With powerful domestic partners and a clear need for a consumer value story in Japanese aviation, the ingredients for success seem to be in place. Nevertheless Japan is a graveyard of brands with successful and established business models overseas that, when transplanted to Japan, did not meet with success.

A large part of the problem happens when brands entering the market are either ignorant of – or not sufficiently respectful of – the different values that underlie consumer behavior in Japan. Making some degree of adaptation to account for differing needs and values related to your product – and sometimes your broader approach to doing business – is usually critical in both getting off the ground and in building the foundations for lasting success.

Dominic Carter is CEO of CarterJMRN KK, a Tokyo-based global research company. He is also a former chair of the ACCJ Marketing Programs Committee.

In this sense, Jetstar’s strategy of hitching itself to JAL’s somewhat tarnished post-bankruptcy star seems to make a lot of sense. Apart from the obvious regulatory and operational wrinkle-smoothing that JAL can offer the new airline, there is a significant short-cutting of effort needed to convince consumers that the new airline is legitimate.

The other star that Jetstar has hitched itself to is the popular half-Japanese tarento Becky. Outsiders often wonder why Japanese advertising seems to rely so heavily on the use of celebrities, including some of the biggest name stars from overseas (who would not be seen dead endorsing the same types of products in their home countries). The reason is that in Japan celebrity endorsement generates a level of trust and credibility, not to mention a visibility that can be hard to match. Needless to say, building trust is a more complex task than securing the services of a celebrity to endorse your brand, but in terms of getting around consumer defenses and having them pay attention, there are few quicker ways to do it.

Creating trust requires genuine effort in terms of investment and strategy, but there are steps that can be taken to leverage your resources. Partnering or even licensing your brand with an established “name” allows your brand to gain trust by association. This not only mitigates the massive investments in money and time related to starting up in Japan, it can also be a most effective way of seeing the market through Japanese eyes. However, it is critical to identify the correct partner and to assess their real intentions.

Knowing that they are approaching a famously xenophobic market, foreign entrants often feel that being perceived as foreign may be a weakness. But the reality is that being seen as foreign can be a strength. Often it comes down to your ability to re-set your category’s agenda. This is a strategy for turning one’s “foreignness” into a positive, because it is sometimes harder for a Japanese company to do so without being seen as negligent of prevailing rules and norms.

The idea is to force the market to change its existing practices to compete with you on your own terms. Failure to do so more often than not means that your product or brand will be simply ignored, even if it enjoys a brief honeymoon period.

In most fields, Japan has extremely wealthy, competitive and responsive domestic players who are more than able to respond to the challenge of foreign entrants. In a culture that cries out for innovation and is served by companies that are used to meeting that need, there is little point expecting anything if you can’t offer a genuinely different approach.

This column is not intended to offer a detailed analysis of Jetstar’s business prospects. However, given that they intend to offer a breakthrough value proposition to consumers and seem to understand the value of using stars (people and brands) to smooth the way, you’d have to say they seem to have more than a fighting chance.

Photography by Benjamin Parks

“The management didn’t like to hear it,” says Sato. “They said ‘if you have such great ideas why don’t you run the company.’”

So she decided to do just that.

Sato bought Cosmo and headed back to Tokyo – where she’d grown up – asking her American husband Donald Kanak to make the move with her. After a year working in business development, she assumed the role of President at Cosmo PR.
Kumi Sato was 27 years old.

Ahead of the Curve
Today, Cosmo PR specializes in advocacy and communication strategies for companies in the healthcare and food industries. Clients include major industry players like GlaxoSmithKline, for whom Cosmo helped lay the groundwork for the Japan introduction a cervical cancer vaccine. Under Sato’s leadership, Cosmo has built an enviable network of policymakers, doctors and patient groups, while also working closely with organizations like the Medical Journalists Association of Japan and the ACCJ – where Sato serves as Chair.

In recent years, Sato has won a string of awards for her work, including “Business Stateswoman of the Year 2011″ from the Harvard Business School Club of Japan and “Outstanding Individual Achievement” at the Asia-Pacific SABRE Awards. Cosmo, too, was named “2011 Japanese Consultancy of the Year” in the Holmes Report.

The media loves to portray Sato, who is now 52, as the model female CEO, the one who can have her cake and eat it too. Certainly that is one way to describe her; in addition to building a thriving company, she also has a husband and three grown children. But when she met with the Journal in her office on a sunny March afternoon, Sato didn’t want to talk about work-life balance or even a subject that has long been dear to her – female empowerment (Sato founded and later sold a website dedicated to empowering women, womenjapan.com).

Instead, she wanted to focus on her company and how it evolved from that editorial-driven PR firm to the award-winning communications consultancy that it is today. Embedded in that story, she says, are crucial lessons for firms in Japan. And when you listen to her story it becomes apparent that the most impressive thing about Sato isn’t that she has risen to a position in Japan that few women have before. Rather, it’s her consistent knack for staying ahead of the curve.

Out of the Comfort Zone
In the 25 years that Sato has sat in the president’s chair, she estimates that she has changed the direction of her company four or five times. Looking back, she sees herself more as an entrepreneur type than a typical CEO.

“The natural tendency for companies is to become conservative and then be sort of pessimistic or inward-looking and my job is to make sure that everyone is looking outward, pushing them and pushing them,” says Sato. “I’m constantly thinking about where the world is going and how we need to change to keep up. I don’t like us to be in a comfort zone, ever.”

Getting Cosmo out of its comfort zone was the very first thing Sato did. When she began refocusing the company, she quickly identified that foreign firms lacked brand identity in Japan, so Sato decided that this would be Cosmo’s new focus. However, in order to meet the needs of these new overseas clients, Sato needed a staff with a particular expertise and language skills. She needed bilinguals like herself who had been educated abroad – even though, unfortunately, such people were scarce at the time.

Sato came to the conclusion that she would need to hire foreign people not just as token copy-editors, but to work closely with the rest of her Japanese team. Essentially, two people were needed to come together to make one bilingual “person.”

“The major challenge was changing the Japanese mindset, the fear of dealing with their foreign counterparts,” Sato explains. It would take years. One of the first things Sato did was to ban the use of the expression “in Japan” from the office. It’s an example of one of the small – but necessary – little changes that can provoke a big mental shift.

“You can’t say ‘in Japan’ because the world is going to go more and more global and, yes, we understand local sentiments, but we’re in the service business so you can’t use ‘in Japan’ as an excuse. You always have to come up with a constructive solution – and that was the culture I began, which is always to provide solutions.”

Walking through the Cosmo office, Sato emphasizes the open layout: one big room with clusters of desks facing each other.

“I make them sit next to each other,” she says with a laugh.

Of all her successes, it is clear that her cosmopolitan team is among the dearest.

“One of the things that I felt really proud about this company is that, if a foreigner walked into Cosmo 25 years ago, they’d be treated as a foreigner – as okyakusan. But now when they come in, our people are so used to working with foreigners that immediately they’re on a first name basis,” she says.

“I changed the company from being insular to being natural. There is an ease that carries over into the workplace, an ease to work with new people from different countries. This is very important because Japanese companies don’t have that.”

Importance of Specialization
One of Sato’s other critical moves was to specialize. After the boom years, Cosmo rode out the 90s downturn by helping companies navigate the thorny language of mergers, downsizing, and “refocusing.” With the new decade – and new market and economic realities to face – Sato felt that it was time to move forward again.

Photography by Benjamin Parks

This was how she decided to focus on the healthcare and food industries, and decided to build up a knowledge base by adding doctors and scientists to Cosmo’s advisory board. It is also her favorite way to make decisions.

“The best way for me to envision which way the company is going is trotting around the world. I want to see what’s happening. What are the leading companies doing? I spend about a hundred days out of the year outside of Japan really talking to different firms.”

Talk about a global strategy. It helps that Sato has an international network of friends that began with her student days (she earned a BA in East Asian studies at Wellesley in Massachusetts) as well as a global family (her husband works in Hong Kong and her children study and work in the US and Singapore). She’s also a self-professed information junkie and even admits to reading celebrity gossip rag Radar online.

Increasingly, Sato is looking more and more towards Asia and expanding her network there.

“I go there, find out what’s going on and then I come back and share it with my people. It’s not like the CEO is off doing their own thing,” says Sato, who also notes that Japanese companies, in general, would benefit from a more open policy towards sharing information.

“That is the message I want to send to the heads of big companies in Japan: don’t underestimate your staff.”

The latest project from the globetrotting CEO is a book on communication tools and strategies due out later this summer from Nikkei. In it, Sato hopes to distill some of the lessons learned at Cosmo, turning it into useful advice for a larger audience.

And while, as always, she’s wondering about what will come next, Kumi Sato is also happy where she is.

“I like running Cosmo more than I did ten years ago,” she says. “One of my mentors said to me years ago that if you want to create a great firm, hire people who are smarter than you. I truly believe this and it’s exactly what I did.”

Photography by Benjamin Parks

NATURAL HOKKAIDO
By Katou Phoenix, Contributor

If you thought Japan was only packed trains and crowded streets, you would be wrong. Hokkaido, the country’s northernmost island, offers a natural setting of lush greenery, ice-capped mountains and ocean-front seafood that is as good as anywhere in the world.

Surrounded by the nutrient rich cold waters of the Sea of Japan on the west, the Pacific Ocean on the east and the Sea of Okhotsk to the north, there is no shortage of ocean delights. During the winter, seafood lovers head to the coastal seaports to sample delicious crab, sea urchin, salmon, squid, octopus, shrimp, and many other delicacies. The crab in particular is exceptional, with an extensive range from Horsehair Crab, Queen Crab and Red and Blue King Crab. The icy waters help to produce a rich, sweet flavor. Sea urchin is another local delicacy. It thrives on the abundant kelp farms in the Pacific Ocean, resulting in a nutrient packed meal. Shiretoko Peninsula, on the northeast coast of Hokkaido, is famed for having the most rich and sweet sea urchin in the world. Another hot spot is Rishiri and Rebun on the northwestern tip of the island.

If you like sashimi, there is no better place to find it than Hokkaido. Visit a kaiten-zushi restaurant for a truly memorable experience. Take a seat at the sushi bar and watch as freshly prepared dishes pass in front of you on a slow moving conveyor belt. When you see something appealing just grab it and dig in. Fish markets are another huge draw for anyone visiting Hokkaido. These are a great way to learn about the Japanese fishing culture and sample the morning’s catch. The best time to go is early morning when the fish is freshest and there is ample variety.

Whether you are a novice or expert in the realm of seafood, Hokkaido has an ocean dweller that is sure to satisfy your hunger pangs. All you have to do is head north from Tokyo for a new world of Japanese delights.

HISTORIC KYOTO
By Bonson Lam, Regional Partner

When I first discovered Kyoto, I fell in love with the clacking sound of the geta on the cobblestone alleyways of Pontocho and the occasional a glimpse of a kimono-clad geisha on her way to Gion.

Little did I know that many other people have also been mesmerized by these moments for centuries – and some even want to relive them now. For a few thousand yen and some imagination, you too can be transformed into a geisha on your next trip to Kyoto.

With the help of experts at one of the many kimono rental shops in Kyoto, dressing as a geisha – at least for one day – is a possibility. At the Kozai Yuzen-en and Kimono Design Gallery, experts there will transform you, while a photographer waits to capture your best side. You can spend up to three hours parading around the scenic gardens and historic buildings, enjoying the glamour from around ¥10,500.

At Yume Kyoto, you can hire a kimono for only ¥3,500 and get assistance in fitting and dressing. The catch is that they choose the kimono to save you time and money. They accept walk-in guests but, to avoid disappointment, you should reserve in advance. For ¥5,250, you can choose your own kimono and still get help in fitting and dressing. Men’s kimonos are also available.

At the Miyako Gallery (at Nishijin Tondaya), kimono rentals run about ¥2,800 per person and ¥5,000 for two including tax. The store also offers a variety of kimonos, in different patterns and colors, depending on the occasion or the age of the wearer. If renting a kimono doesn’t suit your fancy, you could always buy one second-hand. Kyoto has a thriving market for this and the cost can be as little as ¥500. Women’s obis remain the expensive item, although simple ones can cost as little as ¥1,500.

Whatever your choice, your memories of a geisha can come true – at least for a day – on your next visit to Kyoto.

It’s a small request but one that can chill the spine of a busy corporate executive. Being called upon to speak — be it a speech, presentation, seminar or staff meeting — can make even the smartest of CEOs and managers cringe — even those with impeccable qualifications.

In fact, public speaking is such a universal fear, that studies have shown it to be humankind’s number one worry. But it doesn’t have to be. With a little knowledge and practice, almost anyone can become a decent orator. Some, like Winston Churchill, even overcome speech impediments to become great.

Mike DeJong
ACCJ Journal, Editor-in-Chief
mike@accjjournal.com

As a writer and corporate trainer, I have worked with many executives on their presentation skills. [Ed note: I did a seminar for the ACCJ’s Young Professional Group last month]. I have watched corporate leaders go from being nervous-nellies to polished presenters in a manner of weeks. The key is that they work hard and listen professional advice.

In this month’s Journal, we turn the spotlight on the people who can help get the message out: communications professionals. These are trainers, public relations experts and marketing pros – either in-house or outsourced. These pros are the best at what they do and can help any corporate executive tell their own story more effectively.

Kumi Sato is one of those public relations experts. She not only runs Cosmo, one of the top agencies in Tokyo, but also finds time to serve as ACCJ Chair. Under Sato’s two decades of leadership, Cosmo has won numerous international awards.

In our cover feature Team Concept (page 24), Rebecca Milner finds out what inspires Sato, what motivates her, and why she doesn’t like to talk about being a role model for Japanese female executives – even though she is.

Kumi Sato has also written about the dearth of crisis management skills in Japan, an issue which came to the fore after last year’s Tohoku triple-disaster. So it’s not surprising that crisis management is also the focus of our article On Message (page 28). We asked several top PR pros to share their thoughts about corporate messaging in post-crisis Japan.

What should companies do to improve internal and external communications? What are the advantages of outsourcing communications versus having PR staff in-house? Their answers to these and other questions should help anyone looking to better manage communications.

Yours truly returns this month with an article called Make An Impression (page 32). In this piece, we cover all elements of an effective presentation, from creating a basic structure and delivering a strong introduction to smooth transitions and finding an effective conclusion. The emphasis of this article is on improving one’s verbal and non-verbal techniques.

Finally, the ACCJ’s Direct Marketing Committee Chair Joe Peters contributes to the discussion on communications with Online Sales (page 36). His article examines a growing trend in Japan in recent years – the area of online sales.

So this month, communication is the key. Telling your story better — whether navigating a crisis or marketing your products – it’s all part of doing business in the age of social media and the 24-hour news cycle. You can take on communications yourself and go it alone. Or you can mitigate risk and get professional advice. There are many communication pros out there waiting to show you the way.

With survey measurements taken every two years, the results from this research give ACCJ leadership a better understanding regarding the needs and desires of ACCJ members, and thus help guide us in making decisions that affect the organization’s prospects for the future.

Michael Alfant
ACCJ President
malfant@accj.or.jp

The most recent “Member Feedback” measurement, taken in October 2011, indicates that:

■ ACCJ members are overall satisfied
■ Membership in ACCJ is valued, and
■ ACCJ’s key benefits of providing networking, information and advocacy are being consistently delivered

Overall, gains have been realized across most key indicators of member satisfaction, not only recovering from the “post-Lehman Shock” declines shown in the 2009 survey, but also improving upon the 2007 data.

Member loyalty is once again increasing, with 49 percent “totally agreeing” that they are likely to renew their membership and 39 percent saying that they would recommend the ACCJ to a colleague or friend, suggesting that improvements in other key indicators (such as Value and Process Areas) are resulting in greater levels of member satisfaction.

I am also happy to report that perceptions of the ACCJ as an “organization of excellence” increased more than in any previous survey year.

There are a few things we can do to improve member experience; fortunately, they aren’t that difficult.

Specifically:
■ Younger (and new) members need more “mentoring”
■ Small tweaks to publications, website and other communications vehicles will yield even more positive impressions of the ACCJ as an organization
■ Continued attention to delivering high quality programs and events will also pay off in greater member satisfaction

It is encouraging that ACCJ members feel so positive towards our organization, but we would never want to rest on our laurels. Going forward, we need to continually work at improving our processes and refining the way we do things so that we can ensure that ACCJ member satisfaction remains consistently high. Striving to be the best we can be is one of the core characteristics that helps set us apart as an international business organization.

With this in mind I have challenged the BOG and our Committee Leadership to “move the dial” in a positive direction by one percentage point on all measurements in the next survey, which will be taken in Autumn 2013.

As always, your help and ideas are most welcome.

Illustration by Louise Rouse

Public speakers are made not born. Sure, some people begin with more natural talent than others, but even the world’s greatest speakers hone their craft through repetition and practice. Some, like Winston Churchill, even overcome great speech impediments to develop into world-class orators.

Practice is the key to becoming a great speaker along with preparation and learning some simple public speaking techniques. Over the past few years, I have worked with dozens of CEOs, senior managers, politicians, public servants and members of the military on improving presentation skills. I have found the following techniques the most effective in developing clarity and confidence – and in making speeches or presentations more compelling.

Elements of An Effective Presentation
An effective presentation must have several verbal elements to generate and hold audience interest including a basic structure, smooth transitions and engaging content. However, these elements are only part of the equation; a good presentation also requires effective non-verbal communication. This includes vocal delivery, eye-contact with the audience, hand-gestures and body movement – along with the use of visuals and/or props. Staging, lighting and adornments also impact how the message will be received, along with what you wear. Clothing, hair and make-up are also important factors in sending out strong non-verbal signals during a presentation.

Experts suggest the key to a good presentation is simplicity. Keeping things simple and straight-forward makes a presentation easier for the audience to follow. That’s why I always recommend that speakers limit the use of technical language (or jargon) and go easy on numbers or statistics. The best presentations stick to 3-or-4 main points, book-ended by a strong introduction and conclusion.

Verbal Elements of a Presentation
1. Basic Structure
A good presentation should have three main elements: an introduction, body and conclusion. While each of these elements should work together to maintain audience interest, your introduction is most important in getting the audience interested in your topic. It’s true that you only have one chance to make a strong first impression, so start your presentation with a bang.

Introduction
■ Begin with a question or story to engage the audience
■ Clearly state your thesis and to orient the audience as to where you will go
■ Think of yourself as a tour guide taking the audience on a trip: i.e. “Today, I’m going to talk about (thesis). First, I will discuss (point 1). Next, I’ll look at (point 2). Finally, I will examine (point 3). Now, let’s being with our first point (point 1).”
■ Use humor ONLY if you are comfortable telling jokes

Body
■ Keep this section simple, limited to 3 or 4 main points
■ Make each point different if possible. i.e. use a story to support the first point, statistics for the second point and an analogy for the third point
■ Don’t overload a presentation with too many ideas, turning it into a ‘shopping list’ that audiences cannot follow

Conclusion
■ Should restate your thesis and recap main points. i.e. “Today, I told you about (point 1, point 2 and point 3). I hope all of these points have convinced you of (main thesis).”
■ Conclusion should lead back to your introduction

2. Smooth Transitions
Transitions are effective in guiding your audience through the various elements of a presentation. Transitions move your listeners from the introduction into the first point and then connect each main point and your conclusion.

Sign-Posting, Listing or Sequencing
■ Outline each element as you come to them to guide the audience through your presentation (this is called ‘signposting’). i.e. “I have just told you about (point 1). Now, let’s move on to (point 2).”
■ Helps to orient the audience in the direction you want to go

3. Interesting and Engaging Content
The best presentations contain focused content that supports one or two main ideas. These ideas become the thesis of your presentation. Boil presentations down to the most important idea that you want to get across. Then state this thesis in your introduction; refer to it during each main point and show how you have supported your thesis in the conclusion. By continuously referring to your thesis as you go along, you keep the audience on message and help to sell the main idea of your presentation.

The style of writing used to create a presentation is also important. Presentations are meant to be heard rather than read, so the writing should reflect this fact. Professional speech coaches recommend that a presentation be listenable – in other words, easy for the audience to understand. Your language should be simple and easy to follow, free of technical words or jargon that might go over everyone’s head.

For example, a presentation might include a sentence such as this, “The sanitation engineer was able to devise a control mechanism to mitigate the propagation of fluid from the corroded conduit…” A more listenable sentence might read, “The janitor fixed the leak in the rusty pipe.”

A speaker should not try to impress the audience with vocabulary or technical language but with the ideas they are trying to convey. An audience that cannot follow what is being said will not understand these ideas.

Non-Verbal Elements of a Presentation
1.Vocal Delivery
In a presentation, how you say something is as important as what you say. Your subject might be fascinating and your content highly interesting, but if your vocal delivery is a flat monotone, your audience will quickly lose interest. A presenter needs to be dynamic, varying their speaking style and using their voice to its full capacity to elevate a presentation beyond the mundane.

Key T.I.P.S. for Vocal Delivery (Tone, Intonation, Pace & Style)
■ Tone: The volume of your voice or how loudly or softly you speak. Don’t stay at one volume, vary it up. Speaking softly at key times during a presentation draws the audience in, while raising the volume for key points drives your message home.
■ Intonation: Or how high and low the pitch of your voice goes during a presentation. A high voice can be grating on the ears while a low voice can be difficult to hear. So again, change things up. Use a lower voice to end or support key points, the way broadcasters end segments on authoritative ‘down notes.’ Also, avoid using the same pitch patterns during presentation and don’t start and end paragraphs at the same pitch. This is called being ‘sing-songy’ during a presentation.
■ Pace:How fast or slow one speaks during a presentation. This is crucial to being understood. Those who speak too quickly are difficult to follow, while presenters who speak too slowly bore the audience. Again, vary your speed; go quickly over less detailed areas but slow down to deliver key facts or statistics. Varying the speed of your vocal delivery creates interest and keeps the audience engaged.
■ Style: Formal or casual. This should be appropriate for the audience at hand. Do not use an overly casual vocal style with a business audience but also avoid too much formality with a public audience. (In general, English audiences prefer less formality than Japanese audiences due to cultural differences in communication).

2.Eye-Contact
As the old saying goes, “The eyes are the window to our soul.” They are also the most important non-verbal element of a presentation. Strong eye-contact allows the presenter to engage with members of the audience, driving home key points subtly but effectively. Eye-contact also allows the presenter to get non-verbal feedback from the audience. This information tells the presenter whether or not the audience understands what is being said and whether or not the audience is still interested. A good presenter makes eye contact with as many audience members as possible and uses this non-verbal feedback to adjust or improve their content while it is being presented.

Eye-contact also helps fight nervousness. A presenter who sees that audience members are ‘getting it’ gains confidence and becomes a more effective speaker. So making eye-contact is a great way to fight presentation anxiety.

Tips for Eye-Contact
■ Look from front to back and left to right as you deliver your information
■ Stop at favorable faces and return to them to make key points
■ Try to look at audience members for 2-3 seconds before moving on

3. Hand Gestures and Body Movement
Hand gestures are important in supporting main points. They add value to the spoken content, offering a visual element to back up the audio (vocal) elements of a speech. In a similar vein, body movement creates visual interest for the audience. A speaker who moves around the room appears more dynamic than one who stays in one place for the entire presentation. A note about hand gestures and body movement – they are culturally defined. Some cultures, such as North Americans and Europeans, use hand gestures and body movement a great deal when communicating. Other cultures, such as Asians, use few or none. So again, a presenter needs to know the appropriate non-verbal cues for the audience at hand.

4.Visual Aids/Props
Audiences get bored easily in this television and internet age. They are used to computers and (now) mobile phones that deliver content through audio and visual means. Although a presenter can be effective with style and vocal delivery, visual aids and/or props can add value to a presentation. In fact, many audiences expect to see visuals such as Powerpoint slides at the very least.

Powerpoint slides, charts, maps, drawings and photographs complement the spoken portion of a presentation and make it easier for the presenter to explain complex details or statistics.

Tips for Visual Aids/Props
■ Keep them simple and do not overload slides, etc. with information
■ Limit slides to 3-4 simple sentences or bullet points
■ Make sure visual aids are appropriate for your audience
■ Make slides, charts, graphics, etc. large enough for everyone to see
■ Use flip-charts (not slides) for smaller or one-on-one presentations
■ Use audience members as props – or to demonstrate props Ultimately, delivering a strong presentation is not difficult. But it takes confidence, organization and practice. Work on the tips suggested here, and you will be surprised at how quickly you improve.

This scene used to be uncommon in Japan – but no longer. Over the past decade, Japan has seen a surge in online sales and direct marketing. According to Masayuki Kakio of the Japan Direct Marketing Association (JADMA), sales via DM channels have grown an average of 6.4 percent per year over the last ten years, increasing from ¥2.5 trillion to over ¥4.6 trillion ($31 billion to $58 billion).

Kakio explained the phenomenon to members of the ACCJ Direct Marketing Committee meeting earlier this year. He used Chart 1 to show how and where direct marketing had its greatest impact. As total retail sales of tangible goods for direct marketers doubled from 1.7 to 3.4 percent during the period from 2000 to 2010, department store sales took the biggest hit.

Kakio predicts that mail order sales will overtake domestic department store sales in the next few years. More and more consumers are purchasing items directly from overseas shops through the Internet. The purchase of goods from the US now accounts for 10 percent of all mail order sales in Japan.

Newspaper Sales Declining
Newspapers used to be a major channel for advertising in Japan. However, that too is changing. According to JADMA statistics, the Internet has overtaken newspapers, growing from ¥170 billion in 2000 to ¥658 billion in 2010 ($2 billion to $8 billion).

Kakio says people still read newspapers, but digital versions rather than print: “You can see evidence of this by the low number of people reading newspapers as they ride the trains when compared to past years.”

“Direct marketing ads in the newspapers are now mostly comprised of cruise tours, supplements, and anti-aging cosmetics – all geared towards the over 50 age group as these are the people who are still most loyal to newsprint.”

Age demographics and the number of people making online purchases are also changing. It used to be that few consumers over the age of 60 used the Internet. Now, two-thirds of women over 60 and half the men in that age bracket make purchases online. As Japan’s market continues to grey – a quarter of the population is over 65 – this will only increase.

Kakio says this is a demographic that direct marketers cannot afford to ignore, “These are the people who don’t want to spend their time going to doctors and they are conscious of their health, the foods they buy, and they want supplements to protect against aging. They also have more time, and money, to spend on hobbies. Products that match this demographic group are selling well.”

So, if you are considering where to spend your company’s media budget, Chart 2 might help. It shows statistics of where other marketers spend their advertising money. Growing demographics Direct market should also be aware of the growing “housewife” demographic.

Kakio says these women have taken on a new purchasing power, using their smartphones for online shopping instead of PCs. The four main products they buy are:
Health 1. food and supplements
2. Cosmetics
3. Food products
4. Other beauty related products
(medical devices, jewelry, toiletries) Items one through three should be of special interest to direct marketers because they are most often sold as “repeat products” on a monthly basis.

Types of businesses
There has also been a change in the types of businesses operating in the direct marketing arena over the last few years. Originally, it was primarily mail-order companies. Next came dedicated cosmetics companies like DHC. Now, primary and secondary small producers can – and do – sell over the Internet through online sites such as Rakuten. And the big brands aren’t just sitting back and watching these smaller firms eat up the market. National brands have jumped into the fray, with the firms like Uniqlo and Yodobashi offering more of their products online.

“Multi-channel sales have become very important. Merchandisers have to enable consumers to buy their products through any channel, but the important point to for these companies to keep in mind is that they want consumers to buy their brand and at their store, whether it’s online or bricks and mortar,” says Kakio.

Regulations As direct marketing in Japan has grown over the past few years, regulations governing the industry have also changed. The Japanese government believed that consumers needed protection because many direct marketers have no physical stores. So the government created the Consumer Affairs Agency and implemented the Act on Specified Commercial Transactions in December 2009. This legislation governs and strengthens regulations on mail-order sales including Internet transactions.

The legislation sets rules for returning goods for a refund. For example, a consumer may return a purchased item within eight days if conditions for returning goods are not clearly specified in an advertisement. However, other types of return/refund rules can been specified by a direct marketing company in a sales agreement, if the purchaser agrees. The sales agreement must make it clear what can and cannot be done. The ‘how to return’ information must be clear and indicated in the purchase agreement. If it is not clear the merchandiser must accept the return. The consumer is responsible for shipment costs. A clear guideline of the procedure is available on the METI website.

The Act also changed the rules for sending email advertisements from operating under an opt-out system to an opt-in. An advertising email may not be sent to a consumer unless the consumer has requested it. Direct Marketers must keep records of requests for information for three years.

In December 2011, JADMA created rules to register companies selling health products and supplements, which make up 40 percent (¥267 billion / $3.3 billion) of the products sold through direct marketing. The Consumer Affairs Agency was also taking a closer look at what is said and what is actually done in this area.

In all, it seems that Japanese consumers are buying and selling millions of yen worth of products every day. They’re doing it at home, at work and on the train. So smart companies that want to increase business and/or sales need to take a look at them, because online shopping is growing by leaps and bounds.

Joe Peters is Chair of the ACCJ’s Direct Marketing Committee.

So how does a company or government get prepared for a crisis? What should corporate executives or government officials do when disaster strikes? This month, the Journal posed these questions and others to leaders of the major public relations firms in Japan. We asked them to give us advice in post-3/11 Japan.

Journal: In post 3/11 Japan, what do you see as being the greatest challenges for you and your clients?

Ross Rowbury, Edelman Japan

Hiromitsu Sakuma, Ogilvy PR Japan:The Great East Japan Earthquake made it suddenly clear that global corporations no longer regard Japan as a priority market where they will invest and make wide-ranging commitments. A claustrophobic atmosphere has emerged along with this trend, and the outlook for the economy and business has deteriorated rapidly. It is now extremely difficult to prepare long-term outlooks. On the other hand, there are a number of other trends, especially in the fields of alternative energy sources and energy conservation. The knowledge, technology, and craftsmanship that can turn challenges into opportunities exist in Japanese companies and in the market.

Shuri Fukunaga, Burson-Marsteller Tokyo: The biggest challenge is the reinstatement in the eyes of the world Japan’s credibility, which has been dramatically minimized by perceptions of weak leadership, fumbling governance and weak communications in 3/11’s aftermath. This perception remains uncorrected. For some of our Western clients’ operations in Japan, this perception – coupled with the persistent sluggishness of our economy and rise of China – makes it increasingly difficult for them to gain global headquarters’ attention which they used to get more readily before.

Shoichi Yoshikawa, Hill+Knowlton Strategies

Deborah Hayden, Kreab Gavin Anderson: It is time for leadership with concrete messages, rather than fluffy catch phrases. It is time not only for meaningful words, but also concrete actions. The talk of recovery and change – seemingly craved for across Japan – needs to be backed up with results and activity.

Journal: What lessons did companies (PR and non-PR firms) learn from the March 11 disaster? A greater emphasis on crisis communications perhaps? Or being better prepared for a disaster?

Paul Hasegawa, Cosmo: There’s been a greater realization of the importance of both crisis communications and business continuity planning. Communications in a crisis must be timely, accurate, transparent and truthful. It is quite obvious that the government failed in all three respects after the earthquake.

One major example would be the announcement of the meltdown at the Fukushima nuclear power plant. Scientists were stating in the media that the reactors were in full meltdown in the days after the tsunami. It took the government until the summer to ‘confirm’ this publicly.

Deborah Hayden, Kreab Gavin Anderson

Sakuma: Naturally, companies have become more aware of the importance of crisis communications and the need to be ready when crises occur, but the main lesson companies have learned is that good planning does not mean good implementation. Crisis plans need to be practiced and reviewed regularly in line with real conditions. If crisis preparations cannot be effectively executed, they are nothing but words on paper. It is important to do simulations of what to do in a crisis on an ongoing basis and actually conduct practice exercises.

Journal: How do Japanese companies compare with Western firms when it comes to public relations and messaging in general? Are Japanese companies as successful in ‘telling their own message’?

Dr. Jochen Legewie, CNC Japan: In general, Japanese firms lag very much behind their peers in telling their own message to an audience outside of Japan. Six of the 50 largest companies worldwide stem from Japan but only two are listed among the 50 most admired companies. Toyota comes in as No. 8 in size but only as No. 33 in being admired, which is still the best among Japanese firms.

Fukunaga: Our experience in working with both Japanese and Western firms tells us that there are companies, regardless of origin, that are good at telling their story and that there are also those that are not so. As a norm, companies with CEOs who understand the responsibility of corporations as members of the society and take on the role of communicating actively to the public have a head start.

Dan Underwood, Ashton Consulting

Journal: What are the benefits of in-house PR versus outsourcing? In other words, why should companies hire firms like yours?

Rowbury: PR stands between the organization and its external and internal stakeholders. It not only informs but also has the ability to take the pulse of stakeholders and society at large. The benefits of this position to the organization can only be fully realized if there is objectivity. It is often difficult for in-house PR to be fully objective. This role must fall to an agency. In addition, as Japan evolves its communication model it is only the global agencies that will be able to introduce them to best practices from around the world.

Hasegawa: In-house PR people are experts in their own business: they know what to say. On the other hand, PR firms are experts in communications: they are better able to transmit a message as they know how to say it. We have expertise in placing stories, fostering media relations, and understanding how the media will respond to stories and announcements. We understand both the client’s business and the media. We know how to engage with issues and influence the public through stakeholders and key opinion leaders.

Jochen Legewie, CNC Japan

Journal: Is public relations different for a Western company (as opposed to a Japanese firm) in this country? Are there distinct characteristics that companies should be aware of?
Hayden: The basic principles of how to approach strategic communications don’t change. What foreign companies operating in this market do need to be aware of, however, are some of the cultural elements and the unique characteristics of how media in Japan operates. Engaging with media via the press clubs is one example, but there are many subtleties that need to be taken into consideration when communicating with stakeholders in Japan. Simply rolling out a communications campaign using the exact same tactics as adopted in Western markets is not an option. You can retain the core strategy and approach, but localizing to ensure the message and delivery resonates is critical.

Fukunaga: If I were to generalize, our Western counterparts at client organizations take well to integrated communications approaches, that mix and match different disciplines of public relations. Our Japanese counterparts are inclined to accept more readily segmented standalone approaches – for example, by media relations alone, or by internal communications, by crisis communications, by government relations, and so forth.

Shuri Fukunaga, Burson-Marsteller Tokyo

Sakuma: The basics of public relations are the same around the world. What we must be aware of is that there are differences between markets and media climates. Compared to other markets, Japan already has many companies that lead in their product areas globally. These companies have naturally already listed their shares on Japanese stock exchanges. It is
important to be aware that competing with these Japanese companies and competing with them in the PR domain is tough.

Journal: Is media training important in Japan or is it still a growing field? What are the benefits of media training for a Japanese company?

Hayden: It is vitally important, but this is not unique to Japan. Given the global and real-time nature of today’s media, and the pressures companies are under from the markets, putting executives in front of the media without them first being trained is a huge risk. It is essential that those representing the company understand how to effectively communicate its position, and how to avoid being drawn into commenting on issues that should be avoided.

Legewie: Japanese companies are internationalizing at a high speed but many of their executives remain weak in playing foreign media. An outspoken, media-trained Japanese company president is still the exception. Such persons can make a huge difference in positioning their company overseas where expectations are running extremely low.

Hiromitsu Sakuma, Ogilvy PR Japan

Journal: With Press Clubs and a cultural factors impacting how Japanese journalists work (as compared to the West) is it easier to ‘manage the message’ in Japan?

Hasegawa: Press clubs are just mutual-preservation
societies. The journalists in the club get embargoed stories and the companies or ministries making the announcement get to control the environment, to an extent. The journalists will rarely ask awkward questions, so yes, in that respect, it is easier to manage the message. But true management of public opinion requires a more thorough and comprehensive process that goes beyond the press clubs.

Rowbury: Traditionally the quid pro quo relationship between Japanese organizations and press clubs has probably made it easy to manage the message in positive times. But we have seen from a number of recent corporate scandals over the past years that the Japanese media can be just as frenzied and aggressive with local organizations as their overseas counterparts when the situation calls for it.

Journal: Any thoughts about the future of public relations in Japan?

Yoshikawa: More Japanese companies are expanding portions of their operations overseas, for long-term investment by way of M&As, joint ventures, alliances and other partnerships. While this creates opportunities for us, the challenge for Japanese corporations will be to evolve themselves and adopt international standards of communication, be it language or culturally.

Underwood: Boardroom-level corporate communications in Japan is still in its infancy compared to many European and North American countries with far smaller economies, but we see it moving in the right direction.

Paul Hasegawa, Cosmo

Legewie: Public relations in Japan is slowly but clearly moving away from simple relationship-based company or product promotion to integrated and strategic communications, in other words from simple PR agencies to communication consultancies.

Sakuma: What I am going to say is not limited to Japan, but I think the frameworks of PR and advertising will become more and more unclear, and that increasingly more attention will be given to how to plan for and make use of various communication channels. On the other hand, as symbolized by social media, the cornerstone of PR, which is to listen sincerely to others in both good times and bad times, will become the foundation for all forms of communication activities.

Rowbury: We believe public relations in Japan is about to enter a golden age as stakeholders demand that government, business and organizations move from a single direction “announcement” model to one of true engagement. Public relations is the discipline that is best equipped to facilitate this transformation. The future is bright indeed.

Revitalizing Tohoku Event, April 5

After coming within centimeters of death, Arakawa is now fighting to get his business and the Ishinomaki community back to life. One way he is supporting the community is through the Ishinomaki “Genki” Revitalization Association which promotes its member’s products and services through their Ganbappe website (www.ganbappe.biz/e/). Arakawa notes that although the Government of Japan NPOs Help Rebuild Tohoku Volunteering makes a difference has created a revitalization fund for small and medium sized companies, it is not enough for all the small companies that suffered from the disaster, and Tohoku still needs corporate and volunteer support to recover.

Volunteering boosts employee morale, and gives work greater meaning by making employees part of something bigger than themselves. Glynn Brasington of Pitney Bowes Japan told the Journal in a previous article that, “Volunteering really empowered members of my staff. They were so excited to be able to make a contribution. The people who did it, said ‘Yeah, we did that! What can we do next?’”

“Sixty of our 200 employees engaged in volunteer activity in Ishinomaki, in teams of six,” said Brasington. “Each team had very mixed representation from around the country and from different departments. Team leaders, who were not necessarily in leadership roles in their day-to-day work, took real decisions for others about safety and organization.”

To share ideas among companies for increasing CSR, Peace Boat has sponsored idea exchanges for HR directors get together and share information on volunteer preparedness for the big quake that is supposed to hit in the coming years.

Arakawa of the Ishinomaki survival story gave the key note speech at last month’s ACCJ event, “Revitalizing Tohoku: Reigniting Volunteering Efforts for Reconstruction,” which hosted a number of NPOs and their work. The event was MC’d by Shaun Dubin, moderated by Melanie Brock, and hosted by the ACCJ Tohoku Revitalization Task Force led by Jay Ponazecki and Jonathan Kushner. Held at the Goethe Institute in Akasaka, 15 volunteer organizations participated to explain what they have been doing in the past year and what they will do this year to support the revitalization of Tohoku. Seven of the participating NPOs shared their activities for Journal readers here.

Give2Asia is a San Francisco-based foundation that helps donor-advised giving across the Asia-Pacific region. G2A helps private philanthropy focus on Asia and magnifies donor impact. Give2Asia immediately established a Japan Earthquake & Tsunami Fund after the March 11 disaster to raise support for the affected communities. G2A led a relief and recovery campaign with more than 22 other organizations across the country, including non-corporate groups like the Japan Society of Northern California, Keizai Society, Japan Policy Research Institute, and Artists Help Japan. They also brought in corporate help. So far, the group has raised more than $5.6 million.

G2A started by supporting emergency relief efforts but puts a high priority on recovery and redevelopment. It has been in regular contact with more than 50 organizations and done outreach to more than 150 groups in the three worst-hit prefectures.

Shaun Dubin, Motokazu Arakawa, Jay Ponazeki and Jonathan Kishner

HABITAT FOR HUMANITY
Habitat for Humanity is a global nonprofit housing organization that seeks to bring people together to build homes, communities and hope. Since 1976, Habitat has served more than half a million families by building and improving homes; by advocating for fair and just housing policies; and by providing training and access to resources to help families improve their shelter conditions.

Soon after 3/11, Habitat for Humanity launched the ‘Rebuilding Japan’ program. Initial efforts focused on providing and supporting volunteers to clear mud and debris from houses, community buildings and communal areas in Ofunato and Rikuzentakata, Iwate and Ishinomaki. Habitat volunteers have already spent about 10,000 days and their work still continues.

HANDS ON TOKYO
Founded in 2006, Hands On Tokyo addresses the critical needs of the community by partnering with other organizations focusing on educational and social issues in Tokyo as well as disaster relief in north eastern Japan. By collaborating with partners to create projects designed to meet their needs, HOT provides numerous bilingual volunteer opportunities for individuals or corporations.

Tohoku projects are mainly conducted on weekends and include debris clean up, supporting strawberry farmers, hosting community cafes and BBQs, delivering supplies to those in temporary housing, and making candles for festivals and ceremonies. The group has also helped restore damaged cemeteries, create new town evacuation routes and even recreated lost wedding photos.

Tasukeai Japan with ACCJ Governor Tish Robinson

JAPAN EMERGENCY NGO
JEN (Japan Emergency NGO) supports the self-reliance of people in need in Ishinomaki by delivering psycho-social support. JEN also works with companies to provide long-term volunteer opportunities. JEN received a Foreign Minister’s Commendation for 2011 from the Government of Japan for its activities in Tohoku.

NADIA
NADIA has been working hand-in-hand with residents of Ishinomaki since the disaster. Believing that “hands don’t have nationalities,” the NPO has continuously brought direct volunteer manpower to help clear out left over debris and mud from the Tsunami where government officials couldn’t stretch their help. More than 25 nationalities are represented among the 1000-strong pool of volunteers that went weekly up north.

As NADIA has developed close relationships with local residents, as well as major actors for local economy recovery, the support is made according to real needs. The clearing and cleaning of individual households being almost over, NADIA is now helping to find ways for people to get back to a normal life.

PEACE BOAT DISASTER RELIEF VOLUNTEER CENTER
The mission of Peace Boat Disaster Relief Volunteer Center provides support for the long-term social and economic recovery of the Tohoku region of Japan, focusing on the city of Ishinomaki, Miyagi Prefecture and its environs. Peace Boat works in consultation and partnership with local communities, responding to situations and needs, enabling and empowering them as part of there recovery process. Peace Boat’s operations focus on the training and deployment of volunteers in the belief that volunteers can provide essential support in the physical regeneration of Tohoku, and the human solidarity they provide is a vital factor in a comprehensive recovery of the region.

TOHOKU UP PROGRAM
Tohoku UP Program is a joint program between Microsoft Japan and NPO Sodateage Net. As Tohoku enters its recovery period, two major needs are housing and employment. Tohoku UP program specializes in underserved youth employability to increase employment opportunities of the people of Tohoku disaster-affected areas.

The program enables the NPOs in Tohoku an environment to incorporate IT skills training as part of the support programs for victims of the earthquake. The new skill sets not only support information access but also opens up new job opportunities which may have never been on their radar.

TRACING THE ROUTE
Shaun Dubin, who MC’d the ACCJ event, traveled along route 45 from Kuji in Iwate Prefecture all the way down to Ishinomaki six months before the Tohoku earthquake and tsunami. He returned again last November to trace as much of the route as he did before, including Kita Yamazaki. Dubin says a lot has changed on the geographic level and on the business level. When he asked a merchant in Kita Yamazaki “where are all the tourists?” he was told “the tour buses do not stop here anymore.” He believes it’s time tourists returned to the area to help support the local economy.

Give2Asia:
www.give2asia.org/japantsunami-2011
Habitat for Humanity Japan:
www.habitatjp.org
Hands On Tokyo (HOT):
www.handsontokyo.org
Japan Emergency NGO (JEN ):
www.jen-npo.org/en/index.php

NADIA: team-nadia.org
Peace Boat:
www.peaceboat.org/english/
Tohoku UP Project:
www.ms-tohoku-up.jp/

Tish Robinson serves on the ACCJ Board of Governors, in addition to job on the faculty of Hitotsubashi University, where she teaches Organizational Behavior and Systems Thinking. She led several volunteer trips to Tohoku and headed the 2011 ACCJ Tohoku CSR YearBook, available at: http://www.accj. or.jp/doclib/csr/2011_CSR_Yearbook.pdf

Illustration by Rio Sleue

Style or Type?
DiSC® (and its near-twin Tracom’s “Social Styles”) aims to educate you about your preferred communication style, and it does so by asking a series of questions that you are expected to answer while keeping a specific, common work situation in mind. By doing this, DiSC® identifies behavior preferences (not personality types) that normally fit into one of four boxes (“Dominance/influence/Steadiness/Conscientiousness”). DiSC is provided in Japan by HRD through certified users.

Myers-Briggs (MBTI Step 1), based on Jungian psychology, asks 93 forced-choice questions and results in one of 16 “reported types.” Then, with the help of a certified practitioner, you can determine your “best fit” type. The 16 different types are made of the various combinations of eight dichotomies (Introverted/Extraverted, Sensing/Intuition, Thinking/Feeling, Judging/Perceiving). MBTI is available in Japan through certified users.

Or a Combination?
Lumina Spark, from Lumina Learning® is the newest psychometric assessment of the three. Lumina Spark combines elements of DiSC® and MBTI and asks 144 Likert-scale questions (from strongly agree to strongly disagree), some of which describe your personality, and others that focus on your behavior under various circumstances. The result with Lumina Spark is three different profiles: your “underlying,” “everyday,” and “overextended” personas. Lumina uses similar dichotomies as MBTI, including extraverted vs. introverted, but the other three use more everyday language (people vs. outcome focused, inspiration vs. discipline driven, big picture vs. down-to-earth thinking). The result is an individual report rather than a “type.” Lumina Learning® is now certifying users in Japan as well.

Why Use These Tools?
Over the years, I’ve heard just about every type (no pun intended) of response to these assessments. Paul B., a DiSC® champion, has taken the assessment seven times, and while his style has hardly changed, he found that sharing his communication style with his colleagues and subordinates has improved his leadership and self-awareness. Also, knowing his current colleagues’ styles, along with a refresher of how each of them likes to communicate, he has strengthened his relationships within his teams.

Paul is someone who really likes (and effectively uses) DiSC®. I’ve worked with and heard many similar positive responses to MBTI. Some go so far as to say the results and subsequent follow-ups changed the way they manage. And yet here’s one who was violently opposed to it. An MBA student of mine started off our review session with the following (paraphrased) rant: “I don’t like anything about MBTI. Carl Jung refused to endorse it. It has no validity. I see no point in discussing it.” Others (often SPs in MBTI terminology) do not like being “put in a box,” and thus might prefer Lumina Spark’s individual approach, as long as the “no boxers” are not against all assessments – like that feisty MBA student seemed to be.

I’ve seen vast differences between business and academic users of such psychometric tools: students and psychologists want to know if the tools are “valid and reliable” (that is, do they measure what they are supposed to measure and they are consistent over time), whereas business people want to know “if it works,” i.e., is there something practical to be taken as a result of the assessment? Since this is a business journal, I am assuming you’re more interested in the practical. And I promise you this: DiSC®, MBTI and Lumina Spark can all be of great practical use – or not!

A Few Right Ways to Use Psychometrics
The single best reason to use a psychometric assessment is not for applicant screening or for career promotions or the like. It is for “self-awareness.” Learning how and why you might clash with other people or tasks can help boost your own productivity. Learning what stresses you out versus what tunes you up can help you better plan your day, your week, and even your whole career. You will certainly shine brighter in your next interview, whether as the interviewer or the interviewee. How? By better knowing your strengths and potential blind spots as a communicator.

Within a team, you can also use the assessments to find out how others you work with prefer to communicate, what types of assignments they like, how to better use deadlines, what types of rewards work best, and many other insights.

Misuse?
Users of these types tools often misuse them. Unfortunately, some psychometric tools come out with incorrect assertions right on their websites; for example, the Hogan Personality Inventory’s description states that “extraverts are needed for sales positions; introverts for long distance truck drivers.” This is a common misuse of a personality tool – assuming that some personality characteristics automatically portend well for certain tasks. That may be a tendency (yes, many people in sales are extraverts), but I have several clients here in Tokyo whose best salespeople are introverts.

One consultant in town said that during his master’s degree in education, the professor used the MBTI and then asked why all the I’s (introverts) are in the program. “You need to be an extravert to be a good teacher.” Hogwash.

So the most common misuse is turning “type” into “stereotype.” A second misuse is deciding that the newly found insights generated from a psychometric tool now explain everything about a person you work with (or yourself!). “He’s a “D” (in DiSC®), so of course he thinks that way.”

For one thing, when talking about DiSC® or Social Styles, you’re best staying away from “he’s a” or “she’s a…” anything; they are style preferences, not personality descriptions. And secondly, even if talking about personality, such as with the MBTI or one of the Lumina colors, you’re better off confirming how the person views a given issue at a given time; the tests explain some but not all motivations and behaviors. The danger of creating armchair psychologists is actually quite real.

Most Importantly
If your company is already using one of these (or other) tools, it’s a good idea to be familiar with the one they are using. Find a certified user/distributor and learn the language of that tool. It can help all of your communications and accelerate your personal development. And it can give your team the same company-wide common language and create deeper relationships as you explore the drivers behind different behaviors. As one of our clients said, “The best insight for me was in learning why I wasn’t getting along with one of my colleagues. It was like a light bulb going on!”

That light bulb shines brightest when using one of these powerful tools. As Jung said, “Everything that irritates us about others can lead us to an understanding of ourselves.”

If you’re managing a bilingual team, make sure you’re confident with the reports and facilitation done in both languages. DiSC®, MBTI and Lumina Spark all were originally developed in English, and all have been translated into Japanese.

Above all, note that these are self-development and self-awareness tools, first and foremost. If you believe (as I do) that self-awareness is a key leadership skill, invest in self-awareness from different angles. Be sure you know the tool that you would have your team use.

My Preferences

Andrew Silberman is chair of the ACCJ’s Membership Relations committee, president & chief enthusiast for AMT Group (www.amt-group.com) as well as the lead vocalist & rhythm guitar for the roots rock band Moonshots (www.moonshots.net). Direct comments or questions to him by e-mail: Andrew@amt-group.com

Lumina Spark is interesting to me due to its modern and individualized reports and the fact that one of its partners, Elizabeth Handover, is a fellow ACCJ member. After taking the assessment, I found it both consistent with the other assessments I’ve taken and also interesting to explore my three different personas – as well as my team’s, who are also certified in MBTI and DiSC®.

In terms of “time investment to benefit ratio,” that’s something you’ll want to assess for yourself. DiSC®, since it measures behavior, takes the least amount of time to administer and to understand. MBTI goes deeper into psychology and has nuanced terminology that requires native or near-speaker fluency, both for participants and facilitators. Lumina Spark delivers the most individualized of all the reports.

Whatever your own preference, I do recommend you find out more. Why? Because as the good doctor C.G. Jung said: “Your visions will become clear only when you can look into your own heart. Who looks outside, dreams; who looks inside, awakes.”

Rather than talking in generalities, let me tell you about my latest concrete recruiting experience. We all know Japan is special and in the case of recruiting globally-minded Japanese, it really is. Could not be easier, could not be more efficient: every autumn, Japan organizes the “Boston Recruiting Fair” – the Boston Convention Center is rented for three days and students from around the world who are interested in getting a job with a Japanese company – or in the Japan business of a global company – come together. It’s very convenient and very efficient. Last year, about 25,000 students came from all sorts of universities around the world – Japanese kids studying overseas, globally-minded Japanese studying in Japan, or overseas kids interested in Japan. Companies from all industries and sectors are represented – from Japanese and global fortune 500 players, to small/mid-sized niche players.

Even the Bank of Japan and several other local bureaucracies are there to meet new talent. It could not be easier, better organized, or efficient. The truly global nature of this Boston Forum certainly stands in sharp contrast to the local domestic practices. Also, I know of no other country where global recruitment is organized in such efficient manner.

Jesper Koll is a Managing Director and Head of Research at JP Morgan Japan Securities Inc. He has been analyzing and investing in Japan since becoming a resident in 1986.

The real excitement, however, comes through the applicants. Last year, I received notice from about 200 students wanting to come and work in financial research in Tokyo. So much for Japan no longer being “interesting.” Most interestingly, slightly more than 40 percent of the applicants were Chinese. And of these, almost all had spent at least two or three years in Japan during high school or
doing undergraduate studies.

