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. 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).

5. 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.

6. 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).

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.

Given that the market for luxury in Japan has been shrinking in recent years, Hankyu’s decision to double down by opening a luxury emporium exclusively for men seems like a bold one.

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.

The ritzy men’s department store targeted at shoppers in their late twenties to forties follows a successful 2008 Hankyu Men’s launch in Osaka, and appears to emulate the trailblazing and successful Isetan Men’s store in Shinjuku, Tokyo.

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.

Japolia - Fotolia

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.

Fotolia.com

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

Photo by Stuck in Customs, used under the creative commons attribution license.

The Minister referenced a delay in the U.S. to adopt IFRS as well as the extensive damage to supply chains caused by the earthquake and tsunami that devastated northeastern Japan as reasons for delaying local adoption. In the U.S., the original plan was to officially decide whether IFRS would be implemented or not in 2011 and, assuming implementation would proceed, for public companies to begin application of IFRS sometime between the years 2014-2016. The Securities Exchange Committee (SEC) however has changed its view such that IFRS will now be implemented following a five to seven year transition period and may therefore become effective sometime between the years 2016-2018.

Looking at the two reasons the Minister for Financial Services gave to delay adoption of IFRS in Japan it can be surmised, based on Japan’s continued reliance on U.S. policy to shape their own decision-making, that the delay is more the result of delayed adoption in the U.S. than damaged supply chains in Japan.

The statements by the Minister for Financial Services gave cause to a majority of public corporations in Japan to delay considering whether they should adopt IFRS into their own accounting system and policies. While a number of the largest corporations in Japan are indeed proceeding with preparations for IFRS, it is important for SMEs and multinational corporations to also prepare to adopt IFRS.

WHAT IS IFRS?
To help understand why companies should consider the impacts of these new reporting standards, we need to outline the basics of IFRS. Its underlying concept clearly departs from traditional accounting principles such as acquisition cost basis and periodic income statements. Instead, IFRS focuses on fair value basis and comprehensive income statements, placing a heavy emphasis on corporate valuation rather than periodic accounting of profits and losses.

The reason for this paradigm shift is mainly due to the requirements of investors in the global capital markets. Such investors are strongly interested
in information related to a company’s constantly changing stock value, or the future cash flows created by holding the stock. That is, the increasing amount of equity being invested in global markets requires a system that departs from the traditional accounting principles that emerged in 15th century Venice.

Modern finance theory, including the commonly used Discounted Cash Flow model, works well to fulfill the needs of investors. The IFRS does not really change accounting rules in the realm of traditional accounting—it is a completely brand new concept of reporting system specially designed for the investors of global capital markets. Indeed, the paradigm of IFRS is in finance rather than in accounting.

The International Accounting Standards Board (IASB)—the 15 “cardinals” that set the accounting standards for IFRS— recognize the fundamental departure from what was once an accounting focused set of rules and have dropped off the word “accounting” from the name originally
considered (the International Accounting Standards or IAS). They now use the new name International Financial Reporting Standards or IFRS.

THE SITUATION IN JAPAN
Many Japanese corporations may question whether IFRS fits traditional Japanese business culture or not, as it is primarily designed to fit the investment culture of the West. For example, IFRS 3 sets out the rules for M&A and business combinations. Applying the acquisition method, it identifies the acquirer, recognizing and measuring identifiable assets and liabilities of the acquiree. In Japan, mergers are seen more as a marriage between two companies rather than the end result of a search for strategic assets.

The attitude towards mergers in Japan is a reflection of the role agriculture has played throughout Japan’s history. Japan has historically placed an emphasis on agriculture and farming over hunting, and this can be seen as one reason Japanese tend to try to avoid conflicts. Moreover, Japanese companies still depend heavily on bank financing as well as capital markets. For these reasons, it is likely that a majority of domestic public companies are confused as to why they should have to change their corporate policies to fit accounting rules created mainly to fit the interests of global investors.

Looking at the modern Japanese economy, we must acknowledge the fact that nearly 30 percent of total investment into Japanese stock markets comes from foreign investors. Furthermore, corporations in Japan must recognize the dramatic shift in domestic demography, the impact of the gigantic national debt, and the role the hollowing out of domestic industries due to the strong yen will play. The logical point that follows on from these facts is that we cannot survive if we simply sit on our hands, waiting for the economy to pick up in Japan.

Corporations in Japan should instead embrace the global rules of IFRS as we commit to compete in the global economy.

Jun Nagamine, CPA founded accounting firm Nagamine & Mishima more than 20 years ago. Aaron Kleinman is a Senior Consulant at the firm Nagamine & Mishima. www.nagamine-mishima.com

For a country as densely built and populated as Japan, proving that you have the right to use a piece of land would logically be a part of the building permit process. Some local governments do indeed require proof that there are no border disputes, but many do not. Even in central tokyo, where rules and regulations tend to be better enforced, border disputes are quite common and can range from tree branches or ventilation pipes extending over property lines to pieces of buildings that somehow are not constructed fully consistent with the original building permit and stick out where they should not.

The role of land plays a disproportionately large role in the Japanese economy and psyche. During the bubble area more than 20 years ago, tochi shinwa, or “land myth,” the idea that land intrinsically had value and that prices would rise forever, was an essential element in excess speculation and Japan’s later downfall. In many Asian countries, “fee simple” or “freehold” ownership of land is prohibited or highly restricted, increasing Japan’s attractiveness as an investment destination. Japan has no general restrictions on fee simple land ownership and ground leases are relatively uncommon, so those desiring to own the dirt under their toes have a wide range of choices.

The corollary to this story is that over the past 10 years, the idea that even vacant land has intrinsic value is essentially gone. These days, commercial properties are priced on an income-based approach, not a purely historical value basis. The other side effects of this global desire to own dirt are that sokochi, or land ownership with an income-producing ground lease in place, are becoming more popular while buildings on top of a fixed-term ground lease have much less liquidity.

Several REITs now own sokochi, from which 100 percent of the income can be distributed to shareholders because of zero depreciation. Owning a building on top of a fixed-term ground lease means extremely high depreciation, causing problems both for REITs and investors who use a tokutei mokuteki kaisha (TMK) as an acquisition vehicle. In a fixed-term ground lease,
the lessee must demolish the building at the end of the lease and has no option for renewal, making it difficult to value the property’s cash flows on a long-term basis.

It has now been 11 years since the introduction of the fixed-term ground and building lease law in Japan and excusing the analogy to the “X-Files,” alien DNA from fixed-term leases has now sufficiently mixed with that of standard leases to the point that they are difficult to differentiate. In other countries, long-term, non-cancellable leases with built-in rent escalation clauses exist to the delight of core funds seeking stable income with little direct need for management. In Japan, the only real distinction between the two lease types is that at the end of a fixed-term lease, the tenant has no right to renew. Landlords in a competitive environment to secure tenants have watered down the other potential benefits of the fixed-term lease law to the point that tenants have much stronger bargaining power.

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

In early August, BNY Mellon adopted my idea (see December 2010 column) to start charging interest on certain bank deposits. It would be nice for Japanese banks to take notice and try something similar. If even a small portion of the mountain of cash sitting idle in Japanese savings accounts was invested in value-creating businesses, the economy would be transformed.

Nevertheless, a potentially more important development is slowly unfolding before our very eyes: Google’s Chromebook. When Google seeded the first version of the cloud-centric notebook (the Cr-48) with early adopters last year, most seemed relatively unimpressed. Today, the notion of buying a computer that is essentially a “thin client” that forces you to rely on a menu of applications and services only accessible via the Internet seems a bit foolhardy. And the current consumer pulse (at least in the U.s.) seems to agree. When the Samsung- and Acer- produced Chromebooks went on sale in May, there was little of the fanfare and excitement that usually accompanies something like a new Apple Macbook Air. Further, Google seemed to do little to promote the commercial launches. But upon further examination, It appears that the reason Google has done little to address the concerns regarding individual consumer adoption may be related to the company’s real target and first major beachhead for the product: the travel industry.

Two high-profile tie-ups featuring the Chromebook have recently been revealed and they offer the best clues yet as to what Google is really trying to accomplish with the seemingly underpowered notebooks.

The first involves one of New York’s hippest guest lodgings, the Ace Hotel. this fall, every room will come equipped with a Chromebook, lovingly wrapped in customized felt that guests can actually take with them around the city using free WiFi or 3G service. Each Chromebook will also come with a specially designed Google app that offers a detailed guidebook of the city’s hot spots for dining, shopping and clubbing. The other promotion involves one of the Chromebook’s pilot program companies, Virgin America. Passengers on the airline will be able to use Chromebooks free-of-charge, along with a free WiFi account.

While individual consumers may still be wary of adopting a relatively pricey cloud computer, and local governments (like the City of Orlando, Florida) have still only committed to “experimenting” with the notebooks, for the immediate future, attacking the travel industry makes perfect sense for Google. Next to raw data culled from Google web searches, the next best source of information for the search giant will be in-the-field data from mobile users. Data that will likely be fed into the company’s massive number-crunching mechanism and other location- centric initiatives like Google Places, Google Offers, and of course Google Maps. If Google can successfully marry their search engine and cloud ecosystem to millions
of travel terminals located in top hotels and airports around the globe, the company has the opportunity to create a kind of three-dimensional consumer behavior grid the likes of which we’ve never seen before. So yes, the Chromebook may be just a bit more important than we all originally thought (particularly in light of Google’s recent $12.5 billion Motorola Mobility deal).

But a major challenge presented here will be getting mainstream users to adopt such a vastly different computing paradigm. Changing well-worn habits, even in the age of often transitional digital technologies, can seem like a radical proposition, even to the most forward-thinking of tech aficionados.

A similarly radical approach is being called for by the founder of Japan’s Fast retailing, tadashi Yanai. In this issue Yanai calls out to his fellow Japanese citizens to buck tradition and programmatic thinking by embracing the prospect of failure in the interest of learning something new and building something great (“Dare to err,” page 24). Most Americans are quite familiar with this maverick approach to doing business, but when such a prominent Japanese businessperson steps forward with such sentiments, it is an unmistakable signal that Japan has once again reached a point in history at which the gravity of the moment literally forces a change in thinking. Many of us who do business in Japan greatly appreciate Japanese culture and tradition, but imagining a Japan in which Yanai’s words come to full fruition via the efforts of a new breed of Japanese entrepreneurs is quite exciting.

Please contact us at: editorial@accjjournal.com

Photography by Jeremy Sutton-Hibbert

One problem is that we look down on developing countries. We should be willing to learn from companies in these countries if they are better than us. But we lack the willingness to learn because we have been so successful before. That holds true for managers and employees alike.

Another problem is that Japanese business people and companies are lacking in individuality. too many people think that everyone must be the same. That’s a basic fault.

Finally, Japanese companies seem to have their eyes in the rearview mirror. They have become introspective. I think we should get back to something more like we were at the end of the war when Japan rose to prominence from a situation in which it had nothing. (It was during this period that Fast retailing got started, in 1949.)

We’ve lost that spirit, maybe because we are under the illusion that we are rich and superior. But many countries are just as rich, and in Japan, income has stagnated for many people for a decade or more. Japan is still very comfortable to live in, if you are Japanese. But there’s a difference between being comfortable and being viable. We are gradually losing our viability.

In short, Japan has been utterly defeated as an economy. We’re losing the economic game. So why are we being so foolish? Or, more precisely, why aren’t we learning from our mistakes?

Learning from mistakes is something that Uniqlo has had to do—several times, unfortunately.

We opened our first store outside Japan in 2001, in London. And we failed spectacularly. We quickly opened 21 outlets in britain—and shut down 16 of them by 2003. In retrospect, that was probably good, because we learned so much. Our big mistake was to try to do things the British way. We never capitalized on our strengths.

For example, we let Uniqlo’s UK president create a compartmentalized management team, with area managers, store managers, assistant store managers, and then the sales staff. Store managers only spoke with other store managers. We don’t have that kind of class system in Japan. Our organizations are flat.

China, the second overseas market we entered, was a failure at first, too. We faltered in China because we went too far in adapting to China. Per capita income is low—about 5 percent of Japan’s—so we figured we should sell at much lower prices. That was a mistake. Uniqlo has a Japanese identity; no one wanted a Chinese Uniqlo.

Vegetables were a disaster too. We saw food distribution as a backward sector, so we went into partnership with a food group, Ryokuken, in 2002. but vegetables are not an industrial product; you don’t know exactly when they will be ready or in what volume. We eventually understood that it would be impossible to succeed unless we ran our own farms, and we did not want to be farmers. After two years, we shut operations down.

The important thing is not so much that we failed in these instances, but that we learned and eventually succeeded. In Britain, we now have more than a dozen stores, including a flagship on London’s Oxford street, and are doing well. China is our fastest-growing market, with almost 100 stores. By 2020, we hope to have more stores in China than in Japan (1,000 plus). Uniqlo’s international operations are growing fast. We now have stores in 10 countries, with Thailand, Brazil and India in our sights. By 2015, most of our employees could be outside Japan.

Failures are always unpleasant; from the right perspective, though, they can be useful. Our travails in Britain and China fostered resilience and led us to understand three important things. First, to create the best possible Uniqlo in other countries, we had to use the best aspects of our own organization. Second, while globalization is difficult, it is also essential. And third, to succeed outside Japan requires understanding other markets on their own terms.

In short, Uniqlo has to be both Japanese and global. the analogy to Japan as a whole is obvious.

One thing Japan has to get rid of is the idea that things are one way here and different everywhere else. The Japanese are really strong at home, and incredibly weak away from home. We need Japanese who are strong away, or who don’t distinguish between home and away. We’re trying to build this idea into Uniqlo’s culture. For example, English is spoken at business meetings with foreigners, and we want all emails to be in english in a few years.

Most ordinary Japanese industries are bound up by government regulation, or by agreements (tacit or explicit) within the industry. The idea is to create a union or association or something and then use it to start imposing regulation and preventing competition. I hate that sort of approach. We do our best to avoid the government industrial structures so typical of much of the Japanese economy. These are meant to be safety nets; in fact, they are shackles on global competitiveness.

My advice for young Japanese is simple: get out of Japan. One of our weaknesses as Japanese is our ineptness at communicating with other cultures. Even people who speak english well are closed off psychologically. They don’t speak frankly like I do. there’s this uniquely Japanese standoffishness, this hesitancy to become too involved. And it’s detrimental to globalization.

Tadashi Yanai is the founder and president of Fast Retailing, the parent company of Uniqlo

If we give it everything we’ve got and start to move in the right direction, I’m confident that we will succeed. Even if we experience failure, we can pick ourselves up and try again. That’s what Uniqlo did— and that is what Japan can do.

Illustration by Phil Couzens

When in doubt, the yen will rise. The track record of Japan’s currency really is impeccable—when I arrived in Tokyo in 1986, about 160 yen bought me one dollar. Twenty-five years later, I can buy the same dollar for less than 80 yen. For those of us fortunate to earn their living in yen, this surely qualifies as good news, doesn’t it?

Why is the yen so strong? Here, the easy answer is to point to the other side— it’s the dollar that is weak, what with all the concern about the U.S. economy, the Federal Reserve printing money and the ever-rising U.S. trade deficit. However, today I don’t want to do this. rather, let’s have a look at the true underlying strength that actually explains perfectly well why the yen keeps rising. In short, the yen keeps climbing because Japan Inc. remains relentlessly focused on innovation and keeps on pushing her competitive edge.

Facts speak louder than words: Every day there is about $2 billion more coming into Japan than going out. Make no mistake, Japan remains one of the two largest net creditor countries on earth. And unlike the largest creditor (China), Japan does not accumulate global IOUs under the protection of a fixed exchange rate.

Where does the money come from? Simple, Japan exports way more than it imports. Japan runs a sizable trade and current account surplus with all major economies of the world, including a net trade surplus with China. This fact, more than anything else, attests to the fact that Japan Inc. remains very much on the cutting edge of global competitiveness, innovation and economic power.

So let’s be clear, the yen keeps rising because Japan is so competitive, so successful that the dollars earned by Japan Inc.’s exporters keeps on rising faster than the dollars Japan must pay for her imports. So on a net basis, there always remains excess demand for yen (because once the import bills are paid, the excess dollars earned by exporters will be repatriated back to Tokyo headquarters, i.e. they sell dollars and buy yen).

Debates on currency are always lively and confusing. Most often, analysts point to central bank policy as the key—if the Federal Reserve prints more dollars than the bank of Japan prints yen, then surely the dollar must fall. That’s all understandable, and does have some relevance. However, in the final analysis it must be the success or failure of the private sector that is the measure of what is really going on. And as long as the private sector can sell more to the world than it buys from the world, well, that means the private sector must continue to be very competitive. It also means that the domestic currency will continue to be bid up by exactly those excess dollar earnings.

A VICIOUS CYCLE, OR A VIRTUOUS ONE?

So Japan has been a victim of her own success, and the yen keeps on rising. Superficially, many commentators think this is a bad cycle: as the yen strengthens, those dollar export earnings translate into fewer and fewer dollars. Indeed, corporate profits of companies listed on the stock exchange decline quite significantly when the yen goes up—for every one yen gain, aggregate profits drop by almost 3 percent. Make no mistake, yen strength is negative for short-term earnings (just as, by the way, dollar weakness is a strong net boost for U.s. corporate profits, more than 60 percent of U.S. corporate profits come from overseas operations/sales, so the cheaper the dollar gets, the greater the buying power of those overseas earnings).

From a more structural perspective, however, the relentless rise in the yen does force ongoing structural change in Japan’s economy. First, it forces corporate managers to keep on investing in more productive factories and more efficient manufacturing processes. The rising yen is definitely one reason why Japan is the undisputed global leader in factory automation and robotics. At the same time, the strong yen forces companies to innovate, or die. Despite individual and headline grabbing examples of failure, the fact that Japan Inc., in aggregate, keeps running sizable trade surpluses suggests innovation keeps having the upper hand.

So from a macro economic perspective, the verdict is very clear: the strong yen has been a virtuous cycle for Japan. It is one reason why the country remains hyper-competitive and a major global creditor country.

UP, UP AND AWAY

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.

Call it the great “hollowing out,” or call it the next wave of Japan’s globalization. Underneath the rhetoric, Japanese entrepreneurs are actually laying the foundations for the survival of Japan’s national economy going forward: a “headquarters” economy, a “rentier economy”—Japan’s future well being will be founded on the dividends and income earned from her global operations and capital assets. And then there will come a point when physical exports will no longer exceed imports, and the yen will start to weaken, meaning that the purchasing power of those overseas earnings will start to buy more and more yen. As always in economics, it’s a tricky balancing act, but it just may work—Japan’s pension and future gets covered and paid for by rising overseas earnings from the investments happening now. It just might work…

Illustration by Phil Couzens

Over thirty years ago, before the arrival of the personal computer, there were desktop computers called office workstations. Designed around the first generation of microprocessors, these computers ran business applications like word processing, spreadsheets, and accounting. they were an improvement over the dumb terminals hanging off of mainframes and minicomputers, but ran proprietary operating systems and software. My third startup, Convergent Technologies was in the business of making these workstations.

THE OEM BUSINESS

Convergent’s computers were bought and then resold by other computer manufacturers—all of them long gone: Burroughs, Prime, Monroe Data systems, ADP, Mohawk, Gould, NCR, 4-phase, and AT&T. Convergent had assembled a stellar team with founders from Digital Equipment Corporation and Intel as well as engineers from Xerox PARC. And once we went public, we hired a veteran VP of sales from Honeywell.

As the company’s revenues skyrocketed, Convergent started a new division to make a multi-processor Unix-based minicomputer. I had joined the company as the product marketing manager and now found myself as the VP of marketing for this new division. We were a startup inside a $200 million company. A marketer for five years, I thought I knew everything and proceeded to write the data sheets for our new computer. Since this new computer was very complicated—it was a pioneer in multi-processing—I concluded it needed an equally detailed data sheet. In fact, when I was done, the datasheet describing our new computer, proudly called the MegaFrame, was 16-pages long. I fact-checked the datasheet with my boss (who would be my co-founder at epiphany) and the rest of the engineering team.

We all agreed it was perfect. We’d left no stone unturned in answering every possible question anyone could ever have about our system. As we typically did, I printed up several thousand to send out to the sales force. The day the datasheets came back from the printers, I sent the boxes to the sales department in Convergent’s corporate headquarters, a separate building across the highway, and sent a copy to our CEO and the new VP of sales. (I was thinking it was such a masterpiece I might get an “attaboy” or at least a “wow, thanks for doing all the hard work for our sales organization.”)

So when I got a call from the VP of sales who said, “Steve, just read your new datasheet. Why don’t you come over to corporate? We have a surprise for you.” I smugly thought, “They probably thought it was so good, I’m going to get a thank you or an award or maybe even a bonus.”

FARENHEIT 451

I got in my car to make the five-minute drive over the freeway. Turning into the parking lot, I noticed smoke coming from the far end of the lawn. As I parked and walked closer I noticed a crowd of people around what seemed to be an impromptu campfire. “What the heck?” As an ex sales and marketing VP, our CEO had a Silicon Valley reputation for outrageous stunts so I wondered what it was this time. A spur-of- the-moment BBQ? A marshmallow roast?

Heading to a meeting with the VP of sales, I almost walked past the crowd into the building until I heard the VP of sales call me over to the fire. He was there with our CEO feeding things into the fire. In fact as I got closer, it looked like the campfire was being entirely fed by paper. “Here, toss these in,” they said as they handed me a stack of… Oh, my g-d, they’re burning my datasheets!

THE BONFIRE OF THE VANITIES

I stood there stunned as I realized that my 16-page carefully constructed, brilliantly written, technically accurate datasheets were being destroyed en masse. I guess I was speechless for so long that the VP of sales took pity on me and asked, “Steve, do you know we have a sales force?” I managed to stammer out, “Yes, of course.” He asked, “Do you know how much we pay them?” Again, I managed to answer, “A lot.” then he got serious and started to explain what was going on. (In the meantime our CEO watched my reaction with a big grin on his face.) He said, “Steve, I’ve never seen such a perfect datasheet. It answers every possible question a prospective customer could have about our product. The problem is that our computer sells for $150,000. No one is going to buy it from the datasheet. In fact, reading these, the only thing your datasheet will do is give a prospective customer a reason for saying “no” before our salespeople ever get to talk to them.

“Do you mean you want a datasheet with less information?!” I asked, not at all sure that I was hearing him correctly. “Yes, exactly. Your job in marketing is to get customers interested enough to engage our sales force, to ask for more information or better, to set up a meeting. No one is going to buy our computer from a datasheet, but they will from a salesman.”

MARKETING TO MATCH THE CHANNEL

It took me a few weeks to get over the lesson, but it stuck. When selling a physical product through direct sales, Marketing’s job is to drive end-user demand into the sales channel. Marketing creates a series of marketing activities at each stage of the sales funnel to generate awareness, then interest, then consideration and finally purchase.

Ironically, over the last decade, I’ve seen web startups have the opposite problem. For web sites with an e-commerce component, the site itself is supposed to both create demand and close the sale. Web designers have to do the work of both the marketing and sales departments.

LESSONS LEARNED

• Marketing materials need to match the channel

• Marketing’s job in direct sales channels with consultative sales need to drive demand to the salesforce

• Indirect channels require marketing material with more information than a direct channel

• Websites that sell products combine sales and marketing

• Confusing these can get you your own bonfire

Steve Blank is a veteran of Silicon Valley and serial entrepreneur, and teaches entrepreneurship at U.C. Berkeley Haas Business School, the joint Berkeley/Columbia MBA program, and at the Stanford University Graduate School of Engineering. The Japanese version of his latest book “The Four Steps to the Epiphany” can be found here, and you can read more of his business insights at: www.steveblank.com.

Sam Kidder, ACCJ Executive Director

In May 1979 the ACCJ published the United States – Japan Trade White Paper. Written under the leadership of then ACCJ President Bob Baker, this document set the standard for Chamber advocacy with recommendations to both the Japanese and U.S.  governments about what measures could and should be taken to remedy the growing imbalance in our mutual trade. Critical to the White Paper’s success, the recommendations were preceded by some self-reflection, urging American business to do a more aggressive job of marketing in Japan and to increase knowledge of and sensitivity to Japanese business practices.

Bob Baker, who headed up Dow Chemical’s operation in Japan, was an active Chamber leader until his departure from Japan in 1984.  Even after leaving, he kept in touch and traveled to Tokyo often, especially to participate in the Fulbright Golf Tournament, an event that, like the White Paper, owed its origin to his leadership. On a visit to Tokyo several years ago, Bob stopped by my office and handed me a significant amount of money to be given to charity.  He trusted the ACCJ to put it to good use. Bob passed away this May, 32 years after our first formal White Paper and dozens of ACCJ advocacy documents later. We are all indebted to Bob for his service to ACCJ and for his deep commitment to the U.S.-Japan relationship.

Just as Bob was leaving, another outstanding leader was just beginning to get involved in ACCJ activities. John Kakinuki, who left Japan at the end of June to take a position in the States, has been one of that handful of ACCJ leaders in each generation whose contributions to the organization and to the broader relationship between our two countries stand out. Whether it be as a policy expert on dozens of issues, our most polished team leader for Diet door knocks, one of our tireless Champions who helped revise and update our Constitution, or the “best-dressed” at the Charity Ball, we will miss John, but we are sure he will keep in close touch.

