toshiba

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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Lessons from the decline of Japanese electronics manufacturing in the UK for the automotive industry

Although around 10,000 manufacturing jobs in Japanese electronics companies in the UK were lost in the 1990s-2000s, about the same number have been added, either created by Hitachi Rail or in the automotive or air conditioning sectors. Japanese electronics companies such as Sony, Fujitsu, Panasonic, NEC, Mitsubishi Electric and Hitachi still all employ thousands of people in the UK.

It is a story of how industrial policy cannot ultimately stop product obsolescence, shifts of manufacturing to cheaper locations or the transformation from mass manufacturing of products to supply chain ecosystems providing solutions and services. Recent investment from Japan in the UK is in services and infrastructure, for the domestic UK market, and at least for now, the EU. But this has meant fewer jobs in the areas that voted Brexit.

Bunging £10s of millions at Nissan to compensate for tariffs was not going to stop these shifts. Over 10% of the 7,000 Nissan employ in the UK are working in design centres, not on the factory floor. Being a gateway to the EU now, even in manufacturing, needs regulatory alignment and free movement of people so suppliers can visit and base themselves at client sites and provide services and ship prototypes around the region.

The shift to electric vehicles means the car companies have to cooperate more than ever with ICT and electronics companies. Many of these ICT and electronics companies have joint European HQs spread across the UK, Netherlands or Germany, with senior management and teams scattered across the region, working virtually or at customer and partner sites. They have also integrated back office and technical support into cheaper locations such as Portugal or Poland.

Some examples of the history of Japanese electronics companies in the UK over the past 30 years:

Fujitsu

Fujitsu is the biggest Japanese employer in the UK with over 8,000 employees, 2,000 down on a few years ago, as it grows delivery and support centres in Portugal, South Africa and India and downsizes in the UK. It acquired 80% of UK’s ICL in 1990 (increasing to 100% 1998). ICL had 2,000 UK employees, 26,000 worldwide, with mainframe and PC factories in Letchworth, Manchester and the Midlands. ICL was born out of 1960s industrial policy – the British government had a 10% stake in it for a while. To this day, Fujitsu provides a lot of government IT infrastructure and services. Its last computer factory in Europe, in Augsburg in Germany, will shut down in 2019, retaining manufacturing in Japan only.

Hitachi

Hitachi used to employ around 1,000 people in its factory in Aberdare, Wales, making cathode ray TVs, video recorders and microwave ovens. It was shut in 2001, blaming low price competition from Asia. Hitachi has since shifted away from consumer products to infrastructure. In the UK it acquired the now stalled Horizon Nuclear Power projects in Wylfa and Oldbury and set up Hitachi Rail in the UK as the global headquarters with a new factory in Newton Aycliffe, employing nearly 2,000 people.

Hitachi employs another 4,000 people in the UK services sector – for example credit and loans company Hitachi Capital, IT consultants Hitachi Vantara and Hitachi Consulting and Vantec, providing logistics for Nissan.

Sony

Sony came to the UK in 1973, and had 2 plants in Pencoed making cathode ray TVs, employing 1,800 by the 1990s. As these started to shut down, Pencoed transformed itself into an innovation centre, developing and producing broadcast and professional equipment, employing 500-600 people.

Sony has been restructuring across Europe recently, consolidating back office functions into cheaper regions. It was still manufacturing DVDs in Enfield in the UK but this was shifted to Austria in 2017/8, reducing capital in UK by over £250m. It still employs nearly 2,000 in its music, home entertainment and interactive businesses in the UK.

Ricoh

Ricoh still has a factory in Telford (and two other plants in UK), employing the same number of people in 2018 as in 1991 – around 700 – but the product range has shifted from faxes to printers and consumables.

Mitsubishi Electric

Mitsubishi Electric acquired Apricot Computers in 1990, with a plant in Glenrothes and R&D in Birmingham, employing 442 in 1991. Glenrothes was shut in 1999, blaming cheap competition in Asia. It still has manufacturing in the UK, employing nearly 1,000 people (many of whom are non-UK EU citizens) in Livingston, at its airconditioning plant.