Four or five years ago, barely 10 percent of applicants had been Chinese. So yes, a tremendous shift is going on. And yes, those Chinese kids are eager and keen to work in Japan. Clearly competition for jobs is getting tougher for Japanese kids, no matter what the official immigration policy says. And clearly, from a hiring managers’ perspective, those “tri-cultural” students are very attractive – fluency not just in the languages but also the cultures of Japan, China and America carries a premium.

So why does this make me optimistic on Japan’s youth? That’s because the real surprise came from the Japanese nationals applying. With 40 percent Chinese and about 10 percent from other nationalities, the Japanese were still about half of all applicants – now studying in America, the UK or Australia. The surprise was that of the Japanese applicants, more than one-third had been studying in China for at least one or two years prior to their studies at English-speaking universities. How impressive, and what a clear sign that competition always works both ways: we’ve got a more global, more competitive job market with more students from China competing for Japan-related jobs. At the same time, my experience from the latest student recruiting fairs has been that Japan’s youth is responding and not afraid to compete. Tri-cultural Japanese kids can do, hands down. If at all, the only problem is my own incompetence – while I am perfectly capable of checking the Japanese language ability of Chinese students who claim to speak Japanese, I am absolutely incapable of testing a Japanese applicant’s Chinese language ability. I guess I am the one getting old and expendable…

Now, the flipside of all this is the fact that almost none of these tri-cultural, aggressive kids were actually interviewing with Japanese companies. Why not? The answer was almost always the same – they were worried about limited career prospects relative to true global companies. They do not want to spend the first four of five years of their working lives being the nail that’s hammered back in.

Indeed, how aggressive and impressive some of these Japanese new global youth were left me very optimistic. One kid was
studying at an extremely competitive US university, double major in mathematics and economics with a GPA just a smitten from perfect. Twenty-two years old, two years in China, sharp as a tack. So after a while during the interview I asked him:hey, let me ask you a real ‘gaijin’ question – where do you see yourself in five or ten years and who do you want to be?” He replied, “Well, Koll-san, until six or seven months ago I had the perfect answer to this – I wanted to become the first Japanese national to win the Nobel prize for economics.”

Then he paused, leaned across the table and said “But Koll-san, now that I have been working with two Nobel prize-winning economists, I realize that academia is not for me. I want to work in the real world!”

What more do you need to know? See what I mean – I’m very bullish on Japan’s new global youth. Whether Japan Inc. can adapt to their raw energy and global outlook and ambition is, of course, a different question.

According to finance ministry data, the government sold a total of ¥1.02 trillion ($14 billion) worth of currency over the first four days of November. That followed an ¥8.07 trillion operation October 31 – the biggest single day sell-off ever. This came after the yen hit a postwar high of 75.32 to the dollar.

The ministry data was the first official confirmation of a “stealth” intervention, although many traders suspected the move.

At a news conference, Finance Minister Jun Azumi wouldn’t comment on the November action but did say everything remained on the table. “I will not rule out any options, and I’ve been telling you that I will act when necessary.”

A senior government official told the Daily Yomiuri that stealth intervention was the most effective tactic to stem the yen’s rise in November. “We made a judgment that (stealth intervention) was the most effective way,” the official said. It is not known whether the Japanese government notified US financial officials of its move at the time.

Stuck in Limbo
Nearly 300 passengers on a Kyushu line bullet train had an awful day in March. They were trapped inside a train for six-and-a-half hours, when the driver stopped the train in Fukuoka. TBS reports the driver was concerned about a sheet of plastic hanging from an overhead wire. The plastic is commonly used in farming.

All other trains on the line were stopped as crews removed the sheet and did safety checks on the train. To make matters worse, heating, cooling and toilets did not work during the stoppage. No reason was given as to why the passengers were not allowed off the train during the mishap.

The train made it to its next destination around 10:30 pm and was operating on its normal schedule the next morning.

Attracting Tourists
Japan’s top tourism official thinks the country could be more receptive to foreign tourists. Japan Tourism Agency Commissioner Hiroshi Mizohata told a news conference at the Foreign Correspondents’ Club that it is up to all Japanese people to make tourism a priority.

“We have to make sure that every single Japanese—each individual—truly understands this concept that tourism is very important for the revitalization of Japan and stimulation of the Japanese economy,” Mizohata said.

Mizohata comments came shortly before the launch of the “Japan. Thank You.” campaign, which is designed to show Japan’s appreciation for foreign support following last year’s Tohoku disaster. The campaign’s goal is to re-establish Japan as a major tourist destination. However, most of its posters and banners will be displayed inside Japan, where they will be seen by foreign visitors already here. It is not yet known whether the campaign will be run externally.

According to the JTA, the number of foreign visitors to Japan last year fell nearly 28 percent from the year earlier. This year’s numbers look more promising, with foreign visitors down only four percent in January. A campaign to attract foreign tourists by offering 10,000 free tickets to Japan was cancelled due to a lack of funding. However, Mizohata says the Japanese government is looking at alternatives to bring back inbound traffic. But he says Japan needs to do many things to reemerge as a leading tourism destination.

Ben & Jerry’s
One of America’s most popular brands of ice cream has returned to Japan. Ben & Jerry’s opened a new store store in Tokyo’s Omotesando Hills last month. Ben & Jerry’s is owned by Unilever and has 815 locations in 27 countries. However, its last store in Japan closed in 1997 after limited success.

The ice cream is popular with celebrities and known for the quirky names of its flavors: “Cherry Garcia,” named after Jerry Garcia, guitarist for the legendary rock band the Grateful Dead and “Goodbye Yellow Brick Road,” named for a song by Elton John. The Tokyo branch offers ice cream, chocolate and banana sundaes, caramel, brownie and strawberry milkshakes and some original flavors for Japan.

The store also sells T-shirts and other gift items.

Illustration by Louise Rouse

Banking Salaries
In an effort to reduce risk-taking in the banking sector, the government’s Financial Services Agency will soon require banks to identify employees who earn large salaries in Japan. As of July, banks will be required to disclose the salaries of employees who earn as much money as their board members. Banks will also have to disclose how many employees they have in this category.

“We are doing this as part of an international movement to prevent banks from linking too much of an employee’s salary to performance,” says FSA supervisor Tsuyoshi Saito. It’s believed a performance-based pay system led to financial disasters similar to the problems at Lehman Brothers in 2008, where employees invested heavily in risky securities backed by sub-prime loans.

However, the new rules might not apply to everyone in Japan’s financial sector. Only banks covered under the Banking Act will qualify. Most highly paid, performance-based employees in Japan’s financial sector work for firms that are not defined under the Banking Act, including companies such as Goldman Sachs, Morgan Stanley and Deutsche Bank. Some foreign banks will have to follow the rule though, including Citibank Japan, State Street Corporation and Societe Generale Japan.

Up In Arms
In a controversial move, the Japanese government has ended a decades-old ban on arms exports, paving the way for Japanese firms to take part in multinational weapons projects. The move is intended to boost the domestic arms industry and reduce spending on national defense. But it will be the first time in decades that officially-pacifist Japan will allow companies to partner with foreign
firms to develop weapons.

In 1967, Japan announced that it would tightly control foreign weapons sales, stopping arms sales to Communist states, countries directly engaged in international conflicts, or nations under UN arms embargoes. The rules were further tightened in 1976 when Japan effectively banned all weapon sales.

A limited number of exceptions were made for technological cooperation on projects like missile defense with the US. Now, Tokyo will be able to develop and produce arms with the US and European countries and to export military equipment for peaceful and humanitarian purposes such as UN peace-keeping operations. Japan will also be allowed to provide equipment such as helmets and bullet-proof vests to countries where its Self-Defense Forces are deployed.

Experts say Japan’s military hardware has become outdated, while regional neighbor China has been spending heavily on defense and technology.

Illustration by Louise Rouse

Hitachi first began making TVs in 1956 and will continue selling TVs branded with its “Wooo” logo – despite being made overseas.

Illustration by Rio Sleue

In Japan however, traditional business practices dictate what most market participants can and cannot do. Tokyo is the world’s largest metropolis with a population of some 30 million people and no geographical constraints limiting supply of land. With a falling, aging population, earthquake risk, expensive and limited supply of electricity and a strong yen, there are many reasons not to invest in Japan. Yet since the earthquake last year, yields on income-producing property have fallen, showing that investor demand is buoyant. It is unlikely that many of those recent acquisitions have been by foreign investors.

In fact, JETRO statistics on inbound foreign direct investment (FDI) showed a net outflow of $2.255 billion in 2011, a huge turnaround from the peak of 2008, when FDI increased by $24.55 billion, a large chunk of which was likely in real estate. Although the JETRO data is not separated by asset class, making it impossible to be sure, one of the few bright spots in the 2011 data was the $781 million increase from Singapore investors, which have been active buyers of Japanese hotels, logistics facilities and seniors’ homes.

Seth Sulkin is the President and CEO of Pacifica Capital K.K., a Tokyo-based real estate asset manager specializing in commercial properties.

Overall, an outflow of FDI shows poor prospects for both M&A and real estate investment in Japan. Private equity investors who raise equity or debt in Japan typically limit their activity to friendly deals, so corporate divestitures are a key source of deal flow. Yet even domestic buyout shops are grumbling about the recent news that the Development Bank of Japan (DBJ), 100% owned by the government, would buy the chemicals division of Sony Corp.

With privatization plans apparently on indefinite hold, the government needs to review the appropriateness of allowing DBJ to intervene in the private sector and use its enormous market power to grab deals that would otherwise be made by private companies. The megabanks are not allowed to own more than five percent of non-financial companies, yet still exercise outsized influence as both lenders and shareholders. DBJ is like a mega-bank on steroids given that it is an arm of the government.

As far as I can see, demand for income-producing property is being driven by low interest rates, a massive pool of bank deposits and stagnant loan demand in other sectors. Japanese banks are desperate to lend money, so they beg their best customers to borrow to buy real estate to the point that the blue chip companies are only paying interest rates of 50 basis points or so. With the cost of capital so low, companies can therefore accept a lower return on their investments and still obtain a large positive yield spread. Unless real estate fundamentals like rents and occupancy improve, this inevitably leads to lower return on assets (ROA) and return on equity (ROE) over time, both of which are already low by international standards.

Low interest rates and strong mega-bank influence must have been the key factors driving the merger between listed real estate companies Shoei and Hulic that I described in my March Journal column. The annual meetings of both companies turned out to be anti-climatic. Despite being asked to throw away half the value of their investments, more than 98 percent of Shoei shareholders approved the merger with barely a whimper from those in attendance. Shoei’s largest shareholder, New York-based fund International Value Advisers, with 22.6 percent, could have almost single-handedly blocked the merger, but it must have accepted the dire warnings of Shoei management at face value that without the merger, the company would not be able to survive on its own.

While Mizuho Financial Group is the main bank to both Shoei and Hulic – and likely was heavily involved behind the scenes to help keep Shoei out of bankruptcy – another one of its real estate affiliates, unlisted Kowa Fudosan, stepped across keiretsu lines on March 26 to announce a merger with Nippon Steel City Produce, developer subsidiary of Nippon Steel.

It is clear a constantly shrinking domestic market keeps the pressure up to transform or die.

Ask anyone who attended the Asia Pacific Council of American Chambers of Commerce (APCAC) meeting about their experience March 1 and 2 and, with very few if any exceptions, you’ll hear that it was great. Whether or not you attended yourself, ask participants what they learned – or re-learned – and you will learn even more.

Thomas R. Nides, US Deputy Secretary of State, signs for ACCJ President Michael Alfant (Photo by Genki Art Photography)

“You live, you learn.”
Canadian singer Alanis Morissette has a song called “You Learn” on her album Jagged Little Pill. I quote from the song at the start of Chapter 23 of my book Get a G.R.I.P. and suggest her video for the chapter’s exercises for a reason. Watch the video and you will be inspired. The video can be a testament to everyone who worked so hard to make APCAC the success that it was. Let’s look at a few more of the song’s lyrics and apply them to the conference. My aim is to share with you some of my learning, as well as give those of you who missed the event some of its flavor.

“I recommend biting off more than you can chew, to anyone.”
Lest there be any doubt, APCAC was a full-course meal (actually five). Clark Griffith of GE Capital who, like me, joined the Chamber in 1993, said, “This is not the same Chamber we joined.”

Having nine US ambassadors in a third location (away from the US and their assigned country) sharing the same stage doesn’t happen very often. It’s a major endeavor. Nor do you – as a regular ACCJ member – get a chance to schedule one-on-one sessions with senior commercial officers from over a dozen countries in a single two-day period. Nor do you get a chance to ask questions directly to the Deputy Secretary of State, the founder of Rakuten, or a vice chairman of one of the world’s largest and most successful American multinational corporations. How often do you see the Japanese Prime Minister in person, let alone hear him make a newsworthy statement about an upcoming visit to the USA? APCAC 2012 offered star power.

The ACCJ President was on his game at APCAC (Photo by Genki Art Photography)

Sure, over the course of a year, ACCJ membership affords you that kind of access – but not all at once. Everyone who attended learned something, and every ACCJ leader will take away something they can use as they go back to “normal” events.

“Wait until the dust settles.”
As I write this, the dust is still swirling from the event, and it may have settled only by the time of publication. Let me reflect both on the dust as it was swirling and on what ACCJ leaders and members can learn from the event itself.

The swirling dust included differing opinions on the role of government in PPS (which are either Public Private Partnerships or Private Public Partnerships, depending on who you speak with). Many found that discussion fascinating, while one person told me he thought of the Japanese English pronunciation of PPP (“Three P” can come out sounding like “sleepy”). Like most panel discussions anywhere at anytime, how much you enjoy it often depends on your area of interest. Every panel discussion offered something of value to every participant and the networking that followed the Q & A sessions in such company was truly energizing.

The moderator plays a key part in the success of a panel. We saw competence personified from many (several women played that role with aplomb) as well as one moderator who may have confused “moderate” with “dominate.” A successful panel discussion depends on three human elements: the panel, the moderator and the audience. If two of the three are excellent, you’ll get at least a very good session. That was certainly the case at APCAC.

“You choke, you learn.”
In Morissette’s video, there’s a scene where she enters a gym on horseback. She dismounts the white stallion and saunters up and through a group of tough-looking inner city men playing a heated game of basketball. She takes the ball, eyes the hoop and sinks a swish.

ACCJ President Mike Alfant wanted to visually demonstrate Hillary Clinton’s APEC proclamation that the US is making a ‘pivot’ in its foreign policy, with the focus now on Asia. He asked someone to toss him a basketball. For the audience, wondering why he was suddenly talking about basketball, it looked like Mike was the typical software geek. He bobbled away my pass that hit him right in the chest. After his able demonstration of the pivot, Mike then went off plan and decided to pass the ball back to me.

To my surprise and horror, Mike sailed his pass a good three feet over my head and, had it not been for David Wouters (ACCJ member since 1969) reaching up and hauling in the errant ball, 50 journalists present would have been scribbling headlines like “ACCJ President Injures 2 Japanese to Open US-Asia Business Summit.”

So what was the learning there? You might think it was, “No more props” or, “No more off script.” Or maybe you learned that Mike has never played basketball. And surely you would think, “You’ve got to practice every part of a presentation.” All those would be incorrect.

First, the facts: the bright lights shining on the stage meant that Mike (a former competitive basketball player who might have played with some of the guys in Morissette’s video) could not see the ball as it came toward him. So even if we had practiced – unless we had done so with the stage lights on (rarely a possibility) – he was not going to catch that pass. You plan, you practice, and the only thing you can count on is that something will not go according to plan.

Practicing the return pass would have made sense. Mike would then have been able to compensate for the one-meter-high stage that, along with the distance, gave Mr. Wouters his chance to save the show. But think about this: if Mike had practiced, surely one of the organizers would have advised against the stunt. One of the key takeaways from the event – and one of Ambassador John Roos’ longstanding aims while here – is to encourage more entrepreneurship. Entrepreneurs take risks that don’t always work out.

Andrew Silberman is chair of the ACCJ’s Membership Relations committee, president & chief enthusiast for AMT Group (www.amt-group.com) as well as the lead vocalist & rhythm guitar for the roots rock band Moonshots (www.moonshots.net). Direct comments or questions to him by e-mail: Andrew@amt-group.com

This was a much more welcoming and interactive ACCJ than the one Clark and I joined almost 20 years ago. Our current ACCJ has something for everyone. Looking back at all the presentations – and all my interactions – my real learning boils down to this: real relationships.

Real Relationships
Many of the APCAC speakers referred to the warm relationship between the US and Japan. One of the best speeches was delivered by Ichiro Fujisaki, Japan’s Ambassador to the US. He spoke from the heart, in fluent English, without notes. I re-learned how much better a speech sounds when delivered his way. He spoke authentically about the relationship, echoing and amplifying feelings expressed in an emotional eight-minute video that participants watched on APCAC’s first day.

APCAC 2012 allowed for the creation of new friendships and strengthening of existing friendships. That might sound like a cliché, and again, every ACCJ event offers that kind of opportunity. But when you blend the organizational skills, participants, speakers and an excellent venue, you get what we got: exceptional opportunities to learn.

Note:In researching Dr. Moore for this article, I learned with sadness that my former professor passed away last November 27. I also found out about his background: that he dropped out of high school to join the Navy and enter WWII, served our country in WWII, Korea and Vietnam, rising through the ranks to become a captain. He later earned three master’s degrees and a doctorate. Most of my fellow students knew him as “Loren,” one of the most personable and accessible professors you could imagine. It is with continuing gratitude for all he taught us that I’d like to dedicate this Andrew’s Ax to his memory.

Illustration by Louise Rouse

The report found that only 0.4 percent of Todai students studied abroad last year while a mere 1.9 percent of current undergraduates are from overseas. This lack of international diversity is a reason why Tokyo University fell to 30th place on the Times Higher Education Supplement latest rankings. About 70 percent of the world’s universities begin classes in the fall.

Japan’s current academic schedule is tied to its strict entrance exam system and a fiscal year for business that runs from April to the and of March. Therefore, changing the academic calendar would signify a radical shift in the way business is done in Japan.

Todai boasts 15 Prime Ministers and hundreds of corporate leaders as gradates, so its changes normally set the standard for other Japanese schools.

SHRINKING POPULATION
If the latest population estimates are accurate, Japan will have much more room over the next half century. The Ministry of Health, Labor and Welfare predicts the population will shrink to a third of its current size by the year 2060.

The latest forecast from the ministry’s research organization, the National Institute of Population and Social Security Research, sees Japan’s population falling to 86.7 million by 2060, from the current population level of 127.7 million. The institute says the population should also hit 42.9 million by 2110.

According to the institute, the population decline is due mainly to Japan’s low fertility rate, which stood at 1.39 in 2010 but will keep falling until it bottoms out at 1.33 in 2024.

The government predicts that in 50 years, 39.9 percent of the population will be 65 or older, compared to 23 percent in 2010. On the positive side, Japan’s life expectancy rate is expected to rise from about 86 years of age (in 2010) to nearly 90 (in 2060) for women and from 79.6 to 84 years of age for men.

The institute bases its population forecast on census and demographic statistics and is used by the government to create social policy.

WE’RE NUMBER TWO!
The next time you pay 300 yen for an apple at a Tokyo supermarket, step back and take a breather. You no longer live in the world’s most expensive city. Tokyo has relinquished its title to Zurich, Switzerland on the latest cost of living survey published by the Economist magazine.

The magazine says currency movement has pushed the Swiss city ahead of Tokyo into top spot, from 4th place in the previous survey. Geneva takes third place while Osaka/Kobe comes in fourth. Tokyo still has the world’s highest prices for a loaf of bread and a kilo of white rice. Gasoline prices also remain close to the top at nearly $2 US a liter.

The cost of living survey is done twice yearly, and compares more than 400 prices for 160 items including food, drinks, clothing, gasoline and household supplies – along with rent, utility bills, schools and recreational costs.

More than 50,000 individual prices are collected by the magazine’s researchers in each survey.

CRAZY FOR COMBINIS

Illustration by Louise Rouse

And business is so good that the three main chains plan to open nearly 3,000 stores this year. That will be a record number of openings and will bring the total number of combinis to more than 45,000 nationwide. Seven-Eleven leads the way with plans to open 1,350 new stores. Lawson plans as many as 900, while Family Mart hopes to open about 800 stores.

Convenience stores saw a sharp rise in sales after the March 11 earthquake and tsunami. New customers favored convenience stores over supermarkets for many items, forcing the companies to expand product ranges.

PAPER CUTS
Twenty-three board members and other executives at Daio Paper group companies will face discipline in connection with the scandal involving the company’s former chairman. Mototaka Ikawa gambled away billions of yen of the firm’s money at casinos in Macau and Las Vegas.

Daio will suspend some board members and cut the salaries of others who were allegedly complicit in the scandal. A special in-house committee set up to investigate found that Ikawa borrowed a total of ¥10.68 billion from seven group companies. The money was transferred to bank accounts in the 47-year old former chairman’s name between May 2010 and September of last year. The committee found that some of the loans were made without collateral and without the approval of the board of directors as required by law.

Ikawa was arrested last December on breach of trust charges. Although he has paid back almost ¥2.1 billion, the remainder of the money has not been recovered.

Employees said nobody at the company would question orders given by the Ikawa family. Ikawa’s grandfather founded Daio, Japan’s third-largest paper mill.

UP IN THE AIR
Japan’s first low-cost domestic airline will soon be jetting out of Narita Airport. Australia’s Jetstar has announced plans to begin serving Narita on July 3, pending regulatory approval.

The discount airline’s fleet of new A320 aircraft will initially serve five Japanese markets: Tokyo, Osaka, Sapporo, Fukuoka and Okinawa.

“Serving the Japanese customer for the past five years with international services gives us a clear advantage in rolling out a domestic network,” says Jetstar Group CEO Bruce Buchanan. “The Jetstar brand is a known quantity in this market and that awareness is helping us put together a strong, hard-working local team.”

Fares and schedules have not been announced. But Jetstar Japan CEO Miyuki Suzuki says the carrier is preparing for strong customer demand when fares for the first five destinations go on sale.

“In a country that’s never had a true low fares domestic network, the ability to travel for an average of 50 per cent less will open up new places and opportunities,” says Suzuki.

Suzuki says the company has also received nearly 9,000 applications for Japan-based cabin crew positions.

“The great response we’ve had from potential crew and the positive discussions we’re having with local airports has allowed us to bring our first flight forward by several months.”

Jetstar Japan is a partnership between the Qantas Group, Japan Airlines and the Mitsubishi Corporation.

PANASONIC’S SOUND IDEA

Illustration by Louise Rouse

The electronics giant has developed new technology to help people being fitted for hearing aids. Focusing on brain wave patterns, the new technology allows listeners to estimate the loudest level of sound that can be comfortably tolerated.

Finding a maximum volume is important in testing hearing aids and getting them to work properly. However, hearing aid users often undergo uncomfortable and even painful testing periods when maximum volumes are set. Panasonic’s new technology, developed with researchers at the University of Fukui, helps reduce the strain. The company hopes to have the technology on the market by 2015.

Filter is compiled from reports by Japan Today, Kyodo News, the Daily Yomiuri, the Mainichi Daily News, the Japan Times,TBS and the Wall Street Journal.

Photo by Benjamin Parks

These questions are difficult to answer. But this one isn’t – does one’s interest and concern over what is posted on Facebook change from culture-to-culture? Quite simply, the answer is “yes.” At least that’s what our surveys found when we asked people across 12 countries various questions about personal privacy.

Sixty-five percent of Hong Kong citizens agree that “it’s better to be open about your problems,” compared to 50 percent of Americans and only 20 percent of Japanese. However, half of the Japanese surveyed agree that they “get embarrassed very easily,” compared to about 40 percent of Americans and only 30 percent of Hong Kong citizens.

The findings are part of a global investigation McCann Worldgroup did last year entitled: “The Truth about Privacy.” Our study involved extensive interviews across a dozen countries, followed by extended Internet surveys with about seven thousand people in the UK, US, Hong Kong, India, Chile and Japan. The research set out to understand what privacy means to people; if privacy concerns differ; and how marketers can cultivate responsible sharing.

What emerged was that people everywhere are concerned about “privacy.” However, “privacy” remains a complex, multi-dimensional issue that encompasses everything from personal, real-world snooping to sharing data online. Further, when it comes to data sharing we need to unpack the issue even more as people categorize data into different categories, i.e. shopping, location, personal, medical, and financial. People also have varying degrees of concern with sharing each type. In fact, 71 percent of consumers say they are willing to share shopping data with a brand online. Eighty-six percent of consumers say that there are major benefits associated with sharing data with businesses online while 65 percent see one of the top two benefits as better access to discounts and promotions.

Tatemae vs. Honne
In Japan, every gaijin quickly learns how important it is to sort out “honne” and “tatemae.” The former concerns a person’s true feelings and desires, which may be contrary to what is expected by society or what is required according to one’s position and circumstances. Honne is often kept hidden, shared only with one’s family or closest friends. Tatemae, on the other hand means “façade” – and is the behavior and opinions one displays in public. Tatemae is one’s public face: what is expected by society and required according to one’s position and circumstances. This public face may or may not match one’s honne.

It turns out that when it comes to how willing Japanese people are to share their points of view, their lives and their public face, they do indeed think very differently than the rest of the world. They are also very shy about exposing themselves, reflecting a long term cultural reticence to stand out.

Our survey found that Americans are cautious but more experimental to a level around the global average, while the Japanese are just shy of revealing too much about anything. We got the following results when we asked people how much they were willing to share on social media pages:

■ 50 percent of Indian people say they want as many commenting about them as possible, the global average is about 25 percent, while only 10 percent of Japanese feel that way

■ Well over 50 percent of Indian people say they love to be the center of attention. Surprisingly, only around 20 percent of Americans feel that way, but not surprisingly only around 10 percent of Japanese do

■ And while 45 percent of Indian people would like to be on a reality TV show, fewer than 10 percent of Japanese want to “get their chance.” Perhaps that helps explain why Japan is the only major market in the world where the “Idol” style of programming has never taken off

■ As for how important it is “to build a positive image of yourself online,” Americans come in around the global average of 45 percent, while Indian people are again much more likely at 70 percent and the Japanese are the least likely to agree at 25 percent

Standing Out From the Crowd
While Japanese people have embraced blogging, text messaging, twitter and social media sites like Mixi and Facebook, they show distinct beliefs as to what they are willing share. Others around the world have embraced social media sites as a way to broadcast their lives and themselves. In developing countries like India, Malaysia and Chile, we found people viewed social media as a way to advertise themselves. The reason Indians were so enthusiastic to reveal themselves was simply that they felt it was a way to get an edge in a fast changing world.

In Japan, there was a definite counter view. The relatively anonymity of being able to use tags and bios without revealing real details meant that people could feel free to voice their own thoughts without the trap of “standing out from the crowd.”

Japanese people are also more afraid of losing their security online than many others. While about 50 percent of the people we surveyed said they feared the possibility of having someone impersonate them for goods and services online, the number jumps to nearly 80 percent in Japan. So for the Japanese, sharing seems fine as long as the environment can be controlled.

Helpful Findings for Business
Here are some other findings uncovered by our research that might help business people:

Businesses need to understand the privacy value equation
For all types of companies and brands, there are four key dynamics to privacy and maintaining a proactive, productive and share-worthy relationship with consumers: control, choice, commitment and compensation are the key to assurance and trust. People want a commitment from companies that their personal data (i.e. email address, phone numbers, etc.) won’t be passed on to third parties. Globally, 55 percent of people say this is one of their top three most important criteria when deciding to trust a brand. They also want a choice about how their data will be used. About 51 percent around the world say it is important to know exactly how their data is going to be used. When it comes to control, 49 percent want to be in total command of which pieces of data they share, while the vast majority want to know what is being shared. Consumers also want compensation. They want a reason to share data and an understanding of how they will benefit. It’s no surprise that Amazon is one the most trusted brands because people can see how the company uses data to make relevant suggestions.

A Brave New World of sharing
In a world where social networking is a normal part of everyday life, people are required to spend more and more time managing their online brand. Consumers around the world admitted to multiple online personalities, on the spectrum from ‘virtuous me’ with information suitable for family and employers to ‘popular me’ where they include items intended to impress friends and social acquaintances. And this habit of “creating” different online personas was heightened in Japan. This becomes a challenge for brands which need to understand what version of their consumer they are interacting with each day.

Privacy is a two-way street
While 84 percent of consumers believe they have a total or some right to privacy, only 51 percent believe the same applies to the government. The government, it seems, must trade privacy for power. Similarly, only 57 percent of consumers believe a brand or business has a right to privacy. Sixty-five percent of consumers say a reality TV star has a right to privacy; the other 35 percent might believe that star has traded his or her private life for fame (and perhaps a cash prize). Increasingly, governments and businesses will need to recognize that privacy is a two-way street. People might be willing to share more of their personal information in order to gain benefits but they expect a greater degree of transparency in return.

The rise of the Savvy Shopper…especially in Japan
It may come as no surprise to find that when it comes to attitudes towards privacy, Japanese people have a different profile to Westerners. But the difference is actually more different than we initially thought. We identified five profiles on consumer behavior and attitude towards receiving, sharing and privacy:

■ Eager Extroverts (15 percent of the global population, less than 4 percent in Japan ) are the people most likely to want to be on a reality TV show

■ Sunny Sharers (20 percent globally, 6 percent in Japan ) are most likely to say they like receiving surprises in their “in box”

■ Savvy Shoppers (37 percent globally, 60 percent in Japan) are most likely to sign up for store loyalty cards

■ Spam Stoppers (9 percent globally, 8 percent Japan ) are most likely to want to cut off all unknown correspondence

■ Walled Worriers (19 percent globally, 22 percent Japan ) are most likely to agree that they don’t trust big business

The largest group, Savvy Shoppers, best embody a nuanced approach to this brave new world of sharing and the Japanese approach. They are willing to engage with businesses in exchange for commitment to security and compensation in the form of discounts or preferred status. A full 86 percent of all consumers globally understand that there are major benefits associated with sharing data onlineand that shopping data is the type of information they are most willing to share (71 percent of consumers globally are willing to share shopping data with a brand online). For the majority (65 percent), one of the top two benefits is better access to discounts and promotions – a very “Savvy Shopper” mentality. And this is where Japanese people show a much greater willingness for limited openness than say Americans.

So it seems that privacy is really about trade-offs. People are quickly learning that nothing is “truly private” anymore. However, at the same time, they also know that the value of privacy can be a valuable commercial tool.

So next time you read about how Japanese women carry an estimated 26 store cards for various retailers, just remember, they are very savvy shoppers. However, they might not be so keen to tell you about it.

Dave McCaughan is Director of Strategic Planning at McCann WorldGroup’s Asia Pacific office.

For those of us fortunate enough to attend the summit, we were treated to an incredible lineup of speakers and panelists. It’s hard to know where to begin, but just running through some of the names quickly, we had Japan’s Prime Minister Yoshihiko Noda and Minister of Economy, Trade and Industry Yukio Edano, US Deputy Secretary of State Thomas Nides, Undersecretary of Commerce for International Trade Francisco Sanchez, Ambassador John Roos, Charles Lake (AFLAC), Ambassador Robert Orr (Asian Development Bank), John Rice (GE), Ambassador Hans Klemm (Economic Coordinator, Bureau of East Asian and Pacific Affairs, US Department of State and US Senior Official, Asia Pacific Economic Cooperation), Ambassador Sung Kim (Korea), Hiroshi Mikitani (Rakuten), Ambassador Jeffrey Bleich (Australia), Principal Deputy Assistant Secretary McCarthy, Takeshi Niinami (Lawson), Assistant USTR Wendy Cutler, Lewis Kaden (Citigroup), Ambassador David Adelman (Singapore), William Toppeta (MetLife), Deputy Minister Dang Huy Dong, Planning and Investment Vietnam, Ambassador David Carden (ASEAN), Monika Merz (Toys R Us), Ambassador Paul Jones (Malaysia), Robert Eberhart (Stanford University), Ambassador Scott Marciel (Indonesia), Kevin Thieneman (Caterpillar), Ambassador David Shear (Vietnam), Commissioner Masamichi Kono (Financial Services Agency), William Stanton (Director, American Institute in Taiwan) and Japan’s Ambassador to the US Ichiro Fujisaki.

Michael Alfant
ACCJ President
malfant@accj.or.jp

Actually, having run through that list of eminent individuals, I’d like to note that I’ve named only around half of the speakers at the conference! There’s just not enough room in this column to name every one of the distinguished participants. Being informed by so many uniquely qualified experts was really a remarkable experience. At one point during the conference, it occurred to me that we’d assembled what was probably the deepest and broadest array of participants from the US business community and government ever seen in Asia.

I feel as if I learned so much in those two days that it will take me weeks or months to assimilate it all. Our ability to make this event happen is really due to the credibility and reputation that the Chamber has earned over the last six decades.

Coming less than one year after the catastrophic March 11th earthquake, this event proved categorically that not only is Japan back in business, but that we’re one of the business communities providing leadership and vision globally.

From a Chamber perspective, we’ll be enjoying the benefits from this great event for years to come. In my concluding remarks at the conference, I said that I’d like to individually thank each ACCJ volunteer leader and staff member that contributed to APCAC but that I’d need an hour or more to do so. This column will be the second time I’ll once again issue a collective “thank you!” to all the folks that made the 2012 APCAC Asia Business Summit such a fantastic experience.

I hope that you’re all as energized and motivated as I am right now… and we still have nine months to go in 2012!

Thanks again.

A classic example is the Volkswagen ad that aired in 2011 featuring a child dressed as Star Wars’ Darth Vader. The boy struggles to make his power felt on various parts of his home until he comes face to face with his dad’s new VW and starts the engine – just using the power of “The Force” (helped by his dad using a remote start button behind the scenes). For the 2012 Superbowl, VW continued the Darth Vader theme, albeit with a somewhat witty and unexpected twist. Both campaigns are great pieces of advertising, and well worth checking out on YouTube.

It’s hard to imagine a similar level of cultural anticipation around a television campaign in this country. Japan is the land of the 15-second spot – bite-sized chunks of often celebrity-driven TV that, to the untrained eye, seem to have little narrative or strategic meaning connected to the brands they advertise. None have reached Superbowl levels of cultural interest, but one campaign has come close: the multi-year “White Family” series for mobile carrier Softbank. This campaign, which has aired over 100 different versions since June 2007, has captured the hearts of the Japanese public and has coincided with several years of strong market progress for Softbank.

Dominic Carter is CEO of CarterJMRN KK, a Tokyo-based global research company. He is also a former chair of the ACCJ Marketing Programs Committee.

However, Sawamoto has a close connection with dogs. He writes, “I’ve never thought deeply about it, but I felt like dogs do preach or give you advice when you’re in need. I simply thought it would be nice if the father was a dog.”

The African-American man first appeared in Softbank’s Aquos cell-phone ads as the “yoso guy” – which in Japanese literally means ‘unexpected.’ His character and blank look have not changed since he began appearing in the White Family series.

The campaign reflects Japanese family life as well as popular culture, using common “gal” slang (“Gals” are cute young Japanese females like the ones you often see in Tokyo’s Shibuya district). Lately, the ads have taken an even more fantastical tack, like being set inside a space rocket, racing with famous Japanese superhero Ultraman and batting in front of famous baseball player Sadaharu Oh. The dog-father, who reflects in some ways an idealized Japanese father, even has his own Twitter account with over 180,000 followers.

The White Family campaign is unusual in Japan in that it is relatively uncommon to carry the same themes over a period of years – for domestic advertisers at least. Advertisers commonly believe that they are battling such a crowded media marketplace – and jaded consumer – that constant “freshness” is a must. In the same way that Hollywood constantly pumps out movies hoping for hits, domestic marketers are always churning out new products and campaigns. Given this notion, Softbank appears to have struck an interesting balance between freshness and consistency, which provides some useful pointers for foreign brands pondering their strategy.

White Family remains a very Japanese advertising campaign in that it doesn’t always make sense as a story (unlike the US VW ads) and does not overly dwell on product stories or reasons to buy. In this sense, its seemingly postmodern course would be anathema to most American marketing directors.

However, there are some characteristics of Japanese advertising and marketing in general that are worth knowing about if you are marketing your brand here:

■ Frugal Japanese consumers tend to be more defensive about spending money than their American counterparts
■ Trusting the seller is even more critical in Japan before transactions take place
■ Endearing or appealing celebrities and characters are often used in ads to get around these first two barriers
■ The way brands are created and marketed is very different and based on emotion that often doesn’t directly relate to product attributes or reasons to buy
■ Campaigns, packaging and whole sub-brands are often used for short bursts and then discarded in favor of the next big thing

Marketing in Japan, like so many other things, often bypasses the critical mind and works on pure emotion. That Softbank can carry on this campaign over such a long time – and still hold the interest of consumers – carries many worthwhile lessons for those trying to connect with consumers in this market.

Illustration by John Shelley

“Kazuya!” she called out.

The little boy turned and there was a moment of recognition. But Akeo never got to follow up. To her surprise, the principal marched over and grabbed her arm. “Why did you come here?” he barked. “Why did you interrupt the concert?”

Akeo was pulled into a separate room and interrogated. She was ordered to leave the school and not talk to her son again.

“That choir concert was in the morning,” she says. “I waited outside the gate until six o’clock. But he did not come out.”

Akeo was treated like a criminal for wanting to see her son. But she was not a criminal. In fact, she was a victim of child abduction and parental alienation. And she remains so to this day.

In late summer 2006, Kazuya was spirited away from the family home by Akeo’s Japanese ex-husband. Akeo tried everything to get her son back including hiring private investigators and going to court more than 60 times. Nothing worked. Despite being a desperate mother, she has only seen the boy three times since his abduction.

“I met him two times in the Family Court,” she says. “One time was one hour – the other time was 45 minutes.

“The last mediation, my ex-husband made an agreement. I could meet my son every two months. But then final mediation, he gave the court my son’s letter. The letter said: ‘Oh, I have to study to enter high school. It is quite difficult for me now (to meet you).’

“Always, I had hope. But that day finished everything. I can’t do anything about my son.”

Takaji Takeuchi can sympathize with Akeo’s desperation. On a warm spring night in March of 2011, he tried to talk to his son who had also been taken away by his Japanese ex-spouse several years before. Japan had been hit by the horrible 3/11 tragedy and Takeuchi, like many others, was concerned about his family. He found his son at home with his ex-wife.

Takaji Takeuchi has only seen his son Kousuke five times in five years. (Photo by Mike DeJong)

Both Takeuchi and Akeo’s children have been turned against them. It’s a common occurance for children separated from their mothers or fathers for lengthy periods of time. And it’s something that causes great pain on all sides.

“Every year, (at) New Year I say this year will be better,” Akeo says. “But you know, every year is getting worse. Still, I must keep going and keep doing something.”

Heartbreaking But Not Uncommon
These two cases are heartbreaking but not uncommon in Japan. In fact, there may be thousands of parents like them, who have lost contact with their children following a marital breakdown.

The reason is simple: there are no provisions for joint custody in Japan. In fact, under the country’s Meiji Era Civil Code, child custody is awarded to only one parent following a divorce, with the other parent is generally shut out. With no enforceable visitation rules, non-custodial parents generally lose access to their own children.

“Japanese Family Law is a misnomer in that there isn’t such a thing,” says Colin P. A. Jones, professor at Doshisha Law School in Kyoto. “There is not a statute that is called Family Law.

“There have never been a lot of substantive rules clearly laid out somewhere in a statute, which say parents have to do this for their children… or after divorce this is what’s supposed to happen.”

Jones says the parent-child relationship in Japan is defined in terms of a marital relationship, so essentially, divorcing a spouse also means divorcing one’s children. In the rare cases where visitation is granted, Japanese courts usually limit non-custodial parental time to a few hours per month. The custodial parent retains the right to cancel visitation at any time without penalty. This policy differs greatly from Western countries where the rights of parents are maintained and enforced – even after divorce.

“For a number of historical reasons, Japan has never really developed the notion that there are Constitutional rights associated with the parent-child relationship,” says Jones. “That is why child abduction – as we would call it – within Japan has been a problem as long, if not longer, than the international abduction cases have been.”

Masako Akeo has only seen her son Kazuya three times in six years.

Critics say it’s a system that promotes and legitimizes child abduction and alienation.

Best Interests of the Child?
In denying or severely limiting visitation, Japanese courts often reason that children “need protection” from the “trauma of divorce.” For example, in 2003, a desperate mother looking to visit her son was told by an Osaka High Court that “the child is satisfied with his current established lifestyle” with his father and new step-mother. The court denied the mother’s visitation request stating that “exposing the child to different lifestyles and methods of discipline can have adverse effects on the feelings and emotional stability of the child.”

This opinion flies in the face of research by child psychologists, psychiatrists and child welfare experts worldwide who argue that, despite the conflicts inherent with divorce, children need contact with both parents to grow up as healthy, well-adjusted adults.

“Empirical and longitudinal studies show that maintaining contact with non-custodial parents is beneficial for children’s well-being,” says clinical psychologist Kazuyo Tanase, a professor at Kobe Shinwa Women’s University.

In an interview with NHK, Dr. Tanase said she believes the current visitation system in Japan does not serve children or parents well. “It should be changed. Parents with no custody should be able to spend substantial amounts of time with their children like weekends and long vacations with overnights, not just several hours a month. Secondly, couples shouldn’t be allowed to separate or get divorced without a parenting plan in place. Finally, couples should be able to choose between sole custody and joint custody.”

Happier days for Masako Akeo and her son Kazuya.

In recent months, diplomatic officials from the US, Canada and Europe have lobbied Japan to implement a joint custody system. Senior members of the Obama Administration including Secretary of State Hillary Clinton have also pushed Japan to join the 1980 Hague Convention – an international agreement that protects children from abduction. Japan is the only G8 country yet to sign the accord. The Japanese government has pledged to join the Hague Convention this year and the Justice Ministry has already released legislative proposals due to be submitted to the Diet this spring. However, critics say the proposals include so many conditions that the law will be virtually unenforceable.

“It’s pretty depressing,” says Jones, after reviewing the proposals. “It seems pretty clear that Japan is going to implement the Hague based on a number of assumptions that conflict with the assumptions of the Hague Convention.

“The implementation regime (in Japan) is basically going to assume that the taking parent has a good reason – they’re going to protect the taking parent until the left-behind parent proves otherwise.
“I don’t see it really getting anywhere – really making any changes.”

Black Hole For Child Abduction
Japan is a signatory of Article 10.2, the United Nations Convention on the Human Rights of the Child, which reads: “A child whose parents reside in different states shall have the right to maintain on a regular basis, personal relations and direct contacts with both parents.”

Yet personal relations and direct contact with both parents often does not happen in Japan. And, with its lack of respect for international court rulings and a decades-long reluctance to join the Hague Convention, some critics call Japan a “black hole” for child abduction.

In fact, the US State Department warns that “Abductions to Japan represent one of the largest portfolios in the Office of Children’s Issues and are among the most difficult to resolve. To date, the Office of Children’s Issues does not have a record of any cases resolved through a favorable Japanese court order or through the assistance of the Japanese government.”

Two high profile cases recently highlighted the need for Japan to get serious about child abduction. Last December, Wisconsin doctor Moises Garcia saw his nine-year old daughter returned after a four-year fight. The child had been abducted to Japan by her mother, who ignored a US court order granting the father custody. The child was returned as part of a plea bargain agreement when the mother was arrested in Hawaii on child abduction charges. In 2009, the Japanese ex-wife of American Christopher Savoie also ignored a US court order and took the couple’s children away. Savoie traveled to Japan to try and get the children back but was himself arrested on abduction charges. The charges were later dropped but Savoie was forced to leave Japan without his children.

In both of these cases, Japan failed to recognize US court decisions and experts say this highlights not only problems with Japanese law but also the country’s disregard for international court rulings.

Left Behind Parents
An organization known as Left Behind Parents Japan (LBPJ) has been campaigning for Japan to join the Hague Convention and to implement an enforceable visitation system. The group – which brings together foreign and Japanese parents who have lost access to their children – has taken its fight to senior levels of the Japanese government, including meetings with a former Japanese Justice Minister.

“Meeting with (former Justice Minister) Eda Satsuki was extremely important because he’s been a lawyer for over 40 years,” says LBPJ spokesperson Bruce Gherbetti. “He was a Family Court Judge early in his career, so he understands the issues at play.

“And I believe that he inherently believes that the solution is for Japan to sign the Hague Convention.

“Ultimately, Article 818-819 needs to be changed. That’s the (article of the) Civil Code that speaks to sole parental authority.

“Kyodo shinken is the answer,” says Gherbetti. “Kyodo shinken or joint custody.”

Not Only A “Foreign” Matter
From the attention given to high profile international abduction cases, one might assume the child abduction issue is a “foreign” matter in Japan. However, it is not. Japan’s divorce rate is now more than double what it was in the early 1970s and statistics show that nearly half of all marriages end in divorce (nearly 40 percent in 2010) – which means there could be thousands of permanently separated Japanese parents and children. At least 20 percent of the cases also involve left-behind mothers.

“If you’re a public school teacher, you’re looking at a class where one-third of the children probably have experienced a parental divorce,” says Jones. “Just nobody talks about it and the law really has not addressed what should happen to children after divorce. What is in their best interests after divorce.”

Despite all of the publicity surrounding the issue, it does not appear that help is coming soon from the Japanese government. In an interview with the Japan Times on February 1, 2012, Japan’s new Justice Minister Toshio Ogawa had this to say about modernizing the Civil Code: “If we allow dual parental rights, it will be difficult to decide which parent the children live with and to make other decisions. I believe a major complaint that people seeking dual parental rights have is that they don’t get to see their children enough. That can be largely solved by ensuring visitation rights.”

“The problem is that visitation rights are not enforceable under the current system,” says Gherbetti. “You could talk about visitation rights all you want, but if one parent still has veto rights over the other, then visitation provisions are essentially meaningless.

“To continue to disallow dual parental rights is a human rights violation, plain and simple,” says Gherbetti.

LBPJ member Dennis Gunn adds, “If one side has tyrannical power over the relationship with your child, then sooner or later – and usually sooner – that is going to be abused.

“They have devised a system here that is guaranteed to cause the parents… and the children to suffer.”

Photo by Louise Rouse

“I’m kind of an activist,” she says. “Maybe so my son can see TV or magazine or newspaper.

Okay, Mommy’s doing this for me. That’s why I’m doing this – for my son.”

ACCJ President Mike Alfant. Photo by Genki Art Photography

APCAC panels focused on innovation and entrepreneurship, the TPP , restoring supply chains after the earthquake and the floods in Thailand. There were also discussions about energy, good governance, health care and financial services. Guest speakers included nine US Ambassadors from around the Asia-Pacific Region and some high-level personnel from Washington such as US Deputy Secretary of State Thomas R. Nides and Under Secretary of Commerce for International Trade Francisco Sanchez.

But the real highlight came on day two:a surprise visit by the Prime Minister of Japan, Yoshihiko Noda. Prime Minister Noda thanked the ACCJ for contributing to the relief efforts in Tohoku and spread the message that “Japan is open for business.”

In a prepared statement, Noda said: “As you are all aware, the Asia-Pacific region is the center of global growth. It is private companies such as those you represent here that have enabled the realization of sustainable economic growth in the region and this is something I applaud.

“I hope that efforts will continue to ensure that the growth trajectory for the Asia-Pacific is one that is both sustainable and balanced.”

The Prime Minister also expressed his wish to “make a visit to the United States… and work with President Obama to make further efforts to strengthen our invaluable bilateral ties.”

Noda’s visit followed a March 1 address by Yukio Edano, Japan’s Minister of Economy, Trade and Industry.

Other APCAC speakers included Rakuten’s Hiroshi Mikitani, and Takeshi Niinami, President and CEO of Lawson. In light of last year’s 3/11 tragedy, APCAC 2012 devoted one panel directly to business supply chain disruptions. A great deal of attention was also paid to changes in business development and opportunities.

Several panelists noted a “post 3/11 effect” which may have opened the doors in several areas, particularly, though not exclusively, in areas of IT (a reflection in part of how many businesses were cut off from constant communication with overseas offices and/or other facilities in Japan). The need for a comprehensive review of Business Continuity Plans was also a theme repeated in several panels.

TPP was also a hot topic in various panel discussions. Since talks between the various countries involved are still in the early stages, there were no definitive answers for what a final agreement might look like or what follow-through mechanisms for contentious issues might look like.

Prime Minister Yoshihiko Noda. Photo by Genki Art Photography

A March 2 breakfast session on Good Governance centered on questions about corporate governance and legal compliance, which were also issues addressed at several other panels. Overall, APCAC 2012 brought many people together and garnered good reviews from those who came to network and learn.

“I was impressed with both the quality of the speakers and the attendees,” said James R. Fink, of Colliers International. A first-time APCAC attendee, Fink said, “Going forward it would be helpful if there could be some time devoted to how the various chambers across the region can coordinate and cooperate in effective ways to assist and promote American businesses.”

Hank Wang, of the Beijing office of Garvey Schubert Barer, said, “I (was) impressed by the number of our ambassadors that showed up at this conference to show their committed devotion to the common task of rebuilding a strong US economy and by the way people from the government and private sector work together, a true public private partnership.

“I thought that the event went very well,” he added.

However, one thing Jeff cannot do is see his five-year old daughter. That’s because, as a divorced father in Japan, Jeff has lost all rights to his own child. Jeff carries a photo of his little girl on his mobile phone – a wonderful image of a lovely little child that is, sadly, the only thing he has left to remind him of the girl. I’ve asked Jeff if he would consider going to court to fight for his daughter but he says, “No.” He knows it would be a losing battle, likely cost him dearly, and provide no guarantee that he would see his daughter again.

The last time we spoke, Jeff told me his hope is that his daughter will seek him out when she grows up so that the two can re-connect. It’s the only chance he has in a country where there are no laws to protect parental rights.

Mike DeJong
ACCJ Journal, Editor-in-Chief
mike@accjjournal.com

As our article Left Behind (page 22) points out, there are likely thousands of “Jeffs” across Japan (and hundreds of foreign people) who have lost contact with their children following divorce or separation. Japan’s sole custody policy awards children of divorce to only one parent; these parents have the ability to shut their former spouses out of their children’s lives forever if they desire. Due to a lack of enforceable visitation laws, even court-awarded visitation to non-custodial parents can be ignored.

With Japan’s divorce rate close to 40 percent, it is a monumental problem that is rarely written about in the domestic media. One law professor estimates there may be a child in every Japanese classroom separated from a parent forever.

While the parental-children’s rights article might make you sad, Dave McCaughan’s piece Privacy Watch (page 28) should make you glad you picked up the Journal this month. Dave writes about an interesting survey on online information-sharing, examining the issue of how much privacy people are willing to give up in exchange for online convenience. How willing are you to share your credit card details or personal information online? How open are we about telling intimate details on social networking sites like Facebook? It seems Americans and Japanese differ greatly in many of these areas.

Raising capital is another issue that we examine this month, specifically in the form of “rights issues.” Rights issues are where companies offer shares to stockholders at a discount, allowing them to raise capital without diluting shareholders’ existing investments. Simon Roue explains how the process is employed (Rights Issues, page 32) in Europe and how it could also work in Japan, with a few legislative changes.

ACCJ members also welcomed the world at APCAC last month. Aron Kremer has some great photos of the summit (page 46) in this month’s ACCJ in pictures.

Finally, I would like to thank the many readers who have called or emailed us about the Journal. Many of you have told us how much you like the new direction of the magazine. Thank so much for your kind comments and your continued interest in this publication. We will continue to work hard to make the Journal a valuable part of your ACCJ membership.

Keep those comments coming in!

In my view, chances are very good that yes, this time is different, that the BOJ action is fundamentally different from what we have seen in the past. I say this for two reasons. First, the timing of the move is a marked departure of previous BOJ practice. Just a couple of weeks before the move, central bank technocrats actually revised up their economic outlook. Over the past thirty years, whenever this happened, it meant the guardians of Japanese money were bound to turn conservative – the outlook is improving, so no need to stimulate growth anymore. The fact that this time they actually eased policy and injected more money into the system – after becoming more upbeat on the economy – tells me that something has changed. To clarify, the BOJ now wants to be part of a pro-growth policy coalition. Monetary policy complacency is a thing of the past.

Why the change of heart? From a global perspective, there is clearly a lot of pressure on Japan to follow the US Federal Reserve and the European Central Bank, since both have become much more outspoken and active in supplying liquidity to their economies and markets since the start of this year. Also, China has begun to ease policy. No doubt peer pressure from other central bankers was part of the reason for the BOJ move.

