According to the Global Entrepreneurship Monitor (GEM) project, nearly 400 million entrepreneurs were starting and running businesses in 54 countries surveyed in 2011, and over 140 million of those entrepreneurs expected to create at least five jobs over the next five years. Research by the Organisation for Economic Co-operation and Development (OECD) shows that new and young firms have been the primary source of new jobs in the United States over the past three decades.

Entrepreneur and venture capital Jeffrey Char, who founded maneo, Japan’s first social lending service site, and is President and CEO of J-Seed Ventures, a Tokyo-based venture incubator.

“Entrepreneurs drive economic growth, but people in Japan don’t believe it,” says Tokyo-based venture capitalist Jeffrey Char.

Which is odd, because many of Japan’s largest and most globally successful companies are for the most part the result of entrepreneurial activity during the Meiji Era and following World War 2.

Japanese entrepreneurs who founded or transformed businesses include: Soichiro Honda (Honda), Akio Morita (Sony), Hiroshi Mikitani (Rakuten), Yataro Iwasaki (Mitsubishi), Konosuke Matsushita (Panasonic), Eiji Toyoda (Toyota), Masayoshi Son (SoftBank), Hiroshi Yamauchi (Nintendo) and Yoshikazu Tanaka (Gree).

The collective revenue of just these companies (and there are many more) is $1.4 trillion and they employ over 1.3 million people worldwide.

Many of these companies are the opposite of what people think of when they year the word “start-up”, but at some point all these companies were start-ups, or small companies in another line of business.

It’s not Japan’s most famous success stories that have been propping up its anemic economy over the past 20 years; according to a study by Professor Kyoji Fukao of Hitotsubashi University and Professor Hyeog Ug Kwon of Nihon University, entrepreneurs and “intrapreneurs” (business units operating in an entrepreneurial manner within larger organizations) have the highest job creation rates of any business group: companies established after 1996 created around 1.2 million new net jobs by 2006.

William Saito, a Tokyo-based entrepreneur and venture capitalist, agrees with Char. “One fundamental problem is a misapprehension of the nature of entrepreneurship,” he wrote in a 2011 essay. Saito says government officials pay lip service to the idea of fostering entrepreneurship, but have no idea how to do so.

“Japan’s bureaucratic response is reflexive and predictable,” he wrote, outlining a typical government strategy, comprising the drafting of plans with “catchy numerical targets”, the proposal for a real estate project perhaps titled “Entrepreneur City”, and the allocation of cash grants to would-be entrepreneurs, “allocated equally among the prefectures, and administered by a small army of bureaucrats tasked with processing voluminous paperwork from applicants.”

Sound familiar? It should. That approach is by no means unique to Japan.

Saito went on to define – with help from Webster’s – an entrepreneur as someone who “assumes the risks” of a business or enterprise, and notes that for Japanese, the main “risk” in entrepreneurial activity is “failure”.

As is often the case in communal Japanese society, it’s not so much failure that worries people, but being seen as having failed.

Fear of failing

According to the GEM project, 53 percent of Japanese who perceive opportunities for entrepreneurial activity (i.e. starting a new business) also said fear of failure would prevent them from starting a business. In the United States, only 32 percent of would-be entrepreneurs said fear of failure would be an obstacle, and in China only 36 percent thought that way.

Indicative of other pressures on Japanese, only six percent of Japanese perceived opportunities to start new businesses in 2012, compared to 32 percent of Chinese, 45 percent of Thais, 43 percent of Americans and 55 percent of Finns (who were by no means the most bullish would-be entrepreneurs surveyed).

Char says, “In Japan there’s this image that if you’re a company founder, and you fail, the yakuza is going to come after you. People who think that have watched a bit too much TV.”

Jason Winder, co-founder of bilingual invoicing software company MakeLeaps.

Jason Winder, Tokyo-based co-founder of bilingual invoicing software company MakeLeaps, says, “The perception in Japan is that people start companies because they don’t have any other options – that they weren’t able to get jobs when they should have, and basically, that they’ve failed. But starting your own business doesn’t make you any less valuable; if anything, it makes you more valuable!”

Entrepreneur Paul Buchheit, who was the 23rd employee at Google and later helped found FriendFeed, which was bought by Facebook in 2009, said in a recent New York Times article about Silicon Valley seed accelerator Y Combinator, “The general public doesn’t understand start-ups at all. They’re mystified how a company with no revenue can be worth a billion dollars.”

Sitting in Y Combinator’s cafeteria, surrounded by founders of many of the 50 or so companies Y Combinator funds in each of its investment cycles, Buchheit continued, ”One of the companies in the room will be worth more than all of the others put together. Ninety percent will ultimately fail. That makes for a very interesting game of trying to figure out who that one company is.”

How to make a billion dollars

What are the building blocks of an entrepreneurial society?

The starting point for every entrepreneur is an idea. And outside Orwell’s Nineteen Eighty-four and certain of Japan’s totalitarian neighbors, entrepreneurial ideas do not constitute thoughtcrime. Great ideas are literally a dime a dozen, however.

What counts is translating the idea into a profitable business, or at least a business that shows the potential for profit.

Like many entrepreneurs, James Riney, co-founder of a new Tokyo-based storytelling startup called Storys.jp, had an idea for a business. And when he left his banking industry job to pursue the idea, he had relatively little trouble navigating the world of finance to secure investor capital.

The Storys.jp team, including co-founder James Riney, second from left.

On reflection, though, he and his partners decided their idea presented a few potential problems: one, the idea was getting more and more complex as they developed it, and two, their competition was well-funded and increasingly turning its attention to the Japan market.
So Riney and his team pivoted, in the vernacular, identifying a single aspect of their original idea – one that beta users of their service had been spending a surprising amount of time on – and decided to focus their attention entirely on that. They launched Storys.jp a few months later, and in mid-May signed a deal with Fuji Television that may see users’ stories produced for broadcast. “We’re aiming to have 100,000 users by the end of the year,” says Riney.

Venture capitalist Tetsuya Isozaki, Managing Partner, Tetsuya Isozaki & Associates.

Tokyo-based venture capitalist Tetsuya Isozaki believes successful entrepreneurship is less about ideas than their application. “Entrepreneurship is about figuring out what you can and can’t do,” he says. If you can learn what your strengths and weaknesses are, you can move forward.”

Isozaki says his firm doesn’t invest seed capital, the first tranche of money required to get ideas off the drawing board. They invest in early stage companies that “have a product, and have showed they have been able to navigate the process somewhat.”

Money, money, money

After the idea, then, comes money. Many entrepreneurs bootstrap their businesses into existence, working other jobs while they get new businesses off the ground, or spending their savings. Another time-tested funding method is obtaining capital from the three Fs: friends, family and fools.

If more money if required, however, or the three Fs cannot be persuaded (as often in risk-averse Japan they cannot), entrepreneurial finance is required.

One avenue of funding is banks. The good news? Interest rates in Japan are low. The bad news? Banks (not just in Japan) are possibly even more risk-averse than mothers (who wish you’d get a real job).

Another avenue is equity investors, such as Jeff Char. But Char says, “Venture capital is only appropriate for a very, very small proportion of companies.”

Giving up equity for cash is probably the most expensive way of raising money, if your business is successful. That $100,000 check written by Sun Microsystems co-founder Andy Bechtolsheim to Google co-founders Sergey Brin and Larry Page in 1998 was worth, in March 2010, around $1.7 billion.

A final, embryonic source of investment capital is crowdfunding platforms such as Kickstarter and Lending Club. These platforms can either fund projects by soliciting advance sales (the Kickstarter model) or through P2P or social lending (the Lending Club model).

Japanese crowdfunding equivalents include Readyfor, Campfire, Motion Gallery and Kibidango.

In 2007, Jeff Char’s J-Seed Ventures co-founded Maneo, Japan’s first and largest social lending site, and he explains, “Individuals fund the loans, which typically are taken out by franchisees, or entities trying to fund a specific project that banks don’t want to finance.”

Will work for food

After scraping together a bit of money and polishing up your product or service, you need … customers! Even one customer would be a nice start.

That’s another problem in Japan, according to Char and Winder. “It is very tough to get that first sale,” says Char. “My first sale, in a company I founded in California in the 1990s, was to PacBell. I can’t imagine having landed NTT if my company had been founded here.”

“The solution is to hack it,” Char continues. “You make that first sale any way you can. Are people using your product? Even if they’re not paying, they’re ‘users’, and you’re not lying if you describe them to prospective customers as ‘users’.”

Winder says, “It takes a long time to establish credibility. Outside Japan, prospective customers say, ‘That’s great, how much is it?’ Here in Japan, they say, ‘That’s great, who else is using it?

“Our business is especially sensitive. We’re asking customers to trust us with their sensitive financial information. It’s understandable they’d want to see references. What was very helpful for us was to be able to post customer testimonials on our website,” he says.

A people business

The credibility problem extends to finding talented employees. Although the facade of Japan’s famous lifetime employment social compact has been showing cracks for years, a job with a Nikkei 500 firm is still the brass ring for many university graduates (and their mothers).

Char says a big difference between the US and Japan is the difficulty in Japan of “attracting smart, hardworking, passionate people to join you.”

Winder concedes the point, but says, “If you can find great people in Japan, they’re really great. They’re dedicated, intelligent, and easy to work with.”

But, but, but …

As a developed and sophisticated economy, Japan has most of the infrastructural elements to be an entrepreneurial society. It has the rule of law, including protection for intellectual property developers. It has world-class manufacturing capability, an outstanding transportation network and a large domestic market. It has sophisticated financial markets. It has a well-educated labor pool (including millions of well-educated, underutilized women).

But the rate of total “early-stage entrepreneurial activity” (i.e. businesses in operation less than three and a half years) in Japan is less than one-third that of the United States, according to the GEM project. The same study showed that Japanese considering starting new businesses are more afraid of failure than their counterparts in other Asian countries, and Japan ranks a distant last among Asian countries in societal belief that entrepreneurship is a good career choice.

And how are Japan’s well-educated, underutilized women coping with the frustrations of corporate life? They’re not setting up businesses, if that’s what you’re wondering. Of the 54 countries in the Global Entrepreneurship Monitor study, only four (France, Denmark, Slovenia and Pakistan) had lower rates of female entrepreneurship than Japan.

Saito thinks the government has a role to play – not in “creating” entrepreneurs, but in removing obstacles that prevent entrepreneurs from achieving success on their own. Among his suggestions is that the government should let failing enterprises fail. Looking at the GEM project data, it’s interesting that while Japan starts fewer businesses than almost any other country, it also allows fewer businesses to fail.

Among Saito’s other prescriptions are the streamlining of bureaucratic processes and the welcoming of foreign entrepreneurs.

Char notes that the current government model for funding “innovation” heavily rewards the pursuit of science and technology patents. “How much money is being made by the thousands of inventions we taxpayers have invested in?” he asks. “They’re rewarding invention, not application.”

Isozaki thinks Japan simply needs more success stories, and a media interested in telling stories about companies outside the Nikkei 500. “More than government assistance, Japan needs more venture capitalists showing investors what can be done,” he says.

Yes, we can

Comparing entrepreneurship in the US and Japan is like comparing apples and oranges, says Char, who notes that although Silicon Valley boasts a tremendous support infrastructure for start-up companies, Lubbock, Texas, for example, doesn’t. “Yes, Japan can be a much less convenient place to set up a company,” he says, “and yes, it’s expensive, but on the other hand, there’s much less competition. If it’s tough to raise investment capital, it’s tough for your competitors. If it’s tough to land that first sale, it’s tough for your competitors.”

Serial entrepreneur Terrie Lloyd, CEO of Japan, Inc. Holdings.

Serial entrepreneur Terrie Lloyd, founder of 18 communications and software companies [including the company that publishes this magazine] over the past 30 years in Japan, says, “Being an entrepreneur in Japan is hard, but not impossible. The mark of a real entrepreneur is to survive and make your mark on the world in some way. To do that, you need a strong sense of purpose, and you need to believe in yourself.”

Isozaki offers up his view of the qualities required of a good entrepreneur: “You need good contacts, networking skills, adaptability, resiliency, communications skills and an ability to deal with failure.”

“To create energy for making positive changes, societies must consider that entrepreneurship is not the heroic act of a few individuals, but the accomplishments of many people who pursue their ambitions in a supportive cultural and institutional environment,” says Professor Slavica Singer of J.J. Strossmayer University in Croatia, an author of the GEM report.

In November 2012, visual designer Eduardo Galvani launched an interactive iBook, The Yellow Cab of the Universe Rides the Solar System, that incorporates animation, video, music, 3D graphics and interactive imagery and is intended for use in schools as an astronomy textbook.

Galvani, who has lived in Tokyo since 1989, had been writing the book in his head for 10 years, but felt it would have been too time-consuming and not cost-effective to create in the way he wanted to. Everything changed for him, however, on February 2, 2012, when Apple Computer launched a software application called iBooks Author.

“With very few exceptions, interactive e-books to date have been glorified PDFs,” says Galvani. “The potential was not being explored. You would have a few effects, and then be back on the PDF page. Before iBooks Author, I would have had to spend 3-4 times more time, and the book would probably have been outdated by the time it was done.”

The day Apple released iBooks Author, Galvani downloaded the application and started work on Yellow Cab. “It took me around two days to learn to use the application properly,” he says. “On the first night, I created the title. On the second day I thought up the taxicab.

“I had previously thought about many ways to tell the story, but once I decided to go ahead and try to write the book, I said
to a friend, ‘If this isn’t a success, I will close my design business, move to New York, and drive a taxicab. I have all the requirements: a driving license, a green card, a bad accent, and I am rude to my clients.’ And that’s where the idea of the taxicab came from.”

Galvani continues, “I’m a visual designer, a graphic designer. But I never thought my legacy would be shaving cream commercials. And after the earthquake and tsunami, my work started to dry up, but after February 2, I was working day and night on the book, and I was confident that people would love it. At that point, I got a telephone call from an old client, who works for a very, very powerful company, and who wanted me to work on a television commercial.

“The guy calls me and says, ‘Eduardo, can you come here at five o’clock?’ And I said, ‘No.’ And he asks me why I can’t come, and I tell him, ‘I”m busy.’ So he says, “Can you come tomorrow?’ And I said, ‘No, I’m busy.’ Because I had pushed all my chips into the center of the table at that point. Anyway, the conversation concluded, and I am not kidding, with this guy telling me, ‘You’ll never work in this town again.’ That’s a story I hope I will enjoy telling for many years to come.

”Though he had decided to close his design company and was working full- time on the project, Galvani knew he needed help. David Russell, an editor, was asked to match Galvani’s visuals with text, and Todd Porter was named CEO, “to handle the business side of things, which I hate to do,” Galvani says.

Galvani also sought the support of the scientific community, including physicists at Caltech and NASA. “Ten out of 10 people I showed the book to said, ‘Great!’, ‘Fantastic!’, ‘Wonderful!’,” he recalls. “And so when I contacted [British physicist] Paul Davies, he sent me on to people at Caltech. And the Caltech people said, ‘Oh, you must talk to people at the University of Arizona!’ And everyone all along the way was so open, so willing to help. The Caltech people looked at some of the data I had and said, ‘That number is so old! You have to add two more zeroes!’”

Scientists at the University of Arizona provided Galvani with the blueprints to the Mars rover, Curiosity, and NASA sent a special hard drive that gave Galvani access to the Curiosity data feed. “I have been able to use things that no one has published anywhere else,” says Galvani. “It’s just because they think it’s a great project, and because they want the same thing I do: to help people to learn about and love science.”

Galvani has been interested in science since he was a small boy, and he had a tutor, Father Francesc Domingo i Segura, who was a Jesuit priest and was very interested in philosophy and science.

Galvani says, “Father Francesc devoted 15 years of his life to educating me, opened doors for me to rational thinking, observation, curiosity, and when I was 11 years old, introduced me to Bertrand Russell’s ABC of Relativity. And I said, ‘Wow.’ The same year, he introduced me to Russell’s Introduction to Mathematical Philosophy.

“The next year, my parents both died, and I was taken into the care of my grandparents. The first birthday after that, when I would be 13, Father Francesc said to me, ‘Eduardo, on this birthday you will get whatever you ask for.’ He suggested I ask my grandparents to let me attend an event for children that was being held in Ithaca, New York, at Cornell University. The event was organized by Carl Sagan, and I met him then. I met him again 10 years later, and through him I met Michio Kaku, and through Kaku I met Paul Davies, and so on. The scientific community is a small family.”

The Yellow Cab team now comprises seven people in various roles, including translation into other languages. But Galvani says, “At the moment, it’s a labor of love. Everyone involved in the project is getting paid less than they are worth, or not at all, giving their time and effort because they believe strongly in the book, in the mission. I’ve been spending my life savings to make this happen, and that’s true for everyone on the team.”

On November 2, 2012, nine months after Galvani began work, the team launched Yellow Cab as an iPad application, and it was soon ranked the number one paid textbook on the iTunes Bookstore. The English version is now available in 47 countries, including Japan, and Japanese, German and Swedish editions are planned for launch starting this autumn.

Production of the second title in the series, The Yellow Cab of the Universe Visits Mr. Albert’s Brain, which will follow Albert Einstein through the world of physics, is underway, and biology and chemistry titles are in the pipeline after that.

“In the dedication to the book I wrote that I created this for my daughter, who is a teenager, and who like many teenagers, thinks she doesn’t like science,” says Galvani. “But I created it for every kid. To me, this is the final legacy of Steve Jobs. Steve was all about education, and iBooks Author made it possible for me to create something that didn’t make sense, economically, for me to make before. I had the whole thing in my mind, but I couldn’t afford to produce it. It’s a software application I would pay $10,000 for, and they’re offering it for free!”

What a shock for anyone who has devoted his career to this market! To anyone living and doing business in Japan, with its population of 127 million and its purchasing power parity per capita GDP of over $33,000, the description as “niche” seems, frankly, ridiculous.

However when you consider its relentless efforts to control and limit foreign goods and influences, as well as all the other challenges of growing a foreign-owned business here, it’s easy to see how some would think of Japan as a large, but globally irrelevant market.
The fear that Japan may become (or may already be!) an irrelevant global player is something that clearly concerns the new Abe administration, not least because of its security implications. Frantic efforts at hard and soft diplomacy are underway to regain some of the influence that Japan has lost around the world over the past 20 years.

Riding to the rescue is a key pillar of Japanese soft diplomacy – the so-called “Cool Japan” campaign. With the slogan having been in use since the early 2000s, the idea of Cool Japan is not new (and may have been a copy – the sincerest form of flattery! – of the Cool Britannia campaign of the mid- to late-1990s). It encompasses a large range of modern Japanese cultural outputs that have struck a chord overseas. Mainstays such as manga, anime, cosplay and Hello Kitty are key platforms of Cool Japan, but music, fashion and architecture have also played a role.

But why is so much Japanese cultural output considered cool? Perhaps the essence of Japan’s cool (modern) culture lies in its ability to take foreign aesthetics and use them to express a range of Japanese ideas without any sense of irony or self-consciousness. The ideas expressed are completely Japanese, appearing to the outsider to be completely within aesthetic norms but also completely unique. For a global culture constantly in search of something new, and to escape from its set of clichés, Japan offers something fresh and exciting.

The political implication of Cool Japan is that these cultural elements so admired overseas can be translated into some sort of soft power, making audiences overseas much more receptive to Japan’s exports and its agenda in general. In recognition of the importance to the nation of foreign receptivity to its culture, the once-feared Ministry of Economy, Trade and Industry (METI) is officially in charge of the Cool Japan “project”. In its draft budget, the national government has allocated a cool ¥50 billion (around $500 million) to the global promotion of fashion, anime and everything else “cool”. A public-private entity is in the works that will officially spearhead the spread of Japanese modern culture, especially into ASEAN markets.

The critic in me believes there are few greater guarantees of uncoolness than government involvement, but it’s clear that the Abe administration is cognizant of the need for Japan to manage its brand. South Korea, never slow to catch onto a successful trend started elsewhere, has also recognised the usefulness of being a part of global popular culture.

Indeed, the “Cool-Japanners” probably looked on with not a little envy at the success of Psy’s “Gangnam Style”, which seemingly came out of nowhere to ride the heights of the charts (and encourage some very silly dancing) in the US and around the world.

Of course, trying to emulate the success of Gangnam Style is hard even for Psy, and therein lies the challenge for Cool Japan. The nature of “cool” is that it is ephemeral, and any attempt to create it deliberately usually has the opposite effect. In some ways, it was the very unselfconsciousness and lack of awareness that people overseas were watching that made modern Japanese culture so interesting. So, a light touch seems in order. Also, it should not be forgotten that traditional Japanese culture generates a lot of interest overseas; Japan has a wealth of cultural assets it could make more accessible to overseas audiences.

Whether or not the Abe administration fears Japan is becoming a “niche market”, it is refreshing to see a government so committed to making Japan relevant in the modern world, and especially in Asia. This can only be a good thing for Japanese businesses selling from Japan and for those of us who stand to benefit from greater interest in this market.
Nevertheless, it would be a pity if all the good work in soft diplomacy runs aground on the (offshore, surrounded by submarine oil deposits) rocks of history; for all its emphasis (and spending) on soft diplomacy initiatives, it seems the Abe administration is equally committed to promoting a version of history not agreed by its neighbours. The unique and enduring power of American culture is that its attractiveness persists even in those countries where the people are opposed to American policies. If Japan’s cultural exports prove cool enough to override politics, that will be an achievement indeed.

Over the past 20+ years, I’ve run seminars and workshops on so-called “soft-skills” for corporations, mostly here in Japan but also throughout Asia with occasional work in Los Angeles, San Francisco and Madrid. This summer we’ll add Zurich.

And a few years back, I started a discussion with an old friend, recruiter Gary Bremermann, about what separates average performers from those who consistently rise to the “top of the charts” – the outliers who out-hustle, outperform and outshine their peers.

We are fascinated by these people, and we come into contact with them regularly in our work in management training (me) and recruiting (Gary). We both agree the world could use a lot more people who spend their time not wondering how things will turn out, but ensuring things go great.

Gary and I began exchanging ideas about what core characteristics and skills these individuals share and we gave them a nickname. We call them “RockStars”. We chose that term because we share a love for music and because the rock star metaphor is a fun and effective tool in developing and encouraging people to transform themselves into higher achievers.

Who are the RockStars?

The way we see it, RockStars are people who lead and inspire others. And are recognized for their ability to do so. The RockStars we know consistently outperform their peers. And though they are driven to achieve, they aren’t always found at the front of the stage.
Leadership and inspiration first.

People want to work in a RockStar’s inspirational energy field. Are you developing your ability to lead and inspire others to stardom? Who are you inspiring? And what do they say about you as a leader? Do you know?

Being on stage with the spotlight on you can be scary. RockStars rise to the challenge, learn what it takes to be effective leaders, and gain confidence in their abilities to meet and surpass expectations.

Everybody around a RockStar, including his or her bosses, subordinates and peers recognizes the star’s unique abilities. For some, recognition is an end goal, but whether you are chasing that goal or not, recognition is a natural outcome of high performance. People notice when someone is an expert in their field. They notice when he or she performs at a level that is well beyond average.

RockStars are competitive. They compete with their peers and are constantly being compared to others. They consistently receive the highest marks on performance evaluations. Once they complete projects, they are ready to tackle the next … often on a bigger stage. They are far from being “one hit wonders”.

Achievement and success are rarely easy. Competition is tough, with many distractions along the way, and it takes tons of energy to stick with something long enough to master it and get results. What separates RockStars from ordinary performers is their drive.

RockStars work tirelessly to master their craft. They attach meaning and a “higher purpose” to their goals. And even when they face huge challenges to reaching those goals, resilience born from their unwavering internal drive keeps them going.

Finally, a common misconception about RockStars is that they are all outgoing, attention-seeking, high-profile extroverts who occupy the center stage, like the lead singer or lead guitarist of a band. In fact, many RockStars are the exact opposite – they are introverts who want to stay away from the limelight. They don’t need to be the center of attention. They are happy to apply their expertise and get the job done quietly and effectively while being a (if not the) key contributor to the success of the team.

Japan needs more RockStars

Japan is entering a period in which it must succeed internationally to sustain economic growth. The more Gary and I developed our conversation about RockStars, the more certain we were that Japan needs RockStars who can perform on any stage, anywhere on the planet. These “made in Japan” RockStars will provide the necessary leadership for Japanese companies expanding to global markets or international companies looking to hire the very best, regardless of nationality.

It’s true that some people have innate talents they develop and apply to achieve what looks like easy success. But we believe anyone can work hard to develop skills over time that will almost guarantee success … if they focus on the right things.

What it takes

So what does it take to become a RockStar?

From the outside, success often looks easy. We believe those who are “born” RockStars are outnumbered by those who figured out a way to build their talents through consistent incremental improvement. Carlos Santana, one of greatest guitarists of all time, says one of the reasons he keeps playing guitar is to learn what a guitar can do. This from a man who has won 10 Grammy Awards.

RockStars are committed to becoming the best they can be in their chosen professions. They put in the time and energy to focus on areas they need to work on. They read industry journals, join and take leadership roles in trade organizations and constantly seek ways to improve. No matter how good you are, a RockStar knows you can always get better, by asking questions such as, “How can this product/service be better?” “How can I do more, faster, and better?” “Where are the future opportunities?”

RockStars understand that innovation leads to breakthrough results and they are willing to take risks with new ideas even if there is a possibility of failure. In doing so, they stand out from the crowd who are held back by fear.

RockStars have a clear mission.  Make no mistake – being a RockStar is not easy. You will be tempted to give up, accept mediocrity, think small. Committing to a mission sets you on the path toward success (success as you define it). A mission, properly identified and aligned with your passion, will keep you going in the face of challenges and will give you the motivation to bring your very best to everything you encounter.

John Lennon, who dreamed of being a musician, almost gave up the guitar after two lessons, thinking it was too difficult. He kept going, however, driven by his mission, and became a legend. You can too.

The way people deal with adversity greatly affects their destiny. RockStars recognize their failures and mistakes, acknowledge them, and learn from them. Those who blame others or their circumstances often repeat the same mistakes and find themselves in the same situation over and over again. “The market’s bad.” “My boss is terrible.” “My customers are stupid.” “The leads are weak.”

All of us can fall prey to making any of these excuses at any time. But RockStars are aware of what they can control, namely their responses to circumstances, and they rock on.
Not one person became a RockStar on his or her own. None. Zero. Zilch. Zippo.
Every single person who has achieved anything significant has done it with the support of and in collaboration with others. RockStars depend on an army of people and they learn how to identify key partners and work with them in order to succeed.

Are you ready to rock?

RockStars are born and they’re made. Musicians, athletes and professionals of all types often show early signs of their future success. Something in their genes drives them to perform. But it’s what they do with their innate talent and how they develop their skills that makes all the difference.

The first step is self-awareness. You need to know what your natural strengths are. Next, what do you want to accomplish? Then, what skills do you need to develop in order to reach your goals?

By knowing yourself, challenging yourself, and consistently improving your skills, you’re destined for RockStardom. By hiring great people and strategically developing them, a leader supported by a talented team rises further faster.

The United States has agreed to return land around Kadena airbase to Japan by 2024.

The US military has announced that US military-occupied land south of Kadena, including Makiminato Service Area and Kuwae Tank Farm No. 1, will be returned as replacement facilities become available outside of Japan, mainly on the islands of Guam and Hawaii.

A new timetable for the relocation of Futenma airbase has also been revealed, with the airbase slated to be relegated to offshore runways in a less developed area of Okinawa in 2021.

Futenma and Kadena airbases have been a source of conflict between the US and Japan for decades.

Okinawans say the bases – located near or in crowded residential areas – are dangerous and noisy, and relations have been further aggravated by incidents such as the 1995 rape of a 12-year-old girl by servicemen, and the 2004 helicopter crash on the grounds of Okinawa International University.

The long-term relocation strategy is expected to reduce the number of US military personnel in Okinawa from 50,000 to 10,000.

MORE FRESH GRADUATES FIND JOBS

On April 1, approximately 840,000 new recruits began their first day of work throughout Japan.

The figure includes the 81.7 percent of college graduates who found employment before graduation, a percentage that has increased for the second consecutive year and demonstrates improved business confidence. An estimated 77,000 college graduates have not found work and are now unemployed.

The percentage of high school students not going on to university who were offered jobs prior to graduation has also increased; the disaster-struck Tohoku prefectures of Iwate, Miyagi and Fukushima in particular reported job placement rates of over 90 percent.

Also on April 1, Japan Airlines inducted new employees for the first time since declaring bankruptcy in January 2010, and convenience store giant Lawson Inc doubled its intake of new recruits, with roughly a third of those foreign nationals. Both Nomura Holdings Inc and Daiwa Securities Group Inc picked up more new recruits than in any of the past four years, and 70 percent of new hires in the engineering department of Rakuten Inc were from foreign countries.

Masayuki Higuchi, vice department manager of global human resources at Rakuten, explains the large percentage of foreign hires, saying, “Graduates from overseas universities, for example in China, are often better trained in their fields; Japanese universities don’t provide practical training to students.”

TOKYO MITSUBISHI UFJ EXPANDING TO SOUTHEAST ASIA

Tokyo Mitsubishi UFJ will establish a new head office in Singapore to spearhead expansion into Southeast Asia.

The move is the result of high economic growth in the area, which has attracted many Japanese companies. Wage growth in China has also contributed, prompting companies to move production to Southeast Asia.

The International Monetary Fund (IMF) projects the economic growth rate of the five primary nations of Southeast Asia – Indonesia, Malaysia, Thailand, the Philippines and Vietnam – will be 5.5 percent in 2013.

One of the key drivers of growth is infrastructure; the Asian Development Bank projects $600 billion in infrastructure needs over the next decade.

However, the opportunities have been clouded by regulatory uncertainty and bureaucracy. Southeast Asia is having trouble finding private investment funds, with potential investors put off by histories of project delays and failures, as well as a lack of government guarantees on pricing.

Bert Hofman, World Bank chief economist for East Asia and the Pacific, says, “There’s a lot of money floating around but it’s money looking for a return.”

MALE BALDNESS: INDICATOR OF HEART DISEASE

Researchers at the University of Tokyo have found a positive link between certain types of male baldness and heart disease.

The study, published in the BMJ Journal, featured 37,000 subjects and found a 32 percent greater risk of heart disease in bald men compared to their full-maned counterparts.

The study only found the link to balding of the crown region of the head, as opposed to the more common receding hairline, which 80 percent of men experience by the age of 70.

The reason behind the link is currently being researched, with leads including sensitivity to male hormones, insulin resistance and inflammation of blood vessels.

However, experts also say the risk of heart disease related to baldness is significantly less compared to other factors, such as smoking and obesity. Rather than watching your hairline, they suggest watching your waistline, noting that maintaining a healthy weight is still the number one way to prevent heart disease.

JAPAN STEPS CLOSER TO JOINING THE TPP

Japan has taken another step toward formal entrance into the Trans-Pacific Partnership (TPP).

After Prime Minister Abe’s March declaration of Japan’s intention to pursue inclusion in the TPP, a formal invitation was issued to the country in late April by members at the Asia Pacific Economic Cooperation forum held in Indonesia, and the Obama administration notified Congress of its intent to include Japan in the TPP.

Joining the TPP would further Prime Minister Abe’s vision of reviving the faltering Japanese economy by boosting exports to rapidly developing Asia-Pacific markets. The addition of Japan, the world’s third-largest economy, to the TPP would mean the members would be responsible for about 40 percent of global economic output and one third of global trade.

Despite its intention to join, Japan also aims to appease its national farm lobby by protecting staple agricultural products such as rice, wheat and dairy products.

Japan’s potential membership has significant implications for other members as well; a TPP that controls such a significant portion of global trade would represent a giant leap toward an Asia Pacific Free Trade area.

CHINA’S YOUTH EYED BY JAPANESE AUTOMAKERS

Japan’s automobile makers are looking to capture the China market by targeting Chinese youth born in the 1980s, who analysts project will soon emerge as the world’s largest market segment. Kimiyasu Nakamura of Dongfeng Nissan says, “I expect the auto market in China to post eight percent growth this year.”

The progressive thinking of Chinese youth plays an important role in the opening of the market. The majority value product quality, safety and fuel economy over Chinese boycotts of Japanese products. In a Kyodo News report, a 27-year-old customer at the Shanghai International Motor Show said, “We look at quality, safety, fuel efficiency and price levels, and we think Japanese cars meet these criteria,” expressing disregard for diplomatic tensions between the two nations.

Nissan, Toyota and Honda have each unveiled concept cars developed after researching the needs of typical Chinese households. The Chinese nuclear family typically includes grandparents, resulting in a need for larger and more accessible vehicles, reflected in the announcement of a six-seater concept car and vehicles featuring suicide doors (a term not favored by auto manufacturers!) lacking B-pillars, allowing for more interior space.

Commenting on the recent growth of the passenger vehicle market, which increased from 14.48 million to 15.42 million units from 2011 to 2012, Kimiyasu Nakamura of Dongfeng Nissan says, “There is nowhere in the world where the passenger car market expands by 1 million units a year. This is an attractive market.”

SUPERDUPER-FAST SUPERCOMPUTER

Japan’s Ministry of Education, Culture, Sports, Science and Technology (MEXT) has announced plans to develop a next-generation supercomputer 100 times faster than the Fujitsu K computer, currently installed at the RIKEN Advanced Institute for Computational Science campus in Kobe. The K computer, one of the world’s fastest, used for a variety of applications including climate research, disaster prevention and medical research, is based on a distributed memory architecture with over 80,000 computer nodes.

The K computer was the first computer in the world to break 10 petaflops, or 10 quadrillion computations per second, and currently operates at 10.51 petaflops. The new supercomputer will shoot for exaflop capability, which is equivalent to 1 quintillion computations per second.

The ministry plans to use the computer to develop new medicines and medical formulas, and most importantly to develop and enhance simulations and statistical analyses that predict natural disasters like earthquakes and tsunamis.

MEXT projects that the cost of developing the computer will be less than the ¥110 billion used to develop the K Computer, and will seek funding as part of its fiscal 2014 budget request.

JAPAN TOURISM HITS POST-3/11 HIGH

In March, 857,000 visitor arrivals to Japan marked a high since the 2011 Tohoku earthquake and tsunami, recording a 26.3 percent increase over the previous month.

The Japanese tourism industry was dealt a blow by the 3/11 disaster, after which radiation emissions from the crippled Fukushima Nuclear Power Plant reduced monthly visitors by half. The decline in visitors persisted throughout 2011, recovering to pre-disaster levels only in January 2012. Following a dip in February 2012, numbers of monthly visitors have been roughly equal to pre-disaster levels.

In March, South Koreans (207,000 people) comprised the largest share of visitors, followed by Taiwanese (147,000). Visitors from Thailand numbered 45,000, a 70 percent increase over the previous month. A press release from the Japan National Tourism Organization claimed tourism from China is also recovering, breaking the 100,000 mark for the first time since September.

Also influencing resurgent tourism has been the yen’s recent 20 percent decline against the US dollar and other currencies. On the flip side, the weaker yen is believed to be responsible for a 4.9 percent decrease in Japanese traveling overseas.

The Beatles’ press conference at the Hilton Akasaka in June 1966.

On June 20, 1963, the day Conrad Hilton opened the first Hilton Hotel in Akasaka, a young Japanese man, Kinsaku Omata, went to work in the hotel’s print shop. Remarkably, Omata-san (along with one other employee who started at the same time) is still at work for the company, which is celebrating its golden anniversary in Japan this year.

During the past five decades, Hilton has expanded its Japan portfolio to 10 properties, replaced Akasaka with Shinjuku as the company’s Japan flagship, and with the opening of its Conrad Hotel in 2005, led the way for an influx of international luxury hotel operators including Mandarin Oriental, Peninsula, Ritz Carlton, Four Seasons, and Shangri-La.

Timothy Soper, Vice President, Operations – Japan, Korea and Micronesia for Hilton Worldwide, has been in his post for less than a year, but has worked for Hilton for 25 years, including two previous postings in Japan, and he grew up in Hong Kong when the Hilton there was the only five-star hotel on Hong Kong Island.

“I remember Sunday hotel brunches were a very special treat back then, and after my family moved back to England, I always wanted to come back to Asia, to work here,” he says. Soper did come back, and his first job in Asia with Hilton was as food and beverage director at the Hong Kong Hilton (which like the Hilton Akasaka, has been replaced by newer properties).

Newcomers to Tokyo may assume the luxury hotel market has always been robust in Japan’s capital, but despite Japan’s well-deserved reputation for service excellence, and its unparalleled tradition of luxurious ryokan, before 2005 there were only a handful of properties – such as the Imperial Hotel and Hotel Okura – that fit the Western definition of a five-star hotel.

Hilton, which has had a longtime presence in Asia not only in Tokyo but also in Hong Kong (since the 1960s), Singapore (since 1972) and Shanghai (since 1988, when it was the first international five-star hotel to open in China), has hosted the Beatles, Richard Nixon,  Sean Connery, the Dalai Lama and Margaret Thatcher, among many others, in its Japan hotels, and the visit by the Beatles was a memorable one.

Arriving in June 1966 at the height of “Beatlemania”, the Fab Four found themselves confined to their room as a result of a threat against them by a right-wing organization, allowed out only for their performances at the Budokan, and for a memorable press conference in a Hilton meeting room.

Question: “What understanding of Japan did you come to this country with?”
Paul: “We don’t know much about Japan except what we’ve read or seen on film.”
John: “And we don’t believe all that.”
Paul: “But it seemed like a good place, you know.”

It certainly seems like a good place for Hilton, which plans to open a hotel in Okinawa next spring, and has plans to expand within Tokyo and to other cities in Japan where it does not yet have a presence.

“If you compare London, where I think we have 16 or 17 properties in different categories, to Tokyo, there appears to be a lot of room for growth here,” says Soper. “And outside the Tokyo area, we see many other cities where first- class hotels can be sustained.”
Soper points to the recent purchase of the Hilton Odawara as an example of the company’s commitment to the Japan market, saying, “Out of more than 4,000 properties we manage worldwide, Hilton owns only about 20. We’re primarily a management company, and for us to buy a hotel, that signals a very strong commitment to the market, and indicates we see tremendous opportunity.”

Like its competitors, Hilton is benefiting from the resurgent economic sentiment that has followed the introduction of “Abenomics”, with the weakening of the yen not least among the factors driving inbound business and leisure travel to Japan.

“Our business in part relies on business and market confidence,” Soper says. “The business mood in Japan is extremely strong at the moment, in stark contrast to the  trading environment of the past 20 years. The recovery from 3/11 has been much stronger than anticipated, the new prime minister is making changes, and commitment at the Bank of Japan to the two percent inflation target is influencing business decisions. It’s a good time to be trading here.”

It’s not only international hotels that are benefiting from business optimism; travelers have also benefited from the arrival in Japan of luxury hotel brands.

“Since we opened the Conrad in 2005, and so many other companies followed, the bar has been raised for everyone, including or perhaps especially the Japanese companies,” Soper says. “Many of the new luxury hotels have beautiful public spaces, large rooms, and elegant amenities, and in the hotel industry, everyone keeps a close eye on what their competitors are doing.

“So five-star hotels become ‘five-star plus’ and four-star hotels become five-star hotels.  In many cases, this prompts hotels to invest and renovate where perhaps they might not have done so otherwise.”

Hilton itself is not immune to the “race to the top” – the Hilton Tokyo in Shinjuku is undergoing large-scale renovations, and the Hilton Osaka will get its own makeover starting in July. Improvements are also planned for the Hilton Tokyo Bay, and next year for the company’s properties in Odawara and Nagoya.

Industry growth can be expected from the leisure market as well as the business community, according to Soper. “The increased number of high-quality hotels around Japan – not just in Tokyo – means Japanese travelers are increasingly choosing domestic destinations for their holiday and weekend travel,” he says.

“Even destinations people have visited before, if they can stay in a five-star hotel, become an entirely different experience.”

At that press conference so many years ago, the Beatles were asked, “What do you think the differences are between Japanese fans, yours, and teenagers elsewhere in the world?”
Paul McCartney replied on behalf of the band: “I think the only difference with fans anywhere is that they speak different languages. That’s all. That’s the only difference.”
The advent of “Western-style” luxury hotels in Japan has demonstrated that – as unique a market as Japan likes to think it is – people all over the world like being pampered.

As dawn approaches atop Tonodake (Mount To), a chill wind whips over the exposed peak. Off to the west, Mount Fuji begins to emerge as the darkness that cups the peaks of the Tanzawa range fades to a fleeting purple hue before the rising sun changes the sky to a more familiar hazy orange.

The night before, tired from two days of hiking through 35-degree heat, I grudgingly agreed to be woken early to catch the sunrise. Right now, watching Fuji’s symmetrical peak piercing a slow-flowing mass of creamy cloud, I’d have happily hiked a week for this.

The man who woke me, Wada-san, stands beside me sharing the view. Short and lithe, and with skin weathered from living almost half of each year in Tonodake’s creaking wooden mountain hut, he’s wearing an expression of contentment that wouldn’t look out of place on a statue of Buddha.

“It’s beautiful, isn’t?” he says. “I’m glad you got to see it like this.”

I nearly didn’t. The three of us on the trip had aimed to reach the 1,490-meter Tonodake in a day and then work our way through to neighboring Mount Tanzawa and several other taller peaks over the following few days. An early cock-up soon put paid to that.

On day one, having already started out late after a train delay in Tokyo, we turned onto the wrong trail a couple of hours into the hike and later had to scramble off-trail for an hour
up the side of a steep, wooded peak to get back on track. Exhausted and with darkness descending, we gave up on reaching Tonodake that night, instead pitching our tents on a small patch of shin-high dewy grass that at first provided cool relief and then offered up an infestation of leeches that clung to our flesh under bloodstained socks and t-shirts.

The next morning was only marginally better. Running short on water, we dropped nearly 600 meters and climbed another 800 to restock our
water supplies at a small hut on the peak immediately before Tonodake, then napped through the searing midday heat and humidity before winding our way through undulating wooded trail that eventually gave way to a sharp, sun-baked climb to Tonodake. We were drenched in sweat
by the time we reach the mountain hut, where Wada- san greeted us with a smile. “Hot day, eh!” He was the first person we’d seen for hours; only about the third since the trailhead the day before.

For ¥4,000 per person, we spend the night at the hut, talking to Wada-san about the mountains over dinner; about the wild deer that will sometimes feed from his hand;
about the natural springs we can drink from on the rest of the hike; about how Fuji-san changes her colors throughout the year. When we tell him about the leeches, he politely fights to hold back a laugh. The laugh wins.

“You need rubber boots and tobacco,” he says, reining in the chuckles and showing us the crushed up cigarettes he has taped around the top of his black rubber boots. “Leeches won’t go anywhere near tobacco.”

As we leave Tonodake the next morning, Wada-san snaps a photo of the three of us at the peak. A few weeks later several copies arrive in the post with a letter handwritten on washi paper. With it is a photo of an early-morning Fuji dated the day after we had left. “It looked even better the next morning. I hope you can come and see it like this one day,” Wada-san writes in the letter. I hope so too.

The best starting point for hikes around the Tanzawa area is the trailhead at Okura. To get there, take the Odakyu Line from Shinjuku to Shibusawa Station (1 hour, 15mins; ¥650), then bus #2 (15mins). To book a stay at Tonodake’s mountain hut, see www.cnet-sb. ne.jp/sonbutu (Japanese). Accommodation with dinner and breakfast is ¥6,000.
If you want to reach Tonodake in a day, plan to be hiking by 9 am.

The Temple

Soaking up to my shoulders in the temple’s piping hot cypress bathtub, white wash-towel resting on my head, can of beer in hand, I can’t help thinking that piety might have its perks. After shuffling back to my room – clunky wooden sandals occasionally snagging in the temple’s gravel courtyard – the multi-course vegetarian dinner delivered by one of the monks seals it.