Before the events of 3/11, I was writing about topics in Chamber governance to give readers a better idea of how the ACCJ works. Perhaps the most timely topic now would be the annual election process. The Constitution mandates that the President appoint a Chair for the Nominating Committee (NomCom) by July 15. The Committee is then formed and over the summer meets often to construct a slate of candidates. NomCom is looking for a diverse set of people with experience or interest in the Chamber. The slate is then presented at the Annual General Meeting, normally in October and then an open election is held. For several years now we’ve been conducting the election electronically.  Corporate Sustaining and Company Members that qualify as American entities each have one vote. Nominations are also accepted by mail or from the floor at the Annual General Meeting. The main reason for mentioning all this here is to encourage readers to think about and put forward people you think who can become the Chamber’s next Bob Bakers and John Kakinukis.

We’ve all seen it before. A friend, colleague or rival shows up for a meeting carrying the latest game-changing, technological wonder-product and proclaims that it’s “going to change everything.” The new piece of “it” tech gets passed around the room, from person to person, leaving some bouncing with excitement and others casually nonplussed. Yet as the weeks go by, more and more of your colleagues begin carrying the “it” device around. It soon shows up on the morning talk shows, and is featured in glowing reviews from all the leading newspapers and magazines. Suddenly, everyone has one. And then, just as suddenly, these items seem to disappear, never to be heard from again.

This is a phenomenon that has captured the imaginations of business analysts for years, spawning buzzwords in the media such as “early adopters,” leaving many brands feeling as though they must innovate or be left behind. In today’s business world, often the most innovative companies are also among the most admired. But innovation—be it the latest tech or revolutionary HR policies—can be costly for companies ill-prepared to truly commit to change. How should a company choose which innovations to adopt, and which should be avoided? What techniques can companies use to discern the latest fads from actual pioneering trends? In “Mastering the Hype Cycle: How to Choose the Right Innovation at the Right Time,” authors Jackie Fenn and Mark Raskino seek to demystify why it is that people get so excited about innovation, and how to best utilize these tools of market flux.

The term “hype cycle” is the invention of author Jackie Fenn, a research fellow at Gartner Inc., and is first introduced in the book as a helpful tool that businesses can use to understand how innovations are born, adopted and die. Its general shape is a steep upward curve that sharply plunges before gradually tapering off into another upward slope. “The hype cycle also highlights the need for continual, ongoing awareness about your own decision processes when faced with never-ending waves of potential innovations,” state Fenn and Raskino. “Over the coming decade, you, and the organizations you work for, will be adopting innovations faster than ever before.

Divided into two parts, the first part of “Mastering the Hype Cycle” is dedicated to a general explanation of what the hype cycle is, its pros and cons, the theory behind its development and the real-life opportunities and lessons it affords. As described by its authors, the hype cycle is a “simple and highly visual way to represent the cycle of overenthusiasm, dashed expectations, and eventual maturity.” It’s here that readers become most familiar with colorful terms such as the “peak of inflated expectations,” the “trough of disillusionment” and the “plateau of productivity.” Loaded with case studies, graphs, charts and even passages detailing behavioral economics, the first four chapters of “Mastering the Hype Cycle” is the perfect crash course for those looking for a basic introduction into market trends or a better understanding of the ups-and-downs of innovation adoption.

However, the meat, and real value of the book comes from the second half of the book, which more thoroughly details how to utilize the hype cycle for business professionals. Fenn and Raskino painstakingly put together a guide for innovation adoption via the “STREET” (scope, track, rank, evaluate, evangelize, transfer) technique. Each “step” has its own detailed chapter, replete with real-life examples to illustrate the points being made in addition to detailed, yet accessible advice for implementation.

Fenn and Raskino are thorough and honest in their analysis. With its catchy name and simplicity, the hype cycle itself could very well be one of the many potential innovations the authors detail chapter after chapter. As such, it would have been very easy for the authors to present the hype cycle as a one-size-fits-all “innovation how-to” manual. Instead, wherever possible, Fenn and Raskino advocate the hype cycle as one part of a more methodical, bordering-on-scientific approach for innovation adoption.

Throughout the book, the authors are careful to deflate hype and emphasize that companies should seriously evaluate whether an innovation will benefit a company’s long-term goals or core ideals. In fact, more often than not, the authors are quick to remind the reader that sometimes the best course of action is to avoid tackling unnecessary innovations.

One thing to note, however, is that, as the authors acknowledge, “Mastering the Hype Cycle” was written in 2007, before the Lehman Shock, and is based on four years of research conducted during a time when “innovation was quite naturally high in the minds of business leaders and a topic of many business magazine and journal articles.” To that end, the book admittedly offers little advice with regards to innovation adoption in a less favorable economic climate.

Putting that aside, “Mastering the Hype Cycle” is a good resource for any businessperson looking to implement any kind of innovation, or interested in doing so in the future. It won’t provide you with definitive “yes” or “no” answers, but it will certainly give you the tools necessary to make an informed—and hopefully, the best—decision.

“Mastering the Hype Cycle: How to Choose the Right Innovation at the Right Time”, published by Harvard Business Press, available online at http://amzn.to/lSm60g

What started as a small operation by the Australian and New Zealand Chamber of Commerce in Japan to help foreign companies enter the Japanese market, is now one of Tokyo’s best kept secrets for supporting foreign organizations’ business expansion in Japan and fostering the career development of foreign and Japanese young business professionals.

Since its inauguration in 1993, 848 participants from 45 countries have gone through the program. They have produced 159 business plans for JMEC project clients, some of which have become repeat JMEC clients. NRW Japan K.K., the Economic Development Agency of the German Federal State of North Rhine-Westphalia, for example, was a project client for three consecutive years in JMEC 13, 14 and 15.

JMEC participants are often among the most international in Tokyo. This year’s 51 participants came from 20 countries, including the U.S., Canada, Australia and New Zealand, as well as various European and Asian nations.

The 18 women and 33 men, average age 33, included not only sales and marketing professionals, accountants, recruiters, engineers and IT specialists, but also teachers, an architect and a designer. Most work for private companies or public organizations, but some already run their own business.

Holders of a bachelor’s degree with at least two years of work experience and good working English, may apply to join the JMEC program. Some participants this year, however, held higher qualifications. There were eight master’s degrees, three MBA’s and one Ph.D. At a participation cost of 125,000 yen, with lectures taking place on Saturdays, this is a time-and cost-efficient way to level up one’s career in Tokyo. Over the years, the number of Japanese applicants has been increasing. Forty-five percent of participants in JMEC 17 were Japanese.

Some of the JMEC participants are employees at JMEC sponsoring companies. Sending up to seven employees at no cost, depending on the level of sponsorship, is part of a sponsorship deal for JMEC’s 35 corporate sponsors. Hewlett-Packard Japan, a JMEC Platinum Sponsor for some years, has been using this career development option for their staff on a regular basis.

The seven-month JMEC training consists of a series of lectures and workshops followed by a teamwork phase when participants in groups of five or six research and write a professional business plan for an assigned JMEC project client. The document is submitted to the project client and the JMEC judges at the end of April, which is followed by oral presentations to both audiences. The judges then determine the winners of the competition, who are announced at the annual Awards Ceremony at the beginning of June.

“The JMEC process of lectures, team interaction, building a business plan and presenting in English offers a fantastic way to provide more opportunities to internationalize Japanese staff at ACCJ member companies,” says Thomas Whitson, a partner in Transaction Services at KPMG FAS Co., Ltd., and also Chairman of the JMEC Executive Committee.

Each year there are about 10 project clients, including SMEs, global corporations and NPOs. This year’s clients included businesses as diverse as multinational diversified technology company Sumitomo 3M Ltd., start-up Zava Holdings K.K., design and construction management services provider Lend Lease Japan, telecommunications provider PBXL and childhood-cancer charity The Tyler Foundation. Other project clients were Hafele Japan K.K., ERCO Lighting Ltd., TÜV SÜD Japan Ltd. and Honka Japan Inc.

Dr. Andreas Stange, president and CEO of TÜV SÜD Japan Ltd., said, “We experienced a highly motivated team, which brought us valuable insights into the Japanese market place.”

Mark Ferris, co-founder of The Tyler Foundation, said, “Our JMEC team’s business plan provided a lot of well-researched and carefully thought out information. Many suggestions we had already considered, but to see them presented by an external party, backed up by statistics and logic, was a powerful way to help us better understand our priorities.”

Jim Weisser, co-founder and CEO of PBXL K.K., agrees, “I strongly recommend JMEC to other organizations looking at expanding in the Japanese market. We received a mix of insights that we could not have found internally, as well as a ready-for-production business plan.”

“Our general impression was that the clients did get some very good ideas and good value,” says Rike Wootten, president of K.K. Gotairiku Partners, and one of three JMEC judges.

This year’s JMEC teams spent on average 1,400 hours on their plans, but four teams each spent more than 1,600 hours, with one close to 2,000 hours. JMEC participants and nearly 200 invited guests waited in anticipation for the announcement of the winners JMEC 17 at the annual Awards Ceremony on June 10 at the Tokyo American Club.

This year’s first place went to Team 8 who wrote a business plan for Sumitomo 3M Ltd.; second place was awarded to Team 3 and their business plan for TÜV SÜD Japan Ltd., and in third place came Team 4’s plan for Honka Japan Inc.

Mary Fidler, born and raised in Washington State, is a member of the first-prize winning team whose members each won an HP laptop and a one-year membership to the ACCJ, along with free admission to ACCJ events.

“We all felt very positive after the presentation to the judges, but I also knew that the competition was very strong. My expectation was to get as much out of the program as possible. Winning is pure icing on the cake,” says Fidler.

According to Fidler, her motivations for participating in JMEC were to broaden her knowledge of business practices in general and to gain more specific knowledge of business practices in Japan, as well as the opportunity to meet seasoned entrepreneurs and people like herself who start their own companies.

Fidler, who is a jewelry designer and the director of Mokumedo, a jewelry brand that incorporates ancient Japanese metal techniques with a modern design, now hopes to take her business to the next level.

“I joined JMEC because I wanted to learn how to write a business plan for the company I want to launch. Now I feel that I have a good grasp of all the aspects required to produce a plan so that I can move my business forward,” she adds.

Fidler’s four teammates have not only become new friends for life, but also her new business advisors.

“When you go through a competition like this together, the sense of accomplishment as a team is enormous. I have already warned my teammates that they will have to go over the business plan that I will create for my company and everyone seems eager to help me,” Fidler said.

Kansai City native Nic Swindler and his team won third-place and a two-night stay at any location of Small Luxury Hotels of the World. Swindler moved from the U.S. to Japan in 2008 because he wanted to pursue an international career and use his Japanese. He works at the recruitment firm The Ingenium Group.

Asked about what he took away from JMEC, Swindler says new perspectives on how foreign companies in Japan operate and an understanding of the existing market potentials in Japan despite the economic turndown.

“Participating in JMEC was probably my best decision of 2010. I am sure that I will reap the rewards from the lessons learned and the friends made in years to come,” said Swindler.

“The speakers who joined us on several occasions really sparked some entrepreneurial interests which I never knew existed. I now see that business leaders’ success—and by extension that of companies—is due largely to focus and effort. A good business plan can give you focus, but without a concerted effort to execute the plan it is just a bunch of paper.”

British Chamber of Commerce in Japan President Philip T. Gibb, a JMEC judge, said, “The standard of the business plans and quality of the information and research this year was extremely high. The closeness of the final scores is testament to the effort put in by all participants.”

In his speech at the Awards Ceremony, judge Wootten revealed that the competition was very close, with a difference of just 1/3 of a percent between 1st and 2nd places, and 2nd and 3rd places. And the difference between 3rd and 4th places, in other words winning a prize or not, was just 1.27 percent.

For the third year in a row, the ACCJ, a JMEC sponsor, kindly donated prizes, such as memberships and event vouchers, to each member of the top three teams. At a reception, ACCJ President Mike Alfant introduced the winners to the benefits of an ACCJ membership and urged them to make good use of their prize.

“There was certainly excitement in the room. Not only had they won the JMEC competition, but they now have the opportunity to further their business networking by being part of such a valuable organization,” said Laura Loy, JMEC 17 Program Director.

“I want to take President Mike Alfant’s words to heart and really participate in as many events as possible to meet people and to get the most out of the membership. I enjoy active participation and hope to take part in some committee work,” said Fidler.

The ACCJ is one of 16 foreign chambers of commerce in Japan that support the JMEC program and, thereby, take advantage of the benefits that JMEC offers, including marketing and promotional opportunities to the wide JMEC network and the Tokyo business community at large.

This year’s JMEC participants were forced to postpone writing their business plans when the earthquake and tsunami struck northeast Japan on March 11. In an unprecedented move, the JMEC Executive Committee which consists of one representative from each supporting chamber decided to extend the deadline for handing in the final plans by two weeks.

“We are very proud of everyone who successfully completed the program this year. The events of 3/11 were a unique challenge for the teams, but after a little time off to attend to personal matters, they got themselves back on track,” said Loy.

Typically, proceeds from the raffle held at the annual JMEC Awards Ceremony are used for running the JMEC operation. However, this year it was decided to donate all raffle proceeds to Sendai-based Tohoku New Business Conference (TNB) to help earthquake-effected SMEs in Fukushima, Miyagi and Iwate prefectures.

Due to the generous donations by JMEC corporate sponsors and the kind individuals who bought raffle tickets at the event, JMEC was able to raise 575,000 yen. TNB is part of a national network of non-profit business organizations which, since 1988, has helped companies with business strategies, advice, surveys, information and events.

“JMEC is very pleased to donate the proceeds of its raffle to this very good cause that embodies the spirit of JMEC, which is to help mostly small to mid-sized companies thrive in Japan,” said Loy.

The ACCJ appeal is a natural extension of the ACCJ’s long history of charitable activities and community support, both as an organization and through its individual members. The ACCJ’s Community Service Fund has been making disbursements to the needy since 1995. The ACCJ acts as a leader in corporate social responsibility, both by encouraging its members to be responsible participants in their communities and by engaging in philanthropic activities that benefit those in need.

Tasked with distributing the funds raised by the 2011 Tohoku Earthquake Disaster Appeal, the ACCJ’s Community Service Advisory Council (CSAC) has been operating based on 6 key principles:

• Donations should be direct; not go through third parties such as the Red Cross.

• Donations should go directly to those most affected and in need of support.

•Donations should be made to recipients selected from a large variety of worthy causes.

• Donations should be made to recipients that are all-volunteer programs; i.e., programs with no overheads so that all funds go directly to the designated purpose.

• Donations should support specific projects that the ACCJ can be identified with and that could not be carried out without the support from the ACCJ.

• Donations will not be made to cover operating budgets of organizations or in a way that would cause the ACCJ donation to lose its identity.
Following these principles naturally led CSAC to work with NPOs/NGOs and local governments to identify the most impactful uses for the funds raised. One of the lessons learned from the 1995 Hanshin Earthquake was that many government-related organizations are constrained by laws and regulations, often making them slow to respond and resulting in certain needs going unmet. In response to this, many NPOs/NGOs have come into existence. These organizations are often quite small, with low administrative overheads. They are often better equipped to provide rapid response as well as flexible localized relief and recovery programs.

While the fund-raising continues toward the 100 million yen goal, the ACCJ has begun to distribute the funds already raised. Says CSAC member and long-time ACCJ leader, Tom Jordan, “It has been surprisingly difficult to give this money away in a manner that meets our stated principles.”

Nonetheless, the first 27.3 million yen has now been distributed, with further distributions expected soon as CSAC continues to review proposals and select suitable recipients.

The recipients of these first distributions are groups and causes that are consistent with the ACCJ’s long range philanthropic goals of supporting the sound health, education and welfare of children and generally promoting good health in threatened communities. Additionally, funds have gone to support one of the ACCJ’s stated goals for 2011: to recognize the important role of entrepreneurship in driving growth for the Japanese economy by supporting and promoting the success of entrepreneurs.

h2>Supporting Children’s Welfare & Education

Soma City Scholarship for Orphans and Victims of the Disaster
Before March 11, Soma city in Fukushima Prefecture, located some 40 kilometers north of the stricken nuclear power plant, was a port community with an economy based on the fisheries industry and fruit production. This city of 37,000 lost 459 of its citizens in the disaster. The tsunami that hit Soma was more than 7 meters high, reaching as far as 4 kilometers inland in places and destroying 4,682 homes. Now its citizens are struggling to clean up, rebuild and heal.

Especially affected are the 44 children who lost one or both parents (the UNICEF definition for orphan). The city of Soma has established a scholarship fund to provide these orphans with money for their academic and living expenses until the age of 18. The program also provides support to the orphans by a team of clinical psychotherapists and health nurses. The ACCJ funds provided to date will ensure scholarships of 30,000 yen per month for 3 of the orphans.

Children’s Musical Instruments for Schools in Fukushima City
While Fukushima City was not inundated by the tsunami’s water, there was substantial damage from the earthquake itself. Working with Masahiro Sato of the Fukushima City Council, the ACCJ has established a program to facilitate the recovery of music programs in two local schools.
The Noda Primary School Marching Band has been nationally recognized for over a decade. Many of its members lost their instruments in the disaster. The ACCJ’s support will allow them to get new instruments. Additionally, a grand piano will be replaced at the Hokushin Junior High School in Fukushima City.

Through restoring these school music programs, the ACCJ funds will contribute to the ability of children traumatized by the disaster to return to normalcy. Says Tom Jordan, “We believe that this is a wonderful project since music and musical activities will help the children recover from their recent traumatic experience.”

YMCA
The ACCJ, through its Community Service Fund, has long been a supporter of the Tokyo-based activities of YMCA Japan, many of which relate to children’s welfare. After the March 11 disaster, YMCA volunteers have engaged in a wide range of support activities in the disaster zone, including assistance with clean up efforts as well as programs for the disaster victims in evacuation centers.
The ACCJ funds will be used in a special YMCA project providing grief counseling and therapeutic assistance to children evacuees. Among the types of therapeutic activities organized by the YMCA are day camping outside the disaster zone, swimming outings in Sendai and magic shows in evacuation centers. The YMCA will add other activities as the program develops and in accordance with the needs of the affected children.

Kids Earth Fund
The Kids Earth Fund, an NPO established in 1988 to promote children’s welfare through art therapy and psychological counseling, is working with children in the devastated areas to overcome trauma and related anxieties. Volunteers travel to evacuation centers, hospitals and schools to help, instruct and interact with children, using art therapy to bring hope and a ray of sunshine into their lives. The ACCJ’s funds will help to acquire additional art-related supplies and provide other logistical support to the art therapy program in the disaster zone.

Promoting sound medical care

Nippon Foundation
After the earthquake/tsunami, many expecting and nursing mothers in the Tohoku area found themselves living in temporary evacuation shelters or even in their cars. Often these living conditions are unhealthy, especially for pregnant women, resulting in increased risk of miscarriage and delivery complications. The ACCJ’s donation through the Nippon Foundation will allow 50 pregnant evacuees to deliver their babies in hospitals and remain there for 5 days of post-natal care. Providing this safe and clean environment for post-natal care for mothers and their newborns will help these new lives get the best possible start in spite of adverse conditions.

The ACCJ is pleased to have this opportunity to work through the Nippon Foundation, which emphasizes education, social welfare and public health as a means to promote development both in Japan and around the world.

Otsuchi Town Medical Facilities Support
The Sanriku coast of Iwate Prefecture bore the worst of the tsunami’s furor. Several communities along that coast have been so badly destroyed that it is currently unknown whether they will even be able to rebuild. Of the 21 hospitals administered by the Iwate Medical Bureau, three that are situated in coastal areas have been heavily damaged and are not currently operational. One of them is the Otsuchi Hospital.

In the immediate aftermath of the disaster, Otsuchi Town in Iwate Prefecture was identified by the media as one of the worst hit communities. Struck by the tsunami just half an hour after the earthquake, the town lost 10 percent of its population, as well as most of its buildings. Working through a project launched by the Iryo Governance Gakkai (Medical Governance Academic Society), ACCJ funds are being used to restore Otsuchi Hospital and hire doctors to replace those who perished in the disaster. By ensuring the availability of medical care for the people of Otsuchi Town, the ACCJ is helping to facilitate the town’s recovery.

Supporting Entrepreneurs

ETIC’s Support for Disaster Recovery Leaders Project
On June 20, the ACCJ Board of Governors met with members of the Junior Chamber of Commerce in Iwanuma, near Sendai, and heard first-hand some of the difficulties being faced by young businessmen and women trying to stay in business while recovering from the disaster and in many cases coping with deep personal tragedy. Even just listening to their stories seemed to help them, but it is clear there is more that could be done.

In ordinary times, Entrepreneurial Training for Innovative Communities (ETIC) provides training and support for young social and business entrepreneurs. In response to the Tohoku disaster, ETIC launched two initiatives under their Support for Disaster Recovery Leaders Project.

One initiative is to send skilled entrepreneurs into the disaster zone to assist in the management and operation of evacuation shelters, improving the efficiency and efficacy of the shelters in providing evacuees with a dignified and healthy environment.

The second initiative is to help entrepreneurs and small/medium sized entities (SMEs) destroyed or severely affected by the disaster to get back on their feet by providing financial grants and by dispatching teams of experienced volunteer managers into the devastated areas to provide training, human resources support, mentoring and coaching. The ACCJ’s donation is supporting this initiative, which is particularly important as a means to encourage younger people to remain in the disaster zone and build productive lives there, rather than abandoning the region completely.

Future Disbursements from the Funds Raised

The CSAC and ACCJ staff have spent long hours identifying needs in the disaster zone as well as finding ways to meet those needs. They continue to review proposals from local governments as well as NPOs/NGOs to find the best possible uses for the remaining proceeds of the 2011 Tohoku Earthquake Disaster Appeal. They welcome ideas and suggestions from ACCJ members, which can be directed to Masafumi Miyata in the ACCJ office (mmiyata@accj.or.jp).

If you haven’t yet contributed to the 2011 Tohoku Earthquake Disaster Appeal, or would like to make an additional contribution, you now have the option of making a contribution in Japan, which is not tax deductible, or making a contribution through the United States which will be tax deductible in the United States.

Make a pledge to be paid through your ACCJ Member Account or by credit card by contacting helpjapan@accj.or.jp.

To donate via check, please make your check out to Friends of the American School in Japan, Inc., noting (ACCJ/ASIJ Japan Recovery Fund) on the check and sending it to:

Friends of the American School in Japan, Inc.
c/o International School Services
15 Roszel Road, Princeton, NJ 08540
Attn: Ms. Deirdre Simon, Director of Accounting
Phone: (609) 452-0990 Ext. 330

To donate via bank transfer (be sure to note  “ACCJ/ASIJ Japan Recovery Fund”) on your bank transfer and include your name):

Bank: TD Bank N.A.
Address: 3470 Quakerbridge Road, Mercerville, NJ 08619
Phone: (609) 689-6300
Routing Number: 031201360
Account Number: 7856737254
Account Name: Friends of the American School in Japan, Inc.

ACCJ Member Companies have undertaken a number of individual company initiatives to help out with the earthquake recovery. Engaging in meaningful volunteer work in Tohoku, or even nearby in hard-hit Chiba, has served as an ideal opportunity for a number of companies to establish or expand their CSR (Corporate Social Responsibility) programs while boosting employee morale and teambuilding in the process.

In the big picture, American companies have used this event as an opportunity to deepen U.S.-Japanese relations by lending a helping hand. This is a new frontier of CSR in Japan that may very well serve to stimulate volunteerism on a broader scale. The collective sentiment has been centered on the notion that local business leaders will mobilize larger domestic and international support and spread volunteerism to rebuild and go forward.

The devastation in Tohoku is beyond imagination. Driving along the coast in Ishinomaki and Onagawa, it immediately becomes clear that everything is in total ruins as far as the eye can see. Estimates by the Japanese Prime Minister’s Cabinet as of June 25, 2011 put the damage at $500 billion, making this the most costly disaster on record. In the city of Ishinomaki alone (population 126,000), 20,000 homes were totally destroyed and another 10,000 were damaged. In the aftermath of the disaster, 300,000 people were displaced from their homes all over the eastern coast of Japan. Thousands of people are still in evacuation centers. The scale of this disaster is so huge that it’s going to take the combined efforts of the government, volunteers and the private sector to begin the recovery process.

So what have ACCJ member companies been doing, and what needs to be done? Below are a few of the activities ACCJ member companies are undertaking, listed alphabetically by company. It is not possible at this point to provide a comprehensive list of all ACCJ companies and their activities, since we do not know what everyone is doing in exhaustive detail, but the following is an attempt to scratch the surface of what’s happening.

AMERICAN AIRLINES

American Airlines Japan is supporting an innovative group called “Tohoku Relief Homestay” which sends over 300 students from Tohoku to the U.S., Australia and New Zealand. American Airlines is offering special travel arrangements for those who are going to Dallas and Los Angeles. Members of American Airlines have also volunteered in Ishinomaki, and the company is planning an employee volunteer trip to Ishinomaki.

Together with Japan Airlines, American Airlines hosted a charity bazaar in late May and donated all proceeds to Chuo Kyodo Bokin Kai (Central Community Chest of Japan). There will also be a charity concert with volunteer performers from both airlines in mid July. One employee noted, “Our Bazaar was held more than two months after 3/11. We weren’t sure how much participation we could expect as many people had already made their donations and/or done their portion of contributions. But the reaction was good and we learned that people still cared and wanted to contribute.”