However, in my view, domestic pressures and dynamics are the more important factors. Many key inflection points in Japan can be traced back to key decisions on senior level appointments – get ahead of jin-ji and you’ve got a map of what’s really driving things. It just so happens that the current Governor’s termends in February next year. So slowly but surely, the jockeying for positions is starting, particularly since the last time around Japan was placed in the awkward position of not having a Governor for several months because the nemawashi consensus building of who should get the job had not been done effectively. The BOJ’s position is simple and straightforward – a BOJ man should get the job. Against this, the Ministry of Finance is lobbying hard to get one of their people, or at least an independent non-BOJ person, to run the bank.

The reasons for the MOF’s frustration with the BOJ – and hence its push for a non-BOJ man as the next governor – are understandable. Yes, the central bank should be independent in its choice of how policy should be implemented, but the policy goal should be aligned and in-sync with the other big policy goals of the nation. In other words, the central banks should be independent but accountable. This is why, in my view, the BOJ made the surprise move on February 14. The bank actually adopted a de-facto inflation target by publishing a hard-number goal to reach one percent inflation. This is a big step. Previously, they had a range of acceptable inflation running from zero to two percent. In practice, this meant that zero inflation was acceptable. Now, with the one percent target, zero is no longer tolerated. It’s a subtle difference but, in reality, a big step towards the MOF’s overriding policy goal of getting out of deflation and moving towards some
positive price dynamics in Japan.

Jesper Koll is a Managing Director and Head of Research at JP Morgan Japan Securities Inc. He has been analyzing and investing in Japan since becoming a resident in 1986.

But will it work?
So Japan now has a positive inflation target and to achieve it, the BOJ will purchase another ¥10 trillion of government bonds. This means that, de-facto, Japan’s central bank will now be buying almost all of the net new bonds issued by the treasury. So the government is now getting all its new debt “for free” – the MOF issues the IOUs, the BOJ buys them and pays for this by printing money. The big question is whether this money will actually find its way into the economy – demand for goods and services – or whether it will just end up under the mattress or be used to pay-down debt. Over the past 20 years, that is effectively what has happened whenever the BOJ eased policy. However, this time ’round, it could be different. The reason is simple: the bulk of this additional fiscal deficit this year is actual re-construction spending. So the money raised will actually go directly to small/medium sized companies in Tohoku, or into support for affected families who do not have any other income.

So chances are good we’ll get a real “multiplier” of the money making it into demand. It is this combination of real demand fiscal spending – combined with the BOJ printing the money – that makes me confident that, yes, this time it will be different. Technocrats unite, so 2012 brings better growth prospects to Japan.

Illustration by Rio Sleue

The Japanese government regulates electricity rates for individual homes, but TEPCO is essentially able to charge whatever it feels like to large-scale corporate users. Although technically, the market for large-scale electricity users was deregulated several years ago, practically speaking, most corporate customers such as our shopping center do not have any real alternatives to buying electricity from TEPCO. I was surprised, therefore, when TEPCO contacted us in January for a meeting to discuss its “request” for a 14.8 percent rate hike.

Two extremely polite but downtrodden-looking employees from a TEPCO branch office in Chiba visited my office in early February to explain their request. They handed us a one-page explanation signed by TEPCO’s president using the word “onegai” in the heading. According to the New Century Japanese-English Dictionary, the word “onegai” means a wish or request. I interpreted the president’s words, therefore, to mean that we were not obligated to accept the rate hike.

According to the Japanese media, TEPCO’s board is refusing to allow the Japanese government majority ownership of the company despite a huge injection of taxpayer funds.I explained to the TEPCO Chiba representatives that, as of that time, TEPCO shareholders had not made any sacrifices other than losing their dividends, which they should not be entitled to anyway since TEPCO is now losing money. TEPCO creditors had also not made any sacrifices. TEPCO employees have been forced to take salary cuts, natural under the circumstances, but as a Japanese taxpayer, I feel like TEPCO is ungrateful for the government bailout.

The letter from TEPCO’s president says that in order to maintain a stable supply of electricity, the company has been forced to import more fuel to replace the nuclear plants that were shut down following the accident in Fukushima. While I don’t dispute those facts, it is not clear why customers should have to bear responsibility for TEPCO’s own mistakes in design, planning and judgment, when shareholders have not given up any ownership or control in the company.

Seth Sulkin is the President and CEO of Pacifica Capital K.K., a Tokyo-based real estate asset manager specializing in commercial properties.

I also told TEPCO’s representatives that I found their request for a rate hike especially galling as it occurred before they had ever apologized to us individually for all of the trouble that they caused – or made any offers of compensation for the losses suffered as a result of the electricity shortages last year. Our shopping center lost a huge amount of business as a result of shorter opening hours for several months as a result of a “request” from TEPCO to save electricity.

In a second meeting with TEPCO’s Chiba branch in late February to discuss the compensation issues that I raised in the first meeting, I was told that the “request” made to large electricity users last summer to cut demand by 15 percent was merely voluntary, so TEPCO had no obligation to offer compensation for business losses suffered.

If the request to save electricity last summer was merely voluntary, then TEPCO’s onegai now is certainly just as voluntary. So I intend to say “no”. I strongly encourage all readers to do the same.

Photo by Markus Langer - Fotolia

With the Financial Services Authority (FSA) and Tokyo lawmakers currently examining Japan’s rules around rights issues, it’s worth looking at the European model to see why rights issues are so often used for large-scale capital raises. The European model gives us insight into what factors authorities here could address in trying to streamline the Japanese process. Let us focus on three key factors behind European rights issues:

1. MANAGING DILUTION
A common misconception of rights issues is that the lower the subscription price of the offering for the issuing company and existing shareholders, the worse it is. This is not the case. The subscription price is irrelevant for shareholders who want to exercise their rights.

Consider this example: a company has 100 shares and 100 shareholders, each holding one share. Shares cost ¥1,000. The company wants to raise another ¥100,000, so it offers existing shareholders the ‘right’ to buy two new shares at ¥500 each. After the transaction, each new shareholder will own the same proportion of the company (one percent) but will now hold three shares rather than one, while the company will be worth ¥200,000.

Now consider the same facts, but where the company offers the shares at ¥100. Each shareholder has the ‘right’ to buy one share at ¥100 and, after the transaction, each shareholder still owns one percent of the company which is also worth twice what it was – i.e. the two scenarios lead to the same economic and ownership outcome.

The first example illustrates why rights offerings are so successful at managing dilution: the shareholders all have certainty as to their ‘right’ to buy a number of shares at a fixed priceor, if they don’t want to buy additional shares, the purchase price discount gives them something of value which can be sold, and this value creates a market in which to sell it. Whatever the outcome, the shareholders are not diluted economically, and at least have the option to avoid control dilution by following their rights.

2. CERTAINTY OF FUNDING
With rights issues being used primarily to raise large scale capital, bringing in cash is usually the priority for management. In acquisition financing, it can even be a legal requirement to have capital certainty in order for a bid to be made. Rights issues are very effective at guaranteeing proceeds for two reasons:

First, a discounted rights offering provides a significant incentive for existing shareholders to invest additional capital or, if not, for third party investors to do so. In the first example above, the rights have value, so shareholders who don’t want to invest will be highly incentivized to sell them. When there is no immediate value to the rights investors who fail to buy in have no incentive to sell the rights, which could then expire unexercised. That is fine for the shareholder from a dilution perspective but not for the issuer who needs a set amount of cash.

Second, the discounted offer makes it easier for issuing companies to get funding from banks at a reasonable cost. Rights offers are typically underwritten by a bank (or group of banks) agreeing to take on any rights left unexercised at the end of the process – paying the subscription price as any other investor would. The larger the discount, the easier it is for banks to underwrite. It is also more likely that shareholders will subscribe because their voting dilution will be greater and banks can base their underwriting decision and cost on both the absolute price they pay for the shares and the likelihood of taking up unexercised rights.

3. MAINTENANCE OF AN ORDERLY MARKET
In a fully marketed deal, a company will announce its intention to raise capital, publish an offering document, and then market the deal to investors. That usually happens over a period of roughly two weeks. However, no price is set for the offering until the end of the marketing period and, with the market being aware of the upcoming issuance of shares, there is an opportunity for investors to trade the stock opportunistically during that period to push the eventual pricing point down.

While there are situations where a rights issue can be ‘attacked’ by the market, it is much harder for opportunistic investors to have significant price influence because the subscription price is set up front and, as illustrated in the above examples, shareholders have an incentive not to sell shares – but to sell ‘rights.’ A rights issue only becomes a problem when the actual share price drops below the subscription price – and with a subscription price often at a discount of say 30-40 percent to the preannouncement share price, there would have to be a large slump in the market value of the issuing company to prevent the exercise of the rights from being economically rational.

HOW CAN JAPAN GET THE SAME BENEFITS?
In principle, it is very easy to agree with the concept and rationale of rights issues. However, the real challenge is in adjusting existing laws and regulations to allow a successful implementation of a rights issue process that works for Japan. We believe four key factors will help make sure the process works:

1. FOCUS ON THE END, NOT THE MEANS
It is easy to state in clear terms, the simple benefits of the rights issue process.

2. ELECTRONIC SHAREHOLDER COMMUNICATION
With Japan’s large retail shareholder population, the cost of ‘treating shareholders fairly’ can be prohibitive if an issuing company has to not only publish documentation but also send out thousands of physical copies to every shareholder. By requiring only electronic documentation – as they do in Europe – and putting the onus on shareholders to request hard copies (or that they waive their right for hard copies), managing the process for large retail shareholders becomes much more practical.

3. SPEEDY TIME FRAME
Europe works because the process is a complete package which includes the risk period and subscription period. A key practical part of this is risk management and the need for certainty of funds. Non-underwritten deals in Europe are typically viewed as a sign of desperation from an issuer, so having a time period that allows for underwriting at a reasonable price is very important. Most of Europe has a two-to-four week period during which rights trade and where banks are on hard risk. A trading period significantly longer than this—and obtaining underwriting from banks—will become much more of a challenge.

4. FLEXIBILITY
Rights issues for companies with large and liquid free floats (where there are no major shareholders) are typically the most straightforward. However, many situations are much more complex, such as InBev’s rights issue for its takeover of Anheuser-Busch in the US, where part of the large shareholders’ shares were sold and the proceeds used to exercise remaining subscription rights. This minimized dilution while limiting the additional cash invested. The process needs to allow for variation and adjustment to make sure specific situations are considered in a way that benefits all stakeholders.

One thing is certain: rights issues provide a very elegant and orderly mechanism for corporations to raise large amounts of equity capital while still treating all shareholders fairly. The proposals to adjust the rules in Japan to make rights issues more favorable should be welcomed by corporations, banks, individual shareholders and regulators alike. A workable process that is eventually employed will significantly improve international investor commitment in Japan.

Japanese Prime Minister Yoshihiko Noda made a surprise visit on day two

Yukio Edano, Japan's Minister of Economy, Trade & Industry

APCAC Entrepreneurship Panel: Robert Roche, Oak Lawn Marketing, Hiroshi Mikitani, Rakuten, Kenneth P. Morse, MIT Entrepreneurship Center, ACCJ President Michael Alfant & US Ambassador to Japan John V. Roos

John G. Rice, Vice Chairman, General Electric Company

Thomas R. Nides, US Deputy Secretary of State

Hiroshi Mikitani, Chairman and CEO of Rakuten Inc.

APCAC welcomed delegates from 27 American Chambers across the Asia-Pacific region

Kathy Matsui of Goldman Sachs moderated the APCAC Financial Panel

US Ambassadors at APCAC: Jeffrey L. Bleich (Australia), Scot Marciel (Indonesia), Sung Y. Kim (South Korea), Paul W. Jones (Malaysia), David I. Adelman (Singapore), William A. Stanton (American Institute Taiwan), David L. Carden (ASEAN) and John V. Roos (Japan)

ACCJ President Alfant welcomes Thomas R. Nides, US Deputy Secretary of State

Francisco J. Sanchez, US Under Secretary of Commerce for International Trade

Photography by Irwin Wong

Case in point – a story told by Asako Hoshino of Nissan at the ACC J panel event, “Leveraging Women’s Leadership to Drive Your Company Forward.”

“I had a woman in my department who refused to be considered for promotion into management,” says Hoshino.

“I asked the reason… she said when she got married she would like to stay at home. I asked her if she had any marriage candidates in mind at that moment. She said ‘no.’”

“So, I encouraged her to advance her career while she was waiting to get married, since sticking to a staff level job would not result in interesting or challenging work. She took the challenge, and now she is a General Manager in Hong Kong.”

“Reaching out to young women and explaining to them that they can be aggressively confident about what they are doing is critical,” added panelist Lorraine Hariton, US State Department Special Representative for Commercial and Business Affairs. “Being a mentor and seeking out (other) mentors is critical to giving women confidence to move ahead.”

In the January edition of the Journal, the article “Off-Ramps & On-Ramps” unveiled some startling statistics about the reasons why educated women leave the Japanese workforce. The article was about a study conducted by the New York-based Center for Work-Life Policy – which challenged the stereotype that Japanese women just want to “stay home and have babies.”

The study found 74 percent of college-educated Japanese women voluntarily leave their jobs, more than twice the number in the US or Germany. A total of 49 percent of these women quit because they feel stalled in their careers, pushed out by rigid work schedules or unsupportive employers. More than half of Japanese university graduates are women but only 67 percent actually in the workforce.

“Statistically there are far fewer women in powerful positions,” says event moderator Elizabeth Handover, Vice Chair of the CSR Committee. “Only eleven of the CEOs of the global Fortune 500 companies are women, which is less than three per cent. Women in the US comprise 34 percent of entrepreneurs.”

“Companies could increase their productivity by between 25 and 40 percent if they improved their diversity and empowered women.”

Women in Management
Nissan’s Asako Hosino says her company has been actively promoting gender diversity, “When I joined Nissan there were only 35 female managers out of 2,500 managerial positions in Japan. Now the number is 160, so four times bigger compared to 2002.”

Asako Hoshino, Nissan Corporate VP

Hoshino lists four key success factors at Nissan in the area of diversity. The first is the Diversity Development Office (DDO), which Nissan created in 2004 to monitor the commitment by each functional area to diversity practices. Nissan’s Diversity Development Office has proposed a wide range of innovations, starting from day-care centers to flexible work time programs.

Following that, the second key success factor is the Diversity Steering Committee which is targeted at developing diversity. The company knows that diversity development needs to be top-down.

The third key to diversity at Nissan is training, especially concerning empathy for working with different people. The fourth and final key is mentoring and networking, including with strong female leaders abroad, who provide a bench mark for the female career tracks in Nissan and who motivate the female young managers at the company.

Hoshino says, “Women can be a strong change agent in society and in organizations, toward achieving greater efficiency and competitiveness.” She urges young women to be “honestly aggressive. Don’t copy the aggressiveness of males, but at the same time, be assertive and bravely innovative.”

Women in Local Government
Japanese women are also severely underrepresented in politics. In fact, only 1.5 percent of all local governments heads are women. Yokohama’s Mayor Fumiko Hayashi is one of them. She was also the first mayor to come from the private sector, having carved out a solid career in auto sales. She served as President of Fahren (now Tokyo Volkswagon) and at BMW before joining Daiei as Chairperson and then CEO.

Yokohama Mayor Fumiko Hayashi

Hayashi says, “Frequently I am asked why I have been able to achieve top performance in any organization that I went to. Why is it that you are able to turn around a company with a very bad performance to a company with an excellent performance? What I did was very simple and straightforward. I would scrutinize each junior colleague and identify their positive aspects and simply praise them for their positive character.

“Most senior people scold their colleagues and tell them they are doing it wrong. They never praise their colleagues. After I became President, I still tried to stay very close to the people on the ground, since the actual implementation of this business plan really rests with people. That is why I feel it is important that I stay close to people and to communicate with everyone.”

Women in Senior Government
Hariton led the US delegation to the Women’s Leadership Network here in Japan when Japan headed up APEC and initiated a dialogue on women’s issues.

She says, “One of the things we find women are often doing is taking it into their own hands when they leave they start their own businesses. This is one of the reasons why APEC is focusing on empowering women entrepreneurs through access to capital, access to markets and capacity building, because the way we can really inspire change is through entrepreneurship. Almost all new jobs come from entrepreneurs. So when women start to build their own businesses, they gain power, and they change society.”

The Role of Government In Promoting Women
Elizabeth Handover asks the panelists, “What role can and should governments play in terms of forcing organizations to shift their policies?” Hayashi responded, “I think at minimum what the central or national government should do is to create a ministerial position responsible for women’s issues.”

She adds, “The first such challenge is to address the issue of the large number of children on the waiting list to get into nurseries and kindergartens. All the heads of municipalities and local governments said this is something that could never be done; (but) I have committed myself to reducing the number of children on the waiting list to zero.

Hariton responds that APEC provides a vehicle for 21 member countries to compare best practices and see what the others are doing. Measurement is a good way to understand what the situation is. Government can also support women by making sure the legal framework is positive and equal and by providing finance for women entrepreneurs in various areas.

Making the Shift to More Flexible Work Arrangements
Another question posed to the panelists: “What would you advise in terms of helping organizations make the shift towards more flexible work arrangements?” Hoshino sees a solution starting with “changing the organization from the top down, and having awareness among the top leaders that this issue is not just for the individuals involved, it is for the corporation. It is for the benefit of the company.”

Lorraine J. Hariton, US State Department Special Representative

Hariton says American companies in Japan are great role model. For example, IBM has flex time, and BMKK (part of Bristol-Myers Squibb) has an active program to encourage women back into the workforce after they leave. Hariton was delighted to hear that Vicki Beyer, ACCJ Vice President, has created a women’s business committee at the Chamber.

“A committee of really committed people really makes a difference in the world,” Hariton says.

Tish Robinson is a professor of Organizational Behavior and Systems Thinking at Hitotsubashi University. She co-chairs the ACCJ HR Committee along with Taka Miyawaki.

PetrVaclavek - Fotolia

Another big thank you to ACCJ members for reading—and to the Journal for inviting me—to keep swinging the Ax in 2012. Last month, we chopped up Global Readiness and this month I’d like to return to the business of meetings – a place where Global Readiness can either shine brightly or dull everyone down when not adequately developed.

In January’s Strokes to the Finish Line column, we covered the rowing analogy for meetings: “three strokes” (compliments, questions, and validation), and we examined one of the most common momentum killers for meetings – the word “but.”

But… I mean AND there’s more!

ENEMY WORDS, PHRASES, AND FROWNS
Now that we’re into the Year of the Dragon, let’s hone our slaying skills. In January, we shared that “keeping the ‘buts’ out of your mouth” encourages more contributions and builds momentum. However, several other silent – and not so silent – killers lurk. Let’s start where communication began.

ROLLING EYES & HEAVY SIGHS
Long before we came up with words, we communicated through gestures and vocal utterances. Guess what? We still do. It’s our primary form of communication. That’s why how we look and how we sound take precedence over what we say. Clients who see themselves video-recorded during one of their meetings often express shock at how “bad” they look or sound. They feel embarrassed and had no idea what they look and sound like to others, whether when speaking up or remaining silent. Watching themselves, they can see how their unconscious reactions serve to either help or (in many cases) hinder a meeting’s progress. This knowledge is especially valuable for leaders, due to the asymmetric influence on meetings you attend.

Even if you don’t record your meetings, go into your next one aware that your visual and vocal reactions will either negatively or positively influence others, and thus influence the outcome of the meeting. You might even want to assign “Angel’s Advocates” to ensure the first response following any suggestion is positive. That way, you remain free to disagree later and choose another course of action and you will encourage more contributions.

Many visual and vocal expressions are subtle and tough to catch, and even tougher to counter. On the other hand, a trained ear can easily capture words and phrases for later slaying, like the enemy dragons they are. There are five enemy words and phrases that sap the energy from you and others who aim to drive a meeting towards its goal. Note how often (or not) they’re used in your daily meetings, conversations, and presentations. Ready your swords!

HAVE TO
“Well, we have to put in more time on this project….” “I have to check with the CFO…” “You have to understand.” Let’s take these one at a time.

“Well, we have to put in more time on this project.” How does that make you or your team feel? Could you inspire the team more by saying, “Let’s put some more time into this project”? Or, “I’d really like this one to impress the client, big time. How about another two or three hours to really nail it down”? Saying, “We have to” places a burden on the team and, as we’ll see below, it’s a false burden.

“I have to check with the CFO…” No, you don’t. In fact, you don’t have to do anything – anything, that is, except to live (until you die). That’s it. Think about it. What else do you “have to” do? Some will say, “Well, I have to go to work.” Do you? Or do you choose to go to work because you want to receive a paycheck, or to maintain a certain social status, or to contribute to something bigger than yourself?

“But Andrew,” I hear some say, “I have to eat.” Not as much or as often as you think. Ask a hunger striker. You eat because you prefer not to be hungry, not because you have to eat. You won’t die for 30 days or more without food and even then, you only “have to” live until you die, remember? Oh, by the way: keep that ‘but’ out of your mouth.

“I have to pay taxes.” You choose to pay taxes because you want to avoid the penalty that comes with non-compliance. By now you’ve got the picture. There’s only one legitimate “have to”: live.

What about that pesky CFO who requires that expenditures above a certain amount go through his or her office? Well, yes, there are consequences for failing to gain approval from the CFO, who may hold final authority. That differs from having to check with them. Much better to say something empowering to yourself and your team, like “I’m on board with this and with the CFO’s approval, we’ll be set.” Saying, “I have to check with the CFO” makes you sound passive and less powerful than you are.

The worst offender in the “have to” world is one we so often hear in heated discussions: “You have to understand that…” Just as you don’t “have to” do anything except to live, neither does the other side. Beware of the person who knows this truth the next time you say or hear, “You have to understand.” They’ll reply, “Why?” or simply, “No, I don’t.”

JUST
“I’d just like to add…” When you’re in a meeting, driving towards a goal, everyone is there to contribute. Whenever you say, “just,” you’re giving a half-power stroke that only serves to delay the finish. “Just” diminishes your contribution. Catch yourself and help others eliminate “just.” Use “Let me add,” or “To add to Satoshi’s point…” With apologies to Nike, “Do it!”

SORRY (and other apologies)
Speaking of apologies, most that happen during meetings are unnecessary and most are not really apologies at all – rather, they’re habitual phrases. “Sorry to interrupt…” Never interrupt. Add value, and return the floor to the other speaker when you finish your 30-second or less contribution. That’s positive, right? So why apologize? Pull your oar –take your stroke – and keep the meeting going. An interruption interrupts; a contribution contributes. The difference? Check others’ reactions. Are meeting participants more or less engaged? Was the person you spoke over irritated or enthusiastic – or even, as is often the case, relieved? (How many times have you or someone else droned on a bit too long and forgotten the main point? Someone jumps in with a compliment or quick paraphrase. That’s nothing to be sorry for!)

Andrew Silberman is chair of the ACCJ’s Membership Relations committee, president & chief enthusiast for AMT Group (www.amt-group.com) as well as the lead vocalist & rhythm guitar for the roots rock band Moonshots (www.moonshots.net). Direct comments or questions to him by e-mail: Andrew@amt-group.com

When you apologize, it’s most likely out of habit or to sound polite. What you may really be saying is, “I’m sorry to be helping us clarify where we are going and for helping us get there quicker.” See how ridiculous that sounds? Yet so many of us fall into the “sorry” trap.

Sort of, Kind of, and other modifiers Even professional broadcasters fall victim to these worthless modifiers. A recent KCRW program Left, Right and Center, a radio show dedicated to debating political issues of the day, featured the host and one of his regular contributors continuously modifying their remarks with this self-limiting language. “Well, I’d sort of like to point out …” Sort of? You’re getting paid to sort of express an opinion?

Why chop your oars off at the handle? Dig deep into the water and express your point. If you’re not sure where you stand on the issue, you can still declare: “We’ve heard good arguments for direction A and solid reasons for B; let’s take a few more minutes to hash this out, and if we need more information, we can postpone the final decision until next week.”

Rather than expressing politeness, most of these modifiers are simply habits. Space-fillers, as useful as, “You know,” “like” and “and so on.” Once you start looking for these non-contributors, you may be surprised how often you find them. Then, recalling a message on my father’s office wall: cut them. No, Dad wasn’t an L.A. gang member but an orthopedic surgeon. That somewhat self-serving sign on his wall said, “A chance to cut is a chance to cure.”

So cure your meetings by slaying these self-limiting demon dragons.

Illustration by Shane Busato

Does this story sound familiar? No, I am not talking about Olympus, but a real estate company called Shoei (TSE:3003). On December 20, Shoei announced plans to merge with another real estate company called Hulic (TSE: 3265) that effectively valued Shoei’s shares at about half the price they were prior to the merger announcement. [Full disclosure: my company is a small shareholder in both companies]

Olympus is of course a well-known brand globally, so its troubles naturally attracted much more attention, but there has been little media coverage of the Shoei/Hulic merger. While disgruntled individual shareholders have been venting on various financial message boards, the Tokyo Stock Exchange and government oversight bodies do not seem to be focused on why Shoei shareholders are getting such rough treatment and whether Shoei’s disclosures to shareholders were complete and accurate.

Seth Sulkin is the President and CEO of Pacifica Capital K.K., a Tokyo-based real estate asset manager specializing in commercial properties.

Given that Shoei’s largest shareholder is a US investment fund, International Value Advisers – with more than 20% of voting rights – the annual general meeting this month should be extremely interesting. It will also test the power of the Mizuho Group, the main bank for both companies, which is rumored to be pulling the levers behind the scenes on this deal. In another sign that the prolonged economic slump is triggering big change in domestic business practices, the Japan Retail Fund (JRF) announced last November 24 that popular variety retailer Tokyu Hands had filed a lawsuit seeking to cut the rent paid on its Osaka Shinsaibashi store by 20 percent retroactive to December 2009 and by 30 percent from December 2010 forward.

While rent reduction requests and litigation are all too common these days,what made this particular request unusual was that the suit apparently seeks to overturn an agreement that Tokyu Hands itself executed with JRF in October 2008 to keep the rent same for a period of three years until 2011.

According to the real estate web site Nikkei Fudosan, Tokyu Hands has so far declined to comment on its rationale, so we don’t know if it has found a specific contractual basis to ignore its previous agreement or if it is questioning Japan’s lease law generally. If the court ultimately finds in favor of the tenant, it could have a profoundly negative impact on real estate investment and valuations.

The head of one major foreign bank’s real estate lending group told me that if Tokyu Hands wins this lawsuit, he would immediately shut down the lending business and go home. As an investor and landlord, the prospect of tenants being able to overturn executed agreements on rent at will is a scary one indeed.

This is partly because one can easily create a non-profit organization in the US by simply filing a tax return describing the group’s intended activities – which might span a wide range – and agreeing to certain rules. In contrast, total giving in Japan runs at less than .1% of GDP (individuals: only .03%) and only about 17% of all citizens have given to a charity in the past year.

There are several reasons for this gap. One is the relatively flat income structure of Japan, which has far fewer high-paid people than the US – those who not only have the extra money to give but also are in high tax brackets where tax deductions are more valuable.

Another reason is the lack of a religious custom of “tithing,” or donating a fixed portion of one’s income on a regular basis.

But there is another reason; quite simply, it has historically been very difficult for Japanese private sector groups to create non-profit organizations which avoid paying taxes and to which donations are tax deductible. Most organizations have been either created by bureaucrats or required licenses and other approvals that were very hard to obtain.

A New System for “Public In terest Corporations ”
The quintessential case in point is the “public interest corporation” or koueki houjin (“KH”) in Japan. For years, KHs could only be created by government ministries, so they came to be viewed as quasi-governmental in nature.

Bureaucrats could form a KH easily and quickly; they would establish an organization whose intended activities linked closely to categories listed in the law; then, they would have their own Minister stamp some forms to make them official.

In many cases, officials would “suggest” that groups of corporations make the initial donations to get the organization started and presto – fund-raising occurred overnight. It was essentially assumed that if the bureaucrats in charge said so, the intended activity served “the public interest.”

As a result, there came to be thousands of “public interest corporations,” many of which – you guessed it – were staffed by amakudari officials and received hefty government subsidies.

However, with the budget-cutting pressures of the past few years, things have been changing. In 2006, after six years of deliberations, the government passed a law that not only allowed private people to set up KHs for the first time, but also outlined objective criteria that KHs would have to meet in order to ensure that their activities actually did serve “the public interest”.

The new law came into effect at the end of 2008 and, because there were actual criteria, the legal meaning of “public interest” was defined in detail for the first time. The main purpose of this was to cut all the waste – to set things up so that unless pre-existing KHs re-applied, met the new criteria and converted to the new system, they would automatically lose their KH certification and their beneficial tax advantages.

Now, several years after the new law was implemented, there are still more than 500 public-interest organizations waiting in a huge backlog of conversion applications

to the Cabinet Office alone. Additionally, there are more KHs that are “throwing in the towel” because they likely do not qualify under the new rules or because of the burdens of being a KH. [see fig I]

But another admirable – and explicit – goal of the new criteria-based system was to stimulate more charitable giving: to make Japan more of a donations-based society (kifu shakai, kifu bunka). In part, this is the other side of the coin from the goal of cutting wasteful spending. If private sector initiatives could establish KHs by themselves, and individuals and corporations simply “voted with their feet” by giving donations, government tax subsidies for “worthy efforts” could be reduced and the societal value of those new organizations would be seen in a new light by the fact that they were supported by private donors. Conversely, with actual clear criteria to follow, the private sector could be confident that applications might be accepted.

Thus in 2010 the nonprofit association that I lead, The Board Director Training Institute of Japan (BDTI), applied to the Cabinet Office become a private-sector initiated KH. The process was very long and arduous, but in April 2011, our application was approved.

To me, this was not just a matter of getting tax advantages. Much more importantly, it marked a major advance in the quest to improve corporate governance in Japan, because for the first time, the government had affirmed that training and information dissemination to improve corporate governance are activities that serve “the public interest”. This implicit “policy statement” was very important to me.

BDTI has obtained broad approval to conduct two activities as “public interest” activities: (a) offering training programs and E-learning courses about corporate governance, as long as they are open to the public; and (b) information dissemination, conducted mainly at seminars and on the bilingual discussion forum and data library on our web site, http://bdti.or.jp/english/. But it has also obtained approval to derive revenues from advertising, and for offering customized training programs and consulting to specific companies about governance and board practices. BDTI can offer these services at a profit as long as it spends less than one half of its total expenses on them. As long as it meets this condition and a few others, the entire entity of BDTI need not pay any tax and donations are tax-deductible for each donor.

Doubling the Tax Benefit of Donating
Last year, the Tax Agency did something to increase the tax incentives for Japanese individuals to give to worthy causes, creating a new system that, in the case of qualifying KHs, will essentially double the tax benefits received by donors who are in anything less than the highest tax bracket.

Generally, if you donate ¥100,000 to a KH, you can deduct that amount from your taxable income. Thus, if your marginal tax rate is 20%, your taxes will be reduced by ¥20,000 (because 20% x ¥100,000=¥20,000), so you will be able to help society to the tune of ¥100,000 by giving up only ¥80,000 of net cost to yourself.

The new tax credit benefit is a bit complex to calculate, but for anyone whose taxable income is less than about ¥50 million – which is to say, most Japanese taxpayers – the gist of it is that if you donate to a qualifying KH, you will be able to help society to the tune of ¥100,000 by only giving up about ¥60,000. In effect, the tax credit calculation assumes that your marginal tax bracket is very high even though it is not.

For the first time, in Japan’s exceedingly flat-income society, many ordinary people with mid-level salaries will have a real reason to make charitable donations, even if the amounts are relatively small. When combined with the fact that private sector organizations can apply under a criteria-based system, Japan’s new system sets the base for the growth of new grass-roots organizations that will benefit society and for individual donors to support them.

Japan’s hope of becoming a charitable-giving society could become a reality.

Kinks to Work Out
Having said this, the system still has some kinks to work out. Because the immediate primary goal of the new system is (understandably!) to eliminate the “old system”
KHs that do not deserve that status, the application process is exceedingly rigorous, time-consuming, and costly. It takes anywhere between five months and a year to get approval, and even before that, merely preparing the documents and figuring out the complex rules (and arcane accounting system) takes several months at least. Moreover, one needs to hire specialist advisors to do all of this.

In BDTI’s case, it took about one year to get approval. During that entire application period (and before it), donations were not tax-deductible, which made them harder to collect. As a result, many charitable organizations in Japan are so scared of this burdensome application process and the arcane accounting/operating requirements, that they shy away from applying to be a KH. When such persons read my name card and hear that BDTI has obtained KH status as a “start-up” association, they are amazed and ask, “How did you do that? It is incredibly difficult….” The sad answer is that they are right, it was incredibly difficult.

In contrast, creating a similar tax-exempt non-profit in the US – a 501(c) (3) organization – is as simple as describing the organization by filing a special tax statement (estimated time to complete: eight hours) and receiving an IRS recognition letter a few months later. Once the letter is received, any donations made after the filing date become tax deductible, retroactively.

It is easy to see that for newly-formed social entrepreneur groups like BDTI, which don’t have a lot of time to waste nor money to pay advisors, the Japanese system still needs some improvement. But once most of the old-system KHs have been weeded out, it should be more feasible to simplify the application procedures.

The good news is that, this new system is definitely a step towards creating a “giving society” in which private-sector, grass-roots initiative play a greater role.

Nicholas Benes is Representative Director of The Board Director Training Institute of Japan, a non-profit “public interest” organization certified by the Japanese government. (Contact: info@bdti.or.jp).

TEPCO says fuel costs for the fiscal year ending March 31 will also increase by about 830 billion yen over last year.

Back in December, the utility also announced plans to raise household electricity rates. However, the move requires government approval. It’s believed TEPCO is looking to hike household rates by 10 percent starting next fall.

The utility might also be hard-pressed to maintain normal supply, with all of its nuclear reactors expected to shut down this month for regular inspection.

TEPCO PAYS AGAIN
In yet another blow to TEPCO’s bottom line, the Tokyo Electric Power Company will be asked to foot the bill for all contaminated rice grown in Fukushima Prefecture since last March 11. The Ministry of Agriculture, Forestry and Fisheries is buying up all rice contaminated with radioactive cesium and passing along the costs to TEPCO.

Agriculture Minister Michihiko Kano told Fuji TV in December that the government would purchase all rice with radiation levels exceeding 100 becquerels per kilogram. Ministry officials estimate about 4,000 tons will have to be bought – and later destroyed.

The cost is expected to top 1 billion yen over the next year. Rice sales from eight areas in the prefecture were banned due to radiation that exceeded safety levels.

EARTHQUAKE READINESS

Illustration by Louise Rouse

The Tokyo government began holding earthquake drills five years ago to help foreign residents get better access to disaster-related information, improve the skills of volunteer interpreters and strengthen cooperation among organizations.

But the disaster-readiness plans were intensified after the events of March 11 last year, when coping with disaster became a larger concern – particularly for foreign residents who have less access to emergency information.

According to the Tokyo Metropolitan Government, there were about 400,000 registered foreign residents in the city as of December 1, 2011.

WHISTLEBLOWER OF THE YEAR
He might not be popular with former employees or business partners, but one-time Olympus CEO Michael Woodford continues to be lauded for his corporate bravery. Woodford has been honored as Whistleblower of the Year by the Association of Certified Fraud Examiners – a US-based organization that monitors corporate malfeasance.

The ACFE has given Woodford the Cliff Robertson Sentinel Award – handed out annually to “the unselfish heroes whom society has tarred as being ‘whistleblowers,’ who are our frontline of defense against wrongdoing.”

Woodford was fired from Olympus in October shortly after bringing to light shady accounting practices and hidden losses. He took his complaints to police and regulators in Japan, the US and the UK. A few months later, the company admitted to a 13-year cover up of more than $1.5 billion in losses.

Woodford tried to lead a proxy challenge to oust the directors who fired him, but gave up the fight due to a lack of support from Japanese investors and Olympus partners.

However, his efforts to right corporate wrongdoing earned him widespread praise, including “business person of the year” awards from the UK’s Sunday Times and The Independent.

WENDY’S RETURNS

Illustration by Louise Rouse

Higa operated Domino’s Pizza stores in Japan before selling the business in February 2010. The company is said to be a pioneer in the Japanese home delivery market, known for its use of the Internet and wireless technology to promote menu items and enhance the customer ordering experience.

In December 2009, Wendy’s closed 71 restaurants in Japan after failing to renew its agreement with a former franchisee. The re-launch promotes new “premium” products including four types available only in Japan. New menu items include the “Foie Gras Rossini” with original foie gras terrine, and an upgraded line of classic products such as Hot-n-Juicy hamburgers, premium chicken sandwiches and entrée salads.

Wendy’s is planning to open 100 stores in Japan over the next five years.

TOUGH SELL
It appears the government’s plans to raise the consumption tax will be a tough sell with the Japanese public. Recent polls indicate a majority oppose plans by Prime Minister Yoshihiko Noda to double the levy from its current rate of five percent over the next few years.

A Kyodo News survey in mid-January found that 79.5% of people were against the plan – suggesting instead that the government first look at cutting costs. The survey was taken after a New Year cabinet reshuffle, and more than 43% of respondents said that the government should crack down on wasteful spending first before asking taxpayers for more money.

Polls by leading newspapers found similar numbers: the 55% of Yomiuri Shimbun readers oppose the tax, as do 57% of Asahi Shimbun readers.

Despite the opposition, the tax hike might be inevitable. Experts say an increase is necessary if the government is to get a handle on Japan’s mounting debt, which currently sits around 200% of GDP.

HITACHI TRAINS
Hitachi is hoping its new lighter aluminum passenger train will be a hit in Europe and other international markets. The company’s new ‘global railroad car’ is a short-distance commuter train that is cheaper to make to a standardized design and features simplified interiors and exteriors.

Illustration by Louise Rouse

The company is also planning a factory in India, which will act as a center for Asian productions.

In 2010, Hitachi sold about one-quarter of its rail cars overseas. Japan’s top five railway companies – including Hitachi and Kawasaki Heavy Industries – already own nearly 10 percent of the world market.

Japan’s top five railway companies – including Hitachi and Kawasaki Heavy Industries – already own nearly 10 percent of the world market.

PLAYBALL JAPAN!
Japan’s greatest baseball export Ichiro Suzuki is coming home – at least for a week. The Seattle Mariners star will lead his team into a season-opening Major League Baseball series in Japan later this month. The Mariners will play two games against the Oakland A’s at Tokyo Dome March 28 and 29. The games will count in the standings and will be the first MLB season openers in Japan since the Boston Red Sox and the A’s played at the Tokyo Dome in 2008.

“It allows (Japanese fans) to see Ichiro playing in a Mariners uniform for the first time,” says Jim Small, Major League Baseball, Vice President Asia.

“We almost provided this opportunity in 2003 – but the games were cancelled due to the pending war in Iraq. Now they’ll get to see him with the Mariners. This is such a treat and rare opportunity.” Small adds that the games will take on additional significance, coming so close to the one-year anniversary of the 3/11 disaster.

“We plan to commemorate the anniversary and recognize people who have done so much to rebuild the Tohoku area,” says Small. “I think the great thing about baseball is that, because there is so much appetite for it, there is an opportunity for us to shine the light on the people who are the true heroes. Our plan is to recognize them and focus the light on them.”

MLB Commissioner Bud Selig adds that, “Most importantly, with the shared love of baseball between our nations, I believe that we can use this event to further assist the ongoing relief efforts throughout Japan.”

Prior to the opening series, the Mariners and A’s will also play exhibition games against two of Japan’s top teams: the Yomiuri Giants and Hanshin Tigers on March 25 and 26.

Illustration by Rio Sleue

Many attribute this to the “Galapagos Effect” – the way some products developed here in isolation in much the same way animals evolved independently in the islands off the South American coast. Like Galapagos animals, many Japanese products developed unique adaptations not found anywhere else. Japan’s cell-phone industry was one such area.

However, isolated environments such as the Galapagos tend to whither once feral animals, diseases and humans from overseas are introduced – and the same seems to have happened to the Japanese cell phone industry following the launch of Apple’s game-changer: the iPhone.

Fast forward to 2012. Today, Japanese phone makers and carriers – who arguably produced the first “smart” phones – are adapting to a whole new world. Somewhere along the way they lost control of the agenda and are now furiously trying to conform to a new paradigm created by Apple and emulated by Google. Previously coveted handsets have now been relegated to the category of “feature phones.”

At first, many experienced Japan hands felt the iPhone didn’t stand a chance. It was supposed to be too different and lacked features that Japanese users had come to appreciate, such as 1-seg TV and electronic payment capability. How wrong these critics were. Reports late last year quoted a 23 percent penetration rate of smartphones into the 120 million-user Japanese market. It is not a stretch to imagine that these 23 percent are bigger spenders than the rest, so this is really where we now find the game for profits.

A survey last October of 3,300 mobile phone owners by Internet Media Press R&D found that among smartphone users, 60.9 percent were using Google’s Android. Apple’s iOS users were just over 36 percent. The survey also found, not surprisingly, that smartphone use was highest amongst younger people and that two thirds of those who didn’t yet have a smartphone planned to get one.

Dominic Carter is CEO of CarterJMRN KK, a Tokyo-based global research company. He is also a former chair of the ACCJ Marketing Programs Committee.

Google is certainly getting a boost from the collaboration of the Japanese handset makers who have embraced Android, as well as Korea’s Samsung whose Galaxy handsets are widely seen as the greatest threat to Apple. The retail outlets of Japan’s three main carriers now have dedicated sections to smartphones, reflecting the important share of business that these devices now represent. In a development that should light the fire under the domestic handset makers, carriers are now also taking products from Korea and selling it under their own brands.

All in all, it seems that the market has never been so open to competition. Local app developers are certainly doing their part to make the smartphone format relevant and will be a critical part of the mobile eco-system moving forward.

What lessons can be learned from this for American businesses in Japan? Perhaps most importantly is that, contrary to seemingly endless and self-serving assertions on the part of established players, nobody really “owns” the consumer here. The inroads being made by the Koreans mirror those in other consumer electronics categories, and Japanese companies must respond or wither on the vine.

Never has the huge Japanese market been so ready for products and services that genuinely meet needs. In this sense, the ground for the type of iconoclastic consumer innovation that American companies exemplify seems more fertile than ever before.

Photo courtesy of Kengo & Kuma Associates

The 20th Century’s rush to modernize pushed traditional architecture aside in favor of new technologies and today, Japan can easily be called one of the most exciting architectural landscapes on the planet. There are few architecture environments as adventurous as Japan: a place where microhouses are built on microscopic building sites, where skyscrapers rise on seismic quake lines and where material and form are pushed to revolutionary new heights. It is a constantly changing architectural landscape in which buildings rise and fall more often than prime ministers leave office.

Photo by Lorenzo Barassi

Pritzker-prize winning architect Fumihiko Maki has described Japan’s distinctive architecture as a result of its geocultural character: Japan has had to respond to its equally rich and volatile natural environment, as well as the push and pull of its own history and globalization.

This seems even truer in light of recent events: with global economic uncertainty and the triple disasters of March 11th, Japan has had to again rethink how it wants to go forward. It could just be the beginning of a
quiet architectural revolution, as architects and urban planners – as well as the general public – seriously question the country’s architectural ideals since 1945 and ask: howcan this be done better?

What kind of communities and structures should we be building? How do we balance issues like environmental suitability and sustainability, energy efficiency, safety and even beauty with economic and social factors? Generally, where do we go from here?

Now, with reconstruction in Tohoku only beginning, the need and desire to find innovative and sustainable ways of building is only growing. Even before the March disasters, many Japanese architects had already been looking for answers not only in new technology and design but in the past. Japanese architecture has traditionally prized and worked in response to nature, so it is unsurprising to see architects and their clients not only looking to new green technology but also back to Japan’s architectural traditions; a shoji screen can be as relevant as a solar panel in sustainable architecture.

REVIVING OLD JAPAN
One of the interesting trends in recent years has been contemporary renovations of historic buildings. For generations, especially in the expensive real estate market of Tokyo, an older building was viewed as a something to be destroyed and replaced by something newer, bigger, and more profitable. Safety concerns were frequently cited as a reason, but considering the expertise available in seismic retrofitting, restorations are often a choice.

Photo by Louise Rouse

Sensitive renovations of historic buildings have been a forte of architect Kengo Kuma. The architect has said his aim is to ‘recover the tradition of Japanese building” and reinterpret it for the 21st century. Many of his projects – from an elegant restoration of the 100-year-old Fujiya Ginzan Onsen in Yamamgata to the major remodelling of the much loved Nezu Museum and gardens in Tokyo – do just that; effortlessly blending history, contemporary style and the latest technology. These works carry the hallmarks of the best of environmentally aware architecture: respect for context and history; use of local craftsmanship and materials where possible; and innovative mixes of Japanese traditions and contemporary innovations.

SMART ENERGY DESIGN
Energy efficiency is a big issue in green architecture. As Japan grapples with questions about new energy sources, architectural experiments are trying to discover how to make smaller energy footprints using both low and high tech solutions.

Atelier Tekuto’s A-Ring House in Kanazawa Prefecture is an experiment with aluminium to create sustainable, energy efficient housing. Using geothermal energy and the natural heating and cooling of aluminium, the silvery structure is a high-tech, ‘zero operating cost’ house.

Less futuristic but no less experimental is Coal House designed by Terunobu Fujimori, a respected architectural historian and architect whose work challenges all preconceptions about contemporary Japanese architecture. In contrast to the polished seamless surfaces and forms common to contemporary architecture, Fujimori embraces the traditional and the handcrafted, and finds ways to bring them into a modern context.

Coal House was part of the Sumika Project in which Tokyo Gas enlisted four architects (Toyo Ito, Taira Nishizawa, Sou Fujimoto and Terunobu Fujimori) to each design an energy-efficient home based on ‘primitive’ living. Fujimori chose the cave as his inspiration, resulting in Coal House, a characteristically mix of playful experimentation, sophisticated craftsmanship and a broad frame of reference ranging from the Japanese teahouse to the caves of Lascaux.

More energy experiments are being attempted by hi-tech companies like Panasonic, which is working with other Japanese companies on an energy-efficient “smart town” on the outskirts of Tokyo. Fujisawa Sustainable Smart Town is being built on the site of an old Panasonic factory. The town’s design features an intelligent network of electricity grids that will permit energy conservation, sharing and storage. There will be a system of electric car sharing, solar panels, LED lights and smart appliances that communicate with a main network to conserve energy. Passive energy sources will also be tapped with “wind paths” and strategically placed greenery. When completed in 2014 (at an estimated cost of 60 billion yen), it will support 1000 households for approximately 3000 people and should, according to Panasonic, reduce normal carbon emissions by 70%.

THINKING ABOUT URBAN PLANNING
Dense and expensive urban landscapes mean that more of life in Japan is lived in public spaces. Where apartments and homes might be smaller, public spaces offer alternative places for people to work and socialize. Japan’s cities are leading the way in transforming urban infrastructure into extensions of the home, making public spaces – from schools to cafes – cozier, more sustainable and user-friendly.

A leading project is Klein Dytham Architects’s new T-Site Daikanyama . Designed for Tsutaya (the major Japanese CD/DVD/book seller), it covers a 12,000m2 site with a cozy, low-rise complex of shops, eateries and an art gallery organized around a public green space with old growth trees. The whole space acts like a public living room; cafes and patios are almost always packed with people working, eating and socializing. With its more subtle approach to commerce, generous amount of space for greenery, and user-friendly way of organizing public space, it has proved incredibly popular with both the public and the architectural cognoscenti. It is a prototype that will no doubt inspire similar projects in Japan’s dense and often chaotic urban landscapes.

Photo courtesy of Shigeru Ban Architects

GOING GREEN, LITERALLY
The lack of space in dense cities is also creatively addressed with Tezuka Architects’ extension to their awardwinning Montessori Fuji Kindergarten in Tachikawa, in greater Tokyo. Called “Ring around a Tree” , it is a language lab encircling a full-growth tree and makes going to school like playing in your backyard (something most children in crowded Tokyo do not have). Like the Fuji Kindergarten itself, the project uses the site’s trees as starting points for an architecture that inspires learning, imagination and play.

Code Kurkku, Photo by Louise Rouse

Tokyo’s popular Azabu Juban shotengai (shopping street) often sees buildings come and go as businesses look to attract customers with fresh buildings and designs. Among the latest crop is an elegant plant-clad project by Edward Suzuki Architects. Called the “Vent Vert” or “Green Wind,” its nine-storey facade will be covered by live greenery which, when completed this spring, will give both tenants and passersby the visual and tactile pleasures of a vertical garden on a dense city street. Similar walls of green can be found in projects around the city including Shigeru Ban’s Nicolas G Hayek Center- a commercial building owned by the Swiss company Swatch in Ginza – and the Yoyogi Village by Kurkku , a restaurant complex designed by Wonderwall as a tranquil, green filled retreat in busy Shibuya.

Hiroshi Nakamura and NAP Architects – who earlier created a house, House C , with a living roof in Chiba– are now attempting a small forest in Tokyo on top of the new Tokyu Plaza Omotesando. Opening in April, the shopping complex will feature a roof like a bouquet of trees, a symbolic nod to the famous zelkovas of Omotesando Dori and inserting an ecological note into a glamorous consumerist boulevard.

So despite the endless non-descript towers that continue to pop up all over the built landscape, the architectural mood in Japan looks to be moving towards a more subtle design aesthetic, reflecting a growing awareness of the need to always consider the environment, both built and natural. Post-March 11, Japan’s geo-cultural reality has again put it in the unique situation in which the country could potentially lead the way in green design and technology.

House C, Courtesy of Hiroshi Nakamura & NAP Architects

The seeds have been planted, but will they grow? Either way, 2012 may well mark the beginning of the next phase of Japanese architecture.

The ACCJ Journal is here to help you! Listed below are basic tips for filing your individual 2011 Japan tax return. By being mindful to these tips and rules, you should be able to reduce your tax burden and could even find yourself with a refund!

Of course, please keep in mind that the following are general guidelines; we strongly recommended you consult with a tax professional if you are not sure whether you are eligible to deduct certain expenses, or if you have other concerns about your financial situation.

Who Should File and When to File
Individual tax returns must be filed sometime between February 16 and March 15 in the calendar year that follows the taxable year. Extensions are not allowed.

Identify Your Tax Resident Status
The first step in preparing your return is to know your resident status. The scope of taxable income and taxability varies depending upon this status. People are divided into two categories: either “resident” or “non-resident.” The definition of a resident is a person whose domicile is in Japan or who has resided continuously in Japan for more than one year. A nonresident (“NR”) is an individual who doesn’t have a permanent residence in Japan.

Residents who do not have Japanese nationality and who have been living in Japan for five years or less (over the last ten years) are classified as “nonpermanent residents” (“NPR”). Residents who have lived in Japan for more than five years (over the last ten) are considered permanent residents (“PR”).

NRs should note that even if the amount of time you have been living in Japan is less than a year, if you have a job in Japan that requires you to reside here for at least one year, you are presumed to have a domicile in Japan. Also, remember that while your visa status and the length of your visa are important factors in determining your resident status, they are not the absolute deciding factors.

The Amount of Salary
One other factor that impacts whether you need to file a return or not is if, as a salaried worker, you earned more or less than ¥20 million in Japan source income. If your gross receipts from a Japanese company exceeded ¥20 million, you are required to file an individual tax return. Additionally, if you receive foreign source income paid in Japan or remitted into Japan, you need to file a return.

Suppose you are a NPR working at the Japanese subsidiary of the US parent company and receive all of your salary from the Japanese company. In this case, you should receive an annual withholding statement or Gensen Chosu Hyo for the previous year from the company sometime after the new year. If your gross receipts on the statement are ¥20 million or less AND you do not receive any salary out of Japan nor any foreign income, the tax amount on the statement will be the final tax since your employer has fulfilled the tax liability on your behalf through the year-end adjustment process.

However, you may still want to file an individual tax return if you have certain deductible items, such as medical expenses, that might qualify you for a refund.

Know Your Taxability
Determining the taxability of your earned income and capital gains depends heavily on your resident status and the source of the income. NPRs are taxed on Japan source income as stated in the Japanese tax code – including salaries – regardless of whether it is paid in Japan or abroad. NPRs are however not taxed on foreign source income that is retained outside Japan. Residents that have lived in Japan for more than five years (over the last ten) are considered permanent residents (PR), and all of their income – both Japan source and foreign source – is taxable.

Tax treatment for a NR differs according to the type of income and whether the NR has a permanent establishment – such as an office.

