Brexit-Japanese Reactions

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Brexit-Japanese Reactions

Posted on 24 June 2016 in Market Insight, News -
Brexit

I was asked by the LA Times to comment on the impact of Brexit on medium-term and long-term trade between the UK and Japan. The UK has benefited from massive investment by Japanese companies bringing their European HQ here and there have been unprecedented levels of M&A activities from Japan in recent years, specifically to gain more global market share. Not all of this market share has been tied to the EU but every single Japanese company I speak to quotes the significance of the UK’s membership of the EU as their decision to invest here.  Although it is far too early to predict anything at a very uncertain time, I could tell the Times that from working with and talking to the Japanese business community in the UK at various levels, they were extremely worried about a Brexit and how it would affect their access to European Markets as well as knowing there would be uncertainty on an unprecedented scale following it.

Given the Japanese aversion to change and unpredictability, the Brexit has caused shockwaves amongst the Japanese business and diplomatic community in the UK. It also caused the Nikkei to plunge to the lowest level in 5 years, shares in Japanese companies in the UK dropped and the Yen surged prompting the Japanese Finance Minister to issue a statement that they would intervene where necessary to off-set the affects of this on their currency and Japanese exports.

There is also the issue of the Japan EU Trade Partnership that is currently being negotiated. It is too early to say whether this will continue and whether it will bring more advantages for European companies wanting to trade with Japan. However, British investment in Japan could  stay strong if we can negotiate a separate deal with Japan. We are mostly dealing with the unknowns at the moment- a situation that risk-averse Japan is very nervous about.

On a positive note, there are elements of the Japanese way of doing business that make me feel confident that we will continue to enjoy positive trade with Japan. Most Japanese businesses have long-termism at their core and recent inward investment from companies such as Hitachi Rail in the UK have built upon long-term relationships and were made with the intention of being here for the long run come what may. This will hopefully be the key to what will happen with most Japanese companies in the UK-long-termism along with a propensity to caution and dislike of change will hopefully mean they won’t jump ship straight away and may stick around long enough to support us keeping the UK economy strong and competitive.

 

 

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The Japanese Relationship with Humanoid Robots

Posted on 25 April 2016 in Cultural Awareness, Inter-Cultural Training, Market Insight -
Hitachi Robot

When I go into British companies to talk about Japan, I often get asked, “Why do Japanese people love Robots so much?” Although the development of Artificial Intelligence is happening on a global scale with robotic manufacturing technology no longer dominated by Japanese companies, they have developed a close relationship with and acceptance of “humanoid” robots as seen by the recent examples serving in shopping centres, banks and hotels (although technically this one was a dinosaur). With a rapidly ageing and decreasing population (with no real signs of immigration filling the gaps) alongside limited child-care facilities, the use of humanoids is certainly attractive for Japan’s current social challenges. Last year, PM Abe opened Japan’s Official Robot Revolution Initiative Council and called on the nation’s corporate sector to “spread the use of robotics from large-scale factories to every corner of our economy and society.” The humanoids that are being developed by Japanese companies such as Soft Bank (Pepper) & Hitachi (EMIEW3) can express themselves, have good mobility and seem to offer an alternative to the “human” experience.

Japanese Acceptance of Humanoids

The Japanese have never had much of a problem forming strong emotional bonds with substitutes for human connection. Look at their relationships with manga characters and let’s not forget they were the country who gave us virtual pets such as Tamagotchi. Many of these create intense emotional connections. The social media network LINE’s AI school girl character had men falling in love with her. I have often heard people quote the Shinto concept of ‘animism’ in Japan (meaning that all objects have spirits) to explain the emotional relationship between Japanese people and robots.

Cultural Factors Needing Consideration

A recent symposium* on the acceptance of humanoids comparing the UK and Japan showed that there is a significantly lower acceptance of humanoids in the UK and alarmism that they may take away jobs and render humans useless. Findings from the same symposium stated that: “In order to further social acceptance of the humanoid across cultures, designers of robots need to consider cultural factors in their potential users.”  Japan must culturally assimilate these humanoids outside of Japan to avoid an inward focus of their technology. They may be leading the way scientifically with face recognition yet facial expressions of Japanese people can be quite hard to read and even come across as indiscernible to more expressive cultures. The ritualistic set phrases used in different social interactions may foster a sense of intimacy for Japanese users, but may prove too distant and again “robotic” if used elsewhere.

However, to meet Japan’s current social challenges, humanoids may well be a solution-recent Nomura research indicates that almost half of the jobs in Japan could be managed by robots. However, I still remain unconvinced for their substitute as a child-care option..

*4th International Symposium on New Frontiers in Human-Robot Interaction-April 2015, Canterbury UK: Differences in Social Acceptance of Humanoid Robots between Japan and the UK.

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How Japanese Companies are Contributing to Sustainability in the UK: Event Report

Posted on 22 March 2016 in Market Insight, News -
Nottingham Event Panel (2)

This event took place at Nottingham Trent University on March 14th, 2016.