Before coming to Mount Koya (aka Koyasan), I’d expected a temple stay to be more Spartan. I’d imagined bland tofu dinners and cramping up trying to sit cross-legged through lengthy prayer sessions – good fodder for a story, if not for an enjoyable weekend. I’d even smuggled in a couple of one- cup shochu, thinking the temple might be dry. I shouldn’t have worried. Just before dinner, when a young monk drops by my tatami-mat room to make sure I’m ready for my meal, the first question he asks is, “Can I get you a beer?” No wonder most of the pilgrims I see in Koyasan look so contented.

Koyasan has been attracting pilgrims since the monk Kobo Daishi founded the Shingon sect of Buddhism on the cedar- covered mountain in Wakayama Prefecture 1,200 years ago,
and today clustered around its eight peaks there are some 120 sub-temples and monasteries, half of which, like Eko-in (www.ekoin.jp/en), where I am staying, offer accommodation. Unlike Tonodake, the journey to Koyasan is about time and money, not sweat and leeches. After taking the shinkansen to Shin-Osaka it’s a short hop on the Midosuji subway line to Namba Station, from where the Nankai Line slowly makes it ways to Gokurakubashi Station on a route that becomes gradually more winding, over the course of 90 minutes eventually making its way into densely wooded valleys. The final leg is a five-minute cable car ride from Gokurabashi up to Koyasan.

From the upper cable car station the classic Koyasan tourist route begins. Buses run to the Shingon sect’s main temple, Kongobu-ji, which houses a fine collection of
16th century screen paintings and has one of the largest Zen gardens in Japan. A short walk from there is Koyasan’s sacred inner precinct, the Garan, where Kobo Daishi built the mountain’s first monastery and where today some of the Shingon’s most valued antiquities are kept in modern reconstructions of Koyasan’s earliest buildings. Another bus takes you to the far side of Koyasan, to Okuno-in cemetery, where Kobo Daishi’s understated mausoleum is partially hidden in the woods behind a lavishly decorated hall illuminated by 10,000 constantly lit oil lanterns.

It’s a warm sunny afternoon by the time I get to the sprawling cemetery, but Okuno-in’s towering cedars keep it cool and dark. Dank
moss carpets the ground and creeps over the statues and headstones. Yoda would feel at home here. But for the occasional group of pilgrims – dressed in white and carrying rosaries and staffs – nothing stirs. It feels as if I have the place to myself. And that would have been the highlight of the trip, if it weren’t for what happened the next morning.

Come 6 am there’s a knock on the sliding door to my room and a gentle reminder that morning prayers are about to start. Five minutes later I’m scuttling across the courtyard to the faintly lit inner temple, where the air is thick with musty incense and the heavy scent of aged wood. Several seated monks are reciting sutra in a low, hypnotic drone that occasional breaks form, quickening and peaking in concert with the pounding beat of a single drum. Then silence comes abruptly, and we – the monks and half a dozen other guests – move single file to another smaller, darker building in the temple compound.

Here, we sit around a kneeling monk, who readies a pile of 108 kindling sticks – one for each of the 108 defilements to be overcome on the road to enlightenment – with the poise of a kabuki actor. As the drum beat and chanting begins anew, he starts to burn them on a small altar. Flames rise and spit. The drum ups tempo. The chanting soars. Like Hendrix sacrificing his Strat at Monterey, a fiery crescendo caps a spectacular gig. More than that, it caps a spectacular weekend away.

To book a stay at one of Koyasan’s temples, contact the Koyasan Tourist Association and Shukubo Temple Lodging Association (www.shukubo.jp/eng). Expect to pay around ¥10,000 per person with two meals. Budget ¥15,500 each way for trains, which take four and a half hours from Tokyo Station.

The Farm

If there’s any drawback to mountain huts and temples, it’s that they aren’t suited to family getaways. My six-year- old boy would love the trains to Koyasan, but he wouldn’t last five minutes at a temple – come to think of it, the temple might not last five minutes with him there. Brown’s Field Farm (www.brownsfield-jp. com) on the Boso Peninsula in Chiba, however, is an entirely different getaway.

Founded in 1999 by essayist and natural foods cooking teacher Deco Nakajima and her husband, writer/photographer Everett Kennedy Brown, Brown’s Field was born out of a desire to create an eco-village where people can experience traditional Japanese rural living.

Although visitors can help out on the farm, Brown’s Field is more about unwinding than it is about getting mucky. The first thing we do when we get there on a warm May day is pile into one of the rainbow-colored hammocks by the farm’s rice paddies and sway for a while before grabbing a lunch box from the farm’s organic café and picnicking under a tree.

After lunch, with my wife and son off chasing frogs and counting insects, Everett stops by to give me a tour of the farm. We start with a peek into one of the two tree houses and the renovated Meiji-era barn where visitors can stay overnight, then walk around Ji Ji No Ie, a beautifully restored farmhouse a few minutes’ walk from the farm that now functions as an inn. As we stroll around we pass children petting the farm’s goats. There’s a woman doing yoga. A couple is fast asleep on the barn’s wood decking. Others are picnicking in the fields. The soundtrack is one of frog croaks and birdsong. A week on from our visit, when the rice planting begins, it’ll be a far busier scene, but at this moment there’s almost nothing really happening – and that’s perfect.

“The idea is for there to be a variety of little cubby holes where people can come and get away; spaces where we can escape the daily things,” Everett says, as we clamber up to the second floor of an old wood-built kura (warehouse) he’s renovating into a gallery. “This is a place for time travel.”

This particular time machine creaks gently in the wind like a galleon drifting on calm seas, but is otherwise quiet enough to hear silence ringing in your ears. It’s so peaceful I’m starting to wish we’d booked in for a night so I could make the kura my cubby hole for the evening, or maybe cycle down to the local beach Everett tells me about to watch the sunset. Instead, I wander back to the paddies for another hour or two of time travel in a hammock, before it’s time to head back to Tokyo.

Brown’s Field Farm is a 10-minute taxi ride (¥1,200) from Chojamachi Station on the JR Sotobo Line, which can be reached from Tokyo Station via the Keiyo and Sotobo lines
in one hour and forty- five minutes (¥1,620). Accommodation, with dinner and breakfast, starts from ¥8,000. www.jijinoie.com

Administration officials fall into two categories: career professionals and political appointees. We know the career professionals quite well; we have worked with them on complex bilateral trade issues sometimes for decades.

Just moments after our meeting at USTR we learned the administration had notified Congress of its decision to go ahead on the Trans-Pacific Partnership, triggering a 90-day Congressional consideration of Japan’s inclusion among the TPP negotiating countries.

The trade professionals who had been working around the clock were excited, and convinced that despite the inevitably intense work that still lies ahead we are at an historic crossroads on the long and sometimes bumpy road of our trade relationship with Japan. Our conversations with them focussed mainly on the hard work and practical need to set up a systematic approach to support the coming negotiating efforts.

The political appointees shared the view that having Japan in the TPP is indeed a game changer, and with this group, discussions tended to look at the strategic dimension of the TPP, i.e. the implications of Japan’s participation for a strengthened US-Japan alliance, especially within the regional geopolitical context.

Both groups of administration officials were optimistic that Japan’s participation in the TPP will produce solid economic benefits for both countries.

Most of the elected officials we met with shared this optimism. Senators and Representatives from beef-producing states were satisfied their issue is behind us and are looking forward. Our twin messages that Japan and the United States have a long list of shared values and that both economies will benefit from TPP was acknowledged and appreciated. Of course, we did discuss some of the political roadblocks that will present significant challenges in both countries. And we certainly did hear from those who have major concerns. However, even the skeptics agreed that Japan’s decision to participate in TPP negotiations is a positive development.

Then I was up in New York and spent a Sunday afternoon at the Sakura Festival at the Brooklyn Botanical Garden. That provided a whole different perspective on how people in the States see Japan. There was origami instruction for the kids and an impressive bonsai exhibit. There was a Yamagata traditional dance that segued into Sinatra’s “New York, New York”. There was a pond with koi that everyone seemed to know were “koi” and not “carp”.

And then there was the cosplay: African-American teenagers in sailor fuku, a six-foot-three transvestite BoPeep and dozens of anime characters I couldn’t identify. One highlight was a fashion show, comple­te with catwalk into the crowd (an enormous and raucous crowd) with competitors dressed as game and anime protagonists and villains, an insight into what Japan means to another slice of American society.

Finally, what does the American media think about Japan? During our time there, The Wall Street Journal, The New York Times and The Washington Post all had something to say about Japan. The Wall Street Journal piece described the steps Prime Minister Abe is planning to take to make it easier to revise the Japanese constitution with an eye to naming the Emperor head of state and dissolving Article 9.

The New York Times article on Tokyo Governor Inose’s politically incorrect characterization of Istanbul’s weaknesses as an Olympic host city reminded its readers that the Galapagos Syndrome does not only apply to Japanese telecommunications products and services but also is a characteristic of too many Japanese politicians who are not familiar enough with the unwritten global standards that apply to polite international discourse.

The Washington Post editorial, published the Saturday after our meetings concluded, praised the bold measures Prime Minister Abe has taken on the economic front, including moving forward decisively on TPP. However, the tone of the piece was apprehensive that his rhetoric on nationalist issues would put at risk the progress to date.

Enthusiasm for Japan’s entry into TPP and for our partnership with Japan in the region and beyond. Fascination with the traditional and contemporary flourishes of Japan’s amazing culture. Interest and concern in major American media about where Japan’s leaders are taking the country. This is just a snapshot of ways in which Americans view Japan. Japan passing? Not now.

This year, for the first time, we included non-elected leaders as well, including John Harris of BD, and Mark Norbom of GE, as Special Envoys, to bring operating CEO perspectives from Corporate Sustaining Memberships to the meetings (and a special thanks to them, too, for BD’s hosting of a team dinner, and GE’s and Citi’s joint hosting of a reception for the Japan-interested community based in Washington).  And, to add critical subject matter expertise, Rebecca Green, as Chair of the Energy and Environment Committee, participated as well. The broad cross-section of industry and ACCJ perspectives, including both large companies and SMEs, as we broke into two teams led by myself and Andy, was invaluable, and I cannot thank these leaders enough for their willingness to take a week out of their already busy schedules to engage in this important activity.

Not surprisingly, given this year’s ACCJ theme of 共就生長, or Achieving Growth Together, we focused on the importance of Japan’s participation in the Trans-Pacific Partnership, as a potential major contributor to long-term sustainable growth for both the US and Japan – and the competitiveness of US and Japanese companies both in Japan and the fast-growing emerging markets of the Asia-Pacific region.

We carried this message to a variety of meetings across Capitol Hill, with legislators from both parties, especially focusing on the House Ways and Means and Senate Finance Committees, and across the Administration, including Treasury, State, Energy, Transportation and Commerce. In addition, we met with Japanese Ambassador Kenichiro Sasae, and other thought leaders on Japan and Asia, most notably representatives of some of the influential think tanks, including a panel discussion with the Center for National Policy, and a meeting with the Brookings Institution; the Congressional Study Group on Japan (which consists of 82 members!); and the Japanese business community and media based in Washington.

A particularly fun event – and further sign of progress in the economic relationship – was an evening of American beef, hosted by Ambassador Sakae at his residence, and featuring not only the ACCJ delegation but also representatives of the beef industry, and Congressional leaders from the beef-exporting states – at which Sen. Max Baucus of Montana, a long-time friend of Japan and the ACCJ, spoke to the gathering on the day of the announcement of his retirement from the Senate next year. He will be greatly missed – but an important purpose of our trip was to build relationships with future elected leaders in the relationship, and we made substantial progress on that.

This was a particularly opportune time to visit Washington – with the official notification on April 24 to Congress of the Obama Administration’s intent to include Japan in the TPP. The groundwork for this development has been laid by many stakeholders, of course, but the ACCJ has been an important stakeholder over the years – with credibility in Washington earned over many years of working with the US Embassy in Tokyo, and on Doorknock visits to Washington. This role played by the ACCJ and the foreign business community was also acknowledged by Secretary of State John Kerry in his recent foreign policy address at the Tokyo University of Science and Technology.

Of course, the hard work in some sense has only begun, with many difficult issues to be overcome – and we also heard some of that skepticism on the Hill – but I am personally very proud of the efforts made by many ACCJ leaders, past and current, to get us to where we are.

We will continue to work with both governments to ensure that the promise of the Abe administration’s growth strategy, and of the TPP, further strengthens the economic relationship between the US and Japan – and the region.

I mention my own background because I think it qualifies me to suggest that Japan may be the toughest country on earth in which to be an entrepreneur. Certainly the toughest developed country.

But don’t just take my word for it. The Global Entrepreneurship Monitor project agrees with me, showing in its 2012 global entrepreneurship report that the rate of total “early-stage entrepreneurial activity” (i.e. businesses in operation less than three and a half years) in Japan is less than one-third that of the United States.
The data also showed, perhaps unsurprisingly, that Japanese considering starting new businesses are more afraid of failure than their counterparts in other Asian countries, and Japan ranked a distant last among Asian countries in societal belief that entrepreneurship is a good career choice.

As a lifelong entrepreneur, I have an interest in the entrepreneurial environment in the country where I have lived for over 10 years, and in writing the cover story for this issue, I thought I would find out what other entrepreneurs think.

Is Japan really “the worst environment on earth” for entrepreneurs? Or does it just feel that way? Are there any advantages to starting a business here in Japan?
People joke that entrepreneurs are “unemployable”, but the truth is many businesspeople are self-employed not because they couldn’t get a job with Sony, or Boeing, or Frank’s Car Wash, but because they greatly prefer to be the masters of their own fates. And of course, successful service industry entrepreneurs are not unemployable at all: they must get “hired” by clients.

But suppose you’ve got a good job with a Fortune 500 company, perhaps no longer a “job for life”, but you’re smart and capable, and you’re certain you’ll continue up the corporate ladder. You might think, “Who cares about entrepreneurs?”

Well, as you may know from reading Sam Kidder’s column in this magazine several months ago, only two business groups in Japan consistently increased employment between 1996 and 2006. The first was foreign-held companies. The second was newly established companies.

Entrepreneurs generate jobs, and employed workers contribute to the growth of consumer spending and overall economic output.

Japan has most of the infrastructural elements to be an entrepreneurial society. It has the rule of law, including protection for intellectual property developers. It has world-class manufacturing capability and an outstanding transportation network. It has sophisticated (if sclerotic) financial markets and a large domestic market (i.e. Galapagos). It has a well-educated labor pool.

But many would-be entrepreneurs quickly encounter the Japan that can say “no”. In fact, many hear that “no” before they get out the door, from spouses and/or parents. One successful serial entrepreneur I spoke with said the low point in his career, during tough times in the middle of an economic downturn, was when his wife said to him, “Don’t you think you should think about getting a real job?”

Most of the obstacles to entrepreneurship in Japan revolve around society’s aversion to risk. For entrepreneurs, it’s difficult to obtain financing for unproven business models. It’s difficult to persuade smart, hardworking, passionate people to work for you instead of for Google or Morgan Stanley or Asahi or Toyota. And it’s very, very tough to persuade that first customer to take a chance on you.

That’s not to say it’s impossible to be an entrepreneur here. Probably the two most famous businessmen in Japan at the moment are Hiroshi Mikitani and Masayoshi Son, founders of Rakuten and SoftBank. And the ACCJ’s own ranks include a number of very successful entrepreneurs (whom I won’t embarrass by naming them!).

There is a perception in Japan that entrepreneurs go into business for themselves because they were unable to land “a real job”. In less developed countries, entrepreneurship certainly can be driven by economic necessity. But in Japan and the United States, people are much more likely to start businesses because they see an opportunity, or want creative or operational freedom, or simply because they want more flexible schedules that allow them to spend more time with their families.
And then there are the people who start businesses because they want to change the world.

Think different.

 
I have no business relationship with Cerberus and have not reviewed in any detail their ideas to improve Seibu, so am not advocating their position, but am interested in the fight as a morality tale showing the importance of structural reform in Japan and the power of entrenched interests. So far, putatively reformist Prime Minister Abe has not acknowledged the importance of transparency, corporate governance and the need for foreign investment to help raise productivity.

 
Based on Seibu’s public announcements and commentary in Japan’s mass media, however, it appears Seibu would oppose any proposal offered by Cerberus, regardless of the merits. Nihon Keizai Shimbun in particular has given a fair bit of space to coverage of the dispute, but the paper has completely ignored the involvement of what I suspect is the main driver of Seibu’s opposition: Mizuho Financial Group.

 
Mizuho (including Mizuho Bank, Mizuho Corporate Bank and Mizuho Trust & Banking) is the product of the merger of Industrial Bank of Japan, Dai-Ichi Kangyo Bank and Fuji Bank,  and as a result is the “main bank” for more companies than any other bank in Japan. Its former executives can be found on the boards of countless listed companies, including in many chief executive suites. Seibu’s president comes from Mizuho as does another of its directors. Mizuho Corporate Bank and Mizuho Trust & Banking combined hold the largest share of Seibu’s outstanding loans.

 
Seibu has its origins as the personal plaything of the former magnate Yoshiaki Tsutsumi. During his prime in the late 1980s, he was the richest man in the world, as he grew Seibu from its origins as a commuter railway in Saitama to develop hotels, golf and ski resorts and department stores in Japan and around the world. As Tsutsumi made serial acquisitions and piled on more debt, Mizuho was not trying to publicly thwart his actions.

 
After Seibu was caught cooking its books and the company was booted off the stock exchange, no Japanese company wanted to be seen near the company. Cerberus came in to invest about ¥100 billion and ended up with about 32 percent of the equity of what came to be known as Seibu Holdings. Given the difficulty of buying and selling large chunks of even listed companies in Japan, no investor would buy a large minority stake in a private company without the expectation that it would have a strong say in the firm’s management.

 
If Cerberus’s offer succeeds in raising its stake above 33.4 percent, it will have what is known as “negative control” in Seibu, meaning it will have veto power over major decisions, such as re-listing the company and the appointment of directors, including the president. Effectively, this will severely limit Mizuho’s influence over Seibu. Rather than trying to find a compromise, Seibu’s ex-Mizuho president and other directors are trying to fight a public war of words in a desperate attempt to dissuade Seibu shareholders from accepting Cerberus’s offer.

 
Having been through a similar, but more private dispute with Katakura Industries, I am very sympathetic to Cerberus’s plight. Katakura’s president and managing director, both of whom came from Mizuho, refused to consider my company’s ideas to add value, rejected our takeover offer without even discussing it with the board and actively fought our shareholder proposal to put me on the board as an outside director, confident that Mizuho and its other main banks would support them in anything that they did. While I obtained the majority of foreign shareholder support, Japanese financial institutions held about half of Katakura’s shares, so my proposal was doomed.

 
Given the close brush with death that Mizuho’s predecessor banks went through in the 1990s and Mizuho’s later need for a government injection of capital to stay alive, it is hard for me to understand why Mizuho executives are more qualified than a private equity fund to parachute into their borrower clients and take over control.

 
Unfortunately, Prime Minister Abe is seeking to restore the control of entrenched interests such as the nuclear power lobby, so it is hard to imagine him appreciating the significance of reducing banks’ control over listed companies. At the moment, the government is even considering strengthening the power of banks over companies by making an exception to the five percent ownership restriction in certain situations. [To try to reduce the power of the zaibatsu and banks in post-war Japan, Douglas MacArthur’s law-drafting team instituted restrictions on bank ownership of non-financial companies to five percent, similar to Glass-Steagall provisions to banking law in effect in the US at the time.] So far, Abenomics has resulted in short-term speculation in stocks and property, but sustained growth will require structural reform as well as a stable or preferably growing population.

Peter Tippett, Vice President & Chief Medical Officer, Verizon Connected Health, speaking at “The New Era of Health Care: Innovation-Driven & Patient-Focused” on March 29.

Jesper Koll, Managing Director, Head of Japan Equity Research, JPMorgan Securities Japan Co., Ltd., giving a lively and informative talk at “Jesper Koll’s Annual Business Forecast: Japan-Asia’s Sleeping Giant Awakes” on April 8.

Rajiv Biswas, Senior Director and Asia Chief Economist, IHS, speaking at “The Long-term Oil and Gas Outlook: Implications for the Asia-Pacific Economies” on March 27.

Alex Ross, Director, World Health Organization (WHO) Centre for Health Development in Kobe, receiving a Certificate of Appreciation from Vice President-Kansai Kiran Sethi at the Kansai Business Programs Committee event on February 28.

Britt Creamer, Director, Operations in Japan, Japan F-2 Program, Lockheed Martin TASIC, offering a fascinating look into the importance of quality and getting it right the first time at the Aerospace Industry Subcommittee event on February 27.

Dr. Shoshana Loeb, Founders Council, Good Company Ventures, receives a Certificate of Appreciation from Women in Business (WIB) Committee-Chubu Chair Christine Sakamoto at the WIB Breakfast Meeting on March 13.

And yet, from the April issue, the ACCJ Journal has been designed by Ernesto Teruya, who is Peruvian.

Because it’s not every day you get to work with a Peruvian in Tokyo, I decided to check out one of the newest additions to Tokyo’s restaurant scene, Bépocah, in Harajuku, with a native guide. The restaurant is a short walk from Meijijingu-mae Station, and on the evening we went proved a warm, comfortable refuge from cold, wet springtime weather.

We – Ernesto and I were joined by Louise Rouse, Ernesto’s predecessor as designer of the Journal – started with drinks (putting together the Journal is thirsty work!), and Louise and Ernesto ordered pisco sours, the classic Peruvian cocktail made with grape brandy (and egg white, lime juice, simple syrup, and bitters). A Peruvian beer (Cusqueña) for me, and very quickly the cebiche (also spelled ceviche) arrived.

Peru is famous for cebiche, and some historians believe it was invented there. Bépocah dedicates a full page of its menu to cebiche, but Ernesto ordered us the cebiche tradicional de pescado, which is a traditional fish cebiche, for those of you who don’t speak Spanish. The preparation is simple: marinate the fish in lime, and add a bit of chopped hot pepper (aji limo, in this case) and cilantro. Our cebiche was garnished with a bit of large-kernel Andean white corn, known as choclo, which was delicious and surprisingly unsweet.

If you know one thing about Peruvian food, you probably know the country is home to a reported 3,000 varieties of potato. Not all of those are on offer at Bépocah (though they do import a handful of potatoes that are native to Peru and not available at your local supermarket), but Ernesto ordered us Papa a la Huancaína, which translates as Huancayo-style potatoes. Papa a la Huancaína is a simple and tasty salad of boiled yellow potatoes with a sauce of feta cheese, milk and aji amarillo, a yellow hot pepper.

Starters out of the way, Ernesto ordered us a creamy chicken stew – aji de gallina – made with cheese, milk and pecan nuts, and lomo saltado, stir-fried sirloin steak with red onions, tomatoes, aji amarillo and cilantro.

Everything we had eaten to that point had been delicious – simple and flavorful – and we were starting to think we were full, but then the next table took delivery of a plate of what looked like enormous beef yakitori, and smelled delicious. It was beef, as it turned out, but not steak. Our neighbors had ordered anticuchos de corazón, which if again, Spanish is not one of your languages, is beef heart. It would have been heartless not to order some, so we did, and we were not disappointed.

We passed on dessert, but a few fruit dishes looked interesting: an aguaymanto sorbet and a lucuma ice cream. Aguaymanto is an orange-yellow gooseberry encased in what appears to be a paper lantern, and lucuma is called “eggfruit” in English, and resembles a small papaya. Something to try next time!

Bépocah opened its doors on March 21, 2013, founded by Bruno Nakandari and Haruko Nishimura, friends who abandoned careers in software development and advertising to pursue Bruno’s dream of opening “a Peruvian restaurant that feels like a Peruvian restaurant in Lima, not an ‘ethnic’ restaurant that caters to cultural stereotypes.”

Accordingly, the decor is elegant and understated (not a stuffed llama to be seen anywhere!), and dominated by a two-story atrium that connects an upstairs dining room with the downstairs bar and kitchen area. The restaurant is open for dinner only, from 5:00 pm to 2:00 am Mon.-Thu., and until 5:00 am on Fridays and Saturdays.

Many of our clients ask us about training for sales leaders/managers. The usual concern is that the sales leaders don’t seem to be very effective in getting their sales teams to produce results. Usually, a significant component of the problem is the structure of Japanese sales organizations, which can create two obstacles to success.

One of the potential obstacles is the practice of job rotation, which can see generalists moving around organizations through sales, accounting, operations, planning and marketing. Sales managers may be in their positions for only a few years before being moved on, and if you have recruited one into your company during that brief cameo, impressed by his or her firm’s brand and reputation, your new star manager actually may not have much real sales experience and possibly zero sales management ability.

The other potential problem, by no means unique to Japanese sales organizations, is that the best salespeople get promoted to sales manager for – unsurprisingly – their sterling efforts in pumping out the numbers. As managers, they are expected to leverage their abilities to the broader benefit of the sales team, but those who do can’t always teach. Some salespeople have no idea how to manage, have been provided with little or no training and are lost.

What abilities do sales leaders need and what should you look for when hiring (or in evaluating already hired sales leaders who are not delivering the goods)? In my experience, there are 12 main areas of development that may need attention.

Personal Leadership should be based on a clear vision of team objectives. The development of shared values builds critical trust with the team, and helps salespeople find their own motivation. The Communication Skills required for both leading a team and selling to a customer are similar. Asking questions rather than giving orders, being a good listener, and getting to know colleagues well enough to understand their “career drivers” all build trust and loyalty.

Building the Sales Team requires understanding each team member’s stage of development, as well as the responses required to maximize individual potential at each stage. Pinpointing reasons for non-performance is possible only through good situational analysis, and while recognition and appreciation are in short supply everywhere in the sales world, they are particularly scarce in “tough love” Japan.
Most sentient employees resent a “one size fits all” management style, but when it comes to dealing with salespeople’s Personality Styles, many managers interact with team members as though they are all cast from the same mold – the manager’s!

The well-known personality types include detail-oriented Analytical, action-oriented Driver, Expressives, who want to see the big picture, and Amiables, who treasure teamwork and group solidarity based on shared feelings and aspirations. The point is that everyone is (very) different, and good managers know that one size does not fit all!

Understanding how to switch gears (phrasing, cadence, energy, content) to interact with each different personality type is a sales leadership essential. It is also a coachable skill to pass on to salespeople dealing with customers, who manifest the exact same variance in personality types.

Performance Management requires sales leaders to understand the “law of restricted performance”, i.e. that salespeople’s understanding of their bosses’ expectations can determine their results level, or put another way, that our expectation of people is generally what they accomplish. Performance drivers need to be identified, tracked and the process sustained. Doing a salesperson skill assessment helps to identify gaps and attach the best coaching and training solutions.

In addition, mistake handling needs a well thought out strategy because it has the potential to create motivational problems within a team. Team members watch carefully to see how sales leaders handles the person who has made the error, as they know they might be next. The same applies in cases of non-performance. How these incidents are handled determine the culture and motivation within the sales organization.

Sales leaders need to oversee a Transfer of Skills to the team, providing not only an overview explanation, but also demonstration, coached practice sessions, judgment of progress through live-fire observation and finally, a hugely important feedback mechanism.

Sales Meetings have varying degrees of complexity depending on the objectives.  Information sharing and strategic planning are entirely different animals and require different skill sets. Sales leaders need to know how to construct meetings that are powerful motivators, rather than seen as an imposition or waste of valuable client face time.

Time Management is an obvious, if variously mastered skill. A disorganized sales leader creates problems for his or her organization. They don’t get enough completed because they are inefficient. Even worse, they set a poor example for their team.

Finding New Prospects is a sales mantra. This difficult task needs coaching and guidance from the sales leader. Getting sales referrals is a lost art in many countries because sales people shy away from the job due to fear of rejection. Sales leaders need to exhibit strong coaching skills in this area.

Finding greater revenue from Existing Accounts makes sense, because the costs of developing deeper partnerships with existing clients is so much less than for landing new clients. Clients buy brand value, product value, service value and most important, salesperson value. Sales leaders should be driving the development and expansion of the salesperson’s value to the client.

Clients have different buying perspectives that need to be accounted for. Uncovering the “what” and the “why” are part of a salesperson’s communication skills that a sales leaders have to pay particular attention to developing.

Pipeline Management of the sales team makes all the difference to getting the right outcomes and also for the reporting and forecasting process for companies. Future investments need to be considered in the context of income deriving from concrete results and this is where forecasting based on pipeline information plays such a key role. When will projects be confirmed, when will contracts be signed, when will payments arrive – sales leaders must have the answers.

Finally, sales leaders must be well versed in the Innovation Process and be able  to tap into the knowledge, experience, intellect, passion and motivation of the salesforce to produce ideas for growing the business. No longer in the front line, the sales leader must avoid becoming isolated from the latest trends and directions of clients and the market.

Looking around your own organization, how do your sales leaders stack up in these 12 areas? It is not only possible but desirable to measure performance in these areas, and if you find gaps in understanding, missing elements or disappointing performance, it may be time for you to take action!

Flipping through Toastmaster magazine the other day – as you do – I came across an article that set me off: “The Myth of Non-verbal Communication”.  A contributor had written of her experiences in a workshop about the importance of nonverbal communication, and either wittingly or unwittingly had completely misunderstood some of the seminal findings on the subject, work by psychology professor Dr. Albert Merhabian.

Dr. Merhabian is best known for his “7-38-55 rule”, which posits that in communicating our feelings and attitudes, our audiences find us likable or not based on our words (7 percent), the way we sound, i.e. our tone of voice (38 percent) and our body language (55 percent). If you’ve never heard of Dr. Merhabian’s work, and are interested in the research, I encourage you to read his booklet Silent Messages.

The workshop participant got into a jousting match with her facilitator, and finally acquiesced, saying she was “silenced but not convinced”. I suppose some others, hearing the 7-38-55 rule for the first time, may also misinterpret it to mean that words are not important, or that, as the participant thought, “You’re saying that if I speak Chinese, as long as my tone and body language are consistent, you will understand me?”

No, that’s not what Mehrabian was saying.

Mehrabian broke down and then researched three elements of any presentation – verbal (the words we say), vocal (how we say them, and this includes tone, pace, volume, etc.), and visual (how we look).
VOCAL – HOW YOU SAY SOMETHING
Take a simple seven-word phrase: “I didn’t say he took my money.” Those seven words are the “verbal” part of the message.  Note though, that both the impact and the understanding of your message will vary depending on all sorts of vocal variables, including (but not limited to) your pace, tone, volume, pauses and stress. Take stress as just one example. Go through the seven words as a sentence, and stress a different word each time, noting the possible interpretations:

I didn’t say he took my money. (Maybe someone else said it.)
I didn’t say he took my money. (Emphasizing that I did NOT say he took it.)
I didn’t say he took my money. (I may have implied it, or proved it, or …)
I didn’t say he took my money. (Perhaps I said someone else took it.)
I didn’t say he took my money.  (Perhaps I gave to him, or he found it, or earned it.)
I didn’t say he took my money. (Perhaps he took someone else’s money.)
I didn’t say he took my money. (I may have said he took something else.)

You created seven different meanings simply by stressing a different word – vocally. Now, you could also express the phrases with different emotions (anger, surprise, defeat, admiration) and realize that to express that emotion, you must change some aspect of the vocalization. The words, by themselves, have trouble communicating all that.

To take an extreme example of just one vocal element, if your volume is so low that no one hears what you are saying, then you lose any of the content generated from the words, regardless of how well crafted your message is. Don’t let that happen!

Also, you will consciously or unconsciously use the visual component effectively or not. If you were to turn your back as you said any of the words of our example, or hunch your shoulders, or aggressively point your finger, each of those actions will have an impact, and often a profound impact, on how your audience captures your message.

A Recent Example
Last month I was invited to attend CEO Larry Ellison’s product launch announcement for the new line of SPARC computers by Oracle/Sun. The event was well attended, with about 400 guests at Oracle’s Redwood City Campus Conference Center. A very nice lunch followed by a champagne toast, all on a gorgeous spring day in northern California.

Oracle as a firm runs on serious brainpower. Thousands of very smart software engineers and now hardware engineers as well (having purchased Sun Systems for over $7 billion) have propelled Oracle to its current market position. One key audience for Ellison was the press, and he got what he wanted: the next day, page two of The Wall Street Journal showed a picture of Ellison on stage, and quoted the technical specifications of his new line of business computers, which he claims incorporate the world’s fastest microprocessors in their class.

That was the message. They have fast computers that are now less expensive than before. We saw the computers on full display. But also on display were Ellison’s lack of presentation skills.
The event started with an amazing light show, music building over several minutes and then the President and CEO of Oracle was “announced” to the crowd like the Michael Jordan-led Chicago Bulls of yesteryear.

He rose to his feet, back to the audience, walked on stage, turned to us, and one of his first utterances was “… Uh …”. During his presentation, he regularly looked down at teleprompters or at the computers themselves rather than making eye contact with anyone in the audience. He said nothing that anyone else in the company couldn’t have said; his announcement seemed dull when compared to his sales guys and engineers I met during the lunch. In his defense, for investors and the media, the important thing appeared to be that Larry Ellison had made an appearance and is therefore excited about SPARC.

If Ellison wanted to make a more positive impact during this or any other presentation or in any interaction with others, he (and all of us) would do well to put Merhabian’s findings into practice. Sure, you need to get the words right. You (as Ellison) can increase impact by thinking through and practicing the vocal elements, such as when to speed up, when to slow down, when to pause, when to raise or lower your volume, all depending on what you want to emphasize.

THE UH-PIDEMIC
One of the biggest vocal issues speakers have is starting off and then continually employing filler words like “uh”. As I said, that’s how Ellison started off. These filler words, and others like them (“y’know”, “like”, and the overused modifiers “sort of” and “kind of”) only serve to reduce your impact. The remedy? First, be aware if you are using these verbal crutches. Record yourself or ask your colleagues if you tend to overuse any phrases. For most of us, that first step is all it takes.

VISUAL IMPACT
Once you’ve taken care of the verbal tics, take a look (literally) at the visual components. One of my favorite video clips I share with clients is a question/answer during the debate between George H.W. Bush and Bill Clinton back in 1992. You can Google it when you have four minutes to invest in an eye-opening experience. Watch the clip with the sound completely off, and see if you can tell which presenter wins over the audience, and even how they do it. It’s all in the 55 percent Mehrabian wrote about: visual communication. Eye contact, movement, body language, posture – all of these play a role, and a greater one than the words alone, when it comes to generating likability.

Our species communicated for millions of years before inventing language, and when it comes to intangibles such as “likability”, we still communicate more with our tone and how we look than with the words we choose to use.

Meanwhile, if you’re looking for a really fast computer, or the fastest boat (Ellison’s team is the current America’s Cup champion), you can look to Oracle. But don’t go looking there for the best business presentations – at least not yet.

Alastair Townsend’s practice, BAKOKO, recently transformed the offices of executive recruiters CDS into a bright and open modern workplace.

Demands for space saving, openness, and interaction have driven the last ten years of western workplace evolution. Benching – desks joined in long continuous rows with a central spine for cabling and fixtures – has become more popular because it addresses these demands while offering efficiency and flexibility. Thus, Western businesses have been abandoning their cubicles for an open plan layout that closely resembles the conventional Japanese office, where staff sit in rows without partitions. The Japanese model saves space and maintains open sight lines – particularly from the manager’s desk.

Trade-offs between personal comfort and privacy vs. organizational transparency can be a tricky (and often a politically charged) balancing act. Cultural factors add further complication. In terms of productivity, this entails compromise between working with fewer distractions – overheard phone and office conversations – and a freer flow of ideas with a greater sense of common purpose.

The right combination of desk size, layout, and privacy are dictated by the work at hand. For example, a call center employee’s space and privacy needs differ from those of a marketing team that works collaboratively. Mobility is also a factor. A salesperson who is frequently out and about with a laptop needs less real estate than a deskbound analyst who writes reports, takes calls, and files paperwork all day.

The right desk system should offer the flexibility in terms of size, layout, and partitioning to accommodate a range of users, as well as being extensible and reconfigurable to meet future growth and changing needs. Unfortunately, several large Japanese manufacturers’ dominance of the office furniture market has made them complacent. Their surprisingly expensive products lack the quality, design flair and innovative flexibility that some foreign competitors offer in Japan.

Increased seating density and openness should be accompanied by common spaces for employees to use away from their workstations. Informal meeting areas, such as break rooms and lounges, provide appropriate spaces for spontaneous chats. Likewise, private sanctuaries – small meeting rooms or study booths, for example – offer quiet places to make sensitive phone calls, read trade literature, or compose reports in peace. Protocols for when these spaces should be used reinforce a common understanding and reduce distractions.

The rounded silver “core” of meeting rooms is encircled by a black “racing strip” – a loop that symbolically transports candidates along their career journey without any dead ends.

Before speaking to any staff members, visitors form their first impressions about the company – its values, practices, and prosperity – while they wait to be met. The reception/waiting room is essentially an immersive branding opportunity, but one that transcends mere company logo and colors. It’s an environment where visitors should feel welcome, valued, and comfortable.

Hallways and corridors aren’t necessarily functional routes from points A to B. Like city streets, they transport traffic and should present changing views and chance encounters. Dead ends should be avoided at all costs. Signage and clear sightlines aid visitors’ orientation. Lighting and color contrasts can reinforce navigation, build sense of arrival, and convey energy in what would otherwise be dead space.

When planning meeting rooms it’s important to consider their size and the degree of openness (partially or fully enclosed, glazed, or completely open). These factors can vary to accommodate different meeting types: formal or informal, scheduled or spontaneous, private or open, etc.

For self-contained meeting rooms, creating the appropriate atmosphere is particularly important to consider. Distinctive colors, textures, artwork, and lighting help create a conducive mood. A mixture of atmospheres and furniture can create a range of experiences, each of which leaves a memorable impression on the visitor.

Meeting areas on the periphery of the workspace are a release valve for workers who wish to hold impromptu conversations without disturbing others or going through the formality of reserving a meeting room. Open seating areas can double as temporary working space for mobile workers and consultants.

Japanese companies love holding long internal meetings, endlessly discussing ideas, often without reaching a clear outcome. Standing meetings offer an antidote (we all have a threshold for how long we can stand in one place). Frequent, short meetings can allow participants to maintain concentration and focus on reaching a conclusion. A meeting point is typically a central bar-height counter at which teams can spontaneously huddle to discuss ideas without disturbing those seated around them.

Most Japanese offices come with a small kitchen for brewing tea and coffee and reheating meals, but lunch is all too often eaten at the desk. A pleasant and attractive break area encourages staff to move about, take breaks, and socialize internally with others from across the company. More than just a staff canteen, the break area can host meetings and multiple functions before and after lunch hour. Mobile workers can alight here; visitors can wait and meet casually over a cup of coffee; and the entire office can gather for workplace celebrations.

Japan – where fax machines are still a common sight – is addicted to paper. Piles tend to clutter desktops and any available surface. Providing adequate filing space, both at the desk, but also in central cupboards, is key to portraying a well-managed and orderly business. Often, filing units can be integrated within walls or double as privacy dividers, even seating.

The reception is clean and stylish, presenting a modern, sophisticated, and professional image to the stream of candidates who arrive for interviews.

A cloak room may seem like an indulgence, but if staff don’t have space to store winter coats, suit jackets, extra ties, etc, they’ll inevitably be slung over partitions or on makeshift coat stands blocking aisles and corridors. Establishing practical housekeeping protocols will ensure that the space gets utilized and the workplace remains uncluttered.

Another bane of the office, suspended ceiling tiles typically conceal mechanical equipment, wiring, and pipes. They also conceal a significant amount of headroom which can be liberated to heighten the sense of space. Like many retail spaces around Tokyo, exposed pipes and ductwork give an office a less stuffy vibe, thanks in no small part to better air circulation. Light from fixtures suspended below can be reflected off the exposed ceiling, evenly washing the workspace with diffuse illumination and without glare.

In a well-designed office, work, meeting, and support areas are not mutually exclusive, and their functions can blur and overlap. In order to extract the most value from Japan’s high office rents, managers can and should creatively consider and encourage flexible use of space and provide attractive amenities to offset space savings. A more dynamic office improves staff morale and retention rates by offering greater choice and individuality. Design can uplift office life and maybe even your company’s bottom line.

But how is growth in the Chamber going? We may not have experienced the lost decades, but along with the entire foreign community in Japan, the ACCJ was impacted seriously by the Lehman Shock and then the tragic events in Tohoku. Our membership remained as engaged as ever. Our finances remained strong. But we could not escape a decline in membership numbers. With the same type of optimism that is bringing energy to the Nikkei 225, we are confident that the ACCJ is poised to grow.

With “growth” as our theme for 2013, let’s check in and see where we stand and where we hope to go. The two most positive indicators are the numbers of Corporate Sustaining Members (CSM) and the percentage of women in our membership. Before the Lehman Shock, our CSM total tended to bounce around just below 40 memberships. It is now up to 50 and growing.

Our leaders have spent a lot of time meeting face-to-face with existing CSMs to better understand what these key members need from the ACCJ. We’ve been working hard to find more and more ways to deliver value, and we expect to add more CSMs in the months ahead.

A second positive indicator is the increased percentage of women members. For years this languished around 12 percent. When Tokyo  followed Chubu and Kansai in establishing a Women in Business Committee, and began to more actively solicit women’s participation in our activities, the numbers began to climb.

Currently just over 19 percent of our members are women. This is still low and we have to do better, especially because in our advocacy we are pushing hard on the issue of increasing opportunities for women in the workforce as a key contributor to growth.

A third indicator that is positive but which presents challenges is the growing percentage of our Japanese members. For years we would tell newcomers that our membership is roughly 40 percent American, 40 percent Japanese and 20 percent “other”. It is now almost 50 percent Japanese. Because total member headcount is pretty much where it was as we pulled out of the Lehman Shock slump and well above the 3/11 trough, it is clear our demographics have evolved. So the challenge now is to develop programs and activities that fit these changes. Not too long ago, the ACCJ used to publish a book titled Living in Japan. Maybe what we need now is something – book or online material – aimed at our Japanese members with a title something like Working for an American Company.

Today, as the number of bureaucrats has been cut back and the government’s ability to intervene in the private sector has been sharply curtailed, it is much harder to find examples of useful and effective policy, particularly without spending huge sums of tax money. As the world waits breathlessly for concrete results from Abenomics, an expert panel convened by the Ministry of Land, Infrastructure and Transportation (MLIT) is helping to channel private capital into the health care industry, a critical need in Japan.

At the moment, while there is no legal barrier to J-REITs buying care facilities or hospitals, Orix JREIT is apparently the only one that has made an acquisition, indicating that most REITs are waiting for further clarification from the government before dipping their toes into this asset class. As Japan’s aging population continues to grow, the government is concerned that there will be insufficient private sector capital to construct enough care facilities and rebuild the nation’s many aging hospitals. The government’s own ability to finance this sector is highly constrained, given its huge debt load. By making it easier for REITs to invest in this sector, care facility and hospital operators will have many more options for raising money through the capital markets.

Unlike their publicly traded brethren in other countries, J-REITs do not take on development projects. On the few occasions when REITs have had to redevelop properties they have owned, these assets were temporarily shifted off their balance sheets to sponsors or construction companies during the period with no cash flow. Unless the situation changes, therefore, REITs will not look to take on the development of health care facilities, but will either buy existing assets or acquire upon completion.

Unlike office buildings, shopping centers and warehouses, health care facilities are far more management-intensive assets, so REIT asset managers will have to hire specialists who can conduct deeper due diligence and monitor the financial health of the operators (tenants) running these properties. Operators are far more difficult to replace than ordinary tenants in other asset types and the ultimate users of these facilities are sick or elderly individuals, so terminating contracts and foreclosing on collateral becomes trickier, as you cannot simply throw patients into the street if an operator is removed.

