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Japan’s megabanks lose popularity with Japanese graduate hires

It’s not surprising that Mizuho, one of Japan’s megabanks, has fallen in popularity from the top spot for 2018 new recruits to #17 for those graduates aiming to join in 2019, according to recruitment agency Disco. As previously blogged, Mizuho’s former president, now chairman, Yasuhiro Sato has been very clear that the bank should lose around 30% of its workforce globally, through greater use of information technology, and yes, AI. His successor Tatsufumi Sakai shows no signs of reversing this.

The other megabanks have fallen less dramatically out of favour, from #2 to #4 in the case of MUFG (dropping the Tokyo from Bank of Tokyo-Mitsubishi UFJ as of April 1) and from #5 to #14 in the case of Sumitomo Mitsui Banking Corporation.

Japan’s airlines JAL and ANA have stayed in the top 5, at #1 and #3 respectively. Perennial favourites, the trading companies Itochu and Mitsubishi Corp have also gained popularity, up from #7 to #2 and #9 to #6 respectively.

Manufacturers such as Toyota (#5 from #12), Sony (#11 from #31) and Denso (#19 from #33) have become more attractive, as graduates realise that the Internet of Things means traditional companies are now moving into more innovative IT related areas.

Japanese graduates who have studied at foreign universities favour foreign companies operating in Japan such as Procter & Gamble, Google and Amazon, or management consultancies, whereas no foreign owned company is in the top 10 for domestically educated Japanese graduates.

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Japanese top executive pay still low, unless you’re foreign – or selling wigs or pachinko machines

I often illustrate that Japanese companies are the “last functioning socialist organisations” in my seminars by pointing out that although they are very hierarchical, the top executives of Japanese companies only earn 10 or 20 times the average employee’s salary, compared to 160 times in the UK for FTSE 100 companies and more than 300 times in the USA for Fortune 100 companies.

Toyo Keizai have confirmed that this multiple still holds, by listing the highest pay differentials for TSE listed companies. The top 10 include new technology companies such as LINE (mobile apps subsidiary of Korean internet company Naver) at #1 with a multiple of 165 between staff and director salaries and Nexon (Korean owned video games company) at #2 with a multiple of 57.7 as well as founder run companies such as Fast Retailing (Uniqlo) at #3, with a multiple of 31.4.

Foreign executives head up Nissan at #4 and Takeda at #5 – both with multiples of just over 29. The rest of the top 10 are around the 20-25 x mark with Sankyo and Universal Entertainment – both pachinko gambling machine companies at #6 and #8 and Art Nature ( a wig manufacturer) at #7. Electronics company Tokyo Electron and chain restaurant company Skylark (Chairman Ralph Alvarez ex President McDonalds) at #9 and #10.

Toyota is at #14 and after #15, multiples are below 20 and cluster around the 10x mark for established companies that are in our European Top 30 such as Sony, Daikin, Panasonic, Itochu, Astellas – through to Canon bunched with 8 others at the bottom of the Top 500 with a multiple of around 6 between employees and directors.

Japan’s megabanks most popular with Japanese graduates, electronics companies making a comeback

Japanese companies’ investment in their brand marketing, particularly their websites, may have more to do with attracting graduates from Japanese universities than attracting new customers in my experience. Given that lifetime employment is still crucial to the big traditional companies (and still something many graduates aspire to), this is not surprising.

So Toyo Keizai’s survey of how the current graduate job seekers in Japan rate potential employers at the beginning and end of the recruitment process is a good indicator of the health of the brand and how well it was communicated to the job seekers. This year the megabanks such as Mizuho (#1) and MUFG (#3) are still in the Top 3 most highly rated employers even after the recruitment process, along with travel sector companies like ANA, JAL and JTB. Other financial services companies like Nomura, Daiwa and Sompo are also in the top 10 with the other megabank, SMBC at #11. This is much in line with the previous years’ graduates’ rankings.