183 Days Rule
Suppose you are a US-resident salaried worker and are dispatched to Japan. If the number of days you work in Japan is less than 183 in any twelve month period in the taxable year, your salary is tax exempt in Japan, provided a few other conditions are satisfied. In practice, you should file the notification form for application of the US Japan tax treaty.

Working Outside Japan
Suppose you are a salaried worker and receive a portion of your salary in Japan and a portion overseas; in this case, you should include all receipts irrespective of where received. However, if you work outside of Japan for a certain period of time, you may separate the income generated while working outside of the country as foreign source income on a pro-rata basis. If the income computed as generated overseas is retained outside and not remitted into Japan during the taxable year, it will not be taxable. This rule however does not hold true if you are the director of a Japanese company.

US Source Income Treatment
NPRs are not taxed on rental income generated through rental properties abroad as well as capital gains generated through overseas stock or investment in offshore mutual funds that were made through overseas securities firms – as long as such income is retained outside of Japan.

Taxable and Non-taxable Income
Benefits provided by your company can also be deducted from individual taxable income. Some general tips on what can and can’t be deducted include:

Housing Allowance
When a company rents an apartment or house for an employee/director, it typically computes a certain portion of the actual rent (as determined by the tax code) and receives this amount from the employee/director. In this case, the actual rent is not taxable. However, should the residential space consist of more than 240 square meters with certain other conditions met, the full rent is then deemed taxable.

Education Allowance for Children
Any allowance for a child’s education paid to an employee is taxable. However, if a company makes a donation to an international school that has an accredited scholarship plan and the school provides free tuition to the children of the director/employee, the economic benefit of this free tuition is then considered non-taxable. You can confirm whether there is such an accredited scholarship plan with the school or with the tax office associated with the school.

Home-Leave Allowance
If you have been working at a company in Japan for approximately one year, company payments for round-trip air-fare and any layover hotel charges are nontaxable. This is allowed once per year.

COLA
This allowance is treated as taxable income.

Stock Options
When the parent company grants Stock Option (“S.O.”) rights and an employee/director exercises the S.O. and receives the stock, the difference between the exercised price and the market value of the stock as of the exercised date is regarded as the salary income. Note however that the US-Japan tax treaty has specific treatment for residents who work both in the US and Japan. Take, for example, an individual who is granted the S.O. of the US parent company during the time they work in America. Subsequently, the individual continues to work with the American parent company for 3 years before being transferred to the Japanese subsidiary and working there for 2 more years. At this point in time, after a total of five years, the individual then exercises the S.O. In this case, two-fifths or 40 percent of the income for the S.O. is regarded as Japan source income.

Other Major Deductible Items
Did you know that you can deduct certain other common expenses to reduce your tax burden? The following are major items that can be deducted when you file your tax return in Japan:

Contributions
When you have made a contribution to government, local authorities or a charitable organization specially designated by the Minister of Finance, such as the Japan Red Cross Society, this contribution can be deducted from your income; the amount that can be deducted is the lesser of the contribution amount or 40 percent of your total income minus ¥2,000.

People who made contributions to support the recovery efforts following the devastation of last year’s earthquake and tsunami can deduct these costs if the recipient organization is a designated organization or the Japan Red Cross Society. Although the original receipt issued by the organization is required in principle, bank receipt for remittance is sufficient for contributions made to the Japan Red Cross Society.

Contributions to persons or organizations outside of Japan however do not qualify for a deduction. Donations to your alma mater for example do not qualify.

Medical Expenses
Expenses related to medical and dental care are deductible. Commuting expenses that are required in order to receive medical care, meals and lodging furnished by a hospital, and special equipment (such as artificial teeth) are all deductible. Eyeglasses and contact lenses are in principle nondeductible except for special glasses after cataract surgery. Most cosmetic surgery and procedures, complete medical check-up, and vitamin pills for promoting health are non-deductible. Medical expenses include not only yourself but also your spouse, as well as any dependents and kin who are in your household.

Deductible amount: total medical expenses paid minus amount reimbursed through insurance minus (the lesser amount of 5 percent of your total income or ¥100,000. The maximum amount that can be deducted is ¥2,000,000.

Social Insurance Premiums
Premiums for social insurance which you have paid or have had deducted from your salary are deductible. Premiums for foreign social insurance systems are not deductible and thus premiums for 401(k), for example, are not deductible.

Tax Amount
Taxable income is computed from all Japan source income minus any deductions. The rate (composed of national and local tax) is progressive – starting from 15 percent and running as high as 50 percent.

Tax Credit
If you are a permanent resident and are taxed in the US for American rental income, you can receive foreign tax credit that is deducted from your tax burden.

Local Tax
My last tip concerns the local tax system. If you are a salaried worker and either file an individual return on your own or have your company file it on your behalf, basically you do not have to file the local tax return since the Ward Office computes your local tax. The Ward Office withholds the local tax from your monthly salary in twelve installments starting from June the following year through the following May. If you are not a salaried worker, you will receive an invoice from your Ward Office requiring quarterly payments for June, August, October and the following January.

Local taxes are levied on individuals who reside in Japan as of January 1st. For example, 2012 local taxes (the tax is computed based on the income of 2011) are levied on any person who is a resident of Japan as of January 1st, 2012. Accordingly, on your last year of assignment in Japan, if you leave Japan by the end of December, your local tax for the last year will not to be levied.

So now that you are armed with these tips and hints, there are no more excuses for waiting to finish getting your finances in order!

Jun Nagamine CPA, founded accounting firm Nagamine & Mishima more than 20 years ago.

This time of year always is, as the old cliché says, a time for renewal and rebirth. However in Japan this year, renewal and rebirth takes on added significance given what happened one year ago. On March 11, we will mark the one year anniversary of the Great Tohoku disaster which delivered a devastating shock to all of us and will remain etched in our lives forever. I expect that most of us will stop on March 11 this year to pause and reflect on the many people lost in that tragedy and the many others whose lives were changed forever.

Mike DeJong
ACCJ Journal, Editor-in-Chief
mike@accjjournal.com

Obviously, the events of March 11, 2011 will resonate in the minds of people in this country much the way September 11th resonates for many Americans.

With this in mind, we will look ahead in this issue of the Journal. We know that March is a busy time of year, with business managers scrambling to get their financial affairs in order for the coming fiscal year. Students and teachers get set for a new school year in April, and thousands of new graduates are trimming their hair and buying new dark suits for their first day of work.

Tax time is also here, challenging for anyone, especially non-Japanese who don’t know how to navigate their way through a Japanese tax form. In this regard, our resident tax expert Jun Nagamine has an article that can help (“Tax Time Again,” page 28); Jun has put together a list of tax tips, advice and areas to look out for when getting your paperwork together.

Charitable giving is another thing to think about at tax time. However, as Nicholas Benes points out in his piece (“Tax Benefits and Donating,” page 38), Japan’s tax system actually discourages donating for tax purposes by making the registering of a non-profit entity – or “public interest corporation” (koueki houjin) — more of a challenge. This makes Japan less of a “giving society” than other countries. Nicholas offers suggestions to change the system for the benefit of many more people.

As Japan heads into the future in the post 3/11 world, the country will also be looking towards the environment. Japan is already a leader in green technology such as hybrid automobiles and recycling, and many builders are also going green. In her cover story this month (“Greening Japan,” page 22), Deanna MacDonald gives us a look at some cutting-edge designs in Tokyo that will serve as eco-friendly examples for Japanese builders in the future.

Finally, I mentioned baseball season is nearly here. In fact, the Major League season begins this month in Japan, as the Seattle Mariners take on the Oakland A’s at Tokyo Dome March 28 and 29. These games count in the Major League standings and will give Japanese fans their first live look at Ichiro Suzuki in a Mariners’ uniform. The two teams also play exhibition games against the Yomiuri Giants and Hanshin Tigers prior to the season openers. I plan to catch a game or two this month and I hope many of you will join me down at the “Big Egg.”

All of the teams will pay tribute to the heroes of the March 11th disaster before taking the field – a nice way of saluting those who sacrificed in a time of great need.

So March is here – let’s look ahead to a season of rebirth and renewal, while keeping in mind the events of our not-too-distant past.

WHY SHOULD YOU CARE ABOUT THE TPP?
Many of the factors that impede a company’s ability to do businesses in today’s global business environment are not addressed in traditional trade agreements. However, there are high hopes that the ambitious TPP will be a trade agreement for the 21st century and establish a framework that will increase market access for US companies, simplify the business environment to facilitate trade and investment, ensure equal opportunities and a level playing field for all market players, and create an overall a better business environment. This will ultimately enhance competition and bring substantial benefit to US and other companies operating in the Asia-Pacific region.

Michael Alfant
ACCJ President
malfant@accj.or.jp

Another point that makes TPP different is that it is a living agreement. This means that it will evolve and adapt to include new and emerging trade and investment issues as they arise and also expand its membership as countries demonstrate the will to commit to the same high level of liberalization. The TPP currently has nine negotiating partners including Australia, Brunei, Chile, Malaysia, New Zealand, Peru, Singapore, Vietnam, and United States with Japan, Canada and Mexico formally expressing their interest in joining. Other countries such as the Philippines, Taiwan and South Korea have also informally expressed their interest in eventually joining. The TPP promises to become the largest free trade area in the world and is widely seen as the precursor to a region-wide agreement or Free Trade Area of the Asia-Pacific (FTAAP).

JAPAN’S PARTICIPATION: A GAME CHANGER
Certainly, of most interest to US companies operating in, or with Japan, is whether Japan’s interest in joining the TPP will be realized. On January 13, 2012 the Office of the United States Trade Representative concluded its “Request for Comments on Japan’s Expression of Interest in the Proposed Trans-Pacific Partnership Trade Agreement” through the Federal Register. Submissions were overwhelmingly in favor of Japan’s participation (104 in favor to 8 against and 1 indecipherable).

As the ACCJ highlighted in its submission, we welcome Japan’s participation in the TPP. Given the size of Japan’s economy and its role in the Asia-Pacific region, Japan’s participation would be a game changer, not only creating the world’s largest free trade zone but also serving to strengthen the US-Japan bilateral relationship both economically and strategically. However, for Japan to join the group of likeminded countries negotiating the TPP, the country’s leadership needs to move quickly to demonstrate its readiness to embrace the common vision for the highest standard of trade liberalization and to take the hard decisions required to achieve this.

AN OPPORTUNITY FOR US-JAPAN LEADERSHIP IN THE REGION
The United States and Asia are inextricably linked and the future of one depends on the other. As two of the largest economies in the Asia-Pacific, the US and Japan must see the opportunity in TPP and to work together to create a regional architecture that unlocks the region’s growth potential to the benefit of US and Japanese businesses, citizens and the region as a whole.

Preckas - Fotolia.com

What entity has the power to impose its dictates upon all of us, and in doing so exposes all of us to the same risks? Yes, the government. Only government can legally coerce people to act in ways that they would not otherwise choose. And only government can direct subsidies, money and capital on a scale that directly affects how all other resources in an economy are allocated.

All over the world governments have been busier than ever, as testified by an unprecedented surge on fiscal deficits: in a feat never seen before debt-to-GDP ratios have risen by almost 10 percentage points here in Japan, in Europe, in the US and in China over the past 15 months. French economist and politician Frederic Bastiat put it well, “Everyone wants to live at the expense of the state. They forget that the state lives at the expense of everyone.”

How long can this borrowing spree last? When will the next Greece happen?

Why does the increasing bond buying by central banks fail to kick-start a private credit cycle? To answer, my New York partner Ken Landon reminded me recently of something that happened 100 years ago. In December 1912, John Pierpont Morgan was called to testify before a congressional committee that was investigating the role of large banks in capital markets.

The exchange between the committee counsel Samuel Undermeyer (SU) and JPMorgan (JPM) went like this:
SU : “Is not commercial credit based
primarily upon money or property?”
JPM : “No, Sir. The first thing is character.”
SU : “Before money or property?”
JPM : “Before money or anything else. Money cannot buy it… because a man I do not trust could not get money from me for all the bonds in Christendom.”

The truth in what JPMorgan spoke 100 years ago is that credit is primarily about trust – trust in lending money to a borrower who will pay back the capital under the agreed terms. The word credit comes from the Latin word credere which means “to entrust.”

Lack of trust and ‘feel good factor’ in the current global economy go hand-in-hand. Europe is the most obvious example. Bond yields of various countries – most recently Portugal – keep rising (which is another way of saying that the cost of credit for this country is getting more expensive, because lenders do not trust that they will be paid back).

The problem, however, is not Portugal (or Italy, or wherever). The problem is that the political leaders of Europe and the Euro have been insisting that Greece is a ‘special case’ when it comes to private creditors: yes, owners of Greek bonds will have to take a ‘haircut’ – the bonds they own will not be worth 100 Euro as originally stated, but will be worth only 30 Euro or 50 Euro. So far, so good. But what makes Greece a special case, and on what basis exactly is Greece unlike any other country borrowing in Euro has never been stated. No reasonable explanation has been offered. That’s exactly why markets are nervous and why bond yields of various European countries keep rising.

Of course, the purpose of the European official statements on Greece ‘being special’ are obvious. Eurozone leaders are trying to undo a financial panic that they actually created in the first place and the decision to offer ‘haircuts’ for Greek debt is perfectly reasonable. However, it immediately triggers contagious worries in other European countries, particularly Portugal, Italy and Spain. Please do not misunderstand me. The essential problem of Europe is not whether Greek bonds are ‘special’ or not. It is profligate governments who are afraid to cut funding of massive Social Welfare States.

Having witnessed how the private holders of Greek bonds have been treated by Europe’s political leaders – who insist, by the way, that the European Central Bank will be treated differently from private bond holders – investors are perfectly right to mistrust public pronouncements that Greece is in fact ‘special.’ Add to this the current push by Eurozone leaders to impose a Financial Transactions Tax, and you get a clear message that in Europe the interests of the owners of capital are secondary at best when political leaders sit around the table and discuss plans to deal with the crisis.

Jesper Koll is a Managing Director and Head of Research at JP Morgan Japan Securities Inc. He has been analyzing and investing in Japan since becoming a resident in 1986.

Importantly, the European Central Bank is incapable of providing real capital to the economy. No central bank can do this. True, central banks can electronically print up new currency and inject this into banks. But these are merely claims on real capital. Real capital are actual things that are in existence, whether buildings, machinery, or other hard assets – also intellectual property, the creativity, mind and skills of individuals and their partners and workers. No central bank has the power to produce these things – they are the essence of growth and prosperity and without them, money is, well, just numbers on paper. The central bank can produce more and more pieces of paper with numbers, but all this will ever be is a claim on those private sector hard and soft assets. However, the private owners of the capital are free not to accept the claims.

They can, in effect, go on strike and send their wealth elsewhere. The continued surge in the price of gold suggests this is exactly what is happening, as does the fact that private investment is falling. Europe and its crisis is only the most obvious – and urgent – example of a general lack of trust in government and central banking policies. Next month, I will go back to being my optimistic self and will highlight why Japan’s relative and absolute position in the world is about to improve.

For now, let me end by quoting my favorite economist, Frenchman Jean Baptiste Say, who wrote more than 200 years ago (in 1803): “In times of political confusion, and under arbitrary government, many will prefer to keep their capital inactive, concealed, and unproductive, either of profit or gratification, rather than run the risk of its display. This latter evil is never felt under good government.”

Sam Kidder, ACCJ Executive Director

But perhaps most significant, the APCAC Summit will be a wonderful networking opportunity. Not only will attendees be able to hear from and interact with the best and the brightest from Japan and America but there will also be dozens of people both on the podium and in the audience with wide experience throughout the region. We will be hosting the Senior Commercial Officers from APCAC member countries and you will be able to schedule one-on-one meetings to take advantage of their wealth of local knowledge. In two days in Tokyo you will be able to accomplish much of what you might try to do in several weeks of traveling in the region.

In addition to conversations over meals and networking in the corridors of the conference, Ambassador Roos has agreed to host a reception at the Embassy Residence and there are plans for other social activities that will allow for many mixing opportunities.

But you need to be there, or rather, here. So if you haven’t signed up yet, please take a look at our site at www.apcacjapan.com and register. You’ll want to be part of this crowd.

While Tohoku’s population has been falling steadily, Sendai’s has been gradually rising, reflecting its status as the regional capital. Sendai’s real estate market had been a different story during the few years prior to the earthquake. The global financial crisis caused many investors to stop buying property in regional cities, and companies shrank or closed their Sendai branch offices, leading to the extremely high vacancy rate.

While there is no question that the Sendai market is hot at the moment, real estate investors look for consistent, longterm cash flows. And even after the very personable Yoshihiro Murai, Governor of Miyagi Prefecture, spoke to the ACCJ on December 5 to appeal for foreign investment, he failed to persuade me that local governments in Japan have sufficient power to offer attractive incentives.

When asked the most important factor differentiating Miyagi from other prefectures making similar appeals for foreign investment, Murai made a not so subtle comparison to Osaka’s feuding politicians – saying that he gets along extremely well with Sendai Mayor Emiko Okuyama, who was also on hand at the ACCJ presentation. Otherwise, Miyagi’s benefits and financial incentives are neither large nor unique enough to make much of an impact on the thinking of foreign investors. In a telling sign of where the Governor’s real priorities lay, he rushed out of the meeting after his remarks to return to Sendai for the prefectural assembly meeting, rather than stay for an extended dialogue with ACCJ members as did Mayor Okuyama.

Seth Sulkin is the President and CEO of Pacifica Capital K.K., a Tokyo-based real estate asset manager specializing in commercial properties.

When Toyota or Nissan seek to build a new assembly plant in the US, governors from many states make direct appeals to Japanese corporate executives. They also offer hundreds of millions of dollars in grants, subsidies, educational and training incentives. When the Chicago Mercantile Exchange and Sears recently threatened to move their headquarters out of Illinois, the governor and the state assembly worked together to quickly pass a bill offering sufficient tax breaks to keep the companies from leaving.

Compared to the federal system in the US, where states have the freedom to set local income, sales and other tax rates, Japanese prefectures have virtually no control over their income, which limits their ability to offer incentives to attract investment.

Governor Murai’s unique background as a helicopter pilot with the Self-Defense Forces and three years at the Matsushita Institute of Government and Management may give him a broader perspective on the world. But the merits he lists of investing in Miyagi – cheap and plentiful land, low labor costs and proximity to Tokyo – can be said of many other prefectures. He also has not fought hard enough with the central government to secure the kind of incentive packages that will really lure more investment.

I look forward to Mayor Hashimoto’s upcoming battles with the central government. If he is successful in combining the Osaka city and prefectural governments, and wrenching away more local autonomy, we might start to see a real difference in what can be done to attract foreign investment.

Sayonara global creditor, yokoso global debtor Japan.

The dynamics forcing a switch from creditor to debtor have been well documented for many years: as society ages, sooner or later people will begin to “consume” their savings. In an economy where birthrates have been falling for generations and the population is declining, this is manifest “demographic destiny” – and it’s not difficult to forecast the basic trend.

However, experts could never pinpoint the exact timing of when the switch from “savings” (building up assets above funding living expenses) to “consume savings” (drawing down assets to pay for living expenses) would happen. We now have the answer: NOW.

NOW is the fact that in 2011, Japan ran its first full-year trade deficit since 1963. This is a sharp departure from the average trade surplus of 2.7% that Japan ran over the past half century. We – and here I mean the macro research team at JP Morgan – think that the turning point has been reached; within a couple of years, a full-blown structural current account deficit is likely to follow. Why is this happening?

The first key is the change in global growth dynamics. Basically, the unprecedented global economic boom during most of the first decade of the 21st century obscured the underlying trend of Japan’s savings decline. To put it plainly, Japan’s exports were booming, boosted by easy-credit fuelled U S-consumer demand and, importantly, the relentless acceleration of demand for capital goods from the BR IC economies. Exports grew 7.2% during 2000-2007 – until the “Lehman Shock” put a stop to it. Since then, global growth has downshifted significantly – triggering a structural decline in exports from Japan. The numbers tell the story: for every 1% drop in global growth, Japan’s exports fall by about 1.4%. In the new global economic realty, Japan’s export growth rate is down to about one-third of what it was during the 21st century boom decade.

The second factor behind “sayonara creditor Japan” has been a persistent fall in the nation’s terms-of-trade. This is the ratio of export prices relative to import prices – kind of a profit margin for the national economy. If export prices rise relative to import prices, the terms of trade are rising and the country is better off. However, if import prices rise faster than export prices, the terms of trade fall and the country is being squeezed. The latter is exactly what has been happening to Japan; over the past decade, import prices have been rising about 5.4% per annum, while export prices actually fell by about 2.1%.

Here, import prices have been pushed primarily by the surge in global commodity prices, which in turn was forced by the relentless surge in demand for commodities to feed the BR ICs growth surge. Japan’s imported energy price bill, for example, has been rising by almost 10% every year in the first decade of the 21st century. At the same time, the drop in export prices has been forced by the relentless rise in global competition for Japanese products. In particular, the rise of Korean competition in key industries like cars and electronics has forced a de-facto loss of price-power for Japanese makers.

All said, Japan’s terms of trade have fallen 5.5% every year since 2000 – the relative cost of imports-to-exports has basically doubled since the start of this century. Given that total trade is about one-third of Japan’s national income, the net “loss” – or de-facto cost-increase – is equivalent to about 15 trillion yen per annum. This is equal to roughly one month of average pay per household, wiped-out by the loss of Japan’s relative competitiveness. No doubt this relative income drop has been a significant factor contributing to the drop in household savings, over and above the standard demographics argument: the relentless drop in the terms of trade has made the average Japanese much poorer.

Note here that it is the terms of trade that matter, not the exchange rate. Specifically, while the rise in the yen against the dollar makes imports of oil and other dollar-priced commodities cheaper, this positive has been more than off-set by the actual price appreciation of these commodities. Clearly, it is the net effect that matters and the sad reality is that Japan’s yen appreciation has not been enough to cushion against a higher import bill.

Forecasts, please So exports have been slowing while the import bill keeps rising. Where does this leave us in terms of a forecast? If we assume 3% growth in the global economy and 1% growth in Japan as well as a continued 5.5% drop in the terms of trade, Japan’s trade account will keep on falling into a deeper deficit and, by early 2015, the trade deficit will be larger than the income account surplus (interest, dividends etc. earned by Japanese overseas factories and portfolio assets). To put it plainly again, by early 2015 Japan’s trade and current account will likely be in deficit.

Jesper Koll is a Managing Director and Head of Research at JP Morgan Japan Securities Inc. He has been analyzing and investing in Japan since becoming a resident in 1986.

Obviously, some might quarrel with these big-picture assumptions. However, it appears the current dynamics of aggressive overseas expansion by Japanese manufacturers are poised to actually dampen the nations export dynamics. Specifically, Japan’s car industry – which makes up nearly one third of all exports – is set to produce more than 75% of all cars in overseas factories, up from barely 50% in 2003. Made-By-Japan is poised to be a powerful force in global markets – but Made-In-Japan is set to become increasingly rare. As export earnings dwindle, so will Japan’s global creditor status.

Of course, the switch from net creditor to net debtor will have significant implications for yen asset prices – bond yields in particular. In my personal view, the fact that the nation is running out of money is poised to be good news, as it is bound to instill a new sense of urgency in the minds of policy makers. As a wise man once said: “nothing focuses the mind as much as running out of money.”

At APCAC, Chamber leaders and government officials discuss policy ideas, develop advocacy proposals and share best-practices on ways to promote American business across the Asia-Pacific region. Topics on the agenda will include the Trans Pacific Partnership agreement, the evolving trade architecture in Asia, the recent natural disasters in Japan and Thailand, and the role of promoting innovation and growth throughout Asia and America. Essentially, APCAC is a way for members of American Chambers to learn how to speak with one voice.

With this in mind, the Journal sat down with two of the organizers of this year’s summit to discuss the importance of the event. Tom Clark and Lawrence Greenwood are co-chairs of the ACCJ’s 2012 APCAC Task Force.

Journal: What is the importance of APCAC?
Tom Clark: APCAC is an organization that includes over 21 countries, 27 member Chambers. It’s really the voice of American private sector, businesses that are on the front lines of our trade and engagement with Asia. With all the talk about TPP, with all the success that we had at the recently concluded APEC summit in Honolulu, it’s clear that more and more of America’s economic future is in Asia. Certainly the American business future is about the Asian markets where growth is strongest.

And so APCAC really has a role to play in helping the sort of the people who are on the ground involved in business in those countries – making sure that markets are open, that they’re working closely with the US government in terms of letting them know where there are issues that need to be dealt with. (Also) working with the host governments around the region to let them know how American business can help in terms of bringing new products to their consumers, partnering with domestic companies and raising issues that are not necessarily confrontational trade issues… but are often win-win, where we’re raising the issues that frankly also affect local businesses and how can we make the whole system more coherent, make regulation

The second significance is just that having this APCAC meeting here in Tokyo is something that’s really quite important. First of all, it’s the first time of it being in Tokyo for almost a quarter of a century. And it’s very timely to do that now because, of course, the conference will almost be on the one year anniversary of the disasters of March 11. And to show very clearly and concretely what the presence of hundreds of American executives from around Asia means, that the US business union recognizes Japan is open for business, is a big part of our own growth story in Asia, I think is very important.

2012 APCAC Task Force Co-chair Lawrence Greenwood

Journal: So positioning and branding-wise, the summit is an opportunity for you to speak as one voice, 27 chambers 21 countries, promoting American business interests and Western business interests in Japan?
Lawrence Greenwood: Right. As you know President Obama, when he was in Hawaii then with his onward visits to Australia and Indonesia, really marked a strong pivot in American relations with Asia and very strong recommitment to the region on the economic business side. It’s obviously where the rubber meets the road on that in terms of that pivot and that relationship. So,the kinds of issues and the kinds of things we do every day to make money and to provide services and goods to the people and the consumers in Asia is where the American interest is. Right now, this is the only strong growth center in the world. And this region of the world is going to carry us through this very difficult time. So we have got to have even stronger ties here.

For the Chamber, it’s a great branding opportunity because this is the largest Chamber (in Asia) and it’s been very active in APCAC, so it’s also carrying on this greater leadership role that we’ve been playing already in APCAC and it’s a great opportunity to show that.

Another opportunity is that we’re in the midst of a generationally important debate on taxation in Japan which is going to go very much to the sustainability of growth in Japan over the next 20 years. And we’re going to be talking about, in terms of external relationships, the TPP and how open they want to be. So two really important topics that go to the very future of this country are going to be at stake in this time frame. So what better time to bring people from around the region, from the United States to talk about this issues?

2012 APCAC Task Force Co-chair Tom Clark

Now, there have been competitors, there’s East Asian Summit, the ASEAN Plus-6 – now there’s even a Plus-8 which does include the US and Russia – but where that is going is a lot less clear. Where TPP is going, especially after Honolulu, seems to be a lot more clear and that place is a 21st century high level agreement that doesn’t just stop with the usual tariff at the border issues that have been bandied about for many, many years – but really tries to get it some of the deeper structural regulatory coherence issues, transparency, level playing fields – frankly a lot of the issues that ACCJ has been championing bilaterally within Japan only now apply to this growing bloc of countries that are the future of growth and the area that we’re going to hopefully work with to pull the whole world forward.

So TPP, not to be too grandiose, but it really can be the solution to getting Doha re-started; if we could show that a major trading area like the Asia Pacific can come together and advance these high level goals. There’s 21 chapters, it covers things from financial services to environmental goods and services, cross border flows of capital and information, we’ve dealt with state-owned enterprises, government procurement – all the issues that go well beyond traditional tariffs and that we deal with day-to-day in many countries. And on many of them, Japan is a very natural ally and many of them, frankly, Japan and the US are on the same side of the table looking at how these issues might play out in other Asian countries.

And of course our eye is always on China because in the long run, to be a truly APEC vision of an FTAP, this would have to be open to the current APEC members including China. So this could be a solution (to that). So, it’s an incredibly important initiative and it’s one where I think it may be a once in a lifetime chance to move the needle in Japan, and with Japan’s help move a needle throughout the region.

Journal: And the consumption tax issue?
Greenwood: I don’t believe (the Chamber) has a particular position on the consumption tax. But it’s important because it’s one of these basic issues that Japan is going to have to deal with, which is how it’s going to deal with this demographic challenge of an aging society, escalating social costs and a very high debt already. So it deals with this fiscal issue.

And what the business community will be looking for are good actions that demonstrate a sound fiscal policy, that demonstrate the long term debt problem is under control because the concern is that at some point Japan’s current account surplus will go away and then therefore they’re going to have to fund the debt through external financing, and that is a lot more challenging to manage – and so, how Japan’s going to do that goes to one of the fundamental issues about the confidence that people, including Japanese, have in their economy in the future. So it’s one of those key issues, it’s how they do it. In some ways, it’s a little bit like TPP. We’re not saying how Japan should do TPP…we’re not…particularly strong in terms of that, it’s just really will Japan move forward? Will it take the steps it needs to revive growth here after a very long period of slow economic growth?

Journal: What about quake reconstruction and the whole rebuilding of Japan. What do you think will come out of APCAC in terms of recommendations or policy positions in that area?
Clark: While the disasters of 3/11 weregreat human tragedy, there’s also, as always, an opportunity to find a silver lining which may be that we’re not going to be rebuilding Tohoku exactly as it was. We’re going to use this as an opportunity to enrich the lives of the people in that region and hopefully the rest of Japan by having it become a leader, as it reconstructs in things like cloud computing, developing new forms of delivering healthcare to an increasingly aging population.

I think APCAC and the summit will have a lot of recommendations that are being made in the context of the whole region in terms of human development, of healthcare IT, deployment of new forms of low carbon-emitting energy production – all of which can have specific application in Tohoku. Obviously after the nuclear events we’re looking at potentially needing to find additional sources of energy. And there’s a whole chapter in TPP on energy and a whole focus in APEC on energy that I think this conference will have a lot to say.

One of the great achievements of the past APEC year that the US led, culminating in the summit, was an agreement within APEC to reach an accord on environmental goods and services – specifically an agreement to cut tariffs on environmental goods and services to five percent by 2015. And this was achieved, not withstanding some opposition or lack of enthusiasm from Russia and the PRC – but not withstanding that, the administration very deftly secured the support of most of the other countries in the region to move that agenda forward. So that was a big win in Honolulu and I think things like that are directly applicable to the needs of Tohoku as they rebuild to make sure that they are looking at renewables – Japan needs a strong renewables policy to promote those forms of energy efficiency that will not affect the environment so much; that won’t be so reliant on one single form of energy. So as they’re doing that, there will be lessons from the region.

In terms of disaster recovery I think the conference will be able to promote a very stimulating discussion of best practice sharings. Because we’ll have at this conference US Chambers from Thailand – Am-Cham Thailand has been very active in mobilizing support and recovery for the recent flooding there – Chambers from Indonesia which of course has had a number of devastating disasters including the 2004 earthquake – so to have representatives from American Chambers in all of these countries – and I should add also some government officials from these countries as well together, talking about how disaster recovery can be improved and we can learn from the lessons of each other – it should have a very important role to play.

Greenwood: Tohoku also has an opportunity to see if Japan can do something different on entrepreneurship and innovation and that will be in fact one of the presentations and seminar sessions. And it also very much links into Ambassador Roos and the US Embassy’s Tomodachi Initiative which is focused on entrepreneurship, innovation and looking in particular at young people and changing the way people think about entrepreneurship in Japan. Obviously it’s an area with lots of small business already and Sendai is actually a very thriving center for small business. So there’s a lot of opportunity there and also an opportunity, because of the tragedy, to do things differently than in the past. So that’s another theme that we will be exploring in the conference.

Journal: And along those lines, somebody like Mr. Mikitani, the new wave of Japanese business leaders, central to moving Japan in a new direction… How important is it to have somebody like Mr. Mikitani as one of your speakers?
Clark: I think having someone like Mr. Mikitani is very well-aligned to some of the lessons that we want to come out of this conference. The fact that there are new business models that are open in a society and an economy that promote the values of entrepreneurship, that reduce some of the burdens—both regulatory and structural, and even just conceptual to allowing people with a new idea to get to market quickly—how that can add value. Having the ability to talk about what is it that makes entrepreneurship such a vital source of growth and how can Japan, which is a world-class innovator with the best technologies, but which maybe isn’t being as good as it could be because it’s not quite finding the way to promote entrepreneurship and small business – these are topics that will be very timely and very much on the agenda of our meeting.

Journal: At some summits you see local government officials in a “bear-pit” session with foreign executives. Do you do anything like that at this conference?
Clark: We will have members of host governments throughout the Asia region participating in some of the panels. It’s probably a little more focused on some thoughtful exchanges with public and private sector leaders around the area. There will of course be time for interaction with the audience.

Journal: Do political issues like North Korea come up at conferences like this?
Greenwood: Not specifically, but we’ll have US Government officials here as well, from Washington. So it will be much more talking about the ‘pivot’ that I mentioned and what that means for US Government policies in the region and what that means for business, as opposed to security issues.

GETTING A G.R.I.P.!
As you may know, the Ax’s ultimate purpose is to cut through the BS and help you develop your own strengths as a leader, as a manager and as a “globally thinking communicator.” Each topic stands alone and each one can and should inspire you to lead more effectively. This month, at the risk of taking on too big of a tree, we’re chopping into a giant Redwood: Global Readiness.

What do we mean by “Global Readiness”? You’re not the first to ask. At AMT Group, we have been “Developing Global Thinkers” since 1992, and this remains the hottest topic at every annual planning session. With so much rapid change all around you, and the globe seemingly shrinking by the minute, being “globally ready” has taken on even greater importance today.

Let’s take the second word first:Readiness. When you are “ready,” how do you feel? Prepared. You actually expect and welcome surprises. You’ve taken the courses, practiced the lessons, experienced enough to know there’s always more to learn. You’re rarin’ to go. It doesn’t matter if we’re talking about being ready for a night on the town, a day on the greens or your most important IR road show to date. We all know when we are ready, or at least ready enough to give it our best shot.

Today, we’re talking about a specifictype of “readiness” – global readiness. Do we mean you need to be ready for anything, anywhere at anytime? That you’re an expert in everything from social networking to low-latency trading programs? Only if that’s your business. But you do need to be more prepared for the challenges of a global business environment than you have ever been. We all do. We need to consider the characteristics, attitudes and skills necessary to function well in a “global” or international team.

So why don’t we call this “international readiness?” Several reasons. For one, “international” refers to countries and is limited to cross border relations and transactions. “Global” goes well beyond that. Your diverse team of 10 today requires more global skills than large corporations needed in decades past.

What “global skills” are we referring to? Beginning in 2000, and having already worked with over 1,000 MBA candidates, business owners and managers, my company began to develop a prototype Global Readiness Profile. The request came from a multinational pharmaceutical firm which was having difficulty choosing Japanese candidates for short and long-term overseas assignments. Together we identified 25 key (and now customizable) “elements of Global Readiness.”

Here’s how it works: after completing the Global Readiness Profile (GRP), the candidate receives an accurate snapshot of where they score on these 25 key elements,with both qualitative and quantitative results. We add value through an in-depth review of the profile together with the GRP candidates, helping them develop personal “Global Readiness Improvement Plans.”

I’d like to share with you how we go about printing the most accurate snapshot, one that encourages those who take the GRP to take action and Get a GRIP!

First, the GRP uses six human evaluators who, taken as a whole, should comprise the most trustworthy team you can find. Here they are:

1. YOU
If you are the leader of a company or team that is implementing the GRP, then you can tailor the GRP to your current needs. For example, control who takes the GRP, which elements you want to emphasize, de-emphasize or modify, and how the GRP will be used.

2. THE GRP CANDIDATE
One-third of GRP is direct self-assessment and over half is scoring of elements the candidate can confirm for him/herself through video review. The merits of self-assessment (at least with this tool) are huge. When someone sees that their own evaluation suggests they need work on a certain element, they’re more likely to put in the time and effort to improve.

3. COLLEAGUES
Who else can better judge, for example, the interpersonal skills or technical ability of someone than their direct co-workers? And the GRP’s methodology protects you and your candidates from typical abuses and pitfalls of so many so-called 360-degree evaluations.

4-6. GRP GUIDES
The business communication portion (the lower portion of the globe described later, from achievements down around through to negotiations) is scored by three AMT Group certified evaluators, from three continents (Asia, Europe and America). When their opinions differ (which does occur on occasion), you will know why, and you will see what the next best step to take is, depending on the particular “global environment” the candidate faces, either now or in the future.

This chart shows 25 elements that define core skills for Global Readiness. The closer to score to the end of the globe, the better is your GRP.

There are a couple of reasons for this. Most of you reading this article are based in Tokyo, and for you, the center of the world is where you are. While we’re using the GRP for clients in several countries, our primary focus for now is on helping those of us here to expand our influence and leadership to a wider audience. Hence, the higher scores on the profile take you further out from Japan.

(You receive your individual snapshot and you are eligible to receive two customized Guided G.R.I.P. sessions focusing on your most pertinent areas of improvement. This total package costs about ¥90,000 per candidate).

AUTOMAGIC IMPROVEMENT
So the GRP is all about “readiness.” The profile itself helps you identify who’s ready for action, and what they need to do to be “readier.” The stories that come from clients who’ve taken it convince me of its value. One international banker said, “My self image was entirely different to what I saw through this program. Now I know what I need to change.” And even better, anyone who’s that ready for change will change.

Every single GRP candidate has been able to identify the behaviors that enhance – and those that inhibit – positive interactions and influence outcomes. The increase in self-awareness by itself leads to improvement.

NON-VERBAL BLINDSPOTS
In future issues of Andrew’s Ax (and in the book), I will go into greater detail on each of the 25 elements. For now, let’s take a look at one element in particular.

Andrew Silberman is chair of the ACCJ’s Membership Relations committee, president & chief enthusiast for AMT Group (www.amt-group.com) as well as the lead vocalist & rhythm guitar for the roots rock band Moonshots (www.moonshots.net). Direct comments or questions to him by e-mail: Andrew@amt-group.com

Note that under interviews and presentations, candidates are scored on both “responses” and “delivery.” One reader asked us if the GRP covers “non verbal communication,” and indeed it does. In fact, non-verbal communication is a blind-spot for many candidates. By “non-verbal,” we mean anything beyond the words that are spoken. If “verbal” is the words that are said or written, then “visual” (how you look) and “vocal” (how you sound) make up the universe of “non-verbal” communication. (Albert Mehrabian demonstrated that in terms of likability and impact, 93% is generated by non-verbal cues.)

With so many cultures in the world, is there a “global” non-verbal communication that is more or less effective? When describing impact on global teams, yes there is. Can you tell if someone is positive, confident and energetic? Sure, even though there are cultural nuances. Thais and Vietnamese tend to smile more than others, and for some different reasons than people from
other countries. Japanese in particular and Asians in general tend to make less eye contact than westerners. But let me put it this way: I’ve yet to find the culture where slumped shoulders, a drooped head and heavy sighs signaled to others, “Let’s do it!”

How important is all this? Last December my right leg suffered three minor, but none-the-less painful injuries in just 2 days. I told a sensei who said there’s meaning to be found. “Just like with everything else, it’s that word that starts with A, ends with S…” (after pausing a beat so I first conjured the insult I knew he was thinking of) “and has a lot of other letters in between. Yes, it’s all about Awareness.”

Every improvement starts with awareness and a bit of dissatisfaction with the status quo. I’m sure your global readiness is making the cut so far or you wouldn’t be reading this. But every athlete knows that with a new season, the coach again goes through and chooses who’ll be playing on the team. Some make the cut and others get cut from the team. Next season is always right around the corner and the coaches are making their lists. Make sure you keep making the cut!

A public relations representative for McDonald’s Japan Co. told the Mainichi Shimbun that: “Without a mandatory retirement age, the motivation to nurture younger generations of workers seemed to fade among employees, with the passing down of work know-how and information being put on the back burner.”

McDonald’s eliminated mandatory retirement in 2006, after the government raised the age of retirement, in an effort to tap into the experience of veteran employees and to offer performance-based salaries and benefits. However, few employees stayed with the company past the age of 60 and most current employees are young.

The company spokesperson says there were problems with the decision namely, “We saw a trend of employees shirking away from undertaking new challenges” and many began to “think in terms of avoiding making waves and keeping the peace.”

EXCLUSIVE PREDICTIONS
In its final edition of last year, the Nikkei Business magazine published predictions for 2012 from nine Japanese business “experts.” All nine were men and only one was under the age of 50.

Among the comments:

• “measures to deal with the aging population will become an urgent issue for distribution and logistics” (Susumu Iida, age 83)
• “wide propagation of electric vehicles is unlikely” (Masayuki Okano, age 78)
• “deflation will worsen and number of izakaya will fall to one half of the current number” (Seiji Ishii, age 69)
• “US dollar to fall to 60 yen, a huge blow for export-driven businesses” (Motoo Matsuura, age 76)
• “gap between businesses will expand, depending on whether or not they harness the potential of smartphones” (Ichiro Kawanabe, age 41)
• “Ginza night life will also make a comeback” (Takashi Suzuki, age 76)

STOCKING UP
Japanese stocks have been on a steady decline since the bubble years of the 1980s. And the slide has been so precipitous, it cost Japan its place as the world’s second-largest equity market to China in 2008. Now, Japan’s leading exchange, the Tokyo Stock Exchange, has announced plans to buy out its smaller rival, the Osaka Securities Exchange, which would create the world’s second largest exchange behind the NYSE.

In a joint statement, the two companies said the merger will boost Japan’s role as an international financial center and serve as a “step toward the revitalization of the Japanese economy.”

The merger is happening amid increased consolidation involving international rivals and will eliminate duplication at the exchanges, which will be renamed the Japan Exchange Group. TSE President Atsushi Saito will become chief executive officer of the new company while OSE President Michio Yoneda will be its chief operating officer.

The TSE is currently the world’s third largest exchange operator by market capitalization and the merger will bring the total market value of the companies listed on the two exchanges to about 280 trillion yen ($3.67 trillion), placing the new Japan exchange behind only the NYSE in terms of total value.

NO PARTNER, NO PROBLEM
Japan’s population is on a rapid decline and the prospects for a rapid population explosion appear to be getting slimmer. The number of unmarried Japanese men and women without partners continue to grow. According to the National Institute of Population and Social Security Research, the number of unmarried Japanese men without a partner hit a record-high of 61.4 percent last year, up more than 9 percent from the last survey in 2005.

The number of unmarried women with no partner in the same age category – 18 to 34 – also jumped nearly 5 percent to a record high of 49.5 percent.

But most shockingly, nearly half the respondents of both genders say they do not want to date anyone. Most of the respondents say they were willing to get married, but were single because they don’t know how to be in a relationship. More than 86 percent of the men and 89 percent of the women said they want to get married at some point in their lives.

More than 43 percent of men and 53 percent of women asked whether they wanted to get married within a year said “yes,” if they could find someone suitable.

About 10,000 people responded to the survey conducted last June.

Illustration by Louise Rouse

At a science fair in Tokyo, Sony scientists had children mix shredded paper with water and enzymes, powering a small fan. Chisato Kitsukawa, a public relations manager at Sony says “bio batteries are environmentally friendly and have great potential” because they use no metals or harmful chemicals.

However, the technology is a long way from commercial use because of its low power output. Kitsukawa says at the present, the shredded paper process is only strong enough to run digital music players but not powerful enough to replace regular batteries. Sony first unveiled the sugar-battery technology in 2007 and has since reduced the battery’s size.

At the fair, another Sony sugar battery was embedded in a Christmas card, playing music when drops of fruit juice were added to it.

TOYOTA AIMS HIGH
Toyota is aiming high for its 2012 global production target. The company is hoping for a record sales of 8.65 million vehicles this year. That would be the largest output in five years – since the 8.53 million unit total of 2007.

In domestic output, Toyota is aiming to exceed 3 million units. That is the threshold the firm needs to maintain employment and capacity for technological development.

The auto giant set the 2012 production target at 8.9 million but revised it downward in the wake of the global economic downturn and the European debt crisis.

TRAGIC TRAINS
Drunkenness at a Tokyo train station can be annoying and even disturbing for people heading home after work. But now, new statistics show that drinking and riding can also be dangerous.

According to the Ministry of Land, Infrastructure and Transport, 2011 was the worst year ever for people being injured or killed after being hit by trains – with many of the accidents being alcohol-related.

Many of the problems happened in or around Tokyo, and most after 9 p.m. on a Friday night, the peak period for passengers heading home from after-work imbibing. Smartphones and trains are also a dangerous combination; the ministry reports an increase in the number of people falling on the tracks while using their phones or handheld games.

The ministry and rail companies urged people not to climb down onto the tracks to help people who have fallen. Instead, people are asked to press emergency stop buttons located on the platform.

EXPENSIVE PILE-UP
It was something out of the bubble-era excess. Shortly before Christmas, eight Ferraris and a Lamborghini were among the vehicles damaged or destroyed in a massive pile-up in southern Honshu.

Speeding was blamed for the road accident which was believed the most expensive in Japanese history. About 300 million yen worth of luxury cars ended up in a crumpled heap of twisted metal on the Chugoku highway in Yamaguchi Prefecture.

Footage from television coverage showed several racing-red Ferraris spread all over the roadway. About 20 supercars were travelling in convoy on a wet Sunday morning when the driver of the lead car lost control and slid into a guardrail. Drivers behind slammed on their brakes but could not stop in time.

An eyewitness told the TBS network: “A group of cars was doing 140-160 kilometers per hour. One of them spun and they all ended up in this great mess.”

The speed limit on that section of highway was 80 kilometers per hour.

Illustration by Louise Rouse

Chefs require a license to prepare fugu and they do not normally serve parts such as the liver. However, the customer and her husband apparently requested it. Some fugu customers like to experience the thrill of eating forbidden pieces.

In an interview with the Wall Street Journal, head chef Takeshi Yasuge of Fukuji said, “I can’t say anything else except that I am deeply sorry. I am just so sorry. My heart is in chaos.”

Police and health officials are investigating the incident. Yasuge could face a fine or even go to jail for violating the city’s food safety laws.

Michael Alfant
ACCJ President
malfant@accj.or.jp

PROPOSALS TO THE U.S. GOVERNMENT
2. Indicate the timing of the next official communication in all travel warnings and warden messages Consistency and regularity of US Government messaging conveys confidence and can ease apprehension during rapidly changing circumstances. With this in mind, the ACCJ urges the US Government in times of crisis to indicate in travel warnings and warden messages when citizens can expect the next message. Doing this adds certainty and better enables private sector planning and business continuity, even when the situation remains unchanged.

3. Evaluate the style of US Government communications during a disaster
ACCJ members reported difficulty gaining relevant information from US Government travel warnings and warden messages and cited lengthy passages and vague language such as “safe haven” and “an abundance of caution” in communications. In light of modern email, social media, and other information gathering trends, the ACCJ encourages the US Government to review its messaging style and system to ensure that US Government messages are relevant, clear, and concise. In addition, the US Government should consider ways to incorporate information into official US communications that help the American private sector mitigate risk and make sound decisions for their organizations, employees, and families.

4. Educate the American business community on the government’s disaster response plans
The ACCJ urges the US Embassy to institute an ongoing program to educate the American business community on its disaster response plans through annual speaker events with the ACCJ’s Kanto,Chubu, Kansai chapters. These events would introduce US Government emergency procedures and provide the American business community with resources in the event of a disaster. These regular briefings can be facilitated by the Disaster Preparedness Liaison Team.

RECOMMENDATIONS FOR THE ACCJ
March 11 also brought to light areas where the ACCJ can better support members in disaster situations. ACCJ members cited the value of social media as a disaster communication tool and encourage the Chamber to implement the following:

1.Appoint a disaster preparedness and response team from Chamber leaders The ACCJ President should appoint three members of the Board of Governors to serve as the Chamber’s core disaster preparedness and response team. This group would include at least one ACCJ Vice President and the Executive Director. This team would advise the President and comprise the Emergency Response Team to work with the US Embassy on disaster preparedness. In the event of a disaster, these leaders would serve as the Chamber’s emergency response team and would work with the ACCJ secretariat to convey appropriate information to the Chamber membership.

2. Leverage the ACCJ organizational structure to facilitate communication In the event of an emergency,the ACCJ disaster preparedness and response team should facilitate information exchange and communication within the Chamber by reminding leaders that they can leverage the committee structure to share information. If appropriate, committee leaders could convene emergency committee meetings, conference calls or utilize the ACCJ’s social media tools to communicate with committee members. This may be of particular benefit to committees with an industry specific focus and that lack a separate industry organization.

3. Compile and make available information from authoritative sources to Chamber members The Chamber can be a valuable source of information for Chamber members. Consistent with its actions following March 11, the ACCJ should compile and convey credible information for circulation to members via email or posting online. As non-experts, the ACCJ should only make available information compiled from recognized authorities and expert sources. Such information can be helpful for ACCJ member companies reporting to headquarters.

4. Publicize Chamber member contributions In the wake of March 11, many ACCJ members made substantial contributions to disaster relief organizations such as the Japanese Red Cross. In addition to focusing on its own fund-raising efforts, the ACCJ should compile an online list describing the significant contributions of member companies. Doing so would not detract from Chamber initiatives but instead would highlight the good work of American companies as contributing members of the local community.

Mike DeJong
ACCJ Journal, Editor-in-Chief
mike@accjjournal.com

Business professionals are often looking to add to their knowledge-base and qualifications, so our article on foreign university programs in Japan (“Higher Learning,” page 22) is a must-read. In the past, if you wanted to do a Western-style BA or graduate degree, you would have had to leave Japan. Not so any more. Today, there are nearly a half dozen Western universities offering programs here – some of which offer degrees as high as a Doctorate.

Of course, undergrad programs remain the bread-and-butter for most universities, giving ex-pat parents the option of keeping their university-aged children closer to home. No longer do you need to send Bobby or Betty back to the States to earn a degree. They can get a Western-style education in Japan and, best of all, it might even be less expensive than sending them overseas.

Foreign universities in Japan are not only for foreign students either;many Japanese are also taking advantage of the international programs offered here. For example, Masanori Sugano (profiled in our article) was a student of mine at the University of Maryland University College Asia [Ed note: I have taught Speech Communications and Media Studies at UMUC].

Sugano-san is a mid-career government employee in Tokyo who chose an American university when he decided to return to school several years ago. Sugano-san wanted to see what a Western education was like and, as our article shows, he enjoyed the experience.

On a similar theme, students who want to study abroad can continue to do so through the fabulous Fulbright Scholarship. Each year, Fulbright sends 50 to 60 students overseas to gain valuable international experience. The Fulbright program’s director in Japan, Dr. David Satterwhite, tells us more about the benefits of studying abroad on page 36.

Also, as any executive knows, education is not limited to the classroom. We are always learning on the job too. With this in mind, Tish Robinson has details on developing leadership and problem-solving skills in her article on page 32 (“Two Birds, One Stone”).

Finally, the APCAC Summit is now only a month away. This landmark event brings together 300 Chamber officials and diplomats from across the Asia-Pacific Region. It’s a chance to develop policy, advocate ideas and share best practices for promoting American businesses in the region. This month, we get a preview of the Summit from the ACCJ’S APCAC Task Force co-chairs Tom Clark and Lawrence Greenwood (“One Summit, One Voice”) on page 28. I know you will enjoy reading their comments. Personally, I look forward to meeting many of you at APCAC, which should be quite an event. I know that APCAC will be a great opportunity to put Tokyo and the ACCJ front and center in people’s minds as well.

Once again, thank you for your comments and suggestions concerning the Journal, and keep those ideas coming in. Your contributions are important to us as we try to put out the best magazine possible to serve your interests and needs.

Let’s reach for the top in 2012!

“I needed to make a presentation in English and I was interested in learning a foreign language among its native speakers,” says Sugano. “Basically the environment that you are immersed in is good in terms of learning English and (Western) culture while reflecting on your language and its culture.”

The prospect of studying at a foreign university can be intimidating for Japanese students unaccustomed to Western-style learning. Even Sugano, who speaks English fluently, admits to feeling “a little awkward in class” at first. He says the biggest difference is the way that Western students are called upon to participate and not merely sit back and take notes.

“Most professors at an American university seemed to encourage students to ask a lot of questions, while (Japanese) counterparts didn’t seem to encourage students to ask a lot of questions,” says Sugano.

“The teaching style at an American university is a two-way street. Students sometimes openly express their doubts to professors,” he says, adding it is not considered a sign of disrespect.

“Students at a Japanese university rarely ask a question (of) their professors, much less openly express doubts to them,” which can be construed as demeaning to the professors.

