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Using Europe as a global pivot
Asahi Glass Brazilian employees undergoing training in France
One trend we have noticed in the past few years of observing Japanese companies in Europe is a move away from having global operations either directly managed by Japan HQ or via their US subsidiary. In fact there have been a few cases, usually following a major acquisition of a European company, where the Japan HQ pretty much delegates overseas management functions to the European executive team.
One such example is Asahi Glass. When it decided to set up operations in Brazil in 2013, Japan HQ made a decision to leave local management to their European managers, thereby hoping to avoid the three traps that, according to Nikkei Business, Japanese companies often fall into when entering overseas markets – 1) treating developing markets contemptuously 2) disciminatory hiring and HR practices 3) forcing the "Japanese Way" of doing things. The president of AGC Brazil is Italian – AGC reasoning that they are "both Latin cultures".
The European team thoroughly investigated the local labour pool and came to the conclusion that there was a severe lack of high level skills, They decided to implement a brand new hiring and training system. Local media publicity attracted applications from 5371 people, which they whittled down to 600 through looking at educational attainment, and then after a written exam, this was further filtered down to 120 candidates.
These 120 candidates were sent on the Brazilian government SENSAI 3 month training scheme. Most continued working, participating in the course from 18:00 to 23:00 at night. Asahi Glass paid the training fees. Many dropped out because of the punishing schedule, and other participants were able to find jobs elsewhere, using the fact that they persisted to the end of the course to enhance their employability. In the end, Asahi Glass hired 33 people – 1% of the original applicants. Even though this may seem ineffecient, they repeated the process 4 times and were able to gather a workforce of 200 people before the factory began operations.
Around 100 of them were then sent to Europe, to factories in Italy, Hungary and France, for around 3 months. In the two years since the factory started operations, hardly anyone has left of their own accord. Some have become managers, and of the original European team of 13, only 7 remain. The Italian president expects that his successor will be Brazilian.
Nikkei Business magazine comments that Japanese companies are not as serious as they should be about hiring and developing people overseas, and that is why they are having problems hiring outside Japan. "Expatriates from Japan do their best, but does Japan HQ really give much priority to HR strategy?"
Octopus balls to Tokyo – why it matters where your company is from in Japan
Takoyaki (octopus balls) are typical Osaka street food
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)
• Daiichi Sankyo
• Honda
• Kao Corporation
• Mitsubishi group
• Mitsui group
• Nissan
• Nomura (but was Osaka originally)
• NTT group
• NYK group
• Sony
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:
• Seiko Epson
• Toyota
Chugoku (Hiroshima etc) based companies:
• Fast Retailing/Uniqlo
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