Toyo Keizai notes that food and beverage companies seem to be increasing in popularity – Morinaga, Kagome and Kikkoman have all become more popular during the process and compared to last year. Other major companies whose ratings improved dramatically over the recruitment process (so people got to like them once they met them) and are also more highly rated this year than by the previous year’s graduates include Panasonic (up to #39 from #156 last year at the beginning of the process), Mitsubishi Electric (#41 from #154) and Toyota (#35 from #57) and Fujitsu (#47 from #210).

Trading companies such as Mitsubishi Corp, Mitsui, Sumitomo Corp and Itochu whilst still in the top 50, seem to have lost popularity compared to last year.

Japanese overseas subsidiaries in Europe: M&A boom equals more employees, less capital investment?

Recent statistics on Japanese companies’ activities in Europe show an overall positive picture – growth in employee numbers but declines in capital investment. Could this be a reflection of the ongoing Japanese overseas acquisition boom?

Sales of Japanese overseas subsidiaries in the 1st quarter of 2017 were up 7.9% overall on the previous year and at similar levels in Europe, but growth in North America was 4.3% up on the previous year. Asia represents nearly 50% of Japanese subsidiaries abroad, and sales grew 8.8% on the previous year, according to figures from Japan’s Ministry of Economy Trade, and Industry.

However capital investment declined again, by 13.6% (12 consecutive quarters of decreases) particularly in Europe (40.9% decline – the first decrease in 5 quarters) and ASEAN countries. Capital investment in North America was only down 0.8% but even this was the first decrease for three quarters.

Nonetheless, the number of employees increased 1.9% globally, and by 4.9% in Europe, the 15th consecutive quarterly increase. Growth was less in Asia (1.3%) and North America 2.9%).

This may reflect a long term shift of Japanese companies in Europe towards more service oriented, and therefore people intensive businesses, away from capital intensive manufacturing.

However, figures from the Japan Automobile Manufacturers’ Association show that automakers in Europe are still expanding production (by 7%), although below the peak levels of 2007 and 2008. 17% more cars were imported from Japan than the previous year, but Japanese car manufacturers also purchased record numbers of EU made components.

Exports of Japanese cars manufactured in Europe fell 17%, representing around 20% of Japanese production in Europe. These exports went (in order of size) to North America (24%), Latin America (10%), Middle East (10%), Africa (8%), Oceania (8%) and Asia (6%) – presumably including Japan, and the Honda Civic that Boris Johnson drove when he recently visited Japan, citing it as an example of “fantastic” British exports to Japan.

Japanese car manufacturers now operate 14 plants in seven EU countries – 4 in the UK, 3 in Spain, 2 in Portugal, 2 in Poland, 1 in Hungary, 1 in France and 1 in the Czech Republic. The major capital investments in 2016 were made by Nissan in the UK and Spain and Toyota in Poland.

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

Top 30 Japanese employers in France -reflecting France’s traditional strengths

Le quatorze juillet seems a good moment to announce our new Top 30 Japanese companies in France.

The total number of employees covered by the 30 largest Japanese employers in France is 35,000 – lower than the totals employed by the Top 30 in Germany (56,000) and the UK (80,000) but the automotive sector is still dominant with nearly half of the Top 30 being automotive or having some automotive business. Obviously some of the larger employee groups are related to manufacturing workforces – Toyota, JTEKT and NTN for example.

M&A’s have played a part too – NTN, a bearings company, acquired French company SNR Roulements (which was part of the Renault group) in 2006. Toyota Tsusho acquired CFAO in 2012 – a trading company with over 10,000 employees in Africa. Fast Retailing added French brands Princesse Tam Tam and Comptoir des Cotonniers to its retail group alongside Uniqlo.

As you might expect, food and drink companies also feature – Nippon Suisan acquired Cite Marine, and Suntory has its Orangina Schweppes brands based out of France. Ajinomoto is also headquartered in France for the region.

The other key sector is technology, particularly imaging – Canon, Ricoh,Toshiba, Konica Minolta, Olympus and Fujifilm. Once again, each country’s historical comparative advantage is clear (cars, food, films for France, engineering for Germany and cars, finance and other services for the UK) showing how trade and integrated markets encourage specialisation.