Sugano’s situation as an Easterner in a Western classroom is not uncommon. In fact, dozens of Japanese students have signed up for courses at foreign universities in Japan over the past few years. Schools such as UMUC, the University of Phoenix, Temple University, Central Texas College, McGill University and Lakeland College offer various undergraduate and graduate programs in the Tokyo area.

Temple University, Japan Campus
Temple University, Japan Campus bills itself the oldest and largest foreign university in Japan. Established in 1982, TUJ’s downtown campus offers ten core undergraduate programs along with graduate degrees in law, business and education. According to its website, TUJ is home to about 3,300 students from more than 60 countries including Japan, the US, the Middle East and Europe. Temple also offers corporate and continuing education classes at its central-Tokyo based campus.

“We believe that the TUJ educational experience is unique in Japan,” says Masami Nakagawa, Temple Japan’s Chief Communications Officer. “We are the only true university (i.e. undergraduate and graduate programs) that teaches all of its courses in English and that provides a truly international liberal arts education which nurtures the kind of qualities required by today’s multi-national enterprises.”

“All programs (except for the LLM) can be completed at TUJ so that graduates can earn well-recognized American degrees without having to leave Japan.”

TUJ was the first educational institution in Japan to be officially recognized as a Foreign University by Japan’s Ministry of Education. This status allows TUJ to sponsor student visas, enabling international students to attend the university either on a short-term (one or two semesters) or a longterm basis (full four-year program).

Temple University President Ann Hart congratulating a 2011 graduate

“One of the most important reasons for students to come here is that our placement rate is typically about 90% as Japanese and multinational corporations value the liberal arts-based intellectual skills, such as critical thinking, and the communication skills of our graduates,” says Nakagawa.

Studying at a foreign university in Japan is not cheap. However, taking courses in Japan can actually be less expensive than studying Stateside. At Temple, a full-time undergraduate pays ¥730,700 in tuition per semester, or about $19,200 per year. The annual full-time tuition at the main Temple campus in the US is $23,032. That of course does not include living expenses and other costs associated with studying in America. On the downside, TUJ is not considered a Japanese university so it does not benefit from tax exemptions or subsidies from the Japanese government. However, Nakagawa says TUJ has been “working to address these issues to ensure fair competition through various channels.”

Along with undergraduate programs, TUJ also offers MBAs, LLMs, Masters and Doctorate degrees in TESOL in Tokyo.

“These advanced degree programs each serve specific needs of the respective markets,” says Nakagawa. “(The) TESOL program especially, as TUJ’s oldest program, enjoys a high reputation among English teachers in Japan.”

Lakeland College, Japan Campus
Lakeland College is another US-based school that offers degree programs to Japanese and non-Japanese students in Tokyo. Affiliated with the home campus in Wisconsin, Lakeland began offering classes in Japan in the early 1990s. Today, the school boasts graduates at more than 60 universities and colleges in the US, Canada, the UK, France, Switzerland and Australia.

Lakeland’s Associate of Arts undergraduate degree program helps students make the transition to a foreign university from high school in Japan. A student takes courses for two years in Japan and then finishes with two years at the Wisconsin campus or another foreign university.

Lakeland College student La Roy Cotton

“For many students, taking advantage of our two-plus-two program allows them to enter competitive universities that they may not have been able to enter as high school leavers.”

The Lakeland program, like the other foreign universities in Tokyo, helps ex-pat parents keep their children closer to home – at least for the first two years of university, which can be the most difficult. The transition from high school to university does not have to be done far away from family, friends and other support. Also, like Temple, doing two years of university in Japan saves money.

“Parents can save money on air fares, housing and higher tuitions fees by having their children studying in Japan for two years before going to the States or elsewhere for the final two years,” says Brender.

“Since the Japanese Ministry of Education also recognizes us, the students can also stay in Japan and transfer to a Japanese university if they wish. Our college is conveniently located in Shinjuku, so it is an easy commute for most students no matter where they reside in the greater Tokyo area.”

Lakeland College students hard at work

“As part of our community outreach program, we offer a monthly free lecture,” says Brender. “These tend to be eclectic.

Among the lectures we have offered recently are Tokyo Architecture in the 21st Century, the History of Pizza in Japan, International Negotiating Techniques, the Future of North and South Korea, the abduction issue of children by Japanese spouses.”

“We even had a lecture by an 82-year old former kamikaze pilot.”

Like most universities in Japan, Lakeland College is dealing with the ‘demographic issue.’ Every year, there are fewer 18 year-olds enrolling in university or college programs, so the pool of prospective students is shrinking and the competition is fierce. But Brender says Lakeland is facing this challenge by offering students something different: “if the counselors would look more closely they would see that we serve a niche market from which some of their students could greatly benefit.”

“We had one student who graduated from St. Mary’s High School. His parents sent him to the States to study. He was of mixed heritage (American and Japanese) and felt lost there and failed most of his subjects. He returned to Japan and enrolled at our school where he excelled. He ended up with the second highest GPA when he graduated with his AA degree. He is now enrolled at NYU and doing well.”

McGill University, Japan
Executives are often looking to upgrade their qualifications, especially with an MBA. However, many professional people are not able to find time for classes during their busy work-week. Montreal’s McGill University has a solution: a weekend MBA program. The prestigious Canadian university offers a unique program in Japan where students can earn a full MBA by attending classes on Saturday and Sunday. Best of all, again, the McGill program is significantly less expensive than similar programs.

“We charge 4,800,000 yen for the whole program,” says Philip O’Neill, Director of the McGill MBA Japan Program. “That is about 94,000 yen per credit.”

“It includes all the materials, coffee, books, access to materials, etc. At the moment, this is quite a bit less than the cost at the home campus.”

O’Neill says the strength of the McGill program is that it brings in professors from its Canadian campus. McGill was recently named the 17th best university in the world in the QS World University Rankings, meaning it is not only the top-rated university in Canada, but one of the best universities in the world (Tokyo University ranked 25th).

“Our professors are at the forefront of research and teaching in their areas,” says O’Neill. “So, we think this is important for the students’ learning experience.”

“We also have very stringent entrance requirements for our students, because they need to be able to perform at a very high level, and very intensively, during our program. Our program really caters to students who want to have a very intense and rigorous program.”

O’Neill says McGill’s Japan MBA program has proven popular with not only Japanese, but students from all over the world.

“Historically, about 40 or 45% of (our) students are Japanese. We also have students from Mainland China, Hong Kong, Taiwan, Korea, Canada, the US, Europe, South American and sometimes from Africa.”

“This is probably one of the most diverse groups of students anywhere.”

University of Maryland University College Asia
The University of Maryland University College has been offering programs in Asia for more than 60 years. Operating under a US Department of Defense contract, UMUC appeals mainly to members of the US military who want to complete their education on Uncle Sam’s dime. However, while soldiers, sailors and airmen remain UMUC’S bread and butter, the university has started reaching out to civilians.

“UMUC Asia’s mission is to offer academic programs to US military communities throughout Asia and the Pacific,” says Ted Loya, Regional Enrollment Manager for UMUC Asia. “So our students are mainly military students, with a small percentage of host-country students, and an even smaller percentage of third-country students.”

UMUC offers 17 undergraduate degree programs and an advanced online learning program, where students can earn degrees without ever attending a face-to-face class. A full-time UMUC student can earn an Associate’s Degree in two years, just like at a college in the US.

There is one major consideration with UMUC: its campuses are located on military bases in Japan, Korea, and Europe, where security restrictions are enforced. Students from countries on less-than-friendly terms with America are not allowed on the bases.

“UMUC Asia is a guest of the military, so it is required to adhere to local military rules and regulations concerning off-base guests,” says Loya. “In this regard, the different services (Army, Navy, Air Force, Marine Corps) have different policies, so there will be times when a student will not be able to attend UMUC classes at one base, but will be able to attend classes at another base. Basically, restrictions apply on a case-by-case basis.”

In an effort to reach out to Japanese students, UMUC offers an ESL “bridge” program which is designed to help Japanese and other non-native English speakers improve their oral and written English skills, in order to transition into the American educational system. Japanese students need an official certificate of English proficiency such as TOEFL or EIKEN before being admitted into UMUC’S Bridge Program. Students who went to an American high school or college can be admitted without a proficiency test.

Dr. Alan Brender, Lakeland College; Philip O'Neill, McGill Japan; Dr. Bruce Stronach, Temple University Japan; Ted Loya, UMUC Asia

“The idea of keeping kids ‘closer to the nest’ is certainly a selling point,” says UMUC’s Ted Loya. “The uneven American economy has forced a lot of teenagers, and their parents, to reconsider stateside college plans, and once they find out about UMUC’s Asian Division and its competitive tuition rates, they realize that it makes financial sense to begin classes in Asia.”

Best of all, foreign university programs allow Japanese and non-Japanese students the chance to mix and learn together, exchanging ideas and philosophies. Masanori Sugano says that is why he would recommend a foreign university to a Japanese student – it is a great way to foster cultural understanding.

“I definitely recommend an American university to other Japanese students,” he says.

“It is a good option for them, because they recognize their own identity anew as well as improve their English. Moreover, they could play a key role in reducing friction between the US and Japan through mingling with American students.”

Illustration by Louise Rouse

Michael Marquardt, President of the World Institute of Action Learning, shared the concept with an ACCJ audience. The event was hosted by the ACCJ CSR Committee led by Charles McJilton, Elizabeth Handover, and Ako Serizawa, and the HRM Committee led by Tish Robinson, Taka Miyawaki, Ginger Griggs, and Keiko Suzuki. (Elizabeth Handover and Fumiyo Seimiya were keys to organizing the event).

This following article will give you a taste of action learning – in action. Briefly, action learning offers a way to solve the most complex problems, and helps one learn relationship skills, teamwork and how to start changing corporate culture. Here in Japan, many large corporations now use action learning to develop leadership among employees. They also use action learning to develop their culture based on continuous improvement in quality and relationships. One reason that action learning is so highly regarded is that it does many things well and does them cheaply.

Action learning stems from the belief that you cannot become a great leader or develop leadership skills except when you are working on real problems with real people in real time. You cannot be a leader if you don’t know how to work in teams, nor can you get a team to work well together. You cannot solve a problem in isolation and apply it to an organization, either.

Marquardt sets out six interactive components of action learning: the urgency of the problem, the diversity of the group, the questioning and reflection process, the commitment to taking action, the commitment to learning and the facilitator.

1. WORKING ON AN URGENT PROBLEM
First, you cannot get learning or action of any importance unless there is urgency. So action learning starts with a problem – an urgent problem. The more complex the problem, the more learning, creativity, and leadership skills are needed and the more team skills have to develop. Also, the more systems you have to understand. A problem is an opportunity – a positive thing. It provides the challenge and overcoming the challenge is where learning takes place. Learning only comes from that effort.

Illustrating the power of urgency, Marquardt gives an example: the need for the UN environmental program to build an energy-neutral headquarters in Nairobi in twelve months. An action learning group was assembled in Nairobi that included senior people from Microsoft, UN officals and a learning coach. The group met to develop initial strategies and formulated a plan. Twelve months later, they came up with something they didn’t think was possible – a solution to an urgent problem.

2. HAVING A DIVERSE GROUP
The second component of action learning is that you need a large and diverse group of people to get the best ideas, the greatest synergy and the maximum creativity. The more complex and difficult a problem is, the less valuable a single person’s expertise becomes. We know that. Research has shown that a difficult problem cannot be solved by an individual. It is too complex. One person cannot see the whole picture. Having different perspectives and seeing a problem from new angles is what helps us come up with a strategy.

In an action learning group, you want between four and eight members. You need four to get enough synergy and energy but you don’t want more than eight because it is too complex. We have all been in groups of ten or twelve or fifteen people, or twenty-five people, for political reasons. Have any of you been in a successful problem-solving group of twelve or fifteen people? It never happens. It is not because people are not trying but that problems are too complex. What is the difference between eight people interacting and nine people interacting? Thousands more interactions. For action learning to work, there needs to be time and space for everybody to be fully engaged in the learning, as well as in the decision making. So the group cannot be too big.

Also, it is important that everyone is present at every meeting. Whenever we have had poor group performance, it is often because somebody doesn’t show up. Also, ideally, we want diversity in a group. If you have a marketing problem and you only use marketing people, you get a slight improvement. If you want a great strategy, you need to get other people, maybe customers, engineers, or other outsiders, because you want to get questions that are not asked by the experts. Most organizations, or people, don’t want anyone with different ways of thinking in the group because they think it can cause too much conflict or that people will push their agendas. Action learning deliberately seeks people with different perspectives.

Some organizations like IBM use action learning to break down silos. One way to break down a silo is to put together people who don’t normally work together on a project important to everyone involved. When people from different departments need each other to be successful, silos start to disappear.

Some action learning groups deliberately seek to include someone who knows nothing about the project or the organization. This ensures that there are people involved who aren’t afraid of asking dumb questions. A lot of times when everyone is an expert, they are afraid to ask stupid questions. Remember the story of the Titanic? Its engineers all secretly doubted that the ship would stay afloat during a crisis. No one had the courage to ask what if it hit an iceberg. They were afraid they would be ridiculed by their colleagues because they might not have known something that everyone else did. What they needed was freshness in perspective, and the ability to ask essential and sometimes “stupid” questions.

Illustration by Louise Rouse

3. UNDERSTANDING THE IMPORTANCE OF ASKING QUESTIONS
The third component of action learning is the way people work together. Here, the essence of action learning is that group members focus on questions. Typically when we have a problem, we each have an idea how to solve it. We think we have a solution that is going to work. We spend our energy trying to convince others how our solution will solve the problem. In contrast, action learning asks us to put our energy into asking questions to solicit everyone’s ideas.

So I ask what is your idea? What is your experience? Do you have any ideas on this? If I give you an opportunity to hear your ideas, what are you more likely to do with me? You’ll ask me back – well what do you think? Then, the four to eight people, their ideas and their background perspectives all get heard. Usually, when a group comes together faced with a difficult or complex problem, no one has the full answer. It is usually something that emerges from the group. They work and they listen to each other. In action learning, the focus is on asking each other questions – then hearing and reflecting.

Questions are so powerful, they generate creativity in groups, as well as cohesiveness. They cause people to be better focused and to develop leadership skills. Asking questions is the central guideline because it provides the most powerful, positive group norm in the world. Statements can be made only in response to questions. That is not negotiable in action learning where anybody can ask a question at any time. A great question might generate an hour of responses. Or a truly great question might get reflection. But statements can be made only in response to questions.

Asking questions not only gets us good information, it also changes relationships, since we all like people who ask us questions. Moreover, if you are in a group and you hate each other, you are not going to get a great idea. There’s a lot of research to show that norms and group culture determine the group’s performance. Ask questions and the norm transforms a group in front of your eyes. At first group members may fumble because they are not sure how to proceed focusing on questions. But within twenty or thirty minutes, they will start to get it. Questions are the way we learn.

4. TAKING ACTION AT THE END OF EVERY MEETING
The fourth component of action learning is that the group always sets an action to take at the end of every session. The group might meet once a day for four days and on the fourth day the executive comes waiting for the strategies. Or, they might meet three hours a week for six weeks, or even over the course of three or six months. Whatever the timeline, the group knows when it comes together that the problem has to be solved in a certain amount of time. By the end of every session they have actions they are going to take between the session and the next time they meet. Never end a session without actions to be taken. In action learning, unless there is action there is no learning. If you can’t apply the learning it is not really learning. You learn from every action, and in every learning you try to find a way to apply the results.

5. FOCUSING ON LEARNING AS WELL AS SOLVING PROBLEMS
The fifth component of action learning is that when a group comes together it is formed as soon as it begins, and you are in that group for two purposes. First, you are there to come up with some breakthrough strategies on an important corporate problem. And second, you are there to learn. Each of you is an important member of the organization. You have developed your leadership skills. Whether you are high potential, mid-level or even a secretary, you have to have leadership skills. Each of you is there to develop those skills. This changes the dynamics very quickly; because if we are in a group to learn as well as to solve problems, it changes everybody’s dynamics.

Often one or two members of a group think they know the answers; they can be arrogant, pushy and attack or undermine other members in various ways. But in action learning, as soon as we begin, each person identifies the leadership skill that they are going to practice in the session. At the end of the session, each person is asked how they did in their leadership skill. Then other members of the group are asked to give them examples of how they did in their leadership skills. People who are not normally group members become good group members because they respond to expectations.

Action learning creates an atmosphere which predisposes people towards positive, creative and new kinds of behavior. In one situation, the group had been working together for fifteen years, and their action learning group was the first time in which they worked well together. They got a lot of results. It was fun! That is the power of the culture created by focusing on learning.

6. EMPLOYING A FACILITATOR
The sixth component of action learning is that there is a facilitator responsible for the learning, someone responsible for improving the performance of the group through learning. This person manages the time to ensure that there is both action and learning at the end of every session.

All of us are familiar with the ‘Tyranny of the Urgent’. If you are confronted with something urgent and something that is important, what do you do? You always do the urgent. When we are working on a complex problem that urgency will take the entire meeting time and there won’t be any time left for learning. The facilitator has the power to ensure that there is learning and that there is responsibility for it.

When the facilitator leans forward, people stop talking and they listen to the facilitator’s questions. The facilitator only asks questions that help improve the performance of the group and develop its leadership skills. In the final five or ten minutes, the facilitator ensures we develop our leadership skills and how we can work better as a team.

The facilitator manages the group’s time. If the group has two hours to meet, the facilitator lets the group know they’ve got another half hour before he’ll be asking everyone if they are sure of their actions between now and the next session. In the last ten or fifteen minutes the facilitator will ask what have they done here that they can learn and apply to their work, life and people outside of this session.

A skilled coach will enable a group to make great progress in a short period of time, especially in situations where there might be a conflict or the group is stuck. However, if a skilled coach is not available, someone could be appointed from within the organization or the coach could rotate among the group. The important thing is that before the group begins working on the action, they are clear who the coach is for the session.

That coach/facilitator has special power, responsibility and accountability to lean forward if they see an opportunity to help improve the performance of the group. The group won’t resent this. Being an action learning coach is a great way to develop yourself and your personal skills as a leader.

IN SUMMARY
In summary then, action learning occurs when groups learn in action. Every time team members make a decision, they are interacting with each other and they become smarter. So everyone develops their leadership skills while they are working on the problem. They also learn how to work as a team and solve problems together. You cannot solve those problems without working well together and integrating ideas with each other in a certain way. So it’s a way to solve the most complex problems, learn relationship skills, learn how to work as a team, and begin to change the corporate culture. In this way, action learning kills two birds with one stone: realtime problem solving and concurrent leadership development.

(Tish Robinson is a professor of Organizational Behavior and Systems Thinking at Hitotsubashi University. She co-chairs the ACCJ HR Committee along with Taka Miyawaki).

Giving a new meaning to the word “metrosexual,” the Hankyu Men’s store is located in Yurakucho, adjacent to the glitzy Ginza shopping district. With a range of over 350 brands that reads like an A-Z of global fashion, the store comprises nine levels devoted to super-premium apparel as well as male beauty and grooming.

Dominic Carter is the President of Carter Associates, a Tokyo-based global research company. He is also a former chair of the ACCJ Marketing Programs Committee.

Until now, demand for luxury branded goods in Japan has been based on the strong cultural need to signify membership of a “respectable” group in society. There is such a strong structural component to demand for luxury in Japan that is has led some to name it (for now at least) the world’s only mass-luxury market.

Nevertheless, in recent years famous foreign brands have taken a hit due mainly to the stagnant economy. Consumers have tended to concentrate their investment in luxury on fewer, more expensive items (often in leather) or in experiences such as Michelin restaurants or day spas. Especially for apparel, the market has been embracing cheaper brands such as Uniqlo and H&M, mixing brands “up and down.”

Luxury buyers, be they male or female, have become more selective and more empowered. The Internet has also given the savvy Japanese buyer access to a wide range of luxury goods at prices that cannot be met by traditional retailers. The proliferation of goods on the Internet is just one more nail in the coffin of the traditional department store format, which has been in decline for twenty years.

However, Hankyu is clearly not taking the fight lying down. The company has shown it still has the willingness to invest big in the department store format.

“In many ways, what they have done with Hankyu Men’s is a return to what department stores in Japan used to be,” says Nicole Fall, owner of trends and innovation agency 5 by 50. “They are creating a holistic experience where men can be challenged and excited. They are putting the fun back into shopping.”

The new Hankyu store throws down the gauntlet to specialty apparel upstarts such as H&M and Forever 21 that have invaded Ginza in recent years, challenging them by creating a uniquely enjoyable and rarefied shopper experience. While the fast-fashion chains have taken a value-for money seeking market by storm, Hankyu evidently believes there is no substitute in Japan for “real” luxury in terms of emotional satisfaction.

But why has Hankyu chosen to put the “red ocean” of women’s fashion in second place and throw its lot in with men? While the phenomenon of the metrosexual has only recently been celebrated in western countries, influenced by popular magazines such as “Leon,” urban Japanese males increasingly are more than willing to spend significant amounts on grooming and fashion. For young Japanese men, appearing overly “put together” has never risked the image of their masculinity, so there is great value in appealing to their vanity.

Indeed, the male fashion market appears underserved and we could be at the start of a new mega-trend of male fashion, grooming and lifestyle. According to Roy Larke, Editor of Japan Consuming, “The stereotypical salaryman in a bad suit? Those days are over. Men who are young and not so young want to dress well. Even in the context of a shrinking fashion market overall, men still face a dearth of shopping options that cater to their needs.”

Demographics also plays an important role in understanding the decision to open a men’s only house of luxury. According to Fall, “Societal structures and values are changing in Japan. By 2030, perhaps a third of men will remain single. Many men in their 30’s do not have a wife shopping with them, and there is no need to create stores that target everyone in the family.”

So, can we expect Hankyu Men’s to succeed? Certainly, they have made a huge investment in catering to an underserved group. They have planted their flag in the super-premium space, differentiating themselves not only from other department stores but from other retail formats.

Larke offers an interesting perspective on their strategic options, “They could have got it wrong with such a high-end offering if there’s a further downturn in the economy, but what else could they have done to generate the same impact? They still have the flexibility to adapt by moving downmarket if they need to. If they had targeted the mid-range, it certainly would have been hard for them to move up. As it stands, Hankyu has rightly gone for a really unique market position.”

Perhaps Hankyu’s strategy is inspired:create an aspirational destination for a huge, underserved segment, with the flexibility to move the format over time into a wider market. Certainly they deserve credit for continuing to invest and innovate their business and we should wish them the best of luck.

Mike DeJong
ACCJ Journal, Editor-in-Chief
mike@accjjournal.com

Greetings everyone and Happy New Year! I hope all of you had a joyous and relaxing holiday season spent with family and friends. We work hard all year to build successful companies and careers, but spending quality time away from the office is important too. It gives us time to recharge the batteries and refocus for the coming year. There is no doubt in my mind that 2012 will an exciting year for the ACCJ and for the Journal.

In March, our Chamber plays host to the APCAC summit, an annual conference that brings together senior business executives and high-level US Embassy officials from across the Asia Pacific Region. This two-day event is an exceptional affair, allowing us to network with colleagues, share ideas and discuss major issues involving business, trade and investment across the Asia-Pacific Region. The APCAC Summit will be featured prominently in next month’s issue of the Journal. We will examine issues that will be hot topics of debate at the conference, including the Trans-Pacific Partnership (TPP), the soaring yen, and Japan’s looming consumption tax increase. Economic issues and earthquake reconstruction efforts should also be on the agenda.

This month, we honor Rakuten’s Hiroshi Mikitani as the ACCJ’s Person of the Year (“Rebel With a Cause,” page 22) for 2011. Mikitani continues to carve his own path towards success in the business world, and his forward-thinking and innovative ideas are an example for all of us heading into a new year. Certainly, after the events of last year, we could use some inspiration.

Also this month, we introduce an interesting and exciting new direction for our magazine. Starting with this issue, each edition of the ACCJ Journalwill have a theme, grouping together articles, advertorials and advertising features around a common thread.

This month our theme is health care. That means you will read some interesting articles about exciting and groundbreaking developments in the field; some of which involve the ACCJ itself taking the lead. For example, on page 28 (“On-Call for an Ailing Economy”), you can read about the ACCJ Healthcare Committee’s recent 80-question national survey on the economic burden of disease in Japan.

This massive study surveyed 5,000 people from all walks of life, discovering that disease costs the Japanese economy roughly 3.3 trillion yen per year in lost productivity. That is certainly a major drag on economic competitiveness and growth. The survey was released in conjunction with the Chamber’s comprehensive White Paper on wellness and health promotion in Japan. This paper contained 27 policy proposals aimed at reducing the economic burden of illness through the promotion of prevention and early detection by the government, health insurance providers and employers.

Another recent study relating to psychological health and wellness examined the role that women play in the Japanese workforce. This report, done by the Center for Work-Life Policy, found reasons that might surprise you as to why many qualified Japanese women “off-ramp” (or drop out) from the workforce at an early age. Our feature (“Off-Ramps & On-Ramps,” page 34) examines the issues and looks at changes that could help to keep more highly qualified and talented people in the workforce to the benefit of the Japanese economy.

Finally, we welcome a new columnist to the Journal this month. Dominic Carter has agreed to take on our Monitor page, which is great news for our readers. Dominic comes to us with a stellar reputation as research analyst, having lived and worked in Japan since the late 1990s. He is an expert in analyzing advertising and marketing trends and it is our pleasure to share his expertise with you on the pages of this magazine.

As I mentioned last month, the ACCJ Journal is your magazine and we want to continue helping you tell your own stories. But we would like your help. In proposing ideas, stories, photos, comments and directions for us to follow, you can help direct the future of this publication. We want you the members of the ACCJ to contribute to the success of your own magazine.

I look forward to your contributions.

Michael Alfant
ACCJ President
malfant@accj.or.jp

Looking back at the unprecedented events of March 11, 2011, and their aftermath, the American Chamber of Commerce in Japan (ACCJ) believes that over the course of the disaster response a particularly good working relationship developed between the ACCJ and the United States Government and US Embassy in Tokyo. In the disaster response context, this relationship – forged under extraordinary circumstances – serves US strategic and operational interests in Japan well and must be carefully tended to going forward. In an effort to build on the progress made and lessons learned, the ACCJ prepared this after-action report to highlight American business concerns and offer proposals to the United States Government and recommendations to the ACCJ for how to enhance disaster preparedness and communication.

BACKGROUND: An unequivocal American response to March 11

The US Government response to the Great East Japan Earthquake and tsunami came immediately and without hesitation. Operation Tomodachi was the single largest humanitarian relief effort in American history and was a natural outgrowth of deep bilateral ties and American affection for the people of Japan. The ACCJ is deeply grateful to the US Government and all the American servicemen, women, and civilians who gave so much to support Japan in its time of need. Indeed, this response was an unequivocal demonstration of the US commitment to the vitality of Japan and the bilateral relationship.

In particular, the ACCJ would like to highlight the efforts of Ambassador John Roos and the US Embassy staff to connect with the Japanese people. Their initiative and support sent a powerful message to the people of Japan that the United States is, in the words of the President, an “unshakeable” ally.

“As allies for half a century, the partnership between Japan and the United States has been the foundation for our security and our prosperity…. It’s allowed us to become two of the world’s largest economies. It has made Japan the second largest trading partner outside of North America… We are bound by our people — our families, our businesses, students and tourists who bring us closer every day.” US President Barack Obama, November 2010

The American business community is a vital pillar of the US-Japan relationship

The ACCJ believes that the American business community is a vital, integral, and inseparable component of the US-Japan strategic relationship, creating value, increasing living standards, and facilitating greater person-to-person exchange between the two countries. As the events following March 11 clearly demonstrate, however, the American business community in Japan, led by the ACCJ, not only represents critical stakeholders in the US-Japan relationship, but is also a vital source of insight and perspective without which US decision-making in times of major crisis in Japan would be incomplete. Accordingly, mechanisms must be created to ensure that clear, effective and durable lines of communication and cooperation be established so that they can be quickly activated in times of crisis.

PROPOSALS TO THE US GOVERNMENT

In an effort to enhance public-private communication, coordination, and cooperation, address the challenges described above and build on collective experience following March 11, the ACCJ proposes the following:

1. Establish a mechanism to facilitate disaster preparedness and response between the US Embassy and the ACCJ

This mechanism would facilitate communication between government decision makers and private sector stakeholders and be comprised of a Disaster Preparedness Team and an Emergency Response Team.

Disaster Preparedness Liaison Team

Comprised of representatives of the US Embassy and designated ACCJ leaders, the Disaster Preparedness Liaison Team would review, and if necessary develop disaster response plans to enhance public-private sector communication, coordination, and cooperation. The team would meet semi-annually and discuss potential emergency issues and scenarios including, but not limited to:
Travel alerts
Safety
Transportation
Energy
Business continuity
Evacuation planning
Communications and
Other issues

This team would issue a short report to the US Ambassador and ACCJ President, copying the Japan Desk Director at the US Department of State, on an annual basis describing the discussions. Regularizing the meetings of the Disaster Preparedness Liaison Team is essential to ensure its functionality in a time of crisis.

Emergency Response Team

Comprised of the relevant Minister Counselors and Embassy staff, ACCJ President and designated ACCJ leaders, the Emergency Response Team would be convened by mutual assent in the event of an emergency. Its purpose would be to share information, create action plans, discuss the context and ramifications of official US Government messaging, align resources as necessary, and determine next steps. Participants would report back to their respective organizations to facilitate information exchange and enable next steps. The Emergency Response Team will meet in person, or by conference call daily, as necessary depending on the situation.

Next month, we will continue with more recommendations for the US Government and the ACCJ.

Illustration by Louise Rouse

Fuji told an audience at the Foreign Correspondents’ Club of Japan in November that “what’s happening in Europe could take place someday in Japan.”

Japan’s public debt is projected to reach 228 percent of GDP in 2013 and major bond raters Moody’s and Standard & Poor’s have already cut Japan’s credit rating, criticizing the country for its seeming inability to cut the debt burden. The government has announced plans to double the consumption tax from 5% by 2015 to pay for growing health and welfare costs. That falls in line with recommendations from the International Monetary Fund.

The government is also saddled with debts for reconstruction and other costs relating to the March 11 earthquake and tsunami.

HANEDA AIRPORT’S INTERNATIONAL BUSINESS TAKES FLIGHT

Immigration Bureau statistics show that from last November to October, the number of passenger arrivals and departures on international flights increased to 6.93 million, just short of the government’s target of 7 million.

Japanese made up most of these travelers, or 5.04 million. Government officials say this shows that a growing number of Japanese are using the city airport for holiday and business travel outside the country. Foreign travelers made up the remainder of the flyers, about 1.89 million. South Koreans were the largest group of foreign visitors who arrived and departed from Haneda, about 37 percent. Taiwanese travelers accounted for 20 percent, Chinese 9 percent and Americans 8 percent.

Arrivals and departures by non permanent residents at Haneda jumped from 160,000 to a whopping 690,000.

JAPANESE BANKS – GOOD AND BAD NUMBERS

The worst of the worldwide banking crisis might be over but the struggles continue for Japan’s second-largest bank.

Mizuho Financial Group posted a 25 percent drop in net profits for the April-September period, the first half of the year. The decline was blamed on reduced profitability in Mizuho’s core banking operations.

Mizuho is also planning a major corporate restructuring, which will see the merger of its retail and corporate banking units. About 3,000 jobs will be cut in the move, which the company aims to complete by the first half of fiscal 2013.

The merger is aimed at eliminating redundancies, cutting expenses and streamlining operations. The banking giant also aims to reduce the number of managers by 20 percent.

Mizuho is also hoping to restore consumer confidence after being hit by a massive computer problem last spring. The glitch led to the shutdown of all the company’s ATMs, causing a massive backlog of business orders and transfers.

The bank’s former president Satoru Nishibori has already taken the fall – resigning from his job in June as part of the restructuring process.

On the other side of the coin, Japan’s biggest bank had a very good first half. Mitsubishi UFJ Financial announced its first half profit nearly doubled, in part because of bond-trading gains and lower credit costs.

The company has also decided to inject some badly needed yen into Mitsubishi UFJ Morgan Stanley Securities. The bank hopes the 20 billion yen share issuance will help the firm which was hit hard by the European debt crisis.

WHISTLEBLOWER VINDICATED

Illustration by Louise Rouse

Woodford was fired shortly after he went public with allegations that the camera and medical equipment firm had not properly accounted for more than $1.3 billion in unusual merger and acquisition payments. These payments were made mostly to firms registered in the Cayman Islands.

Only weeks after Woodford was ousted, company officials admitted using some of those payments to hide massive investment losses dating back to the 1990s. Police, Tokyo District Prosecutors and SEC regulators are all investigating the company.

Former Olympus President and Chairman Tsuyoshi Kikukawa, one-time Executive Vice President Hisashi Mori and Corporate Auditor Hideo Yamada will all be questioned.

British securities officials are also investigating Olympus payments linked to the acquisition of Gyrus, according to London’s Financial Times.

Employees at Olympus are also reporting feelings of shock, anger and betrayal over the company’s public humiliation. In recent interviews, many were moved to tears by the personal sense of betrayal. Olympus is typical of the large Japanese firms that once offered lifelong jobs in return for loyalty and hard work.

Many Olympus employees are now worried about losing their jobs, as the firm might have to consider massive cutbacks or a sell-off of its core business.

Some Olympus employees are even calling for Woodford to be given his old job back.

PAPER CHASE

Illustration by Louise Rouse

The 47-year-old Ikawa is the grandson of the company’s founder. Investigators say he has admitted to using the borrowed money for gambling at casinos. Ikawa apparently said he planned to repay the loans by selling his stock holdings.

Investigators began questioning Ikawa after the company filed a criminal complaint. Daio Paper is Japan’s third largest paper manufacturer. According to a report by the company’s in-house investigators, Ikawa asked seven subsidiaries to remit a total of 10.68 billion yen in 26 installments to various bank accounts between May and September. He has repaid 2.1 billion yen of the total.

Investigators suspect the total sum of borrowings may be even larger. They’re also looking into whether Ikawa knew he was breaking the law when he took out the loans.

GETTING HITCHED

Now, a report in the Wall Street Journal is backing up these claims. Specialty chemicals company Johnson Matthey is reporting robust sales of platinum in Japan in the months following the natural disasters. That contrasts with the opposite trend for the precious metal in Europe.

Platinum is used in the manufacture of engagement and wedding rings. The company says demand for most other commodities has sunk. A Johnson Matthey spokesperson says more Japanese couples are tying the knot, reversing the trend towards fewer marriages Japan has seen in recent years.

Specifically, the company reports that demand for platinum jewelry in Japan reached 320,000 ounces (9.07 million grams) in 2011. In Europe, demand dropped to 165,000 ounces (4.67 million grams). Johnson Matthey also reports that the recycling of old platinum jewelry has increased since the earthquake and tsunami.

Statistics show that the rate of marriage has been falling in Japan since the early 1970s, when it was about 10 for every 1,000 people. As late as 2010, the rate had fallen to 5.5, the second straight year of decline.

COMING OUT SWINGING

Illustration by Louise Rouse

Former General Manager Hidetoshi Kiyotake fired the first shots at a November 11 news conference, taking team Chairman Tsuneo Watanabe to task for involving himself in the selection of a new coach.

With nearly 100 journalists in attendance, Kiyotake read from a prepared statement, accusing Watanabe of making “improper pronouncements, acting to make the legions of Giants fans and even pro baseball itself his own property.”

“This I cannot forgive,” he added. Watanabe shot back the next day, saying, “Mr. Kiyotake’s actions violate the duties of a company director as laid out under company laws.”

One week after his news conference, Kiyotake was fired. But he said he had no regrets. The 85-year-old Watanabe is not only chairman of the baseball club, but also Chairman and Editor-in-Chief of the team’s parent company, The Yomiuri Shimbun Holdings. The 61-year old Kiyotake was once a reporter for the newspaper, so perhaps it’s appropriate that the two wage their battle in the media.

The Giants’ family feud prompted harsh criticism of both men in subsequent media reports. The Yomiuri’s main competitor, the Mainichi Shimbun , chastised the Giants in a November 17 editorial. The Mainichi suggested that Japanese baseball teams must have “true management, personnel and financial independence,” and called upon the NPB commissioner to intervene, saying “the dustup in the Giants head office is pulling down the image of Japanese pro baseball as a whole, and the commissioner needs to call in the two combatants and warn them that their conduct is hurting the sport.”

Meanwhile, Rakuten founder Hiroshi Mikitani weighed in on the sale of the Yokohama Baystars to social gaming site operator DeNA. DeNA operates the Mobage mobile gaming platform of which Mikitani is not a big fan.

He told the Nikkei Shimbun that, “If you look at the impact Mobage is having on children, you will see that it is not desirable” for DeNA to own a baseball team. Mikitani is also chairman of the Tohoku Rakuten Golden Eagles. DeNA reached an agreement to buy the Baystars from TBS (Tokyo Broadcasting System).

SMARTPHONE MANIA CONTINUES

Surprisingly, LED light bulbs jumped to second on the list, perhaps due to the impact of the Great East Japan Earthquake of last year. Additional eco-friendly items also proved popular including hybrid vehicles and energy-saving home appliances.

Other items and social phenomena that proved popular with Japanese consumers last year were products relating to the Tokyo Sky Tree, the World Cup winning Japanese female soccer team, the all-girl pop group AKB48 and child celebrity Mana Ashida.

The Dentsu list was compiled from an internet survey of Japanese consumers done in November of 2011.

Illustration by Louise Rouse

A big thank you to ACCJ members for reading and to the Journal for inviting me to contribute part two of this three-part series based on the newsletter I’ve been sending to friends and clients over the years.

STROKES TO THE FINISH LINE

Last month, we took swings at the Lost Art of Listening and shared both good and bad examples of three “listening levels” offered by author Madelyn Burley-Allen. There are serious gains to be made by improving your team’s listening skills.

But many business leaders here in Japan often face the opposite issue. Their staff listens–or at least appears to listen–and sits quietly on the sidelines. Whether at an internal meeting, visiting a client or prospect, or dialing into a tele- or video-conference, the “contribution from Tokyo” often falls short of typical western expectations.

THE WRONG KIND OF BLOCKING

A lot of us who follow the NFL know that blocking is a key part of any strong offense. Good blocking wins championships. But another kind of block can prevent proactive contributions at meetings. These blocks can be personal or cultural, as anyone who has lived in Japan will attest. You may have concluded that most Japanese do not want to contribute proactively or assertively to discussions. But over the years here, I’ve discovered that what many perceive as a cultural barrier is in reality a lack of meeting management skill–and it’s lacking on both the Japanese and their western colleagues’ side of the table, phone or screen.

Ask a group of people from anywhere in the world (as I have more than 100 times): “What’s the impression of someone who attends a meeting and doesn’t say anything?” You’ll receive a variety of answers: “The person doesn’t understand the topic.” “Not interested.” “Unprepared.” “Sleepy.” Usually it takes more than 10 of these answers before even one is considered “positive” and that’s likely to be something like, “He really wants to know others’ opinions.” The overwhelming majority of impressions of someone who does not speak up at a meeting, throughout the world and including Japan, is negative. So what’s going on? Why are your people not voicing their opinions?

Digging deeper, we find that the real reasons that someone doesn’t speak up in a meeting generally boil down to two:either they fear looking foolish by saying something that isn’t brilliant, or they don’t want to appear rude by interrupting. So they wait patiently and their “turn” never comes. Or when it does, the topic has changed. We disarm both of those potentially legitimate concerns below.

A BIG ISSUE HELPED BY AN ANALOGY: “STROKE!”

This non-contribution is actually a big issue. You want your team to proactively contribute to meetings and discussions, especially if your team is “on stage” with global or regional headquarters. So let a simple analogy help. “Imagine,” you can say, “that this meeting table (or wherever we’re gathered) is a actually a boat and we’re engaged in the sport of rowing (sometimes known as ‘crew’). We’re in a race. Our objective is the finish line. That objective must be clear, whether it’s to generate a new marketing idea, reduce turnover or decide on an off-site location for the team retreat.”

“We’re all in the same boat, as the saying goes. We all want to achieve the objective. You’re here because you’re capable. We’ve all got an oar in our hands. Now, if you’re in this boat, there are three things you can do: 1) sit there and do nothing. That’s where the term ‘dead weight’ comes from; 2) put your oar in the water and stroke—that’s helping us get to the finish line; or 3) push backwards–that’s interrupting, saying too much or being negative. Whatever propels us toward the goal is good; whatever holds us back or takes us off course is bad.”

THREE STROKES TOWARD THE GOAL

People “get” this analogy and yet they still don’t know what to do. “How can I contribute? I don’t have anything brilliant to say.” First, point out that not everything they, their boss or anyone else says is always (if ever) brilliant. It’s enough to be coherent. Once your people confirm that it isn’t merely the brilliant who speak up, they’ll be more likely to give it a shot. Still, you may hear, “OK, but I don’t want to interrupt.” And they’re right. Interrupting someone is rude.

So teach your staff (and yourself, if necessary!) to interject , to add value, to push forward, etc. This is more than a semantic difference. An interruption cuts someone off; it literally stops their (and thus the boat’s) flow. An interjection, on the other hand, contributes to the goal.

Illustration by Louise Rouse

1) COMPLIMENTS

The first interjection, and one of the easiest, is to state the current speaker’s name and add a sincere compliment, “Joe, that’s a great point.” No one (not even a blowhard who loves the sound of his own voice) will take offense to a sincere compliment. And that compliment gives you the floor, from which you can use up to 30 seconds to add value with your point.

The compliment is not rude, and it’s not a trick. After you present your point, if you feel Joe was really onto something, prove you were listening by reminding him (and everyone else) what he was saying and ask him to continue or elaborate.

All of us seek validation. We like to know that our ideas merit consideration. That’s why compliments work so well. Studies at Harvard and Northwestern universities show that even insincere flattery works, in that flattery generates unconscious positive feelings from the “flatteree” toward the “flatterer.”

Good feelings means the person will feel more engaged, and pull harder on his oars to get toward that finish line. Be careful with the flattery, though, since other colleagues in the room or across the screen may see it as an attempt to ingratiate yourself rather than encouraging a positive meeting outcome. So be sincere. Another meaning of “stroke” is compliment, and complimenting someone sincerely can be one of the best strokes you use to power your meeting toward the finish line.

2) QUESTIONS

Many of your staff may not want to break in with a compliment to someone senior. That’s OK. There are plenty of other options, the most common-sense one being, “Ask a question.”

A lot of fakery goes on in meetings–people pretending to know what others are talking about when really they have no clue. Far better to ask a question early on, even something as simple as, “Can you clarify what you meant by…”

Now, if the speaker is a candidate for “On-and-on Anon,” again you can jump in by first stating his or her name. We all hear our name above the buzz of a crowded restaurant or airport (“Mr. Smith, please pick up the white courtesy telephone…”) and we even hear it above the buzz or our own voice.

Asking a good question shows you’re paying attention, you want to know more, and you are “present.”

3) VALIDATION

At a minimum, your staff needs to know that encouraging words and accepting others’ contributions can go a long way toward helping you achieve your meetings’ goals. Many of your staff are not aware of this.

When Tanaka-san steps up to paraphrase what Denise has said, thus clarifying understanding for herself and others, Denise needs to know the proper response. A quick, “Exactly right, Tanaka-san.” Or, “That’s it!” or even, “Yes!” will do. Silence, on the other hand, leaves most everyone feeling awkward. If, after validating, you want to elaborate or clarify, go ahead.

BREVITY: EVERY MEETING’S FRIEND

In a business meeting, remember your best friend “Brevity.” Author Milo O. Frank wrote How to Get Your Point Across in 30 Seconds or Less. If you are or have a chatterbox on your team, pick up a copy of Mr. Frank’s book. Imagine that when you begin to speak, a stoplight has switched from red to green. After 20 seconds or so, it’s yellow. At 30 seconds, red.

STAYING THE COURSE

Andrew Silberman is chair of the ACCJ’s Membership Relations committee, president & chief enthusiast for AMT Group (www.amt-group.com) as well as the lead vocalist & rhythm guitar for the roots rock band Moonshots (www.moonshots.net). Direct comments or questions to him by e-mail: Andrew@amt-group.com

Every time we introduce this concept, invariably someone will say, “Yes, but what if I disagree?” First, point out that they could have said, “Yes, and what if I disagree?” And my answer is simple: by saying “Yes, and…” you are acknowledging the person and their desire to reach the same goal you seek–the finish line. Then you add your idea, which may differ from theirs, and you can seek areas of agreement or compromise and keep the boat going toward the goal. Interrupting, cutting someone off or saying, “Yes, but your idea won’t work because…” will usually lead to one thing: fewer contributions from the person who was cut off. If that’s what you want, perhaps that person should not have been invited to the meeting.

Every good meeting is an exercise in rowing. Set everyone’s sight on the goal, put the oars in the water, and STROKE!

Nobu - Fotolia

Anybody who has spent more than a few days in Tokyo has noticed that there are too many banks, convenience stores, coffee shops and post offices, among other things. That situation was true even before the global financial crisis, but with the economy in the doldrums for several consecutive years now, real estate owners are trying to find creative ways of attracting tenants to properties that are no longer needed, assuming Japan’s bleak demographic outlook.

With 40 of Japan’s 47 prefectures losing population, this is a much more drastic problem in regional cities. In central Tokyo generally speaking, there are still enough people so well-located properties can find new, alternative uses.

Since Japan’s economic bubble burst 20 years ago, the department store industry has been on a steady decline. From a peak in 1991 of 9.3 trillion yen, nationwide department store sales fell 31% to 6.3 trillion yen in 2010. Even Ginza, the most prestigious retail district in Tokyo, has long suffered from a surplus of department stores. Mitsukoshi and Matsuya have been in an extended battle for bragging
rights to the top selling store in Ginza, while Matsuzakaya, Hankyu and Seibu have mostly been afterthoughts. The 2007 opening of Marui in Yurakucho was the beginning of the end for Hankyu and Seibu.

Seibu announced its closing first and, as merely a tenant, it didn’t have to worry about the future use of the famous Yurakucho Mullion building that it occupied. The building’s owners wrapped up an extensive search with the announcement that Lumine, a unit of railway operator JR East, would lease the former Seibu space. Until now, Lumine had operated what are known as “fashion buildings”, or vertical malls attached to major JR train stations, providing a growing source of profit to supplement the stagnant core rail passenger business. JR East’s decision to make an expensive, long-term commitment on a retail building not connected to one of its own stations was a clear statement that the company must diversify from its core business to have any hope of growth.

Hankyu, meanwhile, has tried to preserve its department store business with an entirely different approach. While the closing of ankyu’s previous format was an acknowledgement that it could not compete against Mitsukoshi, Matsuya and Marui for young women’s purse strings, it went in an entirely different direction with the October 2011 re-opening in Yurakucho as a specialty store for men. Although Isetan’s men’s store in Shinjuku has succeeded beyond the industry’s wildest expectations, Hankyu is likely to have a much tougher time in Yurakucho, where it doesn’t have much name recognition or market power compared to its main store in Osaka, where it first tested the men’s store concept.

Having visited both the new Hankyu and Lumine stores recently, it is clear that a great deal of effort and money has been put into both. However, the results are widely divergent, at least to the naked eye. Lumine is packed with hordes of young women, some with their mothers in tow, checking out many low to medium-priced brands not previously available in the Ginza area. The food offerings on the first floor and basements are also jammed, with long lines for popular take-out items.

Seth Sulkin is the President and CEO of Pacifica Capital K.K., a Tokyo-based real estate asset manager specializing in commercial properties.

In the last several years, a number of department stores in prime locations in Tokyo and other major cities have shut down, only to be revived by other companies in formats attracting far more customers, such as electronic stores. Just as Toyota revolutionized lean automobile production with the use of robots, real estate that can be configured easily and quickly with low labor costs is likely to significantly outperform uses such as department stores and luxury hotels that depend more on the finicky whims of consumers and events beyond the owners’ control.

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According to a major study released by the ACCJ, the costs associated with disease and unhealthy lifestyles cost the Japanese economy at least ¥3.3 trillion per year in lost productivity, a major drag on economic competitiveness and growth. For a country that is already ailing, this loss amounts to a prescription for economic ruin.

GROUND-BREAKING STUDY

The ACCJ study, spearheaded by the Chamber’s Healthcare Committee, was released in conjunction with a comprehensive White Paper on healthcare, containing policy proposals to reduce the economic burden of disease. Suggestions include better promotion of screening, prevention and early detection by the government, health insurance providers and employers. Healthcare systems and health policies in Japan have traditionally focused on treatment of medical conditions after they occur, rather than on prevention and early detection. However, since medical experts believe that many forms of infectious and chronic disease can be prevented or detected early in a cost effective manner, the ACCJ believes its proposals could boost productivity and prevent excessive increases in healthcare costs.

The ground-breaking “ACCJ Survey on Prevention, Early Detection and the Economic Burden of Disease in Japan” was an 80-question national survey. It was sent out in November to 5,000 members of the Japanese public; a cross-section of men and women across all regions and age cohorts.

Based on responses, the ¥3.3 trillion nationwide productivity loss was calculated from Absenteeism (the economic value of sick time off), Presenteeism (the economic value of health-related productivity impairment at work) and Disability Loss (the economic value of salary income lost due to changing or quitting jobs). However, this total is considered a conservative loss estimate, because the data did not include the costs of medical treatment, which were outside the scope of the survey.

ECONOMIC BURDEN OF DISEASE IN JAPAN ESTIMATED AT ¥3.3 TRILLION

“The ACCJ Survey is the first comprehensive estimate of the economic costs of disease ever conducted in Japan, and shows that chronic pain and mental health are greater burdens on economic productivity than expected,” according to Bruce Ellsworth, Vice Chair of the ACCJ Healthcare Committee.

“The large economic impact of these chronic diseases does not show up in statistics about mortality rates, but the survey shows that they deserve special attention.”

Health issues were categorized under five headings: pain, mental illness, physical injury or disability, non-infectious chronic disease, and infectious disease or viral infection. The survey found that the two leading causes of Absenteeism and Presenteeism among workers were pain (including chronic back or neck/shoulder pain, migraine, arthritis and other causes of pain) and mental illness, including depression.

TYPE OF HEALTH ISSUES THAT CAUSED RESPONDENTS TO TAKE SICK TIME OF DISABILITY LEAVE

The survey also found that the top five future medical concerns among people in Japan in descending order are cancer, chronic back or neck/shoulder pain, stroke, influenza, and diabetes. The survey indicates that a significant proportion of Japanese people are not fully aware or taking advantage of the benefits of screening, prevention and early detection. It also showed low participation rates in many relatively easy prevention and early detection measures, such as regular exercise and annual health checkups, despite a general interest in more information and increased participation.

HEALTH AS A COMPETITIVE ADVANTAGE

The “Survey on Prevention, Early Detection and the Economic Burden of Disease in Japan” was released in conjunction with major ACCJ Healthcare White Paper called “Investing in Health as a Competitive Advantage.” This report covers twenty-seven disease areas, ranging from hepatitis and breast cancer to chronic pain and healthcare associated infections. The White Paper offers an analysis
of ways to improve government healthcare policy and includes a number of case studies of successful policies in other countries.

ACCJ Healthcare Committee Chair William Bishop says the policy recommendations were made “in conjunction with the Chamber’s own Growth Strategy Taskforce initiative and based on the belief that investing in the health of the Japanese people would not only result in a higher quality of life, but would also result in an increase in labor productivity and boost economic competitiveness.”

“Further, we believe these policies could boost the efficiency of healthcare spending and prevent excessive increases in healthcare costs,” says Bishop.

The White Paper’s overarching goal is well stated in the following excerpt, “Japan is well known for having one of the lowest infant mortality rates and the longest life expectancy in the world. Although life expectancy in Japan continues to rise, the often diminished quality of life during the later years places a burden on patients, families, healthcare practitioners, healthcare systems, society and the economy. These burdens can be relieved through programs to promote prevention, early detection and wellness. However, as in many other developed countries, the healthcare systems and health policies in Japan have traditionally focused on the treatment of medical conditions after they occur, rather than on their prevention.”

The policy recommendations in the Heathcare White Paper: “Investing in Health as a Competitive Advantage” are aimed at helping employees take fewer sick days off (less absenteeism) and being more able to better perform while at work (less presenteeism). Other benefits would come from decreasing the burden of care on family members and by avoiding an increase in the burden of health care costs.