BECTON DICKINSON

Nippon Becton Dickinson, “BD,” a medical device and diagnostics company with a plant and distribution center located in Fukushima City, has set up a Soup Kitchen to provide hot meal service (takidashi) for the nearly 600 evacuees from the 20 km exclusion zone who continue to live with little hope of ever returning home. In addition, BD provides two to five paid days a year for volunteer activities. While BD has long provided medical diagnostic services and medical device product donations as part of their disaster relief efforts, providing food services was something completely new for BD volunteers.

However, what volunteers lacked in takidashi experience, they made up for in enthusiasm, with the numbers of volunteers growing every week. One BD associate summed up his experience well when he said, “I really felt the pain of the evacuees and when they told me that our food tasted so good, I also felt proud of myself and honestly believed that my cooking was not as bad as I thought.”

BLOOMBERG L.P.

Bloomberg L.P. arranged three trips to send 45 volunteers to work in the tsunami affected coastal district of Iwate Prefecture. They spent nine days cleaning up the mud and debris scattered across the city of Rikuzentakada. Minoru Toyoda, a Bloomberg LP volunteer commented, “We worked tirelessly over the weekend, leaving late Friday night on crammed buses, returning early Monday morning, to improve the conditions in those areas affected by the earthquake and tsunami. Volunteering with the Tohoku Disaster Relief was an incredible experience I won’t forget. More than four thousand people have been confirmed dead and two thousand still missing in Rikuzentakada alone and there remains a lot of rubble and mud in these areas. There is still a need for much more help and everyone should consider volunteering.”

Bloomberg launched a dedicated disaster relief matching program globally and matched employee donations yen for yen on top of their corporate donations to charities, in addition to raising funds for donations for the volunteer organization their volunteers joined in Iwate, through the “Bloomberg Dollars for Your Hours” program. In Tokyo, Bloomberg arranged a donation drive in the office and volunteers helped the charity Second Harvest, who packed donated items to be delivered to the affected areas each day.  Finally, Bloomberg sponsored the Japan Contemporary Dance Network to send 40 artist groups to give over 270 dance workshops to the victims in Tohoku, to give elderly and physically challenged evacuees the chance to move their bodies and to relax and interact with others, while giving children an opportunity to transform their energy into something positive and exciting.

BOEING

On the day of the earthquake, members of Boeing’s Tokyo office provided food and drink to some of the hundreds of people who were stranded near Tokyo station and taking refuge from the cold in the lobby of their building. In the days immediately following, The Boeing Company donated  $1 million toward relief and recovery, and Boeing employees around the world contributed an additional $1 million. Since then, Boeing employees have sent packages of school supplies and toy airplanes to evacuee shelters in the Tohoku area, visited the largest evacuee center in Kazo City, Saitama Prefecture to make and fly airplanes with children staying there and traveled to Iwanuma (Miyagi Prefecture) to help with the clean-up and recovery effort. Francois Pierin of Boeing 787 Field Operations in Nagoya noted, “Preparing for the trip to Iwanuma was a real challenge. Our number one focus was how to ensure that our presence was a help to—not put a burden on—the people of the region. In the end, we decided to bring all of our food for five days, our own sleeping accommodations (in the form of a rented camper van), and our own tools.”

Bloomberg employees on-the-ground in Rikuzentakada

Jared Sisk of Boeing 787 Field Operations in Nagoya added, “Through our trip to Iwanuma, we were really humbled by the strong sense of interdependence and community among the people of the Tohoku region as well as the visiting volunteers. The destruction was overwhelming, but our experience with such a dignified and determined group of people made us feel privileged to live and work in this country.”

FEDEX EXPRESS

FedEx Corporation committed $1 million in cash and in-kind transportation to support earthquake and tsunami relief efforts in Japan. FedEx also lent transportation and logistics expertise to support several agencies such as The American Red Cross, The Salvation Army and JEN (an NGO in Japan focused on reconstruction and other post-disaster assistance) in providing emergency and humanitarian relief to the earthquake and tsunami victims. In Japan, FedEx delivered approximately 30,000 relief supplies including toilet paper, blankets, snacks, bottled waters, instant ramen and flashlights to employees in affected areas and people in an evacuation shelter in Iwate prefecture immediately after the earthquake. Masamichi Ujiie, regional vice president, North Pacific, FedEx Express noted, “We hope that reconstruction of the affected areas is completed soon, and FedEx continues to lend support to the recovery and reconstruction efforts.”

FedEx Japan also arranged two trips in which 75 volunteers worked in the tsunami-affected coastal district of Ishinomaki City in cooperation with long-term partner, JEN. The volunteers cleaned up mud and debris from houses and buildings. Masaya Akitsu, Manager, Operations said, “In light of the scale of the devastation, we could only help in a small way. I believe if people from across Japan and the world lend a helping hand, these small deeds will add up to something big. Nothing you can read will prepare you for the experience. It is important to convey to others what you have seen and felt, and the suffering that is taking place. I hope these small deeds add up for the people in Tohoku trying to get back on their feet.”  FedEx Japan, with their sponsored Olympic athlete, Mr. Koji Murofushi in Miyagi prefecture, also delivered FedEx gifts to people in an Ishinomaki City evacuation shelter and taught them a physical exercise to help prevent deep-vein thrombosis. Receiving a visit from an Olympic medalist raised the morale of Ishinomaki evacuees considerably.

MICROSOFT

Microsoft Japan, right from the day after the disaster, worked with its partner companies and NPO organizations to provide PCs to disaster areas for the purposes of communication and information collaboration. Most in Tokyo will recall that cell phone communications were overloaded and the need for sharing information over the Internet became ever more vital. In order to support this ICT industry-wide effort and also work with the NPO organizations involved, Microsoft Japan volunteers have been and continue to go to the Tohoku area to support the training of the utilization of PCs and the collaboration benefits it provides. Microsoft also donated $2 million to relief efforts in Tohoku.

MORGAN STANLEY

Immediately after the disaster, Morgan Stanley pledged $1 million and launched a charity appeal among its employees, both in Japan and worldwide, additionally matching the employee pledges for a total of $234 million. These funds were contributed mainly to the Japanese Red Cross Society. Morgan Stanley employees also organized a food drive at Yebisu Garden Place, collecting 1.5 tons of non-perishable food items for use by Second Harvest Japan. Another organization supported by Morgan Stanley is ARTS for HOPE, which provides art therapy to victims of the disaster. Morgan Stanley employees donated sewing materials and assembled 20 craft kits for use in shelters in the disaster zone, as well as 100 sets of crayons, paints and sketchbooks for children in a small shelter in Shichigahama and elementary schools in Soma and Minami-soma.

Walmart’s Ayumi Ando leading a volunteer team at Peace Boat

Additionally, Morgan Stanley, which has a long and robust history of volunteerism and community support in Japan, is providing its employees with up to five paid days off before March 31, 2012 to volunteer in Tohoku. A number of Morgan Stanley employees have already volunteered. Thirty employees recently traveled to Ishinomaki on a Peace Boat-coordinated visit to spend a day and a half cleaning up mud-covered debris in houses and restoring drainage facilities. Another 26 employees, family and friends (including volunteers from another ACCJ member, Freshfields) chartered their own bus to Ishinomaki in June and were dispatched by the Ishinomaki Volunteer Center to help clean out a small private hospital that had been inundated by the tsunami. Even as early as March, one employee personally traveled to Ishinomaki to facilitate the construction of three public baths, and another worked with friends to deliver food and other aid to the citizens of Minami-soma.

OAK LAWN MARKETING

Oak Lawn Marketing established the OLM Genki Japan Fund, initially seeding it with about $1.85 million from the company and from it its senior executive shareholders, to support the relief efforts of NPOs working in Tohoku. Additionally, they received over $400,000 from their Product Partners from outside Japan. Oak Lawn Marketing has also joined forces with Hope International Development Agency, Japan, an NPO they have been sponsoring since 2002 and to whom they have entrusted the management of the Genki Fund. In the initial stages of the disaster, they teamed up with The Japan Helicopters Association and Global Medic to provide immediate relief in the devastated areas. To date, this coalition has delivered over 500 tons of aid directly to areas in need. Within two weeks of the disaster, OLM CEO Harry Hill along with Lowell Sheppard the Executive Director of HOPE-JP flew over the affected areas and found that the most urgent need was for logistical support to get items such as water, blankets, mattresses, diapers, baby formula, sanitary products, and medicines to people in shelters in more remote areas. Often there are goods stored in storage depots near the affected areas, but the last mile of getting these goods to the people who need them is often the most difficult, so initially the focus was on supplementing help to these areas until the government was able to take over.

The Genki Japan Fund purchased two 2-ton trucks to transport items and have established their own warehouse depot in the area. They gathered volunteers, drivers and helicopter pilots to transport items to established bases in the affected area and then arranged for local transport to get the goods directly to shelters in remote areas.  Now the focus of the fund is rebirth of the affected areas. Five development officers have been placed on the ground to evaluate mini projects with budgets between 1-10 million yen that will help families or communities rebuild their businesses and return to self-reliance. Harry Hill, Oak Lawn Marketing’s CEO commented, “OLM’s vision of ‘Enriching Lifestyles Worldwide’ is one we can achieve for Tohoku. Our company is built around the concept of the ‘Before and After.’ We identify a problem and we help our customer solve that problem. We hope that in a micro way we can achieve dramatic change in the Tohoku region.”

WALMART

Walmart has donated over $5 million including cash, food, water, daily necessities, general merchandise, and clothing to Tohoku since March 11, partnering with governments and NPOs on the ground so that the money and goods can go quickly to earthquake victims. Walmart has also been actively outfitting temporary housing (kasetsu jutaku) that is being built in Onagawa, by providing household goods such as dishes, bedding, etc. to help earthquake victims who have literally lost everything.

Having volunteered in Ishinomaki, Walmart Japan Vice President Ken Iida notes, “Lots of work still remains that requires manual labor such as gutter clean-up, finding out the needs of local residents, supporting those in temporary housing, etc. Thus, we need to keep sending more resources to Tohoku from all over the world. In order to do this, we need to lower the psychological and financial hurdle to participate in volunteering. The value of human presence in the face of disaster cannot be emphasized enough.”

PUTTING THE TOHOKU DISASTER INTO PERSPECTIVE FOR AMERICANS

To provide perspective for American readers, the closest comparison to the Tohoku Disaster may be Hurricane Katrina, which was of a smaller scale. During Hurricane Katrina, 1,836 people died, and total property damage was estimated at $81 billion. By comparison, during the Tohoku Earthquake/Tsunami, 15,457 people died, and total property damage was estimated at $500 billion. Yet, 75 percent more money in donations has poured in to help in Katrina than to help in the much larger Tohoku disaster.

In response to Hurricane Katrina, American NPOs received $4.25 billion in donations from the public and an additional $1 billion from corporations (according to a CNN report dated September 13, 2005), with the Red Cross receiving over half of the donations. During and after hurricanes Katrina, Wilma and Rita, the American Red Cross opened 1,470 different shelters and served 68 million snacks and meals to victims of the disasters and to rescue workers. Similarly, The Salvation Army provided more than 5.7 million hot meals served in and around New Orleans, 8.3 million sandwiches, snacks and drinks. As part of the overall effort, Salvation Army officers, employees and volunteers contributed more than 900,000 hours of service.

In Tohoku, NPOs received $3 billion in donations from companies and the public, in response to the estimated $500 billion in damages. The Asahi Shimbun reported that some earthquake survivors died in the shelters or in the process of evacuation, and that many shelters struggled to feed evacuees, and some were not sufficiently equipped to handle medical emergencies. In the Ishinomaki area hardest hit by the tsunami, there are around 10 ongoing, established NPOs on the ground (with year round operations and a full-time headquarters) doing relief-stage work, and 200 ad-hoc groups (formed after 3/11 to address the tsunami), with the largest of the established NPOs currently on the ground being Peace Boat. The 10 on-going, established NGOs in Ishinomaki stand in stark contrast to the thousands of established, ongoing NPOs on the ground operating in the aftermath of Hurricane Katrina. This may be an area where companies can step in and support volunteerism in Japan through CSR activities like paid volunteer days.

WORKING WITH NPOS & GOVERNMENT ORGANIZATIONS TO MEET HUMAN NEEDS

The U.N. Office for Coordination of Humanitarian Affairs (OCHA) sets out three phases of disaster response: relief, rehabilitation and rebuilding. The organization explains the phase as such: “Relief is about ensuring immediate survival, rehabilitation is about getting the affected communities back on their feet, reconstruction is about rebuilding infrastructure, and sustainable development includes helping communities to prepare for future emergencies.” We are still in the relief stage, but we’ll soon be moving into the rehabilitation phase.

It is much more effective to work through an NPO or government organization than to go alone and unannounced to volunteer in Tohoku, as these organizations provide vital coordination. The NPOs in the Ishinomaki area meet daily with the Ishinomaki Junior Chamber of Commerce at Senshu University and coordinate the next day’s activities.

Examples of CSR activities that can really make a difference right now include: paid volunteer days, employee matching donations to buy cars for evacuee community car-sharing, microfinancing, job creation, and retraining, among others. Currently, the biggest immediate needs of disaster victims are food and daily living supplies for evacuees contemplating moving into temporary housing. Many evacuees staying in evacuation centers are hesitant to move to the temporary housing being built by the government, because they will lose access to food. Providing cars for car-sharing programs would be one step toward gaining access to food and other services such as health care.

Also, many have lost their jobs as well as their homes, and are not in a position to pay their own electricity or water bills once they move into temporary housing. Microfinancing, small-scale business opportunities, and/or jobs would be most welcome and helpful in getting people back on their feet in a way that promotes independence rather than dependence. Longer term rebuilding will require relocation or investment in hospitals and schools, and education.

With government debt at 225 percent of GDP, the Japanese government faces huge financial constraints to address this disaster on its own, and public private partnerships can play a very important role in this recovery. Many people hit by the disaster in Tohoku are without homes, jobs, money, or food. Illness has set in with the onset of black mold and the rainy season. People are losing hope, and the suicide rate is soaring. People need help now.

Elisa Bortolato, a Bloomberg L.P. volunteer sums it up, “Using my free time to help those affected while working towards a goal as a team to make them feel supported and not forgotten, made the weekend I volunteered the most meaningful in a long time. Witnessing so much destruction and cleaning up the belongings of those who had lost their homes and loved ones from the rail tracks and river bank was a very emotional experience, but it was all worthwhile and I would certainly volunteer again. This was also a great bonding experience and an opportunity to work alongside colleagues we wouldn’t usually come across in our positions.”

JEN—Japan Emergency Network (another well-established NPO that organizes volunteer work in Tohoku, using English-speaking leaders): Volunteering: Miyako Hamasaka,  Tel: 81-(0)3-5225-9357,  Email:  hamasaka@jen-npo.org

Second Harvest Japan (leader in providing food to those in need in Japan):  Volunteering:  Charles McJilton, charles@2hj.org

HOPE International Development Agency (providing small and medium family grants to help get businesses back on their feet): Contact:  Isa Ichikawa, Tel: 81-(0)52-204-0530,  Email:  isa@hope.or.jp

Peace Boat (largest NPO on the ground in Tohoku, organized meaningful volunteer work with English-speaking leaders in Ishinomaki in conjunction with the local government and neighborhood associations):  Volunteering:  Rachel Armstrong, Tel: 81-(0)90-9962-4891,  Email:  rachel@peaceboat.gr.jp

Habitat for Humanity (building homes for disaster victims):  Volunteering: info@habitatjp.org

Local Volunteer Centers in Tohoku (Japanese):

http://msv3151.c-bosai.jp/index.php?top

ACCJ Japan Recovery Fund: Sam Kidder, Tel: 81-(0)3-3433-5381, Email:  skidder@accj.or.jp, Website: http://www.accj.or.jp/doclib/forms/Disaster_Relief_Fund_Letter.pdf

ACCJ CSR Committee: Ako Serizawa, aserizawa@dow.com

ACCJ Volunteer Affinity Group: Tish Robinson, tishintokyo@gmail.com, Hitoshi Maruyama, hmaruyama@accj.or.jp

Over the next few months, Japan faces the challenge of dealing with potential electricity shortages caused by events stemming from the Great Eastern Japan Earthquake and tsunami. Few have forgotten the images of ominous smoke plumes rising from damaged reactors, or the hordes of stranded commuters trudging their way home. Those looking for proof of Japan’s electric dependence needed to look no further than Tokyo’s darkened skyline. In Tohoku, damaged factories struggled to maintain output causing the global supply chain to stumble.

It was in those first few weeks that the concept of setsuden (electricity saving) took root. Artists banded together over Twitter to create artworks encouraging citizens to avoid wasting electricity. The screens in Shibuya crossing fell dark. Escalators shut down. Even Japan’s ubiquitous vending machines were suddenly dimmed.

Thanks in part to these efforts, by April 8 TEPCO stepped back from the near daily warnings of rolling blackouts. Temperatures were rising, lessening the need for electricity-guzzling heaters. The aftershocks had grown fewer and farther apart. To the naked eye, life in Japan was perhaps a bit dimmer, but normal.

Yet, the message had already been sent. Summer was on the horizon and with it, the threat of electricity shortages that could further hamper Japan’s fragile economic recovery. Slowly but surely setsuden replaced jishuku (self restraint) in the media as the buzzword of choice. But Japan is no stranger to energy conservation initiatives, none of which have thus far managed to deter Japan from its nuclear fixation. As Japan prepares for another sweltering summer, the question remains whether energy conservation is the solution, or just another band-aid to Japan’s electric dilemma.

SETSUDEN VS. ENERGY CONSERVATION

Cameras flashed. Men and women, clad in stylish polo shirts and chinos, strutted down the catwalk to showcase Uniqlo’s latest business casual looks. The well-heeled audience murmured critique after each passing model. For all intents and purposes, it had the appearance of a regular fashion show. The only difference was that afterwards, it was not designers, but representatives from the Ministry of Environment (MOE) who took to the stage to kick off the first day of Japan’s “Super Cool Biz” campaign, fronted by a smartly produced fashion show designed to illustrate that business casual had indeed arrived in Japan.

Initially introduced under the Koizumi Administration in 2005, “Cool Biz” is an annual government campaign aimed at reducing electricity consumption by limiting the need for air conditioning. Government offices are kept at a steamy 28 degrees Celsius (82 degrees Fahrenheit), and workers are encouraged to wear short-sleeved business shirts while forgoing stuffy jackets and ties. In light of this year’s heightened electricity concerns, the MOE took it one step further and relaxed the dress code to include Hawaiian “Aloha” shirts, polo shirts, jeans, sneakers and even T-shirts.

The image of stoic Japanese salarymen trading in their dark suits and ties for bright Hawaiian shirts and sandals is indeed, an eye opening one, particularly within the conservative confines of Japan. However, it’s precisely that image that makes “Super Cool Biz” one of the more memorable examples of what exactly setsuden is, and how it differs from previous attempts at energy conservation.

Put simply, “Super Cool Biz” is an enhanced version of its less “Super” predecessor. The fundamentals and goals are essentially the same: reduce summertime energy consumption. Where they differ is in terms of scale and purpose. In addition to relaxed dress codes and steamier offices, Super Cool Biz aims to curb office electricity use by 10 to 15 percent.

“Setsuden is used to mean an effort or activity to save electricity for the purpose of suppressing a peak demand,” explained a spokesperson from the Federation of Electric Power Companies (FEPC) Tokyo office. “Meanwhile, the term sho-ene (energy conservation) often means an effort or activity to use electricity efficiently for the purpose of lowering energy consumption in general.”

As of July 1, the government enacted a mandatory 15 percent power cut for companies whose contracts exceed 500 kilowatts located in all areas covered by TEPCO and Tohoku Electric Power Company. Until September, between the hours of 9 a.m. and 8 p.m., businesses found to be in intentional violation of the government’s 15 percent cut will be fined 1 million yen.

Currently, nuclear energy accounts for roughly 30 percent of Japan’s electricity generating capacity. However, as of this writing, only 19 of Japan’s 54 nuclear reactors remain operational, with the remaining 35 currently either shut down or undergoing safety inspections.

According to a report from the Institute of Energy Economics Japan, TEPCO is projected to have a maximum electric supply capacity of 53.8 gigawatts to meet an estimated 60-gigawatt demand—a shortfall of 10.3 percent. To prevent blackouts, TEPCO must either conjure up a new source of electricity to meet demand, or energy consumption needs to be reduced to meet capacity.

Over the past few months, Japanese news media were flooded with pictures of dressed-down government officials and headlines detailing the various conservation plans of some of Japan’s big name corporations. In addition to cutting electricity consumption, companies such as Sony, Sharp and KDDI have shifted employee work schedules to the weekend and extended summer holidays to reduce energy demands during peak hours. Others have also adopted daylight savings time, with workers coming and leaving an hour earlier than usual.

“Everybody’s getting into it,” says Justin Manger, a Senior Coordinator at Sojitz, an international Japanese trading company. “At our headquarters in Akasaka, the air conditioners are set lower and every other row of lights in the office is turned off, as well as in the lobby areas. We also take part in ‘Light Down,’ which is a nationwide movement where after 8p.m., workers are encouraged to go home and turn off their computers.”

“If telecommuting were to develop as a result of the energy crisis it could have revolutionary effects,” says Robert Dujarric, director of Temple University Japan’s Institute of Contemporary Asian Studies. “Less congested trains and roads at rush hour and more time for parents to take care of the kids (as they wouldn’t lose, as is sometimes the case, 2 or 3 or more hours/day commuting) would make it easier to live far away from city centers.”

SETSUDEN AND BIZ

No one can deny that companies and individuals alike are doing their part to reduce electricity consumption this year. However, the overwhelming desire to contribute to Japan’s recovery has diverted attention away from the critical question: How much will setsuden efforts actually benefit Japan’s recovery?

At a cursory glance, the answer seems obvious. With electricity capacity diminished and a steep reconstruction bill to pay, the Japanese economy can ill afford another crisis. To keep business operating and the economy afloat, the lights must stay on—and cutting electricity usage is the most effective way to ensure that. Or is it?

“Japan is already the most energy-efficient of the world’s advanced industrialized countries,” says Brian Woodall, a professor at Georgia Tech University and Japanese energy policy expert. “To the extent that initiatives such as ‘Cool Biz’ contributes to this, it is a useful tool for energy conservation. But it will be difficult to find additional ways to cut energy consumption, although the mandated cuts this summer may produce some innovative thinking.”

Furthermore, the success of setsuden is entirely reliant on the belief that Japanese will refrain from electricity demands in the heat of summer. As temperatures soared in the last week of June, TEPCO reported that in the Tokyo metropolitan area alone electricity usage reached a high of 92 percent of capacity—a rate that falls significantly short of the government’s target goal of a 15 percent power cut, as well as TEPCO’s estimated 10 percent minimum. While it may be true that the government-mandated 15 percent cut didn’t come into effect until July 1, various other government initiatives and company setsuden measures—including Super Cool Biz—had been in effect for over a month.

“As offices get very hot, it’s clear that productivity goes down. Humans are not optimized for peak efficiency in a 29C office,” says Dujarric.
“Initially, this summer it did not seem that people were making sufficient conservation efforts. But now it looks as if they are complying with government requests. Hopefully, they can continue to do so all summer,” says Jeffrey Kingston, Director of Asian Studies at Temple University’s Japan Campus and editor of a new e-book “Tsunami: Japan’s Post-Fukushima Future.”

But outside the realm of speculation, there is no doubt that setsuden will have a major impact on the Japanese economy. Whether that impact is for the better or worse, is too early to tell.

“All businesses will be affected,” notes Dujarric. “For example if manufacturers decide—as many have—to operate on weekends and close on weekdays, all sorts of businesses, from restaurants to railroads, will be affected.”

Economically, Japan has yet to fully recover from the global supply chain disruptions caused by the earthquake and tsunami. For major manufacturing and production companies, the government’s mandatory 15 percent power cut poses a number of logistical challenges. To make up for lost production and unfulfilled orders, these companies must work overtime. However, altered work schedules and limited electricity supplies mean companies are only likely to incur extra costs and slow output for their troubles.

Such conditions could be the last straw for a number of Japanese companies with antsy overseas clients, and ultimately accelerate the hollowing out of industry in Japan. According to a recent trade ministry poll, 70 percent of Japanese domestic manufacturers expected one or more partner companies to push forward plans to shift production overseas.

Conversely, setsuden may also provide some golden opportunities for retailers who can anticipate setsuden-related consumer demands. Capitalizing on the Super Cool Biz initiative, Fast Retailing’s Uniqlo has seen sales increase 3.9 from last year. Similarly, energy efficient products have also seen a rise in popularity as more Japanese look for alternative ways to keep cool outside the office. In Tokyo’s electronic stores, eco-smart appliances and energy-efficient LED light bulbs have become hot commodities.
“People here are environmentally conscious and aware, and businesses who position themselves to take advantage of the situation will find huge business waiting to happen out there,” adds Kingston. “Japanese will vote with their pocketbooks if given the chance.”

NEVER WASTE A GOOD CRISIS

The fact of the matter is that even if blackouts are averted and the Japanese economy survives this summer unscathed, Japan’s energy dilemma is far from solved. There is no telling when, or even if, the 35 offline nuclear reactors might be restarted. Some, like the Fukushima Dai-ichi and Dai-ni power plants, are damaged beyond repair and will be decommissioned. Others undergoing safety inspection could be restarted if they pass the proper safety guidelines. Of the 19 plants currently operational, a number of them will undergo safety inspections in the near future, as Japanese law requires inspections at least once every 13 months.