Compared to many other expert panels advising government ministries, the 15 members of the body advising MLIT are primarily from the private sector, including health care operators, lenders, lawyers and tax specialists, along with REIT specialists. One of the panel members, Takashi Fujimura, general manager of Shinsei Bank’s health care finance division, has already announced plans to form a health care REIT in the range of ¥100 billion in 2014. As a first step, Shinsei formed a private fund raising money from individuals to buy a nursing home for ¥1.7 billion.

The Japanese government has long been good at creating policy and allocating money to build infrastructure, but generally lags when it comes to the critical soft aspects of its policy goals, which can turn white elephant construction into successful community projects. Hospital and care facility operators struggle to find enough employees already, so unless the government – which funds the majority of the country’s health care services – takes actions that will ultimately result in higher wages for care workers, the private sector capital flowing into construction of additional facilities will go to waste.

While the Japanese government sees privately financed infrastructure (PFI) and public private partnerships (PPP) as important ways to build facilities it doesn’t have the money for, more effort needs to go into thinking of how to efficiently and profitably operate and pay living wages at the same time.

The government should apply the same logic to coming up with private sector solutions to build day care facilities; the cost and licensing hurdles to building a day care facility are immense, and current government operating subsidies are not sufficient to pay wages high enough to attract enough workers. And a shortage of safe and affordable day care facilities not only suppresses the birth rate in Tokyo and other large cities, but also causes women to leave the workforce.

Even if the new Bank of Japan Governor Kuroda is successful in hitting his two  percent inflation target, long-term economic growth requires a solution to the aging and shrinking population problem, and policies to encourage a higher birth rate without huge government spending are necessary.

Charles Schumann

Who better to advise on the design of glassware for use by bartenders and hotel and restaurant professionals than the very people who will be using them?

Founded in the Bavarian village of Zwiesel in 1872, Zwiesel Kristallglas is a market leader in the manufacture of glass receptacles for luxury wine, spirits and food, as well as for interior decoration. And Zwiesel’s motto, “Inspired by professionals,” reflects its long history of creative partnerships, which has included collaborations with renowned designers and top-class restaurateurs, as well as deluxe hotels, airlines cruise ships and star chefs.

Inspired by professionals
Several years ago, Zwiesel Kristallglas began a collaboration with legendary bartender Charles Schumann, who owns the eponymous and famed Schumann’s Bar in Munich. With Schumann, Zwiesel Kristallglas developed a “Basic Bar Collection” that features a full line-up of breakage-resistant cocktail glassware made from lead-free Tritan® Crystal.

Last year, the company developed with Schumann a new handcrafted glassware line under the Zwiesel 1872 brand. This collection is named “Hommage” in an hommage to bar culture, and in addition to various cocktail glasses, includes wine and champagne glasses cut in three different styles. On the launch of the collection last year, Schumann came to Tokyo and created several original cocktails, including the Tokyo Gimlet (see sidebar for the recipe).

Hommage

Timeless, durable, elegant
The Schott Zwiesel brand is known as “the professionals’ glass”, and is a world leader in the international deluxe hotel-and-catering segment. Schott Zwiesel glasses are produced using patented Tritan® technology, which not only makes the glass highly break-resistant and dishwasher-safe, but also keeps them sparkling like new, even after years of use. Schott Zwiesel glasses meet and surpass the expectations of wine connoisseurs who demand the highest quality, both at home and in restaurants.

In 2007, Zwiesel Kristallglas expanded into the area of glassware for cooking and serving food through the acquisition of German brand Jenaer Glas, long-established  as a leader in the production of timeless, elegantly designed utensils and other kitchen accessories made of heat-resistant glass.

Finally, Zwiesel 1872 is the lifestyle brand, producing exclusive, mouth-blown crystal glassware of simple elegance and timeless beauty, honoring a 140-year-old tradition of craftsmanship and quality.

By blending tradition with innovation, Zwiesel Kristallglas has become a market leader, and the preferred glassware choice of top chefs, sommeliers and bartenders around the world. We encourage you not only to try Charles Schumann’s Tokyo Gimlet, but also the Zwiesel 1872 glass that was made to serve it. Kampai!

An appreciation and even a celebration of the natural environment is a key pillar of Japanese culture, rooted in traditional values of common sense, thrift, and harmony with nature. [Careful readers of the ACCJ Journal will remember I wrote about wabi-sabi in these pages several months ago.] But eco’s ancient roots in Japan do not mean there are not attempts being made to update and modernise those values; in many ways, Japan is one of the most dynamic eco-markets in the world.

Something that certainly aids the relevance of eco in Japan is the recent trend towards cutting back wasteful expenditure – a trend that intensified after the tragedy of 3/11. The so-called danshari movement, a term derived from the Japanese words for cutting off, throwing away and letting-go, has spawned a range of popular books and TV shows alerting us that conspicuous consumption is out, and in its place are a host of alternatives that cost less and (purportedly) mean more.

It’s easy to snigger at developments such as the appearance of the mori (forest) girls or their relatives, the yama (mountain) girls – young women who reject modern clothes and dress in rustic outfits (but who may never have left the city in their lives). However, even this trend, as trivial as seems, reflects a change in the consciousness and aspirations of Japanese youth.

Meanwhile, farmers markets have popped up all over Tokyo and are a booming weekend business. Located in upmarket areas such as Omotesando and Marunouchi, the markets do not serve a clientele that can’t access fruit and vegetables any other way. Rather, their customers are for the most part sophisticated, educated people who are actively trying to avoid the mass-production and distribution model foisted on them by the modern economy.

Even in the world of haute cuisine, eco is rearing its head, with organic and biodynamic produce considered the height of sophistication, and some restaurants even serving “dirt”. A trend started by the celebrated Creations de Narisawa in Tokyo’s Aoyama, restaurants are creating sanitized simulations of dirt (deep-fried mustard seeds, ground and artfully daubed on and around vegetable dishes) for those wealthy enough to afford it.

Luxury dirt? Only in Japan perhaps. But in the world’s only “mass luxury” market, eco-luxury is a trend that is starting to take hold. An example is the urban cycling boom. No longer content to ride a rickety mamachari with a bell and shopping basket, consumers are opting for seriously fancy self-propelled transport.

Accordingly, luxury bike stores and bike-oriented cafes are popping up all over Tokyo, and a handful of bike-focused magazines have emerged to tell us how to ride the two-wheeled trend. Hoping not to be left behind, Aoki, one of the country’s largest menswear retailers, has introduced a business suit specifically tailored for bicycle commuting. I haven’t checked it out, so I can’t tell you whether or not it has a chamois-lined crotch.

In the world of architecture, plants are starting to appear not only beside buildings and on top of buildings, but on buildings. One of the best examples is the Green Cast building not far from Odawara Station, southwest of Tokyo. Designed by superstar architect Kengo Kuma, it features a living façade of aluminum planters cast in decayed styrene foam molds, and incorporates a built-in irrigation system for delivering rainwater to the plants. Such buildings facilitate a direct connection between people and nature, even in the middle of the city, softening the hardness of the built environment tremendously.

Further afield than Kanto, the Konoha Mall in Fukuoka’s Hashimoto district is a showcase of eco-thinking and sustainable planning. Designed to maximise a sense of “place and experience”, the mall features leaf-shaped trellises, skylights, and an indoor/outdoor “garden” walk. But the designers did more than simply pay lip service to environmental consciousness; solar cells augment power taken from the grid, rainwater is harvested for the landscaped areas, and low-flow plumbing, low-energy lighting and eco-friendly concrete mixtures all help the building to reduce its ecological footprint.

Natural ventilation provides a much more pleasant atmosphere and also saves on energy costs. During construction, environmental impact was minimized through the use of local and regional materials, and a direct connection to the subway system not only makes the mall very convenient but also reduces emissions from visitors who otherwise might have used their cars to access the site.

Admittedly, some of the numerous developments in eco-marketing in Japan are merely aesthetic. But others reflect a genuine attempt to come to grips with the challenge of living sustainably. And regardless of the motivation behind these environmentally friendly ideas, it’s clear Japanese society is very receptive at the moment to products and services that use less of the earth’s resources and reflect a degree of thought as to how man can minimise his impact on the environment.

Illustration by Yohei Takahashi

Japanese companies are flocking to India to invest in a range of sectors such as the automotive and pharmaceutical industries.

There are currently 800 Japanese firms operating in India, up 100 percent over the past two years, and direct Japanese investments in India have quadrupled during the same period, according to the Federation of Indian Chambers of Commerce and Industry.

The allure of the Indian market is that its population of 1.2 billion people is nearly 20 years younger on average than that of Japan: the average Japanese in 2020 will be 48 years old, the average Indian only 29.

India’s economy has grown by an average of 7.3 percent annually over the past decade, but development of the country’s infrastructure has not kept pace with growth, and Japan has been a strong supporter of infrastructure projects including the $7.7 billion Delhi-Mumbai Dedicated Freight Corridor and the $90 billion Delhi-Mumbai Industrial Corridor project.

JAPANESE SCIENTISTS TAP NEW SOURCE OF POWER

Japanese scientists have succeeded in extracting natural gas from a new source.

The natural gas was taken from methane hydrates, a frozen mixture of methane and water found in space and more recently, in sediments on the ocean floor. The recent extraction was conducted approximately 330 meters below the Eastern Nankai Trough seabed.

The success of this type of extraction was a world first, with research and trials having been conducted in recent years by other countries such as China, the US and Canada as well.

For Japan, which imports over 80 percent of its energy, the breakthrough is profound, as it could potentially provide a significant domestic energy source and an alternative to nuclear power.

Massive deposits of gas, estimated at up to 1.1 trillion cubic meters, the equivalent of over a decade of of Japan’s gas consumption, have been found as close as 50km offshore of Honshu. The US Geological Survey estimates global deposits to tally to a staggering 100,000 trillion cubic meters in total.

AFRICAN AID AIMED AT FOSTERING PEACE, STABILITY

Japan has committed $550 million in aid to African nations, announced Foreign Minister Fumio Kishida at an aid meeting held in Ethiopia in March. The aid package is a response to the hostage crisis at the Tigantourine gas facility in Algeria in January that resulted in the loss of the lives of 10 Japanese citizens, and is intended “to foster peace and stability on the continent,” said the foreign minister.

The funds are earmarked for bolstering African counter-terrorism activities and local policing, as well as supporting various infrastructure projects in which Japanese companies are involved.

Japan’s aid commitment is not only a reaction to January’s terrorist attack, however. China is Africa’s top business partner, with trade exceeding $166 billion, and last summer China’s commerce minister, Chen Deming, said Chinese direct investment in Africa “exceeded $14.7 billion, up 60% from 2009”. The African gold – and oil, and chromium, and platinum – rush is on, and Japan is playing catchup.

IS NORTH KOREA RUNNING A TRADE SURPLUS?!?

Recent research suggests North Korea is running a trade surplus.

Analysts specializing in North Korea at the Peterson Institute of International Economics have released findings that suggest North Korea’s accounts recorded a surplus of $250 million in 2011.

The news came as a surprise to many, as North Korea long has been a famine-stricken economic disaster zone plagued by mismanagement and frivolous military spending.

The trade surplus is believed to have been caused by increased trade between North Korea and its biggest benefactor, China.

Marcus Noland, one of the researchers responsible for the study, believes a trade surplus represents bad news. “It is bad news for North Korea because as a relatively poor country, they should be running a current account deficit, importing capital and expanding productive capacity for future growth,” he says, adding that a surplus also makes North Korea less susceptible to foreign pressure.

STUDENT LOAN DEBT SOARS

Student loan debt in Japan has tripled over the last decade to hit ¥475 billion.

Not only is total debt growing, but also more and more borrowers are finding themselves unable to repay their loans due to both a general drop in income and the bleak status of the nation’s economy.

Although the number of university and graduate school students in Japan dropped approximately 10 percent in fiscal 2011 (in part an effect of the nation’s dwindling birth rate), the number of students taking out loans increased a staggering 70 percent.

According to the Ministry of Education, Culture, Sports and Science, the current average tuition at a private university in Japan is about ¥860,000, with public university tuition about ¥540,000. Comparable tuition costs 20 years ago were an average of ¥200,000 lower.

Deep in debt by the time they enter the workforce, many fresh graduates are finding they must spend over half their monthly pay making payments toward their student loans.

AUSTRALIA BECOMES JAPAN’S BIGGEST LNG SUPPLIER

Australia has pulled ahead of Qatar to become Japan’s largest supplier of liquefied natural gases (LNGs).
In 2012, Australia exported 15.9 million tons of LNGs to Japan, overtaking Qatar, which exported 15.7 million tons. Malaysia, which exported 14.6 million tons, is Japan’s number three supplier.

In 2012, as a result of the shutdown of nuclear power plants that followed the Fukushima reactor meltdowns, Japan imported a record 87.3 million tons of LNGs, of which 18.2 percent was from Australia.

Japan purchased 70 percent of Australia’s LNG exports, which increased 25 percent over the previous year and earned the country $13.8 billion in trade revenue.

Experts predict the costs of importing from Australia will decrease as Australia becomes more efficient at extracting LNGs and as new ventures such as Gorgon, QCLNG and APLNG go into operation.

SAVING LIVES, ONE PHONE CALL AT A TIME

Japan has one of the highest suicide rates in the world, and a recent government survey found that one in four adults in Japan has contemplated committing suicide.

In 1973, Tokyo English Life Line was founded as an English-language counterpart to Inochi no Denwa, and 40 years later, the service, now known as TELL, has responded to approximately 200,000 calls. TELL’s services have expanded to include free phone counseling and information, professional face-to-face counseling, and educational workshops.

The past few years have seen Japanese-language counseling services stretched to their limits, and Jason Chare, Executive Officer and Director, TELL Lifeline, says, “Of the more than 6,000 calls we field annually, approximately two-thirds now come from Japanese nationals who need support readjusting to Japan after living or working overseas, or in handling intercultural relationships.”

In 2007, the Japanese government released a nine-step plan aimed at reducing suicide by 20 percent within 10 years. The plan includes efforts to encourage investigation of the root causes of suicide in order to prevent it, change cultural attitudes toward suicide, and improve treatment of unsuccessful suicides.

The government allotted 12.4 billion yen ($133 million) in suicide prevention assets for the 2010 fiscal year ending March 2011, and for its part, TELL has just launched a fundraising campaign – “Forty for the Future” – that aims to raise ¥40 million over the next 12 months.

MANDATORY RETIREMENT AGE INCREASED

Illustration by Yohei Takahashi

Japan has announced it will increase from 60 to 61 the mandatory retirement age, last adjusted in 1998 from 55 to 60. Plans were also announced to keep increasing the age in one year increments every three years until the age reaches 65.

The change constitutes an attempt to maintain the size of Japan’s labor force, which is shrinking due to an aging population and declining birth rates.

Although some believe older workers are less alert and more prone to making mistakes than their younger counterparts, neuroscientist Toshinori Kato says, “Those who have sharpened their brains through long years of work show little deterioration [of the brain] around age 60, and if they stick with their area of specialization they perform more than adequately.”

An additional challenge facing Japanese industry is highlighted by human resource management specialist Norifumi Mizogaki, who says young employees tend to defer tasks to those senior in age, regardless of relative skill levels.

NEW BOJ CHIEF EXPECTED TO DRIVE ‘ABENOMICS’

New Bank of Japan (BoJ) Governor Haruhiko Kuroda is expected to provide strong support for Prime Minister Shinzo Abe’s stated fiscal and economic policy objectives, dubbed ‘Abenomics’.

Kuroda, who studied under Nobel Prize-winner John Hicks and served as executive director of the International Monetary Fund and president of the Asian Bank Development, has been a vocal critic of the Bank of Japan’s past policies and a strong advocate of monetary easing.

Kuroda has said he would “do whatever it takes” to meet Prime Minister Abe’s two percent inflation target within two years through increased asset purchases and an overhaul of the BoJ’s policy framework.

Under Kuroda’s leadership the BOJ is expected to inject money into the economy by increasing its purchases of long-term government bonds and other assets.

In an interview with NHK earlier this year, Kuroda said, “Japan alone has experienced deflation for 15 years, and whatever the causes, the main responsibility lies with the central bank.”

Imagine you are driving, late at night, in a car that features the latest in automotive technology. You scan the blue-lit digital instrument panel and see you have 15 kilometers of fuel remaining, and you know your destination is only 10 kilometers away. You breathe a (tentative) sigh of relief, but suddenly the readout goes from “15” to “– – –”.

Can you make it? You guess the manufacturer has built a margin of error into the system, to account for foolhardy motorists such as yourself, but at 1:00 am it wouldn’t be fun to discover you’re wrong. Around 10 minutes later, you arrive at your destination, and exhale. You have survived your first case of “range anxiety”, an affliction that affects owners of electric vehicles.

Truthfully, the foolhardy motorist described above was me, several weeks ago, driving back from Tokyo in a Nissan Leaf, which I had been lent for a long weekend by the manufacturer. The Leaf has a reported range of around 140-150 kilometers, and I wanted to see how easy/hard it would be to drive – without burning a drop of gasoline – from my home in southern Miura Hanto to dinner in Tokyo and back.

The total distance was around 160 kilometers, so I knew I would have to charge the car during dinner, but the Nissan navigation system provided me with the locations of chargers, and I figured my “test” would not be much of a test. How wrong I was! [For details, see the sidebar Drive, Baby, Drive!]

ELECTRIC CARS… THEY’RE BA-A-A-CK!

Electric vehicles such as Nissan’s Leaf and Tesla’s Model S are a hot topic today, but electrically powered vehicles have been around since the 1830s, when Scotsman Robert Anderson built an electrically powered carriage. During the second half of the 19th century, improvements in battery technology permitted more widespread development of electric vehicles, and in 1897 there was a fleet of electric taxicabs in New York City.

In 1898, the automotive land speed record was held by the Jeantaud Duc, a French-built electric vehicle that recorded a speed of over 105 kilometers per hour, but less than four years later, the record had been surpassed by a vehicle powered by an internal combustion engine, and the next 100 years belonged to the gasoline-powered automobile.

Global supplies of gasoline (and other fossil fuels) won’t last forever, though, and the oil crisis of 1973 prompted the realization by many people that the future is powered by renewable energy.

Unfortunately, since 1973 not much progress has been made. According to the U.S. Department of Energy, in 2009 motor vehicles used nearly two-thirds of the petroleum consumed in the United States and produced over 60 percent of the country’s carbon monoxide emissions, as well as around 20 percent of greenhouse gas emissions.

And yet, Toyota has sold over 5 million Prius hybrids since the marque was launched in 1997, and says 40 percent of the cars it sells in Japan are hybrids.

A number of automobile manufacturers now sell all-electric vehicles, including Nissan, which has sold more than 50,000 Leafs (the plural they prefer to Leaves) since their introduction in December 2010. Other environmentally friendly automotive technologies include hydrogen fuel cells, clean diesel, and fuels such as ethanol and biodiesel.

DIFFERENT STROKES FOR DIFFERENT ENGINES

In comparing the different approaches taken by manufacturers of environmentally friendly vehicles, it’s worth noting that even automobiles that have the words “zero emissions” emblazoned on the side are not truly zero emissions cars. The energy comes from somewhere, and something. The coal-burning power plant that is the ultimate source of energy for your all-electric car is not “zero emissions”.

What’s important, then, is energy efficiency. What are the financial (to the consumer) and environmental (to society) costs of the energy that propels your vehicle? Weighed against that, what are the compromises in performance and convenience, if any, that must be made by the owner/driver?

The zero compromise driving solution is a regular internal combustion car. Fill ‘er up, and off you go. Burning your way through Saudi Arabia’s petroleum reserves one liter at a time. The upside of gasoline-powered vehicles is that gas stations are everywhere. The downside is … well, in many big cities you can literally see the downside, and your health is suffering as a result.

Not to mention the cost of filling up. While I was driving Nissan’s Leaf around Kanagawa several weeks ago, I stopped at a gas station to ask a couple of guys for directions. They pointed me in the right direction, and as I drove off I imagined them feeling more than a bit of envy as they returned to filling their 15-year-old Chevrolet Suburban with nearly ¥20,000 worth of gasoline.

In its environmental technology manifesto, Toyota notes that every alternative energy source – electricity, hydrogen, biodiesel and natural gas – has its disadvantages. At the core of Toyota’s strategy is the hybrid, combining different power sources – electric, gasoline, diesel, fuel cell – in order to maximize strengths and minimize weaknesses, while minimizing inconvenience (e.g. range anxiety) to customers.

And minimizing inconvenience is undoubtedly a big reason Toyota has sold five million hybrids (and will introduce another 19 hybrid models between now over the next three years). Toyota competitor Kevin Yu, who runs Tesla in Asia-Pacific, says, “It’s very tough to get people out of their comfort zones.”

AT HOME WITH THE RANGE

Seemingly in agreement with Yu, neither Nissan nor Mercedes-Benz are positioning their electric cars as primary vehicles for the average motorist. Nissan spokesman Chris Keeffe says the Leaf is marketed as a second car for short-range driving. As a two-seater, the Mercedes-Benz smart fortwo is in a smaller marketing niche, but is also intended to be an urban runabout, charged at home at the end of the day. Kyoko Shimamura, smart brand manager, says, “We think it’s the ultimate eco-car. It offers urban mobility plus EV for short-range driving. Also, customers tell us it’s fun.”

The smart fortwo certainly is fun. It has terrific acceleration, can shoot the (tiny) gap between a bus and a truck without blinking, and, well, it’s extremely kawaii, if you like that sort of thing. I turned more heads in Tokyo with the smart fortwo than I did with Tesla’s supercar Roadster.

Also, driving both the Leaf and smart fortwo, I experienced something close to glee sitting in traffic, emitting zero carbon dioxide. In the Leaf, which I had for longer, I was tempted several times to drive into an ENEOS station, just to roll down the window and say, “Kidding!”

And yet, I had some anxious moments in the Leaf [again, see the sidebar].

“EV is not yet the mainstream,” says Mercedes-Benz’s Shimamura. “People can enjoy the smart electric drive if their lifestyle fits the driving range. But there’s no question the technology is valuable for certain people, and not at all valuable for other people”

FARTHER, FASTER

When I test drove a Tesla the new Model S was not available, so I drove the company’s first offering, the Roadster, which it has discontinued. The Roadster is a very different proposition to the Leaf and smart fortwo. The battery provides a lot more range, and the performance is thrilling.

Search in Google for “Tesla vs.” and the auto-suggest feature offers to complete your thought with “Ferrari” and “Lamborghini” and “Bugatti Veyron”. Better yet, book a test drive and see what happens when you tromp on the “gas” pedal.

Of course, the Model S is significantly more expensive than either the Leaf or the smart fortwo, but it requires far less compromise, and unlike the Roadster, the Model S will be able to serve as a primary vehicle rather than a weekend or commuter runabout.

Yu says range is much less of an issue for Tesla than for Nissan, Mercedes-Benz and other companies that manufacture electric cars. While the Leaf and smart fortwo claim ranges in the neighborhood of 150 kilometers, Yu says the Tesla Model S can easily cover 400 kilometers on a single charge, and up to 500 kilometers with careful driving.

“I’ve driven to Nagano non-stop,” he says. “I can’t drive there and drive back without charging, but what I can do is stop along the way for a coffee, charge for 30 minutes, and do the same thing on the way back. Or I can charge for less than two hours in Nagano, if I have a meeting or am staying overnight.”

Tesla forecasts it will sell 20,000 Model S sedans this year, and Yu says at that number, the company will be profitable. “Battery prices and capacity are improving by around 5-7 percent every year, and in 2008 we sold the Roadster for double what the Model S is selling for today,” he says.

He reports that over 10,000 people have ordered a Model S in the United States, as well as hundreds in Japan.

SMOKE (NO LONGER) GETS IN YOUR EYES

Like Toyota, BMW is pursuing several technology avenues simultaneously, but BMW Japan corporate communications director Miki Kurosu says the company aims to adopt new engine technologies across all its vehicles. One area of particular strength for BMW is diesel, and the company lent me a diesel 5-series that Kurosu told me could be driven up to 1,200 kilometers on a tank of fuel.

But diesel, you say? Isn’t that just about the dirtiest fuel there is? Well, it’s far from “zero emissions”, but today’s diesel is not the diesel that former Governor Ishihara waged war against in 1999, when he famously waved around a PET bottle of soot at a press conference, announcing his intention to enact restrictions on “dirty diesel”-burning vehicles.

Ultra Low Sulphur Diesel fuel, or “clean diesel”, has changed the game for auto manufacturers, who are interested in the fuel because it has the highest energy density, and as a result, thermal efficiency, of any fuel (including jet fuel). Diesel fuel has an energy density roughly 10 percent better than that of gasoline, and 300 percent better than that of liquid hydrogen. In addition to BMW, Mazda is making a big push with the technology, reporting that 80 percent of its CX-5 sport utility vehicle and Atenza sedan sales in Japan last year were diesels.

And not only has the Japanese government changed its tune on diesel, offering incentives to buyers of diesel-powered cars, but even former governor Ishihara has done an about-face. Returning from a trip to Europe, Ishihara said last year, “I found cars on the roads were almost all diesel-powered, but the smell was completely different from what we used to have in Japan. Diesel cars will make a comeback in Japan, which is a good thing.”

“Ultimately, BMW customers expect us to improve fuel efficiency without sacrificing performance,” Kurosu says. “We are working to achieve this through what we call EfficientDynamics, which combines intelligent energy management with lightweight construction and aerodynamic and engine efficiency improvements.”

Indeed, all the manufacturers I spoke with expressed similar views: that improvements in energy efficiency can be made not only through fuel choice, but also innovation in aerodynamics, powertrain efficiency, reduced vehicle load (i.e. a lighter car), and fuel-saving technologies such as automatic engine switch-off at stoplights.

The latest model of Toyota Prius has an aerodynamic drag coefficient of 0.25, with the Honda Insight the best among commercially available automobiles (but not quite as good as a Formula 1 car!). By comparison, the Nissan Leaf has a drag coefficient of 0.29, the smart fortwo 0.38, and a Hummer 2 0.57 (though you’re probably not buying it for the fuel efficiency).

WHICH PONY SHOULD YOU BACK?

In my investigation of environmentally friendly automotive technologies, I found there are almost as many approaches as there are manufacturers, with price and convenience the main decision-making fault lines.

While electric cars are inexpensive to operate, they are significantly more expensive to purchase. For example, the smart fortwo electric drive retails for ¥2.95 million, but its entry-level gasoline-powered counterpart (admittedly, not exactly the same car) sells for ¥1.59 million.

And as Shimamura noted, either EV works for you, or it doesn’t. If you’re a salesperson who logs 50,000 kilometers of driving a year, a Nissan Leaf is probably not for you (except perhaps as the second car Nissan wants you to think of it as – but if you drive that much on the job, you probably don’t want to spend your weekends behind the wheel!).

Toyota’s hybrids, while more expensive than ordinary gasoline cars, appear to be right in the sweet spot for consumers. At least five million consumers, anyway.

And clean diesel offers around an 18 percent fuel efficiency advantage over gasoline, with the cost of a diesel-engined car not significantly different from that of a gasoline-powered vehicle.

Perhaps at some point, batteries will offer much greater range and have come way down in price. And charging stations will be much more ubiquitous than they are today. Then, the decision-making fault lines will converge and buyers of environmentally friendly automobiles will concern themselves mainly with color and style.

“At some point you’ll stop caring about the technology and just focus on price,” says Tesla’s Yu.

Toyota project manager Hisashi Nakai agrees that technology is not consumers’ primary focus. “Because the variety of environmentally friendly vehicles has been limited, sales growth has been limited,” he says. Although Toyota introduced the Prius in 1997 and has seen steady sales growth since then, the company’s hybrid sales exploded last year when it introduced the Aqua, offering consumers a lower-cost and differently shaped hybrid option. “Basically, consumers want choice, and a good price,” Nakai says. “Ecocars will make their biggest contribution to the environment when they gain mainstream use,” he says.

“We’re not quite there yet.”

US discount retailer Costco Wholesale Corporation established a toehold in the Japan market in April 1999, opening a warehouse in Hisayama, near Fukuoka, and at the moment has 15 warehouses around Japan, with three more scheduled to open this summer.

Ken Theriault, Representative Director of Costco Wholesale Japan Ltd., recalls that a few years earlier, Costco had begun to explore entry into the Japan market as it normally does – with a search for a local partner.

The companies Costco talked to, however, were adamant it would have to change its business model to operate successfully within Japan’s highly structured retail distribution framework. Costco decided to take its chances on its own, and Japan is the only country outside North America where Costco opened without a local partner. “It has worked out well for us, ”Theriault says.

“WE HAD OUR CHALLENGES …”

Costco Japan country manager Ken Theriault

Costco is growing fast in Japan (where few companies have grown at all over the past 20 years), but it is still a minnow compared to retail giants such as Aeon, Seven & i Holdings and Yamada Denki. Elsewhere, however, it is a whale: Costco is the second largest retailer in the US, and the seventh largest in the world.

The company’s strategy is simple: cut out the middleman, keep costs low, and offer low prices. The company carries only 3,500-4,000 products, generally offers only one product within a sector, and charges a membership fee, which helps defray costs.

Opening the company’s first Japan store in Fukuoka prefecture, Theriault remembers “walking through a rice field” that would be Japan’s largest (at the time) shopping mall  less than a year later. “The owners of the Hisayama outlet mall needed a couple of anchor tenants, and they asked us to take a look,” he says.

“They made us an offer, and we agreed.”

“We had our challenges, though,” Theriault continues. “People didn’t know us, and we had a different way of doing business. But it worked out well that our first location was in Hisayama rather than Kanto because we had a chance to train our people properly.”

Not only did Costco have to train employees in “the Costco way” of doing business, but also it had to persuade vendors.

Theriault says that initially, nearly every Japanese manufacturer was fearful of upsetting its wholesalers by selling directly to Costco. In that regard, the company’s Hisayama location worked in its favor; suppliers without robust distribution in Kyushu were able to rationalize direct sales.

But when Costco opened its second store, in Makuhari in 2000, suppliers felt threatened anew.

“Some of our suppliers have been extremely strong supporters,” says Theriault, citing Toshiba and Ito En as examples. Costco carries Ito En products worldwide, and Theriault says the company works with all its Japanese suppliers to identify products that might be suitable for export to Costco stores in overseas markets, including the US.

NOT AS AMERICAN AS YOU WOULD THINK
In Japan, Costco’s product mix comprises 40 percent imports and 60 percent domestically manufactured (or grown) products, and there’s only a 25-30 percent overlap with Costco’s offerings in the US. Among the company’s big sellers in Japan are its store-baked pizzas, dinner rolls and bulgogi beef, as well as staples such as toilet paper, paper towels and perhaps surprisingly, (Japanese) rice.

As it has opened more and more stores, Costco has been able to reduce its supply costs by importing more and more full containers of products by sea from all over the world. By importing a full container of fruits and vegetables directly from Central America, the company can reduce prices by 20 percent, according to Theriault.

Imports are reduced when equivalent products are in season in Japan, and Theriault says the company is working closely with farmers all over Japan to develop reliable domestic sources of the products Costco customers want.

“Fresh food is a huge seller for us in Japan,” Theriault says. “We sell a higher percentage of fresh food in Japan than in the US, and we have a bigger fish department here, including prepared sushi, which is very popular.”

Costco Japan’s buying team works out of the company’s Kawasaki headquarters, but operate globally, sourcing products not only from around Japan, but also from Costco operations in other countries, and from independent suppliers worldwide.

Perrier Water, for example, arrives via Costco France, and Theriault, a keen cyclist, says he is excited about the impending arrival of Cannondale bicycles fitted with larger wheels than are standard in the Japanese market.

Seasonal sales are also important for Costco Japan. Because the company serves as a wholesaler to many small businesses, Christmas comes early at Costco, with trees, wreaths, bulbs and lights on view from what seems like late summer. Similarly, summer garden furniture and barbecue supplies are available the moment the snow melts (or well before, if you’re shopping at the Sapporo warehouse!).

THE SMALL BUSINESSMAN’S FRIEND
Costco offers individual and business memberships, and in Japan around 25 percent of members are businesspeople, supplying their restaurants and small supermarkets and sporting goods shops with Costco products.

Costco also does significant and growing business as an importer for businesses such as restaurants. Through Costco, some companies buy containers of beef that never see the inside of a Costco warehouse, and are delivered directly from the port to the buyer’s distribution hub.

“When we first started in Japan, some cities were worried that we would drive local companies out of business,” says Theriault. “Smart businesspeople quickly figured out they could buy at Costco and get paid in cash by their customers before they were charged by their credit card companies!”

Theriault adds that the company’s highest-priced offerings, such as electronics, jewelry, handbags and clothing, are extremely popular with Japanese customers because of the enormous savings that can sometimes be realized over traditional retail channels.

“We’ve taken a lot of fire from local manufacturers and wholesalers, but we’re recognized now for the volumes we do,” says Theriault. “We’ve had a great relationship with many manufacturers from the start, and they know we can move a lot of merchandise.”

NOT SLOWING DOWN
After opening its initial store in Hisayama, Costco Japan has grown steadily, and will have 18 stores by the end of this year. “We’ve been opening one or two stores a year,” says Theriault, “but we want to increase our pace, and open two to four stores a year. By 2020 or 2022, we hope to have 50 stores in Japan.”

The company looks at market size and other factors such as home and car ownership, but Theriault notes there are over 80 Costco stores in Canada, which has roughly the same population as metropolitan Tokyo.

“We’ve got plenty of room to grow,” he says. “As long as we focus on ‘The Six Rights’ – the right merchandise, in the right place, at the right time, in the right quantity, in the right condition, at the right price – I’m confident consumers and businesspeople will see our value.”

Photo by Jeremy Veverka/Courtesy of Metropolis Magazine

“Any customer can have a car painted any color that he wants so long as it is black”

-Henry Ford, speaking about the Model T in 1909

There are 75.9 million registered motor vehicles in Japan, which accounts for 21 percent of global automobile manufacturing, amounting to nearly 10 million cars in 2012 alone. And although the industry is currently focused on environmentally friendly technologies [see the cover story of this issue] such as electric, hybrid and clean diesel engines, there is in Japan a subculture that celebrates appearance and performance rather than fuel economy and environmental impact.

The “B-kei” car modification scene in Japan is not just “boys with toys” at late night meet-ups in highway parking areas (more on that later!), but a substantial industry, albeit one that sometimes skirts Japan’s motor vehicle regulations. Car modding is part of a broader industry known as the automotive aftermarket industry, which encompasses manufacturing, distribution and installation of all vehicle parts after the sale of the automobile by the original equipment manufacturer.

With 28,000 licensed dealer repair shops and approximately 90,000 independent repair garages nationwide, this market was worth ¥7.987 trillion in 2007, according to the Japan Auto Parts Association (JAPA). Further, in contrast to much of Japanese industry, the automotive aftermarket industry actually grew over the latter half of the 2000s. Although it took a dip in 2011, likely due to the impact of the Tohoku disaster on the automotive industry as a whole, analysts project a growth rate of 0.8 percent annually over the next five years.

Photo by Jeremy Veverka/Courtesy of Metropolis Magazine

The companies providing modification parts and services include the giant Yokohama Rubber Company, which reported ¥466 billion in net sales in 2011 and produces high end tires and custom rims, including the ADVAN brand that is a favorite among car modders. Smaller companies include HKS, known for producing the first commercialized turbocharger kit, which reported ¥8.5 billion in sales in 2011, and Weds, perhaps the most sought-after maker of tire rims, which boasted 2011 sales of ¥23.23 billion.

Other companies are directly affiliated with major automobile manufacturers; among these is Mugen Motorsports, which manufactures exclusively for Honda Motor Co. engine tuners and modification parts ranging from aeros and air cleaners, and Autech Japan, a professional tuning company specializing in Nissan automobiles that also markets fully customized vehicles, much like Mercedes-AMG. In 2011 these companies posted annual sales of ¥5 billion and ¥101.7 billion respectively.

The two largest custom car shows in the world – the Tokyo Auto Salon and Osaka Auto Messe – are held in Japan, and recent shows have featured increasing numbers of foreign automobiles. According to JAPA, imports of foreign aftermarket parts have been increasing over the past decade, signifying the expansion of modification culture to foreign automobiles.

Hoping to learn about the Japanese car modding scene firsthand, I visited a handful of garages and tuning shops in downtown Tokyo that advertised “car customization” services, but was met by confused looks and bland offers to have my car painted a new color or have the upholstery replaced. Showing photos of cars outfitted with cambered tires and souped up aero and body kits, I asked about these kinds of modification, but the replies were all variants of “Sorry we don’t do that here.” After a frustrating day, I decided to try my luck at the infamous Daikoku-futo parking area, off the Bayshore Expressway between the Yokohama Bay Bridge and Tsurumi Tsubasa Bridge.

Feeling like a character in a William Gibson novel, one Saturday night I drove through the heart of Yokohama’s industrial district, and spiraled down off the highway into the parking area, which is one of Tokyo’s best known meeting points for automobile and motorcycle enthusiasts. The thumping bass of dance music penetrated my car’s windows as I arrived in a parking area overflowing with modified cars,with more gliding down the highway exit ramp every minute. There were several vans parked in a corner, putting out enough decibels to play a nightclub, each surrounded by its own small entourage of dancers.

I stepped out of my (embarrassingly plain) car, and a grouping of matte black cars with contrasting white rims caught my eye. Talking with the owners of the cars in that group, and with many others that evening, I learned that although the first generation of car modders – in the 1970s and 1980s – were influenced by the bosozoku (motorcycle gang) underworld, today’s car mod scene is much more interested in car culture than counterculture.

IF YOU’RE THINKING ABOUT MODDING, YOU’LL WANT ONE OF THESE

*When car was still in production

Wandering around the parking area, some modifications seemed “standard” and could be seen on the majority of the cars. Virtually all cars had had their suspensions lowered, and custom rims were also the norm. Drivers told me it was standard for those entering the scene to work “bottom up”, as new rims are an economical change that gives a car a unique feel immediately. Vinyl body wraps were common, as were kits that modified cars’ aerodynamics and bodywork, and under the hood, turbo chargers and high efficiency air cleaners.

I was surprised to learn that these modifications are done by the same types of garages and shops I had visited initially, but are handled in discretely; the shops are unable to advertise these services openly, as most of the mods are illegal under Japanese road law. Also, quite a few “gearhead” owners do their own mods; I met mechanics, engineers, car dealers and chauffeurs.

Asking car and garage owners which cars are popular as a starting point for modifications, I found many fans of the Nissan Skyline and Silvia marques, and Alex Quail, who runs Japan Tuning Culture, a blog dedicated to customized Japanese cars, told me the Honda Civic Si and Subaru Impreza STI are also popular. Though these cars are not expensive, many owners invest multiples of the car’s purchase price in modifications. Most of the people I spoke to were reluctant to share specific numbers, but it was suggested to me that serious modders can spend up to ten times their car’s purchase price on modifications. Even casual modders seemed to have spent at least half a million yen.

One thing I wanted to know before I left Daikoku-futo to the modders (and later, the police, making the parking area safe again for the citizens of Gotham City) was what motivates them to spend so much time and effort and money on their hobby. Perhaps unsurprisingly, many drivers seemed to be rebelling against conformist Japanese society. The modern automobile is the iconic mass-produced product, each one identical to tens of thousands of others. Car modification is a way of expressing individuality. Modders also told me their hobby eases the pain of Japan’s “work first, play never” attitude; being able to drive to work in a customized car makes that drive a little more bearable.

Despite its bosozoku origins and influences, and all the aggressive hairstyles, outfits, and vehicles, the Japanese car mod scene seemed to me less an anarchic subculture and more a lifestyle – or even a philosophy – that unites people with common interests and frustrations, and allows them to share a creative outlet.

I was hungry for more, but it was all over in an instant; a sudden blast of sirens and blaring of megaphones accompanied by flashing red lights rolling down the ramps marked the entrance of the police, who cleared out and closed off the parking area for the night. Move along, nothing to see here.

Photographs in the magazine courtesy of Alex Quail. See his site here.

http://www.jt-culture.com/

A few months ago I decided I wanted to write about automotive environmental technology for this issue of the Journal. I’m not really a car guy, but I’m certain it’s important we humans figure out how to tread more lightly on our planet, and I figured a good way for me to learn more was by researching a story for you.

I started out having heard of the Nissan Leaf, and the Toyota Prius, and Tesla, but never having driven anything remotely “green”. I have a kei automobile, and a 1000 cc motorbike, and like many people, I wince when I pull in to the gas station. [Though with a kei and a motorbike, I wince a lot less than the guys I met a few weeks ago filling up a Chevy Suburban at an ENEOS in Yamato City! That must have hurt!]

So I contacted a few manufacturers, and everyone was delighted to help, with information, interviews, and best of all, test drives (even when you’re not a car guy, it’s fun to drive a Tesla Roadster and a Mercedes smart car, and oh, the adventures I had in a Nissan Leaf!).

What I learned – and hope to communicate to you in the cover story – is that nearly everyone is taking a different approach to “green” motoring.

Nissan’s Leaf is all-electric, and I can report it’s pretty fun to sit in traffic, emitting absolutely zero carbon dioxide. I was also tempted more than once to drive through a gas station just to roll down the window and say, “Kidding!”

Toyota takes another, more practical approach. While most “eco-cars” force drivers to make compromises (e.g. the range of the Leaf is under 150km), the Prius does not. Sure, the plug-in hybrid I drove was barely electric, but it was extremely fuel-efficient. I drove 540km in a weekend, at highways speeds and up into the mountains (electric cars do not like mountains), and used only half a tank of gas. Total cost, ¥4,000. [The highway tolls were another matter!]

Then I drove a BMW diesel, and long-term residents may remember the day in 1999 when former governor Ishihara “killed” diesel, waving a PET bottle filled with soot at a press conference. Today’s diesel engine is not your grandfather’s (or in my case, my father’s) diesel, however, and if I’d had more time with the car, I was assured I could easily have driven 1,000km (and perhaps as much as 1,200km!) on a single tank of “clean” diesel.

A very fun drive is Mercedes-Benz’s smart fortwo electric car. You’ve seen the smart car, of course; it’s been around for years. But an electric smart car is exactly the car you want. If you’re not a family of four (or more), and if you don’t need to drive to Osaka. It’s tiny, it’s fun, it’s kawaii! The smart car I drove, in a green on white livery with the words “electric drive” emblazoned on the doors, turned the most heads of any of my test drives, including the gorgeous Tesla Roadster in which I tore around Aoyama.

Some of you will have read about Tesla’s recent contretemps with The New York Times, after a Times reporter ran out of gas, er, electricity, during a lengthy test drive. As a long-time PR man who has had more than his share of technology clients over the years, I could have advised Tesla that “what can go wrong will go wrong” when putting new technology in the hands of the average person.

Tesla’s road test was set up right at the limits of the car’s (excellent) range, and the Times reporter proved to be an average person (not a seasoned gearhead automotive journalist). So that didn’t go well. But the Tesla? That’s the electric car for you (and me). Tesla is no longer selling the Roadster I drove, but the Model S, which I did not drive, apparently performs (much) better and costs (much) less. It has way more range than the Leaf and the smart car, and it’s (as far as I can determine) the electric car that asks the least compromise of its owners.

Many other auto makers offer vehicles with hybrid engines or other environmental technologies, but I didn’t have the time to drive everything (also, some car makers didn’t call me back!). I had great fun, though, and I got the sense that all of the car people I met were extremely enthusiastic about and committed to “green” technology.

I hope you enjoy the story!

First, of course, was the announcement on March 15 by Prime Minister Abe of Japan’s intention to enter talks to join the Trans-Pacific Partnership, or TPP. With Japan’s participa­tion, the participating countries would represent 38 percent of global GDP, making this high-standard trade regime a force to be contended with, with significant benefits for both the US and Japanese economies, as well as US businesses.