Citing World Health Organization (WHO) estimates, the report says that chronic diseases are the leading cause of disability and death in Japan. Treatment of chronic disease also accounts for the majority of healthcare spending, mostly involving older patients with two or more chronic diseases. In 2009, medical expenses for people aged 70 or older amounted ¥15.5 trillion, or 44% of the nation’s total. In 2012 the Japanese government will finalize the next round of Kenko Nippon 21 (Healthy Japan 21) initiative, a national campaign designed to raise awareness, to promote the benefits of health and wellness and motivate the public to take action, set to be rolled out in 2013.

A main thrust of the White Paper advocacy will be to provide evidence-based global base practices as policy recommendations during the final phase of drafting. As part of this effort, the ACCJ White Paper recommends that the Japanese government create further incentives for people to change their behavior, in conjunction with more traditional public health and wellness educational efforts which have been principally aimed at raising awareness building. Incentives should also be created in the health insurance system to “motivate more people to undergo health risk assessments and adopt healthier lifestyles and behaviors long before the onset of illness and while the risk of disease can be reduced.”

The White Paper is in many ways a series of preventive interventions spanning the preventive health and wellness continuum, from diet, and wellness to vaccination, screening and environmental infection control. At the ACCJ Press Conference held on November 25th, several sections of the White Paper were highlighted. The following is a series of brief snap shots of each.

GREATER UTILIZATION OF HEALTHCARE INFORMATION TECHNOLOGY

With the massive growth of the elderly population, coupled with the shortage and uneven distribution of physicians and other healthcare practitioners, Japan must consider a fundamental change in how healthcare services are delivered to its citizens. healthcare information technology (IT) will be at the core of this change, producing improved efficiency, better outcomes, and higher quality of life. Many governments outside of Japan are investing heavily in healthcare IT, and are already gaining tangible benefits.

During the aftermath of the Tohoku disasters, many believed that, had there been an efficient electronic healthcare record (EHR) system in place, emergency medical care would have been much easier for doctors and patients.

One area where enhanced use of IT would be of benefit is in addressing the emergency needs of stoke victims. The most frequent causes of death in Japan are cancer, stroke, and heart disease.

Stroke alone accounts for 10% of total medical costs, and the number of patients is expected to grow from 1.5 million to 3 million by 2020. Stroke patients must receive thrombolytic therapy (“clot busting”) with a tissue plasminogen activator (TPA] within three hours for it to be effective, but the rate of usage in Japan is less than 2%. The shortage and uneven distribution of physicians, coupled with inadequate utilization of IT, often results in uncoordinated emergency care. If not afforded access to expert care, stroke victims can be left immobile, incontinent, and unable to speak. As a result, stroke patients account for 40% of bedridden care in Japan. Challenges also exist in sharing information between physicians and caregivers on rehabilitation needs, which can have a significant impact on a patient’s quality of life after suffering a stroke. Stroke care creates a significant economic burden and lost productivity for the supporting families and their communities as a whole.

Eriko Asai, Chair, Health IT Subcommittee, summed it up by saying, “Japan has the potential to establish a world class program for stroke prevention and as the world’s leading IT economy has the potential to innovate and lead the future of healthcare IT globally.”

INCREASING CERVICAL CANCER SCREENING LEVELS

Early detection and early intervention are critical for the prevention of cervical cancer. In Japan, out of the 8,000 cases of cervical cancer diagnosed annually, roughly 2,500 women will die. Japan has seen a sharp rise in the number of patients with cervical cancer in their twenties and thirties, and a growing mortality rate. Cervical cancer is the only type of cancer whose incidence can be reduced with a vaccine that is already in use in more than 100 countries and has recently become available in Japan.

Because the human papilloma virus (HPV) is the dominant cause of cervical cancer, regular Pap testing, early HPV testing when recommended, and early vaccination can work together effectively to prevent cervical cancer. In the United States, regular Pap testing has been successfully adopted and recognized as one of the most effective cancer screening tests. The cervical cancer screening rate in Japan was 24.3% in 2010, which is less than half the Organization for Economic Co-operation and Development (OECD) average of 64%.

Frank Florio, President and Representative Director, Nippon Becton Dickinson Company says, “Uniquely, there is no drug, device or diagnostic lag in the case of cervical cancer prevention in Japan. Japan now has all the tools necessary to fight and win. There is however a considerable degree of confusion by many women on how best to prevent cervical cancer which was further substantiated in the recent Health Survey.

There is a real need to better promote the use of the latest technologies to fight cervical cancer in Japan, including HPV vaccination, HPV testing when recommended and, most critically, the latest Pap Testing technology using liquid-based cytology cancer cell screening to increase accuracy and reduce the amount of retesting for cervical cancer.”

INCREASE EARLY DETECTION THROUGH COMPREHENSIVE EYE EXAMS

In Japan, based on Japanese medical standards, 1.64 million people are visually impaired and 188,000 are blind. Of the total, 72% are aged 60 or older. According to a September 2009 study released by the Japan Ophthalmologists Association (JOA), vision problems result in estimated social costs and labor productivity losses of ¥8.8 trillion per year. The JOA estimates that by 2030, the number of people with vision problems and the resulting social costs are expected to increase by roughly 25%.

Comprehensive eye exams by ophthalmologists are important for far more than just determining the prescription for vision correction. They are also important for the detection and diagnosis of eye diseases, including glaucoma, diabetic retinopathy, macular Degeneration, cataracts and eye coordination problems that can cause a range of problems from blurry vision to blindness.

Early detection and timely treatment is crucial to prevent visual impairment and progression of conditions leading to blindness, especially for children under the age of six and adults aged 40 and older. Comprehensive eye exams by ophthalmologists are also valuable for detecting signs of systemic health problems that show early warning signs in the tiny blood vessels and optic nerves in the eyes, including hypertension, diabetes, high cholesterol and heart disease. A recent survey showed that, although 82% of adults in Japan have had some type of vision or eye test, only 28% have had a comprehensive eye exam performed by a physician.

The reasons given by adults for not obtaining eye exams are that they have not thought about it (33%), they do not have time (33%), or they believe they have no vision problems (29%).

According to David R. Smith, President, Johnson & Johnson Vision Care Japan, “The problem in Japan is that the current Kenko Nippon 21 does not include any goals related to eyes and vision though these are included in similar initiatives in the US and other developed countries. There is a real need to add goals for eye and vision health topics to governmental health policy to improve healthy vision.”

PROMOTION OF A HEALTHY JAPAN

ACCJ Healthcare committee members present the survey to Japanese health minister Yoko Komiyama

“The economic burden of disease is likely to increase as Japan’s society continues to age. But by investing in health, Japan could increase productivity and lengthen the average healthy life span (before the need for home nursing care) in a way that supports economic growth,” says Bishop.

“We sincerely hope our Survey and White Paper are seen as a solid contribution to the healthcare and economic policy debate in Japan.”

[The full contents of the White Paper and Survey results are available to view or download in both English and Japanese PDF files on the ACCJ website] ]]> http://accjjournal.com/on-call-for-an-ailing-economy/feed/ 0 http://accjjournal.com/off-ramps-and-on-ramps/ http://accjjournal.com/off-ramps-and-on-ramps/#comments Tue, 17 Jan 2012 03:32:49 +0000 ACCJ Journal http://accjjournal.com/?p=5506

Illustration by Louise Rouse

As a highly qualified professional, Nobuko Suzuki (Ed note: name changed at subject’s request) spent many years working in Tokyo’s publishing industry. However, once she left her job to raise three daughters, Suzuki was unable to return to her previous career field. The only position that the university-educated Suzuki could find when she wanted to return to full-time work was a job in a candy factory. Had Suzuki lived in the Unites States, Canada or Europe, she might have used her educational background and experience to find a more senior position. But in Japan, she is yet another case of a highly qualified woman “off-ramping” to a life outside the working world.

Suzuki’s case is not unique. In fact, it’s the norm in Japan. A new study by the New York-based Center for Work-Life Policy (CWLP) found that a majority of highly qualified, university-educated women in Japan “off-ramp” early on and never find “on-ramps” to resume their careers.

The study, entitled: “Off-Ramps and On-Ramps Japan: Keeping Talented Women on the Road to Success” was compiled through focus groups and oneon-one interviews with more than 1,500 respondents. And the results shed new light on some traditionally held beliefs about working women in Japan.

“This study definitely challenges conventional wisdom,” says Laura Sherbin, co-author of the report. “(The study) goes to show how deeply engrained traditional views have the power to limit the career opportunities for educated Japanese women.”

While conventional wisdom suggests that Japanese women are more “family-oriented” than their Western counterparts and are more likely to quit their jobs to raise children, the “Off-Ramps” study proves otherwise: a vast majority of Japanese women don’t choose children over their careers but are forced out by workplace pressures.

“Only 32 percent of Japanese women cite childcare as an issue in their decision to quit,” says Sherbin. “It’s also worth noting that 43 percent of college-educated Japanese women over 40 don’t even have children, so childcare is not an issue for nearly half of the women surveyed.”

Among the pressures cited in the survey were the rigid workdays, a lack of career advancement opportunities and gender bias found in Japanese companies. These workplace pressures also drive many highly qualified Japanese women to jobs with US or European companies, which they feel are more sensitive to their needs than Japanese firms. That is bad news for a country facing a growing
demographic crisis.

AN EXODUS OF TALENT

Female labor participation in prefectures around Japan (%)

“This is an astonishing figure,” says Sherbin. “We were very surprised to find that childcare and eldercare are not the main forces driving this exodus. Just under half of working women in Japan quit because they feel stalled in their careers.”

Japanese women who want to re-enter the workforce after having children also report that their chances are slim. Most of them (77%) wanted to resume their jobs but only 43 percent succeed in getting their careers back on track, compared to 73 percent in the US and 68 percent in Germany.

Even those lucky enough to find a job faced serious penalties in terms of earning power and job advancement. Forty-four percent said they were forced to take a pay cut, while others reported fewer management responsibilities or possibilities for promotion.

One final obstacle to higher female employment has been the prevailing myth that if more Japanese women work, the further the birth rate will decline, exacerbating Japan’s demographic pressures. However, if one plots female labor participation rates against birth rates for various countries, there is a distinctly positive—not negative—correlation between the two.

GETTING BACK ON TRACK

What would keep highly qualified Japanese women on the career track? Study coauthor Sylvia Ann Hewlett says two things:“the Availability and (the) de-stigmatizing of flexible work arrangements.”

“The majority of women who took an ‘off-ramp’ say they would not have quit their jobs if they had the option to choose a flexible work arrangement,” says Hewlett. “While some form of flexibility is available in most large companies, in reality, 69 percent of the women surveyed (say) that managers are not supportive of employees who utilize flex options; a substantial number say that people who have flexible schedules don’t get promoted and suffer career backlash.”

The majority of the report’s respondents say they would not have “off-ramped” had more flexible work arrangements been available; options such as the ability to work from home more or to arrive and leave the workplace at more flexible times of day.

HELP FOR THE JAPANESE ECONOMY

Ratio of females aged 25-64 with college degrees who are employed (2007), %

“It’s like trying to run a marathon using just one leg,” says Kathy Matsui, Chief Japan Equity Strategist with Goldman Sachs Tokyo.
Matsui has been researching the issue of Japan’s untapped female workforce since 1999, publishing several studies on the topic including Womenomics 3.0 in 2010.

Matsui herself is a good example of an educated senior executive who returned to the workforce after having children. However, she says the “push” factors don’t only apply to women with children but to non-mothers and single women as well.

“In many ways it (the “Off-Ramps” report) validated our original thesis from 1999 that there is a vast pool of talented and experienced women in Japan’s workforce who are simply untapped,” says Matsui.

With Japan facing a demographic crisis, this lack of utilization of a talented and highly educated resource is not merely an oversight; it’s an incredible waste of an economic opportunity. Women tend to be bigger spenders than men, consuming clothing, cosmetics, food, restaurant meals and other items. They are also becoming larger consumers of big ticket items such as holidays and real estate than ever before. Therefore, against a backdrop of anemic consumption, allowing more women into the workforce would provide a huge cash injection for the ailing Japanese economy. Matsui estimates that Japan’s GDP would grow by as much as 15% if the country could close its gender employment gap.

“It is simply because of an 8 million person increase to Japan’s workforce—from closing the gender gap in female versus male employment rates (with no productivity increases assumed). More workers mean more income, more consumption—a virtuous cycle.”

However, in a country notoriously resistant to change, closing the gender employment gap will not be easy, nor will it happen overnight. Cultural beliefs that keep women out of decision-making positions must change and the so-called ‘glass ceiling’ that prevents women from earning salaries equivalent to their male counterparts must also be addressed.

Other opportunities must also be created to close the ‘push’ factors cited in the “Off Ramps” study.

“This is a case where change can be driven by employers, without waiting for government policies to shift traditional mindsets,” says Hewlett. “Companies can create a female-friendly workplace by implementing initiatives that enable and encourage women to advance in their careers. These include formalizing flexible work arrangements, providing career development opportunities and leadership training for both women and men, training male managers to recognize the importance of diversity, showcasing female role models in director-level positions, and creating support/advocacy groups that enable women to build powerful networks.

WOMENOMICS 3.0 RECOMMENDATIONS

Some of the Womenomics 3.0 recommendations involve changing legislation, while others involve social changes and new cultural thinking from top to bottom in Japan’s rigid corporate culture.

“HR departments of companies also tend to quietly “discriminate” against employees (women and men, but especially women) who have large time gaps in their CVs,” says Matsui. “If the Equal Employment Opportunity Law were properly enforced, such discrimination would not be allowed. “Also, I used to be wholly opposed to diversity ‘quotas,’ but watching the positive impact that Norway’s mandatory/legal quota that females must account for at least 40% of boards of listed companies has made me re-think quotas, and as a first step, I think given where Japan is today, I think it may be useful to start a dialogue about introducing similar quotas in the public sector, such as in the Diet. Otherwise, I fear it will take far too long to “move Japan’s needle.”

While some might consider the “Off-Ramps and On-Ramps” report a case of “foreigners telling the Japanese what to do,” report co-author Sylvia Ann Hewlett disagrees. She says the study was actually a result of interviews with Japanese subjects, and it’s their views that are represented in the report.

“We wouldn’t presume to tell any country or culture how to behave. Our research reports are based on large surveys; in this case, we conducted in-depth anonymous interviews with more than 1,500 college-educated men and women. It’s their responses that illustrate the issues confronting women in the workplace and that suggest solutions.”

Sherbin adds, “We hope to follow up this report by focusing on the role of powerful career advocates – namely, high-level sponsors – in advancing and retaining women.”

“Not to diminish Japanese women’s sense of obligation to their families. But consider these figures: 63 percent of Japanese women say that they quit because their career wasn’t satisfying—compared to 26 percent in the US—and nearly half feel stalled in their careers, compared to 16 percent in the US,” adds Hewlett. “Given entrenched workplace traditions that still shunt women into dead-end ‘office lady’ jobs, salary inequities, and lack of role models, it’s a no-brainer for well-qualified Japanese women to “off-ramp” to focus on family for a period of time.”

Ultimately, including more highly qualified women in the workforce benefits everyone – employee, company, country and the economy. Resisting changes to the gender employment gap no longer makes sense for a country like Japan that badly needs all the talent it can find to get its economic house back in order.

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First, why is the foreign pharmaceutical industry so interested in Japan? Japan represented 11 percent of the global pharmaceutical market in 2005, 11 percent in 2010, and forecasts say it will be 11 percent in 2015. During the same period, the US share of the global market dropped from 41 percent to 31 percent and all of Europe was shrinking from 27 percent to 19 percent. Japan represents a consistent percentage of a pie that has been growing 75 percent over this decade. Further, Japan’s growth is focused on new, innovative medicines, which is what our companies discover, develop, and manufacture.

Japan’s major challenge in the pharmaceutical area is its continuing drug lag where a drug is available to Japanese patients generally three or four years after it is available in the United States or Europe. Change over the last half decade is beginning to reduce that devastating gap.

One improvement happened in 2010, when the Japanese government introduced a major reform in the drug pricing and reimbursement system. Its purpose was to provide a predictable and stable return for the enormous investment put into drug development. (Note — It takes 10-15 years to develop a new drug with an investment of over $1.3 billion.) This new system will provide incentives for drug companies to speed up development activities in Japan, which translates into earlier availability for patients. This new system will contribute to a reduction – and the eventual elimination – of the drug lag and will also help reverse the hollowing out of the Japanese pharmaceutical industry.

Unfortunately, this program was introduced only as a two year pilot project and needs to be made permanent. Uncertainty in the pricing and regulatory environment makes development decisions more difficult. Innovative foreign and Japanese pharmaceutical companies are aligned in this objective, which will allow us to serve Japanese patients better. It appears that this pilot program will be extended for two more years, after which the government will evaluate its impact, before deciding whether to make it permanent in 2013.

A second significant development was a PMDA five year plan to reduce the delays in review and approval for new drugs. (PMDA is the Pharmaceuticals and Medical Devices Agency – Japan’s equivalent of the FDA). As the fourth year of the plan draws to an end, we are seeing a reduction in review times, further increases in PMDA’s staff numbers, and additional improvements in the review process. PMDA has now committed to another increase in the number of drug reviewers, integration of the activities of its review and safety staff, and an expansion of its training and education programs for reviewers. PMDA has hired several dozen physicians, a critical change needed to improve the overall capability of the agency. Last year, a group of younger PMDA staff members produced a set of recommendations for change inside PMDA. Implementation of those recommendations would move PMDA toward becoming a world-class drug approval agency. PMDA’s leadership has embraced this report and we welcome that development.

An important change that our industry has been encouraging for many years is a tightening up of the final bureaucratic stage of the approval process for new drugs. We have been told repeatedly that elimination of superfluous committee approvals was impossible. The industry recommendation was adopted in the report I just mentioned, and within six months that change was adopted. The result is that new drugs will be on the market one or two months earlier than in the past. This might not seem like much – unless you are a patient in need of a new drug and you have waited years for it to become available in Japan.

Despite these improvements, no one can rest until the goals are fully met – a steep reduction in review and approval times and a system where development of drugs can proceed simultaneously everywhere. Japanese patients deserve the best medicine available in the world.

A third major change has been progress toward the goal of eliminating the vaccine lag and bringing the world’s newest vaccines to Japanese children and adults. This progress included approval of five foreign-origin vaccines – after a decade where none were approved – funding in a supplemental budget for several of those vaccines to maximize the uptake of these critically important disease prevention measures and a set of strong recommendations by an MHLW advisory committee that included expanding the list of recommended vaccines, developing a Japanese version of ACIP (the Advisory Committee on Immunization Practices which is part of the US Centers for Disease Control and Prevention) and creating a National Vaccine Plan.

Vaccination is recognized worldwide as one of the most cost-effective measures for improving public health. Changes we hope to see include full government funding for all approved vaccines. In the case of many vaccines today where government funding is not forthcoming, the penetration rates can be as low as 20-30 percent – far below the threshold necessary to see a significant decrease in disease burden.

Diet members in the ruling and major opposition parties have been proactive in increasing public awareness of the vaccine lag and in pressing Ministers and bureaucrats to take early action. Their direct and forceful action in this area is a development almost unimaginable a decade ago.

A fourth major change relates to how the government looks at the pharmaceutical industry, having identified the medical care, nursing care and health care related industries as one of the key drivers of future economic growth in Japan. The pharmaceutical industry will be an important part of that. Our industry invests more R&D per capita than any other sector in the global economy. A recent study showed that of the five companies spending the most on R&D worldwide, three are pharmaceutical companies. (The other two are Microsoft and Toyota.) The economic contribution of the innovative drug companies is enormous.

As part of this new policy, the Cabinet Office created an Office for Medical Innovation last year to develop policies that will promote innovation in the healthcare area. We hope the result will be improvements in the areas of pricing and reimbursement, regulatory processes, organizational structure, and tax policies.

The foreign-sourced share of drugs in Japan is approaching 40 percent. Foreign companies supply three-fourths of all cancer medications in Japan. The government, in its policies, has supported both Japanese and foreign pharmaceutical companies equally in improving the drug development and market environment and we hope this continues as new initiatives are made to promote our industry so we can contribute even more to the health of Japanese patients and the health of the Japanese economy.

Finally, let’s look at the budget. Japan’s total healthcare spending is in the low range among OECD members, despite being one of the wealthiest countries and having the fastest aging population in the world. There is a broad understanding that this percentage needs to increase, and some political leaders see ten percent, as compared to about 8.5 percent at present, as more appropriate to deliver the healthcare that Japanese society needs. It is encouraging to see an emerging consensus that the consumption tax, whenever it is increased, will be devoted to social welfare costs, which include healthcare. We must remember that spending on healthcare is not a cost; it is an investment – an investment in people living longer, an investment in the quality of life of citizens, and an investment in the workforce through improved productivity.

There have been many other changes over the last few years too numerous to include in this article. The commitment to improve the healthcare environment, including the pharmaceutical sector, is strong and widespread among policymakers. Together, these will have a profound impact on the health of Japanese society and on the attractiveness of Japan for investment and development of new drugs. The ultimate winner of these changes is each one of us – we are all, or will be patients in the future.

Photography by Lorenzo Barassi

Hiroshi Mikitani started his career at the Industrial Bank of Japan (which is now part of the Mizuho group) shortly after graduation from the Harvard Business School. However, the Kobe native changed direction at age thirty following the tragedy of the Great Hanshin Earthquake. Mikitani has called the 1995 disaster a life-changing moment for him: “I started to realize that life is short, and that anything can happen.” Mikitani had no clear business plan when he left IBJ but was convinced Japan needed new ideas and innovation because there had been little since the early days of Sony and Honda.

Mikitani’s desire for innovation led him to the Internet which was still new to Japan at that time. Rakuten Ichiba (Rakuten Internet Shopping Mall; the characters forming “Rakuten” can be translated as “fun” and “heaven”) was founded in 1997. Now Rakuten Inc., it’s one of the top ten Internet companies in the world, ranking alongside Google, Amazon, Baidu, Yahoo! and eBay. Rakuten operates in a variety of different fields: it’s an online marketplace with tens of thousands of merchants and 2010 sales figures of some 346.1 billion yen. Rakuten is a payments and credit operations – the Rakuten group now includes an online bank, consumer credit, and card issuance as well as an e-money operation. And the company also operates online securities, an online travel business and even a professional baseball team.

In all the online areas where Rakuten does business, it occupies the top or second market position, even beating Amazon’s Japanese operations for overall online commerce (though it’s currently second in book sales).

Mikitani’s imagination and energy have obviously paid off, and his emphasis on providing services rather than manufacturing has given the Japanese market exactly what it needs.

LOOKING OVERSEAS

Rakuten is not only making waves in the Japanese market, it’s also finding success overseas. Mikitani started with the purchase of a Taiwanese shopping site in 2008 then added other acquisitions such as Buy.com in the United States and France’s PriceMinister. He has also formed joint ventures such as Rakuten Belanja in Indonesia (with Global Mediacom)and with Baidu in China.

Other recent moves have included purchases in Brazil (formerly Ikeda, but now re-branded as Rakuten Brazil), Germany (Tradoria) and the UK (Play.com) as well as a minority stake in Russian Ozon.ru. Rakuten’s reach now expands outside Japan around the world, fulfilling Mikitani’s dream of owning a company with global reach.

Photography by Lorenzo Barassi

Rakuten is poised to make yet another significant change to Japan’s landscape, this time in the field of ebooks and electronic publishing. Amazon has been the major player in the e-commerce market with tributaries in most countries including Japan. However, Mikitani’s company is slowly wading into the Amazon-dominated waters.

Kindle devices and the ebooks produced for them have proven wildly popular in the USA, where ebooks now make up a significant proportion of titles sold, but have yet to make an appearance here. Indeed, the ebook market in Japan is heavily fragmented by hardware manufacturers producing ebook readers (together with their own proprietary formats for ebooks), who are often unable to attract a critical mass of publishers to the online bookstores serving their hardware. The fragmentation is compounded by publishers using their own applications to allow the reading of only their own titles on common devices such as Apple and Android. In November 2011, Rakuten announced the purchase of Canadian ebook maker Kobo Inc. for $315 million, with the deal expected to close early this year (Kobo is an anagram of “book”). Like Amazon’s operations in this area, Kobo’s business includes both the production and sale of ebook reader devices and an online bookstore selling the content to go on them, as well as publishing operations. The company holds lead position in its home market of Canada and is a major player in both the French and UK markets.

“At first, I thought all functions would be integrated into tablets,” Mikitani says of his reasons for buying a hardware producer. He changed his mind after realizing that dedicated devices are quite often preferred by customers over “Swiss Army knife” type gadgets. The Kobo readers, like their Kindle competitors, feature highly legible “e-ink” displays, and a battery life that can be measured in weeks, rather than hours. A color Kobo was also recently introduced, which will prove a strong competitor for Amazon’s latest offerings.

Rakuten hopes to also provide the sales infrastructure to publishers, allowing them to sell their Kobo titles through the Rakuten sites. However, Mikitani would like to see other distributors in addition to Rakuten, thereby making Rakuten/Kobo a universal standard for ebooks in Japan.

Certainly when Kobo and its associated infrastructure hits Japan early this year — with Amazon’s Kindle and Kindle Store rumored to arrive at about the same time — we can expect to see a change in the reading habits of Japanese as they ride the trains. Mikitani also has his eyes on another large opportunity for Kobo in Japan — the educational textbook market — which could produce a small revolution in the industry.

PRACTICING WHAT YOU PREACH

One key to Mikitani’s business beliefs is an emphasis on the provision of services, either as an adjunct to hardware (as in the case of Kobo) or the replacing of manufacturing activity. Another key is the belief that the borders of a business should not be limited to Japan.

“Japanese companies are good at creating hardware,” says Mikitani, “but hardware will become a commodity.” Even products which are currently perceived as solid now, such as Apple’s mobile devices, will become mere commodities in the future, he believes.

In addition, the line between hardware and services, as represented by the recent crop of smart phones and tablets, is becoming blurred. Mikitani says it is vital for Japanese companies to move away from a hardware-only base to an “information service plus hardware” business, with the hardware possibly moving offshore. While some Japanese executives are concerned about the rise of the yen against the dollar and other currencies, Mikitani says, “It’s a good opportunity for us (Japan) to shift in two ways: from domestic to truly global; and from manufacturing to value-added services.”

Calling Japanese people “hard-working” and “trustworthy,” Mikitani sees these characteristics as great advantages: “The only way to differentiate the country will be intellectual property and culture, including the working style of the people.”

Certainly Rakuten seems to be proving this assertion. The latest figures available (for Q3 2011) show a year-on-year gain of 11.9% in the consolidated sales of the Internet Services Segment, which includes the Rakuten Ichiba business and Rakuten Travel. The profits for the segment in the same period are even more impressive: a 17.5% year-on-year increase, figures to marvel at, given the generally sluggish economy and the disasters of March 11, which have dealt strong blows to many other sectors.

THE TPP: THREAT OR OPPORTUNITY?

There have been concerns raised about Japan’s participation in the Trans-Pacific Partnership (TPP). Such worries have typically concerned the agricultural sector which Mikitani does not dismiss entirely. However, he sees it as the tip of the iceberg.

“In reality, (the TPP) is a great opportunity for us to destroy the ancien régime of Japanese industries,” he says.

Mikitani is not merely referring here to manufacturing industries but to business sectors that have benefited in the past from a protected environment. In Mikitani’s view, industries that need to adopt global standards and expose themselves to global competition include the telecommunications sector, medical services and healthcare, cloud computing services and electricity generation.

The advent of the TPP is a time for change, Mikitani feels: “It’s a ‘black ship’ moment,” he explains, referring to the arrival of Commodore Matthew Perry’s American fleet in the 1850s, often seen as the start of Japan opening up to the modern world.

“But my point is not about the US or China invading Japanese industry. This will create opportunities for Japanese companies. Looking back on it, people will say this is a great event.”

This is a very different point of view to those often expressed about the TPP, but Mikitani is confident that, “Japanese products and services are very competitive, but they (the companies providing these products and services) have not been trained to think of a global market, which is a shame. [TPP] will force them to think more globally.”

Mikitani says one example of the “Galapagos” mentality isolating Japanese companies from the rest of the world is NTT Docomo’s push forward with the next-generation network, which he characterizes as “a huge waste of money.” Instead, Mikitani would like to see more affordable high-speed access throughout the country to every household.

“We pay high amounts for access right now – sometimes up to 20 percent of disposable income.” Affordable high-speed access will increase the nation’s productivity, by providing more access to information and content. “The cheaper the network, the better for the country,” Mikitani says. “We can build very strong businesses that we can export to other countries.”

For Japanese companies, which typically have concentrated their strengths and focus on a narrow field, Mikitani says there is a need for more overall coordinated efforts rather than one point or product. He adds that Rakuten is trying to do exactly this.

GLOBALIZATION AND RAKUTEN

As far as future links between Japan and the US are concerned, Mikitani is a great believer in the power of modern technology to help break down international barriers. “It’s not just about Japan and the US,” he says, “because the notion of countries is changing.”

The cheap and easy methods of communication and distribution of media around the world mean that there will be big changes in the way that Japanese people view and enjoy media. Specifically, he sees an increase in the Japanese consumption of American content and media. As he points out, “there is no wall with regard to information and content anymore.”

Along with this change, he sees the future strengthening of economic ties, including free trade agreements between Japan and other countries such as the US, as being a very positive thing for Rakuten as a whole.

In line with the breaking down of global barriers, Rakuten has determined that English should be the official language of the company and employees will be required to meet a certain linguistic standards in the future.

This is a bold and highly controversial move; one that has attracted considerable attention. “So many CEOs have a lot of interest in this project,” says Mikitani. “Not just Japanese CEOs, but now we are drawing attention from all over the world.”

The matter is more than simply a linguistic one. “We need to prove it can be done, and it’s part of a project to change Japan.”

But he adds, “this is not just a Japan issue, it’s an issue for every single global company,” even, as he points out, for American companies doing business overseas. “We need to open the eyes of younger people,” he says, adding that he hopes to see new leaders of Japan from a variety of areas. “We need change.”

So far, the experiment appears to be successful. Though the deadline for the language proficiency ranking is the middle of this year, Mikitani can already claim that 85 percent of his employees are able to meet the standard which will be expected of them, or will be able to meet the standard in the future. For the remainder, “we are trying to help those who are still struggling.”

FORECASTING THE FUTURE

It is difficult to predict what direction Mikitani will take Rakuten in the future. With a wide range of interests commanding his attention, including his enthusiasm for Kobo and his pride in the Tohoku Rakuten Golden Eagles baseball team and the Vissel Kobe soccer team – it would be foolish to make predictions and try to second-guess Mikitani’s visions. However, one thing is certain – Hiroshi Mikitani’s example will continue to serve as inspiration to would-be entrepreneurs in Japan, who will be expected to lay the foundation for a new economy that will carry the country forward into the future.

Photo Courtesy of White & Case

He was known for his dynamic leadership, intellect and sense of fairness. Yet Bob Grondine was more than a top legal mind; he was also a friend, family man, colleague, mentor and a leading voice for the ACCJ. Grondine, a former ACCJ President and Chairman, passed away October 20 at the age of 59.

“The first word that comes to mind when I think of Bob is wisdom,” says current ACCJ President Mike Alfant. “He was a deep thinker, very articulate, practical and focused on what was best for his clients and the people around him.”

Grondine served as a senior partner at the law office of White & Case in Tokyo for nearly two decades. But he was more than just a lawyer. Fluent in Japanese, Grondine was an international legal expert who represented dozens of high profile clients including General Motors, Sony and Fuji Heavy Industries. He also promoted legal reform in Japan, which many consider one of his greatest contributions.

Photo Courtesy of White & Case

Grondine was born in the small town of Oxford, Massachusetts who, despite moving to the world’s largest metropolis, never forgot his small town roots. Grondine was one of Japan’s most successful lawyers, yet he never grew too big to listen to people.

“Bob would always take time to speak with as many ACCJ members as possible; not just from large companies and organizations, but everyone,” says Alfant. “That made him a great role model.”

Current ACCJ Chair Kumi Sato remembers the efforts Grondine put in for the organization’s 50th anniversary. Sato says Grondine was busy with his own work, yet still took on the responsibility of organizing the anniversary events. He worked long hours behind the scenes to make the event a success. Sato says this was typical of Bob, who was always prepared to do everything to the best of his abilities.

IMPORTANT TO SLOW DOWN

Despite his often high-profile and professional obligations, Grondine took time to enjoy life. He loved golf and treasured the time spent with his wife Aiko and daughter Michelle. Grondine even counseled others on the importance of spending time away from the office. Sato says Grondine sent her a message as she was about to assume her ACCJ duties. The note read: “We must take care of our health. Work is important, but it’s important to slow down. Remember you’re only human, and your health comes first.”

Sato believes Grondine was instrumental in understanding how Japanese officials work. He studied the Japanese legal environment extensively and, as a result, understood the differences inherent in — and the complexities of — the Japanese system. Sato says Grondine made the ACCJ more conscious of Japanese interests and of putting the Japanese public at heart.

“He was interested in the public,” she says. “Not just in the ‘Chrysanthemum Club’ style, but in legal expertise. He helped us increase the quality of our dialog.”

Grondine graduated from Boston University Law School in 1980 yet, even as a student, recognized Japan as an opportunity. He studied Japanese in university, eventually landing at White & Case in Tokyo in 1992. The company had only three lawyers at the time of Grondine’s arrival but today is one of the largest law firms in Asia. Colleagues say Bob was instrumental in building the firm into a world leader.

Grondine would also return to the US regularly to lecture and mentor young lawyers and law students. A gifted orator, Grondine spoke regularly at Harvard, Columbia and Cornell. He also taught law classes at Tokyo’s Keio University for seven years.

Grondine’s reputation as a mentor was known far and wide. Brian Strawn, a partner at White & Case, remembers hearing about Bob from a professor before coming to Japan. Strawn says he was told “you should definitely seek out Bob Grondine – he’s a guy who really knows the ropes when it comes to being a lawyer in Japan.”

Taking this advice, Strawn regularly conferred with Grondine on important matters while clerking at the White & Case office in Tokyo. Strawn ended up working with his mentor and friend for 13 years. Strawn says Grondine was “a role model who paved the way for dozens of lawyers to come to Japan and build their lives and careers.”

Past ACCJ President Tom Jordan also has fond memories of Grondine. The two met in 1994 when White & Case was a fledgling company with only a handful of employees. Yet even in those early days, Grondine had a strong desire to contribute to the ACCJ. He worked tirelessly in support of ACCJ goals and objectives, serving on the Board of Governors for nearly a decade. Grondine was elected ACCJ President in 2000 and 2001 and served as Chairman in 2002 and 2004-05. Jordan feels Grondine’s efforts to organize the Chubu Chapter were his most significant contribution.

“Bob’s personal persuasion and statesmanship led to the establishment of the third ACCJ Chapter in Japan and the rapid growth of the American business image and presence in Nagoya,” says Jordan.

Yet it wasn’t all serious business. Jordan adds that “At the same time, Bob’s golf improved to a highly competent level, which contributed to ACCJ victories in the annual golf competition against the Europeans.” Grondine became known as one of the few people who could argue a complex legal case one day, then hit a golf ball nearly 260 yards the next.

UNDERSTANDING JAPAN

Grondine’s expertise in commercial law and in dealing with international issues helped many American businesses make in-roads in Japan. In particular, Grondine was a key to opening up Japanese capital markets to foreign participation. Don Westmore, former ACCJ Executive Director, remembers Grondine’s leadership during this process, which resulted in a move away from simple trading with Japan to doing business on an equity-owning basis.

“Bob had a deep, unsentimental understanding of how the Japanese system works, and how to maximize ACCJ influence on it – without having it backfire,” says Westmore. “I don’t think an issue ever came up about which Bob was not completely versed in the nitty-gritty details.”

“Bob had a finely honed appreciation of the need for collaboration in heading a voluntary organization, especially one whose business interests sometimes clashed,” adds Westmore. Grondine’s patience, energy and passion were key qualities of his “leadership through persuasion,” helping drive the ACCJ forward during the years he was at the helm.

Leadership through persuasion might have been Grondine’s style, but it never made him difficult to deal with. In fact, colleagues say the opposite – that Grondine was warm and personable, always ready to offer support and encouragement to others. ACCJ Governor Nicholas Benes remembers meeting Grondine as a young law clerk in the mid 1990s. Benes anticipated meeting a “hard-nosed lawyer,” but instead found Grondine to be a “much nicer and more personable individual than I had imagined.”

Benes and Grondine worked on a variety of ACCJ-related projects together including corporate governance reform and FDI policy. Benes says Grondine’s contributions include “diehard policy advocacy, high professional standards, and a cheerful spirit which was beyond words.”

Benes adds that “you wished Bob was on your side of the desk” when working on M&A projects outside the ACCJ.

Grondine’s influence wasn’t just felt by his fellow Americans. Japanese lawyers also admired his easy-going style and sometimes mistook him for a native speaker. Former ACCJ Governor John Kakinuki remembers first hearing Grondine on the phone speaking casual and colloquial Japanese. Kakinuki recalls feeling that Japanese lawyers were remarkably informal, until he saw the “light-haired, blue-eyed person” who was speaking.

Kakinuki worked with Grondine on the foreign lawyer issue in Japan. He says Grondine’s no compromise attitude helped get the Foreign Lawyer’s Law passed and that Bob was the “single person who accomplished the most for foreign lawyers” in Japan. When the Japanese Federation of Bar Associations Nichibenren celebrated the law’s 20th anniversary, Grondine was the keynote speaker. 

Kakinuki followed in Grondine’s footsteps as Chair of the ACCJ’s Legal Committee, a member of the Board of Governors and a Vice President.

“These were big footsteps to follow,” Kakinuki says. “I could not have been as successful without Bob’s legacy.”

MORE MEMORIES

Many of Bob Grondine’s other professional and personal friends also have nice things to say about their distinguished colleague.

Richard Collasse, Chairman of the European Business Council says “as a professional, Bob was the most impressive, knowledgeable and acute person I ever worked with. And, when he was the Chairman of the ACCJ and I was in charge of the EBC interacting with the Japanese Administration, he was wise, visionary and tough but always considerate.”

ACCJ President Emeritus Debbie Howard remembers that “Bob had a masterful way of explaining complex topics” which made him a key spokesperson for the ACCJ on various issues such as FDI, privatization, growth strategy and other regulatory matters that helped American and European companies make the most of their efforts in Japan.

She adds that “Bob’s enthusiasm and ability to create change inspired me to feel that we all have a role to play in making a better business environment for foreign businesses here in Japan.”

David Case, a partner at White & Case and former ACCJ Governor, says when he moved to Tokyo in 2002, he discovered that “working for Bob was the greatest mentoring experience a young attorney could have.” Case cites Grondine’s extensive knowledge of virtually every aspect of the law and describes him as “the hardest working attorney one could ever meet.”

Case vividly remembers acting as the lead associate in one case and sitting in on a teleconference from Grondine’s office. There, he learned many lessons on how to counsel clients, how to handle surprises and “how to guide clients to practical, common-sense solutions.” Case says Grondine’s impact was “enormous” on all the attorneys in the White & Case office.

Grondine served on former Prime Minister Junichiro Koizumi's task force on increasing foreign direct investment into Japan

“I can say with confidence that the Chamber is what it is because of Bob,” says Lake. “It would be a completely different – and certainly less effective – organization if Bob was not a part of it. We lost a great leader and friend. Bob’s passing came too soon, and the Chamber will never be able to replace the kind of leader he was.”

Bob Grondine may have been passionate about law and the ACCJ. But that wasn’t his only love. He also felt strongly about golf. Grondine spent many afternoons on the course, eventually becoming one of the ACCJ’s better playing members. He loved to get others involved and retained a competitive streak that often put the ACCJ on top of international competitions.

Former EBC Vice-Chairman Erik Ullner remembers Grondine’s competitive fires sparking an idea on the course in 2001. Ullner says Grondine developed the idea of a Ryder Cup style event, where ACCJ members would challenge their European counterparts. Originally called the Daimler-Chrysler Cup in Japan, the Mercedes-Benz Cup is now very successful. Ullner says this year “Bob’s brainchild will celebrate its 10th anniversary. Bob will be truly missed by all of us. However, he left us such a wonderful legacy that Bob will always be remembered through this golf tournament.”

Grondine’s organizational skills, leadership and reputation as a lawyer crossed international borders. Even the highest-ranking diplomats sought him out for advice. Former U.S. Ambassador to Japan Thomas S. Foley remembers Grondine this way: “When I was appointed, President Clinton made it clear that support of American business must be a priority. As soon as I arrived in Tokyo, I met with Bob and other senior ACCJ leaders. Bob was always upbeat and energetic and a wonderful source of knowledge. At regular Embassy briefings and events with the ACCJ, Bob often sat across the table providing inside information on what our companies needed. On many other occasions we sat together at breakfast, lunch or dinner sharing insights into the intricacies of trade negotiations. His affable manner and his encyclopedic knowledge of Japan made my time more pleasant but also much more productive.”

“Bob’s knowledge of Japan was not just confined to commercial and legal matters,” says Foley. “I recall a party we hosted where Bob joined me for the ceremonial breaking of the wooden cover of the traditional sake cask. Rather than one of the standard brands of sake, that year we decided to use special sake from a small local brewer. At the first sip Bob recognized and appreciated the difference. Bob not only understood the finer points of the law and of trade policy, he also had a refined appreciation for so many things. We will all miss Bob and should recognize and celebrate his many contributions to the rich bilateral relationship between Japan and the United States.”

Photo Courtesy of White & Case

“Bob was also deeply committed to the US-Japan relationship. Indeed, he lived a life dedicated to this,” says Porte. “In the 1990s, the considerable deficit of US students studying in Japan was recognized and it was determined that action was needed. Bob responded to this issue by chairing the Japan Committee of the US-Japan Bridging Foundation, an American foundation which raises funds to provide scholarships to US college students for study in Japan. Since inception in the late nineties, over 1,000 scholarships have been awarded.  It could be a fitting tribute to Bob to join together to support the Foundation and provide scholarships to students who can be inspired by Bob’s example.”

That is how Bob Grondine will be remembered: brilliant, inspiring, hard-working and competitive. He was a mentor and role model for aspiring lawyers, and a credit to his native country and to his adopted home of Japan. But most of all, Grondine was a friend and leader to the ACCJ. He will be missed.

Special Lifetime Service Award

The American Chamber of Commerce in Japan has been blessed with outstanding leadership since its founding 63 years ago. Over the years a handful of individuals stand out even among this elite group. Bob Grondine is one such leader. The Board has determined that Bob’s service to the Chamber and his dedication to promoting the Chamber’s mission deserves special recognition.
As Bob wrote when he took over as ACCJ President as the new millennium began, the ACCJ’s focus would be on: market access through deregulation; foreign direct investment; implementation of trade agreements; and business infrastructure improvement through corporate governance, corporate standards and professional services. In all these areas Bob had already made major contributions to advancing American business interests, tirelessly advocating with strategic vision, broad knowledge, and flawless Japanese, but also rolling up his sleeves and working day in and day out with the committees and task forces that were engaged in the daily details which are so important to member companies. During his two very successful, perpetually active years as President, Bob became a well-known and respected statesman of the business and policy-making community in Japan, and further improved the ACCJ’s advocacy “game” and organization with his relentless commitment to quality in every respect. After his time as President, he continued to be a major contributor across the wide range of Chamber activities, not only leading the charge in arcane areas such as competition, but also as one of very few Chamber policy experts to also drive a golf ball over 260 yards and help the ACCJ to victory in our annual shootout with the Europeans.
The ACCJ is a better organization in every respect because of Bob’s involvement. As a leader, a mentor, a colleague and a friend we have all benefitted from Bob’s dedication to the ACCJ. And the Board joins all our members in thanking and commending Bob Grondine for everything he has done, and the example he sets, for the ACCJ.

Mike Alfant
ACCJ President

Photograph: Wrangler - Fotolia

Prime Minister Yoshihiko Noda has announced plans to double Japan’s consumption tax from 5% to 10% over the next decade. The government plans to introduce enabling legislation by the spring. This month, the Journal takes a look at what the increase will mean for consumers and business in Japan.

CONSUMPTION TAX HISTORY

Introduced in 1989, Japan’s consumption tax (JCT) is a value-added levy imposed on transactions carried out within the country. Originally set at 3%, the rate was raised to the current 5% in 1997. The government is now looking to raise the tax in phases to 10% in order to fund ballooning social welfare costs and reconstruction efforts in the disaster hit areas of northeastern Japan.

Taxable transactions for JCT purposes are broadly classified into two categories – domestic taxable transactions and import taxable transactions. Domestic taxable transactions are defined as the sale/lease of assets or provision of services conducted by a business enterprise (including both corporations and individual proprietors, regardless of whether they are residents or non-residents) for consideration within Japan. Certain domestic transactions (i.e. sale/lease of land, transfer of securities) have been classified as nontaxable to reflect social policy and other considerations. Some import transactions are also taxable, including the removal of imported goods from bonded areas.

As with the VAT system in Europe, although the end-consumer is the ultimate bearer of taxes, the obligation to declare and file for JCT lies with the business enterprise engaged in the taxable transactions. Taxable enterprises must remit to the government the difference between the JCT received on taxable sales and the JCT paid on taxable purchases (including import transactions).

Transactions that fall outside the scope of the previously defined taxable transactions, such as export and overseas transactions, are generally exempt from JCT. However, practice and interpretation of the JCT Law in this area has become complicated in recent years due to increased complexity in international transactions. Following are some basic conditions and cases where enterprises are not required to file for JCT (and in some cases even apply for a refund). There are also some cross-border transactions that need careful attention.

EXEMPTION FOR SMALL ENTERPRISES

Under the JCT Law, small enterprises with taxable sales of ¥10 million or less in the base period (e.g. the period two terms prior to the current tax year) are exempted from filing a JCT return. This is only an exemption from filing, and as such, tax-exempt companies are still required to pay JCT to the vendor or service supplier when purchases are made. Likewise, the JCT Law does not prohibit tax-exempt enterprises from charging JCT to its customers. Tax-exempt enterprises are, in effect, allowed to keep the collected taxes less the JCT on purchases, which may for some businesses result in significant windfalls – albeit subject to corporate income tax. This loophole may appear unjustified in the eyes of the end consumer, but there is no illegality involved here.

For newly established firms that do not have a base period, taxpayer status is determined based on the capital size of the business. Specifically, new businesses with capital of less than ¥10 million are exempt from filing a JCT return for the first two years of operation. This means that new businesses may lawfully retain the excess JCT collected over JCT paid for the first two years by keeping their initial capital under ¥10 million. It should be noted, however, that amendments have been made in the 2011 tax reform to tighten this tax loophole. For fiscal years starting on or after January 1, 2013, the JCT exemption for small businesses will not apply if taxable sales in the first six months of the prior business year are ¥10 million or less.

APPLYING FOR A REFUND

Companies that do not qualify for the small-business tax exemption are required to declare and pay JCT collected on taxable sales minus the JCT paid on taxable purchases. However, firms are entitled to a refund if JCT paid exceeds the JCT collected on sales. A good example of this case is a domestic company exporting products manufactured in Japan to a foreign entity. Since export of goods from Japan is treated as a JCT-exempt sales transaction, the domestic company can claim a refund for the domestic taxable purchases (e.g. procurement of raw materials and parts).

An important thing to note here is that the refund can only be obtained by filing a JCT return, meaning that a tax-exempt company with no obligation to file is not eligible for JCT refund. If a refund is expected, tax-exempt small businesses should change to a taxable enterprise in a timely manner. A common pitfall is where new businesses with large outlays in the start-up phase (e.g. first two years of operations) are barred from claiming JCT refund because they have forgotten to register as a taxable enterprise. Owners should carefully consider their business model and investment plans in advance when deciding on their JCT taxpayer status.

DOMESTIC VERSUS OVERSEAS TRANSACTIONS

As mentioned earlier, JCT is not imposed on transactions that are conducted outside Japan. So how do we distinguish between a domestic and overseas transaction? For the sale/lease of assets, the distinction is made based on the location of the assets at the time of the transaction. Let’s look at a case where a domestic company enters into an agreement with another Japanese company to transfer goods that are kept overseas. Although it’s a transaction between two Japanese companies, JCT is not assessed because the goods are physically located outside Japan at the time of transfer. In such a case, foreign taxes must of course still be taken into consideration. Likewise, off-shore trade involving a Japanese company exporting goods purchased or manufactured overseas directly to a third country is also considered a JCT-exempt transaction.

Different criteria are used in cases where the physical location of the assets is difficult to determine, such as intangible assets. For instance, classification of royalty rights (industrial property) is decided according to the location of the official agency that registers the rights. Software license fees (license of copyright) are determined based on the place of residence of the transferor. Software licensed from a foreign company is not subject to JCT.

Provision of services is classified as a domestic taxable transaction if the services are rendered in Japan. Accordingly, even a non-resident will be liable for JCT if he/she performs services in Japan. For example, a foreign professional golfer playing in Japan would be treated as a domestic taxable transaction. However, the golfer’s obligation to pay and file for JCT depends on whether he/she qualifies for the small-business exemption discussed above. Even if the golfer wins ¥20 million in a Japanese tournament, he/she would not be required to declare JCT if taxable sales in the base period (two years prior to the current tax year) are ¥10 million or less. However, if the golfer collects prize money two years later, he/she is obligated to declare JCT on any amount of money earned in Japan as a taxable enterprise.

TAX EXEMPTION FOR EXPORTS

JCT is an inland tax and therefore not assessed on export transactions and export-related activities where goods and services are consumed overseas. Examples of export-exempt transactions include the export of goods, transfer of foreign cargo, international transport/communication and provision of most services to non-residents.

For instance, a Japanese attorney sending legal advice to a foreign client by email would be treated as an export-exempt transaction. An advertising agent in Japan placing an advertisement in a Japanese magazine at the request of a foreign client also should not charge JCT to that client. An important thing to note here is that the JCT exemption on services to non-residents does not apply if the non-resident has a permanent establishment (e.g. branch) in Japan, although certain exceptions to this rule exist which are somewhat complicated. In any event, if services are rendered for a foreign client, the service provider must check to see if the client has a PE in Japan, although such investigations are in practice quite difficult.

As far as the provision of services to non-residents, it should be noted that the following transactions do not qualify as export-exempt transactions: (a) transportation or storage of assets in Japan, (b) food/beverages and lodging in Japan, and (c) services provided in Japan which are similar to (a) and (b). Accordingly, foreign tourists to Japan can reclaim JCT paid on goods bought in Japan other than meals and accommodation.

NOT AN IMPEDIMENT TO GROWTH

An increase in consumption tax is considered by many a necessary step to deal with Japan’s spiraling amount of debt. From a macroeconomic viewpoint, such a policy change – while potentially decreasing the amount of consumption in the short term – will help reposition Japan as an attractive destination for foreign investors. On first glance, an increase in consumption tax to 10% would seem to be a major concern for anyone just considering starting a business or who is still in the first couple of years of operation. However, if you take the time to understand the tax laws in Japan, you will find that the consumption tax should not be an impediment to the initial growth of a company.

Photograph by Irwin Wong

The March 11 natural disaster was of unprecedented scale, resulting in feelings of shock and disbelief that still resonate in offices and boardrooms across Japan. The tragedy forced company leaders and human resources managers to address employee morale in the post 3/11 workplace. On October 3, the ACCJ’s Human Resource Management Committee held a roundtable on this topic. HRM Committee leaders Tish Robinson, Taka Miyawaki, Ginger Griggs and Keiko Suzuki hosted the event.

INITIAL SHOCK AND AWE

“More than six months past 3/11, the disaster remains a once in a lifetime event that is not going to be erased from any of our memories any time soon,” said Aston Bridgman, Director and Deputy Head of Communications of Deutsche Bank Group Japan.

Elizabeth Handover, President of Lumina Learning Japan, added that “my concern is ‘How are people doing now?’ The crisis gave us the adrenalin and the will to do a lot of things but there is still a lot that is not working. And now we have the floods in Thailand and Europe on the brink. It just seems that there is one thing after another.”

Handover continued: “This leads me to reflect on people’s inner emotional life. The crisis allowed people to express their feelings and talk about what they were going through. But now I wonder if it isn’t more deadly that people still have all kinds of anxieties. I still hear people talking about radiation. The feeling is that we are really in for the long haul with more problems mounting up. In some ways, life has sunk back into normalcy but now some companies are shedding employees so that is another anxiety. It seems like there are layers and layers of fear and anxiety to bring morale down and it is essential that we continue to find ways to have employees engage with their feelings and be able to share them.”