“It’s going to be very difficult to restart the nuclear plants that have shut down,” says Kingston. “There is going to be a problem retrofitting some of these plants for safety, to build more secure tsunami walls—throughout Japan there’s been inadequate risk assessment.”
Of course, geothermal options such as oil, coal and liquid natural gas (LNG) can and are being used to fill the gap. However, a large surge in Japanese demand in LNG markets will only exacerbate already fluctuating market prices. Without nuclear reactors, by next year energy costs may skyrocket up to an extra 2.4 trillion yen in 2012.

“Ending nuclear power would be economically very costly and geopolitically very dangerous,” agrees Dujarric. “Oil and gas are mostly located in countries which are generally—with the exception of Norway and few others for gas—unstable, lack the rule of law, and have political objectives that are hostile to Japan.”

Given this, it’s not unthinkable that this summer’s setsuden measures could extend well into fiscal 2012 should nuclear reactors fail to resume operations. But as the old adage goes, “Never waste a good crisis.” As public concerns over nuclear safety rise, Japan has a unique opportunity to hit the reset button on its basic energy policy. In particular, champions of renewable energy have grown both in number and influence.

Softbank CEO Masayoshi Son, one of renewable energy’s most vocal supporters, unveiled his plans to build ten solar power plants throughout Japan. Big, ambitious plans are no surprise from Son—but the fact that this plan is currently backed by most of Western Japan’s prefectural governors is a fact that cannot be overlooked. Likewise, in recent weeks Prime Minister Naoto Kan has repeatedly emphasized Japan’s need to properly invest in developing renewable energy sources.

“Perhaps the 3/11 disasters will provide the impetus for a green awakening in Japanese politics,” notes Woodall. “But this will take considerable political will and a willingness to suffer economically in the short term on the possibly risky promise of long-term gain.”
“Politically, three things need to happen for renewable energy to have a chance in Japan,” explains Kingston. “First, Japan needs better feed in tariff legislation. Second, NISA [Nuclear Inspection Safety Agency] needs to be split from METI. Lastly, Japan needs to upgrade to smart-grid technology.”
Feed in tariffs are measures designed to accelerate investment in renewable energy technology by paying renewable energy producers—including households, small companies and other organizations—for the green electricity they produce. FITs played a critical role in promoting renewable energy in Germany, where they account for 20 percent of electricity generated. Currently, Japan only offers FITs for solar power generation, measures that some believe are in need of revision.
Prime Minister Kan has also advocated separating NISA from METI, a situation that has been blamed for Japan’s lax nuclear safety regulation prior to the Great East Japan Earthquake. Additionally, Kan has also addressed the need for greater separation between electricity generation and distribution operations.
“Ten utility companies have a virtual monopoly on both functions in that they both supply and distribute Japan’s electricity. The only way to promote renewable energy is to split these functions,” emphasizes Kingston.

Another obstacle to widespread domestic renewable energy adoption is the mismatch between electricity generation frequencies in eastern and western Japan. Eastern and western Japan operate on different electric frequencies, making it difficult to channel large amounts of surplus electricity to TEPCO or Tohoku Electric Power Co.’s service areas.

Needless to say, backtracking on Japan’s nuclear investment in favor of renewable energy is an enormous and controversial task. Since the oil shock of the 1970s, Japan had heavily invested in nuclear power. And before the earthquake, the country had plans to increase nuclear power to 50 percent of Japan’s total electricity generating capacity by 2030. Moreover, switching to alternative energy will not happen overnight. Legislation must be passed. Facilities have to be developed and built. Older nuclear plants would have to be either upgraded or decommissioned and eventually phased out. Odds are that, in Japan, the shift to renewable energy will take anywhere from 10 to 30 years. So while public sentiment towards nuclear energy has been somewhat shaken in recent months, forgoing it completely is unrealistic in the short-term.

Frustrating as that may be, there are also a number of opportunities companies and the Japanese government can take to stimulate growth. Last year, the government’s eco-point campaign energized the Japanese electronics sector as shoppers rushed out to trade in their old appliances to buy more energy-efficient TVs, washing machines and hybrid cars in exchange for “eco points.” Recent events indicate that enacting similar initiatives to encourage energy conservation could help to speed up Japan’s economic recovery.

INTO THE FUTURE

It may be too early to accurately assess the full impact setsuden will have on the Japanese economy. It is clear, however, that while the Hawaiian shirts may disappear come September, Japan’s energy dilemma certainly won’t. Moreover, many of the infrastructure benefits from initiatives to switch over to alternative energy sources appear to be years away from fruition. Nevertheless, Japan’s business community seems well disposed toward moving into a new style doing business.

In years to come, Japan’s oft-mentioned “Gross National Cool” may no longer refer to its colorful anime characters and futuristic robots, but rather to a pioneering culture shift, mapping the way for the planet’s post-industrial societies to transition into truly sustainable energy practices.
Surrounded by smartly dressed models, and the applause of his peers, former Environment Minister Ryu Matsumoto ended Super Cool Biz’s inaugural fashion show with a particularly bold statement of intent, “This is not just a temporary measure to survive the summer, but this is going to be a big event to change the way of life in Japan, and people’s lifestyles.”

In the landscape of normally buttoned-up Japanese business, Hiroshi Mikitani is a man possessed of strong opinions and well-defined goals. Recently (August 8), he joined fellow executives at an ACCJ event in Tokyo to discuss responses to the March 11 disaster and the future of Japan, as one of the earliest Japanese supporters of the ACCJ initiatives connected with the disaster.

Being a Kobe native, he was particularly affected by the 1995 Great Hanshin Earthquake, which devastated his native city. On the day of the Hanshin earthquake he was planning to go to New York in his capacity as an investment banker working with the Industrial Bank of Japan (IBJ, now part of the Mizuho group), together with Masayoshi Son, the President and CEO of Softbank, to buy a company there. However, as he watched the news reports of the disaster, he realized that many of his friends and relations had passed away. The next day, he flew to Kobe, and was shocked by the scenes. “For me, that was the moment I changed the way I viewed my life,” he says. “Up to that point, I was thinking about becoming a senior manager at IBJ, but I started to realize that life is short, and that anything can happen.”

This provided the impetus for him to leave IBJ, and start his own company. “I felt we needed a new industry and new venture companies in Japan,” he says, adding that since the past successes of manufacturing giants such as Sony, Panasonic and the like, there has not been the same number of fast-growing Japanese startups. “As an investment banker at IBJ, I saw we needed something new…but not many people were rising to the challenge.”

At the time, Mikitani saw himself as somewhat of a trailblazer, hoping that he, as an ex-investment banker from one of Japan’s most prestigious financial institutions, could found a successful company to be seen by others, who would then follow his example. It took six months from his decision to leave IBJ until his actual departure. “I actually didn’t have any business plan at that point,” he says, “I just wanted to show the public that you can do it.”

Thus, the founding of Rakuten is due, at least in part, to the occurrence of the Great Hanshin Earthquake. According to Mikitani, this is even reinforced within the notion of supporting the entrepreneurial mindset, “The original intention [when founding Rakuten] was to help SMEs sell their products all over Japan.”

Fittingly, years later it does appear that Rakuten has managed to inspire Japan’s entrepreneurial community, a trend that offers some satisfaction to Mikitani’s original plan when he left the IBJ to strike out on his own. “We are seeing many ex-Rakuten employees leaving and starting up their own companies, which I like… well, I don’t ‘like,’ but I like,” he says. One of the most notable of those ex-employees is Yoshikazu Tanaka of GREE, now one of Japan’s largest and most high-profile Internet companies. And while his support of domestic startups remains focused, Mikitani adds, “If we succeed in making this Japanese company into a global one, many entrepreneurs may change their mindset and their perspectives will become more global.”

Rocking the boat

Rakuten recently made waves when Mikitani announced that the company would quit the Keidanren, the Japan Business Federation. In Mikitani’s view, the Keidanren has been protecting the electricity utilities by refusing to consider the split between generation and transmission—a move favored by Mikitani. He adds that, “This decision was based on the assumption that they are representatives of special interests—specific segments. I feel that this is not very fair, and I think that more and more we are going to see entrepreneurs who will push a social movement.” Keidanren chairman Hiromasa Yonemura has refuted this view of the organization, claiming that the Keidanren is a policy group working for the good of the entire Japanese economy and the nation’s development.

“There are various interests in Japanese industries,” says Mikitani of the reconstruction and recovery of the disaster-hit region, “and we need to make sure that the framework is fair and is going in the right direction. We need a more global perspective and a more global framework for that.”

Of course, this is not the first time Rakuten has rocked the boat of Japanese business society. Six years ago, the lines between traditional media and Internet-based commerce looked as though they would become blurred when Rakuten acquired a significant (over 19 percent) stake in Tokyo Broadcasting System (TBS) and announced plans to merge with it. TBS, somewhat taken aback, revised their corporate structure, and prohibited one shareholder from owning more than 33 percent of the voting rights. Rakuten thereupon requested that TBS buy back the shares held by Rakuten and, following a court battle over the price of the shares, TBS bought back the shares at a substantially lower price than Rakuten had originally paid.

Since its founding in 1997, Rakuten has muscled in on a number of areas traditionally associated with older more traditional companies. For example, in the area of online travel Rakuten occupies the number one domestic slot; for online brokerage businesses it boasts the number two position; and for online banks, it also holds the top rank.

Nor is the company a slouch when it comes to going head-to-head with international competition within Japan, losing pole position to Amazon for online books and media, but edging out the Seattle-based giant for e-commerce overall. Even in a new field where Japan probably leads the world, electronic money, Edy, issued by Rakuten group company bitWallet, leads the pack (over the JR Suica and private transport operators’ Pasmo) when it comes to the number of cards issued.

With 10,000 employees worldwide, Rakuten can no longer be regarded as a lightweight upstart. It has carved out a place for itself, not only in the business world, but in the everyday lives of many Japanese people who use their services. This growth has led to Rakuten being ranked at number 12 in the 2010 Nikkei BP Brand Japan list (a remarkable leap from 167th place in 2004).

Can Rakuten work outside Japan?

One question raised with any Japanese domestic hit is whether the domestic experience and success can be exported outside Japan in the same way. Too often in the past, the “Galapagos effect” has produced a product or service, wildly popular inside Japan, but which has no market outside its native country. “We are wasting our talents and resources by not trying to understand the global standards. We need to open our eyes. I’m a great believer in Japanese strengths, but I think we are currently wasting our time and our efforts,” says Mikitani.

Often quoted in the press, Mikitani has made no secret of his belief that there is an opportunity and intention for Rakuten’s operations to expand to the rest of the world. One way in which he is promoting the international nature of the group is to make English the official internal language within the company. All internal meetings will be conducted in English from next year. More than being just a “internationalization” gimmick, this is intended to bring ideas and concepts from overseas back into the home organization as well as to promulgate Rakuten’s own corporate culture to the overseas branches.

“The goal is to convert Rakuten from a Japanese company to a global company,” says Mikitani, “while retaining the good parts of Japanese culture and mindset.” He adds, “We are not a Japan-centric company, we are trying to adopt the best global standards in our group as much as possible.” According to Mikitani, the company’s French operation provides solid business models to follow, while the American arm offers robust technology models. “We’re not just trying to expand, but we are trying to learn from each other,” he says, using the Toyota-inspired word for horizontal knowledge sharing yokoten to describe the process.

As a practical measure to facilitate this information sharing, Rakuten has traditionally held weekly in-house group meetings at 8 a.m. on Monday mornings. This allows Asian group members to participate, but with Rakuten’s recent expansion into Europe and North America, this is obviously not very convenient for the group workers in those continents. Mikitani’s proposed solution is to move such meetings to Tuesdays for the convenience of the overseas subsidiaries, the number of which continues to grow. At the end of December 2010, Rakuten was doing business in five different countries, with operations in another 21 planned for the future. Further, Mikitani hopes to grow the share of overseas transaction volume from 7 percent to 70 percent in the near future. Even within the Japanese operations, the move towards internationalization is apparent in the composition of the workforce. About 25 percent of last year’s Rakuten Japan workforce were non-Japanese. At present, the staff is largely Asian, reflecting Rakuten’s aspirations for a multi-cultured internal business environment.

Moving outside

Rakuten’s overseas shopping mall operations started in 2008 with the launch of a Taiwanese shopping site, and since then expansion has continued on an upward path, with fiscal year 2009 seeing the establishment of a partnership with Thailand’s premier e-commerce site, TARAD.com.

With the acquisition of France-based electronic mall PriceMinister S.A.S. in June of last year for about $250 million, Rakuten began its gradual move into the European market. Prior to this, Rakuten had made a relatively bold move into the North American market by purchasing Buy.com for approximately the same price.

But for consumer sales, the Holy Grail has to be the rapidly expanding Chinese market. In January of this year, Rakuten finally made a move into China, laying out a $50 million joint investment with Baidu, the Chinese search engine leader. The deal has Rakuten retaining 51 percent of an online mall to be developed with this money. This online mall will be labeled as a B2B2C site, meaning that it will serve both shoppers and businesses.

Rakuten’s Indonesian business started in March of this year as a beta, and went live for all consumers in June (the events of March 11 impacted the original launch date). Rakuten Belanja Online is a venture with Indonesia’s media giant Global Mediacom (this is 51/49 split, similar to the Baidu deal). The partnership is designed to harness Global Mediacom’s impressive local reach, and is attracting various Indonesian brand names in a bid to boost the site’s credibility with local consumers.

The secret sauce

So what is it exactly that Rakuten can bring to these various international concerns, apart from cash infusions via acquisitions? According to Rakuten, there are several key advantages to working within the “Rakuten Eco-System” (as it is referred to internally), whereby a range of services, mostly linked under one brand, provide the customer with a one-stop online shopping experience.

Rakuten’s chief strength lies in its proven technological expertise in the area of e-commerce, which it plans to leverage to enhance the existing core competencies of its myriad new acquisitions.

For example, Rakuten points to Baidu’s ability to attract masses of China’s finicky customers, which when combined with the Rakuten e-commerce platform and experience in managing such an operation, acts as a synergetic case study of successful cross border partnerships. One particular area in which Mikitani believes Rakuten can add value to overseas ventures is in the area of customer loyalty programs. The Rakuten Super Points Strategy is seen as a key feature of the Rakuten customer experience, and the company plans to introduce this to the Baidu venture, having already implemented it in the Buy.com partnership.

While e-commerce business accounted for over 40 percent of the company’s net sales in 2010, the banking, credit card and e-money sides of the operation also helped to generate income, accounting for nearly 30 percent of net sales.

It remains to be seen how many of these financial service initiatives—which help to make the Rakuten experience so seamless in the domestic market—can be successfully introduced overseas. The regulation of the financial sector in different countries remains a key factor. “Some [markets] are easier, some are very difficult, but as far as we can, we would like to do it [introduce the Rakuten services] in other countries.” He is a little coy about future markets, but emphasizes flexibility in the approach toward overseas card operations, working either in alliance with a local credit card issuer or, where possible, issuing Rakuten’s own cards.

On the “back office” side of things, Rakuten is one of the more advanced Japanese companies regarding the implementation of technology. For example, Rakuten uses Microsoft cloud technology for its mail system. “Most Japanese companies are afraid of storing their internal data on a public cloud, but I think that’s a big mistake, and we need to change this notion,” says Mikitani, pointing to Japanese regulations that prevent Rakuten Bank from using cloud services for its mail.

According to Mikitani, the events of March 11 have shown that the use of cloud computing is safer, more flexible, and cheaper than a company running its own server. “This is a great opportunity for Japan to use Tohoku to prove that outsourcing and cloud computing can create faster and more agile infrastructures.” The Rakuten Institute of Technology, the R&D arm of Rakuten, is the company’s attempt to proactively develop solutions within the rapidly changing field of Internet business. The section looks ahead to not only what is possible using current technology, but attempts to predict, and in some cases develop, future technologies in order to provide Rakuten with the strategic advantages it needs to flourish.

Rakuten’s response to March 11

Rakuten’s response to the March 11 quake and associated disasters has likewise been somewhat unconventional (as a sidenote, March 11 is actually Mikitani’s birthday; he and some Rakuten executives were celebrating the occasion when the quake hit). Mikitani admits that when donating to charities, “We are not exactly sure where the money is going. Between the staff and myself we donated 1.3 billion yen and we gathered about another 300 million yen from our bank and point services, and so on. The Red Cross is doing a great job, but we’re not sure how it is helping the process. So we decided to donate the money directly to the prefectures: 50 percent to Miyagi, 30 percent to Iwate, and 20 percent to Fukushima.”

In addition to this direct financial assistance, Rakuten has also surveyed disaster victims, including children, inquiring about their needs. In the case of shoes, for example, Rakuten asked various mall merchants to provide these items at cost price, rather than retail mark-up. The results were positive–the process was repeated over twenty times, with the goods offered for sale sold out within 20 minutes each time. But Rakuten’s wishes for change go beyond the way in which relief is distributed.

The future within Japan

As far as post-March 11 Japan is concerned, Mikitani claims that the events have already started to change the way that Japanese people think about their lives. “The rate of marriage is already going up. People don’t want to die alone, so they want to get married. People don’t want to have regrets. So Japanese people will become more and more aggressive and challenging.” But, he adds, “I think that Japanese people and Japanese entrepreneurs are a little bit afraid of standing up and talking about things.”

When talking about the effects of the disaster, especially as it has hit ordinary people, he says, “We need to convert this disaster into an opportunity for change.” He places special emphasis on the now well-documented fact that Tohoku people are very patient. “Even when we [the Rakuten Golden Eagles, the professional baseball team] are losing a game, they still cheer us up. Even when we are five or six points down, they never leave the stadium. This doesn’t just apply to baseball games—it’s a general thing. They are very patient people.” However, he says, “The really tough time is yet to come. The recovery process in Kobe took more than ten years. This current disaster is much more serious, and we need continued support from the global society. All the support from the ACCJ is very much appreciated.”

Despite the many expressions of support, Mikitani still feels that change in Japan is necessary. “We need to change the social sentiment of Japan. Not just for entrepreneurs, but to also make people feel free to stand up and speak up.”

When asked whether he supports the notion proposed by some Japanese entrepreneurs that Japanese would-be startup business leaders should leave Japan to pursue their dreams, he uses another baseball analogy, that of Ichiro Suzuki. “First you set up a good record in the Japanese baseball league, and then you move to the major leagues.

When I lecture at universities on innovation and entrepreneurship, I show students a slide of the top 50 innovative companies in the world and the year they were founded. Besides the fact that only four Japanese companies are listed, there are some other striking points to note:

1. No world-class companies have been founded in Japan since 1946; and

2. Japan’s major companies (and others on the list) grew out of a time of crisis in that nation’s history.

This begs the question we will deal with first: Why? Japan’s defeat in 1945 unleashed a wave of entrepreneurial energy that stunned the world as it swamped global markets three decades later.

It began in burned-out cities with demobilized soldiers desperately seeking rice to put on the table and a way to recover their shattered pride. With nothing to lose, they had no fear of taking risks in order to succeed.

In Shinagawa, Sony’s founders, Masaru Ibuka and Akio Morita, tinkered with rice cookers and radios. In Hamamatsu, Soichiro Honda strapped small engines on bicycles. On the very edge of Hiroshima’s blast radius, survivors at Toyo Kogyo scrambled to produce three-wheeled trucks under the Mazda brand.

This desperate entrepreneurial energy drove postwar Japanese to amass more wealth in the span of a single lifetime than any generation of human beings in history. For a while their momentum seemed so unstoppable that rivals began to contemplate the likelihood of “Japan as Number One.”
Then, the momentum suddenly disappeared after 1991.

At first, the meta-shock of a bursting Bubble Economy seemed to explain it. But 20 years later this country is still nowhere near regaining its mojo. Even Japan’s strongest brands now seem to be losing steam. Korean upstarts like LG and Hyundai are overtaking Panasonic, Honda and Nissan. America’s Apple and Dell are surpassing Sony and Toshiba. Even General Motors, recently arisen from the grave, looks like it might recover its global crown from Toyota.

What happened here, and why?
Even after 20 years, Japanese still don’t know what hit us. But now that it’s clear the problems will not solve themselves, we need to answer a fundamental question: Why did Japan’s entrepreneurial drive disappear?
Who am I to answer this question?

Born to Japanese parents who immigrated to Los Angeles, I grew up in California’s “techno-geek” culture. So it seemed perfectly normal to start a software company in my college dorm at age 19. Without disturbing anyone’s parents, friends and I could stay up all night coding for clients like NEC and Toshiba. But when a Japanese client announced a sudden visit en route home from a trade show, I knew he’d be shocked to find where his code was coming from. So we had to set up an office over the weekend.

From that haphazard start, we went on to establish I/O Software as global leaders in data security. Nine years later, in 2000, Microsoft adopted our core authentication technology, BAPI (Biometric Application Program Interface), into the Windows operating system.
For a veteran of California’s freewheeling entrepreneurial startup scene, the Japanese business world was a stark contrast. To my eyes, the problems were clear.

Many large Japanese companies became global without globalizing. Monocultural teams, devoid of foreign-language skills or global awareness, focus narrowly on domestic concerns and fail to spot emerging wants and needs in distant markets.

Given Japan’s love of order and organization, bureaucracy spreads in companies like kudzu vines: the bigger the tree, the thicker it grows. After three post-war generations, initiative and decision-making in Japanese companies have been strangled by bureaucratic process.

Add to that the Godzilla of bureaucracy—government functionaries who seek order and conformity in all things. Not so long ago they unabashedly quashed “excessive competition” for fear of “market confusion.” No wonder we ranked 187, between Mexico and Zambia in a global ranking of the ease of starting a new business.

Japan’s major companies sprouted, almost literally, after a forest fire: the postwar period when bureaucrats and zaibatsu were in disarray. Over 60 years, along with government, they have grown like a grove of sugi, the tall Japanese cedars whose thick canopy prevents any sunlight from reaching the forest floor below.

True, SMEs (small-and-medium-size enterprises) are thick on the ground in Japan. Over 80 percent of Japanese firms have less than 40 employees. They generate 70 percent of GDP, but few grow to major scale. And that is a problem.

Since 1975-76, when Microsoft and Apple were founded, the U.S. has consistently produced a stream of entrepreneurial ventures that have become pillars of the economy, including Amazon, Dell, Google, Oracle and many others. You can count the equivalent Japanese newcomers on one hand, and on the other hand you can count established Japanese players that consistently rank among global innovators.

Arriving in Japan in 2005, I expected to find legions of frustrated entrepreneurs waiting, like Egyptians, for Twitter to signal the onset of revolution. “After all,” I thought, “Japan has tens-of-thousands of brilliant engineers and scientists. Surely, with dreams stifled by corporate bureaucracy and academic hierarchy, they must be yearning for liberation.” As a mentor or venture capitalist, I imagined myself unlocking the door.

Instead, I discovered that only 12 percent of Japanese dream of being their own boss, versus 49 percent of Chinese. And where 73 percent of Americans respect entrepreneurs, only 32 percent of Japanese feel the same way. This goes a long way toward explaining why Japan has the lowest rate of “Total Entrepreneurial Activity” as a percentage of GDP among the OECD nations: 3.2 percent.

Japanese have been conditioned to fear and avoid risk in every aspect of life. Today’s youth, coming of age in a harsh economy, are even more risk-averse than their elders. Not only are fewer willing to risk venturing overseas, but a growing contingent of hikikomori won’t even risk leaving their bedrooms.
These kids are the product of schools—micromanaged by Kasumigaseki bureaucrats—that energetically stamp out any trace of individuality, creativity, ambition or appetite for risk. Conditioned to memorize and regurgitate the answers to maru/batsu (right/wrong) questions, they enter university with few critical thinking skills and scant ability to debate or discuss.

These kids come from families obsessed with “what the neighbors might think.” If young Taro were to start his own business, and it failed, the family name might be stained forever. Worse, if Taro made a pile of money in his 20s, the Watanabes next door might presume he was a gangster.

To be an entrepreneur is to take on risk, intelligently gauging and mitigating it. As we know from the U.S., failure is part of the learning process. Only 18 percent of successful American entrepreneurs succeed with their first venture.

Why has Japan’s entrepreneurial drive disappeared? I say it’s because our national dream has shrunk to little more than a safe step on a predictable escalator. Get into a good university and ride up to graduation. Then get into a safe company, stand obediently to one side, and ride patiently up the escalator to retirement.

How can we turn this around? That is the subject of yet another editorial.

William H. Saito has spent the past two decades shaping information security policy, establishing and selling companies, and managing public corporations. He is a 2011 Young Global Leader of the World Economic Forum, and author of several books forthcoming from John Wiley & Sons and NikkeiBP, and has a chapter in McKinsey & Co.’s “Reimagining Japan: The Quest for a Future That Works.”Follow William on Twitter @whsaito.

The email continued, “The problem I’m working on is that many founders are either making uninformed decisions or inefficiently learning the new skills they need. The solution I’m exploring is a just in time learning methodology that accelerates founders’ learning curve by aggregating relevant content, peers and mentors… The project is a hybrid between academic and entrepreneurial circles and I’d really love to begin a dialogue with people in the academic world also interested in solving this problem. Your name has come up a lot in that regard. Let me know if this interests you and if you have any time to speak.” It was signed Max Marmer. I set up a meeting and at Cafe Borrone, some kid who looked 18-years old came up to me and introduced himself as Max. “How old are you? I asked. “18,” he replied. Holy s–t.