The TPP announcement can be seen as enabling the shooting of a third arrow (fun­damental deregulation and structural reforms, following the first two ‘arrows’ of refla­tion and stimulus spending) from the Abe government’s economic policy quiver as it works to drive meaningful deregulation and structural reform as part of its broader domestic sustainable growth strategy.

Within the TPP frame­work, the US and Japan can be expected to collaborate to promote regulatory coherence, transparency, intellectual property protection and other initiatives to ensure a level playing field and make both US and Japanese companies more competitive in Asia’s fast-growing emerging markets. The ACCJ reaffirmed its sup­port for Japan’s participation in the TPP in a press release issued immediately after Prime Minister Abe’s announcement.

Second, at a well-timed breakfast event on March 19, organized by Ambassador Larry Greenwood, Co-Chair of the newly-formed US-Japan Regional Leadership Commit­tee, Professor Peter Petri of Brandeis University presented a fascinating picture of how the significant benefits laid out by Prime Minister Abe of Japan’s participation in the TPP may be understated by a multiple of at least three – and perhaps, based on the US experience with NAFTA, even more.

The other key takeaway was that with competing and overlapping trade regimes be­ing pursued simultaneously, the TPP should be seen as a positive impetus to move the whole region, including, ulti­mately, China, toward the long-standing APEC goal of a Free Trade Area of the Asia-Pacific, or FTAAP, based on the high standards of the TPP.

Third, I had the pleasure of attending the annual confer­ence of the Asia-Pacific Council of Chamber of Commerce, or APCAC, in Taipei, on March 21-22. The American Chamber of Commerce in Taipei did a fabulous job of organizing the event, which had not been held in Taiwan for over two decades, and the ACCJ and the US Em­bassy in Tokyo were well repre­sented, with Executive Director Sam Kidder and President Emeritus Allan Smith, as well as Healthcare Committee Co-Chairs Bill Bishop and Bruce Ellsworth, and APCAC Vice-Chair for Policy Tom Clark in attendance.

Andrew Wylegala, who attended from the Embassy with Jessica Webster and Rob Luke, gave a phenomenal pre­sentation on the Japan market opportunity, and in a panel dis­cussion on healthcare, Bill gave a nice overview of the specific opportunity represented by an aging society, not only in Japan but also as a model for other aging societies in the region.

The “fun” highlight of the conference was no doubt the keynote address to the 650-strong gala dinner by Tai­wan’s President Ma Ying-jeou, who had just returned from an audience with the new Pope. Not only did he speak in Eng­lish, but he stayed for the entire dinner, and personally visited every table.

The overarching theme, which the President empha­sized as well, was regional inte­gration, and the role that US-led global and regional trade initia­tives can potentially play for US businesses around Asia-Pacific. This was very nicely summa­rized in Tom’s wrap-up at the end of the two-day conference, which will lead to an APCAC white paper to be issued in June just prior to the APCAC Wash­ington Doorknock.

Finally, speaking of Doorknocks, I am pleased to report that Japanese growth strategy and the TPP will be a key focus of the ACCJ’s Washington Doorknock, which I am about to embark on, with a delegation of 12 ACCJ leaders and member CEOs, as this month’s issue of the Journal goes to press. Thanks in advance to Andy Conrad, who leads the External Affairs Advisory Council, and to Ethan Schwalbe in the office, for their careful preparations. More on that next month.

EL PATO

With a handful of tasty craft beers on tap, a friendly owner-chef who speaks English and loves a good chinwag, and outdoor seating for when the weather perks up, there’s more to El Pato than just a brazenly delicious lamb burger. But carnivores out there should probably taste it before they agree. The woolly quadruped, rarely found in Japan outside jingiskan joints, is here served up in thick, juicy squares of grilled meat, on a substantial foccaccia-like bun (¥1350). If you’ve been hankering for the bleating meat, it doesn’t get much better than this. Bovine boffins can also order up the sirloin roast beef, though ask the chef to give it a flash in the pan if you don’t like your flesh quasi-raw. Vegetarian recipes include some of the homemade pasta dishes (from ¥1,100) – and you can even witness the chef rolling the strands out of his colorful pasta maker by hand. Various salads (from ¥600) and appetizers such as the show-stopping roasted fig with Gorgonzola are just a couple more picks from a stunning menu.

Best vegan

MEU NOTA

With a wide selection of vegan dishes all prepared with love and creativity, this self-styled “vege & grain café” provides a living room-like setting lined with books, dangling pots, green leaves, and musical instruments. One of the landmark dishes is the fresh, tasty taco rice (¥1,000/half ¥650), and today’s soup (¥400) is always a good bet, though the menu is flush with pastas, donburi, and much more. Quaff a coffee certified by Rainforest Alliance (¥480), detox with a green smoothie (¥700), sip on organic wine (¥480/glass), or give yourself a healing boost with the wonderful homemade ginger tea (¥580).

Best Italian

ANTICA LOCALE

It’s not your classic sit-down restaurant, despite a smattering of tables, nor is it a straight-up bar, despite the bottle-lined counter. It’s probably best described as a tavern, and its warm atmosphere, buoyant regulars, and pleasantly arty décor are presided over by Taka-san, one of the neighborhood’s nicest guys. This is unquestionably the best Italian food we have tasted in Japan. And its quality has been corroborated by real Italian people. Kick off with the heavenly penne arrabbiata (¥800), and choose from other pastas and risottos, toasties and entrées, plus decent wine for ¥500/glass or a paltry ¥300 before 8pm.

Best coffee & cake

COFFEE AMP

On your left as you walk down the eclectic southern-side shotengai, just a minute before reaching Omekaido avenue and Shin Koenji Station, sits this charming little café, fronted by a small wooden deck and a slightly surreal patch of grass. The interior design is post-industrial chic, and the few chairs and stools are spare but comfortable enough to sit and inhale the incredible aromas of the house-roasted coffee. A superlative macchiato can be had for ¥350, and the unmatched cheesecake (¥300) will get your blood sugar pumping along with Coffee Amp’s generally old-school funk soundtrack.

Volunteers prepare food for Second Harvest’s weekly soup kitchen at Ueno Park.

Why would an NPO turn down offers for financial assistance in the wake of a disaster? This is precisely what I did after March 11, 2011, when our major donors asked me how much money I needed. In early April we posted on our website for three weeks that we were not accepting large donations until we had mapped out a clear, long-term plan for Tohoku. We became known in the relief community as the organization that turned down aid. Some thought we were just rich and didn’t need the money.  Perhaps others thought I was foolish. I was neither, just lucky in trusting my experience and intuition.

Many people see NPOs as being run by volunteers (not professionals) and as “do-gooders” (read, less interested in operational and financial efficiency than doing good). For the most part, the reality is quite different. There are many parallels between for-profit and non-profit organizations, and most non-profit professionals are primarily driven to provide high-quality services, not change the world or “do good”. They do understand, however, that when they achieve their goals the world is a little better off. But isn’t that what most people feel about their professions?

Running a good company, employing people, providing quality goods and services, and generating returns on investment for investors are all things that should benefit society, and that, ideally, employees strive for. These same concepts, in slightly different form, can be found in non-profit organizations. The gap between the two sectors is not as wide as you might think, but there are differences. The economic fundamentals of a non-profit offer a good opportunity to see these parallels and differences. For the sake of simplicity I have limited them to four categories: capacity, sustainability, staffing, and return on investment (ROI).

Delivering food to refugees in temporary housing in Ishinomaki.

Capacity refers to the degree to which an organization can carry out its mission. For a factory it means how many widgets can be manufactured. For a service provider it means how many clients can be served. For a retailer – how many sales are possible during a given period. The following factors have a great influence on capacity: physical infrastructure, institutional knowledge, technology, staffing, and available resources (i.e., financial, products, and raw materials).

Because our core business is matching excess inventory with end-users, large donations alone were not going to dramatically increase the volume of food we could deliver. In part this is because purchasing food offers  the worst ROI (more on this later). In addition, while I had six trucks at my disposal, we had limited warehouse space at our Tokyo office, where we would aggregate aid before shipping to the disaster area. We also had limited institutional knowledge and experienced personnel for handling a dramatic increase in volume. While this was not our first disaster, none of us had experience providing aid on this scale.

Shipping care packages to Tohoku.

The second challenge I faced was sustainability. Anyone with business experience will tell you that a sudden, dramatic increase in sales is a bane because anomalous sales increases are usually not sustainable. When a new product – be it shoes, a smart phone or a toy – is a hit, there is huge demand followed by increased expectations from investors that higher earnings will follow. Yet, production and sales are rarely in sync and the sales boost is often short-lived.  In the non-profit world, a sudden windfall in donations is problematic because funding is often tied to a specific project or fiscal year. You are very lucky if a commitment for support is for more than one year, and if you ramp up operations without a sustainably economic model, who is going to cover the costs of the new services in the following year(s)?

I first faced this problem in 2006 when a donor contacted me and said, “We have ¥20 million we want to give you to use this year. Draft a proposal for us.” There was one condition: they wanted some kind of capital investment on which they could put their logo. I quickly realized that spending that kind of money is not so easy. Any capital purchase incurs running long-term costs the original donor rarely covers. In the end we found something that worked for both the donor and us, but the experience made me realize that getting a windfall is not the same as establishing a sustainable business model.

Rice bowls ready for distribution in Ueno Park.

Volunteers are great. They are the backbone of our operations. Last year our volunteers logged an amazing 26,530 hours with us; the equivalent of 13 full-time employees. But the average person prefers professional firefighters to volunteer firefighters and would probably rather have a paid referee for his or her child’s soccer match than a volunteer even it means chipping in a little cash. And how many of us would use a bank staffed by volunteers? Send our children to a school run by volunteers? I bring this up because you will sometimes hear about a group bragging that it relies only on volunteers in order to save costs. This is a narrow view of the staffing needs of a non-profit.

Staffing at a non-profit can be put into three categories: paid, unpaid, and volunteer. The non-profit sector in Japan is less developed than in either the Philippines or India when it comes to paid staff per capita, influence on public policy, and acceptance by the public. Since 2006 I have hired more than 20 people and only two had previous experience working in the non-profit sector. Those who do “work” in this sector are either unpaid or receive below market average compensation.

Even though I started working on food banking in January 2000, it was not until March 2008 that I started collecting a paycheck. And yet I never defined myself as a volunteer; I was unpaid. The difference is that volunteers donate their free time provided no other obligations come up, such as work or family. Non-profit workers who are unpaid find other work to support themselves in order to work at the organization.

Paid staff members have institutional knowledge and networks they use to carry out their organization’s mission. The more time they spend in their jobs the more efficient they become. In our case, we delivered 813 tons of food in FY2010 and last year that number had increased to 3,152 tons, all with basically the same number of paid staff in the food banking section. A good deal of this increase in delivery volume can be traced to my staff becoming more efficient at their jobs, which was possible only because the work was their primary focus each day. I could not expect the same level of results if I relied only on volunteers.

Volunteers at Second Harvest’s weekly soup kitchen in Ueno Park.

As a manager, my expectations of paid staff members and volunteers are quite different. The former are easier to manage because we have entered into a contractual relationship in which I pay them for carrying out specific tasks or achieving the goals of our organization. They are not doing me a favor. Volunteers, on the other hand, are doing me a favor and what I can demand or expect from them is quite different.

After 3/11, I needed experienced staff members to meet new demands. However, there was neither an available pool of qualified candidates nor did I have the long-term financial resources to employ them beyond the disaster response period. On the other hand, we did get an influx of volunteers to help us sort packages and load our trucks. And without them we truly would not have been able to respond as we did. However, volunteers have jobs, families and other commitments. These commitments can be put aside temporarily, but eventually they need to be tended to. A large increase in operations can not be sustained by relying solely on volunteers.

Delivering food in Ishinomaki.

The last factor is ROI: what do donors expect to get from their donations? Would we be able to meet their expectations? I cannot tell you how many times I was asked in those early days, “If I give you X amount of yen, how much food can you deliver?” The worst ROI in food banking is via purchasing, because you can’t beat the market (1:1). In 2010 a cash donation of ¥1,000 to Second Harvest Japan delivered 14,000 yen worth of food (14:1). And last year that ratio went up to 33:1 because of our increased efficiency.

Here is where the for-profit and non-profit are worlds part. In the former there is a direct relationship between revenue and the good/services being sold. If I go from 14:1 in 2010 to 33:1 in 2012 I would expect both that my company is doing great and that my staff would deserve a fantastic bonus. In the non-profit world the source of revenue (donor) is not tied to the end-user. Our increased efficiency has not yielded us more financial donations. Furthermore, when we “save” money on a project, we are required to return those savings to the donor, which is a legitimate request. However, one can see the disincentive to come under budget. (Anyone with government experience can see the parallels here.).

Volunteer driver Iwao Sonoda.

A partnership with Second Harvest Japan offers many benefits to our donor companies. First, by donating rather than dumping excess food, companies can reduce their disposal costs. The average cost of surplus food disposal is about 100 yen per kilogram, and it is estimated that in 2012 companies saved approximately 312  million yen on disposal and return costs by donating.

In addition, our partners reap rewards in terms of employee morale and CSR. In 2012, food donors put ¥1.8 billion back into the community. Finally, food donation provides marketing benefits to donor companies, whose popular goods may be purchased in future, as well as positive brand image effects.

Our work would not be possible without our many supporters, volunteers and stakeholders. Our goal is to make food banking and food pantries as common and as culturally acceptable as hospitals and libraries. We want people to move beyond seeing these as charitable institutions carrying out good works to understanding them as public assets providing vital services to our society.

Food donors at Seisen International School.

Sound consultant Julian Treasure admits it’s difficult to sell people something they don’t know they need, and says that after he explains his business – helping organizations harness and use sound to enable better operational results – to potential clients, many people nod receptively, but say, “We’ll do sound next year.”

Treasure’s response usually gets their attention: “Actually, you’re doing sound right now.”

Treasure, the author of a book titled Sound Business, has given four TED talks about sound, which collectively have garnered around five million views, and he says his discussions with people about sound are always transformative: “Once people are conscious of the sound they are experiencing – and the sound they are making – they can take responsibility for designing and managing the aural environment that surrounds and affects them and others. We open people’s ears. Once brand and marketing people understand that good sound is good business, and is costing them money, they have an incentive to take action.”

Surround sound

Treasure notes that in our homes and offices and towns and cities, nearly everything we see aside from plants and trees has been designed by someone. We may not like all of those designs, but our environment has been designed and built, with some thought – and in many cases, after approval by building departments or planning commissions – to accomplish specific goals in specific environments.

The same cannot be said of the sounds that surround us throughout the day (and night). If you live in a city, your days are very likely filled with traffic sounds, construction sounds, the sound of regular airplane takeoffs, and the sound of “those damn kids” outside the nightclub across the street at 3 am. Even inside our homes and offices, we endure extraneous and often intrusive sounds such as the buzzing of a fluorescent light fixture or the rattle of a refrigerator compressor, or even the drip, drip, drip of a leaky faucet.

We ignore most of these thousands of sounds that intrude on us every day, and we believe we have “gotten used to them”, to the point that we don’t even hear them any more. But although we may not be listening to those sounds, we are certainly hearing them.

In the introduction to Sound Business, Treasure notes, “We experience sound from shortly after our conception to our death, 24 hours a day, every day. Our ears are at work even while we sleep – they have no choice; we have no ear lids.”

The effects of noise on people’s lives and health are well documented. Loss of sleep is the most significant, but excess and unpleasant noise can also cause irritability, reduced sociability, reduced communication, and possibly increased blood pressure, adverse blood chemistry and other medical problems.

In one of his TED talks, Treasure says that 16 percent of American teenagers suffers from noise-induced hearing disorder (i.e. is going deaf) as a result of listening to too-loud music through headphones. He also cites a survey at an American university that found 61 percent of freshmen had damaged hearing as a result of headphone misuse.

But even if you’re not a member of “iPod Generation”, or are but keep the volume at a moderate level, around a quarter of the population of the world’s industrialized countries have a hearing problem, mainly due to age. By 50, around 20 percent have some form of hearing impairment; by 70, the proportion is more than half.

Good sound is good business

Most of the sound around us is created by organizations: noisy offices, cacophonous restaurants, delivery vehicles in the street and generic music in shops are a few examples. Every business generates sound every day, yet most of it is undesigned, accidental and unconscious.

Treasure says, “Almost any business can increase sales, customer satisfaction and brand value by optimizing its sound, but sound is probably the last great unexplored country for the marketing profession. Well over a trillion dollars are spent worldwide every year on branding visuals. So it’s strange that I have had the following conversation many times, and it is always the same.”

Me: “Do you have a brand book?”
Marketing director: “Yes, of course we have a brand book.”
Me: “How many pages are about sound?”
Marketing director: “Er, none.”

Treasure’s interest in the sound business resulted, he says, from the combination of having been a musician all his life and working as a publisher, gaining insight into the worlds of business, sales and marketing. After selling his publishing business, Treasure began to explore the world of commercial sound, and realized he could combine his experiences and interests. “Much of the sound that surrounds us all day, every day, is pretty bad,” he says. “But I wondered to myself, does it matter? I did quite a bit of research, and found that it does. It has an impact on our health, and it has an impact on business results.”

The ambient noise level in shopping malls is 70 decibels, the result of a combination of bad acoustics, noise (created by machines, people and music) and the facility sound system(s). Treasure says that incongruent sound can undermine the effect of visual branding and communications by over 80 percent. In contrast, when sound is in harmony with visuals, the impact of branding and marketing messages can be increased twelve-fold.

“There’s a huge opportunity for any business that takes control of its brand sound,” says Treasure. “The right sound is capable of changing people’s purchasing behavior, their brand affinity and engagement, their positive or negative feelings about a brand experience, and their openness and willingness to interact.”

The “wrong” sound can include poorly designed automated call handling systems; unpleasant retail sound; noisy workplaces; undesigned, inappropriate sound in corporate receptions and showrooms; and inconsistent advertising sound.

Optimizing brand sound

The Sound Agency won the 2012 Audio Branding Award for its work with Harrods department store in London, a project that involved taking more than 250 sound readings, developing a sound strategy that identified over 140 discrete sound zones, and created more than 30 music playlists and 20 generative soundscapes. The sounds now heard at Harrods are designed, says Treasure, “to express the Harrods brand values – British, luxury, innovation, service and sensation – in various forms for specific departments, customers, environments and times of day.”

In a brand sound audit, The Sound Agency looks first at a client’s overall brand image in its market context and versus its competitors, considering variables such as brand music (think of Coca-Cola and I’d Like to Teach the World to Sing), sonic logo (think Intel), product sound (think Ferrari or Harley-Davidson), advertising sound (think about whatever television commercial is stuck in your mind, for good reasons or bad) and telephone sound (think about your last experience of customer service via telephone).

In a retail audit, the company sends a team of two to a mall or shop to record sound with unobtrusive equipment. The team takes at least 50 readings, shoots photographs, and returns to the office to write a detailed interactive report (including sound clips) on what sounds were heard where. The auditors score the client premises relative to occupancy (how crowded the mall or shop was) and expected sound quality.

After its audit at Harrods, The Sound Agency started to remake the aural landscape in the toy department, which is called Toy Kingdom. The company develops what Treasure calls “generative soundscapes” – algorithm-driven computer-generated background music that is always changing, and never repeats.

Treasure says, “In our experience, very few organizations have anything at all in their brand book about sound. We look at the organization’s brand personality and brand values to derive powerful audio brand guidelines that inspire ideas and implementations. Not all aspects of our holistic BrandSound approach are applicable to every business, but nearly every organization can do much, much more in the area of audio branding.”

Imagine the following front-page headline and story: “World’s First Green Partnership Agreement Signed”.

And the story below: “The world’s first Green Partnership Agreement has been signed, aiming to foster bilateral promotion of investment; infrastructure development; transfer, manufacturing and international trade of smart city technologies, renewable energies, bio-industry, and environmentally sustainable agriculture; as well as special visa conditions for tourists and business people who will engage in conservation and eco-tourism activities.”

As environmental degradation accelerates globally, the need for bold, innovative, paradigm-shifting policymaking is becoming an opportunity as well as an urgent necessity. It is an interesting exercise to try to imagine which will be the first two countries to enter into a “green partnership” agreement.

Could Japan be one of them? Certainly, the institutional, political and technological framework is adequate. Is the culture ready to go out and take on the world once again through global leadership that is “Made in Japan”? I believe asking the question is one way to start the conversation.

Sixty years ago, when Japanese technological innovation and prowess set out to conquer the world, Japan became the beacon of industrial output, economic growth, human development, and other virtues that were admired by the international community. Nations, companies and individuals came to Japan to learn about organizational behavior, industrial management, kaizen, just-in-time, and other business practices that were state-of-the-art. Steve Jobs, founder of Apple, Inc., visited Japan several times in search of inspiration, partnership, design, manufacturing, and even factory layout models.

Today, the planet looks different, and following the earthquake, tsunami and nuclear reactor meltdowns of March 11, 2011, it looks very different from Japan as well. Our planet is home to seven billion people and that figure will likely reach eight billion within the next 15 years. Consumption of natural resources has been provoking environmental degradation at a pace too fast to mitigate.

Since 1985, we have been consuming more renewable resources than the planet can naturally replenish, and urban development has been altering the agricultural and forest boundaries of our ecosystems, pushing nature farther away from where most people live today. Our society demands more and more energy every year, and the inevitable exhaustion of our fossil fuels bears a cost that no one is paying for today but everyone will have to assume in the near future. Moreover, nuclear energy, which was considered clean, safe, and inexpensive, had a quick and hard fall from grace after the Fukushima reactor meltdowns, especially in Japan but also in other countries that have vowed not to use it again or at all after the disaster
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Given these constraints, today’s leaders cannot and must not pursue business-as-usual policies, goals, deals, and investment. A shift in the relationship between humanity and our environment is required to ensure that we will be able to continue enjoying economic growth, human development, technological innovation and comfort for everyone, and also to ensure that future generations – our children and grandchildren – will thrive.

Japan has been concerned with the state of affairs of the natural environment for quite some time. Shinto religion, more than 2,000 years old, is a set of beliefs that grants sacred or divine status to nature, both living as well as non-living things. This sensitivity is perceived in today’s Japan, a country with 72 percent forest coverage despite a high population density. It is said Japanese learned 600 years ago that if they cut down their forests, they would run out of water. The abundance and quality of water for human consumption in Japan goes without question. This achievement should be replicated, especially in regions in the world where water scarcity affects some two billion people.

For 40 years Japan has been concerned with greater energy efficiency – generation, distribution and consumption. Over the last 17 years, even though the country’s economy has grown roughly 20 percent, energy consumption has remained constant. This means that innovation in energy-saving technologies has represented multi-billion dollar savings for Japan. These technologies that are the foundation of what we call “smart cities” have reached a degree of development that could fuel a new global, Made in Japan “tech boom” that would reinvigorate the world economy and greatly increase the efficiency with which we use energy.

The Japan Renewable Energies Foundation organized an international conference on February 26 at which Dr. Amory Lovins of the Rocky Mountain Institute presented highlights of “Reinventing Fire”, his most recent proposal for green energy and sustainability. It is an action plan that justifies a speedy transition towards renewables, not only because renewable energy makes ecological sense, but because it makes solid business sense.
Inevitably, for a country like Japan, making this transition will imply – among other profound transformations – wrapping up the nuclear experience and facilitating private participation in energy generation and distribution. This goes beyond business and politics and might have to address underlying cultural issues about the way the country is run, how it sees itself among other geopolitical powers worldwide, and where it sees itself in 2040, by which time the present national leadership will have handed power to a new generation.
Regarding a Green Partnership Agreement, Costa Rica is poised to become one of those first two countries. Costa Rica is one of the world’s greenest countries, and in fact has gone beyond sustainable development – we are an exemplar of regenerative development. During the past 30 years, we have tripled our GDP while at the same time doubling our forest coverage.

We derive 95 percent of our electricity from renewable sources and we have placed almost 30 percent of our ecosystems under legal protection.

Already here in Japan there is the technology, the policy, the infrastructure, the financial capability, the track record and, most importantly, the urgency to move faster toward a low-carbon economy, reducing ecological footprint and gaining not only environmental but also economic benefits.

In my capacity as ambassador to Japan, I imagine that the headline and story quoted above will report an agreement between Japan and Costa Rica, a landmark agreement that will benefit both our nations, and that will set an example for the rest of the world. Green growth is an exciting opportunity for international cooperation, development, investment and trade, and the first two countries to engage in a Green Partnership Agreement will set the table for a dozen or so other countries that may be equally ready to embrace the new paradigm for this 21st century.

What will it take to change the world as we know it? Hard work and commitment, of course. But first and foremost, it will start with a shared vision of a better – and sustainable – future.

ACCJ Journal: Your father was a diplomat, in addition to having been a Supreme Court judge, and your great-great grandfather was the first (and sixth and eighth and eleventh) prime minister of Japan. I suppose it was always out of the question that you would grow up to be a rock and roll drummer? When and why did you decide to pursue a career in the Foreign Ministry? Was there a single thing? Or was it simply expected that you would go into “the family business”?

Ambassador Fujisaki: If I had had the talent, of course I would have chosen rock and roll drummer, but I wanted to do something international and by the time I reached high school/university I thought diplomat would be a good choice. My time in the States as a junior high school student really opened my eyes. Japan had been devastated after the war, and in America people were driving cars and eating ice cream every day – not just on birthdays – and it was a totally different world. An attractive world. I came back to Japan for high school, and attended college here as well, and during that time I decided to take the diplomatic exam.

ACCJ Journal: One of your first Foreign Ministry assignments was to go to university in the States, at Brown University, for language training?

Amb. Fujisaki: Yes, but it was a strange experience. I was 23 and had finished university, and was a diplomat, and my roommate was a 17-year-old kid, and there were pillow fights arranged by the 19-year-old dorm leader, and it was a bit strange. Then I went to Stanford for a year as well. But at that time the main thing was to learn the language.

ACCJ Journal: Over the course of your career in London, Paris, Jakarta, Geneva and Washington, if something stands out in your mind, and without giving away any state secrets, can you tell us what was the most challenging issue you faced?

Amb. Fujisaki: It was the earthquake and tsunami of March 11. I had two advantages, though, in my work in Washington. One was that we had a 12-hour time difference. So in Tokyo they could work 16 hours and in Washington we could work 16 hours and in total we could work 32 hours in a 24-hour day.

Second is that in the embassy we had people from every agency together: police, finance, METI, agriculture. I was able to be very well informed by everyone when I made my contacts with the White House and American government agencies, and when I appeared on American television.

The main job was communication – to get the most support from the United States. State Department, Defense Department, White House, and Department of Energy – they had 24-hour teams to provide support. Everyone was really taking this issue as if this was their problem, so I was very grateful. And the American people were very, very supportive. With origami cranes, lots of money, and some kids even donated their birthday gifts … it was very moving.

ACCJ Journal: As a diplomat, your role is really as an implementer of foreign policy, rather than a creator of foreign policy. Did you ever find yourself in conflict with your “orders” from Tokyo, and if so, are there ways in which you can and did influence the formation of diplomatic policy?

Amb. Fujisaki: What you said is right, according to the diplomatic dictionary, but the reality is different. Before they send their formal orders, we usually discuss issues quite a lot. And we in the field have a chance to offer our input. So we are aware of what’s coming, and when we implement policies, we don’t implement them word for word, but rather, “in our way”, according to our knowledge and the context. That’s the essence of diplomacy. If the personal touch and local knowledge were not needed, diplomacy could be conducted by telephone.

ACCJ Journal: After 9/11, the security at US embassies has gotten incredibly tight, and it seems that would have an effect on the degree to which diplomats could immerse themselves in the local environment (and gain knowledge of that environment). Has that been true for Japanese diplomats as well?

Amb. Fujisaki: Well, for Japanese the important moment was when our embassy in Peru was occupied in 1996. That gave us a lesson about security. So it’s not like before. But as ambassador, I didn’t have any security when I was moving around in the United States, visiting 47 states in the course of my duties. I found it very easy to move around, and I think it’s very important to do so in the United States. It’s a huge country, and while Tokyo is the center of Japan, and London is the center of the UK and Paris is the center of France, in the United States, people are very different all around the country. I thought it was very important to meet and speak to as many people as I could.

ACCJ Journal: In 1960, President Eisenhower described the US-Japan alliance as “indestructible”. A lot of time has passed since then, and people have changed and our countries have changed. How would you describe the US-Japan relationship today?

Amb. Fujisaki: Eighty-two percent of Japanese feel affinity toward the United States. Eighty-four percent of Americans feel Japan is a trustworthy, credible partner. That’s an amazing figure. Sixty years ago we had a war between us, and it has been a lot of effort on both sides to achieve the current state of affairs. So I’m pretty comfortable with US-Japan relations, as long as people like each other. As a diplomat, I always say that governments have to be careful of the three “nos”.

The first “no” is “no surprises”. As people there are good surprises, but between countries, almost always surprises are bad. Second, “no overpoliticization”. When issues are politicized, it’s very difficult to make compromises. Third, “no taking for granted”. We’ve been married for 60 years, the United States and Japan. Like an old married couple, Japan and the United States have to continue to appreciate the work being done by the other.

ACCJ Journal: You arrived in Washington in June 2008. In that month Barack Obama saw off Hillary Clinton’s challenge to become the Democratic nominee. And you had the opportunity to witness the start of the real election campaign. And then you retired in November of last year, after President Obama’s re-election, so you saw one full presidential election cycle and a bit more. Many foreigners – and many Americans! – find the American political system confusing. Do you feel you gained any insight into the process during this most recent posting to Washington, or during previous postings?

Amb. Fujisaki: Well, you pointed out that a huge amount of money is spent during the presidential campaigns, and during the last election, I was watching closely, the swing states and the polls, and it was very clear to me that Mr. Obama had a huge lead in the Electoral College. But everyone had to say, “It’s going to be a close race,” because if they’d said, “Hey, the election is over,” then no one would have watched the television news, or been reading newspapers.

One thing I think is that the American election campaign period is a little too long. But on the other hand, I think the Japanese election season is a little too short. It doesn’t give enough time for voters to scrutinize each candidate. In America the scrutiny is too great; in Japan, there’s not enough time.

ACCJ Journal: While you were the ambassador to Washington, the Japanese prime minister changed four times. When the political party in power changes, does the foreign policy change drastically?

Amb. Fujisaki: Yes, it happens. When the Democratic Party of Japan took office, they had some policies that were very different from the historical foreign policies of Japan, such as on Okinawa. But the realities of governance and international relations saw them come back fairly quickly to the policies that had been followed before. And it doesn’t just happen when there’s a change of party control: when Prime Minister Hatoyama raised the idea of an East Asian Community that would exclude the United States, that stance was overturned by Prime Minister Kan, who felt it was unthinkable that an East Asian Community could exclude the United States.

In terms of executing the foreign policy, although we as diplomats act on behalf of our nations, and must be faithful to the wishes of our superiors back in the capital, we are also individuals, and we have opportunities to meet privately with one another, and to have private discussions that can help both sides to try to find a meeting point between the public positions. That’s why we are there!

ACCJ Journal: Five years ago, nearly 34,000 Japanese studied in the United States. Last year there were fewer than 20,000. Why do you think that there is reduced interest in studying in the United States?

Amb. Fujisaki: In my view, going to the United States is not that easy. If you go to Korea or China, you pick up the language and you come back and you can say that you’ve picked up the language. But if you go to the United States, the expectation is that you’ll not only pick up the language, but also a masters in economics or whatever. And it’s not so easy to do the coursework in a foreign language.

So my thinking is that we need to continue to improve the level of English in Japan. And I have three bits of advice that I always share: one is that big companies should make a quota of new hires from foreign colleges, and use them not as interpreters, but as regular employees. The second is to transform the college exam in English. If something more useful, like TOEFL, is used, then people will learn more than just the grammar. Third, we have to improve our quality of English teachers.

My idea is that 1,000 middle school teachers be sent to the United States for a year. Then they return, and after 30 years, each teacher will have taught 5,000 students. It would be a great investment in our future. Two years ago, we started it, with the support of then-Prime Minister Kan, but the Budget Office reduced 1,000 teachers to 100, and one year to six months. But I have met these teachers, and they are really changing. Their eyes are opening to the world and their minds are as well.

Also, when I visited California, and traveled to Silicon Valley, I met so-called entrepreneurs, and they told me they are taking risks. But I think they are not, so much, compared to here. They have a system of incubators, and if they come up with good ideas, there are plenty of potential investors. Here, there are no incubators, and there are few investors. Here, it’s a totally different system, and it’s very difficult for Japanese entrepreneurs.

I think the Japanese economy has to think of something different. The Chinese or Korean system is one that picks the winners. The American system tries to help the entrepreneurs. We do neither, and I think we have to figure something out. In this country, the psychology is not accepting of failure. We have to change the system.

ACCJ Journal: What role do you think the arts and culture have to play in the friendship between nations and between peoples?

Amb. Fujisaki: I think Japan is very lucky to have such a rich culture. And it’s possible to adapt Japanese culture, and make something new, with Western culture. If you look at the top Japanese architects and designers and chefs, they are taking Japanese influences or essence into the Western cultural context. And I think it can give inspiration to a new generation of Japanese.

ACCJ Journal: During her Senate confirmation hearing, former Secretary of State Hillary Clinton brought into the public eye the term “smart power”, which is the effective combination of cultural “soft power” and “hard power”, which is to say a strong military. Most people, I think, would agree that Secretary Clinton and President Obama were mostly effective in their use of “smart power” over the past four years. What can Japan do to exercise “smart power”?

Amb. Fujisaki: I think Japan is blessed with a great deal of soft power, and we have always had that. I think what’s important is that we should recognize the importance, and strength, of our soft power. Today, when we review our budgets, often the budgets involving culture are cut more than other things, which people think are more “essential”. In the long term, if we do that, we will lose the essence of our soft power.

The French are very good at exporting their culture, and American culture is accepted globally. I think that for several reasons, including language, the Japanese government needs to support the export of our culture a little more, for example through translations, and other things.

ACCJ Journal: We talked earlier about the “indestructibility” of the U.S.-Japan alliance, and I suggested that perhaps many Japanese and Americans take that relationship for granted. The real concern for many Japanese – and many Asians – is a China that has grown immensely over the past two decades, is still very unbalanced in social and economic terms, and is flexing its muscles regionally. On top of that, the environmental cost of China’s rise is being paid not only by (hundreds of) millions of Chinese, but also by millions of Japanese and other Asians. If you were in charge of Japan’s foreign policy, how would you address the relationship with China and what would be the priorities?

Amb. Fujisaki: I think China and Japan have to live together as neighbors. We shouldn’t try to pretend that we’re the best friends, because we have differences – social system, political system – but we share a lot with them, a lot of culture, and we owe a lot to them, but both of us are very important economies, and both of us cannot afford to confront each other. Both of us have to live together calmly, and try not to excite people. I think we should not compromise, we should always be alert, but we should not arouse or stimulate others.

ACCJ Journal: The Trans-Pacific Partnership … do you think that the TPP is something that Japan can stand on the sidelines for, or do you think that it’s a must-join?

Amb. Fujisaki: I think it’s a must-join. We must join the negotiations, and then see if we can create an agreement that is maximal to our national interest. Without joining it, I don’t think we can have any say. I think we must be a part of the negotiations, and in fact we’re a little bit late, but we hope that other countries will not raise the bar to entry too high.

ACCJ Journal: What are the qualities that make a good diplomat?

Amb. Fujisaki: I always say there are five qualities that diplomats should aim to have. I’m not saying I had all those qualities, but …

One is, like media, you have to be alert to news, and to try to figure out what’s going on, and make a good analysis of it.

Second, like politicians, you have to make decisions and be a good communicator.

Third, like an American lawyer, you have to be able to negotiate details.

Fourth, like the manager of a five-star hotel, you have to be able to organize things and pay attention to details. To see that everything goes smoothly.

Fifth, you have to be liked by people, and you have to make friends.

These are the elements that I think make a good diplomat.

ACCJ Journal: Thank you very much for your time, Mr. Ambassador.

Amb. Fujisaki: Thank you very much for coming. I enjoyed it very much.

Generally referred to as the enkatsuka law, its official English name is the “Act on Temporary Measures to Facilitate Financing for Small and Medium-Sized Enterprises”. It took effect in early 2009 just a few months after the bankruptcy of Lehman Brothers and was designed to prevent banks from quickly foreclosing on loans to small companies. Although it had no power to compel banks to make extensions, financial institutions generally followed the spirit of the law by offering longer payment terms when asked by “small” borrowers.

Loans to the real estate industry grew rapidly in the 2005-2008 period and a great many of these had a term of three years. As property values plunged 30-50 percent amid the global financial crisis, borrowers either didn’t have the money or didn’t want to throw good money after bad when a mountain of loans came due three years later. Many of these loans, of course, were made to funds operated by large domestic and international funds. Technically, however, many borrowers were special purpose entities with little capital and only a nominee director, so they qualified under the law as small companies. Not only did the banks get karmic credit from the government initially for lending to qualified “small- and medium-sized enterprises” by doing business with these special purpose entities, but when the borrowers requested leniency, the banks duly responded to Kamei’s law by extending the repayment terms.

Originally, experts expected huge loan defaults to result in a flood of non-performing loans as happened following the Asian financial crisis of 1997. This time, however, Kamei-san’s figurative finger in the dike prevented a flood of bad loans from decimating the real estate industry and Japan’s economy.

While there have been many small- to medium-sized sales of non-performing loans over the last few years, the overall volume has been fairly small. In part because many of the underlying assets had enough cash flow to cover debt service, there hasn’t been a huge negative impact on the real estate market. While a few high-profile defaulted assets have come to market, such as the former Shinsei Bank headquarters building in Uchisaiwacho, banks encouraged by the enkatsuka law have played the “extend and pretend” game enough that the real estate investment market has recovered quite a bit from its low in 2009.

Now that the law has expired, though, the question is whether banks will start ignoring requests from borrowers to extend loans and foreclose more aggressively. At the moment, I think Japanese banks are unlikely to change their behavior much, as they still have bitter memories of 15 years ago when selling non-performing loans at deep discounts created huge holes in their balance sheets that ultimately had to be filled by government capital injections.  Moreover, new loan demand is sufficiently weak that banks may prefer to extend existing real estate loans rather than try to re-invest the repayment proceeds in JGBs or other low-yielding instruments.

In addition, with speculation fueled by Abenomics still growing, real estate prices continue to rise, giving banks more reassurance that they will be repaid in full and borrowers some hope that they might even get some of their investments back.

In a potentially interesting corollary to this story, Mainichi Shimbun reported on February 18 that the Legislative Council of the Ministry of Justice is considering a ban on individual loan guarantees by executives of small- and medium-sized companies. If your company name is not Mitsubishi, Mitsui or Sumitomo, banks typically demand that the president provide a personal guarantee on a corporate loan. Naturally, this is a strong disincentive to borrow, so this change, if implemented, could stimulate otherwise stagnant loan demand. When we called the Ministry of Justice to check the status, they refused to comment, but bureaucrats and politicians frequently use newspapers to put out trial balloons, so there is probably at least a kernel of truth to the story.

“With both ‘prisoners’ and ‘vacationers’, the fundamental problem is that expectations have not been set,” he says. “What type of trainee walks in the door depends almost entirely on corporate culture. Is it a culture that sees learning and training as an opportunity?”
Dr. Greg Story, President of Dale Carnegie Training Japan, agrees: “How many managers send people out for training with a briefing, spelling out what the company’s expectations are, and asking employees what they hope to be able to contribute with their newly acquired knowledge?”

Story says the need to communicate expectations to employees is even more important in the era of increased globalization. “The majority of training in Japan is ‘OJT’ – on-the-job training,” he says. “But as more and more Japanese companies expand overseas, either organically or through M&A, we’re seeing that although the businesses are becoming international, the people are not.”

Silberman says, “We want to be our clients’ partner in learning and development. That’s not programs, it’s trust. Ideally, we come in at the beginning, to help the client establish their own expectations, and to help them set expectations for employees. If the groundwork has been done, how people look when they arrive for training doesn’t matter; it’s how they leave that matters.”

Story says Dale Carnegie’s training courses have always emphasized change that trainees can see immediately. “When Dale Carnegie started out, he was paid by the lecture,” Story says. “If he wasn’t able to give people something they could use right away, they wouldn’t come back.

“But although we nearly always see changes in people who have completed our training, the trainees don’t always understand what has happened to them,” he continues. “Some people report back to us that they’re very happy with the results of their training. They say, ‘My boss has changed!’ or ‘My wife has changed!’ Of course, their bosses and their wives haven’t been on the training – it’s they who have changed!”

William Nealy, Jr., Business Development Manager of Impact Japan, says, “The most fertile environment for our business is companies that are going to die if they don’t change. And know it.”

Nealy says his firm specializes in leadership training, and in Japan he says the focus is on developing in managers a “global mindset”. “Our methodology involves experiential learning,” he says. “We want to create leadership simulations that take people out of their comfort zones. It’s not really about skills; it’s about effecting a change in people’s mental mindsets.”

“The definition of leadership is action,” Nealy continues. “We want to see our people first of all notice that something needs to be done, then decide that they’re going to be the one to do it, and finally, summon the courage to take that action.”

Silberman says, “The Japanese system does not reward people for taking risks. And it certainly does not reward them for failure!” He notes, however, that AMT Group’s overseas-headquartered clients are extremely committed to improving employees’ skills.

“Ever since 3/11, there’s been a big shift in terms of concern about Japan’s ‘survival’,” he says. “The subtext of every training discussion seems to be, ‘Can Japan make it? Can Japan compete?’”

One question that looms over every discussion about whether or not Japan can “make it” is the extent to which companies can mine Japan’s least-developed business resource: women. A survey published in March by The Economist showed Japan ranking 25th of 26 countries (only South Korea was lower ranked; New Zealand was top) as a place where women have an opportunity to receive equal treatment in the workplace.

Dale Carnegie offers public courses as well as corporate training, and Story reports that around 30 percent of public course attendees are women, a lower figure than for the firm’s corporate training courses.

“On the numbers, it would appear that women aren’t investing as much as men in their careers,” he says. “Why is that? Is it because they don’t see the point? When will we reach a tipping point? When companies start investing more in women, women will start investing more in themselves?”

Silberman feels low expectations are a problem not only for women but also for men in Japan. “Some of the first training I ever did involved asking people why they were interested in going to graduate school,” he says. “Most people found it difficult to answer. They were going to graduate school because they were expected to. Not because they wanted to, for whatever reason.

“And we see that in the corporate environment as well, of course,” he continues. “People turn up because ‘my boss told me to’. The trainees who thrill us are the ones who arrive with dreams. They have dreams for their business units, for their companies, and most importantly, for themselves.”

In February we looked at the “meta-skill” of meditation, and last month I shared my belief that, lack of energy – among other reasons – inhibits the success of too many strategic initiatives here in Japan. As someone blessed with what others have called “extreme” energy, I want to share with you the results of my studies and practices.

It starts with energy

You may recall a fellow named Albert Einstein. He produced the world’s most famous equation, E = mc2. Energy is equivalent to matter times the square of the speed of light. This means that since the middle of the last century, at least at the theoretical level, mass is a property of all energy; energy is a property of all mass; and the two properties are connected by a constant. In other words, everything is energy.

In business, we know the importance of putting “the right energy” into whatever initiative or activity we’re doing. If you give it a try, you can measure the energy of your meetings, your presentations – all of your interactions with others. How? Just make a scale of 1 to 10, or 1 to 100, rate the energy yourself and ask others to do the same. And even better than measuring the energy is increasing it. That’s what practicing qigong can do.

Qi/Energy

In February I briefly mentioned that my favorite form of meditation is qigong (pronounced “chee gong”), which can mean “energy work” or “cultivating life energy.” This ancient Chinese practice has many different translations and many more traditions. Over the years, I’ve studied directly with two teachers and have found a handful of useful books and videos.