Jiana Leung, Director and Head of Human Resources of Deutsche Bank Group Japan said in response: “In the current macroeconomic environment, there needs to be a greater focus placed on talent management and retention. We need to put our arms around our existing top talent, and we need to drive our talent management agenda to retain, develop and cultivate leadership from within.”

IMPROVING EMPLOYEE MORALE

In terms of retention, David Swan, Managing Director of Robert Walters Japan and Korea, said “one thing that has had a profound effect on retention is volunteering. Volunteering demonstrates that Robert Walters is a company that cares about its employees and cares enough about its community to take an active role in social responsibility. I think that this initiative is something that has really helped a lot.

“In addition to that, we use volunteering in our own recruitment efforts as well. We hire a lot of workers in their twenties, and that generation in particular is very conscious of CSR initiatives; more so than my own generation. We didn’t really think about it very much before but this generation sees it as very important. You often find volunteerism on their resumes. They often talk about CSR activities they would like to get involved with. If we can demonstrate that we are a company that takes an active role with our CSR initiatives, we have found that that can often leave a positive impression on both our current and potential employees. In our experience, volunteering is a much more effective way of getting people engaged than just donating money.”

Kayoko Blake, Human Resources at Morgan Stanley shared “I went to Tohoku twice in summer with an NGO. It was a very rewarding and worthwhile experience. By mixing with the tsunami survivors and volunteers who came from all over Japan and overseas, I had an opportunity to reflect on my situation and to realize how lucky I am. After the 3/11 disaster, Morgan Stanley provided a lot of support to employees, including on-site counseling sessions, an emergency hotline service, several open sessions and seminars with the company doctor and nuclear specialists, distribution of bottled water, promotion of flexible work arrangement, and so on.”

“For volunteers, the company expanded its volunteer leave and the Volunteer Committee organized several initiatives for fund raising and three Tohoku volunteer trips in cooperation with an NGO. As an employee, I felt even more proud and thankful to my employer after my volunteer trip. I think volunteer activities can be good opportunities to foster leadership skill. I was impressed with a lot of young volunteers in their twenties taking lead in various projects. If employees volunteer with their colleagues, they can build further rapport with fellow workers, which may eventually enhance employee morale and loyalty and lead to good employee retention.”

Keiko Suzuki, Vice Chair of the ACCJ HR Committee added “Definitely, volunteering is meaningful. It really deepened relationships among employees. You can’t imagine the magnitude of the damage the earthquake and tsunami made unless you actually were there. When you see the endless debris, you really experience a sense of despair. To share that kind of feeling with other volunteers created a sense of oneness. The experience left a lasting impact. And it was good have my family involved in the volunteer work, also. I brought my husband and I thought that was really something worthwhile – to be able to share the experience with family as well.”

Aston Bridgman of Deutsche noted “We had a number of employees take up their own initiatives. Employees led the way and we have backed them with recognition, and given them the air time to go and recruit for donations or volunteers. That is a great way of recognizing staff and their concerns, and of rewarding their initiative. It is a morale booster, too, that if employees take the right initiative at the right time in the right direction, the company will see and respond to that behavior positively.”

“One employee here, who was very concerned about the whole disaster, got in his car and drove as far as he could, with a couple of other volunteers and supplies. They ended up in a town called Tagajo and started volunteering, getting to know locals and hearing more about where the real damage was. So he kept moving further up the coast and ended up in Ishinomaki, where he and a number of employees have been volunteering on a regular basis since as ‘Nadia’, a group he helped co-found and which is now applying to be an NPO.”

Several HR directors observed a surge this autumn in the use of volunteer leave, with more employees taking volunteer leave now than last spring or summer.

Vicki Beyer, Executive Director at Morgan Stanley, noted “The thing that I see is how much pride in the company is actually engendered by the company’s support of volunteering efforts.  So many people have said ‘this makes me proud to work at Morgan Stanley.’  We hear it again and again in the many contexts of Morgan Stanley-sponsored volunteerism and certainly since the disaster with the various things that we have done we have heard that a lot from employees.”

David Swan agreed. “When we talk about the positive feeling that we get from the company, I had a couple of our team tell me that their volunteer trip to Tohoku was the best thing that they have ever done hands down. Not just within the company, but ‘ever.’ We were able to give people a paid day off that wasn’t annual leave and pay for their trip from housing and food to transportation as well. They seemed very pleased that the company was prepared to do this.”

Photograph by Irwin Wong

“Volunteering really empowered members of my staff. They were so excited to be able to make a contribution. This was also true in our emergency committee following the earthquake. We changed a lot of business practices, led by employee suggestions. The people who did it said ‘Yeah, we did that! What can we do next?’ There was a new self-confidence because they were empowered to do things in a real situation.”

Ginger Griggs, vice chair of the ACCJ HR Committee, added “Spouses — particularly those who aren’t working —can also benefit from being brought into company volunteering.  Psychologists agree that in turbulent, frightening times, purposeful activity gives us a sense of control, and that sense of control bolsters our courage and ability to cope.  The period around 3/11 was a scary time for everybody, and I think many of the unemployed wives who remained in Tokyo may have felt very isolated in those initial weeks while their spouses were at work. 

“I think that for many employees who continued to show up for work even when their companies gave them the option to stay home or temporarily go elsewhere, the workplace provided a support network and an important distraction from anxiety.

“Even so, I remember one Japanese colleague poignantly telling me after 3/11 that when he would get ready to leave for work each morning, it was very painful for him to hear his six-year-old start crying, “Daddy, don’t go!”  Realizing that the little boy was very likely picking up his anxiety from the adults around him, the thought struck me like a bolt of lightning – we need to involve both spouses in company volunteering!  It’s a mutually reinforcing morale booster.  So volunteering and including, extending to the families can also be very helpful, and companies who did that I think experienced potentially even a higher peak of morale from the volunteer experiences.”

GOING FORWARD

Brasington said “going forward, vision is critical. Like many companies, we had experienced three years of restructuring prior to the earthquake. Employee fears at the time were that more would follow as a result of the economic upheaval. Will our US corporation keep investing in Japan? My responsibility now is to set a vision of the future and engender excitement to deliver it. We have focused on new products and new markets in our town hall meetings. We are sowing the seeds of a dream. But it’s got to be a dream that people can believe in and that is the leadership needed now in terms of bringing this country back to life. It is quite easy to be in the helpful mode. It is not very easy to be in the growth mode. And that is what I am looking at right now.”

Elizabeth Handover asked “how do we go forward? How do we create the vision? How do we keep everybody together? I think one thing we can’t go backwards to is what I call “Task-focused” leadership. There is only one way forward, and that is toward “People-focused” leadership. And I think volunteering is a great way to developing this kind of leadership.

“Volunteering is great for women’s leadership too actually. If you can then bring that back in to the company and link it to the way people connect with each other and do their jobs you can begin to transform an organization. I think it is communication, communication, communication. We just have to do more and more of it.”

Volunteering might be just the ticket to enhance communication and provide one way of laying the foundation for people-focused leadership.

Kayoko Blake, Morgan Stanley

Jiana Leung, Deutsche Bank

Keiko Suzuki, ACCJ HR Committee Vice Chair

David Swan, Robert Walters

Aston Bridgman, Deutsche Bank

Akemi Nakagawa, Hartford Insurance

ACCJ HR Round Table Participants

• Glynn Brasington, Pitney Bowes
• David Swan, Robert Walters
• Aston Bridgman, Deutsche Bank
• Jiana Leung, Deutsche Bank
• Kayoko Blake, Morgan Stanley
• Vicki Beyer, Morgan Stanley
• Elizabeth Handover, Lumina Learning
• Akemi Nakagawa, Hartford Insurance
• Taka Miyawaki, ACCJ HR Committee Co-Chair
• Tish Robinson, ACCJ HR Committee Co-Chair
• Ginger Griggs, ACCJ HR Committee Vice Chair
• Keiko Suzuki, ACCJ HR Committee Vice Chair

About the Author

Tish Robinson is a professor of Organizational Behavior and Systems Thinking at Hitotsubashi University. She co-chairs the ACCJ HR Committee along with Taka Miyawaki. Ginger Griggs and Keiko Suzuki serve as vice chairs. The ACCJ HR Committee is currently planning a series where companies can get advice on complex organizational problems anonymously from experts in the field. If your company is interested in participating, please email Tish at: probinson@ics.hit-u.ac.jp

Illustration by Louise Rouse

A big thank you to ACCJ members for reading – and to the Journal for inviting me to begin a 3-part series based on the newsletter I’ve been sending to friends and clients.

WHAT IS ANDREW’S AX?

I started taking wild swings with Andrew’s Ax back in 2002. As musicians know, “ax” is slang for their instrument (especially a guitar, which I happen to play). And anyone who has been fired from work or had a budget cut knows only too well what it means for someone or something to “get the ax.” You’ve probably also heard that when someone feels resentment or a grievance, we say, “They’ve got an ax to grind.”

And then there’s the actual tool used to chop wood. A framed one, known as “the Stanford Axe,” is awarded to the winner of the San Francisco Bay Area’s “Big Game,” the annual college football clash between Stanford and my alma mater, UC Berkeley.

So you can see how all these meanings are connected to my newsletter. Think of Andrew’s Ax as a tool primarily (but not exclusively) for directors here in Japan to keep themselves and their staff motivated, engaged and improving. The time you take reading it is an investment in yourself, as there’s something in each issue you can use to sharpen your own skills.

Today, let’s take some swings at what has become a bit of a lost art.

THE LOST ART OF LISTENING

In Listening: The Forgotten Skill, author Madelyn Burley-Allen divides listening into three levels. This may over-simplify things, but it’s is an easy-to-digest, effective model. Along with her basic model, I’ll share with you some real-life cases of each level that I’ve encountered here in Japan.

The highest, Level One, occurs when you are fully engaged in empathetic listening. (Some say “empathic” listening, and that’s where I will grind some ax. Because I’ve only seen one true empath, and that was Deanna Troi, the half human, half Betazoid on the television series Star Trek: the Next Generation. Still, it is true that some expert listeners may appear empathic. Not a bad appearance!)
Burley-Allen says Level One is “…listening non-judgmentally with understanding to the intent, paying attention to the speaker’s total communication, processing what is being said.” At Level One, you are fully in tune with the speaker, and if engaged in a one-on-one conversation, you find yourself in a subtle verbal and non-verbal dance, where even micro movements mirror each other.

Notice that in order to engage in Level One Listening, you need your eyes and your ears open. When I arrived in Tokyo in 1991, I remember being told, “Don’t be surprised if someone in a group closes their eyes while you or someone else talking; it doesn’t mean they are not paying attention–it may mean they are concentrating.” Well, yes, it could mean they were trying to concentrate, but this “trying” is also shutting out the body language expressed by the speaker. And I have since attended several meetings where a senior person closed his eyes in what could have been interpreted as “concentration” by some, only to then watch the person slump over in his chair and snap his startled eyes open.

On the plus side, I’ve witnessed both foreign and Japanese leaders – expert listeners – engaging in Level One listening. One way to tell is that they answer unspoken questions. Japanese are especially adept at this, and some have even received formal training in it. For example, years ago a client, a JAL purser, shared that he was taught to “listen for what the passenger might want.” The only way to answer unspoken questions is to be truly “in tune” with your counterpart, noticing micro-movements: a raised eyebrow of surprise, or a sudden shift from nodding in agreement to a hint of doubt. Since many Japanese feel that direct questions are rude, your listener may decline to ask for clarification; this means you need to be in listening mode even when speaking, and you may need to be the one to check whether or not your message is being understood. Don’t wait for their questions.

Level Two listening is when you are “hearing the words but not making an effort to understand the speaker’s intent, appearing to listen intently when in fact only slightly concentrating.” Many of us deal with people stuck at Level Two. I bet you can think of a Level Two listener right now, and if you’re honest, you can even recall the last time you engaged in Level Two listening. Today, perhaps?

I’ve seen this often during group discussions, especially with mixed culture teams. Such teams in Tokyo often span across the spectrum of language abilities. Last month, one small group we were working with consisted of two native English speakers (one with Japanese skills, one without) and two native Japanese speakers (one with English skills, one without). This situation poses all sorts of communication problems, but the biggest one is the selective lack of effort by the non-fluent speakers to do anything but wait for one of their bilingual counterparts to interpret for them. We suggest that everyone, even those not understanding the vocabulary, modify his or her behavior to match what it would be in Level One mode. If the listeners do this, the speakers will feel more encouraged, the will disclose more information, and communication will flow.

Level Two is not really listening, but it’s better than…

Level Three, which Burley-Allen calls “sporadic listening.” That’s when you are listening in spurts, just hearing rather than listening, and where you are most likely being either passive, judgmental, or both. You may think that only you know when you’re at Level Three, but your counterparts pick up on it.

A common complaint is that people rely too much on email or instant messages to communicate with someone in the same room, but often that’s because people want to at least get the feeling that someone is paying attention to them rather than being “half” listened to, at Level Two. One client’s team member complained that nearly every time she went to visit her “open door” manager, he would answer her questions without even looking up from his computer screen.

This is happening all too often, and certainly not just in Japan. Technology in general – Blackberries and iPhones in particular – has led many people to forget how to listen, at least how to listen at Level One. Just the other day, after a full morning session with a team here in Tokyo, three of us went to lunch. A Japanese HR manger (who had attended only the first part of the session), their Europe-based leader and I crossed the street for some sushi. We would have just 40 minutes together.

Less than three minutes after sitting down, the first call came to the director. He politely (is this polite?) excused himself to take the call away from the table. Five minutes later, he was back, apologized, and then halfway joined the rest of the lunch. Why “halfway”? Because he was also checking his Blackberry throughout. The HR manger said, “I never take my keitai to lunch, for exactly this reason.”

Andrew Silberman is chair of the ACCJ’s Membership Relations committee, president & chief enthusiast for AMT Group (www.amt-group.com) as well as the lead vocalist & rhythm guitar for the roots rock band Moonshots (www.moonshots.net). Direct comments or questions to him by e-mail: Andrew@amt-group.com

This is either sad or funny – maybe both – but being “on call, 24/7” is one of the reasons for burnout and a key reason for losing the art of listening. Level One listening takes time. It takes effort. And it can’t be accomplished between cell phone calls, text messages or while looking at a computer screen.

A CRUCIAL TEST

There are many ways to test your listening, and I recommend Burley-Allen’s book as a starting place. It is chock-full of assessments, exercises and insights. And perhaps your best test would be one you give yourself after your next conversation with a person with whom you’d like a better relationship. Prepare by writing down a communication goal, something like, “Level One Listening” or “Let Mr. B fully express himself.”

After the interaction, you can ask Mr. B directly, or at least ask yourself if Mr. B. would say he felt truly listened to. Did he feel better, worse or the same about himself as before the conversation? If you really listened at Level One, he should feel better.

Sharpen up your ears, pay attention to what Level (One, Two or Three) listening you’re engaged in. Listen to yourself and your team, and practice. Tune your ears first and the words you speak will be music to your followers.

Illustration by Louise Rouse

What a year 2011 has been. For people like me in the forecasting business, the past twelve months have been a powerful reminder of our need to be humble. And to be prepared to think the unthinkable: Japan’s triple disaster, the real possibility of a Eurozone break up, and America losing its triple-A rating. Yes, the events of 2011 finally made me understand what one of my mentors meant when he cautioned, “If you think you know the worst case scenario, it’s not the worst case at all.”

The good news is that this works the other way around as well – if you think you know the best case scenario, it’s not the best case at all. Let me give you an example. It plays in Greece and illustrates the power – and mystery – of money. Full disclosure here – I am indebted to a German friend who passed on this story. Its origin is from deep within the German blogosphere – a regular posting that calls itself: “Cleptocracy”. I think it’s so good it deserves more attention. Stretch your imagination, think logically, and it just keeps getting better – the magic of money.

WELCOME TO HOTEL EUROPA

Imagine a three-star hotel in the center of Athens, close to the Greek Parliament. Let’s call it “Hotel Europa.” A tourist arrives in the lobby and is greeted enthusiastically by the owner: “Hello my friend. My name is George, what is yours?”

“Wolfgang,” says the friendly young man. “I’m from Germany and am looking for a place to stay for a couple of nights.”

“Very good,” says the owner. “This hotel is close enough to Parliament to see the demonstrations, but far enough to avoid getting pestered by the tear gas. My best rooms are on the fifth floor. I’m sure you’ll like it here. Tell you what, if you leave me a pre-payment of 100-Euro, you can go upstairs and have a look at all the rooms. Best to decide for yourself what we’ve got to offer and what’s best for you. Take your time. I’ll give you the master key.”

Wolfgang says “OK” and puts a 100-Euro note on the counter. He takes the masterkey, puts his backpack over his shoulder and walks to the elevator. As the doors close, the Hotel Europa owner thinks “Wolfgang doesn’t look like the kind of guy who needs a receipt.” So he picks up the 100-Euro bill and calls for his nephew Stavros.

“Stavros, can you do me a favor? Please take this 100-Euro note over to Manolis. You know, our green-grocer from around the corner? I owe him money. Give him the note and tell him he can keep the change.”

The boy runs over to Manolis and hands him the money. Manolis is happy to see Stavros, thanks him and says, “Here Stavros, take an apple. And since you’re here, would you mind taking the 100-Euro note to Petros. Petros runs the machine repair shop around the corner. He fixed my cash register with some new parts a couple of months ago and I still owe him the money. Please give the 100-Euro to him. He can keep the change.”

Stavros runs down to Petros’ shop, tells Petros that Manolis sends his best regards for fixing the cash register, and hands him the 100-Euro note. Petros is overjoyed and gives the boy a pack of gum. Just as the boy turns to leave, Petros remembers that he still owes some money to Gianni for eating in his tavern. “Hey Stavros, do me a favor,” he says. “Please take the money over to Gianni in the tavern across the street. Send him my best. Tell him to keep the change.”

I LOVE MY NEIGHBORS

Stavros leaves Petros’ shop with a big smile. He’s been running around for about 10 minutes, still carries the 100-Euro note, yet picked up a free apple and pack of gum. The boy enters the tavern, where Gianni walks from behind the bar to greet him. Everybody in the neighborhood knows the friendly child. Stavros conveys greetings from Petros and gives the money to Gianni. Then he asks for a glass of water. Gianni smiles, pulls some freshly cooled lemonade from the fridge and gives it to the boy. The boys smiles and thinks “an apple, a pack of gum, and now a free lemonade – I love my neighbors!”

Just as Stavros is about to run off again, Gianni puts his hand on the boy’s shoulder and says: “Since you’re here, could you do me a favor? Can you take the 100-Euro and to your uncle George? Last weekend, I had an argument with my wife, so I slept at his hotel. I owe George about 100-Euro. He can keep the change. Could you do this for me?”

OK, says Stavros. At least I’ll get back to the hotel now. It’s just around the corner. As he walks into the lobby, Stavros sees his Uncle George behind the reception desk and walks over, putting the 100-Euro note back on the counter. “Here, Uncle George. It’s from Gianni. He says he still owes you some money. And keep the change.”

Jesper Koll is a Managing Director and Head of Research at JP Morgan Japan Securities Inc. He has been analyzing and investing in Japan since becoming a resident in 1986.

George immediately hands the 100-Euro note back to Wolfgang, who leaves Hotel Europa hoping for better accommodations. Of course, he has no idea how many people are now free of debt and free of worry – all because of that 100-Euro note now tucked back in his pocket.

As an economist, it is often hard to explain how “fiat money” actually works. Just remember that sometimes only a fleeting moment of contact with money can have unimagined and powerful effects. That is the “magic of money.” Could it get any better?

A Happy Holiday Season to all readers!

Photo: Lom - Fotolia

Although the actual facts are not yet fully clear, media reports suggest the company bought several other firms at high prices and quickly wrote off most of the investments. In addition, they paid an advisory fee on a foreign acquisition that was way above market standard. While this is far from the first time that management of a publicly-traded Japanese company has been suspected of misusing shareholder capital, what has made the Olympus situation so different has been how quickly both the Tokyo Stock Exchange and the Japanese government have noticed the problem and taken reasonably bold action.

As I wrote in last month’s column, recent management buyouts at two listed companies and the hostile takeover of a third have raised expectations among international investors that Japanese stock prices will finally rise to narrow the huge gap between market capitalization and net asset value. A number of offshore funds are combing through little known small- and mid-cap companies to try and figure out the next likely management buyout targets.

As Atsushi Saito, president of the Tokyo Stock Exchange recently stated in the wake of the strange actions by Olympus, “There are laws to protect shareholders.” Up until now, foreign shareholders have never felt particularly well protected, but the situation is beginning to change. The subsequent scandal at Daio Paper, in which the former chairman personally borrowed more than 10 billion yen from various group companies, most likely came to light because of the scandal at Olympus.

For real estate investors, the Olympus situation has the potential to shake up management at public companies generally and to free up a variety of heretofore hidden assets.

Seth Sulkin is the President and CEO of Pacifica Capital K.K., a Tokyo-based real estate asset manager specializing in commercial properties.

In the Japanese real estate market, one of the biggest problems at the moment is the lack of large and stable or high-yielding assets available for sale. Even for companies that did not blatantly throw away shareholders’ money, calls for increased corporate governance and the investigation into Olympus by the Securities and Exchange Surveillance Commission should lead to big changes over time in management practices.

Such a source of asset sales is sorely needed in the real estate market, where there is a paucity of large deals between unrelated parties. Domestic and foreign professional investors are avoiding putting assets on the market as they hope for a recovery in prices. There are scattered deals in distressed properties and loans, but not the consistent flow that many experts have been predicting since the global financial crisis.

Events at Olympus, Daio Paper, Kojitu, Tachihi and Shin Tachikawa are getting foreign investors more excited about prospects in Japan than I have seen for years. And I expect emboldened independent directors and shareholders to be more aggressive in holding management of public companies responsible for their stock price – a concept that until now was considered heresy in Japan.

Although the number of foreign visitors has gradually increased in the past few months, Japanese officials are doubling efforts to convince travelers that Japan is a ‘cool’ place to visit.

Most recently, the Japan National Tourism Organization (JNTO) has proposed a plan to offer 10,000 lucky travelers free flights to Japan—the winners will still have to pay for their own food and lodging, however. In return for free airfare, participants will be asked to write up a report of their experiences to be published online at a later date. The plan however, is still in its nascent stages and must pass a budgetary review in March 2012. If approved, JNTO estimates it will cost the agency roughly 1.1 billion yen, or 10 percent of its overall budget for 2012.

Contributing to the sharp, post-March 11 decline in tourism is Japan’s battered image abroad due to nuclear concerns in Fukushima. The solution? Rebrand Japan Inc. overseas via Japanese pop culture. At the Ministry of Economy, Trade and Industry (METI), the brains behind the ‘Cool Japan’ marketing campaign are aiming to quintuple Japan’s ‘cultural exports’ to 11 trillion yen by 2020. As part of the campaign, ministry officials are planning to host an exhibition of Japanese animation, food and fashion next March in Mumbai. The ministry also hosted a similar exhibition for anime and related products for Indian school children in early December.

In the meantime, Mitsubishi Real Estate Co. will also open a new tourist information center on January 2 to promote the Marunouchi district. The center will also host a number of cultural activities such as seminars and workshops, as well as offer free Internet access and a library of tourism-related books for visitors.

Culinary M&A

Cheap prices and quick service combined with the strong yen has led both foreign and Japanese fast food firms to look overseas for growth.

Popular beef-bowl chain Yoshinoya recently announced that it would triple its overseas outlets to 1,500 stores by February 2016. The company also plans on increasing its domestic stores from 2,200 to 3,000 for a grand total of 4,500 new stores. Tentatively, the company has indicated that it plans to expand its reach in mainland China, where according to Yoshinoya President Shuji Abe, same-store sales are posting double digit growth.

U.S. investment firm Bain Capital LLC also recently closed a deal to buy Japanese restaurant chain operator Skylark from Nomura Holdings Co. for a reported 250 billion yen. Though Bain Capital has stated that they first intend to expand the Skylark chain within Japan, the company has also expressed interest in expanding the number of outlets in the rest of Asia. The sale represents one of the largest acquisitions by a foreign firm in the Japanese market since Lehman Shock in 2008.

Meanwhile, two years after leaving the Japanese market, American hamburger chain Wendy’s has returned to Japan. In a new joint-venture partnership with food importer Higa Industries, the company will reopen its doors in early December in Omotesando. Wendy’s initially shuttered its doors at 71 Japanese locations in December 2009, after it opted out of its franchise agreement with then partner Zensho Co., Ltd. This time around, Higa Industries CEO and President Ernest Higa has indicated that Wendy’s Japan will add new products such as premium sandwiches and hamburgers with gourmet ingredients to set itself apart from the competition.

Back to School

Forget about late nights at the office and company nomikai. The latest trend among Japanese salarymen? Going back to school. According to a recent report in the New York Times, Japanese businesspeople between the ages of 25 to 35 are leading a growing phenomenon of workers putting in hours after work to earn graduate level business degrees—in Japan.

This marks a shift from traditional methods adopted in the 1980s where only a select number of Japanese workers gained company-sponsored professional degrees at overseas universities. Figures from the Ministry of Education indicate that the number of graduate-level business programs in Japan has grown substantially over the past five to six years. Since 2003, more than 30 domestic M.B.A programs have been accredited, admitting roughly 2,300 new students each year. To accommodate Japanese workers, many of these domestic programs also offer online courses or hold classes after the working day has already ended.

On the other hand, Japanese corporations are also enrolling more of their employees in overseas education programs in an effort to globalize. Mizuho Financial Group, Japan’s second-largest bank, recently started a program to send promising local staff to attend leadership courses at the National University of Singapore with participants of from various Asian countries such as Indonesia, Vietnam, China and India. On a similar note, Toyota Motor Corp. recently announced plans to offer a study-abroad program in 2012 for a selected group of new hires in Japan. The company will send as many as 10 new hires to the University of Pennsylvania for six months, covering expenses such as tuition and round-trip airfare.

Smartphone Boom

Japan’s growing addiction to smartphones shows no signs of stopping as domestic telecom and electronics firms look to attract customers by enhancing their smartphone offerings.

Putting an end to Softbank’s monopoly as the only carrier of the iPhone in Japan, KDDI recently struck a deal with Apple to become the second Japanese provider of the recently launched iPhone 4S. The deal is expected to heat up competition between the two firms, with KDDI boasting greater connectivity while Softbank emphasizes its cheaper prices and expertise of its staff in regards to Apple products.

Not be outdone, DoCoMo will also offer a flat-rate subscription plan for smartphone users in addition to a new line-up of phones utilizing its high-speed Xi (pronounced “cross-y”) data communication service. To offset competition brought by the iPhone 4S, DoCoMo will cut its monthly data fees by 1,575 yen to 4,410 yen—the same amount charged by Softbank. Similarly, Sony Ericsson recently announced that it would shift its entire focus toward producing smartphones in 2012. Sony has since bought out Ericsson’s 50 percent stake in the joint venture, valued at $1.5 billion. At present, smartphones account for 80 percent of Sony Ericsson’s sales, while its global market share for Android-based smartphones stands at roughly 11-12 percent.

Figures from MM Research Institute Ltd., predict that the number of smartphones shipped in Japan this year will increase to 19.86 million units, 2.3 times that of shipments for last year. Furthermore, shipments are expected to grow to 30.56 million units by 2015.

Eco-conscious Energy

Following the nuclear dilemma arising from the March 11 disasters, many of Japan’s leaders have publicly vowed to reevaluate the country’s energy policy—in particular, its dependence on nuclear energy. After a summer of setsuden, government officials and business leaders are finally making good on their promises.

In a Nikkei report, a panel of cabinet ministers from energy and environmental agencies will present a list of 93 recommendations to the government in regards to expediting Japan’s plans to build renewable energy power plants. Among the panel’s reported recommendations are measures aimed at relaxing regulations surrounding water rights permits and geothermal resource drilling at national parks. The suggested measures could go into effect as early as the current fiscal year, which ends March 31, 2012. Prior to the disaster, Japan’s energy policy aimed to increase the country’s nuclear power dependence to roughly 50 percent of all energy production by 2030.

Japanese corporations are also keen to invest in renewable energy technology. Mitsubishi Electric Corp. recently announced that it has started full-scale tests of a new smart grid power system in Japan. The project will purportedly help both companies and households save energy as well as limit blackouts and brownouts caused by natural disasters, by implementing a more advanced energy infrastructure. The company has stated that it aims to boost smart grid component sales from 800 billion yen in fiscal 2010, to 1.3 trillion yen by fiscal 2015.

On a similar note, government officials are also calling for greater cooperation with business leaders and communities in regards to environmental cleanup in Tohoku. Environment Minister Goshi Hosono has stated that the government may reconsider its current pledge under the Kyoto Protocol to reduce greenhouse emissions by 25 percent, in light of the nation’s current energy dilemma. Hosono also called for increased decontamination efforts and disposal of radioactive debris at the Fukushima Dai-ichi nuclear power plant.

Recovery Initiatives

Eight months after March 11, the Japanese government is looking to jumpstart Japan’s economy with a host of initiatives aimed at ensuring a smooth, long-lasting recovery in Tohoku. Also on the agenda, Finance Minister Jun Azimi has indicated that the government will take steps to ease the impact the strong yen has had on Japanese companies in recent months.

Put succinctly, government officials indicated that they would focus on doubling the sales tax, balance the budget, and work closely with G-20 member nations to achieve a stable reconstruction plan for the Tohoku region. As such, the government is creating a third supplementary budget estimated at 12.1 trillion yen in fiscal 2011, to help finance reconstruction work up north. Of that amount, roughly 9.24 trillion yen will be set aside for costs directly linked with rebuilding, while another 1.56 trillion yen will be set aside as grants to regional governments to rebuild roads and resettle evacuated residents.

Foreign firms will also benefit from these new measures, as the Japanese government has announced a planned 5-year tax exemption for non-Japanese companies which set up businesses in the prefectures directly impacted by the March 11 disasters. The move comes as Japanese leaders work to ease the impact of the strong yen. Other significant measures under consideration include subsidies for foreign firms to build factories elsewhere in Japan and funding for Japanese firms to make overseas acquisitions.

Lastly, the Japanese government announced it would partner with the World Bank in a two-year project to study disaster risk management. The aim of the project is to share knowledge gleaned from Japan’s experience in order to help developing countries improve their disaster risk management and reconstruction. An interim report will be made available next fall at the annual meeting between the World Bank and International Monetary Fund.

Foreign Talent

Recruitment season in Japan is shaping up with a decidedly foreign twist. As major corporations adjust to accommodate new realities brought on by March’s earthquake, job seekers in Japan are left navigating an increasingly uncertain domestic labor market.

Difficult economic times have caused a number of Japanese companies to scale back personnel in an effort to reduce labor costs. Mizuho Securities will reportedly slash its domestic workforce by nearly 10 percent, cutting roughly 700 jobs by the end of March 2012. In a similar vein, Panasonic also recently announced it would trim its TV business, eliminating more than 1,000 jobs in the process through a voluntary early retirement program. Meanwhile, TEPCO has stated that it will not hire new graduates for fiscal 2013 in addition to offering voluntary retirement plans to older contract workers, reducing staff by a total of 3,600 employees by March 2014.

While the news appears grim, a recent figures from the Regus Business Confidence Index—a twice-yearly global survey of 12,800 business leaders—suggests that major Japanese firms are looking overseas to find talent; 63 percent of big businesses in Japan indicated plans to hire foreign staff—the highest ratio among all countries in the survey. Eyeing the Asian market, major department store Takashimaya stated that foreigners would account for roughly 10 percent of new hires next spring. Meanwhile, just this past October, Rakuten made good on its promise to create a more global workplace; nearly 75 percent of new hires joining the company this year were foreigners.

Illustrations by Rio Sleue

Seriously, on the scale of the world’s most disliked professionals, journalists rank slightly higher than politicians, tax collectors and those annoying people who come to your door seeking money for NHK. Even lawyers loom larger, thanks to wonderful people like Bob Grondine, the former ACCJ President and Chairman, fondly remembered in words and pictures in this issue (“Goodbye to a Friend,” page 22).

Journalists are scorned, vilified and ignored. We are the bad guys in movies and on TV, often portrayed as ruthless or unscrupulous characters who take advantage of unsuspecting prey. If we call you about a story, we are more likely to be hung up on than a Tea Party member who dials the White House.

No, journalists are not the world’s most popular people. And that’s too bad, because where would we be without a free press? Where would we find out about issues that matter to us, to our businesses and to our community? Where would we learn about tax hikes, regulations or new communicable diseases? Most importantly, where would we discover what our elected leaders are doing – or not doing – on our behalf?

So press freedom is honorable and to be cherished. It was important enough to America’s founding fathers that they included it in the Constitution. Journalists may be despised, but what is the alternative? Like baseball umpires, the game cannot go on without them.

Okay, end of sermon. You’re probably thinking that we’re about to turn the Journal into the print version of 60 Minutes. Not so. This is not a magazine about investigative journalism or even daily news. It’s about people; specifically those of you who make the ACCJ work. But journalism isn’t just about breaking news; it’s about human beings and what is important to them in their daily lives.

The ACCJ Journal is your magazine and we want to help you tell your own stories. We want to share your successes and publicize your desires for a better business climate in Japan. The ACCJ does great work and we want everyone to know about it. So in the coming months, we will produce a magazine that you want to read, featuring articles on topics that we believe you will find informative, useful and engaging.

We will also continue to keep you up-to-date on important ACCJ roundtable discussions and committee meetings, because we know that members are busy and cannot always make every meeting.

But we can’t do it alone. If this is your magazine and the stories inside are about you, then we need your help. We want you the members of the ACCJ to contribute to the success of your own publication.

As many of you know, I also conduct media training and speech communications workshops. I begin my seminars with the phrase: “Make the Media Work for You.” That philosophy explains my approach towards media relations; it is not enough to be reactive with the media; one must be proactive to get the story out. The media should not be viewed as something to avoid but as a conduit to a larger audience – a way of reaching new clients, customers, competitors, shareholders and the general public.

Smart media relations people know that the media is not the enemy – it’s an opportunity to tell their own story to the world.

That is how I hope you will view this publication in the future. The Journal is your way to reach a wider audience, to let 3000 of your fellow ACCJ members know what’s going on with your business. If you look down to the bottom right corner of this page, you will see my email address. Use it, because I want to hear from you. Send me your story ideas, event announcements, and news about up-coming committee meetings. Let me hear your thoughts, comments, suggestions and criticisms about what you see – and want to see – in this magazine.

Because it’s easy to sit back and criticize the media for not reflecting your views. It’s more difficult to participate and have your voices heard. Here’s your chance. This is your magazine and I’m waiting to hear from you.

Please contact us at:
mike@accjjournal.com

Michael Alfant
ACCJ President
malfant@accj.or.jp

This year (October 26th-28th) marked the 16th anniversary of the ACCJ Diet Doorknock (“DDK”). The Doorknock a unique opportunity for us to engage in a dialog with important members of Japan’s Diet and other senior officials.

We met with 63 members of the Diet, from ordinary members to Cabinet-level officials, from both houses and all major political parties. Our primary focus (although each meeting was somewhat unique) was on Tohoku Reconstruction, Growth Strategy, and TPP.

On Tohoku, much of the discussion centered on the establishment of special economic and free trade zones, the use of private sector capital to rebuild infrastructure through expanded utilization of the recently amended PFI (Private Finance Initiative) law, and the continuing contribution of ACCJ member firms. I would note here the universal expressions of appreciation we received by everyone we met with in recognition of the support and friendship of the American business community and Americans in general.

On Growth Strategy, we of course utilized one of our key Advocacy documents, the Growth Strategy White Paper, as the basis of our remarks. Here we went through our familiar points, namely that achieving sustainable economic growth will be the best way to foster Japan’s recovery, that ACCJ has remained committed to Japan and our bi-lateral relationship for over 60 years and make what we believe are helpful suggestions for the entire community. Also, that Japan needs to make further efforts to encourage new company formation by Japanese individuals and facilitate more foreign direct investment (FDI) in order to increase employment over the long term.

Regarding TPP, we noted that Prime Minister Noda has taken a forward looking approach to the possibility that Japan might join the TPP negotiations. Of course, the ACCJ’s position is that the decision concerning whether to join the negotiations or not is completely up to Japan, based on its view of its national interests. While we also understand that some in Japan will argue strongly against Japan’s participation, we believe that a successful TPP negotiation which includes Japan as a critical partner is in Japan’s overall best interests and that of other countries in the Asian region as well. Clearly, participation in TPP will allow Japan to have a greater voice in setting the 21st Century trade and investment agenda in Asia, and drive new business models, services and techniques to be introduced into Japan’s service sector which now accounts for more than 80% of GDP. The Diet Doorknock meetings typically lasted about 25 minutes.

While any given meeting may or may not have a lasting impact, my feeling is that taken in aggregate, these meetings do constitute a critical aspect of engagement in, and communication with, one our most important constituents, Japanese Government officials. In closing, I’d especially like to thank Arthur Mitchell, the Chair of our Government Relations Committee, for his stellar work in organizing and executing this year’s Doorknock. I’d also like to thank Ambassador Roos for hosting us at his residence for a reception in honor of the Doorknock. Lastly, but most importantly, thank you to all the volunteer leaders who took the time out of their busy schedules to participate in the meetings. Early feedback is that this year’s Doorknock was especially well received; I’m already looking forward to doing it all again next year.

Illustration of Steve Jobs, Co-founder and CEO of Apple Inc., 1955-2011

After decades of trials and tribulations including an acrimonious resignation from the company in 1985, a triumphant return as CEO in 1997, mainstream hits such as the iMac, iPod, iPhone and finally the iPad, Jobs’ legacy as the man most responsible for popularizing technology products among non-technical consumers is secure.

When I interviewed Apple co-founder Wozniak back in 2002, he confirmed this legacy of mainstreaming technology, saying, “Steve Jobs has been acknowledging the computer as the home digital hub in more than just words and concepts. Apple has come out with software that truly brings home the advantages of a more convenience-oriented lifestyle, and that makes these tasks easy for average people.”

But for a few twists and turns, the history of computing might have turned out quite differently. Many years after his return to Apple, Jobs said that being gradually pushed out of his own company might have been one of the best things to happen to him. But in 1985 the urgency and concern about his future was pronounced. In a letter to Newsweek, Jobs went public with his resignation and wrote:

“I find myself both saddened and perplexed by the management’s conduct in this matter which seems to me contrary to Apple’s best interests. Those interests remain a matter of deep concern to me, both because of my past association with Apple and the substantial investment I retain in it… As you know, the company’s recent reorganization left me with no work to do and no access even to regular management reports. I am but 30 and want still to contribute and achieve.”
And achieve, beyond anyone’s wildest imaginings, is exactly what he did.

“Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma, which is living with the results of other people’s thinking. Don’t let the noise of others’ opinions drown out your own inner voice, heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.” –Steve Jobs

Although most focus solely on Jobs’ work in the world of computing, it must be noted that he is also responsible for essentially saving American animation with his acquisition (during his exile from Apple) and careful curation of Pixar, the most successful animation studio on the planet. Aside from the astounding technological progress delivered by Pixar’s masters of computer animation, it was Jobs, Ed Catmull, and John Lasseter, working as a team and focusing on story over marketing and effects, that turned the small studio into the industry defining powerhouse it is today. When the inevitable Pixar theme park is established, like Disney, it will be the spirit of Steve Jobs watching over the children cavorting with the costumed versions of Buzz Lightyear and WALL-E.

Such a mix of art and technology is what truly distinguishes Jobs from his peers. Indeed, many valuable contributions made by others in fields of technology, science and art have improved many of our lives in ways Jobs never could have. But the marriage of a kind of “philosophy of technology” and product excellence is the reason so many non-business people have taken such great notice of the largely media shy innovator. Some have raised comparisons to Thomas Edison, or even Henry Ford, but the truth is that Jobs was far more similar to Walt Disney. By creating an entire ecosystem of products and readily definable operating practices, Jobs, much like Disney, invented not just products, but “experiences.”

At the foundation of the Jobs story lay the roots of what would later become staples of the simplicity and ease-of-use now common to all Apple products—his fascination with ideas behind Zen Buddhism. In this way, Asia, and Japan in particular, had an overwhelming and far-reaching influence on Jobs and everything he produced. Though Jobs himself never publicly confirmed a strict adherence to the practice, he was indeed very open about his admiration of its various tenets. In fact, in 1991, when Jobs married his wife Laurene Powell, the ceremony was presided over by Zen Buddhist monk Kobun Chino Otogawa, a Japanese man from the small town of Kamo, in Niigata Prefecture.

Jobs’ fascination with Zen Buddhism is so engrained in the American business community’s psyche that just months before his death, Forbes announced a graphic novel tribute to the man titled “The Zen of Steve Jobs.” And even when making the rare on-the-record comment for a reporter, somehow, Zen seemed to slip though. In a 1998 Businessweek interview, responding to a question about the simplicity of Apple products, he told the reporter, “Simple can be harder than complex: You have to work hard to get your thinking clean to make it simple.”

But Jobs’ interest in Japan wasn’t limited to the spiritual realm, he was also a devout fan of one of the country’s electronics giants—Sony. In an interview last year, former Apple CEO John Sculley offered deeper insight into Jobs’ obsession with the Japanese company. Recounting the 1985 version of Jobs that he knew (the last time the two had any meaningful connection), Sculley said, “The one that Steve admired was Sony. We used to go visit Akio Morita and he had really the same kind of high-end standards that Steve did and respect for beautiful products… Steve’s point of reference was Sony at the time. He really wanted to be Sony. He didn’t want to be IBM. He didn’t want to be Microsoft. He wanted to be Sony. Akio Morita was clearly one of his great heroes.”

Morita’s influence on Jobs even extended to his attire. According to Jobs biographer Walter Isaacson, in the early ’80s Jobs, in a bid to emulate the uniforms worn at Sony at the time, recruited the talents of Japanese designer Issey Miyake. But when his uniform idea fell flat with Apple employees back in the U.S., he decided to create his own uniform. Jobs said, “I asked Issey to make me some of his black turtlenecks that I liked, and he made me like a hundred of them… That’s what I wear,” he said. “I have enough to last for the rest of my life.” That’s right, even Jobs’ iconic black turtlenecks are, essentially, of Japanese origin.
The irony of this deep, multi-tiered connection to Japan is that many of the Apple fans that rushed to Apple’s stores in Ginza and Shibuya with flowers, candles and messages of thanks to show respect to his memory probably have little awareness of how much of a direct impact Japan had on the American brand and innovator they’ve come to love.

Of course, while many are still mourning his death, and singing his praises, there are those who remain skeptical of the man and his overall approach. Some cite the fact that there is no discernable charity associated with the late billionaire, an observation that would seem to fly in the face of the widely held belief that true charity happens outside of the spotlight, without any public recognition. We may never know what, if any charity Jobs associated himself with.

What we do know about his non-business pursuits is that Jobs had an active connection to President Barack Obama, meeting to discuss technology, jobs and the state of the country. Jobs himself was largely careful about striking any particularly public political profile, but his wife Laurene Powell Jobs, the co-founder and President of the Board of College Track (an after-school, college preparatory program), was appointed by President Obama in 2010 to be a Member of the White House Council for Community Solutions.

“You can’t connect the dots looking forward. You can only connect them looking backwards, so you have to trust that the dots will somehow connect in your future. You have to trust in something— your gut, destiny, life, karma, whatever—because believing that the dots will connect down the road will give you the confidence to follow your heart, even when it leads you off the well-worn path, and that will make all the difference.”
–Steve Jobs

Interestingly, when I asked Wozniak about the prospects of tablet computers becoming mainstream, a full 8 years before the debut of the iPad, he said, “I do think they have a place in the world. They may someday even predominate over laptops. But today’s laptops are so good, and so important, that it’s almost impossible to give up. You get used to one type of machine and it’s like a tablet will be a secondary machine. Kind of like a PDA, something maybe I carry for other purposes. I prefer one laptop doing all my major functions in the world… So where’s the room for the ‘second car,’ you know. I don’t have that room in my life anymore to have too many computers. They all take too much time.” But, as you might guess, today Wozniak has confirmed that he owns several iPads.

This brings us to what may be the most important aspect of Jobs’ legacy, the ability to divine a future that many, even those close to him, simply could not envision. Microsoft was the first major technology company to show us a working tablet computer, but Apple figured out how to actually make it a practical part of our everyday lives. Sony revolutionized portable music with the Walkman, and a series of digital music players, but Apple cracked the code on how to popularize the dynamic of digital music downloads in your pocket. Smartphones existed before the iPhone—most notably a myriad of feature-rich Japanese handsets, once the envy of the entire industry—but Apple unraveled the mystery of how to make these powerful mobile devices simpler, and thus more accessible to even the most inexperienced consumer.

Given up for adoption as a child, dyslexic, a college drop-out, pushed out of the very company he founded…these challenges were all central to making Steve Jobs the man he became. Without that specific set of challenges, it’s possible that Apple might not even exist today. It’s true that there have been a number of successful technology companies founded in an attempt to change the way we live and interact in our daily lives. But were it not for Apple, the reality of our relationship to digital technology would likely look very, very different.

Overcoming his own set of personal challenges, Jobs managed to excel in a way that transcended business and reached into the arena of life philosophy and basic human endeavor. Thus, despite his great many technological and business accomplishments, in the wake of his death last month, the one idea that resonated most powerfully across the Internet and on pieces of paper stuck to the windows of Apple stores in Hong Kong, Shanghai, Australia, and Japan was a simple phrase Jobs once borrowed to sum up the source of his power, and life philosophy: “Stay hungry, stay foolish.”
He will be missed.

On October 3rd a panel discussion on radiation and food safety was hosted by Jonathan Kushner and Jay Ponazecki, Co-Chairs of the ACCJ Tohoku Revitalization Task Force. The panel included Wade Allison, nuclear expert and medical physicist, emeritus professor of physics at Oxford University, and author of the book, “Radiation and Reason, The Impact of Science on a Culture of Fear,” Akira Tokuhiro, professor of nuclear and mechanical engineering at the University of Idaho, with additional comments from Noriyuki Shikata, Director of Global Communications in the Prime Minister’s Office.

Engineering Challenges at Fukushima

“We live in a post-Fukushima world. That is clear,” stated Professor Tokuhiro. “We have challenges…right now and for many years ahead… However, it is not a daunting task in terms of the technical aspects.” Tokuhiro started the evening with a list of engineering challenges. “First, there are certainly time-sensitive issues…challenges [that] will be here for years to come [and] multi-year expenses.” Tokuhiro noted, “The technical challenges are really not impossible…Fukushima is certainly larger than the U.S. experience at Three Mile Island. And it is relatively a new experience in Japan. However, we do have experience all over the world in the clean-up effort.”

He also noted there are safety issues in terms of the nuclear plant site weathering and waste challenges. These challenges are on-site as well as in terms of waste management, storage and clean up. A large workforce is needed for the clean up, and it will be important to monitor such workforce’s radiation exposure and post-exposure health.

Tokuhiro continued, “We are still doing hot-spot mapping. Actually it is going pretty well, I think. It certainly needs to be a continued effort…More data provides more resolution. People who are close to [or living in] the hot-spot areas…should have options for radiation monitoring. Some villages or cities will be taken off the list of contaminated areas I think. There is a bit of a disconnect between 10, 20, 30 kilometers and where the actual fall-out is. So south of Fukushima there are certainly villages and cities that are relatively free from contamination.”

Regarding topsoil, Tokuhiro commented that clean up “certainly needs to happen…to make the area safe. [Professor Allison will address] whether it is actually needed in terms of [current] radiation levels… Locations for the safe re-deployment of the soil must be established. We saw that, where some of the playgrounds have topsoil taken out, there are tarps on the contaminated soil that cannot sit…for an indefinite amount of time.”

Tokuhiro reminded everyone that food safety generally is now a global issue; it is not just a Tohoku issue. He also discussed how risk is relative to each individual and involves the balancing of benefit and risk perceptions. In weighing the risks of food consumption, one also has to factor in human resiliency. Tokuhiro said “It is self evident that each individual’s biological makeup is unique,” and resiliency is the “ability of a body to accommodate and mitigate the negative health effects of the toxins to which one is exposed.”

He noted that individuals ingest many toxins in today’s polluted world and suggested that one should not single out radiation, highlighting that it is important to weigh the risks after considering updated information based on confirmed and independent measurements.

Radiation in medicine and the Envrionment

Professor Allison began, “I come entirely from the outside (having no links to the nuclear industry), having looked at this problem independently of the Fukushima experience. Having been to Minami Soma last weekend, I was immensely impressed that after six months you can see all of the [deserted] shops and houses… One can only imagine the human suffering, stress and the disconnect in families.”

Allison explained how the effect of radiation depends on the dose and the period over which the dose is administered. According to the professor, just like Paracetamol (aspirin) tablets, if one took 100 tablets all at once, one would have to be hospitalized, whereas, if one took 100 tablets spread out over two or three weeks, one would experience pain relief. So, from his viewpoint, just like the Paracetamol tablets, one should not be surprised that body can cope with certain levels of radiation exposure spread out over time.

He went on to explain that today there are many benefits from radiation diagnostic scans such as a CT scan, which is basically an external dose of radiation. To get a clear CT scan, one needs five to ten milli-sieverts of external radiation. A PET scan involves an internal dose as one’s body is injected with radioactive material, which is then imaged. Both procedures come into wide use within the medical profession. Allison further elaborated by detailing that CT and PET scans involve whole body doses of about 15 milli-sieverts, and pointing out that the types of radiation exposure resulting from Fukushima involve internal and external sources of radiation. Thus his contention is that while technically they are not the same as medical purpose radiation, their effects on the human body are not that different.

So how does this compare with the risks of food safety in Japan? Based on current readings, Allison believes food in Japan is safe for consumption, but did not get into a discussion of meats, seafood and produce on an item-by-item basis. He referred to the regulations published by the Japanese government on July 27, which stated that eating one kilogram of meat with a regulation limit of 500 becquerels per kilogram is a dose of 0.008 milli-sieverts. Professor Allison independently confirmed this calculation.

Allison also said, “When you ingest cesium, it does not go to any particular organ; it more or less moves out of the body, just like the radioactive fluorine in a PET scan.” To get the same dose as in a CT/PET scan, one would have to eat 2,000 kilograms of contaminated beef. Allison commented, “The regulation as it stands is unreasonable. That does not mean to say that it is wrong; because regulations are to do with what people accept, not just from the scientific point of view. Basically we all marched, demonstrated and voted during the Cold War era to reduce any radiation in our lives to an absolute minimum. So they…drew up advice to reduce radiation to as low levels as reasonably achievable…15 milli-sieverts is not a dangerous level. We get it in CT/PET scans; which we are quite happy with.”

Allison continued, “At Chernobyl, some workers received fatal doses of radiation in the initial putting out of the fire, but no worker with less than 2,000 milli-sieverts died of acute radiation syndrome; which is the illness where the body gets so much radiation that it shuts down. At Fukushima, the TEPCO figures, which have been accepted by the American Physics Society, recorded that 30 workers received doses between 100 and 250 milli-sieverts. That is one-tenth of the lowest dose at which a worked died at Chernobyl. So we can see that there would be no deaths from acute radiation syndrome at Fukushima.”

Evacuation Criteria & Medical Applications

To put current levels of radiation into context, Allison further discussed radiation exposure in medicine because most people trust the medical profession. When radiation is used to treat cancer, a fatal dose of radiation is given to kill the cells in the cancerous tumor. The tumor gets a dose of 2,000 milli-sieverts per day over a period of several weeks. Healthy parts of the body also get a dose of up to 1,000 milli-sieverts per day which comes to approximately 20,000 milli-sieverts per month.

That is five times the fatal dose experienced at Chernobyl. Allison remarked that is possible because “The healthy organs are getting 1,000 milli-sieverts and have just enough time to recover most of their functions and get repaired before…the following day[’s treatment]. The cancerous tumor cells do not have enough time to recover and after several weeks most of the tumor cells are dead and most of the healthy cells are still in business. Radio-therapy would not work if biology did not in fact repair damage from radiation.”

With regard to the evacuation criteria applied around Fukushima, Allison noted “The level at which decisions were taken, we are looking at 20 milli-sieverts per year which is a lot different to 20,000 milli-sieverts per month. Although admittedly that is 20 milli-sieverts a year to the whole body whereas the 20,000 milli-sieverts a month is to a relatively local area. But it is still true that the radio-therapy equivalent is very, very large compared with people being forced out of their homes with enormous personal damage and stress levels. So the way that these criteria have been set up according to the international committee makes no concession for the damage to personal, social and economic health associated with evacuation.”