The first part of the evening comprised of a welcome by Dr Angelo Bisignano of Nottingham Business School followed by a short presentation by Sarah Parsons, Japan In Perspective, JETAAUK Chair and Associate Lecturer at NTU, who gave an overview of Japanese Investment in the UK including their key elements such as long-termism and huge investment into skills and training. She talked about examples of Japanese investments in sustainability such as Hitachi Rail’s investment into sustainability of the UK’s train infrastructure and highlighted challenges surrounding sustainability in Japan including the need for more sustainable softer technologies/social initiatives to address the ageing population, gender inequalities and corporate culture issues. She also spoke about the challenges for Japan to adhere to the Global Reporting Initiatives (GRI) guidelines for Sustainability Reporting, mainly driven by North American and European stakeholders commenting how Japanese companies are traditionally much stronger in the environmental areas but not so good at reporting social and governance issues.

This “environmental” strength was certainly evident listening to Rob Gorton, Corporate Planning Manager at Toyota Manufacturing UK, who spoke about the upcoming trends at Toyota in the area of sustainability, including their plans for hybrid and hydrogen technology, and also gave an overview of their recently announced 2050 environmental challenge to address key global environmental issues such as climate change, water shortages, resource depletion and degradation of biodiversity by 2050. Rob also re-iterated the long-term aspect of Japanese business mentality reflected in TMUK’s sustainability policies and spoke of how sometimes these can be at odds with the short-term mentality of British business – noting that it is difficult to graft long term thinking onto short term cultures. He used the example of the manufacture of the Prius that took more than 10 years from inception to achieving volume in sales to emphasise the need for long-term thinking; he anticipates that the numbers of Mirais being manufactured will grow significantly over the coming years. He also spoke about how the UK needs an increase in engineers to support sustainable innovation here. Japanese companies such as TMUK and Hitachi Rail are very involved in raising the skill set of young people in the UK in this area through apprenticeship schemes and links with local schools and colleges.

Both Professor David Smith and Dr Michael Ehret agreed that collaboration and information sharing on top of more long-term thinking is the key to sustainability and in some cases, institutional changes need to take place to realise this. Sarah added that although Toyota is a fantastic role model for information sharing through their various processes, there can be cultural challenges for other Japanese companies surrounding the sharing of information from a Japanese mind-set outside of Japan and also on a management level where slower and more structured decision-making processes and different communicational styles & methods of PR sometimes affect information-sharing both within organisations and to their customers and offices globally.

After the panel discussion, there were several Q&As from the audience including questions on the Brexit referendum (again bringing up the short-term versus long-term debate). This was followed by a chance to network and for everyone to sample the fantastic Japanese buffet provided by Japanese Ideas in Nottingham. Feedback was overwhelmingly positive with some students of the MSc in International Business students saying, “I learned so much, wrote so much and got to eat some amazing food so it was a great evening!”

This event was co-organised by the Japan Exchange and Teaching Programmes Alumni Association UK and Nottingham Business School as part of JETAAUK’s “Spotlight on Japanese Companies in the UK” and was attended by around 60 local business people, academics and students from surrounding universities, JETAA members and representatives from the Japan Local Government Centre and JET

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Brexit and Misunderstanding of Japanese Business Values

Posted on 18 February 2016 in Cultural Awareness, Japanese Corporate Culture, Market Insight, News, Uncategorized -
Brexit

David Cameron recently urged non-British leaders of major companies in the UK to support his opposition to a Brexit by implying they would take their business elsewhere should the UK leave the EU. However, both Toyota subsequently said they would not reconsider their investment should that happen. This was reported in a recent article in the FT as a ‘blow’ to his campaign and incorrectly used as an implication of their support of a Brexit.
Apparently Mr Cameron wasn’t listening at the Hitachi Rail Opening Ceremony in Newton Aycliffe last year when Hitachi CEO Hiroaki Nakanishi announced that they were there to stay and both him and the Japanese Ambassador spoke of historical ties between Japan and UK concerning train manufacturing. (See my blog about this event) This sense of commitment is one particular aspect of doing business with the Japanese that comes from a corporate culture that values long-term relationships, obligations and loyalty over quick profits. Resulting disparities between these values and those of a globalising world have forced change in many areas for Japan, some of which were inevitable such as the shedding of less profitable products of companies and an openness to competition as opposed to supplier/brand loyalty. Such co-operative values are not particularly valued nor are they very effective in western societies where short-term profits and logic prevail. However, these values still remain very much part of Japanese business culture and generally mean that a contract with a Japanese firm, however painstakingly long and arduous it is to forge, is, by western terms, something you can rely upon unless you do something unforgivable.
I am also not suggesting that the Japanese businesses in the UK will stubbornly stay here regardless in the case of a Brexit if it means they will lose profitability or access to vital supply chains. They have shown in the past they will pull out when things go irreparably wrong. Let’s hope it does not come to that. However, it is naïve to expect Japanese bosses of major Japanese companies that have been in the UK for many years, have historical and emotional connections to them and have built communities around them or even more so one that has committed to basing their global HQ for train manufacturing here to publicly deny the values which underpinned that investment in the first place, even if it would further an aim that most Japanese businesses in the UK support- the UK staying in the EU. You only have to consider the Japanese values of honne (real feelings) versus tatamae (public feelings) and face-saving alongside the above mentioned sense of obligation & commitment to understand why this would not be a comfortable situation.
Japan is one of the major inward investors in the UK and has shown immense commitment to R &D, training and education, job creation and community involvement here. I often feel that this long-termism is not always recognised nor appreciated and in this case has been used for political posturing.

