, when in most cases hardly any of their current executives have overseas experience.

Smaller companies may have more scope to put such criteria in place however. The leaders of such companies can set the tone themselves, just as Sony’s Morita Akio did in 1963, when he controversially relocated himself and his family to New York, in order to understand the US market better.

It is surely no coincidence that the current President of Sony, Hirai Kazuo, lived abroad as a child and worked for Sony overseas. Despite Naruke Makoto (ex President of Microsoft Japan)’s assertion that nobody has ever succeeded who went to international school, Hirai did indeed go to the American School in Tokyo.

Sony may be having its problems right now, but I truly hope it succeeds in its revival plans, and proves that the spirit of entrepreneurism, openness to the world outside Japan and adaptability to change of its founder can live on, if the founder himself has set the tone correctly by his own actions.

(This article was originally published in Japanese, for the Teikoku Databank News and also appears in Pernille Rudlin’s new book “Shinrai: Japanese Corporate Integrity in a Disintegrating Europe” – available as a paperback and Kindle ebook on Amazon.)

My book on the history of Mitsubishi Corporation in London since 1915 is now available in digital Kindle format (link to amazon.co.uk)

Has Hitachi opened Pandora’s Box with the ending of seniority based pay?

Hitachi’s announcement on 26th September 2014 that it would be abolishing seniority based pay and promotion for management positions in Japan has caused quite a stir in Japanese business circles.

One HR consultant likened it to opening Pandora’s Box, as it may spread to non-managerial ranks, other industries and may even herald the end of lifetime employment. Both Nikkei Business and Diamond magazines have linked the announcement to Hitachi’s Global HR Management strategy and the database that Hitachi have been developing for the past two years of 250,000 employees, inside and outside Japan. 50,000 management positions in Japan and overseas are now measured by the same standards. These tools and an evaluation system means that with the abolition of seniority based pay, changes can be made to globalize compensation.

The abolition will affect 11,000 management positions in Japan – those people who are at the kacho (team leader) level and above. From October this year, no distinction will be made between function and grade status pay, and there will instead be one “role and results” pay scheme. Under the old scheme, around 70% of pay was determined by the employee’s length of service in the company.

Hitachi want to ensure that they can hire and retain high performers, regardless of nationality, including as mid-career hires. This is deemed necessary if they are going to reach their target of 50% of sales overseas by 2015, compared to the 41% level reached in 2012. The new pay scheme will therefore eventually apply to all management positions in the Hitachi group, not just in Japan headquarters.

According to the Nikkei, this change to the HR system has its roots in the difficulties Takashi Kawamura, chairman of Hitachi until 31 March 2014, experienced since 2009 when as President he started to weed out businesses he felt did not fit the “social innovation” portfolio. “Westerners place emphasis on their skills and expertise, so even if the company changes, they will follow the business that they have been working in. But Japanese people want to stay with the company, even if the business they are working on is devolved elsewhere… As Japan globalises, the relationship between the company and its employees, and employees’ thinking will also change.”

As Diamond magazine points out, this is a drastic transformation from the “family style” traditional Japanese company image that Hitachi used to have. It was known that Hitachi did not pay particularly high salaries, but that its benefits were very generous, and that it would provide a secure and stable environment for employees. It was always very serious about its HR strategies, and seen as a front runner for innovations in Japanese HR systems. So the abolition of seniority based pay is potentially “epoch making”, with implications far beyond Hitachi itself. It is rumoured that Sony and Panasonic are also looking at changing their pay schemes in a similar way.

The abolition of seniority based pay will impact other sacred cows of the traditional Japanese HR system. For example, there will no longer be “Beh-ah” (short for Base Up) negotiations, whereby the same basic pay rise is applied across the workforce, so no more “spring offensive” – the ritual negotiations between the company union and management for the annual pay increase. As a consequence, the raison d’être of the company union itself may be under threat. Lifetime employment will become even more thinly upheld, as people are more able to move from company to company without worrying about losing seniority based entitlements and it will be easier then for companies to get rid of people.

Hajime Yamazaki, guest researcher at the Rakuten Research Institute for the Economy (who has himself changed employers 12 times since joining Mitsubishi Corp in 1981) makes three recommendations to Japanese employees:

Review your lifeplan
Not just in terms of when you retire, but think about potential instability of income when you are still working. It might be best to increase the amount you save.
Take more risks in your job.
If your compensation is going to be based on results, then you have to take a “no risk, no reward” view of your work.
Regularly think about changing employers
Yamazaki is not saying Japanese employees should all start quitting their jobs, but that you should constantly be reviewing your skills and experiences to see if they would help you get a job in another company.