Panasonic

Panasonic, formerly known as Matsushita, had many plants in UK from 1970s to 1990s, employing 1,621 in Cardiff (TVs, microwaves), 469 in Gwent (electric typewriters, carphones), 160 in Port Talbot (components for TVs, video recorders, microwaves) and 63 in Reading (fax machines). Most Matsushita/Panasonic plants in UK shut down in early 2000s, with production shifting to Eastern Europe. 1 plant remains in Wales, employing 400 people, manufacturing microwave ovens but also conducting R&D into fuel cell technology. Panasonic has acquired Belgian IT company Zetes and Spanish automotive supplier Ficosa recently.

NEC

NEC is also shifting into IT services via European acquisitions. It used to have a semiconductor plant in Livingston (Silicon Glen, remember that?) which employed 1200 by 2001, when it shut down. NEC UK employees now number over 1000 again thanks to the acquisition of Northgate Public Services, in 2018.

Others

Oki Electric were relatively late in shutting down their Cumbernauld printer plant in 2018 – and now all production is in Asia. JVCKenwood shut down their East Kilbride TV/CD player factory in 2008 and shifted production to Poland. Pioneer closed its CD player/TV factory in Wakefield in 2009. Toshiba had a factory in Plymouth, which used to make TVs, video recorders, but is now owned by a US company and makes air conditioners. Sharp (now owned by a Taiwanese company) still has a factory in Wrexham as does Brother.

Governance – interview with Yoshimitsu Kobayashi, external director at Toshiba and Tokyo Electric Power

Yoshimitsu Kobayashi, chairman of Mitsubishi Chemical Holdings, seems to be attracted to intractable problems. Not only has he become an external director of Tokyo Electric Power Company, post Fukushima but is now also a director of Toshiba, as it goes through a massive restructuring of its business, following its falsified accounting scandal (see our previous post – Toshiba – where did it all go wrong?). On top of all that he is also the chairman of the Japan Association of Corporate Executives.

Asked by the Nikkei Business magazine why he has taken on both TEPCO and Toshiba, he explains that he regards both as extremely important to the Japanese economy. “Nuclear power is a Japanese national policy, and Toshiba is a national policy company. If it is damaged, then it is damage to the whole Japanese economy” (as we explained in another post Shazai and the art of being a corporate shame magnet). “That doesn’t mean we have to preserve it at whatever cost. We need to be open about all the bad parts of Toshiba, and take responsibility for explaining what happened. Then we can rebuild. Governance needs to have concrete substance, not just on the surface.”

Nikkei Business calls 2015 “Year Zero of Corporate Governance” for Japan. Kobayashi says it will take 10 years to change corporate culture at the roots. Toshiba and TEPCO resemble each other, he thinks, in that TEPCO is learning to be a privately owned company, that looks after public infrastructure, which is similar to Toshiba.

“Aspects of Japan that had been good such as life time employment and seniority based promotion have now become a minus, and Japan has lost its competitiveness. Companies should not rely on politicians. It is not just about deregulating but changing the spirit behind the regulations.”

Kobayashi points out that while Japanese companies have been investing large amounts in overseas M&A, domestic M&A is still a fraction of that. There are 3 nuclear power companies, 8 car companies and yet 20,000 chemical companies. As a consequence, research and development is behind the West and China.

“What’s key is for Japan to keep hold of its traditional technical strength, but work out how to team this up with services.” “Mitsubishi Chemical Holdings is doing this – working on new materials, for the environment and healthcare… and also for light weight cars”.

Kobayashi also believes that top executives in Japanese companies should walk away once they have finished their stint as chairman. However he think that it takes 10 years at the top to really understand a company. The Toshiba system, whereby Presidents only stayed in post for 4 years, but then carried on for many years after as advisors was not healthy. “Maybe it’s because their remuneration is not as high as in the West that they stick around. Dow Chemical’s CEO is earning 50 times what I earn. Although Mitsubishi group companies don’t have so much cross shareholding in common now, we keep an eye on each other’s governance, so oldies are not allowed to hang around”

“Toshiba has a surprising number of businesses. In companies like that where there are many capable people, there are a lot of big fish swimming in small ponds. They think they are the company, and forget the public interest.”