When I asked Max why he was interested in solving entrepreneurial education problems he replied, “I was always interested in big picture trends for where the world is headed. I spent time with organizations like the Institute for the Future and Singularity University. My conjecture became that the world’s biggest problem isn’t poverty or disease or any oft-stated major problem, but that we don’t have enough people engaged in trying to solve these problems. A big piece of the solution lies in the scalable impact of entrepreneurship and an increase of successful entrepreneurs. But potential impact consistently fails to be realized because of self-destruction.”

Tune In, Turn On, Drop Out


Max entered Stanford in the fall of 2010 as a freshman, took as many of the engineering entrepreneurship classes as he could and an independent study with me. Max dropped out of Stanford after his first quarter. But he left to work on what he told me he came to do—crack the innovation code of Silicon Valley and share it with the rest of the world. He set up Blackbox.vc, a seed accelerator for technology startups (and one of the tour stops for entrepreneurs from around the world.) They went to work gathering deep knowledge on what makes successful Internet startups. Max and his partners interviewed and analyzed over 650 early-stage Internet startups. Then they released the first Startup Genome Report—a 67 page in-depth analysis on what makes early-stage Internet startups successful.

Some of their key findings:

1. Founders that learn are more successful: Startups that have helpful mentors, track metrics effectively, and learn from startup thought leaders raise 7x more money and have 3.5x better user growth.

2. Startups that pivot once or two times raise 2.5x more money, have 3.6x better user growth, and are 52 percent less likely to scale prematurely than startups that pivot more than 2 times or not at all.

3. Many investors invest 2-3x more capital than necessary in startups that haven’t reached problem solution fit yet. They also over-invest in solo founders and founding teams without technical co-founders despite indicators that show that these teams have a much lower probability of success.

4. Investors who provide hands-on help have little or no effect on the company’s operational performance. But the right mentors significantly influence a company’s performance and ability to raise money. (However, this does not mean that investors don’t have a significant effect on valuations and M&A.)

5. Solo founders take 3.6x longer to reach scale stage compared to a founding team of 2 and they are 2.3x less likely to pivot.

6. Business-heavy founding teams are 6.2x more likely to successfully scale with sales driven startups than with product-centric startups.

7. Technical-heavy founding teams are 3.3x more likely to successfully scale with product-centric startups with no network effects than with product-centric startups that have network effects.

8. Balanced teams with one technical founder and one business founder raise 30 percent more money, have 2.9x more user growth and are 19 percent less likely to scale prematurely than technical or business-heavy founding teams.

9. Most successful founders are driven by impact rather than experience or money.

10. Founders overestimate the value of IP before product market fit by 255 percent. 

11. Startups need 2-3 times longer to validate their market than most founders expect. This underestimation creates the pressure to scale prematurely.

12. Startups that haven’t raised money over-estimate their market size by 100x and often misinterpret their market as new.

13. Premature scaling is the most common reason for startups to perform worse. They tend to lose the battle early on by getting ahead of themselves.

14. B2C vs. B2B is not a meaningful segmentation of Internet startups anymore because the Internet has changed the rules of business. They found 4 different major groups of startups that all have very different behavior regarding customer acquisition, time, product, market and team.

I’m not sure I believe every one of the report conclusions—it just covers very early stage web startups, and the methodology is still shaky—but this is a landmark study. I think these guys have gone a long way to turn hypotheses about early-stage Internet startups into facts. And they’re just getting started. Congratulations. A+. Download the full Startup Genome report at: http://startupgenome.cc/pages/startup-genome-report-1

Steve Blank is a veteran of Silicon Valley and serial entrepreneur, and teaches entrepreneurship at U.C. Berkeley Haas Business School, the joint Berkeley/Columbia MBA program, and at the Stanford University Graduate School of Engineering. The Japanese version of his latest book “The Four Steps to the Epiphany” can be found here, and you can read more of his business insights at: www.steveblank.com.

Japan’s economy is ready to surprise. And yes, it’s likely to be very positive news—a powerful V-shaped recovery is beginning to unfold and, in my view, Japan could well emerge as the winner in the global growth beauty contest.

There is much evidence to suggest that the disaster-induced plunge in both demand and supply is being reversed faster, and more powerfully than originally anticipated. By early June more than 90 percent of the disrupted factories had been restarted. Total production levels are poised to be back at pre-disaster levels by early August. At the national level, Japan’s total shipments of capital goods already snapped-back to pre-disaster levels by end-May. Clear-speak: Fears of supply chain bottlenecks choking off Japanese industry appear vastly exaggerated. Japan Inc. is back up and running, and ready to regain global market share quickly from here, in my view.

At the same time, domestic demand in general, consumer spending in particular is staging a spectacular recovery. Where uncertainty and fear forced sharp consumer retrenchment in the weeks following the disaster, hard data available for consumer spending points to a super-strong recovery that started in May. Retail sales are surging, condo sales and home sales are recovering fast, and overall consumer confidence is rebounding at rates not seen in almost 20-years.

Most important, the reason for the consumer recovery is not just “austerity fatigue” (Mr. & Mrs. Watanabe getting bored with “self-restraint” and not spending). No, there are deep fundamental drivers that now push up consumer demand. Japan’s labor market is recovering, unemployment is coming down and, yes, wages are rising. Specifically, the unemployment rate has dropped from 5 percent to 4.5 percent over the past six months.

Corporate Japan is hiring with, for example, the car industry now looking to add more than 10,000 workers to its payrolls to make up for production lost due to the disaster. Japan’s construction industry is scrambling to find increasingly scarce workers and, as a result, is beginning to raise wages. Note also that summer bonus pay rose by 5 percent, the highest pick-up in bonus pay in almost 20-years. Make no mistake, aggregate incomes are now rising in Japan, boosted by both increased employment and increased wages.

It’s still a little too early to know for sure, but right now the data available tells a pretty clear story—Japan’s private sector is on a fast and furious recovery track that could well lead to GDP growth rates around 6-7 percent over the coming couple of quarters. If so, that would be almost twice as fast as what can be expected from America or Europe.

Where the disaster has brought out the best in Japan’s private sector dynamism, it also looks to have brought out the worst in terms of the public policy response. National politics appears even more dominated by opportunistic infighting and finger-pointing across all parties. The net result is that policy debate and policy coordination appears to have become de facto impossible. Case in point: More than three months into the new fiscal year (started April 1) the bills required to fund the national budget are still not passed in Parliament. If the main budget is not fully funded, how can we expect public reconstruction of disaster struck communities to proceed?

To be sure, addressing all the policy challenges forced by the disaster—victim compensation, power supply strategy, rebuilding efforts—is a hugely complex task. There are no easy answers. At the same time, the policy response does offer an opportunity to raise Japan’s potential growth rate. A coordinated program of land reform, deregulation, agricultural reform, power supply and power transmission deregulation and tax reform for the disaster-struck areas could easily rekindle private entrepreneurs’ animal spirits to invest for growth in Japan.

Every day wasted by “political kabuki” at home brings yet another Japanese entrepreneur and risk-taker moving overseas to seek better fortunes. This is key. In the end, the goal of public policy must not be to merely rebuild roads and infrastructure. All policy must focus on creating incentives for private capital, for private entrepreneurs to want to go and invest in Japan. Deregulation, tax incentives, special economic zones–this is where political leadership is key to give direction and clarity. Unfortunately, so far very little of this is visible, which adds nothing but more incentives for entrepreneurs to looks elsewhere for growth, for profits and for enterprise. On the current policy mix, the long-term 10-year growth expectations for Japan would have to be revised down from around 1.75-2 percent pre-disaster to around 1.25-1.5 percent. This is because after the disaster as private capital is, at the margin, now less likely to be deployed in Japan, creating less investment for growth and less employment of labor than would have been the case before the disaster. To be sure, without policy leadership coming soon, Japan is poised to be a short-term winner in the global growth beauty contest, but a medium-term loser.

Possible tax hike growth bonus
Having said all this, there is one somewhat ironic twist to the interplay between Japanese economic policy and short-term demand swings. If the government does decide to push up the consumption tax as early as April next year, this could result in a short-term growth boost for Japan. As soon as it is certain that prices will be forced up by the tax hike, Mr. & Mrs. Watanabe will start to “frontload” spending—buying ahead while prices are still cheap. Right now, the government is looking to raise the consumption tax from 5 percent to 8 percent, so buying ahead of this hike would actually deliver savings of around 3 percent. Previous tax hikes have resulted in massive “front-loading” swings, with domestic consumer spending surging more than double digits in the three-four months before the tax hike.

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.

Of course, in the end the front-loading turbo-charge to spending data before the hike forces pay-back downdraft in the three to four months following the tax hike essentially all averages out. Generally, very little changes with regards to the fundamental trends. However, at the current juncture of the business cycle, the immediate impact of a clear cut government decision on next year’s taxes is definitely positive in the short-run. Consumer demand is recovering right now because of the post-disaster snap-back. If by September/October the government confirms that the consumer tax will definitely go up from April 2012, we could easily see added momentum to domestic demand and consumer spending because of “front-loading.”

So here we have it, a Japan poised to win the global growth rate beauty contest over the summer, possibly boosted further by government tax hike decisiveness. Brace for good news from Japan’s economy, and hope that policy makers will not be lulled into even greater complacency by the coming Japan boomlet.

Normally, strong demand for real estate would indicate confidence in a country’s economic growth prospects and the potential for higher rents and occupancy rates. I would posit at this moment in time, however, high demand for income-producing Japanese property from ordinary domestic corporations is in fact strong evidence of the opposite. In other words, Japanese manufacturers and service companies (non-real estate) fed up with the political situation and pessimistic about economic prospects see no reason to invest in their core businesses, so they are seeking to expand their profits through real estate rental income instead.

Real estate acquisitions by ordinary domestic companies have been the dominant story in the market since the Lehman shock, but after a short break following the earthquake, many have now resumed their active search for stable, income-producing property investments. Financial institutions, particularly those based outside of Tokyo, are strongly encouraging this trend. Given that so few companies seek to invest in their core businesses, loan demand has been sluggish, so real estate investment is about the only major use of funds. When a non-real estate company borrows to purchase real estate, banks receive the additional bonus of being able to classify the loan by the industry of the borrower, so bank regulators think it is a safer type of loan than for more “speculative” real estate companies. Assuming that the borrower has a good balance sheet, banks are willing to lend up to 100 percent of the acquisition price at extremely low rates, often less than 1 percent these days.

While it is good for the Japanese real estate market overall to have a wide pool of buyers, the shift from financial to corporate investors is a big reverse of the trend that started in 2001 with the introduction of real estate investment trusts (J-REITs). The creation of J-REITs and the explosive growth of private funds and foreign investment in Japanese real estate led to greater transparency, professionalism, deeper capital markets and higher quality real estate services. Corporate owners tend to manage property directly, to borrow with their balance sheets and to hold property for the long-term, so this trend could reverse some of the progress that has been made.

The best evidence of the shift from professional to corporate investors is to look at the trend in real estate ownership held in what is known as a “trust” structure. In Japan, trust banks are a separate class of financial institutions with special powers to handle real estate brokerage and entrustment. Professional investors, both domestic and foreign, including J-REITs, typically entrust real estate as this saves transaction taxes for acquisition and disposition as well as enhances liquidity through the vetting process necessary for entrustment. In 2001 when the J-REIT market was launched, only 4.1 trillion yen of property was held in trust. The balance continued to grow sharply every year and peaked in September 2008 around the time of Lehman’s collapse at 26.7 trillion yen. Since then, the balance has fallen in each semi-annual reporting period. As of March 2011, the balance held in trust was down to 24.9 trillion. Anecdotally, I can confirm that all of the trust banks we do business with complain about the high volume of trust terminations due to sales to ordinary companies and the scarcity of new entrustments from institutional investors.

Within the next few months, foreign investment in Japanese real estate is likely to pick up again, but once again, this is not necessarily a vote of confidence in the Japanese economy. At a June real estate conference in Singapore, I found that a number of global institutional investors seeking to expand their real estate investment in Asia are ready to start looking at acquisitions in Japan again. When I asked what they wanted to buy and why, the reasons were quite consistent with the thinking of ordinary Japanese companies. Many foreign investors have pretty much gotten past their radiation fears and see Japan as a country of relative stability, at least in terms of prime properties in central Tokyo. Few see growth prospects in Japan, but for pan-Asian real estate portfolios, the political and business risks in China and India combined with overheating of the markets and extreme volatility of rents in Singapore and Hong Kong make Tokyo attractive mainly as a way to lower risk and achieve steady income flows. These same investors also acknowledged, however, that investing in Japan tends to lower the average return of an Asian portfolio.

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

This is not exactly a strong vote of confidence for Japan’s economic and real estate market prospects, but more buyers are always a good thing. With little expectation that rents and occupancy will rise, however, foreign funds now looking at Japan are generally what is known as “core” funds, seeking to buy new, ultra-prime properties and willing to accept low rates of return in the range of 6-8 percent on a leveraged basis. Funds seeking higher returns, referred to as “core plus” or “opportunistic,” are having a harder time justifying investment in Japan at the moment. Core plus funds seek to buy good quality properties and add value through renovation, improved leasing, cutting costs or other measures to boost income and generally seek leveraged returns of 12-15 percent. At medium leverage of 60-70 percent, it is very difficult to achieve double-digit returns without underwriting for rental growth, which is hard to justify in current market conditions where most in-place leases are still above today’s rental rates.

Opportunistic funds, meanwhile, are also struggling to fund attractive deals in Japan. These investors require returns of 20 percent or more, which in a stable or downward market means it is necessary to buy distressed assets, such as non-performing loans. While a few U.S. and European banks have been seeking to selectively clean up their portfolios in Japan, domestic banks enjoying strong liquidity combined with active encouragement from the government to be flexible, have not been taking aggressive action to foreclose or sell loans.

There is quite a bit of equity out there looking for deals, so I would expect at least a chunk of it to find a home in Japanese real estate, despite the low return environment. The more time passes following the earthquake, the easier it is for people to forget and justify new deals.

Seniors are more Internet-savvy than many people believe, according to research by Dentsu. The agency says 62.5 percent of seniors who regularly surf the web or use email are proficient enough to be considered “net-savvy,” and that percentage is increasing.

Almost 60 percent of net-savvy seniors buy products online, and 48 percent use the Internet to buy tickets to events. These web-wise seniors are price conscious and 56 percent say that they would only buy products online that are at least as cheap as at local stores.

The statistics defy stereotypes of elderly consumers being technologically lost. As a result, Dentsu envisions a bright future in online marketing that targets seniors. In order to leverage this potential, the agency has established a program that helps older computer users hone their skills in hopes of continuing the digitalization of the generation, making them better targets for online ads.

Gucci, Chanel… and Alphonso Mango?

Japanese consumers are the world’s most focused “origin inspectors,” by which we mean they really like to know where their products come from— especially food. Origin can be a badge of quality. When shopping at department store food halls, for example, signs boast that cherries come from Aomori prefecture and are sweeter than other cherries. But as consumers downscale their retail paths, the same phenomenon is becoming common in convenience stores.

This summer, both Lawson and Mini Stop convenience stores are releasing budget sweets with luxury fruit ingredients. Lawson is featuring the “Alphonso mango-ko,” a parfait only made from the most expensive variety of mango fruit, the Alphonso mango. The chain is also offering a cherry verrine, a French inspired dessert topped with cherries from Yamagata prefecture. Not to be outdone, Mini Stop is offering its own mango dessert, which uses an entire Thai apple mango. These “high class fruit snacks” have become a big hit among female consumers.

China Talk

As part of the “Global Asianization” trend, the relevance of English as a foreign language is in doubt. A recent study claims that one in five Japanese women aged 22-29 working in business is studying or has studied Chinese. Their reasons vary, but many businesswomen feel that Chinese will be more useful than English in their careers. Others are attracted to the idea of starting something new. However, despite the large number of students, the biggest problem is that about half of the women who start studying Chinese quit, with reasons varying from not having enough time to study to not having any opportunities to use their new language. The key to promoting foreign language learning in Japan among businesswomen may not be promoting interest, but finding relevance.

Asian Attraction

Despite the rise of China, Japanese soft power still holds a certain punch in Asia, especially in Taiwan, according to research by Hakuhodo. Japan’s No. 2 advertising company published its Global HABIT survey about the influence of Japanese, Korean and Western pop culture in 10 Asian cities: Taipei, Hong Kong, Manila, Bangkok, Shanghai, Jakarta, Singapore, Ho Chi Minh City, Kuala Lumpur, and Mumbai.

The definition of “pop culture” included anime, TV dramas, film, music and fashion. The biggest fans of Japanese culture were the Taiwanese. According to the Taipei Times, a significant majority of Taiwanese preferred Japanese anime and fashion to similar products from South Korea and the West.

About 61 percent of those surveyed in Taipei said Japanese anime was their favorite, while 52 percent responded that they liked Japanese make-up and fashion. That compares with a regional average of only 27 percent support for Japanese anime and 16 percent for Japanese fashion. Taipei also gave the highest favorability rate (45 percent), for Japanese dramas, compared with a 10-city average of 17 percent.

Movies and music from the West reigned supreme in almost all 10 cities, except in Shanghai, where slightly more residents said they preferred Korean music to Western music.

JT’s Menthol Shock

As consumers try to beat the heat in the setsuden era, Japan Tobacco has rolled out a new soft drink to cool down thirsty consumers with the power of menthol. Goods to help keep consumers cool through the summer are currently trending, with many mentholated sprays and cooling sheets on store shelves. However Menthol Shock is the first instance of a soft drink using menthol to cool consumers from the inside out that we have found. The drink comes in a smaller-than-normal 350ml PET bottle and in addition to menthol, contains extra carbonation, adding a further element of “stimulation” to the drink.

With air conditioners set at a high temperature for the duration of the summer, many drinks rolling out this summer promise to not only hydrate, but also wake up consumers with powerful stimuli, therefore helping them to stay alert and cool. It remains to be seen if this menthol soft drink will catch on for keeping commuters cool.

While it is estimated that nearly 1 in 13 people on the planet currently use Facebook, the U.S.-based social networking site has yet to challenge either Mixi or Twitter’s dominance over social media in Japan. Despite murmurs from naysayers, Facebook has stepped up its efforts in recent months to adapt its appeal to Japanese consumers.

Facebook’s difficulties penetrating the Japanese market have long been attributed to Japanese users’ reluctance to disclose their actual names, and its poor localization efforts. A survey conducted by Macromill Research in January 2011 indicates that 63 percent of Japanese Facebook users thought that Facebook was ill-suited for Japan’s Internet culture of anonymity. To combat these claims, Facebook recently launched an official ‘Facebook Navi’ site (f-navigation.jp) aimed at teaching net-savvy Japanese how to make the most out of Facebook. Included on the site is an explanation describing what Facebook is, a usage manual and an editor’s pick of Japanese Facebook pages and applications.

Following the popularity of online coupon sites such as Groupon, Facebook also recently launched a new service called “Facebook Check-in Coupon.” The service will allow users to take advantage of Facebook’s location-based “check-in” feature to receive discounts from participating retailers such as Adidas, Domino’s Pizza, and various convenience store chains.

It is still too early to call whether or not Facebook’s renewed efforts will bear much fruit. However, the latest numbers from social media statistic site Socialbakers indicate that in half a year, the number of Japanese Facebook users has skyrocketed 104 percent to 3.7 million, up from 1.8 million users in January.

Meet the Shareholders

In Japan, the “annual shareholder meeting” is not typically associated with anything outside of the ordinary. However, in the wake of the March 11 disasters, a number of companies have been forced under the spotlight as an increasing number of anxious shareholders decide to flex their economic muscle.

By and large, shareholders are increasingly concerned with how companies are tackling the economic challenges brought about by the Great Eastern Japan Earthquake. Toshiba Corp., for instance, took the chance to address shareholders’ concerns regarding plans for the company’s various nuclear investments in light of heightened nuclear concerns resulting from Fukushima. Toshiba President Norio Sasaki informed shareholders that the company would focus on developing next-generation, higher security nuclear reactors while making sure current reactors are up to standard. He also emphasized the company’s investments in renewable energy sources such as geothermal, solar and wind generated power.

Mizuho Financial Group, Japan’s second largest banking conglomerate, also faced the music in its annual stockholder’s meeting in late June. Attended by 4,501 shareholders, the meeting was the largest to date and highlighted shareholder frustrations with Mizuho’s management. Following a surge in deposits after the earthquake, Mizuho suffered a major computer systems failure which left millions of Japanese unable to access their accounts for roughly 3-4 days. Currently, Mizuho is divided into three separate branches (Mizuho Bank, Mizuho Corporate, and Mizuho Financial Group), a situation which is believed to have exacerbated the situation and hindered its resolution. In a record three-hour meeting, Mizuho shareholders demanded that the three former bank executives responsible return their salaries to make amends for the disaster.

Cautious Optimism

Sweltering Japanese summers are not the only thing that seems to be getting Japanese businesses down. On July 1, the latest tankan survey conducted by the Bank of Japan revealed that Japanese business sentiment suffered a sharp downturn following the harrowing events of March 11.
Among major business manufacturers, business confidence fell to a rating of minus 6, an 11 point decrease from its plus 5 rating in March 2011 and the first negative reading over the past five quarters. What’s more, a recent government report revealed that Japan had logged an 853.7 billion yen trading deficit this past May, Japan’s second largest trading deficit on record. However, both businesses and the BoJ remain cautiously optimistic that growth is on the horizon.

While the numbers may initially indicate a dreary outlook for the Japanese economy, a closer investigation reveals that the sharp decline in business sentiment is merely a temporary dip resulting from global supply chain disruptions following the earthquake. For instance, a Ministry of Finance report reveals that the May trade deficit was largely affected by a 38.9 percent decrease in vehicular exports to North America, Europe and the Middle East. However, experts agree that improved export statistics, increased production and continuing progress towards restoring supply chains indicate that business sentiment will most likely show signs of improvement over the next few months. Indeed, the tankan survey revealed that large manufacturers are predicting business sentiment to rise to a plus 2 ranking in September, and are currently planning to increase capital expenditures by 4.2 percent for fiscal year 2011.

Innovation Creation

As with many Japanese companies, the BoJ and the Japanese government are revising their economic forecasts in light of the challenges brought about by March 11. Still others are using innovation to utilize the current situation to their advantage. Spurred by strong overseas demand, Fujitsu Ltd. reported that it expects a net group profit of 60 billion yen for fiscal 2011, an 8.9 percent increase from the previous year.

Fujitsu has announced that it plans to launch a new cloud network-based service aimed at factories and manufacturers in October 2011. The service will allow manufacturers the ability to process large volumes of data, access data stored at their company’s data server, and run software programs using the Internet. For manufacturers, the service is particularly attractive in the current economic climate as it would prevent loss of important data in the case of another natural disaster. Furthermore, the service allows users to access Fujitsu’s data centers directly from home. As more and more companies enact energy-saving measures this summer, Fujitsu estimates that replacing existing servers with cloud networking could reduce energy usage by 65 percent. While the service will initially be available only in Japan, Fujitsu has plans to expand its cloud computing services to China and the U.S., and estimates sales of 10 billion yen over the next three years.

Fujitsu President Masami Yamamoto also recently revealed that mobile phones will be the latest addition to the company’s globalization plans. The Tokyo-based electronics company stated that it aims to increase global shipments of mobile phones by 7 million units by March 2012. Yamamoto indicated that the company will begin selling mobile phones in North America and Europe later this year, and has already entered into talks with local mobile carriers. In late June, the company also announced that they had begun selling mobile phones in the Chinese market, with the intention of capturing 10 percent of the Chinese high-end smartphone market over the next few years.

Softbank’s Pan-Asian Agenda

On the heels of announcing an ambitious plan to promote solar-generated power in Japan, Softbank CEO Masayoshi Son has now set his sights on the rest of Asia. During a recent visit to South Korea, Son celebrated Softbank’s 30th year anniversary by reaffirming his intent to advance Asian technology.

Son announced that he plans to introduce a pan-Asian investment plan aimed at supporting Internet venture firms in Japan, South Korea, China and other Asian countries. Titled the “Orient Express Project,” Son plans to help various Asian technology ventures to expand and launch in other overseas markets. Son stated that he fully intends to continue investing in Japanese, Korean and Chinese technology firms through a variety of methods, including joint ventures and partnerships.

He also highlighted his goal of turning Softbank into one of the world’s top ten companies through market capitalization within the next 30 years. Currently, Softbank owns 800 IT firms across the world; Son aims to increase this number to 5,000 over the next three decades, and expressed his desire to increase Softbank’s market value to 200 trillion yen. On that front, Softbank has already invested $230 million in 127 South Korean firms, including a cloud-computing venture with South Korean telecom firm KT. The Tokyo-based IT firm also recently raised its investments in Chinese e-commerce giant Alibaba and social networking site RenRen.

The Softbank CEO has also become a high-profile and vocal supporter of renewable energy in the months following March 11. In keeping with his pledge to spread an “information technology revolution” throughout Asia, Son is keen on promoting renewable energy development to Japan’s neighbors. In late June, Son met with South Korean President Lee Myung-bak to discuss promoting wind and solar power. Following the conference, Son stated that Softbank would contribute to the development of next generation smart-grid technology.

Business-smart Philanthropy

Following the devastating earthquake and tsunami in March, the outpouring of charitable activities from the Japanese business community has garnered admiration and impressed news media from across the globe. In particular, for their efforts to aid victims of the Great Eastern Japan Earthquake, Forbes Asia named four Japanese tycoons in its list of Asia’s top philanthropists.