Further Comparisons With Chernobyl

Allison continued, “When you have a look at the literature… as recently as February 28th, just a few days before the earthquake, when the latest U.N report on Chernobyl came out, it confirmed the conclusions of the IAEA report and others of 2006, that there was far more damage done to the social structure and people’s mental health, stress levels and so on and that this was a far bigger health problem than any possibly due to radiation. One wonders whether these reports have been read and the lessons applied to Fukushima. Certainly the advice from the ICRP has not been updated in this respect.”

Cancer Research on Atomic Bomb Survivors

The most extensive radiation-induced cancer research has been on the survivors of Hiroshima and Nagasaki, whose records have been followed for 50 years with a large sample size. On average Hiroshima and Nagasaki survivors were exposed to 160 milli-sieverts, and their average cancer risk increased by one in 15. Higher exposure does show increased risk. At high exposure levels, the extra risk per 1,000 milli-sieverts is up nearly ten percent. Allison noted, “But for those who received doses of less than 100 milli-sieverts, the extra risk is consistent with zero; even in this extraordinary large set of data, which I hope is never repeated. So…it is perfectly sensible to consider that below 100 milli-sieverts there is no radiation risk.” (Refer to Table 1)

Solid cancer deaths among Hiroshima and Nagasaki survivors 1950-2000, separated by dose range (Preston et al, 2004)

Table 1

“Expected” means the number of deaths predicted from those in other cities. Doses highlighted have risk compatible with zero (final column).

Below is an illustration (Refer to Figure 1) of various radiation doses. The big red area is the dose to a tumor in cancer therapy which is greater than 40,000 milli-sieverts per month. The tan rectangle shows the dose per month for healthy tissue which is tolerated by the public. The little arrow at the bottom is pointing to the ICRP public lowest achievable level which is one milli-sievert per year or 0.1 milli-sievert per month. Allison noted, “My suggested level for a vision for the safety level is 100 milli-sieverts per month which is 200 times lower than that tolerated willingly by radio-therapy patients…But it does represent a relaxation of radiation safety levels by a factor of about a 1,000 from levels which were designed to reassure people to levels which actually show where danger sets in.”

Some Monthly Doses Shown by the Areas with ALARA and AHARS

In conclusion, Allison commented, “I expect that there will be no deaths from radiation at Fukushima. I expect that there will be many, many, many deaths from fear of radiation at Fukushima. It is fear that is the problem. In particular, appeasing fear by lowering the regulations and telling people not to worry does not work. People are quite capable of making their own decisions. Radiation…is a problem we should learn to live with.”

Note From ACCJ Tohoku Revitalization Task Force

Figure 1

The ACCJ Tohoku Revitalization Task Force recognizes that each person has to weigh the risks of food safety — both in Japan and overseas, but it hopes, through the sharing of information and expert opinions, we can make informed decisions. It is important to better understand and test the assumptions underlying our fears. Based on the panel discussion and questions from the audience, it also is very apparent that the public’s trust in government communications needs to be restored.

For a look at the presentations and a link to a video recording of the event, please check out the ACCJ website: http://www.accj.or.jp/user/detailNews.php?newsid=506&file=/user/210/index/

Tish Robinson is a professor at Hitotsubashi University ICS. She is co-chair of the ACCJ HR Committee and head of the ACCJ Volunteer Affinity Group. If your company has been doing CSR in response to the Tohoku Disaster, please share what you are doing with her at tishintokyo@gmail.com.

Jonathan Kushner is a partner with Kreab Gavin Anderson, an advisory firm specializing in crisis communications, financial PR, and public affairs. He is co-chair of the ACCJ’s Tohoku Revitalization Task Force and vice-chair of the Trans-
Pacific Partnership Task Force.

Jay Ponazecki, a Morrison & Foerster partner, specializes in cross-border business transactions and with her bengoshi colleagues advises clients on key strategic issues associated with doing business in Japan and investing in Japanese companies. She is co-chair of the ACCJ’s Tohoku Revitalization Task Force and vice-chair of the Membership Relations Committee.

Photo by shibuya246 on flickr

Only in Japan does the image of a larger-than-life robot resting idly in a park against a backdrop of modern skyscrapers seem less like a fantastic image out of a science fiction movie, and more like a part of the everyday workings of ordinary life. Standing at a whopping 18 meters (59 ft), the giant robot was estimated to have attracted over four million tourists over the course of a short, two-month exhibit.

Fast forward to summer 2011. After a short stint outside of Bandai’s factory in Shizuoka, organizers have returned the now dismantled Gundam to Odaiba by popular demand. This time around, thousands of enthusiasts have returned in order to get up close and personal with the individual pieces of the original robot. Most opt to pose for a picture whilst sitting inside of its gigantic robotic hand. A few stations away, in the futuristic halls of the aptly named Miraikan (roughly meaning “Museum of the Future”) lives the world’s most famous humanoid robot. Everyday for two, ten-minute demonstrations, Honda’s ASIMO—which standing at 130 cm (4.3 ft) tall and weighing in at 54 kg (119 lb), vaguely resembles a miniature astronaut—captivates spectators of all ages as it walks, runs, responds to questions, banters with staff and even waves at audience members.

From miniature battery-operated robot mascots designed to run triathlons in Hawaii to robotic dogs capable of playing soccer, Japan has long captured the world’s imagination as an international ‘tech mecca.’ And as pop culture icons such as Astroboy and Doraemon prove—robots are as much a part of Japanese science as they are a part of its cultural identity. So much so, that it comes as no real surprise when a Japanese company or researcher steps onto the world stage as the creator of the latest technological innovations.

What is a surprise is when they don’t.

A Conspicuous Absence

As the initial shock following the Great Eastern Japan Earthquake and tsunami subsided and the nation refocused its attention on the crisis unfolding at the Fukushima Dai-ichi nuclear power plant, the stage seemed set for Japanese robots (and by association, Japan’s technological prowess) to shine. Given the increasingly dangerous conditions at the plant, it seemed unthinkable that the world’s foremost ‘Robot Nation’ wouldn’t showcase its supposed arsenal of advanced robots, ready to perform emergency work where humans could not.

Instead, TEPCO workers first turned to the PackBot, a remote-controlled robot built and developed by U.S.-based robotics firm iRobot, perhaps more famously known for its popular house cleaning robot Rumba. Where workers could not go, the PackBot and other robots measured radiation levels, temperature, as well as took photos and cleared debris. Yet as the days passed and news about the courageous workers dubbed by the media as the ‘Fukushima Fifty’ continued to dominate headlines, Japanese robots remained nowhere to be seen.

Now, roughly seven months after the earthquake, it would be misleading to suggest that Japanese robots and researchers have yet to contribute toward ongoing efforts in Fukushima. According to Satoshi Tadokoro, a robotics specialist at Tohoku University known for his expertise in rescue and disaster robots, Japan-made robots have been active in Fukushima since the end of March in the form of 60 remotely operated, unmanned construction system units boasting efficiency rates of 80 percent. However, he also noted that limited coverage in the media has lead to greater confusion amongst the public.

Since June, another Japanese robot called Quince, a robot jointly developed by Tadokoro and the Chiba Institute of Technology, has also helped workers in the efforts to work toward a cold shutdown of the Fukushima reactors. Capable of remote monitoring and light manipulator tasks, Quince has at times, been utilized to obtain readings in areas the PackBot cannot reach due to its greater mobility.

While overshadowed by more immediate concerns such as providing aid for victims and radiation contamination scares, the initial absence of Japan-made robots during the crisis and its direct aftermath did not go unnoticed. While economists publicly debated the course of the nation’s recovery, another unanswered question lingered in the minds of many Japan watchers—where were the Japanese robots?

The Robot Nation

“Japan has been regarded as a leader in the robotics industry both inside and outside Japan—a fact that researchers have been proud of since before the quake,” says Minoru Asada, a Professor of the Department of Adaptive Machine Systems at Osaka University and internationally renowned robotics expert.
Though the first commercial ‘high-tech’ robot was first introduced in the 1980s, Japan’s robotics industry can be traced all the way back to the late 1960s. Since then, Japan’s reputation for both technology and industry has been cemented through product innovations ranging from the Sony Walkman to the Toyota Prius. According to statistics from the International Federation of Robots, in 2010, Japan was the most automated nation in the world, boasting a robot density of 306 robots per 10,000 employees in the manufacturing industry. Moreover, in 2006, a report from the Japan External Trade Organization (JETRO) projected that Japan’s robotics industry would exceed an estimated six trillion yen by the year 2025.

So given the numbers and Japan’s status as an industry leader, the early absence of Japanese robots at Fukushima becomes even more perplexing. Surely, wouldn’t one of the world’s most technologically advanced, robot savvy nations be prepared for exactly such an occasion?
Thus far, the general consensus among experts is that the original lack of Japanese robots had less to do with actual preparedness, and more to do with a lack of practical experience in addition to differing approaches between Japan and the West in regards to robotics research.

According to Asada, Japanese researchers had thought about developing rescue robots for nuclear accidents with the KYOKUGEN SAGYOU (Advanced Robot for Hazardous Environment) robot over 20 years ago. However, believing that such accidents were unlikely, the government and METI instead shifted project’s focus toward developing robots for power plant maintenance. While the project went on to produce a number of robots, none went on to actually participate in any drills.

“Simply speaking, Japanese robotics has lacked sufficient practice in real life situations, even though the level of the technology is quite advanced,” explains Asada. “TEPCO adopted iRobot’s robots first because U.S. robots have been used so often on the battlefield.”

“I know that researchers and research rescue robots were waiting for a dispatch call after the earthquake. It might have been TEPCO’s decision not to use unreliable research robots that were not well documented or cataloged. Or it might simply be a lack of information at the front line about available Japanese research robots,” agrees Yoshihiko Nakamura, a Professor at the Department of Mechano-Informatics at the University of Tokyo. “The U.S. robots were not only well documented and cataloged, but also suggested by the Japanese government in accordance with an offer from the U.S. government.”
Another factor was that military research is effectively prohibited in Japanese universities. Conversely, the U.S. funds roughly $660 billion into hi-tech companies to fund military research. The PackBot, for instance, was deployed for a number of life-saving tasks in Afghanistan before it ever landed in Fukushima. The result is that while Japan excels at creating industrial, civil engineering and entertainment-based robots, the U.S. has the advantage in fields such as aerospace, exploration and nuclear power robots.

“The link between advanced robotics research and military industries in Japan is at the very minimum,” says Nakamura. “Therefore, if the military business in Japan is closed and already matured, business opportunities in military technology are not attractive for small industries. The deployable robots for disasters and incidents could have been equipped if guided by national policy as they were in France and Germany after the Chernobyl incident. However, there has been no visible robot market in Japan led by military demands or such policy initiatives.”

Instead, Japanese researchers have focused their attentions on developing consumer robots designed to assist in everyday tasks in order to usher in a more Jetsons-esque vision of the future, where robots both coexist and collaborate with humans.

Industry of the Future

In 2005, 340 teams of amateur and veteran robot developers spanning 31 countries gathered in Osaka to participate in that year’s RoboCup conference—an experimental, project founded by Japanese robotics experts aiming to build a team of 11 humanoid robots capable of winning against a champion FIFA World Cup soccer team. On the sidelines of the event, a team of Sony’s Aibo, a robotic dog, wowed spectators and garnered positive buzz with their capability to learn, adapt and play competitive soccer games.

Photo by mujitra on flickr

“Japan has only industrial robots and robot ‘toys’ as an industry. Some companies are struggling to open new areas, but are not very successful. Therefore, there are many types of research robots, but [they] are not commercially available,” explains Tadokoro.

“[There] is the lack of dynamism to grow small businesses, which was seen 50 years ago in companies like Sony, Panasonic, Honda and so on. The major industries are too large to wait for the growth of business in markets under $100 million, even if they have the technology within the company,” agrees Nakamura. “The industries that have robots as their main business are mostly for factory automation in automobile companies and are less aggressive for new applications of unclear business opportunities.”

Furthermore, experts agree that economic challenges stemming from the events of March 11 will likely pose new challenges for researchers as they try to turn their futuristic visions into reality. To what extent, however, still remains unclear.

Following a strong year of growth in 2008, statistics from the Japan Robot Association indicate the Japanese robotics market plummeted 53.6 percent due to the effects of Lehman Shock in 2009. While the market has made significant strides toward recovery since then, the global economic downturn has left its imprint on the industry. For the first time, Japan slipped one spot to the world’s second largest robotics market in 2010 despite increasing production by 103.9 percent from 2009. Neighbor and economic rival South Korea claimed the top spot, with significant investment in China boosting the country’s ranking to fourth place.

“Industrial robots were definitely affected by the current recession. Its impact on research innovation of service robots is unknown, however, because such robots are developed by governmental funding, and are only research robots. Any serious effects would take place from the next fiscal year starting in April,” says Tadokoro. “As for the response robots, the situation is foggy. Research will go forward, but I do not know what first responder organizations and military will decide.”

“The earthquake struck Japanese industry supply chains, including the automobile industry and caus[ed] their current hardship in regards to sales. This then affected the robotics industry, whose main customers are based in the automobile industry. The economic recession stemming from not only the earthquake, but also global financial instability, will force the government and the industries to cut research budgets in the short term,” says Nakamura.
Despite the short-term setbacks, industry experts are quick to point out that they remain focused on the future and are committed for the long haul. Undeterred by negative publicity, Japanese robotics experts formed the Robotics Task Force for Anti-Disaster (ROBOTAD), a community of volunteers dedicated to discussing and exchanging ideas to utilize robots for recovery efforts in Tohoku. Additionally, researchers are also keen on continuing ambitious experimental projects aimed at pushing boundaries and fostering innovation.

“The leading industries conducting future robotics research will continue their investments as far as I understand,” asserts Nakamura, who also serves as ROBOTAD Anchorman alongside both Asada and Tadokoro. “For this reason, activities pursuing advanced robot technologies have not been affected for now, and will maintain their focus toward building social applications for robots.”

“In spring 2013, a new town will be opened just north of the JR Osaka station, and I had a plan to develop a RoboCity CoRE (Center of RT Experiments),” says Asada. “But due to the quake and strong yen, some companies gave up investing in such experiments with us.”

RoboCity CoRE, Asada explains, is an experimental joint research project developed by the city of Osaka with help from Osaka University professors aimed at building inner city labs for symbiotic experiments between humans and robots—a sort of ‘future city’ where researchers, artists and companies can collaborate on new technological developments and ideas.

“A non-industrial robotics market has not been established, yet. Therefore, we need some experiments that are open to public like RoboCup to test how future robot products can be accepted by society,” says Asada.

“The Fukushima nuclear power plants will take multiple decades to decommission,” says Nakamura. “New technologies developed while decommissioning these plants must be retained for the future disasters and incidents. The international network and collaboration developed through these efforts among scientists and engineers are essential for this goal.”

Journal: How did you become CEO of Dale Carnegie?

Peter Handal: I was doing consulting in the late ‘90s and the Dale Carnegie company asked me to do some work for them about strategy and corporate direction. I made a presentation of my findings to the board and to my surprise they liked what I laid out for them enough that they asked me to join the board. I was on the board for about six months when the existing CEO decided he wanted to retire, and they asked me to take on the lead role. This was in January 2000. I found out later that they were specifically interested in bringing on someone from outside the firm, someone who could understand the culture, not destroy it, and who was ready to build on the rich tradition and insights that the company has developed over the years. Basically, it was a matter of good timing.

Journal: What makes Dale Carnegie special?

Handal: Dale Carnegie was founded 99 years ago, in 1912, and is still privately owned. The founder and first Chairman was Dale Carnegie, who famously wrote the book “How to Win Friends and Influence People” back in the 1930s. After his death in 1955, he was succeeded by his wife Dorothy Carnegie, who went on to build the business into a global organization. When she retired in 1978, she was succeeded by other members in the family. It’s the links with the founders that gives the organization its strength and its special culture. Dale Carnegie was inspirational and Dorothy Carnegie was an excellent businessperson. As a result, the people there today are smart and nice to work with, and with such a great reputation, the quality of the engagements makes the work really interesting. Right now I think I have the best job in the world.

Journal: What has been your greatest achievement during your tenure?

Handal: There have been a number. Firstly I’ve been able to stimulate the development of new products. Prior to my joining we only had “time-space” programs, where we sold blocks of time in classrooms, for example a management course for twelve weeks. Now we have a whole variety of things to offer clients, addressing their actual needs rather than our concept of what those needs should be.
Another major step we took was to expand our global reach. We’re now in 86 countries, providing training in 30 languages, meaning that about 60 percent of our business is now outside the U.S. This is a dramatic change from 12 years ago.
Probably the third major change has been the quality of interaction with and support to our partners. You see, we’re a franchise organization, and we’re only as good as we can help our partners to be. Therefore, we’re always coming up with new and better services to ensure that our franchisees have what they need to development their local markets.

Journal: It was my impression that Dale Carnegie was a licensing operation, rather than a franchise.

Handal: Certainly in the beginning it was. Dale Carnegie would travel all over the U.S. from city to city. When he met someone he liked and thought he could work with, he would teach them the method then give them a license to reuse his materials and methodologies. In a way, he was the first “software” licensor. This changed in 2000, when the company moved to a franchising model. This has been much better for our partners, since they can now own the business, versus simply working to further our interests. This means they own their own clients, they have a strong contract, and can get financing to build their operation into something much larger.

Journal: How does e-Learning fit into your business?

Handal: We have built our business around two-way interaction and the ability to guide and coach as an interaction develops, so as to make the student aware of what they are saying and how they are saying it. This is a challenge in the e-Learning sphere, and we are applying resources to create a strong model that will work worldwide. Right now we have two means of delivery: Firstly, we have modules that include exercises, games, etc., that you can do online, and these are not dissimilar to what you would find in any online university. Secondly, we have webinars, and these are surprisingly effective. We can break up online classes of 25 people into groups of 5, just the same as we do in the physical world, which makes them very interactive.
Then there is online-physical “blending,” where we reinforce that was learned in a real setting with online exercises later. I think this is a likely major direction for us in the future.

Journal: Who are your competitors?

Handal: Perhaps surprisingly, our biggest competitors are the HR departments of our clients themselves. They all have their own training departments and while they start off with mainly technical things, such as IT, accounting, processes, they will typically aspire to do more soft skills such as leadership programs as well. Another area of competition is local colleges, who are really focusing on soft skills training. They offer their courses at low cost, which is of course a competitive threat.

Journal: Amongst corporate trainers, is Dale Carnegie the largest?

Handal: In this industry, because most companies are privately held, it’s hard to tell. But our guess is that 4-5 competitors, companies like Franklin Covey, are about the same size as us.

Journal: Please give an example of your scope and capability.

Handal: We recently went into a bid with four competitors for a client in Germany. After a tough fight we won the project, largely because the client wanted the same training at the same delivery standard across 40 different countries, and of course many different languages. We were the only company that could deliver to this requirement.

Journal: What is your competitive edge?

Handal: Well way back in the 1930s, Dale Carnegie pioneered the concept of changing your behavior to match the values and hopes of those you wanted to influence, and this was a unique body of knowledge. However, over the years others have picked up on Dale Carnegie’s insights and have copied parts of them. So today, what makes us different isn’t so much the original intellectual property but rather the way we impart our programs, our training methodologies. For example, if you went into a college, you will find is that it’s all one-way lecturing. In contrast, our approach is to be extremely interactive. Our trainers go through intense training programs themselves and they are educated to coach people literally as they are interacting with them. They walk the talk by showing how to be a good listener and the different kinds of listening. They are very good at drawing responses out of people and getting them involved.
If you were to drop mid-stream into a Dale Carnegie class, you’d probably feel very uncomfortable. It takes a few hours or longer for people to be willing to open up and interact at the level that we require. There is a lot of presentation work by participants to the rest of the class, and during these presentations they are not only expected to present the actual content, but also to stay alert and be aware of the interactions going on around them, so that they can use that awareness in real business settings later.

What we are trying to do is to change behavior, not try to “teach” people principles. This, I believe, is what makes us different.

Journal: Japanese firms are on an M&A spree, is this a strong opportunity for you?

Handal: Certainly Japanese multinationals are very aware of the need to develop positive, global cultures inside their rapidly growing organizations. We are pitching to a number of firms on the basis that we can offer consistent training across multiple countries to the entire workforce of a foreign subsidiary. Right now, most clients are dipping their toes in the water and trying us out for single country engagements, so they are learning our capabilities.

Journal: Is there a trend that you can identify?

Handal: Well, most of these Japanese multinationals are focusing on language skills first, like TOEIC. This is understandable, since basic communication is of course the most basic need. But what they are now finding is that in assigning managers abroad to integrate their holdings or to interact with new suppliers and customers, they need their people to improve their interactions. Listening, polite behavior, and being aware of how they are perceived is as much a factor of success as is direct communication.

I have just spent the last three days visiting many companies here in Japan, and what I’m seeing is that the push towards management training is coming from the top of the organization, not from the middle, as we would see in Europe and the U.S. The reactions I have been getting from Japanese senior management is that they do indeed understand the importance of training and want more of it. Essentially many of these senior managers want to change their corporate cultures and make them either more competitive or more internationalized, or they have a specific problem that they want resolved, such as improving sales performance or improving product/services development. In fact, about 50 percent of courses here in Japan are to address specific problems in the firm.
I might add that a trend becoming very obvious overseas and which I expect will start to manifest itself here in Japan, is the quality of engagement of employees. There is a talent war going on globally, and companies need to work harder to keep their best and brightest. CEOs want employees who see the business as more than just a place to work. They want contributors and innovators who are fully engaged. This is a highly relevant issue for Japanese firms. A recent Mercer survey found that the average level of engagement for Japanese employees is extremely low: just 27 percent of staff are motivated and actively engaged with their work. This really impacts productivity.

Photo by fidelramos flickr

So I visited Kai-Fu Lee. Years later Kai- Fu Lee became famous for many things. He set up Google.cn, Google’s presence in China. He worked for Microsoft before that. Before that he created all the speech recognition techniques that, to this day, Apple probably still uses. Heck, probably every speech recognition program out there, even on your Android phone, probably uses techniques originally developed by Kai-Fu Lee. Now, he has millions of followers on Weibo (the Twitter of China) and he has a VC fund for Chinese Internet startups.

I had first met Kai-Fu Lee when I was trying to decide what grad school to go to. When I visited him he showed me the project he was working on. It was a device that could understand any possible English command you could possibly speak if you were, say, on a battleship in the middle of a war in the Middle East.

But later, when I visited Kai-Fu, it had nothing to do with speech recognition. Like many young people he had gotten burnt out. There came a point in his grad student studies where he couldn’t bear to program another computer that understood, “Fire the missiles!” So he took a year off and like most people who get burnt out and take a year off, he created the world champion Othello program.

The basic idea was this: take 10,000 Othello positions that are either totally winning or totally losing. Put them in a database. Now, when a program is considering a move, see if the move closely matches, statistically, a winning position, or a losing position. Make the move that most closely matches a winning position. This basic idea created the world champion Othello program. And apparently it resolved Kai-Fu Lee’s burnout issues and he got his Ph.D in speech recognition (which, oddly enough, uses the same basic techniques as the Othello program).

I wanted to win a million dollars by using his same technique for Go so I went to him and asked him if he would work on it with me. He said, “No,” it’s too impossible. He had tried it, he told me. There are too many possible choices in Go and even if two positions look very similar in every possible variable, one could be completely winning and one could be completely losing. Not like speech recognition. Not like Othello.

James Altucher is an investor, a contributor to MarketWatch.com, and the author of 'I Was Blind But Now I See' (http://amzn.to/qM8kLi), you can read more of his work at: http://www.jamesaltucher.com

The odd thing is I just invested in a company that uses a very similar technique to Kai-Fu Lee’s Othello program. This company classifies brain scans to determine what type of depression a person has. They have a database of tens of thousands of brain scans detailing what anti-depressant or anti-anxiety drug worked for each brain scan. Apparently, most people with depression are horribly misdiagnosed and it takes an average of eight years in normal therapy to determine the right type of anti-depressant or anti-anxiety drug that will work. The original target customers of this company: Army soldiers returning from war in the Middle East. It all comes full circle.

Photo by Takadanobaba-Kurazawa on flickr

Against the relentless stream of bad news on the global economy, it is important not to lose sight of what’s actually going on in the real world. Yes, barely a day goes by without a new dramatic sounding headline: American debt downgraded, Greek debt default talks collapse, China inflation at record high, just to name but a few. Remarkably absent from all the scary headlines is Japan. For Japan, the news flow has tended to surprise on the upside: industrial recovery from the March 11 disaster running ahead of schedule, no major negative impact from power shortages, and the political leadership transition from PM Naoto Kan to PM Yoshihiko Noda took place as swift and smooth as changing trains in Tokyo station. Can it be that in the midst of a global economic storm Japan has found her place as a haven of stability?

Let’s look at what’s going on. Three major forces have come into play. First, the rebuilding from the March 11 disaster has given Japan’s domestic economy lots of positive momentum. Right at the time when global demand was starting to slow, Japan’s private and public sector began to spend here at home, energized by the necessity to rebuild. Complacency was never an option. Car companies switching production to Saturdays and Sundays, convenience stores running overtime on top of overtime to re-stock their warehouses, trucking companies so busy they had to hire new drivers and, of course, the entire clean-up and reconstruction effort pushing up demand for labor across all of Japan.

Take note that almost 500 million jobs have been created since March. No, it has not been just gaman, but real hard sweat and action and human endeavor that was triggered by the disaster. The animal spirits that drive economic growth are back. So just as America and Europe fell into their respective confidence crisis moments, Japan moved the other way. For the first time in many decades, a home-grown demand momentum has been built in Japan.

Where’s the proof? Just look at the drop in Japan’s unemployment rate, the rise in consumer spending and retail sales, the smart recovery in housing and construction activity (not just in Tohoku, but here in Tokyo and other big cities). And yes, all this pick-up in demand has actually led to a turn in price-power. Slowly but surely, unit prices in supermarkets and convenience stores are beginning to rise. Interestingly, here we see several large players abandoning their special discount or cash-back programs with sales actually rising after the move to normal pricing. Good to see economics still works: when demand rises, suppliers get more power over price.

The second force in play has been an unprecedented rise in corporate activity. We’re seeing record activity of mergers and acquisitions, aggressive re-organization of supply chain relations and generally a much more focused approach to running companies. Again, I think the March disaster pulled corporate managers out of complacency. All of a sudden management realized that they had to act, that business as usual was no longer an option. Japan Inc moved from strategic planning to strategic action. Case in point: Over 4 trillion yen in mergers and acquisition deals have been done since April of this year, which is about four times as much as normal. This has been a true jolt of new activity.

To be sure, much of this activity is the result of corporate leaders pushing more aggressively overseas. However, the net impact on the economy is not necessarily negative—only rarely do companies go overseas to shut-down domestic facilities. Most of the time, the push overseas merely adds to global capacity. They want to be closer to the export markets and closer to their final global customer. This in turn makes the company overall more profitable which does create a positive feedback loop for Japan-based activities and employees.

Even more exciting is that fact that since March, we have seen several cases of higher profile Japanese companies actually selling parts of their business to global players. The big case in point here is Sanyo Corporation actually selling its white-goods business (refrigerators etc.) to Chinese white-goods company Haier. This must be viewed as a long overdue win-win situation as it allows Sanyo to concentrate on its core competence of being a leading edge high-tech producer and innovator in the electricity storage business, while Haier gets a solid beachhead into the Japanese domestic market.
Again, Japan Inc has demonstrated a boost of energy. It is as though the March 11 disaster was the starting gun to a race where, all of a sudden, Japan Inc actually wants to win again.

Jesper Koll is a Managing Director and Head of Research at JP Morgan Japan Securities Inc. He has been analyzing and investing in Japan since becoming a resident in 1986.

The third force unfolding is something I feel a little reluctant to write about, but from an objective perspective, I think I must. Like it or not, I do think the Japanese governments’ and public policy response (so far) actually deserves to be applauded. Here I am talking from a macro perspective—big-picture monetary and fiscal policy. They’ve done the right thing, and have done so fast and decisively and in a fashion that actually boosted confidence. After all, the Bank of Japan has steadily increased its asset purchases and liquidity provisions. On the fiscal side, the government has added deficit spending through two extra spending budgets and is about to enact an even bigger extra budget to help accelerate reconstruction activity further.

More importantly, the government has decided to postpone any tax increases until 2013. This means that, for 2012, Japan is poised to be the only major economy where next year there will be a net positive boost to growth from the public sector. In contrast, U.S. fiscal policy is set to subtract as much as 1.5-2 percent from growth next year, and Europe is looking at an even bigger negative hit from the public side contraction.

All told, Japan may actually be entering a period where both private and public demand are working together to create a net positive for domestic demand growth. Of course, the woes of global growth slipping into recession are poised to cut-into Japan’s export machine. A one percent reduction in global growth still pulls down Japan’s corporate profits by almost 20 percent. However, this is nothing new and corporate managers are braced for it. What is new is the newfound domestic activity push by both the private and public sector. Against all odds, Japan could well emerge a short-term winner in the global growth and economic management contest in the coming year.

Mercedes Benz has opened a head-turning showroom in Roppongi that aims to encourage consumers to look at its vehicles in a new light. It comes as fewer young consumers here show interest in owning a car of their own.

The massive space, which was also the venue for parties associated with the Fashion Week it sponsors, is called Mercedes Benz Connection and looks nothing like a regular showroom. The first thing most passersby notice is the restaurant, rather than the cars. There are also futuristic auto sculptures, a video-game corner, and a bar that’s open until 4am, all to lure people inside.

Buying a car was once a rite of passage for Japanese males, but the so-called herbivores are less interested in expensive and ostentatious purchases these days. Toyota tried a similar strategy several years ago when it opened its Tressa mall in Yokohama, a place where it could compel consumers to going shopping for food or clothes while coming in contact with its vehicles. But Mercedes’ stylish take on the trend takes the concept into a new, luxurious direction.

Even Smarter Phones

Consumers expect their cell phones to do everything for them, but NTT DoCoMo is taking service options into new territory. It recently unveiled a smartphone that has changeable “jackets” that it says can measure bad breath, body fat or even radiation.
Users slip the phone into a shell-like casing that is enabled with sensors. One of the jackets measures body fat and muscle mass, another tests for bad breath or an odor of alcohol, and UV rays that could damage the skin.
But perhaps the most innovative of all is one that measures radiation, which DoCoMo told the media it created as a direct response to increased consumer concerns in the wake of the Fukushima nuclear crisis.
Not many years ago, Japanese cell phones were far more advanced than those from most other countries. However, in the smart-phone era, domestic telcos have seen the gap narrow. This series of innovations is an attempt by DoCoMo to win back its lead in the minds of consumers.

Gigantic Junket

With tourism arrivals still way down in the wake of the March disaster, the government is going to new heights to lure people back again. It plans to give away 10,000 free roundtrip tickets to Japan to influential bloggers, journalists and Twitter users around the world. That is enough to fill a fleet of A380 super jumbos and would account for about 10 percent of the Tourism Agency’s budget for 2012.

Although numbers have recovered somewhat since March, tourism arrivals were down 36 percent in June from a year earlier. Uncertainty surrounding the nuclear situation is the biggest cause
of concern.

Writers, bloggers and tweeters will be able to apply for tickets online. The agency says that it is hoping the reports they make will help convince potential travelers that Japan “is a safe place to visit.” Nevertheless, the campaign has drawn criticism from local media as a waste of money, with some commentators saying the money would be better spent helping the victims of the crisis and evacuees from around the nuclear plant.

Fast Expanding

Uniqlo has opened a massive new flagship store on Fifth Avenue in New York, the first step in its ambitious expansion plan for the United States. The chief executive of Uniqlo’s parent company, Fast Retailing founder Tadashi Yanai—who is also Japan’s richest person, according to Forbes—has plans to open as many as 300 stores every year worldwide for the next several years, to reduce its reliance on the domestic market.

Group profit declined more than 10 percent in its last business year as sales slipped in Japan. But overseas sales saw double-digit expansion in countries including China, Korea and the U.S. Opening flagship stores in key urban shopping districts has been a cornerstone of the Uniqlo marketing strategy. The brand has another New York flagship store in Soho, as well as others near L’Opera in Paris and on Oxford Street in London. With many economists predicting that the U.S. and Europe are heading for a Japanese-style “lost decade” of economic stagnation, it may be good timing for the affordable apparel retailer to increase its presence in those markets.

Aussie Addition

Another of the many Japanese companies looking overseas, Dentsu, has added Australia to its list of global markets, with the official launch of business in Sydney. Managing Director Emma Hancock will lead the new unit, which for the time being will be based out of the offices of its long-time local partner agency Oddfellows and work with foundation client Toyota.

In her statement to announce the start of business, Hancock said the agency would bring what she calls “Good Innovation” to the Australian advertising market. “We’re all about ‘Good Innovation,’ not innovation for innovation’s sake,” she said. Hancock was formerly an executive at Dentsu Canada.

The Tokyo-based behemoth already owns expanding businesses in regions including North America and Europe, and has been on an international shopping spree in recent years, snapping up smaller agencies on several continents.

photo by Shinnygogo on flickr

For many years, foreign investors in particular have tried to profit by acquiring shares in Japanese companies with large real estate holdings trading well below their net asset values. Failed takeover attempts by Steel Partners and others have created widespread skepticism around the world, though, whether hostile or unsolicited takeovers are actually possible in Japan. Effissimo, a Singapore-based activist fund, supposedly put pressure for years on the management of Tachihi and New Tachikawa, but I don’t know if its ultimate goal was to gain control of the companies or to be bought out at a profit. The fact that Effissimo’s proactive efforts resulted in a buy-out at a substantial premium to the market price has caused a number of international funds to take a fresh look at other listed companies with real estate assets trading at discounts, of which there is quite a large group.

Speaking from recent personal experience, I can say that unlike other countries, management of Japanese listed companies frequently own few or no shares in their own companies, so they are not incentivized to maximize the stock price. Especially in companies where executives and directors come from main banks or trading partners, priorities tend to be on maintaining employment and avoiding difficult major decisions, rather than maximizing profits and selling non-core assets to return cash to shareholders and focus on the main business.

Seth Sulkin is the President and CEO of Pacifica Capital K.K., a Tokyo-based real estate asset manager specializing in commercial properties.

As it turns out, the third quarter of 2011 turned out to be a very busy one for public takeover offers. According to Nikkei Veritas, there were 18 announced deals in the quarter ended September 30, compared with only five in the June 30 quarter immediately following the earthquake. Even more interestingly, the third quarter also saw the successful result of Japan’s only second hostile takeover ever, the magazine reported. A Japanese fund manager called DRC Capital Ltd. waged a hostile bid to successfully acquire Kojitu Co., Ltd., a micro cap stock whose main business is the manufacture and sale of mountain climbing equipment. According to DRC’s web site, the fund manager intends to sell Kojitu’s real estate and focus on the core business, so at first glance, one might think this was another asset-based play. In looking at Kojitu’s public disclosure statements, however, the company disposed of a large real estate division a couple of years ago and has relatively little property left on its books, so maybe DRC believes the core business is undervalued.

Whether it is a coincidence that two such precedent-setting transactions occurred in a span of only a couple of weeks or if this is the start of a new trend is not yet clear. In any event, the market for property-related stocks looks much more interesting for the time being, even as the market for hard assets shows no sign of immediate pickup.

Heading into the third quarter, large Japanese companies are showing signs of optimism despite a myriad of economic concerns revolving around the soaring yen and its potential contribution toward a global economic slowdown. A joint survey conducted by the Finance Ministry and the Cabinet Office measuring the mood of major Japanese companies, shows business confidence increased to a rating of 6.6 in the July-September period, a 28.6 point increase from a rating of minus 22 the previous quarter.

photo by Riacale on flickr

Despite gloomy investment statistics, a bit of confidence might go a long way toward rebuilding the Japanese economy. In a Bloomberg Businessweek report, Nomura Holdings Inc. analysts have stated that Japanese IPOs in 2011 are expected to climb to a three year high due to investors regaining confidence. The company estimates the total number of IPOs to reach 35 to 40 by the end of the year compared to 22 IPOs in 2010. By industry, the report indicated IPOs were most likely to come from medical research ventures, solar energy firms and manufacturers.

Consumer Flux

Shifting from “self-restraint” to “eco-savvy,” in recent months Japanese consumers have decided to exercise their influence through their pocketbooks.

Photo by DoTheJustice on flickr

However, despite three consecutive months of steady improvement, the Cabinet Office’s consumer confidence index remained at a flat 37 points during August. Ratings totaling less than 50 points generally indicate a more pessimistic outlook among consumers; of the four components measured in the index, both livelihood and income readings continued to grow, while employment conditions and purchases of new durable goods dropped for the first time in four months. Citing the strong yen as the main factor influencing sluggish consumer confidence, the Cabinet Office nonetheless maintained its stance that while the situation remains severe, the trend toward recovery would likely continue.

While the strong yen may have hampered consumer confidence, savvy Japanese consumers have recently turned to Internet retailers to take advantage of a favorable exchange rate. BUYMA, a Japanese C2C e-commerce site for luxury fashion, reported the number of transactions jumped up 60 percent in July, and 70 percent in August. International forwarding and shipping company MyUS.com also reported a 450 percent increase in shipping volume for U.S. products by Japanese customers.

Cold Conservation

According to figures released by the Ministry of Economy, Trade and Industry (METI), Japan managed to reduce electricity consumption by an average of 21 percent during the months of July and August, successfully averting any blackouts and brownouts. However, with winter on the horizon, Japanese utility companies have warned that Japan’s power crisis is far from over.

Both Kansai Electric Power Co. and Chubu Electric Power Co. have called upon manufacturers, companies and households to continue this summer’s setsuden (energy saving) efforts into the winter months, stating unpredictable heating demands may exacerbate strained energy supplies. In a news conference, Kansai Electric Chairman Shosuke Mori warned that winter energy shortages might be more severe than this past summer due to the uncertain future facing many of Japan’s suspended nuclear reactors. At present, official figures estimate a potential power shortage of 0.7 percent (1.13 million kilowatts), as well as a 9.2 percent (16.56 million kilowatts) shortage for next summer. Making the best out of a difficult situation, some Japanese companies are electing to proactively adopt a more eco-conscious outlook. From self-monitoring refrigerators and vacuum cleaners to air conditioners equipped with motion sensors, Japanese electronics makers such as Toshiba, Panasonic, Sharp, Mitsubishi and Hitachi are all expected to roll out more energy-efficient appliances for the year-end shopping season. Meanwhile, Japanese retailers such as Uniqlo and Ito-Yokado have already begun marketing and expanding their lineup of “warm biz” clothing designed to trap more heat.

Japan, China rivalry heats up

In a watershed moment, a survey conducted by Transatlantic Trends found that 51 percent of U.S. citizens felt that China and Japan were more important to their national interests compared to their European neighbors (38 percent). But as more Americans turn their gaze toward Asia, the often-competitive economic rivalry between the two nations seems more heated than ever.

For the first time, Japanese companies failed to make Forbes Asia’s Top 50 list of the most profitable companies in the Asia-Pacific region. The absence of Japanese companies marks a complete reversal from when Japan dominated the rankings with 13 companies six years ago. Conversely, Chinese companies comprised nearly half of the list with an impressive 23 companies in total. Moreover, analysts also predict that China will overtake Japan as the world’s top consumer of luxury goods by 2012. Again, dampened consumer mood directly following the March earthquake played a significant role in the findings, as 49 percent of luxury brand stores in Japan were forced to halt business for one month following the disaster.

In spite of the rivalry, cooperation between the two nations is also on the rise. According to figures from the Japan External Trade Organization (JETRO), Japan’s total trade with China reached an all time high, rising 17.9 percent to 12.5 trillion yen in the first half of 2011. Exports to China rose 14.3 percent to 5.9 trillion yen, while imports rose 21.4 percent to 6.5 trillion yen.

Gender Bender

Looking to expand market reach and drum up new sales, an increasing number of Japanese companies are targeting a new demographic: the opposite sex.

Photo by hkdmz on flickr

Following Nintendo’s lead, Japanese mobile carriers have also released customized smartphones aimed at attracting a larger percentage of female users. In particular, Softbank has announced a broad category of smartphones offering features catering to Japanese women reluctant to give up their regular phones, including more color options, decorative e-mails, image touch-up features and customized keypads. For mobile social game developers, targeting female gamers has lead to direct profits. Popular game developer DeNA reported a 23 percent increase in share price this year, while share prices for Gree have doubled. Both companies report that women make up roughly 40 percent of their user base. According to a Bloomberg report, the Japanese market for female-oriented games could rise from 6 billion yen last year to 20 billion yen in the next five years.
Meanwhile, Japanese cosmetics companies are setting their sights on middle-aged Japanese males. Otsuka Pharmaceutical Co. recently joined Angfa Co., Kao Corp. and Lion Co. in launching a new anti-hair loss shampoo aimed at men in their late 30s and 40s. Since 2008, the domestic market for men’s shampoo has grown 3.6 billion yen to 11.2 billion yen, with shampoos aimed at middle-aged men accounting for more than 50 percent of sales.

Supply Chain Adjustments

While economic analysts and pundits focus their attentions on the strong yen, investors are putting their money where the supply chain is. Spurred by the memory of the effects of the dual disasters on the global supply chain, Japanese firms are keen to enhance their logistics and supply chain management capabilities.

Photo by Fontina on flickr

Domestic firms are also looking to reduce costs by diversifying their supply chains overseas. Panasonic recently announced that it plans on procuring more materials in Asia outside of Japan. As such, the company has stated it aims to increase local manufacturing operations to 50 percent in fiscal 2012, a 33 percent increase from 2009.

The renewed focus toward logistics in Japan is aptly timed as more Japanese consumers embrace e-commerce. Experts agree that as e-commerce spreads, more Japanese firms are likely to invest in more modern logistic centers to accommodate rising demand. Domestic e-commerce sales increased 16.3 percent to 7.8 trillion yen in 2010, surpassing department store sales for the first time.

Real Estate Blues

Over half a year since the tsunami swept entire houses into the ocean, new data from the Ministry of Land, Infrastructure, Transport and Tourism reveals an understandably sharp decline in average residential and commercial land prices in Fukushima and other prefectures in the Tohoku region.

photo by pict_u_re on flickr

On the other hand, prices in western Japan—where there was little to no damage resulting from March 11—showed promising signs of recovery. In Osaka Prefecture, land prices increased in 41 locations compared to just 2 locations from the same period last year. Similarly, land prices in the Nagoya area also received a boost as manufacturing firms managed to resolve production delays caused by the earthquake.

However, gloomy statistics have not deterred foreign investment in Japanese real estate. Billionaire real estate developer Donald Trump recently announced that he plans on expanding his world famous brand in both Japan and China after completing ongoing projects in South Korea and the Philippines, citing Asian preferences for brands and the lifestyles associated with those brands.

When I made the decision in 2009 to join the ACCJ Journal relaunch team I was primarily fascinated by challenge of serving a select membership body representing some of the leading companies in Japan. I knew it would be nothing like the wholly commercial publishing ventures I’d been involved with before. I have indeed learned much, and I treasure the many lessons.

We’ve experienced a number of challenges from day one, and March 11 represented one of the greatest. But through the efforts of an amazing team, and a supportive membership, the magazine persevered and did its bit to contribute to the spirit of recovery Japan has so desperately needed in recent months.
On that note, I must express my sincere gratitude to all of those involved in the launch and ongoing production of the new version of the ACCJ Journal. From the Japan Inc. staff, to the kind and hard working staff at the Chamber offices, to all the members who have taken their valuable time and energy to either write or otherwise make themselves available to the ACCJ Journal, please know that any success we’ve had with the magazine has been as a direct result of your involvement—Thank You.

And while the death of Steve Jobs hit me as hard as any long-time admirer of his work, I would be lying if I didn’t acknowledge the fact that wrapping up my tenure here by profiling the life and work of one of my personal heroes is a special honor and feels like the perfect end to a great ride. I watched as some appeared taken aback by all the praise being heaped upon Jobs from businesspeople and consumers alike. Although Jobs was indeed just a man, and had his own very real failings, few business leaders have ever been more deserving of the purely spontaneous show of gratitude and respect that we’ve witnessed in the last month.

Nevertheless, there are some who don’t seem to understand all the fuss. But I’m used to that skepticism regarding Apple and its founder. I have been using Apple computers for decades and only in the last 5-6 years have the light ridicule and “hey, why are you using that toy instead of a real computer?” comments subsided…somewhat. Just last year when I got my iPad earlier than most of Japan, several colleagues walked over to my desk to examine the device with skeptical eyes, one even saying, “Ah ha, I see you have your new toy.” Long used to suffering the playful barbs that being an Apple user inspires, I braced up against the skeptics with the quiet confidence that many years of amazing Apple experiences provide.

Therefore, it came as no surprise to me when, just 6 months later, some of those same colleagues came to me asking for tips on how to use their newly purchased iPads. I’ve seen this pattern occur repeatedly over the years, and the satisfaction of having faith in the product judgment of Jobs never gets old. But we lost that in October. While Jobs’ strategic DNA will likely steer the company for at least the next few years, Apple has instantly become a different company having lost his very exacting guiding hand.

Reading many of the stories about Jobs’ now legendary attention to detail has helped me realize that I, along with many of my peers, have been using Jobs as a beacon in our professional lives. The central message of Jobs’ product philosophy was relatively simple: 1. Care more than your competitor about producing a great consumer experience. 2. Never compromise or cut corners, even if it means taking a hit in the short run. 3. Believe in your vision and execute it with passion.

Jobs did this consistently, year after year, and in the process inspired generations. If you happen to be one of those still wondering why so many people in Japan, Hong Kong, Shanghai, Australia, and America flocked to the Apple stores to deliver flowers and write messages of thanks to a largely media shy CEO, then a great place to begin your investigation would be our cover package this month (“The Life of Steve Jobs,” page 24). I’d also like to thank United States Ambassador to Japan John Roos for crafting a special message for us regarding the passing of Jobs.

Once again, thank you, readers and members, for allowing us to serve you. It has truly been our pleasure.

Please contact us at: editorial@accjjournal.com

Technocrats rule, ok?

Prime Minister Noda’s strongest ally is Japan’s technocrats in general, the Ministry of Finance in particular. This is a big plus and stands in sharp contrast to the deeply entrenched anti-bureaucrat pretense of his predecessors, ex-PM Hatoyama and Kan. Both Kan and Hatoyama very consciously
shut-out the technocrats as they wanted to force a complete break in the decision making process after more than 50 years of LDP one-party rule. The net result, however, was almost complete inaction in policy implementation—nothing got done.

In my view, it was never the fact that Kan or Hatoyama had “no plan” or “no vision” of what to do. Just read the Democratic Party Manifesto and you cannot help but be impressed with the grand-design and vision presented. However, to get from plan to action, you need to have the bureaucracy
on your side. To rebuild Tohoku, to recreate energy policy, and to implement social security and tax reform no Prime Minister can get very far without the proactive support and administrative expertise of the technocrats. The anti-technocrat philosophy of Hatoyama and Kan was, in my view, the fundamental reason for their ineffective (and short-lived) premierships.

PM Noda could not be more different. He has no hard ideology, but brings a healthy “can-do” attitude to the job. Most importantly, the technocrats have come to respect his willingness to learn, attention to detail and willingness to focus on facts, rather than get distracted by debates on “grand design.” PM Noda has the full support of the technocrats, which means his government stands a very good chance of actually getting things done.

How can I show this thesis is correct? Watch for a fast-coming, thoughtful and sizable supplementary budget for rebuilding to be presented soon. Also, look for a fast-track decision on new energy policy. No generalities like Kan, but credible numerical targets on how Japan’s power supply will be secured going forward.

DECISIVE TAX POLICY
PM Noda’s other strength rests in the political world: he is not afraid to be the “bad guy,” the leader who may actually go ahead and force an increase in taxes. “Un-learn what you have learned.” Everybody knows that Japan’s public
finances are spiraling out of control and that the country needs a broader tax base. But given that any Prime Minister who actually raised taxes got ousted within barely six months of taxes going up, nobody volunteered to spearhead the agenda—until Noda.

Lets get concrete: the fact that Noda is actually pushing for tax hikes coming as early as next year was a key reason for him winning the DPJ party leadership race. Importantly, next year (2012) is not an election year, so a popular backlash against the tax hike would not negatively affect individual politicians. If there is a bigger-than-expected backlash, the party will simply vote-out Noda in the next internal Democratic Party leadership vote, scheduled for September 2012.

So yes, Noda could well end up becoming the “fall guy” for doing what is right and necessary—tax hikes. But between now and then he is poised to get a lot of things done.

Jesper Koll is a Managing Director and Head of Research at JP Morgan Japan Securities Inc. He has been analyzing and investing in Japan since becoming a resident in 1986.

Note here, Noda is a self-made man, who almost faced personal bankruptcy several times during his career. A far cry from the second or third generation senior politicians in the Prime Ministers’ office since Koizumi. He’s not afraid to fight, to do the right thing and does bring a welcome “can do” attitude to the job. No wonder the technocrats like him. A few early wins (energy policy and a credible rebuilding program) and the people may well cheer for him, too.

It’s now common for people to say, “Where were you when it happened?” Personally, I was about a mile away from the attack, in my apartment in Greenwich Village. I had just gotten out of the shower when I heard what sounded like a small plane swooping down (a sound I only knew from movies) followed by two beats of silence, and then suddenly hundreds of car alarms went off. At the worst I figured a small plane had crashed somewhere, perhaps ten blocks or so away. but then I turned on the TV and saw that it was, in fact, the Twin Towers (that’s what most New Yorkers called them, but you likely know them as the World Trade Center). I ran back to the bathroom and told my girlfriend to hurry out of the shower. Even then, we still thought it was an accident.

Along with a few neighbors, we went up to the roof and watched the tragic sight of the single tower burning. Several of us wondered aloud whether the people in the other tower would evacuate, or continue to watch the smoking emergency from the apparent safety of the second tower. And then, seemingly out of nowhere, another plane hit the other tower, and we knew that this was a deliberate act. (Although I admit to having at least a brief moment of nonsensical logic, “Maybe air traffic controllers got their wires crossed somehow…twice?”) But it had become obvious: we were under attack. You never know how you’ll react in those situations until it happens. Personally, I was quite angry. Even though I had long ago dropped my teenage notions of joining the Marines (where several of my best friends had gone after high school), I found myself wondering if there might be a way I could quickly join some official group to help to fend off what appeared to be only the beginning of an ongoing attack against our homeland. I was angry, and I wanted to defend my country. And in the following months and years, many other things happened that changed history.

But rather than give my perspective here on the ensuing events, I’d rather share some related insights I’ve had since moving to Japan in 2007. Growing up in New York city, living in the east Village, my childhood friends were largely first-generation Polish, Italian, Puerto Rican, Greek, Indian, and Chinese. I thought I understood their lives, but it wasn’t until I moved to Japan and joined the gaikokujin community that I truly realized how much of a disadvantage being an immigrant can be.

And along with those disadvantages come revelations about how we see ourselves, as well as how others see us and our countries. The issue of 9/11 is sensitive for many Americans, but in Japan I’ve noticed that, after a brief “sorry that happened” statement, expats from other countries sometimes launch into a political critique of America. Given that America is the number one economic power, this kind of scrutiny is understandable. But sometimes the one-sided nature of these critiques can be challenging to bear. In other words, few countries can claim a virginal profile in the dossier of world politics and history. The list of past and present contentious, embarrassing, and unfortunate issues stemming from any number of nations is long.

This fact excuses nothing on the part of any nation. Nor does it argue in favor or against any particular issue. but what it does highlight is need for the expat community in Japan to continue to work hard to respect the sensitivities of our various countries of origin.

This 9/11 anniversary was particularly sensitive for Americans in Japan because it coincided with the six-month anniversary of the 3/11 Japan disasters of this year, compelling many of us to attempt to divide our somber reflections between two catastrophic events.

I remember visiting the home of my Japanese friend’s parents in Fukuoka this March, just two weeks after the historic quake. His mother, a charming and amazingly witty conversationalist, interrupted one of our sake toasts to ask me a serious question: “Which do you think is worse, 9/11 or this current disaster in Japan?” I was shocked by the question, but my answer was honest: “I don’t think you can ever really compare such great tragedies. Each one means something different to each person depending on who they are and where they come from. I don’t think it’s possible for us to compare.” Her eyes registered understanding and acceptance, she nodded agreement, and we continued our toasts. What could have been a moment of great discomfort, and possible insult for all parties involved, became a moment to remind us all that we must work to extend our minds and hearts to understand others, and be sensitive to differing perspectives particularly when we engage each other across international borders.

Please contact us at: editorial@accjjournal.com