Rank	Company	France employees 2016
1	Toyota	3,475
2	Ricoh	3,335
3	JTEKT	3,212
4	NTN	4,200
5	Fast Retailing	2,300
6	Canon	2,077
7	Toshiba	1715
8	Konica Minolta	1,250
9	Bridgestone	1,036
10	Horiba	971
11	Nippon Suisan	911
12	Suntory	900
13	Sanden	850
14	Nissan	800
15	Toyota Tsusho	653
16	Ajinomoto	600
17	Yamaha Motor	571
18	U-Shin	553
19	Fujifilm	550
20	Asahi Glass	550
21	Shiseido	550
22	Amada	519
23	Dentsu	485
24	Toray	456
25	Fujitsu	450
26	Olympus	450
27	Otsuka Pharma	449
28	Toyota Boshoku	440
29	Kubota	353
30	NTT	350
	TOTAL	35,011

Size matters when choosing a Japanese company

Whether you’re looking to work for or supply to a Japanese company, size matters. The most obvious reason being, as bank robber Willie Sutton apparently never said, “that’s where the money is”. That’s why we started our Top 30 Japanese Employers rankings – we’ve found them useful in understanding our customer base and the likely concerns of participants in our seminars.

We use the number of employees as a proxy for size rather than turnover or profit, and although there is a degree of correlation between employee numbers globally and in Europe and overall profit, there are some exceptions.

Toyo Keizai have recently listed up the companies* who made the biggest cumulative profit in the past 10 years and it’s absolutely no surprise that Toyota, one of the biggest companies in Japan and #9 amongst Japanese companies in Europe, made a whopping Y11 trillion ($99bn) cumulative profit from 2007 to 2017, far outstripping NTT and NTT Docomo at #2 and #3 who made less than half that amount. NTT and NTT Docomo are not in our Top 30 Japanese companies in Europe, although another group company, NTT Data, is.

However NTT and NTT Docomo never made a loss, whereas Toyota did go into the red – with a loss of $.8.6bn in 2008/9. Honda, who has had a tough time in Europe (and is #23 in our rankings), has also never made a loss, and accumulated a $36bn profit over the decade. Nissan, who made a loss but was famously turned round by Carlos Ghosn, is 10th largest in Europe in our rankings and has the 6th largest cumulative profit.

I was surprised to see my old employer Mitsubishi Corporation at #5, as they too had some rough patches particularly with losses in the commodity side, but clearly overall the Japanese trading companies have been very profitable, despite their death being heralded every decade – Mitsui is at #9, Itochu at #11, Sumitomo Corp at #14 and Marubeni at #21.

Unsurprisingly, almost none of the Japanese electronics companies feature in the top 30, apart from Canon at #10 and Mitsubishi Electric at #25. Other industries in the top 50 most profitable are automotive (Denso, Bridgestone) and pharmaceutical (Takeda, Astellas) related, and also heavily domestic businesses such as telecommunications (KDDI, SoftBank as well as NTT mentioned above), rail and retail (7&I, Fast Retailing).

Two of the largest Japanese companies in Europe – Fujitsu and Hitachi – are at #69 and #70 – Hitachi’s cumulative profit was heavily dented by the historic loss of $8bn in 2008/9. The largest company in the Europe and Africa region – Sumitomo Electric Industries (due to its labour intensive automotive manufacturing operations) is at #38, with a $6bn cumulative profit.

*Excludes banks, insurance and other financial services companies

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 pernille dot rudlinrudlinconsulting dot com

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

Toyota Group dominates Top 30 Japanese employers in Europe, Middle East & Africa in 2017

We’ve revised our Top 30 Japanese employers in Europe, Middle East & Africa (EMEA) again, this time to include Toyota Tsusho (in at #12) and Toyota Boshoku (in at #29), bumping NYK and Suntory out of the rankings.

The 30 biggest Japanese employers in EMEA now represent over 460,000 employees, around 12% of their total global employment. EMEA employee totals have increased more than the global totals, at around 6% from 2014/5 to 2015/6 compared to <0.5% worldwide, showing that the region is still growing for Japanese companies. As you might expect, the total employment in Japan is shrinking, by about 2% year on year.

