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uniqlo

Home / Posts Tagged "uniqlo"

Tag: uniqlo

“If we carry on like this, Japan will perish” – Uniqlo’s founder Tadashi Yanai

Tadashi Yanai, founder and president of Fast Retailing (Uniqlo) has some hard hitting words for the Nikkei Business magazine series “Wake Up Japan”:

“Japan is the only country which relies mainly on one big intake of domestic graduate hires for its recruitment. But you have to recruit globally. There is competition around the world to hire people, and Japan is falling behind.  Only hiring Japanese people is pointless.

At the moment Japan just seems to be hiring raw manpower, but we need to hire people with advanced skills, knowledge workers. Yet we are still just hiring Japanese people for this too.

Japan’s executives need to globalize too

Japan is two steps behind in terms of skills, yet we think we are ahead of the game. We don’t know the reality of the wider world outside. This is because executives are not learning and not going outside of Japan.  Executives think they are globalising their companies, but they just send out business unit heads, without actually changing at the executive level. If executives aren’t taking risks, with their own money, it won’t go well.

If you want to hire top non-Japanese, you have to radically change Japan’s HR and reward systems. If you look at compensation, levels in China and Europe are around 2-3 times higher, and around 10 times higher in the USA.

Only non-Japanese who love Japanese culture can put up with Japan’s current HR system

Japanese companies set pay just by looking at other companies in their sector, in Japan. So there is pressure for everyone to toe the line. So if you want good non-Japanese people to join you, you will only attract the ones who love Japanese culture.

The lifetime employment and seniority based promotion systems have become calcified. I think they are good systems, but only if the company is growing. It’s OK if the outcome is lifetime employment and seniority based promotion, but this has become very superficial. If you bring in people from outside Japan, seniority based promotion and lifetime employment will collapse.

For example, if you want to build up strength in robotics and AI, you have to hire top people from Silicon Valley, or India or China and work with them. Seniority based promotion is irrelevant then. If you want to work together, it has to be based on a transparent, fair system.

The need for strong, good values to attract good people

If you want to work with people from all round the world, you have to have strong good values yourself.  This attracts good people. Good companies attract good people.

Japan still behaves like a closed country even though it thinks it isn’t any more, just because more and more tourists are coming here. Real globalization means working alongside non-Japanese people. So you have to build a system that enables this.

So I don’t think of career development as being in 10 year increments, rather as 3 year units.  Talented people can become directors within three years, even if they are graduate recruits.  If you don’t have that kind of system, they will quit.”

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Honda – an endless road to globalization

Honda is not in the Boston Consulting Group’s World’s 50 Most Innovative Companies of 2014, having reached #12 in previous years.  Other Japanese companies include Toyota at #8, Sony, Softbank, Hitachi and Fast Retailing (Uniqlo).  Other automotive companies in the Top 50 are Tesla, BMW, Ford, Volkswagen, Daimler, Audi and Fiat.  “It’s becoming a mini Toyota” says Nikkei Business Magazine, “consumers will soon be saying ‘we don’t need a Honda like this'”.

Takanobu Ito became President of Honda in June 2009 and is stepping down in June 2015.  This has been portrayed in the Western media as being a consequence of the Takata airbag scandal, but this was not mentioned by Honda as a reason, and 6 years is a standard stint for many Japanese company presidents.

Ito does apologise, however, in a Nikkei Business Magazine interview, for setting the numerical target of 6 million vehicle sales by 2016.  “It was just a dream” he says now.  Honda had fallen into the trap which many Japanese companies find themselves in, of stretch goals and visions being taken at face value by employees, particularly outside Japan.  Honda was selling around 2.5 million vehicles a year when the “dream” was announced in 2012, as part of the 2016 Mid Term Plan. Honda in the US decided to boost sales of the Accord and Civic by offering even better incentives than Hyundai.

Previously, Honda’s brand had been so strong, it had not had to discount at all.  And then followed the recalls of the Fit hybrid and the Takata airbag problems.

Ito had also restructured the company away from its previous bipolar Japan and North America organisations into 6 regions – Japan, North America, Latin America, China, Asia, Europe.  He has reorganised the R&D side, cutting the number of new models in development by 20%.  Honda used to sell itself as a pioneer, but is now behind Toyota in hybrid car and fuel cell vehicle development.

Ito believes Honda must learn from smaller manufacturers like Subaru and Mazda and focus on its brand image.  “We have structured the company to be global, but now we need the system to make sure this bears fruit”.  The relatively young (55) Takahiro Hachigo (former VP and Director of Honda Motor Europe) will become the 8th President of Honda, with four out of the 6 board directors also changing.

Honda is still making profits, but Nikkei Business concludes that it may be facing the same issues as Sony, another formerly innovative Japanese company, if it does not “rip up the unwritten rules”, and stop relying on past successes.  Both Honda and Sony had become too focused on playing it safe and lost the ability to respond to customer needs.  Honda is harshly judged because it was so innovative in the past.  But it should not look to the past, says the Nikkei, but to the future, and not just to innovative products but innovative management.

For more content like this, subscribe to the free Rudlin Consulting Newsletter. 最新の在欧日系企業の状況については無料の月刊Rudlin Consulting ニューズレターにご登録ください。

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Last updated by Pernille Rudlin at 2021-10-12.

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