Fewer women on the boards of Japanese companies in Europe than in Japan

We’ve revised our Top 30 Japanese companies in Europe again. Where possible we have updated the number of employees, which means the Suntory Group is now in the Top 30 along with Konica Minolta (and Kao and Daiichi Sankyo are out). This time we wanted to take a look at the gender and nationality diversity on boards, both in Japan and Europe, and have discovered that there are actually fewer women on the boards of Japanese companies in Europe than in Japan.

Only two out of 19 (10%) of European headquarter boards of Japanese companies have women on them – Astellas and Suntory (the latter including Makiko Ono, an executive in Suntory Japan) and only 3 of the 14 (21%) UK based Japanese companies we looked at (in cases where the European HQ was not in the UK or there were separate European and UK companies in the UK) had women members – Lucite (subsidiary of Mitsubishi Chemical Holding/Mitsubishi Rayon), Komatsu and NTT Data. Komatsu UK’s female director is Keiko Fujiwara, who is the CEO of Komatsu Europe, in Belgium. This contrasts with 13 (43%) out of the Top 30 companies’ boards in Japan having women directors. In case you were wondering, only 6% of FTSE250 companies have no women on them.

4% of the Top 30 Japanese companies in Europe’s board members in Europe and/or the UK are female
6% of the Top 30 Japanese companies in Europe’s board members in Japan are female
8% of the Top 30 Japanese companies in Europe’s board members in Japan are non-Japanese
16% of the board members of the Top 100 listed Japanese companies in Japan are female
19.6% of FTSE250 board members are female

Around 62% of the members of European and UK boards of of the Top 30 Japanese companies are European, on average. Companies whose boards in the UK and Europe only had Japanese directors were Toshiba, Fast Retailing (Uniqlo), Fujifilm and Sharp. Sharp and Toshiba’s troubles are well known. Fast Retailing recently reported struggles in the US market and falling profits in Europe for Uniqlo, Comptoir des Cotonniers and Princess Tam Tam. Fujifilm has made a remarkable transformation from a B2C camera film to a B2B imaging company but the last set of quarterly results, issued last month were deemed “mixed”.

(Note: only main boards, not executive or supervisory boards were analysed, and company secretaries were excluded)

The full chart is here (highlighted means “above average) and can be downloaded here :Top 30 Japanese companies in Europe board diversity Nov 3 2015

The Olympus scandal – has anything changed since then?

Unfortunately Michael Woodford did not answer the question in the title of the talk, which he gave to the Japan Society this week. It was pretty much the same talk I heard 3 years ago, only even more melodramatic and self dramatizing. But from what he said, I assume his answer would be that nothing has changed, if loyalty to seniors in Japanese companies continues as an excuse to cover up fraud. And certainly, with the recent frauds and cover ups in Toshiba, Asahi Kasei and Toyo Tire and Rubber, it’s hard not to worry that there is something rotten at the heart of Japanese corporate governance.

Woodford rather let his (understandably bitter) personal feelings towards former Olympus Chairman Kikukawa get in the way of two key points I felt. Firstly that Kikukawa was in turn covering up for his predecessor and his predecessor’s predecessor’s mistakes – it was not just about preserving his prestige and his (for a Japanese President surprisingly high) salary. So many Japanese corporate scandals turn out to have roots in previous generations, making it extremely difficult and perilous for successors to do anything about them, as the Japanese people sitting near me at the dinner afterwards pointed out. Secondly, that Kikukawa was able to get all the other directors and employees in the know to collude, not just out of their personal loyalty to him, but their fear that if the fraud was exposed, the consequences of the shame upon them and on Olympus would mean the end not only of their careers but of the company and all its 1000s of employees’ livelihoods.