Adding Toyota Tsusho and Toyota Boshoku made me appreciate once again how important the car industry continues to be worldwide as a source of employment and also how dominant the Toyota Group is. 5 out of the Top 30 are Toyota Group companies (JTEKT and Denso as well as Toyota Tsusho, Toyota Boshoku and Toyota Motor). A further 4 are purely automotive (Yazaki, Nissan, Bridgestone, Honda) and 6 have automotive related companies in their group (Sumitomo Electric Industries, Hitachi, Asahi Glass, NSG, Panasonic and Toshiba).

Toyota Tsusho is not entirely focused on cars however. It is a general trading company, and is particularly strong in Africa, since it acquired the French company CFAO in 2012. CFAO has an automotive sales network but that is only part of its business. Toyota Boshoku makes automotive components such as seating, door trims and air filters.

Similarly, 8 out of the Top 30 Japanese employers in the UK are automotive and a further 2 have automotive related businesses in the group. Our revised Top 30 now included Sumitomo Rubber, who have not only acquired the global rights to the Dunlop brand but also bought a UK tyre distributor Micheldever earlier this year.

If you would like more customised 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) please contact us.

Toyota learns from JTEKT merger to reorganise for the Internet of Things

With driverless cars and the Internet of Things (IoT), the pressure is on JTEKT, a key member of the Toyota group, to find ways of using its combined strengths in the future, says Nikkei Business (JPNS $).

JTEKT’s main product lines are machine tools, steering systems and bearings, with revenues of around ¥1.3 trn ($9bn). It continues to use the Toyoda and Koyo brand names since the merger of the two companies in 2006, as well as the JTEKT brand, which has led to concerns that it is not clear what the company stands for and “we have not produced any synergies despite the merger”, according to one senior executive.

One area that may be fruitful is Steer By Wire (SBW). JTEKT are also trialling IoT technology in their own production lines in Japan with a view to understanding its capabilities better. JTEKT’s IoT technology is already being used by two parts manufacturers and JTEKT is planning to go beyond just selling its technology and into consulting, particularly for medium sized enterprises with a few hundred employees.

However JTEKT is prevented from selling its technology that has been used in Toyota’s production lines, as part of the strategy of strengthening the Toyota group in 2009.

When the German government announced Industry 4.0 in 2013, many JTEKT engineers felt “we’re already doing that” as Toyota’s factories were already hooked up to the internet. This is the kind of know how they would like to sell as part of a consulting offering.

“If we don’t do this, we cannot develop overseas employees, or employees that we do develop, will leave”

Toyota, Volkswagen and General Motors are sometimes referred to as the 10 million club as they each manufacture over 10,000,000 cars a year. Tetsuo Agata, President of JTEKT, instead refers to a 20 million club, whereby Toyota’s main suppliers supply parts for over 20,000,000 cars a year.

Agata moved from Toyota Motors to Toyoda Automotive and then to JTEKT in 2013 and has been focusing on weaving a matrix system of vertical businesses and horizontal functions. A global HR system has been introduced. JTEKT has 44,000 employees, 27,000 of whom are overseas. The key positions in each operation have been made more defined and transparent and regions have been consolidated. The next step is to build a global remuneration and evaluation system. “If we don’t do this, we cannot develop overseas employees or employees that we do develop will leave.”

“I was so shocked how little had been invested in systems development that I nearly fell off my chair”

Agata also looked through each division’s strategies during his first summer holiday and was “frankly, surprised that they were working so well”. He immediately started a training programme on “PDCA” (Plan, Do, Check, Act). He also invested in systems and a reform of work processes in the functional divisions. “I was so shocked how little had been invested in systems development I nearly fell off my chair” he says.

Another horizontal initiative is the “Internet of Everything” – connecting people as well things. He has brought in external resources to work out how to monetize this “soft business” and thinks it will be ready for launch in about a year. “These horizontal threads are things I have to put in. It can’t just be a structural solution, it has to be the culture as well”

The Toyota group is embarking on a second restructuring since 2014, reorganising its transmission, seat and brake businesses. JTEKT has taken 10 years to show synergies since it was formed from the merger and Toyota is using the lessons from this to find hints for how to reform the group for the future.

Last updated by Pernille Rudlin at 2021-10-19.

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