If qigong is new to you, I hope to pique your interest enough to explore further and most of all, to give the practice a go. If you’re already adept at qigong, you might enjoy hearing about the road I traveled.

First charge

I first learned about qigong in 1994 when I went to take a class in tai chi offered by Guo Liang in Nakano, Tokyo. He’s a celebrity-type, a master of qi, performing treatments to cure illnesses and enhance well-being, teaching qigong meditation, and throwing people around his dojo, similar to some of the wild activities an Internet search on “proof of qi” will provide. I only visited his dojo four or five times. I just didn’t get the tai chi movements and was a bit put off by some of his “followers”.

But he offered a “meditation” class that focused on qigong, and I liked those. And at the third class I attended, I felt qi in a way I will never forget (and since I can summon it up now at any time, I am sure I won’t “forget”).

A surge of what I can best describe as “electro-magnetic energy” flowed through my body and kept me enchanted for the rest of the lesson.  It was right there in front of me, then in me, and I could literally “play” with the energy.

Practice

Over the next 15 years, I continued playing with the energy but had no real practice, since, as I mentioned, I wasn’t thrilled with the Nakano dojo.  Come December 2010, I was re-introduced to qigong in Koh Samui, Thailand. San Bao, a German teacher on the island, offers classes Wednesday through Sunday mornings, and I signed up for one. It felt great to practice the slow, breathing-coordinated movements and standing postures with a teacher again, and it felt even better to meet a teacher who was so down to earth. He introduces qigong in a way that anyone can practice – with or without him. There were no photos of him with famous movie stars, no one was being tossed around the room, and his “followers” consisted of spa guests and his friends – an eclectic group to be sure: businesspeople, teachers, journalists, writers, musicians, you name it.

After coming back to Tokyo, I would practice, but just a couple of times a month. I visited San Bao again in December 2011, and picked up his DVD. For the next year, I upped my practice to once or twice a week. Then in December last year I attended three classes in a row.  After the third, I told San Bao, “This is amazing! I can’t believe how great I feel right now!” “You’re preaching to the preacher,” he replied with a smile. The shocking discovery on that third day was a big as the first “charge” with Guo Liang back in Nakano.

Since December, I have been practicing qigong daily. The positive changes are noticeable: better sleep, more positive energy, and no colds. I hesitate to make any more “claims” as to the benefits, for as someone wrote on one website, “Those who practice don’t need any more proof.” And, he might have added, those who don’t practice won’t believe the claims anyway. [Plus, you can find some really outlandish claims.]

Interested?  If so, check out the video series by a teacher San Bao recommended to me – Lam Kam. He demonstrates ten days of 10-minutes-per-day standing qigong exercises, interspersed with interviews and a narration so you can “learn while doing”.

Or, if you’re more interested in learning “about” qi and qigong than in jumping into it, I recommend Bill Moyers’s “Healing and the Mind” series, in which he introduces “the mystery of qi.”
The qigong I practice is a combination of what’s taught by Lam Kam (who studied under Yu Yong Niang) and San Bao (who studied under Daniel Reid). I enjoy San Bao’s choice of slow movements as much as Lam Kam’s standing postures, even though both teachers say that the standing postures are more powerful. The slow movements, synchronized with deep abdominal breathing, help me to deeply relax while at the same time to focus. By starting my day with the practice, I’ve found the benefits last all day.

Qi and Business

All of the benefits that accrue to the person who practices qigong will help his or her business. You already know that when you’re working “in flow”, you will be more effective and efficient, the twin goals of leadership and management. Qigong allows the qi, the energy, to flow.

Qigong is becoming popular. Some fitness gyms offer classes in it. I took one such class and while the teacher certainly knew something of qigong, he threw me off by finishing the lesson with some kickboxing in which you visualize your worst enemy and pound the heck out of him. This was so anathema to everything I’d learned about qigong that it “wrecked” the session for me. On the other hand, it may be just what you’re looking for.
San Bao ends his sessions with three big “respects”: respect for the ancient art of qigong; respect for yourself (for having done a session); and respect for everyone who practices qigong or any other spiritual discipline.

Big respect for those of you who, having read this far, put qigong to the test!

Illustration by Yohei Takahashi

Areas in Kyushu, the southernmost island of the Japanese archipelago, have reported readings of airborne pollutant dubbed PM2.5 almost 20 percent greater than the prescribed maximum daily limit set by Basic Environmental Law.

Fortunately, the Environmental Ministry has stated that the current levels of pollutants will likely not cause immediate health problems and acute reactions, but has warned against risks associated with chronic exposure, and is advising those with respiratory disease, as well as parents of small children, to take extra care to minimize exposure.

PM2.5 pertains to any airborne particulate matter smaller than 2.5 micrometers, about a thirtieth of the diameter of human hair. PM2.5 is particularly hazardous to health as its miniscule size allows it to bypass filters of the nose and throat, and infiltrate deep into the respiratory system, reaching the bronchioles and alveoli. Regular exposure to high levels of PM2.5 can lead to asthma, various cardiovascular and respiratory issues, and even cancer.

Known origins of PM2.5 include the yellow sands of the deserts of Mongolia and China, car exhaust, and smoke from industrial plants and factories. Atsushi Shimizu of the National Institute of Environmental Studies says, “At this time of year they are definitely not yellow sand, so they’re toxic particles.”

ALCOHOLIC BEVERAGE EXPORTS HIT AN ALL-TIME HIGH

The export of Japanese alcoholic beverages increased for the third consecutive year in 2012 to reach an all-time high.

Exports rose 8.5 percent over the previous year to reach a record ¥20.6 billion.
By country, exports were largest to the United States at ¥4.6 billion, followed by South Korea and Hong Kong, at ¥3.5 billion and ¥2.5 billion respectively.

This upward trend of exports is said to be due to an increased appreciation of Japanese cuisine, as Japanese food culture is increasingly introduced and gaining popularity abroad.
And growth is projected to continue as the overseas market for higher priced products such as sake continues to expand.

Exports of less expensive products such as beer, which had been in a long decline since peaking in 1998, are making a strong comeback thanks to market booms in South Korea and Taiwan.

JAPAN’S TOP THREE AUTOMOBILE MAKERS REPORT RECORD SALES IN 2012

Japan’s three biggest automobile manufacturers – Toyota, Nissan and Honda – reported record sales in 2012.

Strong demand in key Asian and US markets offset losses suffered in debt-ridden Europe and in China, where diplomatic tensions with Japan have led to consumer boycotts of Japanese products.

Recovering from a slump due in part to natural disasters in 2011 such as the Tohoku earthquake and flood in Thailand that knocked out manufacturing capabilities, Honda sold  3.81 million vehicles in 2012, 23.3 percent more than in 2011, and Nissan increased sales 5.8 percent to 4.64 million vehicles. Toyota saw sales rise 22.6 percent to hit 9.75 million vehicles, regaining its title as the world’s largest automobile manufacturer, a position it lost the previous year to General Motors.

Financial experts see the future of the automotive market and other export-reliant Japanese industries depending heavily on whether or not the LDP and Bank of Japan can continue to effectively weaken the yen and put an end to en-daka (“expensive yen”). Nomura Securities auto analyst Masataka Kunugimoto says, “A lower yen is positive for earnings. If that continues, it would allow for more research and development spending, which should then strengthen automakers’ competitiveness.”

JAPAN POSTS RECORD TRADE DEFICIT FOR JANUARY

Japan announced a record-breaking trade deficit for the month of January.

The government revealed that a moderate recovery in exports had been offset by imports affected by the recent weakening of the yen, leading to a trade deficit of ¥1.6294 trillion.

Experts say the weakening of the yen due to monetary easing policies promulgated by the LDP is working in tandem with the aftermath of the Tohoku disaster of 2011 to drive up the deficit, as many of the country’s nuclear reactors are in shutdown, hiking demand for fossil fuels, which Japan must import. Japan currently imports over 90 percent of its energy resources from overseas.

Despite recent movements to eliminate nuclear power from Japan completely, Prime Minister Shinzo Abe is expected to return some nuclear power plants to operation. Takeshi Minami, chief economist at Norinchukin Research says, “Abe will probably restart some nuclear plants after the Upper House poll in July, as, without them, the costs to the economy are too great.”

JAPAN EAGER TO DO BUSINESS IN MYANMAR

For Japanese firms, Myanmar is the new Eldorado.

With domestic business sluggish at best, investors and firms in Japan are flocking to Myanmar after the recent accession to power of a nominally civilian government, following decades of military rule.

In addition, the Japanese government recently announced plans to write off $3.58 billion in Myanmar debt, a move intended to assist the country in democratization, national reconciliation and socio-economic reform. Japan supported US-led sanctions against the military regime that held power in Myanmar from 1962 to 2011.

The debt cancellation, along with new influx of investment capital, is seen as “an endorsement of the recent political gains and will help sustain the process,” says Jeff Kingston, Director of Asian Studies at Temple University, suggesting that opportunities will only continue to increase in Myanmar.

The inflow of Japan Inc. to Myanmar will be spearheaded by a government-backed development project of the port city of Thilawa, aimed at relieving a transportation bottleneck and establishing a special manufacturing zone.

JAPAN BARS PRO-PYONGYANG SCHOOLS FROM TUITION WAIVER

The Ministry of Education recently revised the government’s tuition waiver program to exclude ten pro-North Korea high schools. The decision reflects the foreign policy of Prime Minister Shinzo Abe, who has adopted a tough stance against North Korea.

The program was launched by the previously-in-power DPJ to provide tuition waivers to students attending foreign schools that follow curricula similar to their Japanese counterparts.

Critics have condemned the government move, calling it “blatant racism” against ethnic minorities, and say they plan to appeal to international organizations such as the UN in an effort to overturn the decision.

Minister of Education Hakubun Shimomura defended the government’s action, saying, “The schools are under the influence of the General Association of Korean Residents in Japan (Chongryon) and [making them eligible for the program] may violate the Basic Law of Education, which stipulates that ‘education shall not be subject to improper control’.”

Japan and North Korea currently have no diplomatic ties, and depend on Chongryon to act as a liaison.

JAPAN BOXING COMMISSION MOVES TO BOOST SPORT’S FLAGGING FORTUNES

Japan has declared its recognition of the World Boxing Organization (WBO), in what is seen as an effort to boost the sport’s flagging fortunes here. The popularity of boxing has dwindled over the last few decades in Japan. With its recognition of the WBO, the Japan Boxing Commission, which for decades had acknowledged the legitimacy of only two major sanctioning bodies, the World Boxing Association (WBA) and World Boxing Council (WBC), also announced plans to recognize the fourth major boxing sanctioning body, the International Boxing Federation (IBF).

The Ring magazine’s Doug Fischer believes the recognition of the WBO and IBF will invigorate boxing in Japan, doubling the number of available titles, and bringing more big fights to the attention of the Japanese public.

EUROPEAN UNION LIFTS BAN ON JAPANESE BEEF

The European Union has announced a decision to lift a ban on imports of Japanese beef, a move that opens up for Japanese beef exporters a market of 500 million potential consumers.

The Japanese government has been eager to get back into European Union markets since 2006, when an outbreak of bovine spongiform encephalopathy (BSE) in Japan prompted a ban. The lift of the ban was imminent before an outbreak of hoof and mouth disease occurred in 2010. Japan has since taken measures to eradicate the disease and has been declared disease-free by the World Organization of Animal Health.

Japan has also announced plans to lift bans on beef from France and the Netherlands. Japan has restricted beef imports from European Union countries since an outbreak of BSE  in 2001.

The removal of the ban will allow much sought after products, such as “Kobe Beef”, to enter the European market. Experts project the high grade beef imports from Japan will see high demand, due to the appreciation of fine foods in the European Union and a growing appreciation of Japanese cuisine.

Finally, a continued positioning of Japan, together with the US, as partners for growth in the wider Asia-Pacific region. This was reflected in numerous bilateral initiatives in areas such as the Internet economy, economic harmonization and clean energy, as well as multilateral collaboration on issues such as intellectual property, healthcare and financial services, through APEC, and perhaps imminently, the Trans-Pacific Partnership. The ACCJ, with US Embassy support, hosted the Asia-Pacific Council of American Chambers in 2012, under Mike’s leadership, and in 2013 we have established the U.S.-Japan Regional Leadership Committee, led by Larry Greenwood and Tom Clark, to further drive these initiatives, which will in the end make both US and Japanese business more competitive both in Japan and throughout the Asia-Pacific region.

So thank you, Ambassador Roos, Susie and Mike for helping us in Achieving Growth Together, 共就成長!

Elsewhere in the magazine, Álvaro Cedeño Molinari, Costa Rica’s ambassador to Japan, imagines Japan signing the world’s first “green partnership agreement” (of course, with Costa Rica, which is perhaps the world’s “greenest” nation), and Second Harvest Japan CEO Charles McJilton explains “NPO economics”, which as it turns out are not that different from “for profit” organization economics.

I hope you enjoy the issue, and as always, feedback and suggestions are very welcome!

Photography by Benjamin Parks

In 2012, the ACCJ for the first time honored two people with its Person of the Year award. US Ambassador John V. Roos and Ms. Susan H. Roos each brought unique skills and abilities with them to Japan – and each of them has made significant contributions to the US-Japan relationship in their own right. The ACCJ Journal spoke with Ambassador and Ms. Roos in late December about the honor, and their time in Japan to date.

By Eriko Watanabe

As the sun set into the Pacific Ocean on May 26, 2009, the San Francisco Giants were well on their way to shutting out the Atlanta Braves, 4-0, behind an eight inning, eight-strikeout performance from ace pitcher Tim Lincecum.

Lincecum would go on to win the National League Cy Young Award that year, but rabid Giants fans Susie and John Roos, who were living in northern California, enjoying successful careers as lawyers, and raising two children, would not get to see as many games as they had hoped.

You see, the day after Lincecum’s win against the Braves, US President Barack Obama nominated John Roos to be Ambassador of the United States to Japan. The Ambassador, Ms. Roos and their children arrived in Japan on August 19, 2009, and he presented his credentials to Emperor Akihito the following day.

Roos came to Tokyo with the full confidence of President Obama, who said, “I placed great importance in the selection of who would represent the United States as Ambassador to Japan. And after careful consideration, I made the determination that the person who I thought could best do this is somebody with superb judgment, somebody with an outstanding intellect, somebody who is a very close friend of mine and a close advisor, somebody who has worked both in the private sector with cutting-edge technologies, but also is somebody who has a deep interest in public service.  And that’s my friend, John Roos. He is somebody who I’m confident is going to be able to help to strengthen both the regional and the global relationship between the United States and Japan. He’s somebody who will be able to advise me directly on issues that may arise and opportunities that may arise in the US-Japanese relationship. He is somebody who is I know going to be working incredibly hard to make sure that he is listening to and understanding the full scope of Japanese concerns.”

Since the President spoke those words nearly four years ago, his confidence has been borne out by the actions of Ambassador Roos during the momentous events – both political and natural – that have taken place in Japan over that time. Roos has worked tirelessly to strengthen the US-Japan relationship, visiting all 47 Japanese prefectures and leading the American response to the terrible disaster of March 11, 2011, as well as co-founding with Ms. Roos the TOMODACHI Initiative, a public-private partnership among the US Embassy, the US-Japan Council in Washington, DC, and dozens of private-sector Japanese and American sponsors and contributors.

Photography by Benjamin Parks

Both the Ambassador and Ms. Roos brought with them to Japan interests and experiences from their California careers. As a labor lawyer with her own practice, specializing in the fields of employment discrimination and sexual harassment, Ms. Roos built strong connections with Japanese women’s organizations across the country, speaking publicly at numerous venues and to diverse audiences on the importance of gender equality, work-life balance, and women in the workforce. One newspaper article called her a “champion” for Japanese women.

“During my time here, I’ve met with a variety of Japanese people, ranging from government officials to professionals, working mothers, artists, and everyday citizens,” she says. “What are perceived as ‘women’s issues’ by society – not just in Japan – are not simply women’s issues at all. Economic issues aside, when women make less than men for the same work, or receive unfair treatment at their jobs, or are forced to choose between having a career and having children, these situations have a harmful effect on families and put a strain on society as a whole.

Ms. Roos continues, “Cultural change is a slow process; it has been ongoing in the United States as well as Japan for decades. It’s also something that no one person or organization can do alone. It takes the work of a great many individuals. However, it has to start somewhere, and I believe each of us can contribute to a better society by spreading these issues and sharing this dialogue with others.”

Her interests also include fostering the arts as a way to bridge two very different nations and cultures, and she has made a profound impact on this aspect of the bilateral relationship. Her signature initiative was transforming the “Art in Embassies” program in Japan, in which works of art are displayed at US diplomatic facilities around the world; under her guidance, the Ambassador’s Residence in Tokyo became a tangible exhibition of established and emerging artists with ties to both countries. She actively sought out works of art that would challenge and motivate visitors to explore the depth of the US-Japan relationship, including a unique bingata kimono from an Okinawan artist who spent time in New York City. Moreover, she contributed to the public diplomacy efforts of the US mission by bringing together Japanese and Americans through fashion and music, including events involving American designer Michael Kors and Japanese pianist Nobuyuki Tsujii.

Ambassador Roos, too, incorporated his Silicon Valley background into his diplomatic post. Seeking to encourage a much-needed impetus for growth in Japan’s economy, he strongly advocated the development of innovation and entrepreneurship, encouraging young people in every corner of Japan to “dream big” and take risks. Instituting an annual “US Ambassador’s Award” for a Japanese entrepreneur with a risk-embracing spirit, he sought to create mentoring relationships between young innovators and established businesspeople.

Ambassador and Ms. Roos lay a memorial wreath in Nagasaki in September, 2010. Image courtesy of US Embassy Tokyo

Roos also will be remembered for his history-making leadership role in US-Japan relations. On August 6, 2010, he became the first US Ambassador to attend the Hiroshima Peace Memorial Ceremony and, two years later, became the first US Ambassador to attend the Nagasaki Peace Memorial Ceremony. These historic visits were not without controversy, as the idea of an American official representative attending the ceremonies was quite sensitive in certain circles on both sides of the Pacific. Roos noted, “I was tremendously honored to attend the ceremonies in Hiroshima and Nagasaki, not only to pay my respects to those who died in World War II, but also to help advance President Obama’s vision of a world without nuclear weapons.”

But the true legacy for both Ambassador and Ms. Roos lies in the way they have worked to strengthen the vital people-to-people ties between Japan and the United States.

Following the tragedies of March 11, 2011, Ambassador Roos led the American mission to support Japan’s response to the multi-dimensional and unprecedented disaster. Twelve days after the Great East Japan Earthquake and tsunami, the Ambassador and Ms. Roos traveled to Ishinomaki in Miyagi Prefecture to meet with people who had lost loved ones and homes at an elementary school that had been converted into an emergency shelter. Roos called the trip one of the most moving experiences of his life, and remembers being overwhelmed as he listened to people’s stories of survival and loss – but also inspired by the tremendous resilience he saw in the people he met.

Since that first visit, both the Ambassador and Ms. Roos have traveled to the Tohoku region more than a dozen times. On one visit to Rikuzentakata, Roos asked Mayor Futoshi Toba how the United States could continue to help the people of the tsunami-devastated region, and the mayor replied: “You can give hope to the young people.” Moved by the mayor’s words, and determined to create a long-lasting bridge to unite the two countries, Ambassador Roos and Ms. Roos co-founded the TOMODACHI Initiative, designed to connect the young people of Japan with the young people of America, and invest in the next generation of leaders of the bilateral relationship. To date, the TOMODACHI Initiative has raised over $15 million to support more than 25 exchange programs in the fields of education, sports, music, the arts, entrepreneurship, and leadership development. Last year, TOMODACHI sent over 500 young Japanese students to the United States, with plans to increase that number in 2013 and beyond.

To advance the initiative, Ambassador Roos and Ms. Roos enlisted the assistance of a wide range of leaders, athletes, and celebrities. One highlight was the involvement of Lady Gaga, who appeared with the Ambassador at a Tokyo press conference in June 2011 and later auctioned a teacup with her lipstick imprint (for $75,000!) to raise funds for a TOMODACHI arts fellowship. On another notable occasion, TOMODACHI partnered with Major League Baseball and the Major League Baseball Players’ Association to completely refurbish a baseball stadium in Ishinomaki that had been damaged in the aftermath of the March 2011 tsunami.

Both Ambassador Roos and Ms. Roos earnestly hope to create a “TOMODACHI Generation” of young people on both sides of the Pacific who are committed to the future of the bilateral relationship. “People tell me that young Japanese aren’t interested in studying overseas, but in my conversations with students throughout Japan, they tell me they’re very, very interested,” Ambassador Roos says. “Those young people represent the future of relations between the United States and Japan.” The tremendous success of the TOMODACHI Initiative thus far suggests that the Ambassador and Ms. Roos have, indeed, laid the foundation for a significantly strengthened US-Japan partnership for the future.

Exactly when this diplomatic “power couple” will finish their tenure in Japan and return to California is a subject on which Ambassador Roos is noncommittal, but he does say, “It has been the honor and the privilege of my life to serve as US Ambassador to Japan, with which the United States has such a strong and important relationship, and to get to know so many wonderful people from all walks of life.”

Ms. Roos adds, “When I arrived in Japan, I was immediately touched by how kind and welcoming people were to me and my family. As time went by and I learned more about the country and its people, I felt drawn further in. Moving to Japan has been a life-changing experience for me. A part of my heart will always be with Japan.”

Photography by Benjamin Parks

Photo courtesy of Tiger Copenhagen

When Tiger Copenhagen opened its first Japanese store in Osaka last July, a queue stretched far down the sidewalk from the shop’s entrance in the trendy neighborhood of Amerika Mura. Those in line couldn’t just show up either. Entrance required a ticket. And sales weren’t just good. The store literally sold out, as eager shoppers snagged the entire stock within days.

The ticket system ended on November 9, but a queue can often still be seen outside, and around 2,000 customers turn up daily. “If you figure everything in, Japan is one of the largest cash cows for Tiger,” says Tiger’s Japan representative director Claus Falsig.

The company’s success is a testament to founder Lennart Lajboschitz’s flexibility and ingenuity, and it was the company’s willingness to take risks that allowed Falsig to embark on the business experiment in Osaka, a location that was largely Falsig’s (meticulously researched) idea.

Yet even Falsig’s thorough research and planning did not permit him to anticipate the frenzied consumer reaction to the store’s opening.

Tiger’s Tale
Tiger’s global success has a surprisingly humble backstory. Founded in 1991, Tiger opened its first retail store in Copenhagen in 1995 and has grown into a one-stop homewares business with 200 stores in 18 countries. Founder Lajboschitz eventually sold 70 percent of the company to a large private Swedish equity firm called EQT that has fueled its rapid expansion, but Tiger started out as an umbrella repair business.
“This meant that business was only good on rainy days,” Falsig laughs. “So Lennart [the founder] began selling sunglasses. When this wasn’t enough for his family, he continued to expand, gradually adding more items to the store’s inventory.”

When the time came to settle on an official name for the company, Lajboschitz again took an atypical approach. When he went on vacation and left his sister-in-law in charge of the original Copenhagen shop, he forgot to tell her the prices for all of the items on sale. When she called to enquire about it, he told her to charge 10 kroner (roughly ¥150) for every item. Remarking on the similarities between the Danish word for “tiger” and “tier”, the Danish slang term for a 10 kroner coin, Lennart had settled on a name.
Over time, the company continued to refine its strategy, and slowly evolved into a brand offering simple, colorful products, from homewares and toys to stationary and accessories, priced with the average consumer’s real concerns – namely, value – in mind.
Ideal habitat
With a population of around 25 million, Scandinavia is comprised of Denmark, Norway and Sweden, with Finland and Iceland rounding out the Nordic region, which in terms of soft power, punches well above its weight.

But until around two years ago, Tiger was Euro-centric. It was not until Falsig approached Lajboschitz with a wild idea that the company began to explore beyond its original terrain, ultimately leading to Osaka. Falsig’s fascination with Japan began with four backpacking trips he took from northern Honshu southward to Kagoshima.

Following these trips, he was hooked. The food, the people, the scenery, the culture – it all added up for him. Somehow, he had to make the move to Japan. “Tiger wasn’t really planning to open in Japan,” he said. “It was a side project. I wanted to go to Japan. When I pitched the idea, they said okay, go.”
At that point, Falsig had been working at Tiger for five years. As fate would have it, he arrived in Osaka six days after the March 2011 earthquake, and settled in Kyoto, where he began a rigorous course of studying Japanese and conducting market research.

As he pored over figures and mapped out an action plan, he began to see that the brand’s bright colors and subtly kawaii products were an ideal fit for Osaka’s consumer market – especially among its young professional women.

Moreover, the store’s emphasis on value aligns with the city’s mercantile roots and money-savvy residents. After all, a traditional greeting in Osaka is the archaic moukarimakka (“Are you making any money?”).
After sending his initial report to Copenhagen, the response was unequivocal: “They told me to open a shop as fast as I could,” Falsig recalls. The choice of location was right on target. “Osaka people are more conscientious about their spending and like bright colors more than Tokyoites.”

“The atmosphere of the store is light and fun,” adds Saya Arai, a marketing specialist in Tiger’s Osaka office. Music is played through an iPod and warm lighting brings attention to the items on sale. Shelves are low, giving a view across the store of the product range, which runs from hot sellers like ¥100 paper napkins to the ¥300 faux luxury plastic bags, featuring images of designer bags on white plastic.

Contrary to popular wisdom, opening in Osaka actually created more buzz for Tiger, according to Falsig. To date, only about 40 companies have made Kansai their point of entry to Japan. “This makes it much easier to stand out in Osaka,” he said.

Redefining value
In some ways, Tiger ended up making its move to Japan at just the right time. One of the biggest trends at play in its success is Japanese consumers’ decreasing desire to shell out hard-earned yen on designer goods. As Falsig sees it, “People are less convinced that things are worth their price, and have realized that price alone doesn’t reflect quality.”

An extreme example of wallet-gouging can be seen in the case of perfume. “The fragrant liquid itself costs about the same as beer to produce. The same goes for its packaging. But it sells for ¥10,000,” Falsig says.

By selling quality goods for a fair price, Tiger has flipped the profit model of big-name department stores on its head. “We are selling items for what we think is reasonable,” Falsig says. “This mindset that prices should be bumped up just because it’s Japan is totally wrong.”

Tiger’s items begin at ¥100 and go up to around ¥2,000, though the average price is ¥300-400. While the store makes slightly less per ¥100 than in some of Tiger’s other locations, Japan’s close proximity to about 400 suppliers spread across Asia has slashed logistics costs for the Osaka shop.

In a world with infinite choice, “to sell something it has to be unique,” Falsig says. “A cup is a cup. If you don’t make a cup unique – by having different price structure or good design – then why should someone buy a cup from you instead of a competitor?”

Tiger has discovered how to sell its uniqueness to Japan and plans to replicate the formula elsewhere. Within the next few years, the company plans to expand in Japan and leap to elsewhere in Asia – China being a huge potential market. These moves will likely prove exciting for the company as well.
“Most design an airplane first, then fly it,” he says. “We’re designing it as we fly.”

Roberto De Vido & Louise Rouse

How are your strategic initiatives going? If you’re like most managers I spoke to for this month’s Ax, there’s more than a hole or two to fill.

On January 25, I was invited to speak to the International Academy of Strategic Management (IASM) on the topic “Developing Global Leaders in Japan”. The IASM was established six years ago, and on this winter evening, 50 academics and practitioners gathered for their first-ever all-English session. To begin this year, the IASM leadership decided to live up to their name by holding their meetings in English.

Dr. Rémy Mangnier-Watanabe from Tsukuba University emceed the event, and Dr. Tadahiko Kawai, professor from the Chuo University School of Strategic Management, focused everyone on the task at hand. Among other goals, they shared the purpose of the Academy and of the evening – to raise the level of strategic thinking in Japan.

After a brief self-introduction, responding to Dr. Nori Furuya’s kind introduction, I said that the reason Japan lacks strategic leaders is that, when it comes to strategy here: Most leaders in Japan don’t CARE.

I thought this would generate howls of protest, forgetting for a moment that even at the IASM, audiences in Japan don’t howl. But what I saw was more worrisome: nods of agreement … and that was before sharing what I really meant by “CARE” – that in Japan, and elsewhere, there’s a lack of:

• A Common understanding of strategy
• Assertiveness
• Resolve
• Energy

Going through the four “lacking” elements, and sharing examples of each, again receiving for the most part general agreement from an up-to-this-point passive audience. Even after sharing a tale regarding Japanese lack of assertiveness I first noticed while teaching business courses in San Diego, this audience too remained (politely for them, passive for me) silent.

In order to increase the energy level, and likelihood of discussion, we did an exercise. I asked each person to write down the first five words that come to mind when seeing the word strategy. Now, most of the people in the room had taken courses in strategy, and many had taught courses in strategy. I then asked the audience to form groups of four or five and share their answers – just the five words.

Given the audience, I wasn’t surprised by what happened next. All the groups engaged in animated discussions, far beyond just sharing the five words. Ask people to write and then discuss something they’re passionate about and you can expect lively discussions, especially in small groups.

Then came the first of many “aha” moments. I asked the audience, “In how many groups did everyone write down the same five words?” As you might guess, no hands were raised. I mean, it would be unlikely to get agreement on 20 out of 20 or 25 out of 25 words. “OK, how about four of the same words?” No hands.

“Three?” “Two?” “OK, how about one? In how many groups did you all share at least one common word that came to mind when you thought of strategy?” Answer? Zero. One or two groups said that two of their four or five members had shared the same word and one group had three members who shared a common word.

Common understandings are not so common
Now we all could see, clearly, that there is no “Common Understanding of Strategy”. Why? Part of the problem stems from an answer that one participant, Professor Philippe Orsini, had written when he first saw the word strategy: “Abstract.” Strategy is an abstract noun. The only way we can possibly understand what strategy means is by connecting the word to something else we already know. And those connections depend on our unique personal histories. The mystery, then, isn’t “Why is there a lack of common understanding of strategy?” Rather, it’s “How do we have anything even resembling good communication about such an abstract concept?”

For in that room of 50 academics and practitioners, all of whom were very familiar with the word strategy, there were more than 200 different words conjured up – and many of them contradictory (for example, one person wrote “happy” and another “struggle”). For some, the word is positive; for others negative; and still others it’s neutral. Some had a mixture of both positive and negative feelings associated with strategy. And as with any other topic, the more experts you get in a room, the more disagreement you may find as they wordsmith their way through conscious and unconscious attempts to influence others.

Why start with a word?
That’s not to say we should avoid the discussion. Quite the opposite. But you can only begin to create a strategy for developing global leaders after you share a common definition of all the terms in that sentence. And good ol’ Noah Webster, while a very smart man, won’t give you the answer. Everyone needs to know what is meant in your organization by “strategy”. And then what’s meant by “developing”, “global”, and “leaders”. Some will respond, “But we all know what these words mean.” My experience and the exercise both show that while most of us know what we mean with the words we use, we’re sadly mistaken if we think others are receiving the same message we think we’re sending.

Prior to strategy, purpose
The next two questions produced more “ahas”. “Write down the mission, or purpose of your organization.” Only about 1/4 of the audience could do this quickly, and over half of that 25 percent wrote something like “satisfy customers” or “make a profit”, both of which are results of successfully executing a strategy in support of a mission, not the mission itself. If that wasn’t bad enough, then came this: “What percentage of the people in your organization would write the mission or purpose using the same words you did above?” Knowing smiles and some laughter. Very few had written even double-digits. Conclusion? We weren’t yet ready to talk about strategy.

For there’s no real point in talking about a strategy for developing global leaders, or for increasing women in leadership or indeed for anything else until your people share a clear understanding of your organization’s purpose – at the highest level and then down to whatever team you happen to be working with.
Now before you think these answers reflect poorly on the audience (“Judge not lest ye be judged.”), I’ve seen similar responses with just about every client I’ve worked with. You might want to check out how your own team would do with these simple yet provocative exercises. Do you all share a common understanding of your mission? Does everyone share a common definition of the abstract concept (be it strategy, development, growth or whatever) that you’re working on? Are you sure?

Three components of a successful strategy
Toward the end of my IASM appearance, I was asked about my favorite elements of a successful strategy. I shared three.

First, know what you want.

Yes, this is obvious, but so many companies or divisions or departments here in Japan have not defined what they want to create. And remember, as Dave Logan and John King, authors of Tribal Leadership, say, “Culture eats strategy for lunch.” So if you have not recently answered the questions: “What kind of culture are we creating?”; “What’s important to us?”; and “What will define our success?”; you might want to prioritize that discussion above any discussion of strategy.

Second, ask better questions. One client shared that his former country manager’s goal was to create a “strategy to promote more women to senior positions”. My client, a strategic-thinking HR executive, asked: what if rather than—or in addition to—programs designed for women, the organization were to focus on educating the men who held the leadership positions? What if the organization designed programs to raise the men’s awareness of potential biases as well as changes they could make that would open themselves to promoting more women?

Third, strategy, if it is to be embraced and executed faithfully, needs to be self-defined. Too many firms rely on outsiders to create, rather than to facilitate internal strategic discussions. Can “experts at strategy” really help you with your strategy? Perhaps. But how often have you been left with an expensive desk plan and more confusion than execution?

So when the emcee asked: “If you could boil down the strategy of developing global leaders to one element, what would it be?” That one element is … that there is no one element. Just as the purpose of an organization needs to be self-defined, so does your strategy.

Part of the reason I’m so excited to be involved in the ACCJ this year is that we have a clear purpose: “共就成長 | Achieving Growth Together”. By printing this credo on business cards, and sharing it at leadership and committee meetings, everyone knows the strategic direction for the Chamber this year. All our strategic initiatives will flow from a shared commitment to “achieving growth together”. And we at the ACCJ do CARE!

Illustration by Louise Rouse

Prime Minister Abe and his LDP deserve a lot of credit. Just as Japan appeared to be slipping off towards global political irrelevance, Abe’s landslide victory managed to re-engage Japan in the global political and economic debate. Whatever your politics, you cannot accuse Abe’s LDP of lack of ambition: yes to economic growth, yes to constitutional revision, yes to strong top-down leadership. Make no mistake – Abe wants a strong Japan, because only a strong Japan can be a contender on the global scale.

My Japanese friends tell me Japan had one clear goal after the war – to catch up to the American standard of living. They agree the nation was extremely proud to have achieved this, but they also lament that after the goal was hit, there has been a void – no clear goal, lots of little achievements, but nothing really standing out as a unifying theme to be proud of as a nation.

Indeed, amongst my younger friends it almost works towards the opposite extreme. They worry that Japan has become nothing but a “negative example” to the world – stagnation, deflation, record debt, record suicide rate, and a downward spiral of national fatalism and decline. While the baby boomers were able to focus on and be proud of their economic catch-up, the younger generation has recorded no comparable achievement.

As many of you may know, I am from Germany. Much has been made of the comparison between Japan and Germany. In economic terms there is great similarity with both countries strongly focused on catching up to America as well as driving to perfect manufacturing industries; but the more interesting comparison is in post-war history and intellectual development. Indeed, a sharp contrast emerges very quickly: as soon as the second world war was over, right from the outset, the German elite focused on going beyond mere economic goals.

They were very much ashamed of ther fathers and grandfathers and vowed to design a post-war system that made a future war impossible. Thus the foundations of the European Union were laid, initially with the coal and steel union between Germany and France. The German post-war elite set a goal of integrating Europe. This goal was achieved, with the Germans and other Europeans giving up their own national currencies.
The second goal the Germans set for themselves came in the early 1960s, when the division between East and West Germany was set in stone by the building of the Berlin Wall in 1961. Again, the elite vowed to work towards unification – a clear national goal that was achieved eventually. It is something that Germans of all ages are very proud of.

The elite set goals, but what about the people, particularly the younger generation? Both Germany and Japan share a powerful “counter revolution” experience. Indeed, the student revolts in both Japan and Germany were some of the most energetic and violent of all that swept the world in the late 1960s/early 1970s. In both countries, the post-war generation initially showed its leadership ambition by organizing radical and extreme domestic terrorism coming out of the student revolts.

But in Japan, nothing ever came of this – the terrorists were crushed and the student leaders basically got absorbed back into the mainstream of Japan’s political economy. In contrast, German student leaders got organized and developed clear strategies for trying to change Germany’s political economy using democratic institutions. They seized on the developing debate on ecology and the environment and set up the Green Party. Importantly, this Green Party became the rising star of German democratic politics in the 1980s, and by the end of that decade, the Greens turned into the de-facto “king maker” coalition partner for the Social Democratic Party.

In sad contrast, Japan’s student revolt basically fizzled into nothingness and created no concrete democratic political dynamism or institution, Germany’s post-war boomer generation built its own political force and institution. Their goal was to change Germany’s political economy, promote “green” policies, and do so in the democratic (rather than terrorist) way. In doing so, they managed to make politics attractive and relevant for the younger generation. In contrast, Japan’s political apathy amongst the young may very well be rooted in the unwillingness and inability of the “baby boomers” to channel the energy of the student revolts towards something constructive in Japan’s political economy.

Here lies the real challenge for Prime Minister Abe: top-down leadership to revitalize the economy and end deflation is a good start, but clearly the real target must be to inspire the young next generation of Japanese to dare to dream and be ambitious. Make no mistake – Japan deserves a goal that goes beyond mere economics.

Illustration by Yohei Takahashi

In January, Japan’s Ministry of Defense announced plans to add an additional ¥180.5 billion to this year’s defense budget to buy missiles, fighter jets, and helicopters. The allocation, partly aimed at improving air surveillance capabilities, is an addition to the previously published defense budget for 2012-2013 that one government official described as an “emergency economic measure.” The government is aiming to spend 70-80 percent of the money on contracts with domestic firms.

A Ministry of Defense spokesman said the funds were needed “to prepare for the changing security environment surrounding Japan.” Among the security concerns facing Japan are island disputes with China and South Korea, and North Korean satellite launches and missile tests.

Prime Minister Pressures Bank of Japan in Stimulus Package Announcement

On January 11, the Japanese cabinet approved a new stimulus package of more than ¥20 trillion, which it hopes will boost the economy by two percent and create 600,000 new jobs. The announced stimulus focuses heavily on infrastructure development, as well as investment in reconstruction projects in earthquake- and tsunami-affected northeastern Japan.

Since Prime Minister Shinzo Abe took office in late December, the LDP-led government has made economic growth a top priority. In addition to jobs creation, the government has pledged to weaken the yen, a move that would provide a boost to exporters, and to tackle deflation, which has been an obstacle to economic growth for many years.

Critics observed that Japan has rolled out a number of stimulus packages over the years without achieving much, and that in any event, more significant reform will be required to effect long-term change.

Prime Minister Abe has said he expects the Bank of Japan to support government efforts to create jobs by implementing “a bold monetary policy”. Abe noted that the U.S. Federal Reserve has pledged to keep interest rates low until the U.S. unemployment rate falls to around 6.5 percent. “We would like the BoJ to take responsibility for the real economy,” Abe told the Nikkei newspaper. “I think that means jobs. I would like the BoJ to think about maximizing jobs.”

Cerberus To Reduce Stake in Aozora Bank

Cerberus Capital Management L.P. plans to raise $1.7 billion by selling most of its stake in Aozora Bank Ltd. in a global offering. Cerberus has been the controlling shareholder in the mid-sized Aozora Bank for nearly a decade, but says it wants to reduce its stake to about seven percent. Cerberus is in the process of reducing exposure to Japan due to increasingly fewer distressed investment opportunities for foreign funds.

To lower its stake, Cerberus plans to sell 275 million shares in Japan and another 275 million shares overseas. It said it also may sell an additional 41.25 million shares if demand is high. The investment company plans to sell its holdings for ¥231 per share. Citigroup Inc., Morgan Stanley MUFG Securities, and Mitsubishi UFJ Financial Group will act as coordinators for the sale.

Cerberus purchased a minority stake in Aozora in 2000, and became the majority shareholder in 2003 when Softbank sold its 49 percent stake in the bank.

Illustration by Yohei Takahashi

In December, officials from Japan’s Ministry of the Environment (MoE) announced that two of the companies contracted to help with the decontamination efforts in Fukushima had allowed radioactive water to run into storm drains.

Taisei Corp. and Maeda Corp. were working with the government on a joint venture to wash radioactive substances off of buildings, but both companies allowed water runoff to flow into storm drains in the village of Iitate and the town of Naraha.

An MoE task force ordered the contractors to reexamine their practices for disposing of contaminated water. Work continued in some parts of Fukushima, but was temporarily stopped in others because of a lack storage space for tainted runoff.

In mid-December, news agency Reuters reported that of the 21 contracts awarded to develop technologies that will facilitate the decommissioning of the damaged Fukushima nuclear reactors, none went to non-Japanese firms. Some foreign firms acquired experience in the cleanup efforts that followed the Three Mile Island and Chernobyl nuclear reactor accidents, and many more have participated in nuclear reactor decommissioning in the United States and Europe.

In the Reuters report, Jeffrey Merrifield, senior vice president of U.S. nuclear engineering firm Shaw Group Inc.’s power division, said, “There seems to be a real desire to rely on Japanese contractors to do this work. You can try and do it all yourself, which takes a lot more time without benefit of prior experience, making a lot of mistakes along the way.”

The report also quoted an executive with a Japanese nuclear energy firm citing reasons for awarding the contracts to domestic companies: “Foreign firms simply sell their product without providing back-up services or maintenance,” said the executive. “We can’t sign a contract with a company that we can’t get in touch with immediately and one that will rush to deal with any problems right away.”

Mitsui Buys New York Luxury Apparel Retailer Paul Stuart

On December 28, Mitsui & Co. Ltd. announced its acquisition of luxury apparel and accessory retailer Paul Stuart. Mitsui was able to reach an agreement with the founding families and purchase all shares to become the 100 percent owner of the company.

Paul Stuart got its start in New York City in 1938 on Madison Avenue, and Mitsui began importing the company’s products to Japan in 1975, becoming the brand’s exclusive licensee for the Japanese market in 1991. Last year, Japanese sales of Paul Stuart products were a reported $133 million, and Mitsui says it expects to increase Japan revenue to $231 million within two years.

There are two Paul Stuart stores in Tokyo, and about one hundred nationwide, as well as online shopping outlets.

World’s Biggest Curry Chain is … Japanese

Ichibanya Co., the owner of the CoCo Ichibanya, was recognized in January by Guinness World Records as the world’s largest curry chain. Based in Kazunomiya, Aichi Prefecture, CoCo Ichi opened its first shop in Aichi in 1978 and has grown to more than 1,300 franchises, including 100 restaurants overseas. By the mid-90s, CoCo Ichi achieved its goal of having one restaurant in every prefecture in Japan, as well as one overseas – in Hawaii.

Illustration by Yohei Takahashi

Following its recent purchase of a 70 percent stake in US mobile phone carrier Sprint Nextel, Japan’s SoftBank is offering employees a ¥1 million bonus if they can score at least 900 points on the international Test of English for International Communication (TOEIC), which has a maximum score of 990 points. Employees who score between 800-899 points will earn bonuses of ¥300,000, and those scoring lower will be offered language training support.

SoftBank reports that around 800 of its Japanese employees have already recorded TOIEC scores in excess of 800, but says it hopes at least 3,000 will achieve the mark by the end of 2015, when the bonus scheme is set to expire.

SoftBank’s move follows the widely reported announcement in 2010 by Rakuten founder and CEO Hiroshi Mikitani that English would become the official language of his online commerce company. Last year, Mikitani admitted progress had not come as easily as he would have liked, in large part because the company had not offered as much language learning support to employees as it might have. Since then, the company instituted free English language classes, and offers time off for English language study.

In April of last year, Rakuten said 79 percent of documents, meetings and internal communications were conducted in English, an increase from 65 percent a year earlier. And in July, the company went a step further, requiring employees to use English in all internal presentations, documents and memos.