The fact that Olympus survived is actually a vindication of Woodford’s approach, of public confession and resignations. But he is so insistent on making himself out to be a martyr, abused by “uncle” Kikukawa and threatened by yakuza, who nonetheless loves Japan (he kept insisting), that he rather lost the governance argument in all the embroidery of his story.

I asked him at the dinner afterwards if, rather than be a lone crusader, he had tried to get any of the Olympus directors that he says he knew as friends for 30 years or his other corporate friends in Japan (he was alerted to the fraud by a Japanese senior executive in another company) to advise him what to do, even work with him to get the problem sorted, but he said they all told him to shut up. Actually, I felt a sneaking sympathy towards them by the end of the evening.

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

Top 30 Japanese companies in Europe 2021

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Shazai and the art of being a corporate shame magnet

I let out a quiet cheer recently when Mitsubishi Materials, a sister company to my old employer Mitsubishi Corporation, started down the road of apologising for using slave labour in WWII. I used to be on the receiving end of campaigns for apologies and compensation from British Prisoners of War (PoWs) when I was in corporate communications at Mitsubishi Corporation and had many debates with my Japanese colleagues on what the right response might be.

Mitsubishi Corporation is a completely different company now in terms of ownership and structure to the Mitsubishi conglomerate during the war. The founding Iwasaki family was, however, not only pro-British, but also Iwasaki Koyata, the President during the war, was liberal and progressive in inclination, and rather bravely (given that other business leaders were assassinated for not being supportive of the militarist coup) spoke out against the war. The view amongst many Mitsubishi people after the war was – it was the government that forced these actions on Mitsubishi then, and it was the government that rightly said sorry and paid compensation to the PoWs afterwards. If there was a need to punish Mitsubishi as well, then the fact that the Iwasaki family and most of the senior managers were removed from their posts and the conglomerate was broken up under the Allied Occupation is surely sufficient.

Why apologise when it is not your fault – and wouldn’t such an apology be meaningless, almost insulting anyway? Actually there is a word in Japanese for apologising when it is not your own personal fault, but some kind of collective acknowledgement of responsibility is needed – hansei. It means reflection on what went wrong, an expression of regret for it having happened – “it shouldn’t have happened” and, most importantly, a commitment to take action to make sure it doesn’t happen again. You can see why successive Japanese prime ministers who weren’t personally involved in the wartime government might have thought this word adequate, as it appears to reiterate Japan’s commitment to remain a pacifist nation.

However equivalent words with the same linguistic roots exist in Chinese and Korean languages and consequently, Chinese and Korean activists do not accept hansei as being strong enough. The problem is it doesn’t contain enough shame. Owabi is a stronger word for “apology”, and contains a character which involves the symbol for “household”. This was the word used by previous Prime Ministers Tomiichi Murayama and Junichiro Koizumi, in addition to “hansei”, when apologising for Japan’s actions during WWII. By saying owabi, you are being remorseful and acknowledging the shame brought upon your group – whether it be your family, company or country.

Whether current Prime Minister Shintaro Abe will or won’t use “owabi” in his speech marking 70 years since the end of WWII has added poignancy, because not only will he be recognising the shame brought upon Japan (which could argue with some justification that at least it didn’t vote for its fascistic government in the 1930s, unlike Germany) but there is a family angle too. Abe is the grandson of Nobusuke Kishi, a Class A War Crimes suspect who was never tried for his part in the Japanese occupation of Manchuria and the use of Chinese forced labour, and went on to become Prime Minister himself in the 1950s.

In societies with elements of Shintoism or Buddhism or Confucianism underpinning it, as in Japan, Korea and China, apologizing on behalf of your predecessors or ancestors is hard to do. Not so much out of a sense of unfairness, but because you are visiting shame upon their memory, when they are no longer alive themselves to deal with it, and so the shame will simply be visited upon you and your peers and family. It feels like an unproductive humiliation, to be forced to attack your forebears, whom you were taught to respect.