Architect Tadao Ando, Suntory Chairman Nobutada Saji, Fast Retailing and Uniqlo Chairman Tadashi Yanai and Softbank CEO Masayoshi Son were honored for their creative and generous donations to various earthquake-relief projects. According to Forbes Asia, the businessmen were chosen not for the size of their donations, but for their attention to specific causes in the region. For example, in addition to 300 million yen in cash donation, Suntory’s Saji has pledged that 1 yen from each sale (for a projected 4 billion yen) will go towards purchasing new fishing boats as well as funding educational and cultural projects in the afflicted regions.

Similarly, Japanese companies are now using their business-smarts to find new ways to help disaster victims. According to a Daily Yomiuri report, companies are now turning to service-based efforts to help people rebuild their lives. Fujifilm Corp. sent 30 employees on over 60 separate occasions to teach survivors how to restore photos damaged by the tsunami. In a similar vein, NTT East Corp. set up a TV phone health counseling service that connects evacuation centers up north with medical institutions.

Meanwhile, private small-lot funds have become a popular method to rebuild the fishing industry in the hardest hit regions. Companies can donate sums of roughly 10,000 yen to these funds, which are then used to help local fishermen rebuild their boats and replace damaged equipment so that they can return to business. Since April, over 145 million yen has been donated to these private funds.

Stay or Go?

It is no great secret that many Japanese companies are debating whether to shift their production to other regions in Japan, such as Kansai or Chubu. Furthermore, recent reports from the Ministry of Economy, Trade and Industry (METI) indicate that many foreign corporate clients are pressuring Japanese corporations to diversify their production bases and move overseas.

For manufacturing and supply companies, this pressure is particularly intense as power shortages threaten to hinder productivity over the summer. A recent METI survey found that 69 percent of companies believed that factories could be moved overseas at an increasing rate due to the events of March 11. Further cementing these fears, Nidec Corp. CEO Shigenobu Nagamori stated in a press conference that the manufacturing company would experimentally move their facilities overseas. The move was in response to a request from Kansai Electric Power Company to cut energy usage by 15 percent this summer. As more companies respond to pressure from overseas clients, experts worry that shifting production overseas may accelerate the hollowing-out of Japanese industries.

To entice Japanese corporations to remain in Japan, METI announced that it plans to offer subsidies to businesses that choose to diversify their production bases within Japan. Some of the proposed measures would include payments to companies that set up new manufacturing bases in Japan, as well as offering incentives for voluntary energy conservation.

Illustration by Phil Couzens

In terms of Japanese business leaders fully engaged in the often domestically thankless task of dragging Japan, by sheer force of will, into the larger international playing field in ways that transcend brand and permeate the rigid seams of Japanese corporate culture, few cut as dramatic a figure as Mikitani. While many pay lip service to the notion of building Japanese teams capable of flitting across the globe to engage business associates in English while shedding a domestic bunker mentality framed by Japanese tradition, few have actually taken the painful steps needed to truly transform their internal systems in preparation for global competition.

Despite the naysayers and conservative onlookers, Mikitani has dived head first into this transformative process. The immediate results indicate that the company’s strategic shift will pay dividends in the near future, but Mikitani’s relatively aggressive steps have also had the added effect of emboldening other Japanese businesses who have long wanted to take a stab at building a more international profile. This brings us to the true importance of the actions of Mikitani, and others like him including Softbank’s Masayoshi Son and Uniqlo’s Tadashi Yanai: thought leadership.

While it is true that the scoreboard of financial wins and losses is the barometer most use to gauge the effectiveness of business leaders, history has also shown us that financial success alone paints a rather two-dimensional picture of a company and its people. What elevates a brand to the next level—that of cultural authority—is when the people behind the brand take a risk and put the content of their character on the line by actually espousing a dynamic vision that somehow breaks with conventional wisdom.

It may sound like a simple matter, the business of professing a vision, but I would argue the contrary. After many years of interviewing business professionals from all walks of life, one of the most consistent themes I’ve come to recognize from true business leaders is the dedication to and passionate advocacy of a vision. From Mikitani’s tale of bucking the system (“Pushing the Envelope,” page 24), to William Saito’s rallying cry for Japanese entrepreneurs to stand up (“Reigniting Japan’s Entrepreneurial Energy,” page 22), to Alena Eckelmann’s report on the nurturing of undiscovered business talent (“Doing Business the JMEC Way,” page 42), it seems that what we are now witnessing is a rebirth of spirit in post-Tohoku Earthquake Japan.

If you’ve ever been personally involved in a product launch, you’re probably familiar with the reality that those first seemingly destructive steps, while traumatic, are often necessary to clean the slate and make way for a completely new way of doing things. Similarly, despite the fact that the events of March 2011 prompted some to take their personal journey to a new land, for those of us who stayed in Japan, it is now becoming clear that those very tragic and unfortunate events may have very well given many of us the new, empty canvas necessary to illustrate a dynamic new vision for doing business in Japan. In recent weeks the sentiment has become ever more common—this is a new Japan. Of course this statement means different things to different people, but for visionaries, it can mean only one thing: Now is the time to create the next great thing in Japan.

Please contact us at: editorial@accjjournal.com

Sam Kidder
ACCJ Executive Director

The ACCJ overall and many of our Committees and Task Forces have been deeply engaged in thinking about best approaches to return the Tohoku region to economic vitality after the dreadful events of March 11. President Mike Alfant often says that in meeting the challenges Japan and the foreign business community face in Tohoku we should talk not about simply rebuilding what has been destroyed, but rather the operative word should be renewal.

One ACCJ effort that has already drawn attention from Japanese officials at the highest level is the set of recommendations outlined by the Internet Economy Task Force. Their paper gives a vision for renewal with recommendations on how harnessing the power of the Internet and cloud computing can spur innovation and growth in various sectors including telecommunications, small business, education, healthcare and the environment. Through a personal introduction from a very senior contact of Vice President Jim Foster, ACCJ leaders have been able to meet at the highest levels with Japanese officials involved in the recovery process.

The plan they are developing is being put together in a volatile political environment but it seems clear that our suggestions will help to reinforce the arguments of those officials who are looking to turn the Tohoku economic clock forward, not backward.

Speaking of economic policy clocks, I think we are all sorry to see that the TPP consideration process in Japan has been slowed down by the disasters and ensuing political stalemate. According to The Oriental Economist (TOE), a well-respected newsletter on Japanese politics, the March 11 events and subsequent exposure of risks to the supply chain could further accelerate the hollowing out of Japan’s manufacturing industries. Another major factor contributing to this hollowing out, according to TOE, is Japan’s lackluster record for concluding free trade agreements.

JETRO figures show that there is explosive growth in Japanese companies’ exports to ASEAN countries but that growth is not coming from Japan based manufacturing. It is coming from Japanese companies’ facilities based in other ASEAN nations to take advantage of the FTA there. Multiply this experience by the many other bilateral and regional FTAs that exist and it seems highly probable that in order to save jobs in the shrinking agricultural sector, Japan is sacrificing manufacturing jobs. But of course the politics is not simple and even in the States, there could be potholes on the road to TPP participation.

Finally, those of you who call in or stop by the office have likely had the pleasant experience of dealing with Sayaka Mori who has been serving as administrative assistant and coordinator for a number of events and activities. Sayaka will be leaving the ACCJ to take a position as a weather forecaster at NHK. This is a highly competitive and heavily sought job. We will be sad that Sayaka is leaving us but we are very proud that she can fulfill her dream.

For the past 29 years, TUJ has been offering undergraduate degree programs, graduate programs for business professionals, and customized training courses for international corporations.

MBA Program With Executive Concentration
TUJ offers an internationally acclaimed and AACSB-accredited MBA program, which will enable you to accelerate your career by studying even as you continue to work. Based upon the extensive use of U.S.-based professors, you earn the same MBA degree as students who study at the Temple University main campus in the U.S., right here in Tokyo. There are six different intakes during the year, which gives you the ability to start studying at Temple when you are ready.

- The only AACSB-accredited American MBA in Japan
- Financial Times EMBA ranking 2010: 14th in the U.S. and 43rd in the world
- Saturday classes
- Entire program conducted in central Tokyo
- Case studies and texts reinforced by real-life experience
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- Entry point six times a year

Tailored Corporate Training Courses
TUJ’s Corporate Education Program draws on the entire range of educational resources of the university to develop programs that meet the specific training needs of globally-minded corporations and organizations. As an experienced training consultant and solution provider, TUJ can design and deliver in English and Japanese a wide range of customized training programs from a single English course to a company-wide training system.

- Pre-Hire/New Hire Training
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- TOEIC® Preparation Course
- Business Skills Training
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- Training Program Consultation and Creation

For more information, please contact:
tel: 0120-86-1026
e-mail: tujinfo@tuj.ac.jp
web: www.tuj.ac.jp

IUJ’s Global Partnerships to Link Japan to the World

The problem: How to truly globalize the companies in Japan to be able to effectively expand into Asia, thus improving the vitality of the firm. Answer: focus on human resources. IUJ is prepared to help.

The International University of Japan is a graduate school in Niigata. IUJ has formed partnerships with around 40 companies in Japan such as FastRetailing/UNIQLO, Takeda, Mizuho, Panasonic, GE, and Microsoft. They are part of the IUJ Global Partnership network aimed at leveraging the IUJ advantage for the improvement of human resources through customized training programs, academic degree programs, and access to our talented students representing about 50 countries. Access includes active cross-cultural discussions in English in our non-degree programs and degree programs, plus access for strategic employment positions, and project-based summer internships.

The IUJ Global Partnerships will capitalize on IUJ’s unique positioning as a link between Japan and the world. IUJ’s vast network of alumni from over 100 countries can give far reaching benefits for our partnership firms.

IUJ is coordinating a network of Chief Human Resource Officers (CHO). The aim of the network is to share information and knowledge regarding the HR crunch: best practices for training programs for overseas assignments, and introducing non-Japanese talent into the company smoothly for the long term.

With the IUJ Global Partnerships, IUJ hopes to become a key part in linking Japan to the world.

For more information, please contact:
tel: +81 (25) 779-1104
e-mail: info@iuj.ac.jp
web: http://www.iuj.ac.jp

McGill MBA Japan

Reinvent your future with a world class MBA in the heart of Tokyo

McGill University’s Desautles Faculty of Management has been offering Japan’s leading Master of Business Administration program for over 12 years.

McGill’s unique 18 month program, taught by professors flown in from McGill’s home campus in Montreal, Canada, is among the best weekend programs for working professionals anywhere in the world. Studying while you work lets you bring new outlooks, skills, and mindsets that you can apply right away to the business challenges you face. The McGill MBA Japan program, an integrated program with deep coverage in Finance and Global Strategy and Leadership, works towards a degree from McGill University, ranked among world’s top 20 universities by the Times Educational Supplement. In 2011, The Financial Times ranked the Desautels MBA program among the world’s best programs. No other program in Japan can offer the quality, depth, or prestige of McGill.

With students from over 18 countries, including the U.S., Canada, China, India, Thailand, Germany, and Taiwan, the McGill MBA Japan programs offer a truly diverse, global learning environment right in the center of Tokyo. Hosted on the superb facilities of the Hilton Tokyo in Nishi-Shinjuku, the McGill MBA Japan program puts you in touch with the heart of business in Japan and Asia.

Find out how McGill can help you reinvent your career and your future by attending an Open House Session or by contacting McGill for an individual consultation.

For more information, please contact:
tel: 03-3342-3430
e-mail: inquiry@mcgillmbjapan.com
web: www.mcgillmbajapan.com

Tish Robinson, along with David Slater, initiated this ACCJ-Peace Boat Earthquake Volunteer Project. Tish is a professor at Hitotsubashi University ICS and the head of the ACCJ Volunteer Affinity Group. If you would like to join the ACCJ Volunteer Affinity Group to work on this or other relief projects like this, Email: tishintokyo@gmail.com.

Maryanne Murray Buechner worked as a journalist in New York before moving to Japan in 2007. Email: buechner@gmail.com, website: http://mtokyoblog.blogspot.com


Have you or your company wanted to help victims of the March 11 earthquake and tsunami, but didn’t know where to start? Peace Boat Japan, a leader in NGO disaster relief, arranged safe and meaningful volunteer recovery work for ACCJ members over a long weekend in June. This hands-on volunteer project showed what CSR can look like by providing work that made a visible difference in an Ishinomaki neighborhood in Miyagi prefecture, one of the hardest hit areas. The three-day trip, a full-service package in English arranged by ACCJ in coordination with Top Tour Travel, also turned out to be a meaningful team building opportunity, while generating other concrete and creative ideas for how corporations can get more deeply involved in the long term recovery effort.

Forty-two participants—ACCJ members, spouses, co-workers and friends—spent two days in Ishinomaki cleaning residents’ homes and grounds of debris, clearing a park for children to play in, shoveling mud out of gutters and performing similar tasks necessary to help the local community get back on its feet. Because of the personal items and narrow spaces involved, these jobs can’t be done by machine; they require sensitivity and a human touch.

Project Vision
Peace Boats founder Tatsuya Yoshioka’s vision for the project was to build awareness and spark long-term Corporate Social Responsibility (CSR) in response to the Tohoku disaster, inside and outside Japan. The hope was that thought leaders could mobilize broader domestic and international support and spread CSR practices to rebuild the region. Examples of CSR activities designed to make a significant difference include: paid volunteer days, employee matching donations to buy cars for evacuee community car sharing, micro-financing, job creation, and retraining, among others.

Peace Boat, working in conjunction with the local government and neighborhood associations, assigned the work to each team and provided on-site direction from one of its own experienced volunteers. Peace Boat also conducted comprehensive situation and safety briefings for team leaders and offered volunteer insurance for participants. Top Tour Travel Agency of the Tokyu Group oversaw travel arrangements, including Shinkansen tickets to Sendai, hotel accommodations, chartered bus to and from Ishinomaki, and all meals.

The ACCJ organized bilingual team leaders and provided safety gear including hard hats, heavy-duty work gloves, N95 dust masks, protective goggles, and steel boot inserts (to prevent punctures from nails and other sharp objects on the work site). This project grew out of an information meeting to discuss earthquake responses that was organized by Professor David Slater of Sophia University.

Participants came through the experience full of ideas on how to contribute further to the Tohoku relief effort while also promoting CSR within their own companies. “The ideas come when you see what has happened with your own eyes,” said Tatiana Tarasova, chief marketing officer for TUV Rheinland. She said her goal was to get 20 employees from her company, including her CEO, to volunteer with Peace Boat as a group, following the ACCJ model. She also wanted to explore ways to provide used cars to those who lost theirs in the tsunami. “The only way to understand how to do it is to bring people here, and include the decision makers. These ideas don’t come to you if you are in Tokyo. You have to feel it with your skin.” Before March 11, there were 128,000 houses in Ishinomaki, 44,000 were completely destroyed by the earthquake/tsunami, with 34,000 of them partly damaged.

Many of the corporate volunteers said they also saw real value in their employees doing Peace Boat volunteer work as a leadership training and team building exercise, which would benefit individuals as well as the company as a whole, while giving back to the community. “Instead of a regular company day playing football… we could do this,” said Glynn M. Brasington, CEO of Pitney Bowes Japan and leader of Team 4.

ACCJ/Peace Boat team leaders were in charge of surveying the worksite, delegating tasks and making sure volunteers took regular water breaks, among other responsibilities. “Instead of paying money to a training company, I can send my young leaders on the sales team and my engineers in field service out to lead one of these volunteer groups, which puts them in a position where they have to make decisions,” said Brasington. “Considering the amount of coordination needed to do volunteer work and the different roles people have to play to get a good amount of work finished, I’d say this is a good practical leadership training course for people. You learn a helluva lot up here.”

Pitney Bowes’ matching program raised almost $50,000 in three weeks for relief organizations working in Tohoku. “It’s on everybody’s mind,” said Brasington. “It comes up at every dinner, every meeting I have with customers and sales people. What can we do? How? This is something that is organized, and that triggers ideas.”

From a personal perspective, Brasington, who worked as a Scout leader and gravedigger during his university days, said the work was perfect for him. “We were out in the air and close to the earth. We could see the devastation but we could also see that things were coming back together in a very detailed way.” Brasington’s team cleared wood and other debris, including busted bicycles, toys, and assorted personal effects from a public park and leveled the soil, removing chunks of contaminated mud. His group also cleaned up the outside of a house, including the garden and driveway. The toughest bit, he said, was removing the glass shards and rotted remains of some smashed up fish tanks.

By the end of the weekend, many participants felt that volunteering for Peace Boat could be a more satisfying alternative to the usual company off-site meeting. “We typically get together once a year at a conference center to discuss strategy and business initiatives, but it’s really about reinforcing personal relationships among co-workers,” said Steve Kapner, co-founder and Japan country manager for Aquent, a marketing and design staffing firm with 45 employees in four cities in Japan. “We can certainly do that volunteering with Peace Boat.” And, according to his evaluation, there may be other ways to help the relief effort that tie into his company’s areas of expertise that go beyond one-off relief projects. “If you’re digging sludge, when you leave, you’re done,” he said. “You can’t keep digging from Tokyo. But if we come here to do job training, for example, or set up a computer bank at a community center, we can keep that going. The recovery will take years, so the question for me is, what does Ishinomaki need done from a business perspective, and what do I want my people to get out of it? What can my company do to be helpful over the long term?”

On the third day of the project, the ACCJ group toured Peace Boat’s base operations at Senshu University campus, including a warehouse storing food, water, children’s shoes and other donated goods. “I’d like to see some companies lend their expertise in logistics and inventory management, have someone come up here for a couple of days to take a walk through and tell them what they’re doing right and what they’re doing wrong, to help maximize efficiency,” said Charles Lent, an HR and Communication Consultant.

Daniel Bodin, a recruiter for Robert Walters, said he felt a responsibility to take his experience back to Tokyo and share it with others. “We are the ambassadors,” he said. “If I don’t tell anyone about what we did here, or try to generate any activity from it, the effort would’ve been wasted.”

Unfortunately Peace Boat has seen a dramatic decrease in the number of volunteers turning up for work in Ishinomaki. “During Golden Week, I was on team 41,” said Ayumi Ando, a Peace Boat volunteer and communications coordinator who helped guide the ACCJ/Peace Boat volunteer group. “This week, I am on team 11 out of 16.” While the NGO expects more students to come and lend a hand during the summer holiday, the concern is that as time goes on, memories fade and media attention shifts, the numbers will keep dwindling. And they need all the help they can get. International companies interested in enhancing their CSR program are encouraged to seriously consider lending their employees for this purpose. “We’d like to have at least 300 volunteers per week coming up,” said Yoshioka. Having the ACCJ group up for just two days of work, he added, “I didn’t expect there to be such a big impact, that it would make such a difference, but it is such an encouragement.”

With the success of this first Peace Boat volunteer program, the ACCJ now has a pre-tested model for other ACCJ member companies looking to map out their own volunteer opportunities. If you would like to replicate this effort, the ACCJ can provide all the tools you need: a step-by-step list for organizing the trip, including travel logistics, safety rules and procedures, a project management manual; contact info for related vendors and organizations, packing lists and information on where to buy large-size rain boots and other essentials. Several ACCJ member companies gave employees one paid volunteer day to cover the Friday, and paid for the employees’ travel, food and accommodation costs. Participants needed only bring waterproof jackets, pants and boots, and a willingness to get their hands dirty!

Additional thoughts from team participants:

I was very touched by Shuki Ito-san of the Ishinomaki Disaster Recovery Assistance Council and his sharing about their challenging reality, as well as his strong commitment to rebuild the town and promote the creation of jobs for the townspeople.  I hope we will keep the momentum from this weekend going by getting other people involved in the recovery work ahead.  The work we did over the last two days seems like just a drop in the bucket, but it is a very meaningful drop of water, I believe.
–Keiko Suzuki, ACCJ HR Committee, Team 1 Leader

Logistically, everything came off perfectly. The Shinkansen, the bus, the hotel—it was structured and efficient, and that’s what we want. I could probably get 20 or more people from UBS to do this.
–Corey Gustin of Equity Trading at UBS Securities Japan, Team 1

In one weekend, our volunteer teams helped clear three parks, two backyards and a few hundred feet of residential gutters clogged with contaminated silt and mud. These are work sites and progress rates I hadn’t contemplated before, but I know these humble efforts have a place somewhere in the overall critical restoration work to be done. So this small journey of ours to the Tohoku region has been all of heartbreaking, daunting, frustrating and inspiring. The restoration and reconstruction effort will be immense. Such extraordinary projects demand extraordinary planning and coordination.
–Adrian Archer, Associate Director, Hill International, an independent project and construction management firm, Team 2

The ACCJ/Peace Boat ‘Get Your Hands Dirty’ volunteer trip was a super experience on so many levels. It allowed me to meet and work with wonderful individuals from the international and Japanese community whom I would likely never have met. We exchanged ideas, impressions and built our ties to a network of action-oriented people who care about the long-term success of Japan.
—Charles Lent, HR & Communications Consultant and Team 3 Leader

During our time working as a team with a common goal, to make a difference to those who have experienced a tragedy, we experienced the power of diversity. America’s strength comes from the cultural diversity of its roots, the great melting pot. The members of our team were Russian, Mexican, French, British, American-Mexican and American-Japanese. We were three women and three men. Brought together through the ACCJ, we had a powerful mix of ideas and skills to bring to the tasks at hand. The days together gave us time for reflection and time to benchmark our future plans from very different perspectives.
–Glynn M. Brasington, CEO, Pitney Bowes Japan, Team 4 Leader

People want to feel connected. If you donate money, you want to see where that money is going. It would be great if some of that money could be spent hiring local people to do some of the recovery work, to create jobs and generate income.
–Daniel Bodin, recruiter for Robert Walters, Team 6

I think that everyone got a great deal out of digging mud, and seeing just how much manual labor is required to dig Tohoku out of their situation. The next step is to take this experience and use it to stimulate CSR projects. Businesses build cities, and business will have to rebuild Tohoku. So our next step is to help develop and focus the CSR of companies to invest in Tohoku in whatever way they can.
–David Slater, professor, Sophia University, and co-coordinator of this earthquake relief project.



KEY CONTACTS
Peace Boat: Organized meaningful volunteer work with English-speaking leaders in Ishinomaki in conjunction with the local government and neighborhood associations and provided safety briefing. Contact: Rachel Armstrong, email: rachel@peaceboat.gr.jp

JEN—Japan Emergency Network: Another well-established NPO that organizes volunteer work in Tohoku, using English-speaking leaders. Contact: Miyako Hamasaka, email: hamasaka@jen-npo.org

Top Tour Travel: Organized Shinkansen, chartered bus, hotel accommodations, and bentos for this ACCJ-Peace Boat Relief Trip. Contact: Toshi Fujii, email: toshihide_fujii@toptour.co.jp

ACCJ Volunteer Affinity Group: Provided logistical coordination and templates for safety briefing manual, packing lists, trip announcements, team leader responsibilities, emails to group members, steps for organizing, lists of stores in Tokyo that carry large-sized rain boots, etc. Contacts: Tish Robinson, Hitoshi Maruyama, email: hmaruyama@accj.or.jp

]]> http://accjjournal.com/getting-your-hands-dirty/feed/ 0 http://accjjournal.com/the-employment-ice-age/ http://accjjournal.com/the-employment-ice-age/#comments Wed, 20 Jul 2011 05:44:48 +0000 ACCJ Journal http://accjjournal.com/?p=4802 Momoko Nagaiwa strolls into the Starbucks at Roppongi Hills around 8:30 pm on a Friday night, tired and carrying a heavy backpack filled with papers and a laptop. “It’s for my internship,” she explains, before profusely apologizing for running late. Between juggling a part-time job as a clerk at Uniqlo, job-hunting, and an internship with an international trading company, she only has an hour before she has to dash back home to finish more work while simultaneously getting ready for her part-time job and college graduation ceremony that weekend.

Starting Monday, Nagaiwa will enter “real adult life” unemployed and armed only with her diploma and résumé as paper shields in the uphill battle that is the Japanese job market. According to figures released by the Education and Labor Ministries on April 1, an estimated 33,000 college graduates had failed to secure jobs after graduation. Compared to statistics from 2010, the employment rate for new graduates slipped 0.7 percent to a mere 91.1 percent—a third consecutive year of decline which marks the lowest employment rate since the government began collecting data in 1996.

Numbers can also be deceiving. The 91.1 percent does not include new graduates in the areas of Iwate, Miyagi and Fukushima, nor does it give any indication of the cultural differences between Japanese and Western job-hunting practices.

When asked to describe her job-hunting experience this past year, Nagaiwa simply gives a wry, knowing smile that indicates a mix of frustration, bitterness and a glimmer of hopeful determination. Almost every recent graduate interviewed for this article reacted in the same way. That might be understandable considering Japan’s recent economic doldrums, the recent shift by Japanese companies towards more globalization, and a September 2010 survey by the Sanno Institute of Management, which indicated that two-thirds of Japanese white-collar workers felt no desire to work abroad. Except for the fact that at 23-years-old Nagaiwa is fluent in English (despite never having lived in an English-speaking country), studied abroad for a year in Rome and has completed no less than 3 internships. One would think that students like Nagaiwa, at least on paper, would have their pick of whatever company they wanted to join. So why is she, and others like her, finding it so hard to find a job in Japan?

Illustrations by Phil Couzens

A Year (Or more) of Pursuit
In Japan, by the time a new graduate walks across the stage to receive his or her diploma, it’s already too late. Japanese companies generally start recruiting new hires one year before they are set to graduate, meaning the typical Spring 2011 graduate began their hunt as early as January 2010. However, after the Lehman Shock in 2008, China’s ascendency, and the events of March 11, uncertainty in Japan remains high. These days, students are starting the job-hunt as early as their sophomore year of college, in addition to taking classes to help them polish their interview etiquette and craft bulletproof résumés.