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Sharp Corp’s Big Decision-Japanese Business Values Meet the Test of the West

Posted on 11 February 2016 in Market Insight, News -
Sharp

Whether Sharp Corp accepts a take-over bid from a non-Japanese investor, or the less lucrative bailout offer by the state sponsored “Innovation Network Corporation of Japan” (INCJ), it is certainly being seen as a ‘Test by the West’ of whether they can embrace open competition, meet our standards of corporate governance and shed Japanese corporate values that no longer meet the globalisation imperative demanded of them.

A decision to go with the Taiwanese investors Foxconn would be entirely in line with Prime Minster Abe’s rhetoric of cleaning up corporate governance issues and attracting more FDI into Japan. It would also make sense to the outside world, many of whom have become critical of Japan’s prospects for reform. Media reporting of this (in particular by the FT) has been very unforgiving of Sharp Corp’s procrastination on making the decision by saying: “If Foxconn is offering a better deal for shareholders, Sharp’s board should recommend it.” Money talks in individualised societies that value competition, cost effectiveness and short-term profits with no desire to support non-profit making companies. The Japan state funded bail-outs come across as protectionist attempts to keep their know-how away from foreigners whilst forcing shareholders to lose out on much higher returns promised by a more profitable bid.

Difficult Decision

However, it is no surprise that Sharp Corp are finding this decision a difficult one given deeply rooted Japanese corporate values that are inextricably tied to their culture. These include: long-term thinking, selective (often Japan focussed) and long-lasting relationships & obligations, face-saving, loyalty and a need for carefully built up consensus within hierarchies, all of which are valued above competitiveness, individual goals and short-term profits. Japan never adopted the investor model of organisation seen in most Anglo countries-a model that has ROI for investors as its principle goal. A more comfortable fit with Japanese culture was the close-knit “Keiretsu” network model that served the purposes of a fairly insular yet successful business world in its post-war heyday. Although the “keiretsu” network has largely been disbanded, the thinking behind it has not, resulting in actions that are illogical to our understanding and frustrating when doing business with them.

Take the case of the Japanese train company that has served a station to pick up just one school girl in a remote area of Hokkaido. This made big news in the UK, unsurprisingly given that prioritising customer needs before company profits on the train system is something we all dream of here. Mitsubishi Pencils recently attempted to stop production of certain non-profit making pencils used by animators. This seemingly logical business decision caused a back lash from the artists, citing adverse effects on the quality of animations. Mitsubishi Pencils compromised on keeping some of the colours. Loyalty and quality in one of Japan’s strongest home-grown industries won above profit but was perceived outside of Japan as a prime example of how Japan keeps churning out un-productive products out of a misguided sense of brand loyalty.

No wonder then that Sharp Corp could still be swayed by the INCJ offer, which is being seen as offering “more long term worth than the Foxconn deal” and no surprise that Sharp Corp are not immediately putting the needs of their shareholders first-this is not the only motivating factor in Japanese business values. As quoted in the Japan Times, “Money matters, but what’s important is the company’s long-term viability.”

Can Japan Adapt?

However, it is becoming clear that the way in which these values and inflexible structures are played out within Japan Inc. are at odds with a competitive, impatient and evolving world. Corporate cultures entrenched by traditional values, a preference for loyalty and face-saving over competitiveness combined with uber-rigid hierarchies are stifling entrepreneurialism, hindering corporate governance reforms and repelling non-Japanese talent, who want to climb the rungs of the corporate ladder and make autonomous decisions as managers. These differences also cause issues overseas when the skills of Japanese managers and the Japanese corporate culture clash with the demands of global assignments and the people issues in M&A deals.

Given their rapidly shrinking population and woeful representation of women at management level, Japan is facing one of its greatest economic challenges yet: to adapt their corporate values. The eyes of the business world are on Sharp Corp for that very reason. Can Japan successfully reform the corporate structures that hold it back domestically whilst retaining some of their more noble business values? I, for one, hope they can but naturally, it will have to be a long-term game. Whether the outside world is willing to wait around is another matter entirely!

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