The more usual pattern in Japan is for the father or elder to apologise for the sins and errors committed by the junior family members. This was seen most recently when Akio Toyoda apologised following the arrest of Julie Hamp, his personal appointment as Toyota’s global corporate communications chief, for illegally importing opiates into Japan. He even referred to her as one of his own children and then apologised for causing consternation to everyone, rather than any breaking of the law. The words used were yet another way of saying sorry – taihen moushiwake gozaimasen – “there is no reasonable explanation/excuse”. With this he became the shame magnet, taking the hit for Toyota not having somehow prevented her from making a mistake.

Universalist Westerners found this apology perplexing. Their view is that she was an idiot for not realising what the law was, or a criminal for deliberately breaking it. She should therefore be punished, and then maybe can rebuild her career after redemption. Universalists believe the rules are the rules and apply to all, without exception, in contrast to particularists, who take each case on its own merits, depending on the relationships of the people involved.

The Judaeo-Christian view as represented in the Old Testament is somewhat confused – both stating that the sins of the fathers will be visited on the third and even the fourth generation, but at the same time making it clear that the person who sinned is the soul that must take responsibility and be punished. Modern Western ethics, while seeing it as unfair that future generations should be punished for past generations’ wrongdoings, also insist that current generations acknowledge the crimes of the past in order not to repeat them.

In this sense, there is a common thread between East and West. Shame and admission of past guilt are both mechanisms for making sure that the sin is not committed or recommitted – because it is not just you, but your sons and daughters who will suffer the consequences.

By choosing to apologise in English, in the USA, Mitsubishi Materials avoided an oriental linguistic and ethical minefield, for the time being. The question of whether or not Mitsubishi Materials should accept shame will undoubtedly come up when, as they have promised, they apologise to Chinese and Korean forced labour survivors. I sense they were able to start with the apology in English as a warm up to this, with coaxing from Yukio Okamoto, a retired diplomat and renowned smooth operator who is now an external director at Mitsubishi Materials. He does not have to worry about the shame brought on his predecessors, as he is not an insider, and he also probably made sure the word “remorse” was used in English. I would imagine he also understood well the Western mentality that it is not about a Buddhist sense of collective shame so much as a Christian individualistic need to confess sins, publicly take the punishment and thereby gain redemption, allowing all to move on. Or as popular psychology would have it, giving the victims a sense of closure, which will make everyone feel better as a result.

Post confession, there is a sense of relief and a way to move on and move forward – and that is why I cheered when I read the coverage of Mitsubishi Materials’ apology – everyone behaved with dignity and sincerity and there was a sense of positivity. The Japanese participants seemed to have overcome the fear that with shame, there is no redemption, it endures, and it affects the whole group.

The worry is that if the shame magnet-father figure is not strong enough, the wider society will keep pressing until a bigger magnet is found. This is currently being played out with Toshiba’s accounting scandal. Despite the top executives resigning, bowing down for a record breaking 15 seconds of shazai (another word for apology, which contains the character for sin or guilt) and using the word owabi, the pressure keeps on. Hardly a day goes by without someone in the media questioning whether the root causes have really been exposed and whether enough has been done to redress them.

When the Nikkei announced its acquisition of the Financial Times, many Westerners commented that the Nikkei gave Olympus too easy a ride for its financial misconduct, unlike the Financial Times’ investigative approach. Compared to Toshiba, Olympus is not as iconic a company in Japan, therefore there was less sense of a wider reaching shame. Toshiba, however, was one of the Denden Kousha ‘family’ (suppliers to NTT when it was part of the ministry of telecommunications) and continues to be very tangled up in government industrial policy – most recently in joint ventures with another shame magnet, TEPCO of Fukushima infamy, acquiring a majority share of US nuclear power company Westinghouse in order to promote Japanese nuclear power capabilities overseas. Hisao Tanaka, the President who led the apologies and resignations, is seen as the fall guy. Even though his predecessors also resigned, the worry is that the shame is not just on Toshiba, but the Japanese political-industrial nexus as a whole. As Mitsubishi Materials has shown, the industrial side of Japan is beginning to find their shoulders are broad enough to take the hit and move on, whether the political side is too, Abe is about to demonstrate.

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 2021-10-12.

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