“For a business person with ability and motivation, the end of seniority based pay means there will be many opportunities in the road ahead,” says Yamazaki.

Does having more women managers help Japanese companies globalise?

The question of whether having more women managers would help Japanese companies to globalise was raised, but not discussed in depth due to time constraints, at a dinner I attended, hosted by a delegation to the UK from Japan Women’s Innovative Network – a Japanese non profit organisation. An impressively large number of younger women (70) had been sponsored by their companies to come to the UK for a week, visiting various UK companies such as British Telecom and AON, to study global leadership and diversity.

My view is yes, it does help Japanese companies to globalise if they have more (Japanese) women managers, for a couple of reasons. Firstly, it helps Japanese companies and corporate culture seem less “alien” to Western companies if there are more women in management positions in the headquarters, and secondly, because the adjustments Japanese companies will have to make in order to incorporate a more diverse Japanese workforce (gender or other diversity) will help them be more inclusive of “non-Japanese” diverse groups. Attitudes to overtime and working from home would be a couple of areas needing adjustment I would suggest.

On the first point, the question of the role of women in Japanese companies is frequently raised in the cultural awareness sessions we conduct in Europe for Japanese companies. Japan never does well in surveys of the position of women in society – see the most recent World Economic Forum Gender Gap report , placing Japan 114th out of 144 countries (updated for 2017). While you can question the methodology of such surveys, then along comes another one, conducted amongst Japanese women, showing that 1/3 of them want to be full time housewives.

Which leads me to point out in our training (and in the Advancing Gender Diversity day I spoke at for Hitachi’s European group companies – presentation on SlideShare here) that Confucian values remain strong in Japan – it’s not that women are seen as somehow less capable than men, more that there are expectations around the role they should fulfil in society.

Prime Minister Abe is trying to square a circle with Abenomics, by trying to raise the birthrate but at the same time encourage women to go back to work – aiming to have 30% of senior positions in all parts of society, by 2020, through improving childcare and parental leave. But with the amount of pressure on women to be good housewives and stalwarts of the Parent Teachers Association, no amount of improved childcare and leave is going to counteract this or compensate for both parents doing overtime until late at night.

Although the Japanese government can directly change the economy with the first and second arrow of Abenomics, through fiscal and monetary actions, the third arrow of structural reform requires nudging, or even shaming Japanese companies into doing the right thing – legislation alone will be hard to push through and even harder to enforce. So Abe launched in February the “Nadeshiko” * scheme, recognising firms which are making efforts to improve the working environment for women.

Firms given the Nadeshiko “brand” in February of this year include Kao, Nissan, Fast Retailing (Uniqlo) and Daikin. The scheme is not the only initiative taking place – various other surveys have been done of best places for women to work and the Hitachi Gender Diversity Day was partly inspired by the President of Hitachi, Hiroaki Nakanishi, declaring recently that the company aims to more than double the number of women managers by 2020.

Other recent surveys have named Benesse (no coincidence that the founder of Benesse is also the founder of J-WIN) as the most career friendly for women and companies such as Toshiba, KDDI, Bank of Tokyo-Mitsubishi UFJ and NTT have all announced targets for women managers. The Nikkei group has also jumped on the bandwagon, with a seminar series aimed at aspiring women managers (and even has a magazine “Nikkei Woman” ) and published its ranking last year of best places for women to work, which put foreign companies at the top (IBM Japan, Procter & Gamble) along with 2 life insurance companies, Takashimaya department store, Daiwa Securities, Sony, Panasonic, Bank of Tokyo Mitsubishi UFJ, Fujitsu and Sharp.

* Nadeshiko is a type of pink danthius flower associated with women in Japan. It was adopted as a nickname by the women’s soccer team of Japan on its way to becoming the first Asian team to win the World Cup, in 2011.

The original version of this article was published in Japanese in the Teikoku Databank News in 2014. An English version of it appears in Pernille Rudlin’s new book “Shinrai: Japanese Corporate Integrity in a Disintegrating Europe” is available as a paperback and Kindle ebook on Amazon.

Last updated by Pernille Rudlin at 2022-12-09.

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