The standard job-hunting process is incredibly intensive. New grads start off by attending a series of pre-entry informational seminars or setsumeikai, as well as on-campus and off-campus job fairs. On the Internet, students register at numerous Monster.com-esque sites such as Rikunabi to scour over thousands of job postings, and find information regarding company seminar schedules. In the spring, summer and fall, armies of impeccably dressed Japanese college students swarm the big job fairs held at Tokyo Big Site in Odaiba, hoping to catch the eye of an attractive company.

After the application process is done, companies can take months to screen résumés and administer written exams before scheduling interviews with the remaining candidates. Depending on the company, an applicant can expect to attend as many as five or six interviews before finding out if they’re hired.

Whereas companies in the West tend to look at previous experience, Japanese companies are more interested in a candidate’s communicative skills and attitude. “When they [Japanese companies] tend to choose people, they prefer more harmonious people than aggressive people,” says Yoshitaka Okada, Dean of Sophia University’s Faculty of Liberal Arts. “Ideally, they want to hire someone who can realize both achievements and harmony within the group, not someone aggressively pursuing self or personal interests.”

Of those interviewed who engaged in the traditional Japanese job-hunting system, most regard it with a sense of severe anxiety. And for good reason. Those who fail to secure a job the “first time around” face an even tougher job-market, as well as reduced opportunities to advance their careers. So much so, that it’s not uncommon to see students purposely postpone graduating for an extra year, rather than graduate without a job.

“They [Japanese companies] are willing to invest heavily in undeveloped talent. The flip side of this is that they prefer new hires to be fresh and uncorrupted by the influence of other companies,” explains Erica Adams, a career development officer at Temple University’s Japan Campus. “As a result of this preference for new graduates, many-to-most key roles will only be available for those employees who began their career at the company.”

A Lottery of Fish, Sheep and Robots
But is this truly the most effective way to nurture, find and engage emerging talent in Japan? The prevailing sense is that the traditional Japanese method of securing a job makes it increasingly difficult for an ambitious young graduate to find a place where they feel they can make an active contribution. Whether true or not, it often gives internationally-minded participants the impression that the skills they’ve worked so hard to cultivate will be left by the wayside once working life begins. For some, finding meaningful working experiences could be the equivalent of winning the lottery.

“You go to these job forums, with those ridiculously large companies that everyone is drawn to…and it feels like advertising. It’s like candy,” says Shou Kondo (a pseudonym), when recounting his foray into the big career forum circuit during a year’s pursuit of a job that would satisfy both his ambitions and interest. “Everybody’s drawn to it, but there’s such a slim chance you’re going to get it. It goes back to the question of ‘What do I really want to do?’ You go to those job forums and you really don’t figure that out.”

Kondo, a bilingual Japanese graduate who studied for a number of years in the U.S. before returning to Japan for university, is for all intents and purposes exactly the type of candidate companies claim to be missing among today’s “inward looking” Japanese youth. When asked to elaborate why traditional Japanese job-hunting measures left him wanting, he seemed a bit unsure how to put his exact reasoning into words.
“I felt like I was a fish in a school of fish,” says Kondo, after a few minutes of introspection. “And I was the wrong kind of fish. I felt like a sea bass in a school of goldfish.”

“It really feels like you’re sheep being herded into these companies,” says Christian, an American student, who is currently job-hunting while enrolled at a Japanese University in Tokyo. He related that it was hard to feel excited or engaged at career forums due to a perceived lack of interest. “A lot of the company presenters were just reading off a PowerPoint about their company. None of them had any true experience within the company in areas I was interested in.”

Hammer, Meet Nail?
There is a Japanese proverb that perfectly explains the frustrations facing many ambitious Japanese and foreign graduates. Deru kugi wa utareru. The nail that sticks out gets hammered down. Take controversial Livedoor founder and Japan’s most infamous entrepreneur Takafumi Horie. From his casual dress to his aggressive business tactics to his noticeably expensive tastes, Horie is not your typical Japanese CEO. His recent downfall and subsequent prison sentence is widely touted by business conservatives as a cautionary example of what happens when one puts individual career goals before that of the company.
Whatever his individual failings may be, it cannot be denied that Horie promoted a unique brand of “go-getter” attitude that is a rarity in Japan. Before his jail sentence, Horie offered a sobering piece of advice: “Even if you cling to this country, it has no future. It’s better for young people if they just let go.”

On the surface, it’s a fairly straight-forward sentiment, but a deeper look suggests otherwise. It’s true that since the Bubble burst in the early ‘90s, Japan has endured two decades of muted growth and stagnation. “Generally, the trend is that Japan’s economy is not growing. It was sort of stable, but with the recent crises now, the economy is showing a negative growth rate which may improve to some extent, but not as much as we hope,” says Okada. “So companies are not necessarily looking to expand. With the electricity crisis, some companies are actually thinking of moving down south, and some of them are actually thinking of moving out of Japan.”

Okada goes onto explain that while this state of affairs may dim the hopes of many job-seeking Japanese youth, for those with the right mindset, it could be the beginning of a golden opportunity. In contrast with the rising unemployment rates for new graduates, he explains that Sophia University graduates have yet to be negatively impacted—in fact, Sophia’s employment rates have has not declined since 2009. On a similar note, 95 percent of English-speaking Japanese students from Temple University’s Japan Campus graduating class of 2009 managed to find full-time employment. With companies like Rakuten, Uniqlo, Panasonic and Nomura Securities calling for globalization, common sense would indicate that bilingual candidates would have a leg-up on their competition. And that would be the case if it weren’t for Japan’s fixation with tradition.

“The seniors had a sort of ‘responsible disdain’ for their juniors,” says Jonathon Clemons, a fully bilingual American graduate, when describing some of his previous frustrations at a Japanese firm. “You can’t always ask questions or learn from them very well because they’ll just tell you to ‘watch’ how they do things. I was always on the bottom rung, and it was very hard to advance or get a foothold anywhere.” Clemons has since moved on to a foreign firm in Tokyo, which he feels places more value in his opinions and affords him more global opportunities. “I can go up and talk to the head of the company about anything—such as mistakes or errors I’ve found—in order to get the job done and I won’t be held accountable for it. That’s really refreshing.”
This kind of frustration is not uncommon. Rigid, frustrating, disengaged—these are all words international graduates have used to describe their image of life working under a “traditional” Japanese company structure. As such, many with global aspirations write-off, perhaps prematurely, Japanese corporations in favor of a more international company because they believe they might be more likely to utilize their skills.

“I went to an international career forum in Tokyo, and there were all these companies—Japanese and foreign—and all the students were international as well. So I went and talked to companies, but I was told, ‘Yes we want international students, but we don’t have any plans to go abroad. We just want international students because we believe they have stronger mentalities,’” Nagaiwa laments. “I don’t want do stuff like serving tea to clients. I didn’t go to school for that. If I have to do it, of course I have to do it, but I don’t want to just sit there and learn like a robot.”

But bilingualism, trilingualism or even quadrilingualism no longer carries the same cache it once did. Bilingualism is usually considered a ‘plus,’ especially for foreigners with business-level Japanese, but it does not translate into an automatic job. While bilingual graduates may want to utilize their language skills in their careers, companies rarely hire on the basis of language skill alone. For Japanese companies in particular, a new hire represents a long-term investment.
“Although we often hear that life-time employment is a relic of the past, and that job turnover is high among young Japanese, etc., the hiring process at major corporations has not caught up to this reality,” says Adams. “This means that companies in Japan focus on finding students who they feel have long-term potential.”

“A lot of the time there’s a worry that if you hire someone that’s fully bilingual—either Japanese or foreign—that person will get bored in the role if it doesn’t have an international enough feel,” agrees Charles Breen, an HR recruitment specialist at Specialized Group K.K. in Tokyo. “All employers naturally want to ensure that if they invest in training and development, that their people stick around. If their business fundamentally does not offer the environment a bilingual employee desires, then many of these employers would rather avoid the hiring risk all together.”

Breen goes on to emphasize, “However, far more encouraging news is that a growing number of globally focused Japanese firms have recognized the value of a skilled and fully bilingual/bicultural workforce and are driving their hiring from this perspective.”

Fight or Flight?
As the number of new graduates willing to sacrifice lifetime employment for greater career opportunities rises, so does another question: Should they fight to stay in Japan, or place their bets elsewhere? With Singapore, Hong Kong and Seoul emerging as thriving centers of growth, Japan could face a serious ‘brain drain’ if it does not learn to utilize the budding international talent residing within its borders.
“Japan might not be the best market right now for fresh graduates. China, Hong Kong or Singapore are places where young people, particularly foreigners, can get a start,” says Greg Leviton, an HR consultant at The Ingenium Group. But even for those who have found a job, the idea of staying in Japan for the long haul can seem like a gilded cage.

“I don’t intend to stay in this country forever,” says Kondo, who eventually found employment at a foreign firm in Tokyo. “I set a number, 3 to 5 years, and that number has not changed. I want to build on my skills so that I can go to other places.”
“A key point I tell students is be prepared to go anywhere in the world because trying to stick to Japan may not really prove wise in the future,” says Okada. “Due to the declining economy and the hollowing out of industries, if a student really tries to remain in Japan they may be unable to find a job that they would like to do. Location is secondary; students should try to find out what they really want to do and if necessary, they may have to go somewhere else.”

However, this is not comforting advice for foreign graduates who have invested four years of time and money into building a life and career in Japan. For non-Japanese graduates, one particular thorn is securing a job that will also sponsor a working visa. In some cases, although a foreigner may be perfectly qualified for a position, they will be ineligible for hire since they have not acquired a valid working visa, creating a catch-22 situation. While this is less common in positions offered by larger companies, it can prove to be frustrating for those more interested in small to mid-sized companies.

“Japanese are risk-adverse. When it comes to foreigners, a main concern is ‘Who’s going to vouch for you?’ If a foreigner gives the company any room for doubt, they will lose faith,” says Brent Conkle, President of Business Across Cultures, a HR consulting firm in Tokyo.
In 2009, Temple University Japan reported that just over half of its foreign graduates managed to find full-time employment in Japan. Of course, not every foreign graduate has a desire to work in Japan once they have completed their studies. Of those that do, however, some opt to teach English (which may or may not align with their career goals) in order to extend their stay in hopes of finding other work Japan. While many will go on to find full-time work in their preferred industry, it is also an unfortunate fact that others become discouraged and ultimately return to their native country.

In that regard, Japan’s immigration laws can be difficult to navigate. While there are options available, they are not always well advertised, and accurate information can be hard to find. “In Japan, it is possible to obtain a visa for up to 180 days after graduation for the purposes of job-hunting,” says Yoshio Shimoda, a Managing Partner at ILS Shimoda Office and specialist in Japanese immigration law. “However, I think it is too short especially in this difficult financial time.” Getting this ‘job-hunting’ visa however, is no easy feat.

Laura Semmler, a quadrilingual graduate of a Japanese university, recalled that, “It was a major headache. Not only did I have to provide proof I had graduated from a Japanese university, I had to provide a list of companies I had pre-arranged interviews with, recommendation letters from two upper-level school officials, a recommendation from the school that I was a good candidate to stay in Japan, proof that I had enough funds to support myself, as well as proof that I had been properly registered at a ward office.”

Shimoda goes on to mention that although Japan has plans to introduce a new ‘point system’ designed to make obtaining working visas easier for foreign talent by the end of this year, he emphasized that it is not yet clear how or if it will benefit students.

The Information Gap
Before she packs up to leave, Nagaiwa takes a moment to reflect. “I’m here. I know there are companies here—they don’t have to be the big well-known ones—where I could contribute and really learn a lot. I just can’t seem to find them.”

“We tend to think we can get enough information about companies because of the Internet. However, it is almost always limited to large-sized companies, and students have little information about small-mid sized companies,” says Kentaro Sawa, head of Temple University’s Career Development Office. “[Because of] this information gap and students’ tendency to pursue stability, most students rush to large sized companies. On the other hand, many small-mid sized companies struggle to hire new graduates.”

Not a single one of the graduates interviewed expressed aversion to working at a smaller, lesser known company so long as it provided them with an opportunity to learn new skills. In fact, among foreign graduates it almost seemed to be their preferred option.
“Small and mid-sized companies hoping to expand their operations need this type of young, flexible worker. The problem is that nobody knows where they are. No one is looking in that direction,” says Conkle.

Another, albeit much riskier, option is entrepreneurship. When asked about his post-graduation plans, Parker J. Allen makes it clear that he has every intention of starting his own social media consulting company here in Tokyo.

Allen admits the odds are against him. He’s been told that he has to raise 7 million yen in capital, not to mention the conundrum of having to find office space and sponsor his own visa. “As far as a really cool city for young, creative people to get together and get ideas and make business, Tokyo’s great,” says Allen. “But the problem is that there’s just not enough people with great ideas going out and doing them.”
“There are a few exciting ‘movers and shakers’ in our field here in Tokyo,” adds Marco Lüthy. Less than a month after graduating, Lüthy and a partner set up their own Internet media and marketing firm, Robotag Media K.K.

“I was not intending to start a company this year, although it’s always been something that’s been on my mind,” says Lüthy, who spent two years freelancing while completing his studies. “However, as my employment situation changed, partly due to the events of March 11, an opportunity arose for my business partner and I to setup a corporation without needing to take on any investment. We found ourselves in a situation which enabled us to be our own bosses and take on work which inspires us.”

Forging a New System
However slowly, things are changing. Some leading Japanese companies like Rakuten and Uniqlo are at the front of the globalization trend, and the number of foreign hires in major Japanese companies has been rising steadily every year. Furthermore, more companies are investing in overseas recruiting.

“Japan is still a strong country, and Japanese people work well as a collective. Once they [Japanese] move, they will all move,” says Conkle.
“The consequences and implications of the Tohoku quake is one of the most significant moments politically in Japan in the post-war era,” says Kyle Cleveland, a sociologist at Temple University Japan’s Institute of Contemporary Asian Studies. “Things that previously seemed untenable are going to become more relevant. Internationalism is going to benefit people. In the post-quake, post-tsunami Japan, the surge of volunteerism will invigorate NGOs, and opportunities for non-traditional work modes will increase.”
While it’s anyone’s guess if or when Japan will benefit from this shift, in the meantime there are multiple options companies and new graduates can use to their advantage. In addition to proactive skill building during university, experts agree that the essential key to finding a satisfying job is researching your chosen industry.

“The easiest way, if a student has an interest in a certain industry, is to jump online and find a journal, find a blog or find somebody in that industry that they can speak to. Go to networking events. A lot of the smaller companies are at those events because you can build connections that way,” advises Breen.

“Informational interviews are key,” recommends Conkle. “Many Japanese SMEs are open to hiring new graduates, but don’t know how to use recruiting companies or find them. An informational interview can help a candidate get their foot in the door.”
“If universities and companies agree that it is in their shared and best interest to develop outstanding human resources, it is only beneficial for students, companies and universities to start connecting with each other early,” suggests Sawa. “Universities can develop programs where their students can make direct contact with real businessmen, engineers, entrepreneurs, and other professionals inside and/or outside of their coursework. Companies can develop long-term internship programs with universities.”

While the current Japanese system is not perfect, it is far from hopeless. International, driven, young talent is here, and eager to work. But they won’t play the waiting game forever.

]]> http://accjjournal.com/the-employment-ice-age/feed/ 0 http://accjjournal.com/global-health/ http://accjjournal.com/global-health/#comments Wed, 20 Jul 2011 05:30:38 +0000 ACCJ Journal http://accjjournal.com/?p=4783 Although the last few decades have forever burnished the United States’ reputation as a technology pioneer, the sometimes overlooked reality is that the country has been, and continues to be at the vanguard of a myriad of medical breakthroughs impacting the entire planet. Leading that charge is international pharmaceutical company Eli Lilly. Founded in 1876 by Colonel Eli Lilly, the company, headquartered in Indianapolis, Indiana, now conducts clinical research in over 50 countries and markets its products in 143 countries.

As the first company to mass-produce penicillin, today the company is at the forefront of providing medications that address ailments such as diabetes, osteoporosis, thrombotic cardiovascular events, cancer, psychiatric disorders, and male erectile dysfunction. Heading up the company’s efforts in the newly active Asia market is Alfonso “Chito” Zulueta, as President & General Manager of Eli Lilly Japan, based in Kobe.

An Eli Lilly employee since 1988, Zulueta recently managed to slow down his busy schedule to give the ACCJ Journal deeper insight into the how the company has prospered in the Asia region in recent years, as well as offer perspective on what the future of post-Tohoku earthquake Japan may look like in the coming years.

photography by rob walbers

Journal: Is there anything that Eli Lilly Japan does differently here in Japan compared to its Western operations? Also, what is the company’s Asia public profile because, particularly in the West, Eli Lilly has very distinct public profile.

Chito Zulueta: We have made our medicines available in Japan for over 100 years. We had a partnership with Shionogi, which is a company based in Kansai. That’s why when we started our own independent operations here, we ended up operating out of Kobe. We started having our own business here in 1975, the business has grown nicely—we’re going to be close to 2,500 employees. Revenue is targeted this year to reach $2 billion here in Japan and our goal is to double that by the end of the decade.

Over the last few years, our growth has been very strong; we have been the fastest growing pharmaceutical company the last two years. But we’re just ranked number 20, whereas globally we’re ranked number 10 within the pharmaceutical industry, so that just gives you a sense of the opportunities to continue to grow the business here as we bring more innovative medicines to Japan. So, in a way, that is a bit of a difference as to where we are in Japan versus the U.S. Because of the drug lag, there has been a bit of a lag between getting pharmaceutical products into Japan versus the U.S. for a variety of reasons. Now that lag has been reduced over time, but as a consequence we are having products launched in Japan where they have been launched in the U.S. many years back.

Journal: What’s the reason behind that lag?

Zulueta: The reasoning is that Japan, in the past, required independent research and development be done in Japan. Whereas now, at least in the recent past, the Japanese government has embraced the need to reduce that lag and therefore has allowed Japanese patients and Japan in general to be part of global development plans as well as allowed Japan to be part of what we now call a Pan-Asian type of clinical development. As a consequence, we’re beginning to see a reduction in the lag from what was seven years to about two years. The intent is to close that gap fully. In fact, there are some examples where we are getting approval simultaneous to that of the U.S. So that is a major change, which is not only good obviously for the business, but more importantly it is the right thing to do for the patients.

We applaud the government’s efforts here in Japan, they realized that the gap was not acceptable. So they have worked with industry, with us, to really identify the specific steps of the process in each of the clinical development stages, and identified areas to reduce that [time lag]. At the same time, they now allow simultaneous development of Japan with global. So instead of a standalone Japan development, you can just have a piece of that global development be composed of Japanese patients and they would accept that data as part of that product’s approval.

Journal: Among the foreign set here, there’s this thinking that the efficacy of certain drugs, aspirin, etc., is stronger in the West, particularly in the U.S., than it is in Japan. Is this a myth? It sounds like what you’re saying may buttress this thinking, that there are a different set of parameters for the medications delivered here in Asia. Is that perception off the mark?

Zulueta: No that’s a very good question. In fact there is a difference: the ethnic difference, the weight difference, has seen that in Asia for a number of medications, you’ll probably need less dosage than you would in the West. Now that’s taken into account when doing those clinical trials. All of that takes into account the need to potentially have different milligram forms for a particular product treating a particular disease. So you may get approval in the U.S. of a higher dose versus in Asia, but at least it is in one simultaneous clinical development.

Let’s take an example, a simple one may not be appropriate but…Let’s say aspirin for instance, aspirin for a headache. Then they would have one set of patients that would have 25 milligrams of aspirin. Then another group of patients, which would have 50 milligrams. Then they would show that in comparison to no medication at all or in comparison to an existing therapy for that particular disease, for headaches. But they would include Japanese patients within those tests within the clinical development.

Journal: One thing that immediately jumps to mind, particularly in the age of the Internet and the global citizen, is that a lot of people are trying to be global citizens. You have a lot of people who live their lives 1/3 of the year in Singapore, 1/3 of the year in London, 1/3 of the year in California. During the course of the year, they have to go through various treatments. Do you foresee at some point in the future that there will be some sort of global standard or way of approaching medication; instead of it being region based, having some sort of global approach?

Zulueta: Development is becoming more global. The time frame, and the protocol is more global. Now exactly the kind of dosing may be different depending on the ethnicity or the weight of a particular patient. But the actual development of a product is more global now than it ever has been. And that’s very encouraging. In fact, a subset of that globalization of this development is what we call Pan-Asian, where we actually have studies across the key Asian markets: Taiwan, Korea, Japan, Singapore and at times, India and China. We have a number of those studies, and those studies are becoming more acceptable to many of the Asian markets.

Journal: In Asia, can you give us a general sense of where Eli Lilly stands percentage-wise in terms of your market presence and influence?

Zulueta: The influence part makes it a little more difficult for me to assess. I would say clearly Japan is, I think as in most other industries, the big player here in Asia. In fact, in our industry, it is the second biggest market behind the U.S., so it is a very significant part of our total business and of the industry. Behind that would be China, although China as you know, and as we all know, is growing double digits, it’s growing rapidly. But it is still a far third from Japan from a market perspective.

Journal: In the Asian sphere, which country is emerging, is on the fastest growth track? Would it be South Korea, Taiwan, Singapore, Indonesia? Where’s the new action coming from in terms of your business?

Zulueta: At Eli Lilly & Co., Japan has been the fastest growing part of its business for the last 2 years driven by excellent uptakes of our new launched products and market share gains across the portfolio. We see Japan as a tremendous opportunity for growth for Lilly and we intend to continue to invest. China, of course, remains a source of strong growth, and so is Korea which is now a truly emerging market for us. Then you also have the big diabetes markets with very good opportunities for us: Indonesia, India, Philippines and even Pakistan. These countries are in the top 10 of the biggest diabetes countries of the world.

Journal: Going back to Japan, and the origins of Eli Lilly Japan, you mentioned a company called Shionogi. If you could just give us a sense of what that company was about? Why was that the most attractive partner in Japan for Lilly?

Zulueta: It was strategic collaboration that we established. We started supplying our products to Japan over 100 years ago through this company. Shionogi, a highly respected company, based out of Kansai, is still an independent pharmaceutical company and was the biggest pharmaceutical company when we partnered with them here in Japan. And then over time that collaboration evolved to include research and development collaboration until the point in 1975 when we decided to set up our own operations independent of them.

And that’s how it started. We continue to have some important partnership collaborations with Shionogi today.

Journal: A hot topic of debate for a lot of companies in Japan right now is the question of “Tokyo versus a different region of Japan” as a base of corporate operations. Could you talk to us about why you think Kansai is a viable headquarters in Japan, as opposed to Tokyo?

Zulueta: You know last year I was actually in Tokyo through the invitation of JETRO and Hyogo Prefecture to talk about what our experience has been here in Kobe and, as I’ve shared, there is a bit of a history of why we’re here. Let me tell you, I’ve been here three years and we’ve evaluated every year whether or not we should move our operations to Tokyo. And we’ve always come to the same conclusion: that it would not be cost-effective for us to move. Obviously, because we already have an operation here and that would mean a significant disruption for many of our employees. But setting that aside, we think it’s cost-effective being here. The cost of doing business, we think, is lower whether it be office, whether it be housing—so we think overall it is cost-effective.

Given the importance of Tokyo as the seat of government and a lot of what we do is working with the Ministry of Health, Labor and Welfare, we’re often in Tokyo. We also have some of commercial staff based in Tokyo.  So we have a small office in Tokyo, and I’m there often. I do not find that as a problem.  I think the infrastructure is great. Obviously Japan in general, whether it be the shinkansen, or Itami Airport or international flights through KIX (Kansai International Airport), or the airport now in Kobe—could be improved, could be better in terms of number of flights to key cities—but overall we find that to be positive. The other thing is that I think we punch above our weight, so to speak.

Given that we’re one of the bigger companies here in the Kobe-Hyogo prefecture area, we’re able to have a bigger presence in the community. That means a lot to our employees, plus we’re able to tap some of the very talented people who want to live and work in Kansai and I think that’s worked to our advantage. We also have very good relationships with both prefecture and local governments here.

And then the other thing is it’s a wonderful region to live in. We’ve actually come to the conclusion this is a great place to have our business.

Plus, within Kobe there’s a growing medical health care hub being established that we’re very much a part of.

In Port Island, which is very close to where our offices are, the Kobe government has really invested in attracting companies to set up operations specifically around the medical and healthcare industry, primarily around research and development. They’ve built a consortium of companies, and I’ve seen a number of them already set up clinical development, research development and even informatics types of businesses here.

Journal: We talked about a kind of global approach; current and future standardizations, research, R&D here in Asia, what are some of the new innovations, new methodologies, new approaches that may have happened specifically because you were here in Asia versus say the U.S.? Something that was very region specific that played to your advantage of being in Asia?

Zulueta: One area, specifically in Asia, that has been identified as a best practice is our use of information technology, electronic technology, and mobility tools in driving both our development and commercialization efforts. That includes the use of the Internet and the use of information technology to communicate to our customers.

We have really significantly invested in the use of information technology. As an example, our entire sales organization, and almost our entire workforce, they’re all on Blackberries and we use this as a platform whether it be to promote our products to our customers, or to communicate. And we’re going to expand the use of iPads across the organization. I think the West, at least in our business, is probably a few steps behind us in that. We’re using Japan as an innovation hub in the form of information technology.