Japan to Finally Sign Child Abduction Treaty … but When?

In late January, Japanese Foreign Minister Fumio Kishida announced that Japan would sign the 1980 Hague Convention on the Civil Aspects of International Child Abduction, which requires the return of children to their country of origin if they are wrongfully taken overseas by one of their parents. The announcement extended a commitment to signing the treaty that had been made by the previous Democratic Party of Japan-led government.

Japanese courts almost never award custody of children to foreign parents, and Japanese law does not make provision for the award of joint custody and visitation. Japan is the only G7 country not to have signed the Hague Convention on Child Abduction, which requires signatory governments to return children to their “habitual residence” when children are illegally removed or retained from that residence in violation of another party’s, generally the other parent’s, custodial rights.

At the moment, however, Japanese law is not in alignment with Hague Convention requirements, and new legislation will have to be enacted. US Secretary of State Hillary Clinton said, in a news conference with Kishida, that she hoped the Diet would pass the necessary legislation during its next ordinary session.
But while Chief Cabinet Secretary Yoshihide Suga has backed the prime minister’s commitment, saying Japan should sign the treaty “at an early stage”, Justice Minister Sadakazu Tanigaki has taken the opposite view, saying the Diet has more important issues to consider and that the proposed legislation will have to be reviewed.

Illustration by Louise Rouse, After Yusaku Kamekura

I have always liked drinking Tokyo tap water, but it doesn’t taste any more like Kool-Aid now than it did before Abe fever took hold of the stock and real estate markets last October.

Yes, it is true that the Bank of Japan has doubled its inflation target to two percent, but nothing I have seen from the government or the central bank so far has convinced me that deflation is about to end. We are still in the honeymoon period of “Abenomics”, so given the number of domestic and international investors excited about Japan at the moment, the stock and property markets could continue to run on fumes for a few more months. At some point, though, even the most gullible investors will start looking for a new justification to keep buying.

I see little reason why pumping more money into Japanese banks will increase loan demand or loosen lending criteria. Although new Class A office supply in 2013 will be lower than average, there are so many large-scale projects under development that many tenants will be able to put off decisions to move until they are offered better deals. I have heard nothing from Prime Minister Abe on how he intends to deal with the aging and falling population, so with few foreign companies looking to set up regional headquarters or manufacturing operations in Japan, underlying demand remains stagnant.

If the stock and real estate markets can just hang on until the fall, there is something that could actually keep these markets going for years to come—the 2020 Summer Olympics.  Tokyo is competing against Madrid and Istanbul for hosting rights and the International Olympic Committee will decide the winner in September. The vast majority of the 39 Olympic venues would be located in central Tokyo, and many of these would be development projects large enough to keep general contractors and manufacturers busy and happy for quite a while.

The Olympic Stadium alone, an 80,000-seat venue, which would be built on the site of the 1964 Olympic Stadium, would be a huge economic stimulus, and is scheduled for completion in 2019. According to Around the Rings, an Internet site on the business of the Olympics, Tokyo’s bid currently ranks slightly ahead of Madrid’s and Istanbul’s, but weak public support remains an issue.

Regardless of the outcome of Tokyo’s 2020 Olympic bid, and how one may view Japan’s long-term economic prospects, there are always investors ready to buy cheaply. A handful of recent market moves shows that value investors who have placed long bets on the idea that Japanese shareholders will one day wake up and realize their assets are undervalued are beginning to see their dreams come true.

Japan’s largest movie studio, Toho Co. (TSE: 9602), launched a takeover bid (TOB) on January 9 for its majority-owned subsidiary Toho Real Estate Co. (TSE: 8833) at a 33 percent premium that many investors believe significantly undervalues the company’s prime central Tokyo real estate assets. In contrast, when Sankei Building was bought out by its majority-owning parent company a year ago, the premium was 139 percent. As of the time I write this column in late January, the market price of Toho Real Estate has been hovering above the TOB price, so clearly investors are expecting a higher offer.

In another fascinating takeover fight that shows some things have changed in Japan as a result of foreign investment, PGM Holdings K.K. (TSE: 2466) admitted defeat after its TOB for Accordia Golf Co. (TSE: 2131) failed to pass the minimum threshold of 20percent. If not for the fact that both companies were originally listed by foreign companies, which both divested their holdings within the past several years, it is unlikely that there would have been enough floating shares to justify a takeover attempt. The fascinating bit is that while this looks like a value-oriented real estate play, the current key shareholders of both golf course operators are in the pachinko business, and some market observers say the takeover attempt had little to do with achieving efficiencies in the golf business and more to do with unresolved disputes in the pachinko industry.

With speculative interest for real estate rapidly growing, I expect more takeover offers this year, both for operating companies as well as J-REITs, where at least one big deal may already be in the works.

Full disclosure: my company is a small shareholder of Toho Real Estate.

Success is usually thought to be built on a combination of personal attributes such as intelligence, technical knowledge, street smarts, hard-won experience (built on failures from pushing too hard), guts and tenacity. Universities offer a vast array of academic knowledge, information, insights, concepts, theories, technology and debate. Company education is usually focused on producing detailed knowledge about products and processes, including the ability to navigate the organizational labyrinth.

Tick the boxes on all of these and you are set for a rapid climb up the corporate ladder. Once the organization recognizes your talent, however, it will start to expect leverage from your personal abilities. Leverage means not just what you can individually contribute, but your capacity to get contributions from others placed in your charge. As the old saw goes: “All of our troubles in life walk on two legs and talk back.” Welcome to management!

And yet, even if you are a powerhouse, a total workaholic, pounding out 100 hours every week, your five staff members working 40 hours a week are doing twice as much as you are. [By the way, if you are putting in 100 hours a week, we need to talk!]

In your promotion to management, you were recognized for your personal qualities, which quite frankly, you are depressed to discover are not universal within your team. Armed with this knowledge, you might become a Theory X manager, who sees the glass as very much half empty. You become a legend at finding faults and shortcomings within your team. You perceive them as useless. They can’t be trusted, they are lazy, they make mistakes all the time, they don’t take responsibility and they lack the required commitment.
Or you might become a Theory Y manager, who sees the glass as half full. As a Theory Y manager, you see your people as decent, capable, honest, doing their best and wanting to succeed.

Douglas McGregor, a professor at MIT’s Sloan School of Management, developed the Theory X and Theory Y models of workplace motivation, which conclude that the way you see your team influences what the team becomes, i.e. it’s attitudes, not attributes, that matter most. Uh oh!

This means we really have to be more careful about our own attitude than worried about our staff members’ attitudes. We should be walking around looking for the ten things people are doing well rather than the one thing they are not doing well. Leveraging strengths is more effective than trying to minimize weaknesses.
“Gotcha,” however, is a popular pursuit for bosses. They really enjoy finding fault and spending their time whining into their beers about what a pitiful deck they have been dealt back at the office. Could they themselves be part of the problem? Impossible, they believe. Why, they are in this position of leadership, accountability and responsibility because they are superior! If this is you, by the way, get ready for 100-hour work weeks. You will have no leverage and will have to do all the work. Delegation will be but a distant dream.

Here is a simple hint for how to look for the good. When wandering around, tell your team the things you think they are doing well, and ask them what they think they could do better. Here’s another idea. Make your team members happy about doing the things you suggest. Sounds simple, but how does that actually work?

Normally people think they are busy enough already, thank you very much, or they are deep in their comfort zones with the way things are done at the moment.  Long live the status quo. Usually the boss’s suggestion means more work or doing things differently – and neither are particularly attractive for the average employee.

So how do we get people to engage? Instead of giving orders we can ask questions. The self-discovery process that results when employees look for answers leads to greater ownership and commitment to the execution of the task.

We can break tasks down to smaller pieces (“Eating the elephant one bite at a time.”) and remember to “praise the slightest improvement and praise every improvement” (Dale Carnegie Principle #27). It’s all very well to wait until the completion of a task to tell people they did a good job, but what effect might we have on the outcome if we recognize and appreciate their efforts from the start?

We can follow Theory Y and assume our people are competent, serious and capable, and treat them and communicate with them accordingly (Dale Carnegie Principle #28). Given raised expectations, many people will rise to meet them.

We can also acknowledge our own mistakes before criticizing others. If we reflect that we are asking people to step out of their comfort zones to do new things or do things in new ways, how smart is it to whack them whenever they make mistakes? There are always going to be differences in performance between doing something well-practiced and doing something new. That is the messy process of innovation.

We are all the embodiment of our own mistakes.  We have all gained our work and life experience by having been able to discern what works and what doesn’t, mainly by finding out the hard way. We have to appreciate that our own teams can’t be expected to be perfect at the beginning. Shock, horror—they will be just like we were at their level or stage! So we should share the mistakes we have made to show that we understand the learning process, and are committed to improving as a team. We can then plumb the depths of what was good and explore what we need to do better.

And actually, how we handle mistakes is a keenly watched spectator activity. We are all expert “boss watchers”. We can discern the slightest nuance in tone, body language, mood and energy. Public hangings were a popular pastime once, but we have moved on. Some managers missed that email – publicly humiliating staff members over shortcomings is guaranteed to kill their engagement, as well as that of their colleagues. These “hangman” managers are usually Theory X types who have become expert fault finders rather than “good finders”. They forget everyone is watching!

Once upon a time, the idea was “praise in public, punish in private”. But to complicate things, not everyone appreciates being praised publicly. This is especially the case here in Japan, where everyone learns early that ”the nail that sticks out gets hammered down”. Nothing like a gushing boss, telling the team how great you are, to make you stick out. Japanese employees have learned that this breeds jealousy, complaining behind your back and possibly retribution, all of which are best avoided. A client brought in our training, and one of the younger guys got with it and really started to perform. Two of his senpai took him out the back and gave him a belting because he was making them look bad. Urban myth? No it happened, a good reminder that we all should take a good look at our own behavior and possible consequences!

Bosses need to be smarter – adopting a “one size fits all” approach to any aspect of business is likely to limit upside, and can very likely have negative consequences as well. In motivating employees, it’s worth considering that some want public recognition and others want to hide – the boss’s job is to recognize who wants what and to deliver that (where appropriate). If I were to suddenly ask you about what motivates your staff members, would you know the answers? If not, maybe it’s time to get to know your people better!
Being smart is not enough. We have to be “people smart” and that is a learned skill available to all, regardless of rank or stage. Congratulations on becoming smarter!

This year we can throw the full weight of the most professional and powerful American chamber anywhere overseas behind our Tokyo friends. A number of other foreign chambers in Japan are also joining the effort and we’d like to encourage any of you who might have ideas or contacts that would be helpful to get in touch with the 2020 Tokyo Olympics Task Force led by Jonathan Kushner and David Wouters.

We welcome any creative ideas for events or media outreach you may have. You may recall that during the previous bid competition one of the reasons given for Tokyo not making the cut was that Tokyoites’ enthusiasm for hosting the Olympics wasn’t up to the level of its competitor cities. We’ll be doing our best to make sure that’s not the case this time around!

Speaking of competition, we are working hard to convince the new Abe administration that the Japanese government’s growth strategy marathon should be a point-to-point effort rather than one that involves running innumerable laps around the past policy track.

The ACCJ is very positive about the prospects for renewed growth in the Japanese economy and doing everything we can to encourage that growth is a primary theme of President Larry Bates’s program for 2013.

The independent research by Professor Fukao of Hitotsubashi University and Professor Kwon of Nihon University that served as the basis of the ACCJ’s Growth Strategy White Paper shows that foreign-held companies and newly established firms were the only two groups in Japan that consistently increased employment on a net basis between 1996 and 2006. This proves that not everyone got lost during the lost decades and that many ACCJ member companies were running in the lead pack. And by adopting growth strategy policies that harness entrepreneurship, increase foreign direct investment, reward innovation and increase transparency, we are confident that more companies, including our Japanese competitors and colleagues, will be back in the race.

In addition to looking at the study by Fukao and Kim and referring to the recommendations in the Growth Strategy White Paper and the updates our members – especially Nick Benes and Kumi Sato – are putting forward, I would also ask the Abe administration to look carefully at the work done by Arimori, Takahashi and Noguchi.

Students of Olympic marathon running may remember that Yuko Arimori won marathon silver in Barcelona in 1992 and silver in Atlanta in 1996. Naoko Takahashi won gold in Sydney in 2000, and Mizuki Noguchi won gold in Athens in 2004. If Japan is going to stand solidly on the economic growth podium by the time the Olympic flame is lit in Tokyo in 2020, Japan is going to need a strong women’s team.

If you’re searching for a good training program, I recommend you take a look at what the executive marathoners are doing in our Women in Business committees in Tokyo, Chubu and Kansai.

pbSmartLocker allows package recipients to receive notifications of deliveries via smartphone.

Founded in 1920, Pitney Bowes is best known for its postage meters. Worldwide, it serves around two million postage meter customers, and is now one of the USA’s biggest business software companies, as well as a leading global provider of customer communication technologies.

Pitney Bowes products and services allow businesses to communicate more effectively and securely, helping customers build long-term relationships and drive profitable growth.
Software technologies help businesses to streamline addressing systems, maximize cost savings on postal discounts and develop sophisticated customer marketing models, but some of Pitney Bowes’ most exciting technologies originate from its core business, the postage meter.

Information security

A postage meter is a desktop office machine that prints red stamps on letters and packages, saving employees from having to lick postage stamps, right? On the face of it, yes. But if it were that simple, postal services would have a problem: postage meter owners could print as much postage as they wanted.

To allow postal services to track – and invoice – customer postage use, postage meters incorporate sophisticated encryption technology that allows authorities to confirm that the transmission of letters and packages is being paid for. Pitney Bowes owns many patents in the area of data encryption, dating back to the middle of the 20th century.
In fact, Pitney Bowes encryption technologies are now used to print all sorts of secure documents. With fraud estimated to cost businesses and governments an estimated US$7 trillion annually, information security is a critically important aspect of data communications.

Large volumes of data require a reliable authentication process – pbSecure™

Organizations deal with large quantities of information requiring secure handling: financial accounts, brand-protected products, invoices, credit card receipts, identity cards, resumes and educational certificates. Unless its origin and legitimacy is verified, this information poses a potential threat to the security of operations and to the organization’s reputation. Manual verification is time-consuming, costly and potentially unreliable. Pitney Bowes’s pbSecure™ service works as an evidencing solution to address these concerns. It provides proof that important documents or goods have been genuinely issued, significantly reducing time and effort required for verification.

Benefits
Secures documents at the point of origin with a pbSecure™ code using proven Pitney Bowes cryptography/encryption technology

• ■ Instantly verifies information offline or online via cloud database
• ■ Lowers costs by eliminating manual verification, special paper, watermarks, or printers
• ■ Improves process controls and risk management by permitting document/information creation monitoring
• ■ Mitigates legal consequences that might result from fraudulent information having been accepted as legitimate

“pbSecure has different applications in different markets,” says Glynn Brasington, President of Pitney Bowes Japan. “We see pbSecure as very useful for brand protection for parts component manufacturers so they can distinguish authentic products from counterfeits. In the airline industry, for example, this quality control is essential for safety. In the education and employment areas, pbSecure is already in use in India, where employees can verify the authenticity of degree and vocational qualifications.  Additional applications are in the issuance of verifiable tax receipts such as road tax stickers, and secure insurance and delivery of prescription medications.”

Growth in Internet shopping boosts parcel and packet volumes – pbSmartLocker™

The process of person-to-person package delivery and collection can be inconvenient and time-consuming. Unsuccessful collections can disrupt the delivery’s chain-of-custody, resulting in costly re-deliveries. For large corporations with mailrooms handling high volumes of deliveries on a daily basis, manual logging for delivery accountability requires additional resources and time. In addition, packages and other important assets can get lost in the process.

Pitney Bowes has a simple answer to these problems. pbSmartLocker™ is an electronic locker system that securely stores deliveries for easy retrieval. And with dynamic pickup locations, deliveries can be successful the first time around.

Benefits

• ■ Increases first-time delivery rates with convenient 24/7, 365-day access for package retrieval
• ■ Automates “last mile” of delivery to intended recipients, saving time and labor
• ■ Ensures chain-of-custody with real-time email or SMS to intended recipients upon package delivery
• ■ Option for multiple delivery locations improves cost-effectiveness
• ■ Monitors package release and retrieval for clear auditing and reporting

Enhances security by only allowing authorized personnel to place packages into lockers
pbSmartLocker™ is ideally suited for use by organizations in the financial, medical, pharmaceutical, government, higher education and manufacturing  sectors, with chain-of-custody requirements, compliance issues or sensitive materials; postal/courier services that require dynamic pickup points to reduce or eliminate subsequent delivery costs; and organizations or campuses with remotely-located personnel for convenient package pickup.

“With the advent of email, person-to-person letter mail has declined,” says Michael Usami, Director, Solutions Factory Division, Pitney Bowes Japan. “But at the same time, the volume of goods being transmitted by postal and courier services has increased enormously. People are buying all sorts of things online and having them delivered to their homes. Non-delivery – when a driver has to come back two or three times to complete the delivery – represents a huge cost to service providers and an inconvenience to the customer,” Usami continues.
“pbSmartLocker allows delivery people to drop off packages securely, with the system then notifying the recipient electronically, for example via SMS or email, of the specific location of the package. The recipient can then open the locker with a unique code.”

With smart phones enabling locker activation and access, Pitney Bowes expects to see smart lockers  deployed in many applications around the world over the next few years. Many network trials are already under way, for example, for parts delivery to service engineers and online book purchasing. Locker usage is well established in Japan, and it is expected consumers will welcome the introduction of conveniently located, secure smart lockers for taking delivery of their purchases.

U.S. Ambassador to Japan John V. Roos speaking at the 2013 ACCJ Shinnenkai on January 16.

ACCJ President Laurence W. Bates unveiling the 2013 ACCJ yoji-jukugo: 共就成長 (kyojuseicho), which has been translated to mean ‘Achieving Growth Together’, at the 2013 ACCJ Shinnenkai on January 16.

Participants listening to the Developing Global Talent Seminar’s panel discussion on January 24 (ACCJ Kansai). Photo by Kozo Murata

U.S. Deputy Chief of Mission Kurt Tong receiving a certificate of appreciation from Chubu Aerospace Industry Subcommittee Chair Mike Wright after a luncheon meeting on January 11 (ACCJ Chubu).Photo by Andy Boone.

Shuji Kobayakawa, Assistant Director-General of Monetary Affairs, Bank of Japan, receiving a certificate of appreciation from Chubu External Affairs Committee Vice Chairs Darrel Harris and Yuji Suzuki, and Secretary Jon Hobbs on January 16 (ACCJ Chubu).

I wish to focus here, however, on the emerging social media opportunity. For those of you know me personally, you probably know that I am an avid user of Facebook—and to a much lesser extent LinkedIn and Twitter. I find Facebook an amazing tool by which to connect, and keep up with, many different people in my life—from schools, university, and law school, present and former employers, extracurricular activities and member organizations (including of course ACCJ!) and family and other personal friends—in geographic locations all over the world. I believe, however, that there is much more we can do with these social media tools from a business perspective—and am pleased to see the progress we are making in ACCJ.

Many will recall that Facebook was one of the few ways people could communicate with one another in the immediate aftermath of the March 11, 2011 earthquake. The ACCJ was fortunate to have already set up, under former President Mike Alfant’s leadership, an ACCJ Facebook pilot page, www.facebook.com/The.ACCJ, and the leadership was able to disseminate much vital information during the weeks and months that followed.

The time has come, however, to take this effort to the next level, recognizing that intelligent use of social media can enable us not only to disseminate information in a one-way “top-down” manner, but also to facilitate communication among our members on the important initiatives of the ACCJ in relation to key programs and events, networking opportunities, and advocacy.

We need not stop there, as I can envision that these media can also be used to generate discussion around all issues of relevance to the membership, which may in turn actually shape the initiatives of the ACCJ by better informing the leadership. Beyond that, keeping in mind that the Facebook page is public, why not use the tool to further build the ACCJ brand, by conveying our advocacy messages more widely (and hearing the views of those who might have different opinions), or to grow our membership by demonstrating the vitality of interactions among our members on many levels?

For everyone already on Facebook, and who has “Liked” the ACCJ page, I hope you have noticed the growing content on programs and events, including photos of our recent Walkathons, the Charity Ball, and the Tokyo, Kansai and Chubu Shinnenkais. You will also have seen links to various business and economic articles about Japan, which shape the environment in which we all engage in business and advocacy—the Tokyo 2020 Olympics bid being just one example.

I am particularly heartened to see the increasing number of comments—not just likes—on many of these posts, but would like to see more, and more in particular from members. This is possible because we have gradually opened up to a wider group of ACCJ Board members the ability to post—but anyone can comment and generate discussion on any post. So if you are a member of Facebook, but have not “Liked” the ACCJ page, please do so on your next log-in, and start seeing the rich content in your Newsfeed—and start commenting!

A word, too, about Twitter. Learning from the excellent example of U.S. Ambassador John Roos, I have set up a Twitter account through ACCJ, with the user name: @ACCJPresident. I plan to use this to communicate my thoughts about ACCJ and Japan more widely, in line with the ACCJ mission and core advocacy principles—and to do so in both English and Japanese. For both the Facebook page and Twitter, please feel free to send your content ideas, whether photos, impressions of events or interesting articles, directly to me at lbates@accj.or.jp, or to the ACCJ office at commsjisaac@accj.or.jp.

This is still in early stages, and we need to be mindful of how to use the tools properly (for which purpose we have developed simple guidelines available on the ACCJ website), but I am convinced that we can learn only through greater experimentation, and I am excited about the possibilities.

Wabi-sabi pervades many aspects of traditional Japanese design, and is a vital part of the Japanese culture. But if you ask Japanese people to define wabi-sabi , you will get a wide range of answers.

Rooted in Zen Buddhism, wabi-sabi is associated with a lack of ostentation, an appreciation for things in an unadulterated state and a celebration of natural imperfection. It represents the embrace of a non-materialistic way of life that elevates the innate integrity of nature in both its objects and processes.

Wabi-sabi is, in a sense, a rejection of modernity‘s emphasis on progress and constant advancement at all costs. Therefore it is perhaps unsurprising that, as Japanese consumers of all ages struggle with economic uncertainty, many, even the young, are turning to old-fashioned values.

After the 2011 earthquake and tsunami, many outsiders were surprised at the enthusiasm with which people at all levels of society took to the idea of setsuden, or saving electricity. It seemed as if the mood in Japan, even before the disaster, was perfectly suited to the idea of radically cutting back on unnecessary consumption – and was perhaps just waiting for a good reason.

Indeed, in 2009 a boomlet started in the so-called area of danshari, loosely translatable as “cutting back”. Parsimony is in; but finding the satisfaction in having less is creating opportunities for more meaningful consumption experiences.

Take the example of heirloom vegetables. These rediscovered edible treasures include what people nowadays might consider odd vegetables such as white eggplants, purple peppers and red leeks that were, for many years, rejected by supermarkets and mass distributors.

However, thanks in part to the global slow-food movement, these vegetables are beginning to be viewed as special food items with exceptional value. Encouraged by the Ministry of Agriculture, farmers’ markets are popping up all over urban areas including glitzy neighborhoods such as Tokyo’s Marunouchi and Aoyama. These markets have proved very popular and are turning into significant community social occasions, while also connecting consumers with the origins of the food they eat.

In the area of consumer merchandise we are seeing a renewed interest in the work of smaller makers and individual artisans. Under the JR line between Akihabara and Okachimachi a complex of galleries, boutiques and workshops has sprung up, allowing buyers to come face-to-face with the artisans who make a wide range of wooden crafts, ceramics, hats, umbrellas, leather goods, jewelry, glassware and food products.

Aside from the permanent tenants, temporary stalls put up by crafts vendors ensure that a fresh stream of talent is constantly showcased. The complex incorporates a restaurant and a couple of cafes, and a constant schedule of events gives the area a lively feeling.

Younger people are also getting back in touch with traditional clothes. A recycled kimono business, Tokyo135°, started by students from Chuo University, has grown to six stores around Tokyo. Prices starting from ¥5,000 for a kimono are accessible for young people who in many cases are experimenting with new and creative ways of wearing traditional garments.

Japan is a market in which many cutting-edge consumers are, in a positive sense, looking inward and asking questions about what really matters to them. As in all modern societies, there are many areas of unsustainable economic and environmental practice in Japan. But, in Japan, where the wabi-sabi aesthetic has been appreciated and incorporated into daily life for centuries, the consumer-driven sustainability groundswell that can be seen in many countries around the world may have its best chance of going mainstream.

Businesses that are able to understand the needs of consumers prepared to reject some aspects of modernity in favor of well-crafted, tradition-based products and services that offer the simplicity, economy and intimacy characteristic of the wabi-sabi aesthetic will be able to create interesting new value propositions. This might entail launching completely new products and services, but there are also opportunities to leverage appealing aspects of existing brands and businesses.

Japan is a market that cares about heritage and provenance, and many brands – and not necessarily just traditional products – could benefit from a renewed emphasis on the traditional aspects of Japanese beauty. [As an example, think about the success that Japanese denim makers have had globally; Japanese jeans are universally regarded as the world’s best, and fetch extremely high prices in the marketplace.]

Author Richard Powell wrote that wabi-sabi “nurtures all that is authentic by acknowledging three simple realities: nothing lasts, nothing is finished, and nothing is perfect.”

These are perhaps not the qualities consumers want in every product, and over the past few decades Japanese industry has developed a well-deserved reputation for manufacturing perfection, but I wonder if businesses that can offer consumers the modern equivalent of the simplicity of haiku, the gnarled beauty of a bonsai tree, the deliberately introduced flaw in a piece of Hagi pottery might not have an advantage in the market today.

Anyway … here I am, your handsome, charming and talented host, with many years of writing, editing and publishing (and other) experience under my belt as a result of 23 years of life and work in exotic Hong Kong, Shanghai, Kyoto and now, rural Yokosuka (small fishing and farming village, elderly neighbors, fresh vegetables, three-season view of Mount Fuji … well, you know the rest).

As of this writing (some days in advance of publication, as is usual for print magazines), Chinese missiles are not raining down, nor are my Self-Defense Forces-employed neighbors engaging in unusual activity, so I will write on in the assumption the militaristic Chinese bluster that has the Japanese media (and to my surprise several weeks ago, The Economist) in a tizzy about the possibility of war is just that – bluster – allowing us to focus on more important things.

Interest and exchange rates, the demographic inevitabilities of an aging society, etc., and more important, how we as tiny cogs in the geopolitical machine navigate the shark-infested waters of life and career.

You will have noticed U.S. Ambassador Roos and his wife Susan on the cover of this issue. This year the ACCJ board decided to for the first time honor two people with its Person of the Year award.

In a remarkable coincidence, the recipients share the same surname, and are well known to each other, having been married for 31 years. That said, the ACCJ Board made clear in its award that the Rooses had each earned the honor in their own right, and that “it is purely coincidence that they’re married.”

The ambassador’s service in Japan has of course been well documented, and a result of his leadership following the events of March 11, 2011, as well as travels that have taken him to all 47 prefectures (my Japanese friends wonder how many prime ministers have managed the same), he is widely liked and his work appreciated.

But while an ambassador is the point man (or woman) for bilateral relations, fewer traditionally “substantive” activities have been expected of an ambassador’s spouse. Susan Roos is from a different generation, of course, and arrived in Japan an accomplished labor lawyer who had been the managing partner at her law firm in California.

Much of her legal career has been focused on employment and labor issues, and while she has been active in a number of different areas during her time in Japan, the question of women’s participation in the workplace has remained a priority for her. Her public advocacy of women’s rights has been appreciated by Japanese women, and by right-thinking (not rightist!) businesspeople of both genders.

In October 2011, citing his extraordinary leadership and innovative management as the U.S. Ambassador to Japan before and after March 11, the Department of State awarded Ambassador Roos the prestigious Sue M. Cobb Award for Exemplary Diplomatic Service. The award honors a non-career ambassador who has made “a significant impact on bilateral or multilateral relations and has done so in a manner that best reflects the foreign service culture of uncommon commitment in carrying out United States foreign policy through proactive diplomacy.”

Very likely, the ambassador and Ms. Roos will return to their lives and careers in California at some point this year. When we spoke with him and Ms. Roos for our cover story, the ambassador said, “It has been the honor and the privilege of my life to serve as the U.S. ambassador to Japan, with which the United States has such a strong and important relationship, and to get to know individually so many wonderful people from all walks of life.” Echoing her husband’s sentiments, Ms. Roos said, “Moving to Japan has been a life-changing experience for me. A part of my heart will always be with Japan.”

Elsewhere in this issue, we write about Danish firm Tiger Copenhagen, which made Osaka its entry point to Japan, and was rewarded by selling out its entire retail stock within days. We spoke with officials from Okinawa and Yokohama about how they try to attract foreign direct investment, and Dr. Greg Story, a regular in these pages, wonders how good your people skills are.

Our columnists are in good form this month, and over the next few months I plan to add more voices to those pages. Finally, in his message on the next page, ACCJ President Larry Bates wants to get you involved in the chamber’s social media network, and ACCJ Executive Director Sam Kidder offers motivational wisdom from Baron Pierre de Coubertin: citius, altius, fortius!

I inherited the content plan for this issue of the Journal; from April you will have only me to blame. I have some exciting stories planned for the next few months, and I hope you will agree. Drop me a line any time with comments, suggestions and criticisms.

よろしくお願いします!

The home is generally not a showplace and it is uncommon for people to invite colleagues and friends to their houses. So investing in a home to impress others is not something that tends to make sense. On the other hand, Japanese are more willing to invest money in their personal appearance out of the home. As such, when it comes to discretionary ‘me’ spending, things like luxury bags or even luxury cars often take budgetary priority over their homes.

So it is with interest that I have been hearing from friends and colleagues lately about a trend towards young people holding parties at home – so-called ‘uchinomi.’ Whereas in the past younger people have always met up at izakaya (the Japanese equivalent of a pub), it is becoming more common to meet at friends’ houses.

Drink companies such as Asahi, Calpis and pre-cooked food company Kanetetsu have jumped on the trend, launching campaigns encouraging consumers to drink at home with their friends. As you’d expect, publishers are also getting in on the act, launching a slew of magazines and cookbooks on the subject.

While the 3/11 earthquake helped stoke the uchinomi trend because people were either stuck in their apartments or didn’t want to be seen out celebrating, it is also indicative of a wider trend in Japan for younger people to discover the joys of the home.

My impression of younger Japanese working women, the legendary office ladies or OLs of yore, has generally been of a rather hedonistic, experience seeking cohort. A good portion of their salaries seemed to be spent on eating out at the latest restaurants, jetting off on JTB package holidays to the latest trendy destination or upgrading their old Louis Vuitton handbag to a better model. However, that is not really a valid stereotype any more.

Today, trendsetting younger women could be just as likely found at home spending time on Cookpad, a website and associated smartphone and tablet app devoted to peer-to-peer sharing of recipes. It’s a phenomenal success and some sources have quoted a penetration rate of over 40 percent among Japanese females in their twenties and thirties.

In research our agency has done in the food category, it has emerged as the prime tool that people in Japan now use to plan their meals. Cookpad serves a very useful practical purpose in helping users to figure out what to do with what’s left in the fridge or what to buy at the grocery store for dinner – one of the great questions of daily life. However, its social component, where users can rate recipes, make comments and spark conversations, makes it especially compelling.

In addition to cooking, the move to focus more energy on the home is leading to greater interest in traditional cleaning techniques and ingredients. Consumers are increasingly embracing simple, natural and beautiful objects such as Edo-style hand brooms, or charcoal potted-plants with natural odor-relieving properties. These are items that not only serve a practical purpose, but are also things of beauty to be enjoyed.

Alongside this, there is a greater interest in the way that things smell in the home, as products such as stylish humidifiers made from naturally scented wood, or products which diffuse scents from essential oils, gain in popularity. Even scented fabric softeners such as Downy, which were for a long time seen as smelling too strong for Japanese, are gaining in popularity.

All these examples point to the home becoming a more important place to spend time and create experiences. At a deeper level, this reengagement with the simpler things in life appears to reflect an opportunity to reinforce the basic emotional security of consumers. There is a lot out there these days that scares people and so a return to the home – the creation of “my own furusato” – makes a lot of sense.

Even if your business is not directly connected to things consumed in the home, there is still an increasing opportunity for goods and experiences that make the consumer feel safe, whole and balanced. It appears likely that great opportunities exists for businesses that address these emotional needs, as Japanese seek to reconnect with things that comfort and sustain them in and out of the home.

For a prime example at the high school level, one needs look no further than the American School in Japan (ASIJ), based in Chofu, Tokyo. ASIJ has joined the Global Online Academy (GOA), an online consortium of 24 schools from around the world that allows students to take courses that would otherwise be impossible for each of the individual schools to offer, from advanced calculus to a “medical detective” course, in which students learn the art of medical diagnosis.

Paul O’Neill, Director of Teaching and Learning at ASIJ, points out some of the advantages for ASIJ students who participate in the GOA, which he says allows “understanding complex problems from multiple perspectives, creating and collaborating across geographic boundaries, listening and responding with empathy, and developing professional networks and partnerships with a global cohort of peers.”

Head of School, Ed Ladd, adds that while ASIJ is currently the only school in Japan participating in the GOA, schools in the US are at least a year ahead of the curve with regard to this program, having ramped up their participation more fully than ASIJ. In the future, however, the school aims to have about 15 students per semester participating in the program.

The teachers at the school are also gaining from participation in the GOA, and are learning to share their expertise globally. They are also getting the chance to expand their knowledge through distance learning programs from universities.

Universities without borders
Just as students at high schools are linking up online, universities and their students are also benefiting from offering and learning through online courses, offered by online academies like Coursera. Even those who are not enrolled in universities can reap rewards from these resources.

Massive Open Online Courses (MOOCs) are becoming increasingly important lifelong learning tools, as well as being integrated into universities’ educational systems. To that end, the Japan Open CourseWare Consortium now boasts over 20 universities as members, including some of Japan’s most prestigious public and private institutions, as well as affiliates and commercial associates.

The list of member universities includes the Open University of Japan, set up specifically to promote distance learning. The common ground of the consortium, Open Courseware, is defined as an “open free publication of formal course materials on the Internet,” available from top universities not only from Japan but from around the world. While this unfettered access to great course content is a major breakthrough worldwide, in some cases language difficulties make it more difficult for such courses to cross the Japanese frontier in either direction.

Such courseware presents a combination of lectures and explanations by a teacher, which can be viewed at students’ convenience, rather than at set times, combined with assignments and interactive dialog between students and instructors. These techniques are aided by voice over IP and video chats.

Pierre Bourgoin of St. Thomas University in Osaka makes the point, though, that MOOCs do not lead to credit, let alone a degree. Some of these courses do, however, provide a signed certificate following completion.

Bourgoin has expressed reservations regarding the provision and uptake of MOOCs in Japan since Japanese students (as do students elsewhere) chiefly attend college to obtain vital letters after their names. As such, he finds it hard to see how such courses can replace traditional university teaching.

The changing role of schools
Despite reservations, Bourgoin emphasizes that online courses will have a profound impact on the basic nature of schools and universities – not to mention the content of the courses and the ways content is delivered.

Since students are able to find factual answers to questions easily through the Internet, educational establishments can no longer serve as the sole repository of information. As Bourgoin says, “the idea of universities being the gatekeepers of knowledge no longer holds in a world where the Internet can provide high quality content for free.”

Today, teachers need to impart a new set of skills to students, rather than simply providing facts. These skills are outlined on the website of the Partnership for 21st Century Skills and include literacy in information (how to sift through the facts themselves to obtain the relevant subset of information), competency in media (how to present the information obtained in the most effective way) and workable knowledge of ICT (information and communication technology – the nuts and bolts of the process).

Ultimately, these “mechanical” skills transform themselves into more general “life” skills, namely, creativity and innovation, critical thinking and problem solving, and communication and collaboration.
In some ways this shift is liberating for teachers, who are freed from the need to act as machines imparting facts or basic skills, such as typing. The latter can easily be learned by the students themselves, as the differences between home learning and classroom learning become blurred. Online courses for skills and techniques such as mathematics and typing provide both instruction and assessment, allowing students to study at their own pace, without peer pressure.

On the other hand, the instruction of technology presents a real challenge to some teachers, especially to those who grew up in an age without computers. Sadly, this is particularly true of many Japanese schools. Although a high proportion of Japanese schools may theoretically be equipped with computers, in some schools it has been found that computer rooms are even locked in order to prevent the embarrassment of teachers who are less “tech-savvy” than their students.

It may come as no real surprise to long-term residents of Japan to learn of this relatively low use of computers in education, despite Japan’s ubiquitous access to broadband Internet services, and reputation as an exemplary high-tech nation.

To avoid the situation of instructors being outstripped by their students in technological acumen, the progressive Tokyo International School – one of the first ten schools outside the US to showcase Apple technology and the first in Japan to implement a one-to-one laptop solution for its students eight years ago — implements a peer-mentoring scheme among its instructors, which allows for staff to share knowledge and techniques.

In the Cloud
As “cloud computing” takes root as a buzzword in the technology field, it is hardly surprising that cloud-based solutions have been developed for the educational market, as they have for other areas. In the field of class administration, open-source online projects such as Moodle allow teachers to administer classes, provide source materials, and set and grade assignments, which are “handed in” by students as uploaded files.

These abilities, which have found their way into a number of schools and colleges as administrative aids to teachers, make it possible to organize a largely paperless classroom. However, where actual teaching is concerned, a newly developed system known as Language Cloud, specifically designed for the purpose of language education, assists teachers not only with the grind of grading assignments, but also provides an ever-present source of learning material for students.

“Think of it [Language Cloud] as iTunes and the AppStore for language education,” says Theresa Sherry, community manager of Language Cloud, which won the ACCJ Director’s Award in Entrepreneur Awards Japan (TEAJ) 2012. In this analogy, Sherry continues, “iTunes would be the basic Language Cloud platform where teachers and students can manage classes and assignments, while the AppStore would be the Language Cloud App Center, where teachers and students can purchase other educational apps or digitized textbooks.” In addition, the system provides metrics and assessments, recommending content and supplementary material to match the progress of the students on an individual basis.

Other selling points about cloud technology are that it allows students in different physical locations to work together on projects and cuts costs for educational establishments. Particularly in Japan, there are many advantages to the system, which is ideally suited to a country where student numbers are falling due to a declining birthrate and many universities are struggling to survive.

However, Paul Raudkepp of Temple University in Japan points out that the explosion in tuition costs that has occurred in the US has not yet hit Japan, limiting consumer demand for such learning in Japan.

Changes to come
As much as technology is shaking up our schools, Raudkepp adds that education is one of the few business areas which has not yet been seriously disrupted by technology. He adds that such disruption, when it comes, will affect smaller universities more than larger ones. The main reason being that larger universities are better able to mix traditional teaching methods with new ones, such as MOOCs (possibly offered for free), and still retain their brand.

“Once students can receive university credits for MOOC courses and then transfer those credits to other institutions the landscape will change drastically,” Raudkepp says, adding that universities will need to accommodate more students at a lower price from any location. Students will have more choice, allowing them to mix and match online and traditional learning.

Almost certainly, if there are to be changes in the way that higher education in Japan is packaged and marketed to students, these changes will result from moves made by foreign- and foreign-minded institutions. Changes such as Tokyo University’s decision to readjust the academic year to match that of the rest of the world could also put pressure on Japanese institutions to offer more versatile packages.

Although Japanese schools are not in competition with international schools in the same manner as are higher educational institutions, in due time these schools may also come to see the advantages in adopting 21st-century technology and providing a more skills-oriented, as opposed to content-driven, approach to teaching.

Illustration by Yohei Takahashi

On December 16, the Liberal Democratic Party of Japan (LDP) returned to power in a landslide victory in the national general elections. The win marks the end of rule by the Democratic Party of Japan (DPJ), which was led by Yoshihiko Noda. Hopes run high that the return of the LDP to power will bring much needed stability to the Japanese government, which many feel was missing in recent years.

The LDP-New Komeito alliance claimed the majority of 325 seats in the lower house. The DPJ, which had 230 seats before the election, now has only 57. Following the defeat, Noda announced his decision to step down as the leader of the DPJ. “I bear the biggest responsibility for the severe defeat,” he said, before announcing his resignation as party president. During Noda’s time as PM he was able to secure support and approval for a two-step plan to increase the consumption tax to ten percent in Japan. Many see the snap election as part of the agreement Noda made to gain support for this plan to increase the consumption tax.

The new LDP-controlled government will be led by returning PM Shinzo Abe. Abe, seen as politically conservative, is in favor of revising Japan’s war-renouncing constitution. He is the second leader to hold the office of PM twice since World War II. “Today’s victory is due to the confusion that the DPJ caused,” Abe said after the elections. “I can say that our policies gained support, but I can’t say that we’ve recovered our trust.”

Nikkei Hits a High

Riding the coattails of the election and LDP victory, the Nikkei hit an eight-and-a-half month high, with the yen hitting a twenty-month low in relation to the dollar. The high cost of the yen has been hurting Japanese exports for some time, so the devaluation of the yen has prompted optimism amongst many in Japan.

After declining to 83.77 against the dollar, the yen is at its lowest point since April 2011. Japan’s newly elected PM Shinzo Abe hopes to move out of a recession and two decades of stagnant economic growth through high fiscal spending and an easy monetary policy. He also set an ambitious new inflation target of two percent for the Bank of Japan. In turn, Abe also hopes to make Japanese exports more competitive on the world’s stage.

As a result, several major Japanese companies surged in value, especially from the utilities sector. TEPCO, which has suffered since the meltdown at its Fukushima power plant, saw gains of more than 32 percent following the election. Sharp Corp., which recently had to take out loans and find new investors in order to continue operations, increased in value by 11.9 percent.

Huffington Post to Launch in Japan

In the spring of 2013, the Huffington Post will launch a Japanese edition, with help from Japanese staff at the Asahi Shimbun. Japan is the sixth country to gain an edition of the Huffington Post outside of the US, following Canada, the UK, France, Spain and Italy.

Since it was created in 2005, the Huffington Post has become one of the largest US news websites. Based mostly on news, blogging and social media, the website allows users to create and share content. In total, the website attracts around 46 million visitors and generates around 8 million comments each month.

The new Japanese website is part of the company’s efforts to expand operations internationally. According to CEO Jimmy Maymann, the Huffington Post is pursuing a policy of direct expansion and expects to operate in 15 countries within the next 18 months. The Huffington Post also hopes to become more attractive to advertisers by offering an improved and expanded online experience for its readers.

Mistaken Nuclear Projection

In late October, the Japan Nuclear Energy Safety Organization released documents that detail the projected spread of radiation in the event of a nuclear disaster. These plans were to be used by local governments in the event of nuclear crisis. In December, however, Japan’s Nuclear Regulation Authority (NRA) released revised versions of each of the projections citing errors in the documents released in October.

According to the NRA, there were errors in the data for every nuclear power plant in Japan. The NRA thoroughly reexamined the data to make sure that there were no further mistakes in the projections. Revised diagrams that graph the spread of radiation were drafted for specific plants in Hokkaido, Kyushu, and Sendai.

Some of the changes made include corrections to faulty weather data and reprocessing of some data from other power plants across the country. The updated reports also show the farthest distance that severely high levels of radiation could conceivably spread.

Following the recent general election, speculation runs high about how Japan’s new government will address the issues surrounding nuclear power. Currently, the LDP rejects a nuclear-free energy policy.

Illustration by Yohei Takahashi

In the aftermath of the Sasago Tunnel disaster, which killed nine and injured many more, the Japanese government has vowed to inspect all highway tunnels that were completed around the same time as the Sasago Tunnel  in hopes of preventing future accidents.

An inspection of the Tokyo-outbound section of the Sasago Tunnel revealed 670 defects and other problems, according to an official. Of those problems, 632 were associated with the bolts that secured the concrete slabs of the tunnel to the roof. The 4.7km tunnel has a total of 12,000 bolts, of which 608 were found to be loose, while 22 had partially come off. Experts concluded that the bolts that partially came off most likely did so due to corrosion.

The government conducted inspections on 57 of 59 tunnels in the area surrounding Sasago Tunnel and found defects in 14 of them. However, officials added that the defects do not pose an immediate threat to the safety of motorists using them.

Back in the game

Japanese gaming companies appear to be making a comeback. But this time around, it isn’t the console making giants of yesteryear. Mobile gaming is the new face of gaming in Japan, with companies like GREE and DeNA becoming household names over the last few years.

In the third quarter of 2012 alone, DeNA made an operating profit of ¥20.4 billion; more than Nintendo’s projected earnings for the entire year. Meanwhile, GREE  earned an operating profit of ¥15.75 billion yen, down five percent from the same quarter last year. These companies are making money through a new business model that allows users to download games for free.

The companies then sell cheap add-ons for each game, increasing the chance of winning. Each add-on costs around ¥100. The companies credit much of their success to Japan’s advanced high-speed mobile phone networks, which make it easy for enthusiasts to play games while commuting.

The success of these companies has not been limited to Japan. DeNA’s hit RPG “Blood Brothers” climbed to the number one spot in twenty-seven countries. DeNA President Isao Moriyasu envisions following in the steps of Japan’s large console makers, such as Nintendo and Sony, by shifting the company’s focus to cultivating business abroad. GREE founder Yoshikazu Tanaka has expressed a desire to focus on emerging markets in a bid to increase the company’s growth potential beyond what is offered in developed countries and markets.

MUFG Expands

Mitsubishi UFJ Financial Group Inc. (MUFG) is expanding abroad. Recently, MUFG bought a 20 percent stake in VietinBank of Vietnam for $720 million, as well as Bank of America Merrill Lynch’s stake in their Japanese joint venture.

Due to the strong yen and the limited potential for growth within Japan, many Japanese banks are looking to invest abroad, culminating in a buying spree among Japanese banks in South East Asia. As many Vietnamese banks are suffering due to high inflation and economic instability, the Vietnamese government is focusing more on maintaining economic growth than reforming the banking sector.

Many banks see investment in Vietnam as safer than China, especially in light of tension over the Senkaku Islands dispute between Japan and China in the South China Sea. Over the past five years, other banks, such as Mizuho Financial Group Inc. and Sumitomo Mitsui Financial Group Inc., have each purchased stakes of 15 percent in Vietnamese banks.

After MUFG invested in Morgan Stanley in 2008, many questioned the strength of the joint venture between Bank of America Merrill Lynch and MUFG. While the joint venture started with a net worth of ¥25 billion, at the end of March 2012 the joint venture’s assets were said to be worth around ¥1.8 trillion.

NTT Launches Network Services in Vietnam

On December 13, NTT Communications announced that it began offering networking services through a joint venture with Vietnam Posts and Telecommunications. The services are targeted at multinational businesses in areas that have data storage, outsourcing and internet communication needs. Last year, NTT became the first foreign-capital enterprise to receive a telecommunications and network license in Vietnam.

The joint venture is called Global Data Services JSC (GDS) and operates the Thang Long Data Center, which is Vietnam’s most advanced Tier-3 data center. Vietnam’s increasing need for Internet services and government plans to stimulate business growth are spurring the push for more reliable Internet services nationwide.
NTT’s inroads into the Vietnamese market could signal an oncoming rise in the number of Japanese businesses doing business in Vietnam, as evidenced by the growing number of Japanese companies that are looking into ways to conduct business in the country.

“We are delighted that the government of Vietnam now has awarded NTT Com a license for network services,” says Park Jong Buhm, CEO of NHN Vietnam. “This wide range of reliable, high-quality ICT services will enable multinational companies to grow their businesses more efficiently in Vietnam.”

When Harumi Mukai, MD, PhD, worked at Tsukuba University, her day began at 7 am with preparing experiments for the day. After wrapping up her early rounds in the lab, from 8 am to 9 am she visited patients’ bedsides in the university hospital, followed by a trip to see new patients at a clinic until 2 pm or 3 pm. After that it was back to the hospital to check on patients again. At this point, her day was just beginning.

After somehow squeezing in time for lunch, she taught medical students, made another trip to the hospital to check on more patients, and rushed home to make dinner for her kids. Putting her children to bed, she then returned to the lab to tinker with experiments in progress. After that, she went home, slept and rose early to do it again the next day.

When a supervisor paid her a visit at her own hospital bed when she was recovering from giving birth to her second child to ask her when she could get back to work, that was enough. She began to look elsewhere and the pharmaceutical industry caught her eye. “It was just too much,” she recalls.

Her life returned to balance when she received an offer four years ago to work for Janssen, where she now serves as Director of Oncology, Virology and Immunology for the company’s Science Department. Compared with the endless list of obligations in her former post, her main duties today, which include reporting on safety and conducting clinical trials, feel manageable and interesting. Since the move, she hasn’t looked back. “I’m quite happy where I am now,” she says. “I really didn’t know anything about drug development before, but I was curious to learn more.”

Dr. Mukai’s choice to make the move from medicine to the pharmaceutical industry mirrors a trend in Japan. More medical doctors are moving into the pharmaceutical industry than ever before. The industry itself is likewise in a state of flux.

Around the world, there is a growing need for medical doctors with a practical understanding of pharmaceuticals, who can oversee the process of drug creation from the development stage to the point where patients are taking them. In response to this trend, Osaka University is launching a new course in pharmaceutical medicine from April 2013 that will prepare doctors and other professionals with backgrounds in science and engineering to work in the pharmaceuticals industry.

“This program builds a bridge between basic science and practical science,” says Akiyoshi Uchiyama, MD, PhD, an executive member of the Japanese Association of Pharmaceutical Medicine (JAPhMed) and President of Artage Inc., a dietary and nutritional consultancy. “It will show doctors how to register the drugs they have developed and how to take them through the clinical science phase to turn them into pharmaceutical products that benefit society.”

Addressing this process of drug development and tackling key concerns such as safety, the new program to be launched at Osaka University could become a game changer for Japan’s pharmaceutical industry.
For Yasushi Suzuki, a pharmaceutical industry recruiter who works for CMIC Best Solutions, “the greatest thing about the program is that it will open young medical doctors’ eyes to more options for their future careers.”

“The greatest thing about the program is that it will open young medical doctors’ eyes to more options for their future careers…” Yasushi Suzuki, recruiter

Osaka University is creating this new course with good reason. While Japan ranks third globally in terms of basic scientific research, its place dips to 18th when it comes to clinical development, falling even below China. Not to mention, the nation has historically lagged when it comes to the introduction of drugs and medical devices. While the time lag in the approval process is largely due to bureaucratic barriers, its underperformance in clinical research and drug development stems from a dearth of funding.

According to Yasuhiro Kanatani, MD, PhD, Director of the Department of Health Crisis Management in the National Institute of Public Health, Japan’s slow drug review process and funds famine is mainly due to its lack of a strong centralized body that oversees the industry. “There is no real equivalent of the FDA,” Dr. Kanatani says. “There are far fewer drug reviewers in Japan than elsewhere, too.”

This picture, however, is starting to change. “In the past the timeline for drug approval in Japan was sometimes as long as ten years,” says JAPhMed Chairperson Kyoko Imamura, MD, PhD. “But now regulatory authorities are working hard to shorten approval times. This is very good news. There has not been any negative impact on safety so far with this shortened approval time.”

Since 2007 the PMDA (Pharmaceutical and Medical Device Agency) has been reviewing drugs and pharmaceutical products submitted by pharmaceutical companies in consultation with clinical and regulatory experts within twelve months. For special drugs, such as those for intractable diseases, the review process has been accelerated to within six months. Increasing the number of pharma-savvy doctors reviewing drugs will only accelerate the process further.

“The goal of the program at Osaka University will be to increase the number of doctors who are able to converse at the level needed to address all sides of the approval process,” Dr. Uchiyama says. “It is crucial that everyone involved in the approval process is able to discuss medicine at the medical and scientific levels.”

Alongside the quickening of drug reviews, in recent years the Japanese government has also stepped up funding to key universities for medical research. As Japanese researchers make key breakthroughs, most famously seen in the Nobel Prize winning adult stem cell research by Shinya Yamanaka, MD, PhD, of Kyoto University, this increased flow of funds will hopefully continue to grow.

“It is crucial that everyone involved in the approval process is able to discuss medicine at the medical and scientific levels…” Akiyoshi Uchiyama MD PhD

Japan doesn’t really have much choice but to change. To keep pace with trends in the global pharmaceutical industry, business as usual is not really an option. Around the world, pharmaceutical developers are pursuing greater levels of safety, efficiency and efficacy than ever before in an ongoing effort to standardize the industry.

Europe and the US are at the forefront of this global push to standardize medical research and development. In a bid to streamline its program with the progressive West, Osaka University is basing the curriculum for its graduate level course in pharmaceutical medicine on similar programs in the UK, Switzerland, Germany, France and beyond.

Beginning in 1975 at Cardiff University, medical schools across Europe began developing a common syllabus for medical schools that essentially prepares doctors to work in almost part of the healthcare industry, from pharmaceutical ethics to the ins and outs of conducting clinical trials. Since 2009, the EU has been standardizing this course curriculum, and in 2014 intends to spread it worldwide.

Until the launch of Osaka University’s pharmaceutical medicine program in April 2013, Japan has had no such framework in place. With the help from JAPhMed, the program has been developed at the Center for Advanced Medical Engineering and Informatics, Osaka University, which received support from the highest levels of government, receiving funding from the Ministry of Education, Culture, Sports, Science and Technology (MEXT) to support postgraduate training; from the Ministry of Health, Labour and Welfare (MHLW) to support drug discovery; and from the Ministry of International Trade and Industry (MITI) to support translational research.
Opportunities for pharmaceutical industry leaders to get involved are ample, and include sending executives to give lectures, sending employees for further training, providing internships for students in the program and recruiting graduates.

“When I was teaching at Tsukuba University, there was no program that educated students about clinical trials or anything like that,” Dr. Mukai says. “It’s important to provide a program that fills in this gap for people who already have medical expertise so they can become involved in approval procedures and clinical trials.”

The standard course will last two years (equivalent to the EU’s PharmaTrain Masters course), with the option of a shortened one-year course (equivalent to the PharmaTrain Diploma course), and is targeted at MDs and those with backgrounds in science and engineering who are interested in translating their knowledge and experience into a practical skill set that will allow them to work in the pharmaceutical industry. Graduates will be prepared to work as leaders of R&D efforts, in medical affairs, post-marketing management, as reviewers of new drugs and as developers of investigator initiated clinical studies.

“Some doctors see a clear hierarchy with doctors at the top and the marketers and pharmaceutical industry at the second level…” Kyoko Imamura MD PhD

Around the world today there is a growing emphasis on pharmacovigilance, or PV for short. This is a fancy term for catching and figuring out how to address complications and side effects that medicines may cause. The growing importance of PV will be a touchstone in the program, and could be seen as a boon for doctors who want to work in the medicine biz. “This is a good entry point for doctors who want to enter the pharmaceutical industry,” says Yoshiko Maruyama, a representative from the human resources department at Bayer’s Tokyo office.
Mujgan Ates, Vice President, Medical, at AstraZeneca in Osaka, adds that “need is increasing for the most up-to-date scientific information exchange with physicians about our products, adherence to therapy, and patient educational programs in order to link the science with the unmet need of the patients and improve patients health conditions.”

From communicating with the public about drugs and treatments to overseeing trials via quality assurance and safety studies, doctors who can bridge the gap between basic science (research) and practical science (turning the research into usable products and getting them into the market) are a hot commodity today.

“In a hospital the objective is very clear—to take care of patients. But when doctors enter a company, the roles of various team members are not so clearly defined…” Harumi Mukai MD PhD

“Pharmaceutical companies have had a very difficult time recruiting doctors to work in the industry,” says Dr. Imamura. “Some doctors see a clear hierarchy with doctors at the top and the marketers and pharmaceutical industry at the second level.”

This perception, however, is changing. “The number of physicians who are interested in the pharmaceuticals is definitely increasing,” Suzuki says. “Usually these doctors already want to explore opportunities in the industry on their own, and then approach me.”

Viewed from the side of the pharmaceutical fence, however, credentials aren’t enough in themselves. According to Suzuki, for many doctors pride comes before the fall.

“Many of the doctors who are initially interested don’t have the right temperament or mindset to fit into the industry,” he says. “A common issue is having pride about their knowledge.”

Alongside pride, corporate culture shock is another stumbling block for those with a hankering to work in the industry. Traits like being a team player and having strong leadership skills are two facets that not all doctors possess. Further, as doctors often start in management level positions, this can produce resentment among subordinates, some of whom may have already spent a significant length of time working for the same company that their manager has only just joined.

“In a hospital the objective is very clear – to take care of patients,” Dr. Mukai says. ”But when doctors enter a company, the roles of various team members are not so clearly defined.” For some, this is the whole point: the interaction, the team. For some seeing patients or tinkering in a lab are not enough. These are the types that gravitate to the industry.

Maruyama from Bayer concludes: “For doctors who are interested in working more with people and who are good communicators and leaders, this is a great fit.”

Reed Travel Exhibitions, organizer of the leading luxury travel events International Luxury Travel Market (ILTM), ILTM Asia and ILTM Africa has announced the launch of ILTM Japan, a brand new event that is scheduled to take place from March 11-13 in Kyoto.

ILTM Japan will connect international exhibitors and high-end luxury travel agents, all of whom must be accredited to participate. Approximately 60 from each group will be available for pre-scheduled appointments on a strictly one-to-one basis. Among the invited buyers, 50 percent of them will be from Japan, while approximately 30 of attending suppliers will be from global destinations. Meetings will take place in The Sodoh Higashiyama Kyoto, a venue famed for its bespoke parties.

Various sponsors will compete to impress with the best hospitality during the evenings and breakfasts. Many expect Kyoto City Mayor Daisaku Kadokawa, who was instrumental in bringing the event to Kyoto, to show off the epitome of ‘omotenashi’ hospitality with flair, but the city has so far kept its plans under wraps.

Kyoto’s hosting of this event speaks to the strong partnership between city authorities, the national government and the local hospitality industry. Each party recognizes that future growth for the industry will require Japan to develop its vast potential to increase international visitors.

The potential to change entire industries

The City of Kyoto placed a bid to host the event to strengthen Kyoto’s global brand image. Specifically, the event is an opportunity to forge a strong future for Kyoto’s hospitality and craft industries, which have served Japan’s elite for more than a millennium. Japanese traditionally bring guests to Kyoto to show them the best that the country has to offer.

The event will likely have repercussions that extend far beyond the immediate luxury travel market. The Kyoto Convention Bureau, which is supporting the event, pointed out that the show is a huge win for Kyoto and is an incredible opportunity to show Reed Travel Exhibitions how rewarding the city’s business environment is. ILTM Japan is expected to significantly bzoost Japan’s profile as a global center for Meetings, Incentive Travel, Conferences/Conventions and Exhibitions/Events (MICE).

Global shift in the luxury market

The partnership behind ILTM Japan is responding to global shifts in the travel and hospitality industries, and was quick to recognize Japan’s potential to satisfy affluent travelers’ changing demands. According to an article published in the Guardian last year, high worth individuals are shifting their spending habits from “owning luxury to experiencing it.”

One of the most enriching experiences is travel, so the industry could reap great rewards if it provides unique experiences for the upscale market. With the fastest-growing population of millionaires right next door in China, Japan is poised to benefit substantially from the growth of luxury tourism. Further, inbound travel to Japan reportedly increased by 40 percent in 2012, boding well for the industry’s future growth.

Another reason Japan was selected to be part of the next stage of developing the global ILTM brand is because it is home to the second-largest population of high-net worth individuals after the United States. Alongside wining and dining in traditional ryokan, a growing number of wealthy Japanese are seeking more depth experiences by taking part in local cultural activities, enjoying local fashion and discovering unique crafts.
Furthermore, Japan is one of Asia’s largest outbound travel markets, accounting for $27 billion in 2011 alone. In 2012, a strong yen, lower fuel surcharges and increased air capacity contributed to an increase in the growth of Japan outbound traffic, which was already up 15 percent year-on-year.

ILTM Exhibition Director Alison Gilmore says, “Whereas ILTM Asia [in Shanghai] has a seven-year proven track record in providing access to a range of buyers from over 20 countries across the burgeoning and diverse Asia Pacific, ILTM Japan will venture further, providing a direct opportunity for a selection of the world’s elite travel products and experiences to reach the most discerning of Japanese luxury travel agents and specialists.”

Olly – Fotolia

“If you were to work on improving your ability in one area, something that would help all other aspects of your job and even your life, what ability would you choose to work on?”

Several years ago, a teacher asked me that question and I answered, “Meditation.” Even before reviewing the ever-increasing scientific evidence, I identified meditation as a killer app, a meta-skill that would provide benefits like better sleep, clearer focus and more energy. I knew it would help all other management skills. I believed it, but I sure didn’t see it.

Why? Perhaps like you, I tried and failed many times. In fact, over the years I felt more stress in my failed attempts to focus on the breath or some meaningless mantra for more than a minute or two. My Great Uncle Edmund (Edmund Jacobson, founder of Progressive Relaxation) admonished, “Any effort to relax is a failure to relax.” He was right. I was trying and failing to relax.

So this month, I want to share with you some practices that work, with the aim of bringing you at least a step or two closer to all of the benefits that silent meditation provides. But first, a word on meditation.

False start

Meditation: Does the subject interest you? If you’re like most of my executive MBA students and clients, and indeed most business people I’ve talked to about this, you have at least given it some thought and even a try, probably more than once. You may even be a seasoned practitioner. If so, congratulations! You’re surely reaping the rewards.

Or you may be like Pete (name changed to protect his ignorance), a visiting student at my university 25 years ago, who thought it would be funny to undermine our professor’s attempt to include the practice in class. The professor, who had just returned from Moscow, having been consulting the Gorbachev government on free-market tools for perestroika, was teaching the course Creativity in Business, an elective in my international MBA program.

The professor rang a bell and asked us to focus on the sound, listening as intently as we could for a minute or so before beginning our class. The next week, Pete, with a smirk on his face, tossed a blue stuffed fish toy on the table. “What’s that?” the professor asked.  “Oh, that’s a meditation fish. Let’s all look at it.”
I’m not sure what grade Pete received—in fact, I think he dropped the class in the end—but the damage was done. The professor never again rang the bell and never again even mentioned meditation. This was a loss for us all.

Stop!

One of the most difficult exercises (at first) for some readers of Get a G.R.I.P. is the one in Chapter 20 called “Stop!” The chapter covers meditation and the exercise consists of doing nothing other than meditating for ten minutes, or five if ten is too tough, once a day for a week.

Why is this difficult?  Because most successful people have formed a bias for action early in their lives, and that bias serves them well.  After all, if you look at your own organization, it’s the people who get things done who you treasure most. Being asked to do nothing sounds like the ultimate waste of time.
But having recently again taught Temple Japan’s executive MBA Course (Managing and Developing Human Capital in the Enterprise) and having seen the results of student exercises related to meditation, I’m compelled to share their successes stories as well as wisdom gleaned from some of their presentations.

Lessons Learned

Much to my delight, none of the students offered up a mediation fish. In fact, the pairs who volunteered to share what they learned during a week of performing the exercises in Chapter 20 all spoke of the benefits they received while working incredibly hectic schedules (over 90 percent of them are working full-time during the demanding program, and most have families). Among the benefits they listed were less stress, better moods, higher productivity and even better relationships with colleagues, classmates and family members.
One pair walked us through a brief meditation, and another played a video that I’ll link to below. Anyone who pays attention during meditation notices an immediate, positive change. You really do need to do that, though. As local musician Steve Gardner says, “You can’t use a credit card to pay attention.”

Trial and Error

All of those trials and (mostly) errors I made over the years served a purpose, in that I’ve been lucky enough to practice with more than ten different teachers in search of a style or method that works for me. Had I latched onto one early, I might now be a fanatic for the one right way.

What I’ve learned is that taking a few minutes out of the day, especially first thing in the morning but really any time during the day can reboot my brain and recharge my energy. The “One Moment Meditation” promoted by author Martin Boroson (www.youtube.com/watch?v=F6eFFCi12v8), is a perfect example of a practical mediation technique that works. This is the video that was shared by a pair of my students.

Qigong (pronounced “chee gong”, which literally means “life energy cultivation,”) is my personal favorite form of mediation. It combines slow movements, breathing and standing poses that focus the mind and increase the energy flow from head to toe. Each exercise is simple for beginners, and yet to master qigong would take a lifetime. When demonstrating one of the standing poses, a teacher named San Bao, who works mostly on Koh Samui, Thailand, says, “Don’t worry, the first 58 minutes are the most difficult. It gets easier after that.”

He explained that there are teachers of qigong who only take on new students who can perform a standing pose for at least an hour, and yet we all gain increased wellbeing by doing one for just a few minutes. That’s the beauty of qigong and indeed any meditative discipline.

My students shared other lessons as well. Many had practiced a form of meditation at some point in the past but had dropped it for some reason or another. They all found it very easy to get back into whatever practice they had once started.

That’s another beauty of meditation. Unlike with physical exercise, where your muscles tend to atrophy with disuse and soreness returns the first time you go back to it, the benefits of meditation appear to be cumulative. That is, every time you focus consciously on the present moment, and thus raise your self-awareness, you increase your skill in doing so, regardless of consistency.

Both research and more importantly your own experience will show that being fully present and having your teammates fully present improves communication and performance at work. How many presenters at meetings haven’t a clue that they are boring the socks off their listeners? How many of those struggling to listen are even aware of the frustration that’s building inside them? (Well, maybe that’s easier.)

How great would it be if those on both sides of the table could recognize the feelings inside themselves and in the other side and bring a dose of interesting, real discussion to the mix?

If you’ve read this far, you owe it to yourself to follow up with Boroson’s 5:35 entertaining video. I also like the newsmaker interview where he talks about the “stresscalator,” a term he coined to mean increasing the stress of those around you, which is exactly what happens when you lose patience. And patience, remember, will definitely increase with meditation.

Mediation is not some freaky New Age practice (even if lots of New Agers do meditate). It’s simply being here, now, in the most effective way you can. Rather than tossing a stuffed fish on the table, why not give it a shot?

Illustration by Shane Busato

Optimal payable distribution. It sounds like obscure technical jargon, but it’s actually a concept that could have a big positive impact on J-REITs and the overall real estate market in Japan. As I finish this column on December 21, the GLP J-REIT is listing on the Tokyo Stock Exchange. And its corporate governance and distribution policies could radically shake up the J-REIT market.

GLP J-REIT is sponsored by Global Logistics Properties, a listed vehicle in Singapore whose sponsor is GIC, the Singapore sovereign wealth fund. Unlike private funds and ordinary companies that own real estate, REITs (real estate investment trusts) are special investment vehicles that exist in a highly regulated environment in exchange for certain tax benefits. Specifically, if they distribute more than 90 percent of their profits, they don’t have to pay corporate taxes.

Profits are defined as income minus direct operating expenses, depreciation and interest expenses. Since depreciation is a non-cash expense, however, its effect is to reduce profits available for distribution while increasing cash on hand. In other countries, REITs typically distribute some of the cash generated by depreciation along with profits. In Japan, opposition from large domestic shareholders and inertia have prevented the use of REITs so far.

With GLP’s listing, however, this situation is about to change for the better. In its offering prospectus, GLP stated that it intends to distribute about 30 percent of the cash generated by depreciation. This bonus cash is referred to as an optimal payable distribution (OPD). According to an investment banker familiar with the offering, GLP’s initial distribution yield is expected to be about 5 percent, but the OPD bonus should raise that figure to more than 6percent. By comparison, the Japan Logistics Fund (8967) offers a yield of 4.88 percent and the Industrial and Infrastructure Fund (3249) is at 4.42 percent.

Overseas demand for the GLP J-REIT has been strong, according to the investment banker, due to its high yield, transparency, performance-linked compensation for the asset manager and good corporate governance. While I don’t expect other J-REITs to copy all of these features, I do expect them to closely watch how the market responds to OPD. The president of a J-REIT asset manager sponsored by a major Japanese real estate company recently told me that he is seriously considering OPD, but wants to better gauge the reaction of major domestic institutional investors before going forward.

For accounting purposes, OPD is treated as a return of capital, causing headaches for trust banks, securities firms and accountants handling these issues, as well as certain shareholders such as regional banks. The return of capital must be recognized as a sale at market price, so depending on the acquisition cost of the shares, shareholders must adjust their books and declare profits or losses, potentially complicating their own financial statements and projections.

What really impressed me most about GLP’s transparency was the presentation prepared for its own shareholders at the extraordinary general meeting to approve creation of the J-REIT. Comparing the prospective REIT portfolio with the remaining GLP assets after the sale, by location, age and remaining lease term the profile was virtually the same. In other words, unlike certain Japanese REIT sponsors that I will not name here, GLP did not dump its less attractive assets into the REIT. It also gave a compelling explanation for how the REIT formation created value from the perspective of both the parent and REIT shareholders.

Only a few days before GLP’s listing, Prologis, a US REIT that is one of the largest logistics investors in the world, announced its intention to form a J-REIT. While Prologis has not provided further details, I can only assume that it will use GLP’s listing as a model in a variety of ways. If GLP’s price performs well after listing, I expect other J-REITs to quickly adopt OPD.

For the greater real estate market, OPD will increase demand for two types of assets that have been out of favor, namely, regional shopping centers and properties built on top of fixed-term ground leases. Both types of assets generate huge chunks of cash from depreciation that J-REITs could not efficiently utilize until now.

In 2013, J-REITs are expected to raise large amounts of equity and debt, but there is a shortage of large, high quality assets for them to buy. The introduction of OPD will widen the pool of REIT food and could help to push up real estate prices overall, despite generally soft fundamentals.

Full Disclosure: my company purchased a small number of GLP J-REIT shares on the listing day.

Why, everyone might wonder, should we be concerned about the growth of the ACCJ itself? And what does growth in this context mean? We are, after all, a mostly not-for-profit membership organization, and the ACCJ brand is recognized by the Japanese and US governments, as well as major Japanese business organizations and other American chambers in the region, as being very strong. Moreover, with more than 2600 members currently, we are the largest foreign business organization in Japan. And we are on very solid financial footing.

Fundamentally, I see three reasons to focus on ACCJ growth. The first reason is that membership—and in particular the number of commercial memberships—provides the revenue base enabling us to do what we do. Second, the total number of commercial memberships and members has been slowly but steadily declining over the past several years, especially since the so-called “Lehman Shock.” And third, there is nothing better than growth to energize the membership and further build the brand.

Therefore, I have established, with approval from the Board of Governors, a Special Presidential Task Force (SPTF), under the capable leadership of Vice President Jeff Bernier of Delta. Its mission is to examine all aspects of membership engagement and expansion across the organization, and to report back to the Board within six months with specific recommendations for an explicit membership growth strategy.

A key data point for the SPTF, in carrying out its mission, will be the results of the biannual qualitative member study, conducted (with great thanks!) on a pro bono basis by Carter JMRN, as reported to the Board in December 2012, and to the Leadership Forum this past month.

While nothing is sacred, and all topics are open for discussion, Jeff and I envision the SPTF addressing the following questions, among others:

• ■ What can we do to more strongly engage the 50 percent of our members who are Japanese, especially through programs focused on global leadership development and/or programs conducted in the Japanese language?
• ■ Are we leading by example when it comes to what we advocate as to the benefits of greater female participation in the Japanese workforce? And how can we do more?
• ■ Are we striking the right balance, in light of our diversity, between the needs of the many larger and smaller enterprises that comprise our commercial memberships?
• ■ Are there certain industry sectors within US business in Japan (e.g., retail, travel and tourism, agriculture) that we should be targeting more strategically for membership?
• ■ Should we be targeting more non-US commercial memberships, given the strength of our governance processes, and the value proposition we can provide to all foreign businesses in Japan?
• ■ How do we more consciously involve the CEO’s, including Japanese CEO’s, of our larger commercial memberships to provide inspirational examples to all of our members, while meeting their own needs regarding advocacy and best-practice sharing?
• ■ How can we leverage all of the communication tools, especially the newer tools, to consistently convey our messages internally, externally and among our members?
• ■ Are we doing all we can on programs—variety, level, quality, focus—to appeal to and meet the needs of the diverse interests of our members?

This is only a sampling of the issues for consideration, and we will structure the SPTF such that we can elicit input from the entire membership. I look forward to everyone’s enthusiastic participation in this important process, as we strive to grow in the spirit of 共就成長.

Upon entry, the dimly lit interior of Kita Aoyama Salon cloaks you in privacy no matter where you sit. There’s not much to see in the ambient soft lighting and candelabra glow bouncing off dark wood walls. We choose the stunted bar stools allowing us to check the goods. Better yet, most of Salon’s elixirs are not on the menu. Like any good bar, the bartenders prefer to find out what you like and match the drinks to suit.

Special cocktails involve custom infusions, bitters and homemade syrups. These, like the elderflower grenadine or the ginger-and-lemongrass syrup, go into drinks such as fresh-fruit martinis or to spike up something traditional—in our case a zippy pineapple Moscow mule (¥1,400).

We asked about their bottled beer and chose a Lion stout (¥1,000) from Sri Lanka out of that night’s varied off-the-menu selection (including Jever from Germany, and Duchesse de Bourgogne from Belgium, ¥1,400). We paired it with some soft homemade beef jerky marinated in soy and sugar (¥700) and let our eyes get accustomed to the dark.

Salon is now focusing on an earlier—and hungrier—crowd. A slight increase in the lighting means customers can now see their food. With the help of a small flashlight, we ordered the special dry curry with rice (¥1,400), aged for 100 hours and containing 34 spices. Not too hot, it kept our taste buds guessing—tamarind, cinnamon, apple, pickled onion and dry fruits? The steak (¥1,600) came served with fries to soak up the roast-like gravy. They also serve a salty bagna cauda with fresh vegetables (¥1,000).

Bartender Kosuke Hidaka cleverly recommended cocktails based on our conversations. First was a gin and tonic with hyuganatsu, that purely Japanese crossbreed of lemon and yuzu (¥1,200). Simple. Refreshing. Unique.

We noticed a few bottles of absinthe and had to ask. Hidaka duly whipped up a concoction with muddled mint, lime and sugar. He added Beefeater gin, some Carib and house syrup, then dropped in a bomb of Marilyn Manson’s Mansinthe and set it before us. “This,” he proclaimed, “is a Cheap Mojito.” At ¥1,350 we were inclined to disagree, but it was strong and biting, and left us floating up the stairs when we left, with thoughts from the green faerie muse.

Chris Zarodkiewicz, Governor-Chubu, Christine Sakamoto, Chair of Women in Business Committee-Chubu, and Deryk Langlais, Chair of Mobility Manufacturing Committee, enjoy the Mardi-Gras buffet at the Champagne Ball on November 16

Harry Sullivan, Principal Officer at the US Consulate in Nagoya and Matt Frasier, Nagoya Canadian Consul, raise glasses for a toast at the Champagne Ball on November 16

Tokyo American Club General Manager Tony Cala and Food & Beverage Director Brian Marcus with a guest at the ACCJ Charity Ball on December 1

ACCJ staff with a guest at the ACCJ Charity Ball on December 1

Guests take a break from the party to pose for a picture at the Champagne Ball on November 16

Dancing the night away at the ACCJ Charity Ball on December 1

Charity Ball Committee member Marlo Michaeli with a lucky prize
winner at the ACCJ Charity Ball on December 1

The Bakersfield Soul of Jett Edwards and Steve Gardner at the ACCJ Charity Ball on December 1

Guests feeling the Mardi-Gras spirit at the Champagne Ball on November 16

Guests enjoying themselves at the ACCJ Charity Ball on December 1

Our sister and brother chambers in APCAC and indeed around the world typically call themselves AmCham. In APCAC there is AmCham-Bangladesh, AmCham-Korea, AmCham-Malaysia and so on. But in Japan we are proud of the ACCJ appellation. We work hard to protect and enhance the ACCJ brand and we believe it has broad resonance in the business and economic policy community here.

I must admit that when I hear others referring to us as AmCham-Japan I have sometimes found it grating. Our Embassy friends who in most cases have worked in a number of other countries around the world sometimes call us the AmCham. The same is often the case with visitors, newcomers who have been expats in other markets and our colleagues from other APCAC chambers.

This past December I was listening to Keizo Yamada, our Director in Kansai. Keizo was debriefing us on his visit to AmCham Thailand, a visit that we arranged as part of our own effort to find synergies and efficiencies by working more closely with other APCAC members.

Keizo kept using the term AmCham and all of a sudden it no longer bothered me, even when he referred to our Japan operation with that term. So I began to wonder if we should use the term AmCham more often ourselves. After all, we are working harder than ever on regional issues and Japan’s role in the region is a major subject of ACCJ advocacy.

So I would be interested in hearing from readers to get your thoughts on this subject. Right now, I think most of us are a bit allergic to calling ourselves AmCham-Japan. But should we care? Are we missing a branding opportunity? Or would we be tarnishing the ACCJ brand if we sprinkled our documents with the AmCham name?

As many of you are aware, the ACCJ is making a major effort to increase our leverage through social media. As part of that, I am posting this same message on our networking sites to see what members think. I look forward to reading your comments.

To comment, please visit our sites on LinkedIn and Facebook:

Another area where sweeping changes can be seen is in education. It may still be frigid outside now, but the slow march to spring in Japan means one thing: school. In anticipation of the coming academic year, this issue of the Journal features a topical story on the explosion of technology in the classroom.

Technology is poking and prodding its way into every facet of schools around the world and is radically altering the way we learn. Over the past decade, our schools have been flipped upside down by technology in the forms of tablet computers, laptops, multimedia presentations, cloud computing and an overall sense that the lines between classroom and living room are becoming hazy. At the heart of this shakedown we find the Internet as a radically democratizing force for increasing access to information.

Our schools (“the academy”) were once our chief repositories of knowledge. But what happens in the age of Google, Wikipedia and social networking websites where opinions and information spread in a flash, as quickly as your bandwidth allows? What are students and teachers to do?

The short answer: rather than acting as disseminators of factual information as was their main task in the past, teachers today are spending more time training students to vet and make sense of the ever expanding ocean of information online, as well as help them learn to effectively communicate their findings through various media. In Schools of the Future, we take a tantalizing look at where this trend is heading.

Rather than focusing on a change in the fabric of our learning methods, as seen in Schools of the Future, we get a glimpse of a new graduate program offered by Osaka University that aims to address a significant shift in Japan’s medical industry (Lab Inc.). While the majority of Japanese doctors have historically flocked to work in hospitals and clinics, a growing number of MDs are foraying into the adjacent pharmaceutical universe.

Osaka University is responding to this trend by offering an innovative new graduate-level program in pharmaceutical medicine, aimed at doctors and professionals with backgrounds in science and engineering who want to know the inner workings of the process behind developing drugs and bringing them to the market.
In Lab Inc., a number of leaders from the field share their thoughts on Japan’s changing pharmaceutical landscape, explain why more doctors are making the switch from practicing to developing medicine and outline some of the opportunities for doctors and businesses to capitalize and get involved.

Alongside these education-related feature stories, this issue also contains the usual nuggets of wisdom from regular columnists. First, Dominic Carter gives us a peak of a trend in which more Japanese are entertaining friends at home (Homeward Bound). Seth Sulkin follows up with a slice of insight into how optimal payable distributions – an arcane term before an introduction – could be a major boon to those who invest in Japan’s real estate market (Growing REIT Food). Andrew Silberman then imparts some sage advice on the benefits of disconnecting from the outer world and going within, even if only for a few minutes a day in Tuning Out the Noise.

In this issue we also get a preview of a luxury travel event scheduled to take place in Kyoto on March 11-13 (Kyoto Woos the Jet Set). For the first time in Japan, Reed Travel Exhibitions, organizer of the worldwide International Luxury Travel Market (ILTM), will host the first ever ILTM Japan event, which aims to bring together high-end luxury travel exhibitors and luxury travel agents to meet, mingle and do business. According to tour organizers, Japan’s potential in the luxury department is massive.

Finally, in keeping with the education theme, this issue includes a special advertising section that showcases some of Japan’s best schools and programs. These ads and the stories to go with them are featured in the hope that they help you make informed choices for educating yourselves or your children. From kindergarten to professional school, one thing is certain. Education is being reimagined for the 21st century. It’s up to us to decide whether to adapt to these changes or be left behind.

Photography by Juan Carrera

Three goals for growing the ACCJ brand

Newly elected ACCJ President Laurence (Larry) W. Bates has big things in mind for the ACCJ. And big hopes often necessitate change. Effecting positive change is already tricky enough at home, but in another culture the challenge can be formidable.

For Bates, the best way forward is by accepting the system for what it is and working with it, instead of against it. “Every business culture is what it is, and you need to work and promote change from within it,” he says. “We [ACCJ] may not be part of the Japanese establishment, but we are part of Japan as a whole. We have been welcomed by the establishment, and we are recognized as having an independent voice. We want to think of ourselves as an honest broker or change agent.”

In November, Bates spoke to the ACCJ’s ordinary general meeting about three themes related to change and growth that he wishes to emphasize during his term as ACCJ President.

The first theme is growth in personal leadership. By offering its members the opportunity to grow and become contributors to their companies, the ACCJ can help to energize these member companies, which can then feed back into the ACCJ, contributing and helping to build the organization’s brand.

As a practical example, he asks whether the Chamber is doing enough to reach out to its Japanese members (about 50 percent of its membership) and providing them with the value that they are seeking.

“I’d like to experiment with programs directed towards Japanese members, in either English or Japanese, to give them something that they can’t necessarily get in terms of globalization skills inside their companies, such as how to work with and influence diverse teams,” he says.

Likewise, Bates hopes to provide a forum for female ACCJ members who wish to develop their leadership skills, and to help them meet the challenges they face in their companies through the Women in Business Committee, giving them confidence to communicate internally about the value of their external engagement.

He also sees room for personal growth with regard to “vertical” functions, and lists government relations, human resources, and sales as examples of functions, for which training and growth opportunities may not be available in smaller enterprises. He hopes the ACCJ can reach out to employees in smaller organizations to assist with such personal growth programs.

The second growth area President Bates is keen to engage is the ACCJ itself. Since the “Lehman shock” of 2008 there has been a decline in Chamber membership, probably due to the fact that there are fewer Americans and foreigners living in Japan than before. However, Bates says that this “should not be a reason for this market not to be considered a market for growth—either for business or for the ACCJ.”

He points out that many American companies are doing extremely well, with Japanese staffing sometimes even at the CEO level. He adds that there is still a lot of room for American players in the Japanese market, even if the national growth rate of the world’s third-largest economy slows to one percent or even falls to zero growth. The market is far from saturated in many areas where American companies do business, including some critical fields of technology such as information technology, life sciences and clean energy.

Building on the membership engagement programs implemented by past ACCJ President Mike Alfant, President Bates hopes to use such engagement to generate excitement through growth, which will enable the ACCJ to achieve many of its ambitious goals. Social media, and its use by forward-thinking CEOs, is another tool he feels that members of the ACCJ can use to communicate more effectively with one another—and with external stakeholders—on important issues, allowing them to contribute as thought leaders for growth in turn.

The third area where President Bates hopes for forward movement is in the field of advocacy. This includes revitalizing Japanese growth and expanding market opportunities for US companies. Even if TPP comes to fruition with Japan’s hoped-for participation (more on this below), he says, “We need to expand US-Japan bilateral government dialogue with the participation of the private sector, whether it be in clean energy or economic harmonization.”

He points to the success of the Internet economy model originally proposed by the ACCJ. This model is based on a White Paper produced by the ACCJ a few years ago, and has resulted in positive, constant interaction between the public and private sectors from both countries.

The intention of these dialogues is to create an appropriate regulatory environment that will ultimately create a more vibrant Japanese economy and more business opportunities for ACCJ members engaged in the Internet economy sector.

Another growth initiative comes from an ACCJ White Paper issued two years ago (Charting a New Course for Growth: Recommendations for Japan’s Leaders), which highlights specific policy reforms that the Japanese government could implement to create the right policy environment for growth.

Over the past 20 years, the paper concludes, the major factors driving job growth in Japan have been foreign direct investment and entrepreneurship—whether domestic or foreign. According to the paper, a regulatory environment that encourages and promotes these two growth drivers would be beneficial for the future of Japan. These are two major areas where the ACCJ can act as an advocate for change.

Photography by Juan Carrera

Journey to the East

Bates can trace the path to his current position as leader of Japan’s premier foreign business community and change agent to his first arrival in Japan nearly 30 years ago. What many don’t know, though, is that he started his Asian adventure in China. Growing up in a small town in Connecticut, at a time when Nixon and Carter were thawing US-China relations, the seeds were planted early for Bates, who saw China as the potential future setting for his career.

Majoring in Chinese studies and economics at Yale, Bates remembers that the 20 students who started the intensive course with him dwindled to only five by the end of the third year. Following graduation in 1980 (B.A., summa cum laude), he taught English on a Yale-China Association fellowship to English majors at Wuhan University in the Yangtze River Valley in Central China, shortly after the re-opening of China’s universities following the Cultural Revolution. He returned to the US to attend Harvard Law School in 1982 and to study Japanese.

While working for the New York law firm of Paul, Weiss, Rifkind, Wharton & Garrison in Beijing in the late 1980s, Bates experienced first-hand the events surrounding the Tiananmen demonstrations, which seriously disrupted business with China, and reinforced the lesson that “one needs to be flexible and keep as many options open in one’s career as one can,” he says.

This flexibility landed him with a place at Tokyo University as a Fulbright Senior Professional Research Scholar, which allowed him to co-teach comparative international economic law; a difficult subject at the best of times, but doubly difficult when teaching (and grading student papers) in Japanese. Following his nine-month stint at Tokyo University in 1990, he joined the Tokyo office of Morrison & Foerster.

In 1992, he was recruited to GE’s medical systems business as general counsel for Asia, based in the plant in Hino, in western Tokyo, enabling him to draw on his cross-cultural experience in Chinese and Japanese law and business.  He spent a number of years traveling and growing the business in the region, including four years in Hong Kong. He then returned to Japan in 1998 on the heels of the “Big Bang” financial reform package instituted by then Prime Minister Ryutaro Hashimoto, when GE Capital started investing in the Japanese financial services sector.

Reflecting on his moves, he sees Tokyo as “the most exciting city in the world.” While some see the difficulties of living in Japan’s largest metropolis, he says that he relishes “peeling the layers of the onion to get to the real story,” which he sees as “a tremendously interesting and challenging part of the experience.” He adds with a laugh, “Maybe it’s the lawyer in me.”

The attention to detail and quality in the Japanese approach to things–whether in restaurants, shops, or the dedication of employees—is a major selling point for him that compensates for the occasional frustrations that inevitably come with living in a foreign culture.

“It’s been so long since I’ve felt the pangs of the newcomer to Japan,” he says. Yet he recognizes that some aspects of Japanese business and government culture can be difficult, such as the time needed to build consensus on the details of necessary changes. “Once a decision has been made, it goes forward beautifully with high-quality execution,” he adds. “But getting to the point where decisions are made can be the most frustrating part of the process.”

Change and the TPP

Bringing about positive change and arriving at decisions in Japan are linked to an underlying need for consensus. Accepting that this is simply part of Japan’s social fabric is part of working from within the system, instead of fighting against it. Although many criticize Japan as being a society which does not respond to change, Bates points out that in the time he has lived in the country many changes have taken place. He points to one area in particular where the ACCJ has helped to promote change.

“If I think back 20 years to when I first came here as a lawyer, it was almost impossible to participate in a government meeting,” he says. “The door wasn’t open.” Now it is possible for the ACCJ to talk and share ideas with members of the Diet (see Diet Doorknock in the November issue of the ACCJ Journal), civil servants and bureaucrats. Even if there isn’t, and never will be, perfect agreement, the Japanese government considers the ACCJ’s opinion.

In light of this shift, Bates is optimistic that there is a genuine desire for change within the political establishment. Such change, however, will require a significant degree of outreach between the different political parties and factions involved in governing Japan. The ACCJ is prepared to help with policy ideas, and ultimately with business success stories.

On the subject of the Trans-Pacific Partnership (TPP), Bates points out that “as the ACCJ, we think it would be very much in Japan’s interest to be a part of it. If Japan participated in the TPP, the GDP of the member countries would amount to around 40 percent of the world’s GDP.” He adds that if Japan were to join TPP, Japan and the US could work together to take the lead in shaping the international regulatory environment throughout the Asian region, creating a more competitive environment for both US and Japanese companies.

TPP is therefore not about forcing Japan to break down existing market barriers, although it may help to facilitate business in all participating countries.  At the moment, the EU and China increasingly influence global standards and regulations, such as those for privacy and IP protection. However, a set of standards backed by the US and Japan, which share many common interests, along with other TPP member countries, could provide a valid alternative.

“We in the ACCJ think that Japan really needs to step up to the plate if it sees that it is in its interests to do so and to be willing to negotiate on the same terms as all the other TPP participants,” Bates says. “I think that they will make the decision to do that at some point in the future.”

He adds that he thinks the government is ready to do all of this, even though various sectors have expressed concerns. “But that’s true of any country considering any significant trade agreement,” he adds, citing the initial reluctance of many in the US to join NAFTA as an example.

He makes an additional point. Embracing the TPP would be good not only for the major market players, but also for subcontractors and others in the supply chain. Although at first sight it may look as though the trade agreement is of benefit chiefly to the big names, Bates says that the whole economy would reap the rewards.

What began in 1950 when local high school students shaped six snow statues in Odori Park evolved when the Self-Defense Force joined in and built the first massive snow sculpture. In the ensuing decades, the festival has grown and been refined to become an internationally recognized event.  The 64th Sapporo Snow Festival will be held from February 5 through February 11, 2013.

Today two million people from around the world descend on Sapporo for one week every winter to ogle the hundreds of snow sculptures and statues that make up this winter wonderland, stretching from Odori Park, starting from Sapporo TV Tower and its neighboring ice skating rink, to the grounds at Community Dome Tsudome and the main street in Susukino. An ice sculpture contest, snow slides, mazes and seasonal delicacies are also on offer. From atop the TV tower, visitors get a sweeping view of the festival’s expanse of snow illuminated by glittering lights.

Snow sculptors from all over the world create their pieces at the festival, and the most talented teams compete in the International Snow Sculpture Contest.The winner of the 2012 International Snow Sculpture Contest was The Leaping Dragon from Hong Kong—a monstrous snow dragon that paid homage to the incoming Year of the Dragon and according to the sculpting team, brought a good dose of harmony, good luck, kindness, righteousness, wisdom and strength. Through their artwork, the team hoped to show the world their wish for world peace and spread the virtues of the dragon.

Many other sculptures at the festival shared the themes of peace and unity. My personal favorite was a sculpture from Sweden called Sweden’s Souvenir (Sweden no Omiyage). The sculpture was composed of clean, modern lines, with a simplicity that understated the craftsmanship needed to complete the piece.

Some of the most intricate, famous and large pieces at the Snow Festival that weren’t part of the contest were the massive Snow Aquarium, which showcased the different animals of the sea, Mickey Mouse as he appears in Fantasia, the National Palace Museum from Taiwan, the Taj Mahal and Tsuruga Castle. The detail that goes into these monstrously large, ephemeral sculptures—they only last for a week—is an incredible sight.

A caveat: When I ventured to Hokkaido, the air was bitter cold and filled with snow flurries and northern winds that burned any inch of skin left exposed. As I trudged along in these conditions, I wrapped my scarf around my face, pulled my hat over my forehead, and walked with careful, small steps on the icy sidewalks. Grips to attach to the bottom of your boots to prevent slippage on the ice are a winter essential for Hokkaido, along with heat packs (kairo) to keep in your pockets or stick to your body. I stuffed kairo in my shoes, gloves, and pockets at all times, but still have never felt such unrelenting cold. I went to Sapporo unprepared, but luckily both essentials can be found at almost any convenience store in the area.

The pathway that leads to the sculptures is thankfully lined with hot drinks and food, providing some respite from the cold.Hokkaido specialties include potatoes, lamb, seafood, and of course, Sapporo Beer. I grabbed a cup of hot citrus sake to keep me warm as I strolled around the park, but my drink was chilled within seconds of hitting the air. So much for staying warm!

Images courtesy of the City of Sapporo

In November, Steve Olson, the Executive Director of the recently established SelectUSA office in Washington, D.C., zipped around Asia on a whirlwind tour to promote SelectUSA, a foreign direct investment (FDI) initiative of the US federal government that is housed within the Department of Commerce.

Olson, who is also a Senior Adviser to the Secretary of Commerce, visited five cities in five days with little time for a break. According to Andrew Wylegala, the Senior Commercial Officer at the US Embassy in Tokyo and a Japan representative of SelectUSA, they traveled over Veteran’s Day, working ten hours-plus in each city, before traveling back home the following weekend. “The only tourism or relaxation element was a half day of temple touring on a Saturday morning in Kyoto,” Wylegala recalls.

With word about SelectUSA to spread, however, Olson had good reason to push on. During the tour, he visited Taipei and Kaohsiung in Taiwan, Seoul, and ultimately Osaka and Tokyo—a fitting conclusion to the trip as Japan represents America’s second largest source of FDI on a stock basis, second only to the UK. In both Japanese cities Olson presented at a series of roundtables and meetings with Japanese and American enterprises and associations.

“The common denominator of the interactions was an enthusiastic response to our enhanced FDI outreach and a clear desire for further support, SelectUSA programming and opportunities to expand in the US,” Wylegala says.

During his stop in Tokyo, Olson, Wylegala and Kevin Chambers, another Commercial Officer at the US Embassy in Tokyo (who, along with local staff member Michihiko Yokoi, serve as Olson’s implementers for SelectUSA in Japan), made time to speak with the ACCJ Journal about SelectUSA, the reasons why now is a great time to invest in the US and what this landmark FDI attraction program can do for Japanese firms eager to enter the US market.

Source: Department of Commerce, Bureau of Economic Analysis—FDI by Ultimate Beneficiary Owner

A Growing Pie

The existence of SelectUSA is a sign of the times. Until its launch in 2011, wooing FDI was almost entirely left to state and local governments. The federal government didn’t play a significant role until the latter years of the Bush Administration, when an initiative known as Invest in America began. In recent years, shifts in global competitiveness and expressions of interest from the states who seek assistance for their still primary role in investment attraction welcomed the federal government to play a more supportive role.

“It’s a very positive step and a reflection of the Obama administration’s commitment to this issue,” Olson says, adding that it is ultimately a bipartisan one recognized by Republicans and Democrats alike. “We can’t take investment attraction for granted. It’s too competitive.”

As such, the U.S. Commercial Service has made attracting foreign investment as one of its three pillars, along with promoting the export of US goods and services, and defending US commercial interests overseas.

The program started as a pilot in ten countries. Following an initially positive response, it entered its second phase in October 2012 and now covers 25 markets, including Japan. In the first year, SelectUSA trained more than 80 Commercial Service Officers and locally engaged staff in these 25 markets, which represent almost 90 percent of all FDI in the US.

With the rise  of large developing economies like China, India and Brazil, the US cannot afford to rest on its laurels. Until the late 1980s, the US received 45 percent of annual global FDI. This figure, however, has dropped to less than 20 percent due to the economic rise of developing countries.

While the US may have lost a share, according to Olson, “The pie has grown. That’s the good news. The total amount of investment flow has increased substantially.” European countries, Canada and Mexico, to name a few, are spending tremendous resources on attracting investment at the national level. “We need to do a better job of seeking a bigger slice of this bigger pie,” he adds.

Despite the drop in its global share of FDI in recent decades, the US still managed to attract $227 billion of investment in 2011 alone and “has long enjoyed the position as the premier destination of foreign direct investment in the world,” Olson says.

The stellar FDI record of the US is good news for workers concerned about jobs. There are currently 5.3 million Americans who work for US subsidiaries of foreign firms. “These are high-paying jobs, which tend to be in the manufacturing sector,” Olson says.

Advanced manufacturing jobs today are no longer of the repetitive, conveyor belt variety seen on Laverne and Shirley, Olson adds. “These are highly technical jobs that require significant training.”

Competitive Edge

The growing competition from economies like China, India and Brazil is real, but so is the competitive edge of the US. First and foremost, the US is an easy place to do business. Compared with the preponderance of red tape in some countries, it’s hard for some to grasp just how easy it is to start a business in the US.

“You can start a company in an afternoon,” Olson says. “States differ, in terms of regulations, taxes and their approach to incentives, but they are all united in their desire to attract investment. This is an ideal time to invest in the US.”

The US is ranked fourth worldwide in the World Bank’s Ease of Doing Business 2012 ranking, which Olson considers “remarkable given the size of our market.” When it comes to private equity rankings, the US came in first in the IESE Business School’s 2011 Venture Capital and Private Equity Index.

Alongside ease of doing business is the fact that productivity is rising in the US, while it is falling in many other developed economies. Further, US-based companies are located in the largest developed consumer market in the world.

“Manufacturers in the United States also have low or no-tariff access to all of our free trade agreement (FTA) partners,” Olson says. “Toyota, for example, is taking full advantage of our FTA with Korea that started this year, and is now exporting cars from the United States to Korea.”

The country’s low cost of electricity also plays a big part in attracting investment, especially from energy intensive industries, such as fabricated metals and petrochemicals. In Japan, the cost of energy is rising—a trend that was only intensified after the triple disaster of March 2011.

“We’re seeing a lot of new investment,” Olson says, “in those industries as a result of companies doing not just five- and ten-year projections, but 30-year projections of what their total cost of production will look like. Of course, a critical one would be energy.”

Another factor that gives the US an edge is its innovative spirit and strong intellectual property protection laws. Over half of the patents granted by the United States Patent and Trademark Office are given to foreign firms, entrepreneurs or ventures.

“That’s a recognition not only of the entrepreneurial, innovative spirit of America, but also a recognition of our strong intellectual property protections and a desire to commercialize these inventions in the United States where they can take advantage of these protections,” Olson says.

Japan is traditionally associated with electronics and automobiles, but there are plenty of other areas for expansion, according to Wylegala. “We might look to medical equipment, pharmaceuticals, renewable energy and design services as areas where Japanese firms may seek to build from strong domestic foundations or shore up relatively less developed areas by acquiring US expertise.”

Wylegala adds, “aerospace is a good news story where Japanese entrepreneurs have done a good job of integrating themselves into global supply chains,” citing the example of the Boeing 787 Dreamliner, for which 35 percent of the industrial production was completed by Japanese firms.

A one-stop investment shop

Steve Olson, Executive Director of SelectUSA

SelectUSA ultimately serves two main groups—state and local economic development organizations (EDOs), and foreign firms (small, medium and large-sized enterprises). Commercial officers help the former with organizing and holding investment promotion events, as well as providing counseling, and help the latter to connect with state and local economic developers.

Commercial officers like Wylegala and Chambers are on the ground rolling out the programs of SelectUSA in Japan. Much of their work includes arranging seminars and other events to attract investment to the US. They often do this in conjunction with particular states or regions of the US. Any state or region can call on SelectUSA Commercial Officers in Japan to help attract the appropriate audience, identify the right sectors to focus on and arrange event logistics.

Such an event generally begins with remarks by an Embassy or Consulate official on why the US is a good place to invest. Next, a state or local EDO representative takes over and talks about the advantages of investing in their own city, state or region.

For firms that decide to make the move, SelectUSA then provides all manner of assistance. Especially for smaller firms, Commercial Officers like Wygelala and Chambers serve as invaluable sources of useful information on federal incentives like worker training programs, as well as questions about daunting matters like incorporating in the US and filing taxes. In short, “if they have questions, we can provide clarity,” Olson says.

SelectUSA can act as a federal ombudsman for investors who have questions about a rule or regulation, from visa requirements to Food and Drug Administration regulations. When further expertise is required, SelectUSA can introduce businesses to various service providers, of which the ACCJ is flush. This adds up to SelectUSA serving as a one-stop-shop where investors can learn, plan and act on their vision to take a piece of the American FDI pie.

“There are so many service providers based in Tokyo,” Wylegala says. “They are stakeholders who have a key role to play. If a Japanese company is going outbound, perhaps they haven’t figured out where they’re going yet. But they know they need accounting, consulting, legal services. If they come to ACCJ members, that is a services export. We’ve already got a win there.”

Illustration by Yohei Takahashi

Japan’s Economy Shrinks in Third Quarter

On November 12 the Japanese government reported that Japan’s economy shrank 3.5 percent in the third quarter. The outlook for the rest of the year wasn’t any better, due to weak demand for exports.

When the Japanese economy grew by 5.2 percent in the first quarter of this year, many were optimistic about what the rest of the year would bring. Growth, however, stalled in the second quarter, slumping to around 0.3 percent. By the third quarter, the Senkaku Islands dispute with China coincided with a drop in demand for exports, which hurt Japan’s third-quarter results.

A 0.5 percent drop in consumer spending exacerbated the problems caused by the islands row with China in the third quarter, as did a 3.2 percent decrease in corporate capital spending. Construction spending also declined in the areas affected by the 2011 Tohoku Earthquake over the same period.

While Japan’s recession has dampened hopes for a global recovery, many are predicting that fourth-quarter results should be a slight improvement on the third-quarter slump. “If the economy does recover in any way it will be a minute rebound,” said David Rea, an economist with London’s Capital Economics.

Wii U Debuts Overseas

Video game lovers, get ready. The next generation of video game consoles are starting to hit the market. Nintendo Wii U, the first to be released from the eighth generation of consoles, debuted in the US and Europe in late November. The perennially popular video game company hoped that an early release in the US would give it a strong footing in the inevitable race between the next generation of consoles.

The Wii U has a sleek new design, meant to attract more hardcore gamers to the system, and comes equipped with a powerful HD processor. The system features a new control pad, resembling a tablet PC, which contains traditional controls as well as a touchscreen.

The gaming landscape has changed dramatically since Nintendo released Wii in late 2006. Neither the iPhone nor the iPad were around to compete with at the time, and mobile gaming hadn’t yet become the force that it is today. Only time will tell if the next generation can keep up with the pace of change.

Qualcomm Bets on Sharp

In early December, Qualcomm, a San Diego-based chip maker, has purchased ¥5 billion ($61 million) worth of new shares in Sharp. The announcement added that the American chip maker could invest an additional ¥5 billion yen in shares if its relationship with Sharp blossoms. The deal gives Qualcomm a 2.6 percent stake in Sharp, which is in the midst of restructuring.

Like many one-time Japanese electronics giants, Sharp has fallen on hard times. In response, earlier this year, the company borrowed money from Mitsubishi UJF Financial Group and Mizuho Bank to maintain its operations. An investment deal with Taiwan’s Foxconn Technology Group fell through after Sharp increased its loss forecast for this year. Sharp is also in investment talks with Round Rock, Dell Inc., and Hon Hai.

Sharp’s TV business has been losing ground to competitors from abroad. However, the company hopes to turn things around by refocusing its business on the mobile market. Sharp is also in final talks with Intel Corp., which is interested in investing in Sharp to secure an adequate supply of LCD touch screens for its Ultrabook, a direct competitor to Apple’s tablet PC.

Aeon’s China Makeover

On November 25, Aeon reopened its Jusco Huangdao Shopping Center in the city of Qingdao, in China’s Shandong Province, and announced its plans to rebrand all of its Jusco stores in China by renaming them Aeon. The company, which rebranded all of its stores in Japan in March 2011, decided to make the same move in China as part of a push to change the course of its fortunes in China.

Jusco’s Qingdao store temporarily closed after protestors caused 700 million in damages to the building on September 15. Most of the damage was covered by insurance, and Aeon continued to pay the store’s 370 employees during its closure. The store partially reopened in October, before fully opening on November 25.

The name change to Aeon will be effective at all of Jusco’s 36 stores in both mainland China and Hong Kong on March 1, 2013. Haruyoshi Tsuji, the president of Aeon’s China subsidiary, announced that the company is going to step up its efforts in corporate citizenship in the communities where its stores are located. “The risks [of attack] will not decrease unless Aeon stores become truly indispensable to their communities,” Tsuji said.

Aeon has participated in social outreach in China before, such as planting trees near the Great Wall of China. However, the store’s corporate leaders have expressed concern that their efforts haven’t been sufficient.

Aeon launched a nationwide sales campaign in China in December in a bid to attract customers back to its stores. The retail giant currently has 36 stores across mainland China and Hong Kong, and plans to open ten shopping malls in the country by 2015.

Illustration by Yohei Takahashi

Toyota’s Global Recall

On November 14, the world’s largest automaker, Toyota, announced a global recall of some 2.77 million vehicles. The recalls were made in response to complaints filed in Japan and abroad about water pump and steering problems.

This recall pertains to vehicles manufactured between August 2000 and December 2011. About 1.5 million of the affected vehicles were sold in Japan and the rest were sold abroad. Customers claimed that the steering problem can subvert the driver’s control of the vehicle in the worst case, and the issue with the water pump could make the vehicle inoperable. “There have been no accidents or injuries from these problems,” a Toyota spokesman told reporters.

Toyota reclaimed the title of the world’s largest automaker earlier this year from America’s GM. However, the company has since experienced a series of setbacks. In October the company recalled more than seven million vehicles globally due to other problems. The company’s hard times have been attributed to the effects of a strong yen and low demand in China, due to the Senkaku Islands dispute. Rivals Nissan and Honda also announced recalls this past year.

Sasago Tunnel Accident Prompts Safety Inquiry

On December 3, the Japanese government ordered the inspection of about 50 tunnels in Japan’s mountainous regions. The call for inspection was made after the tragic collapse of the Sasago Tunnel in Yamanashi Prefecture on the Chuo Expressway, in which the tunnel roof collapsed onto the Tokyo-bound lanes at around 8am on December 2, resulting in nine deaths and two injuries.

When the collapse occurred, 270 concrete slabs—each weighing 1.4 metric tons—fell from the arched roof of the tunnel over a 110-meter stretch of the road. Several moving vehicles were crushed by the falling concrete and one of the crushed vehicles caught fire. Attempts to rescue the victims were delayed as rescuers had to first extinguish the fire and reinforce the tunnel roof before entering.

According to authorities, no problems were found during the tunnel’s last inspection in September. The accident in Sasago Tunnel, which opened in 1977, has raised questions about the safety of Japan’s other tunnels that opened around the same time. Some suspect seismic activity as a possible cause of the collapse. However, no earthquakes were reported in the area around the time of the accident.

NTT DoCoMo’s Loss, SoftBank and KDDI’s Gain

Japanese mobile phone provider NTT DoCoMo suffered a net loss of 40,800 subscribers in November alone, following an exodus of former users who opened accounts with smaller rivals Softbank Corp. and KDDI Corp., both of which are Apple partner carriers.

According to an announcement made by DoCoMo, the iPhone 5 launch was responsible for the shift, which resulted in the first drop in subscribers since 2007 and the company’s biggest loss since it was formed in 1991.

Over the same period, subscribers to Softbank and KDDI increased by 301,800 and 228,800, respectively.

Illustration by Yohei Takahashi

Japan and India Sign Rare Earth Pact

On November 16, Japan and India signed a memorandum to work together on the production of rare earth minerals. The two powers agreed that Japan will decrease its dependence on China, which controls production of most of the world’s rare earth mineral supplies.

The agreement will be supported by both governments and overseen by the trading house Toyota Tsusho Corp. and an Indian state-owned company. Starting next spring Japan will import 4,100 tons of rare earths, or more than 10 percent of its overall demand. Rare earth minerals are used in the production of many high tech products from batteries and wind turbines to LED lights and cars.

In 2011, China ceased rare earth exports to Japan in the wake of a territorial dispute. The US, Japan and the European Union are currently in search of other rare earth sources in order to lessen dependence on China.

This rise reflects the beginning of a shift in the nature of the Japanese economy from one primarily based on manufacturing and exports to that of a rentier society. Japanese are proud of the country’s tradition of monozukuri, or the making of things. But as the strength of the yen persists, the population ages and declines, and more and more factories are shifted offshore, companies and individuals will increasingly have to rely on passive real estate and interest income to survive, due to Japan’s failure to develop into a consumer nation. Becoming a country of coupon-clippers reflects poorly on long-term economic prospects, but is very good for Tokyo’s real estate market, at least as long as there are enough tenants to pay rent.

As you would expect, there is quite a strong correlation between demographics and land prices. But Sayuri Shirai, a member of the policy board of the Bank of Japan recently pointed out a more interesting correlation between the so-called “dependency ratio”, or the ratio between the working and non-working population, and land prices. She showed that land prices peaked when the dependency ratio was lowest.As the Japanese population ages and shrinks, there is inherently less direct need for land, so all else being equal, land prices should fall. Since companies and individuals need stable income, however, well-located properties in central Tokyo could still go up in value even as the working population rapidly shrinks.

Mitsui Fudosan (8801), Japan’s largest real estate company in terms of sales, rose about 50 percent since the start of 2012, roughly on a par with the TSE Real Estate Index. Smaller, more volatile companies such as Sun Frontier (8934) skyrocketed beginning in late October on expectations that a change in government would lead to more economic stimulus, looser monetary policy and massive real estate speculation. Sun Frontier’s stock was up 600 percent on the year, but the price tripled in only a month from late October to late November.

Yes, it is true that banks desperate to offset a lack of demand from borrowers in other sectors are loosening their standards somewhat on real estate lending, but most of the deal flow still appears to be refinancings or related-party deals. I haven’t yet seen or felt the kind of irrational exuberance that I saw in the late 1980s or the years prior to the Lehman Shock in 2008. Since the earthquake in March 2011, yields on well-located properties in central Tokyo have fallen considerably, reflecting demand from REITs, ordinary companies seeking to boost passive income, wealthy individuals and foreign core funds. I haven’t seen any big jump in demand for more speculative assets, such as vacant land and empty buildings.

Still, the skyrocketing prices of small- and medium-sized real estate companies late in 2012 shows that investors expected the opposition Liberal Democratic Party to win the December 16 lower house election and stimulate the economy, resulting in a sharp rise in real estate prices and speculative investment in 2013.

Otherwise, in 2013 I intend to keep my eye on the relationship between rents on new, large office buildings, the free rent trend and the number of cranes in central Tokyo. I still have trouble reconciling the data streams produced by office leasing brokers, showing office rents and vacancy rates beginning to stabilize, with anecdotal data points and what I see around town every day.

A recent Nikkei Fudosan survey found that more than half of tenants signing leases in office buildings larger than 10,000 square meters since 2009 have received free rent, averaging more than four months as of the end of 2011. Anecdotally, I am hearing that for S-class buildings the more typical range is 12 to 18 months of free rent on a five-year lease. Depending on if and how free rent is reflected in the statistics, the real trends could be significantly different than the numbers actually reported. But I have not been able to come to any definitive conclusions based on discussions with some of the companies producing the data.

While new office supply in 2012 was well above average, it is supposed to be below average in 2013. Yet, the number of S-class buildings under construction in traditional office districts is massive, suggesting that rents and vacancy rates will be under pressure for some time, even as technology gradually kills underlying demand for office space.

Model by Louise Rouse. Photography by Julio Shiiki.

Last month an Ax reader suggested I write an article that deals with fear. So I conducted a few interviews around the Chamber and beyond and want to share the results and a few insights with you.

What are you afraid of?

Ask someone that question and depending on how you vocalize it, it can sound dismissive, disarming or way too private to discuss. My informal research into fear in the workplace found that, first of all, everyone is afraid of something. Ask someone what he or she is afraid of and you will get an answer.

Some commonly expressed fears were not getting one’s point across, keeping one’s job, the economy not bouncing back, another earthquake, competitors hiring away our talent, and dealing with one’s boss. There was one person who broke down: “It’s currently a critical situation,” this manager of an important product launch said, and left quickly… in tears.

Everyone’s afraid of the wrong thing

All too often, communication issues, especially between boss and subordinate, spring from unspoken, unacknowledged and sometimes, as seen in the Johari Window exercise I’ll walk you through below, completely unknown fears. The “angry” boss who was visibly and verbally upset with another client, who inspired the answer “my boss” above, was not so much angry as fearful that if the Japanese branch failed to follow their overseas headquarters’ mandate, it would be his head that would be on the chopping block.

(It’s not for nothing that we call this newsletter the “Ax.” Better to be sharpening and swinging your ax than to be axed.)

But that fear (disguised as anger in that case) triggered two local subordinates’ emotional reactions, which hindered their communication with the manager and demotivated them substantially. Fear is an emotion, which we know means “energy in motion.” Emotions are what motivate us all.

First, you might want to know what you fear.

Peering Into the Johari Window

Joseph Luft and Harrington Ingham created the Johari Window in 1955 to help people better understand themselves and others, and to improve relationships. We won’t get into the whole process here—you can find plenty of options online, beginning with Wikipedia—instead, just picture four quadrants. These four quadrants are organized according to whether the aspects in each window are known to self and others (quadrant one, Arena), known to others but unknown to self (quadrant two, Blind Spots), unknown to self and others (quadrant three, Unknown) or known to self but unknown to others (quadrant four, Façade). See the image to the left.

The Johari Window, especially when combined with personality assessments that reveal common fears of a given type, can shed light on lots of issues.There’s value in both exploring your own and team members’ windows with practical exercises. But for our purposes, let’s just briefly examine quadrants two and four, as they relate to the example above.

The manager who rained down anger on the two subordinates is coming from one of those two quadrants. And I would wager that either he would deny the fear factor—people sound much more authoritative when angry than afraid—or he would put up a façade of anger, knowing deep inside that he was really fearful of either falling out of compliance or potentially losing his job—or his bonus. So either he’s in quadrant two or four.

Once the window’s open, now what?

Once you recognize the fear as fear and not anger, whether you are the subordinate or the manager, you can at least address it. “What are we afraid of here?” “What’s the worst that can happen?” “What’s the best outcome for us?” These are three useful questions.

What is FEAR?

Once recognized, fear is more easily overcome. First, let’s be absolutely clear that fear is an emotion, and as such, it is both real—feelings themselves are real, and they affect us more than most of us commonly acknowledge—and is also completely manageable once you know the trick. Part of the trick is using your brain to better think through and beyond the fear.

I owe a debt of gratitude to Tony Robbins for first sharing something that helped me and my father through his kidney and liver transplants in 1987-88. (My dad was the first to receive both replacement organs within a year, having pricked his finger and contracted hepatitis while operating on a Hell’s Angels gang member in the late 1970s.) What Tony teaches is simple.

In his signature program “Personal Power,” Tony shares the “FEAR” acronym. FEAR, he says, stands for “False Evidence Appearing Real.” Combine Tony’s acronym with the classic line from Michel de Montaigne and you’re on your way to overcoming fear, whatever the fear is related to. Montaigne gave us this: “My life has been full of terrible misfortunes, most of which never happened.”

The acronym challenges us to ask what the actual evidence is for feeling the fear we feel. And Montaigne is telling us that for the most part these tragedies that can overwhelm us are mostly, if not all, in our minds. Again, ask anyone what he or she is really afraid of and I guarantee it’s something in the future. They are not saying, “I’m so afraid that last year might be a disaster!” And whatever their fear is, feeling it means they are definitely not “in the ‘now.’”

Fear is a failure to be in the present.

Be here now

Jon Kabat-Zinn is doing some amazing research and profound work with medical patients as well as organizations by facilitating people’s access to the present moment. His one hour lecture where he teaches meditation at Google, which can be viewed on YouTube (www.youtube.com/watch?v=3nwwKbM_vJc&feature=g-all-esi), is both entertaining and enlightening. He makes doing nothing both fun and useful.

And then there are Steve Chandler and Tony Robbins, who will both tell you in their own ways that the antidote to fear is action. My conclusion: Whether it’s by doing something—taking action, or as Tony Robbins would say, “massive action”—toward making sure the thing you fear fails to materialize, or by doing nothing at all, by regularly getting absolutely into the present moment through mindfulness, you can overcome any fear anywhere, including in the workplace.

How about setting a goal of creating a “fearless” workplace? Show zero tolerance for leaders who “manage by fear,” whether intentionally or unintentionally. Read The No Asshole Rule: Building a Civilized Workplace and Surviving One That Isn’t by Robert Sutton if you need help.

Fear is natural, fear is human. And not very helpful for most of us at work.

Dear Reader, who asked for this topic, fear not! Get yourself and your team into the moment. And if fear is present, help your colleagues express whatever fears they feel and introduce the acronym “False Evidence Appearing Real.” Lead by example and take action.

I sometimes think back to Franklin D. Roosevelt’s famous Fireside Chat where he said, “The only thing we have to fear is fear itself.” He’s talking to me. For that is the only thing I fear today: being afraid. And that’s why I take action and practice inaction. For whenever I am in the moment we call “now,” it is literally impossible for me to feel fear. And as long as my actions are consistent with generating a more positive future, then that’s the future that’s coming. Bring it on!

A final swing this month. Think about this: You’ve been able to handle every “bad” thing that’s happened so far in your career and in your whole life, in one way or another. You’ll handle the next frightful experience too. And probably better.

The ACCJ staff looks forward to working with you in 2013!

Illustration by Louise Rouse

Acouple of years ago I started quibbling in public speeches that I’ve got one of the hardest jobs in the world: I am one of the last Japan optimists. And in my world – the world of economics, finance & policy making – being a Japan optimist almost feels like being someone who tries to convince people that Elvis Presley is still alive.

Surely, the King is long dead. However, Japan’s economy  is very much alive, and if anything, my optimism about Japan’s prospects and investment opportunities has grown in recent months.

Let me make one thing clear at the outset: my Japan optimism is not based on potentially positive changes in domestic politics or policy making. Yes, politics can help, and yes, I’m sure my job would get easier if the government returned to be stable, consistent, and focused on governing rather than politicking.

Hope for better politics springs eternal, but let’s stay focused on what really matters. In the end, wealth creation and sustainable growth can only be generated by private companies, entrepreneurs and risk takers. This is the root cause of my optimism: I have great confidence that Japan’s private sector dynamics are at a fundamental inflection point.

Specifically, I am watching the following private sector trends. All of them started in 2012. You may agree or disagree with my thesis, but these are the empirical data points we all need to watch carefully in the coming six-to-twelve months to verify – or falsify – the case for Japan optimism.

Money and credit cycles are taking a positive turn

Japanese bank credit and loan growth started to turn positive in early 2012. Growth has been slowly rising at around one percent, but this is real growth and marks an important turning point after almost 20 years of net credit contraction. Clear speak: Japan’s credit crunch and deleveraging cycle is over and a new re-levering cycle could be starting. When the money and credit economy turn up, real economic growth is poised to follow.

Analysis of this upturn leaves room for caution. About one-third of the increase in credit demand traced back to the rebound in demand triggered by the March 11 triple disaster. Also, about 15 percent comes from the ‘special loans’ that the government guaranteed to tide over cash-strapped utilities companies. So about half of the upturn in the money economy can be directly traced to post-March 11 factors. These will now begin to fade – and the other half must get stronger. I expect more acceleration in the recent increase in private sector credit demand.

This spike in demand is largely attributable to three factors: a rise in mortgage loan demand as a younger generation of Japanese buys homes and mansions, a jump in consumer credit demand due to a rise in demand for durable goods, corporate investment spending as companies restructure and upgrade their capital stock, and Japanese banks venturing outside of Japan to lend in overseas markets.

In my view, these private credit demand drivers are more important than much of the media debate about the Bank of Japan. Yes, the central bank may be buying more government bonds to help liquefy the economy and postpone fiscal austerity. But to get bullish on Japan, we need to see growing demand for credit and loans from private households and companies. I’m upbeat about the start of a positive cycle, but will watch the money supply data like a hawk in the coming six to twelve months.

The real estate market is bouncing back

From what I can see, Japan’s real estate investment cycle is beginning to take a turn for the better. Last year brought positive news on rising housing starts, tightening demand and supply conditions in the condominium market, as well as an increase in real estate transactions. In 2013, we will likely see follow-through.

First, we should get evidence that commercial rents will go up. At least one major real estate company has indicated that rents in downtown Marunouchi will rise from April 2013. As I suspect, others will follow. The up-cycle in rents is bound to be a key indicator to global and local investors that real change for the better is underway. Second, we should see evidence of land prices rising. To be sure, this will likely happen only in prime and central locations in Tokyo and perhaps a few other major cities. But this is where new up-cycles always start.

A key point: Japanese banks are willing and capable of providing mortgage credit. At the same time, a new generation of “echo-boomers” – the children of the boomers – is beginning to see accelerating growth in their income. That’s my thesis at least. The bank credit and residential property markets are the points of reference to prove or disprove it.

Corporate activism and investment for growth

In 2012 there was a surge in corporate metabolism, with global and domestic M&A activity reaching historic highs. For large companies, most of this activity was “outward-bound” (i.e. increasing the global footprint by buying overseas companies or building new factories, distribution hubs, retail malls or R&D centers). For small- and medium- sized companies, domestic M&A became a big theme, with aging owner-founder presidents actually coming off the fence to merge with and acquire competitors, or become integrated with them.

Importantly, the surge in corporate metabolism was broad-based, across multiple industries, from food and beverages, steel and car parts to retail, telecommunications and financials. While cases-by-case analysis is important, the aggregate results of these forward-looking investments should start to materialize from 2013.

How? While 2012 brought the inevitable costs of acquisition, consolidation and restructuring, 2013 should bring concrete signs of a structural rise in corporate profitability and investor returns as positive synergy delivers growth in productivity and higher margins. And yes, by the end of 2013 or early 2014, we should even begin seeing a return of price power among newly consolidated industries.

The great stabilizer

So there you have it – a clear-cut case for being bullish on Japan, based on a private sector-led upturn, raising land and asset prices, and a proactive growth strategy for the corporate sector. In clear speak, the “animal spirits” are returning to Japan and risk takers stand to be rewarded more than their safety-seeking, cash-hoarding counterparts. The government could clearly play an important role in accelerating these private sector trends. But what’s officialdom to do?

In my opinion, the biggest wish is political stability and consistent policy. Over the past decade, the constant merry-go-round of Prime Ministers, cabinet ministers and political parties has greatly undermined Japan’s fundamental strength. How can you expect private entrepreneurs to invest in a country that constantly flip-flops on essential policy matters related to tax policy, labor law, healthcare, pensions and social security. Remember that just two years ago corporations were promised tax cuts, while in fact taxes have gone up.

Japan’s national economic policy has been consistently marked by vacillations and u-turns. If we had a stable government, led by a Prime Minister who actually stays in the job for two or three years, consumer and corporate confidence to invest in the domestic economy is poised for growth.

The good news is that the risk is low that Japan’s government would increase public sector spending or raise public sector interference in the economy. Why? Because of the fiscal deficit. With a debt-to-GDP ratio above 200 percent and tax revenue of less than half of total public spending, one thing is certain. No matter who rules Japan, the government’s focus will inevitably shift to more efficientless expensive public spending.

While the debate rages on about monetary and fiscal policy, the real trick will be creating a consistent policy setting that offers new growth opportunities for the private sector by speeding up privatization and deregulation. There are a plethora of high-growth opportunities. All we need are simpler rules and deregulation to empower private risk takers, creating profit and jobs.

Since the private sector has reached a fundamental turning point, now I simply wish the government would step up to the plate and create consistent policy. Japan’s private sector deserves it. Ah, hope springs eternal.

In light of current public health trends, the ACCJ Healthcare Committee has been engaging Japan’s key decision makers in an ongoing process of advocacy by issuing a series of Healthcare White Papers that outline various policy recommendations. These evidence-based recommendations derived from global best practices are meant to encourage healthcare initiatives that boost the overall health, well-being and vitality of the Japanese people, leading to higher labor productivity and greater economic competitiveness.

Since 2008, we [the ACCJ Healthcare Committee] have focused our proposals on prevention, early detection, early diagnosis and early treatment. A series of ACCJ Prevention Viewpoints ultimately led to the first ACCJ Healthcare White Paper in 2010, entitled Improving Health and Productivity in Japan: An Increased Focus on Wellness, Prevention and Early Detection, and then to a greatly expanded second ACCJ White Paper in 2011, entitled Investing in Health as a Competitive Advantage: Proposals to Reduce the Economic Burden of Disease by Promoting Prevention and Early Detection. White Paper recommendations are sent to all 722 Diet members and all prefectural governments, the Ministry of Health, Labour and Welfare (MHLW), and literally thousands of opinion leaders and stakeholders in the healthcare industry.

Following the end of the 2010-2012 biennial healthcare reform cycle ending March 31, 2012, we conducted a follow-up survey of the companies involved to assess the status of the 124 policy recommendations made in the 2011 White Paper.

In brief, we found that 46 of the 124 recommendations (37 percent) were deemed to have been fulfilled at least in part. Whether progress had been made during the last biennial healthcare reform cycle, all 124 recommendations were deemed to still be valid by their owners, and with any necessary updating, still relevant.

The most significant progress was in the continued funding of national cancer screening initiatives and the fourfold increase in funding to enhance infection control at hospitals in Japan. Other areas of notable progress include the expansion of IVD rapid diagnostics, diabetes management, osteoporosis prevention, chronic pain research funding, vaccination policy and hepatitis screening and awareness.

It is important to note that the universal National Healthcare System in Japan has been globally recognized as one of the best in the world. As a longtime resident of Japan, I can personally testify to the ease of access and quality of care. Following the kaizen philosophy that has made many of Japan’s industries global leaders, we recognize that in all things, there is always room for improvement. Our White Paper recommendations are not meant to be comprehensive, but rather suggestive examples of the kinds of policies likely to yield significant benefits.

Promoted in this way, the 2011 White Paper received an overwhelmingly encouraging response. To address reforms made in 2012 and the gaps that remain, we plan to further expand, update and issue a new White Paper by the end of March 2013. Beyond updating the existing 27 sections in the 2011 White Paper, we have received proposals for an additional eight to ten new sections.

In December, in preparation for the launch of the new White Paper in March 2013, we launched a beta web page that allows users to download either the entire 2011 White Paper or each of its 27 sections separately. The long-term plan is that we will be able to update each section of the new White Paper separately much as ACCJ Viewpoints are currently updated on an annual basis. This will provide the ACCJ Healthcare Committee with a unique platform for the creation of the first evergreen White Paper, with individual sections updated separately, as needed, on an ongoing basis. When launched in March 2013, the new White Paper will replace the current 2011 online version.

An ounce of prevention…

The trends that have motivated us to issue these White Papers are real and the stakes are high. According to the World Health Organization (WHO), 80 percent of heart disease and stroke, 80 percent of type 2 diabetes and 40 percent of cancer could be prevented through lifestyle change.

Specifically, this means a healthy diet, exercise and not smoking. Vaccines, medicines and screening tests can also play a key role in preventing chronic and infectious diseases, complications, and allowing early detection and treatment. Moreover, studies by the American Institute for Preventive Medicine suggest that every $1 spent on wellness and prevention results in a return on investment of roughly $3, in terms of improved health outcomes, higher productivity and healthcare savings.

The reasons for these savings are simple. Preventative healthcare measures lead to higher economic competitiveness because they decreases worker disability (taking them out of work), absenteeism (when sick) and presenteeism (underperforming while at work due to a health-related impediment).

Healthcare-associated infections (HAI), or nosocomial infections, are another area of prevention that must be addressed more rigorously in Japan. An HAI is an infection that a patient contracts while receiving treatment for another condition in a healthcare facility. Patients who contract an HAI end up with a longer hospital stay and require further treatment, leading to higher overall costs.

The risks of HAI affect not only patients, but also hospital staff, from doctors and nurses to orderlies, cleaners and laundry staff. For example, needle stick and sharp object injuries pose a serious occupational risk to healthcare workers. Even the smallest puncture of the skin can expose a healthcare worker to more than 30 blood-borne pathogens, bacteria, and parasites, any of which can cause serious and potentially life-threatening infections.

In Japan, it is estimated that 450,000 to 600,000 sharp object injuries occur every year. This means that 65 percent of nurses and 25 percent of doctors experience sharp object injuries, with the degree of danger being higher for doctors.

While nowhere in the world is immune to the effects of harmful lifestyle choices or the risks of HAI, these issues are of particular importance for Japan. With its aging population and increasing competition from emerging markets abroad, greater attention is shifting to public health than ever before.

According to the economic analysis contained in the ACCJ’s Growth Strategy Task Force 2010 White Paper, Charting a New Course for Growth: Recommendations for Japan’s Leaders, the insufficient growth in labor productivity in Japan has had a significantly negative impact. The paper argues that raising productivity is the key to maintaining economic growth in Japan, which has ample capital resources but faces a shrinking population.

Yet, Japan’s labor productivity is 60 percent less than the US level. Further, labor productivity is even lower in the services sector, and is growing more slowly, despite the fact that services account for 80 percent of Japan’s GDP—a number that is growing. Hence, increasing labor productivity, especially in the services sector, is tremendously important for Japan.

Signs of change

While much work remains to be done, the good news is that health insurance providers, governments and corporate leaders around the world, including Japan, are no longer taking public health for granted.

As seen in the Cabinet Office’s report, New Health Frontier Strategy, the Japanese government is stepping up efforts to address these issues. Moreover, Japan’s annual health screening system (tokutei kenshin), in which everyone aged 40 and over undergoes an annual health checkup and those at risk of metabolic syndrome receive guidance on how to reduce health risks, was introduced in April 2008. This system is one of the first such national programs in the world.

The roots of some of the positive changes that have come about in Japan’s healthcare system can be traced back to White Paper recommendations. One positive example from the 2010 White Paper is cervical cancer screening. The Japanese government’s decision to increase cervical cancer screening by funding free cervical cancer screening coupons for women aged 20, 25, 30, 35 and 40 came about in part as a result of a White Paper proposal. The proposal for free cervical cancer screening coupons for targeted age groups was ultimately included with a similar proposal for free breast cancer screening coupons, targeting women aged 40, 45, 50, 55 and 60, which was under consideration at the time.

The free cervical cancer screening program, in combination with efforts to raise awareness by nonprofit organizations and the MHLW, has improved the screening rate for cervical cancer to roughly 30 percent, up from 24 percent—one of the lowest rates among member countries of the Organisation for Economic Cooperation and Development (OECD).  There is however still much to be done considering that screening rates in most industrialized countries are as high as 80 to 90 percent. The good news for women in Japan is that the MHLW has a goal of doubling the cervical cancer screening rate to 50 percent by the end of fiscal 2013.

Another area of policy change that will bring multiple long-term benefits is in the area of vaccines. In the 2010 year-end supplemental budget, funds were allocated for three recently approved vaccines, namely, vaccines for infant conjugate pneumococcal, haemophilus influenzae type B (Hib) and the human papillomavirus (HPV). Funding gaps exist in some municipalities where local governments do not contribute to vaccine reimbursement. The White Paper has recommended that this gap be closed.

There have also been positive strides made to prevent nosocomial infections in the form of a fourfold increase in insurance coverage per patient at large hospitals with more than 300 beds and new funding for small hospitals with less than 300 beds, meant to enhance infection control.

In sum, all of these changes are positive signs that the Japanese government and healthcare establishment are making great strides in their collective efforts to improve the healthcare system by providing sustainable universal healthcare to the people of Japan. Clearly, the shift to a healthcare system founded on prevention, early detection, early diagnosis and early treatment, particularly in an increasingly aging society, has become more an urgent necessity than a matter of choice.