Journal: What about innovation as far as the drugs themselves? Many in the West see Japan and Asia as this mystical, exotic place of odd cures and interesting herbal remedies. Has that played a part at all, or is this just more cultural mythology at work?

Zulueta: Well, there are what we call traditional Chinese Medicines, or what people call proprietary Chinese medicines (pCm), and a number of companies in the industry continue to look at such opportunities. Lilly was one that looked into one or two potential ones, but not to a large extent. However, keep in mind that within the bio-pharmaceutical space of our industry, Japan has been a major contributor of very important products. Whether they be cardiovascular products, cancer products, diabetes products—many products have actually been discovered and developed here in Japan and are important global medicines.

Japan will continue to be a source of research and development and a source of innovative medicine. Companies like Lilly continue to look at opportunities here in Japan to collaborate and license and co-develop some of these medicines. The other piece is that there are certain diseases that may be specific to Asians. To give you an example, gastric cancer, which is a predominately Asian disease. It’s not a phenomenon in the West, so we are beginning to develop and look for medicines that are specific to Asia, in Japan and in China. So there are diseases specific to Asia, but also Asia becomes a source of future innovative medicines which then may be licensed and co-developed for use in the West.

Journal: Globally, can you just go over some of your best known products?

Zulueta: Our biggest product is called olanzapine. It is for the treatment of schizophrenia and bi-polar disease. That is our biggest product not only here in Japan, but globally. Lilly is known as a very significant player in the field of neuroscience and mental health. So olanzapine is an extension of that. The other big one for us would be duloxetine for depression. We also have in Japan the only non-stimulant, non-controlled ADHD (attention deficit hyperactivity disorder) product called atomoxetine. All three products are doing extremely well here, very well received by the market as they are truly innovative medicines. You’re probably more familiar with fuluoxetine for depression but this product is not available in Japan at this point. We’re also a very big cancer player with a product called pemetrexed, for the treatment of non-small cell lung cancer, as well as mesothelioma, which is a cancer based on asbestos. And of course diabetes. Lilly was the first company to make and commercialize insulin globally for patients with diabetes. We have a number of diabetes-related products including insulin and exenatide (GLP-1). In addition, tadarafil for the treatment of erectile dysfunction (ED) is growing rapidly as the preferred ED drug. We’re also very big in the field of osteoporosis or bone diseases, so you can imagine in Asia this is a huge opportunity because of the aging population and Asian women tend to have more osteoporosis related diseases. We recently launched a product called teriparatide that builds bone and prevents future fractures for patients with severe osteoporosis.

Journal: Is that because of the lack of calcium in the diet here?

Zulueta: That’s one reason. The other thing they told me, and I heard this from one of our experts, is that they have less weight and less weight apparently puts more burden on the bones, interestingly enough.

Journal: I understand you’ve been with Lilly since the ‘80s. Can you just give us a brief look at your background with the company and how you’ve seen the company grow throughout the decades up until now?

Zulueta: I’ve been with Lilly 23 years now, started off in Asia having worked in Manila and Singapore early in my career and then worked in the U.S. several times in various capacities. Prior to this role here, I was based in Hong Kong for several years managing all of Asia except Japan because Japan is a standalone region and to us significantly bigger than all of the rest of Asia combined, and now I’ve been in Japan for three years. It is clear that in the future, as in many industries, Asia will be at the forefront of much of the growth. And that growth is real. In China, much of Southeast Asia, Korea, India…it’s truly an exciting time to be in Asia. It is the future for economic growth and the same is true for our industry. But let’s not forget Japan…it remains a highly attractive large market, with excellent people and opportunities for growth for those who see the ‘glass half-full.’ If you look at the size of the populations, you see the growing per capita incomes, you see the aging population for instance in Japan and as you know as the population ages, the demand of healthcare and therefore the demand for innovative medicine increases. So I think for companies like Lilly that are focused on innovation and innovative medicines, the future is extremely bright here in Asia. So I have to tell you I am thrilled to be here and I think a lot of folks are thrilled to be part of our business here in broader Asia.
Now things have changed. When I think about when I joined in Asia 23 years ago, I think there was a lot more focus on pushing our products, or trying to sell our products. And I have seen a change to a focus on “What is the right thing to do for the patients?” It is a dramatic change.

And I don’t think it’s only Lilly, but for the industry. We realized, at the end of the day, we need to be focused on what is the right thing to do for the patient. And in some cases, our products are not the right products for a particular patient. So we have to have a deeper understanding on which patients benefit the most from our products and in what way, and what services and support we provide them, their families, as well as healthcare professionals. I think we’ve become more integrated in our focus on what is best for the patient.

The other thing I would add that has changed is the need for more partnerships. We call it integrated pharmaceutical networks. Being an independent pharmaceutical company—one of the very few left, by the way—we do know that we cannot do it all ourselves in-house. So across the value chain, from discovery research to the clinical development to the manufacturing to commercialization, a key element of our strategy is to look for strategic partnerships, which I have to say, when I joined the company and even ten years after I joined, that was not a specific focus of ours, and that is a major change.

Journal: In the wake of the Great East Japan Earthquake, does Lilly have any particular activities or involvements in the recovery or outreach efforts? And, outside of recent events, are there any CSR activities that the company is involved in that we might want to know about?

Zulueta: I think within two days, we announced that we were going to make a financial contribution as a company of 100 million yen. On top of that we had close to another 30 to 40 million yen in employee contributions financially. Of course we haven’t quantified the amount of medicines we’ve made available and, as you know, most of our medicines are life saving, so we made that available very quickly. So we’ve been very pleased with the reaction of our people and of course we’re not done yet. We’ve just started. We will continue to look for ways to continue to support the Japanese government and the country. I think the country and its people have been an inspiration to many in terms of how they’ve reacted and we’re just pleased to be a part of that.

On top of that we have many Corporate Social Responsibility activities. Most of which are related to health care. We support a number of advocacy groups. For instance we support PANCAN, a pancreatic cancer group that looks for the next generation of treatment. We provide them support on an ongoing basis. We also provide awards to health care professionals as well as patients for reintegrating patients with mental health issues back to society. People are helping support that and we’ve provided a system of awards and recognition to encourage them.

We also support people who have been taking insulin for 50 years. Just recently we set up what we call the “cancer of the arts” program which supports patients and their families who have been very supportive of efforts to show what it is like to manage cancer and we call that Lilly Oncology on Canvas. It encourages cancer patients, their families as well as health care physicians to paint, write essays describing what it is like to manage cancer and in so doing inspiring other cancer patients that they can fight this battle and win it. There are many others we support and of course in Kansai we’re very active with ACCJ activities. We’re a major sponsor of the Walk-A-Thon here, which is every year, we have it in different parts of Kansai. Proceeds of that go toward various women’s groups because we’re very supportive of the diversity effort, particularly around female diversity here in Japan.

Journal: What are we missing about the Asia story? What should we be paying attention to, examining or keeping an eye out for that maybe you’ve been able to see more clearly from your vantage point moving forward?

Zulueta: That’s an interesting question. Some companies were later than others in their assessment of the opportunities here in Asia, but the opportunity is real so everyone’s accepted that. The question now is a question of how much commitment they have to Asia. Meaning: how much investment and resources. And then second, the talent that you put behind your operations

To me, the first part of it is resourcing. I think some companies are still not all-in. This is the place to be. I mean, the demographics would suggest that. So, at least for Lilly, really it’s been in the last five years where we’ve really gone all-in, and I think there’s still continued opportunity. But you have to be resilient enough to know that there will be ups and downs—in the long haul you’ve got to invest to win. I think some companies may be missing that.

Also, the talent you put behind the operations here. That takes a longer period of time but I have my own biases in terms of Asia in particular. I think sometimes multinationals go local too quickly in terms of staffing key senior positions. I think you’ve got to get the right people in the right jobs here: people who want to win, who have a sense of where the business is, and who can execute, and then take time to seriously develop your local talent including overseas assignments and give them meaningful leadership roles that prepare them to be effective global executives back here in Asia and move forward. At the same time, I have seen some of the expats that come may over-compensate for the cultural differences. We obviously need to be cognizant and appreciate the cultures but  I think there are more similarities than there are differences in running a business.

Journal: Finally, what areas, in terms of products, or market focus, does Lilly plan to venture into in the next two decades?

Zulueta: I think we will continue to focus on areas such as neuroscience. Of course the next field in neuroscience that will be a major focus for us will be the treatment of Alzheimer’s. We have a major product for that. We’re also very focused on a new area called autoimmune diseases like rheumatoid arthritis, psoriasis, and lupus. We’re currently not in that field, but we have a very exciting innovative portfolio of products that’s moving forward. And then we have our staple therapeutic areas such as cancer and diabetes and bone diseases.

So we expect to grow much faster than the market. As I said earlier, we think we are still underrepresented here and that there are tremendous opportunities for us to improve our ranking and grow our business significantly in Japan.

]]> http://accjjournal.com/global-health/feed/ 0 http://accjjournal.com/mentors-coaches-and-teachers/ http://accjjournal.com/mentors-coaches-and-teachers/#comments Wed, 20 Jul 2011 04:39:38 +0000 ACCJ Journal http://accjjournal.com/?p=4777 When the student is ready, the master appears.”
-Buddhist Proverb

Lots of entrepreneurs believe they want a mentor. In fact, they’re actually asking for a teacher or a coach. A mentor relationship is a two-way street. To make it work, you have to bring something to the party. Recently when I was at a conference taking questions from the audience, I got a question that I had never heard before. Someone asked, “How do I get you, or someone like you to become my mentor?” It made me pause (actually cringe). As I gathered my thoughts, I realized that I’ve never thought much about the mentors I had, how I got them, and the difference between mentors, coaches and teachers.

Teachers
What I do today is teach. At Stanford and Berkeley, I have students, with classes and office hours. For the brief time in the quarter I have students in my class, at worst I impart knowledge to them. At best, I try to help my students to discover and acquire the knowledge themselves. I try to engage them to see the startup world as part of a larger pattern; the lifecycle of how companies are born, grow and die. I attempt to offer them both theory, as well as a methodology, about building early stage ventures. And finally, I have them experience all of this first hand by teaching them theory side-by-side with immersive hands-on using Customer Development to find a business model.

At times, the coffees, lunches and phone calls I have with current and past students are also a form of teaching. Most of the time students come with, “Here’s the problem I have. Can you help me?” Usually, I’ll give a direct answer, but sometimes my answer is a question. In both cases, inside or outside the classroom, I consider those activities as teaching. At least for me, mentorship is something quite different.

Mentors
As an entrepreneur in my 20s and 30s, I was lucky to have four extraordinary mentors, each brilliant in his own field and each a decade or two older than me. Ben Wegbreit taught me how to think, Gordon Bell taught me what to think about, Rob Van Naarden taught me how to think about customers, and Allen Michels showed me how to turn thinking into direct, immediate and outrageous action.

At this time in my life, I was the world’s biggest pain in the rear, lessons needed to be communicated by baseball bat, yet each one of these people not only put up with me, but also engaged me in a dialog of continual learning. Unlike coaching, there was no specific agenda or goal, but they saw I was competent and open to learning and they cared about me and my long-term development. I’m not sure it was a conscious effort on their part (I know it wasn’t on mine), but it continued for years, and in some cases (with my partner Ben Wegbreit) for decades. What is interesting in hindsight is that although the relationship continued for a long time, neither of us explicitly acknowledged it.

Now I realize that what made these relationships a mentorship is this: I was giving as good as I was getting. While I was learning from them—and their years of experience and expertise—what I was giving back to them was equally important. I was bringing fresh insights to their data. It wasn’t that I was just more up to date on the current technology, markets or trends, it was that I was able to recognize patterns and bring new perspectives to what these very smart people already knew. In hindsight, mentorship is a synergistic relationship. Like every good student/teacher and mentor/mentee relationship, over time the student became the teacher, and this phase of relationship ends.

How Do I Find A Mentor?
All this was running through my head as I tried to think of how to answer the question from the audience. Finally I replied, “At least for me, becoming someone’s mentor means a two-way relationship. A mentorship is a back and forth dialog, it’s as much about giving as it is about getting. It’s a much higher-level conversation than just teaching. Think about what can we learn together? ‘How much are you going to bring to the relationship?’”

If it’s not much, then what you really want/need is a teacher, not a mentor. If it’s a specific goal or skill you want to achieve, hire a coach, but if you’re prepared to give as good as you get, then look for a mentor. But never ask. Offer to give.

Steve Blank is a veteran of Silicon Valley and serial entrepreneur, and teaches entrepreneurship at U.C. Berkeley Haas Business School, the joint Berkeley/Columbia MBA program, and at the Stanford University Graduate School of Engineering. The Japanese version of his latest book “The Four Steps to the Epiphany” can be found here, and you can read more of his business insights at: www.steveblank.com.

]]> http://accjjournal.com/mentors-coaches-and-teachers/feed/ 0 http://accjjournal.com/yes-inflation-is-the-biggest-risk/ http://accjjournal.com/yes-inflation-is-the-biggest-risk/#comments Wed, 20 Jul 2011 04:19:06 +0000 ACCJ Journal http://accjjournal.com/?p=4771 You know why God created economists? To make the weathermen look good… You get the point: forecasting the future is what economists are supposed to do and yes, more often than not, the forecasts tend to be wrong. Take my own case. In more than 20 years of forecasting the Japanese GDP, I have been right on the money for a grand total of exactly three times (and yes, it’s true, my forecasts have been significantly more bullish than what actually happened in almost two-thirds of all my forecasting years…I’ve never been ashamed to be a Japan optimist).

So, now that we’re clear about the occupational hazards surrounding economists and their forecasts, let me tell you about my biggest and most important prediction: I think the global economy stands at a key inflection point. Inflation is rising, inflation momentum is building and the negative impact of rising prices on private sector growth and wealth creation is going to be the key challenge for anybody with a savings deposit around the world.

Not surprisingly, economists have a hard time agreeing on what inflation is and where exactly it comes from. However, for you and me in the real world, it’s simple—inflation is when the purchasing power of our money declines, when the $10 I earn today will buy me fewer apples tomorrow than they do today. The reduction in the purchasing power of money can be explained by simple demand and supply. The price of apples goes up either because there are fewer apples around, or because there is more money chasing the same amount of apples. Either way, inflation is too much money chasing too few goods. For the first time in over two decades, I think we have reached exactly that stage in the global economy.

Lets looks at the supply side (i.e., the global economy’s energy to create more goods and services). Since the end of the 1980s, the global supply side—the ability and willingness of entrepreneurs to create more goods and services—underwent an unprecedented boost. This is because three fundamental forces combined.

Firstly, the end of the Cold War freed up an incredible amount of resources and factors of production. Specifically, almost three billion people were freed from the fetters of communism and entered the global workforce. Wages across most sectors in almost all global economies began to decline, unless you had a special qualification or skill that could not easily be replicated. The net effect was a significant downward push on overall costs, and thus prices.

Secondly, the world’s third industrial revolution started to get going in the early 1990s—the IT and information revolution. Businesses across all sectors of any economy were massively affected, whether a small local bookshop, a department store, a medical service provider, or a giant manufacturer, in every corner of the industrialized marketplace the Internet and information revolution forced new business models, and brought new entrepreneurs offering old services or products for lower prices and higher convenience. Again, the net effect was a relentless rise in price competition, and the purchasing power of our money actually rose.

The third force was, yes, globalization. Throughout the 1990s the world underwent massive liberalization of trade flows and investment flows. And it was not just the trade of goods across borders that got accelerated. Services which previously were mostly landlocked in national economies opened up to cross-border competition. The latest example of this is the sharp rise in “medical tourism,” patients actually moving temporarily to another country to take advantage of the lower costs and better services of medical facilities and expertise.

To be sure, we could easily refine this list further, but from a macro perspective, I think these are the three key forces that shaped much of global economic development over the past two decades. The net effect has been that across countries and across all industries and sectors, the world underwent a massive entrepreneurial boom. Everywhere more goods and more services were created so that inflation really never had a chance. There was never “too much money chasing too few goods” because of the massive rise in the supply of goods.

In my view, this has still not come to an end. There are two reasons for this. To begin with, it’s because the three deep factors mentioned above have now largely run their course. Sure, there still is more technological innovation and creativity in play, but the marginal impact of, for example, the first iPad is infinitely larger than the upgrade to the iPad 2. The first one is a game changer. The second one is, yes, smaller and faster and all of that. But in the end it’s still just an iPad. Ditto for trade liberalization and the sharp rise in the global supply of labor.

Already the often-mentioned legions of high quality Chinese high school and university graduates has peaked out. Indeed, since last year we have seen that wages and employment costs are beginning to rise sharply, particularly in the so-called “factories of the world” and BRIC economies. The bottom line: the ability and willingness of entrepreneurs to offer more goods and services for cheaper prices is, slowly but surely, coming to an end.

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.

At the same time, the Lehman Shock and the threat of a global depression has led to global central banks printing unprecedented amounts of money. Too much money chasing too few goods, and you begin to see the big macro forces coming together.

The first evidence of all this comes in the form of commodity prices, anything from gold, to copper, to grain and pork bellies. Global food-price inflation is running at historic, and unprecedented levels. The effect of all this is poised to feed into other goods and services prices before too long. But it always works this way when there is too much money chasing too few goods.

So what will happen from here? In my personal view, we’ll see a much more persistent, much more pronounced rise in the general price level, in inflation, across all goods and services. In other words, the purchasing power of our money is set to decline.

How can this be stopped? We can hope for more deregulation and more technological revolution. However, most likely the bulk of the adjustment will have to come from policy makers stopping the massive creation of liquidity. Already China has started an aggressive monetary tightening process to reduce liquidity. Ditto for India, Australia and many Latin American economies. How long it will take for “too much money” to be mopped-up from the system remains to be seen. For now, the risks of policy makers being behind the curve, and inflation eroding our purchasing power remains high. This is true across the globe, including Japan, in my personal view. Brace for the negative impact of inflation on your yen purchasing power here in Japan.

]]> http://accjjournal.com/yes-inflation-is-the-biggest-risk/feed/ 0 http://accjjournal.com/saving-grace/ http://accjjournal.com/saving-grace/#comments Wed, 20 Jul 2011 04:06:51 +0000 ACCJ Journal http://accjjournal.com/?p=4746

It has been more than three months since the earthquake and for those of us fortunate enough to be living in Tokyo, life is back to normal— at least on the surface. As the frequency of aftershocks has lessened, the psychological impact of the disaster has also faded considerably.

In fact, Tokyo has returned to normal so quickly that Japan may have lost a unique opportunity to break away from the policies that have held down growth for so long. Perhaps the best example of the return to normality is politics. As of early June, when I am completing this column, Prime Minister Naoto Kan, with some last-minute behind the scenes maneuvering, managed to hold on to his job by making a vague promise to quit when the reconstruction and nuclear power situation improves. The internal divisions of the DPJ and petty bickering with the LDP show that politicians seem more driven by personality differences than with tackling Japan’s enormous reconstruction, demographic and fiscal challenges.

Since the earthquake, Tohoku residents forced to leave their homes may not be starving or sleeping outside anymore, but they have very little to look forward to. TEPCO’s compensation program is in limbo; people ordered out of their homes by the government because of radiation danger are still forced to make mortgage payments on houses they may never use again; there appears to be little progress on raising the consumption tax which is desperately needed to help improve the government’s finances; and the planned reduction in corporate income tax which would help improve Japan’s international competitiveness has apparently been put off indefinitely.

Prior to March 11, Tokyo was already behind in the head-to-head competition against Singapore and Hong Kong for regional headquarters and the jobs they create. The earthquake caused a number of companies to shift functions and certain positions out of Tokyo, so the government will have an even greater challenge to convince companies why they should locate critical headquarters’ functions here. The government has begun efforts trying to convince Asian tourists to come back, but with little effect so far. Korean tourist arrivals in April were down so steeply (66.4 percent) that with little fanfare, China took over the number one slot for what may have been the first time. I am not aware of any post-disaster efforts by the Japanese government to try and persuade businesses around the world that they should return or increase their presence in Tokyo.

With apologies to those owning expat rental housing, this summer is clearly the time to be looking for a cheaper and better place to live.

While there is a certain amount of turnover every June when families transfer out of Japan at the end of the international school year, anecdotal evidence suggests an unusually large number of families are leaving this summer or have already left since the earthquake.

With the Kan Cabinet on life support and liable to fall at any moment, it is hard to imagine any bold action on the economy, reconstruction or anything else. Several major credit rating agencies are warning that Japan’s high government debt level is untenable and political instability may lead to another reduction in the country’s sovereign credit rating. Given that 95 percent of Japanese government bonds are held domestically and interest rates are so low, the markets are unlikely to react precipitously to a downgrade, but this is one more headache that Japan doesn’t need.

In the meantime, the “Reconstruction Design Council” appointed by Prime Minister Kan to come up with the intellectual framework for helping Tohoku has met seven times since its formation in mid-April, but it seems to be attracting little attention and generating no national debate about the nation’s priorities. Part of the reason could be the nature of its 15 members, of which seven are academics, three are writers and three are prefectural governors. There is only one businessman (from Sony) and a famous architect (Tadao Ando), and the vague mandate of this council and lack of visible support from the cabinet or anywhere else mean that it is unlikely to accomplish anything useful.

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

Part of the problem is that while the council’s mandate has no geographical restrictions, its discussions are limited to problems in Tohoku and rebuilding stricken areas is a given, rather than a major discussion topic. Although I am not in any way suggesting that Japan abandon the Tohoku coastline and move everybody in the affected areas elsewhere, the earthquake, tsunami and radiation problems have created urgent, national issues, yet the government, including the Reconstruction Design Council, seems to be treating this as a discrete, local problem.

There have been proposals for special economic zones in Tohoku, with tax incentives and reduced regulation, but based on the track record of similar programs throughout Japan, these incentives will not be compelling enough to encourage investment in Tohoku that would have gone elsewhere or to prevent businesses from leaving. To use an analogy from the cinema business, the worst kind of discount is when a customer shows up at the box office to be pleasantly surprised at the low ticket price. Helping those who can afford to rebuild and who would do so anyway is not the best use of scarce resources.

The Japanese government has been extremely effective in one area—keeping the secret that Tokyo is the world’s most livable city. For those of us expatriates who have experienced Tokyo, it is very hard to imagine life elsewhere. While Singapore and Hong Kong each has positive attributes, neither can offer the mix of clean air, safety, food, culture and overall vibrancy of Tokyo. As time passes, however, more and more foreign companies give up on Japan’s recovery prospects and turn their attention and capital elsewhere. Given Japan’s political and economic inertia, it is easy to imagine that nothing positive will come out of the March 11 disaster. I hope that the new cabinet will seize the agenda and broaden the debate to how Japan solves its shrinking population and fiscal situation, as well as reconstructing Tohoku. A growing population and mild inflation would boost real estate prices and the stock market, increase tax revenues and solve most of Japan’s thorniest economic problems.

]]> http://accjjournal.com/saving-grace/feed/ 0 http://accjjournal.com/monitor-18/ http://accjjournal.com/monitor-18/#comments Wed, 20 Jul 2011 03:50:26 +0000 ACCJ Journal http://accjjournal.com/?p=4737 Can Dentsu & MIT Help You Shop?

From May 17, Dentsu would like to aid your shopping needs with the launch of the “Finding Gifts with Sasha” website (http://sasha.nadya.jp). It’s the third step in a collaborative experiment with Nihon Unisys and the MIT Media Lab to develop a “context-reading communication computer,” basically a computer program that can use common sense to mimic human speech and interaction.

Sasha is a virtual little boy and shopping assistant who can learn through interacting with the world around him. Sasha relies on information gleaned from social media to learn more about the gift-giver as well as the recipient. By analyzing comments posted on social media websites and “listening” to feedback from the user, Sasha’s suggestions get better and more appropriate, illustrating his “learning.”

Of course, available information plays a huge part in his success. Since it relies mainly on information available on social media sites, if you or your intended recipient do not have a social media presence or do not post very much information, Sasha has a hard time coming up with suggestions.

Fashion Gets some “Legs”

Japanese sock and leg-wear brand Marcomonde has opened its first stand-alone store in Aoyama. Optrico, the Marcomonde produced store, expands the concept of the company’s unique internationally themed sock collections into a store themed on travel, adventure and a “fantasy country and the fashion of its inhabitants.”

Macromonde is famous for sock and legging collections with names like “Mexico,” “Vietnam” and “Hungary.” The Optrico select shop expands the concept beyond just socks to include accessories and clothing fitting with the company’s playful and international image. Socks and foot accessories of course have pride of place, but the new store aims to make patrons feel more involved in the fanciful international image of the brand.

At a time when fewer Japanese are venturing abroad, products that help consumers relate to and experience the outside world without leaving Japan have seen a boom in popularity.

Changing Ideas of Japanese Masculinity

On May 19 Dentsu released the results of its Male Lifestyle survey conducted in February. The survey divided men aged 35-64 into three types: “Work-focused,” “Balance-focused” and “Focused on my life.” The survey found that the largest number of men (41 percent) in the survey fell into the “Work-focused” category while 33 percent reported themselves as “Balance-focused” and 26 percent were “Focused on my life.” Perhaps it is no surprise that the majority of men came out as focused on work-the “traditional” image of the working Japanese male. However when looking at attitudes toward work, these “work—focused” men seemed much less happy and satisfied with their jobs than their balancing counterparts.

The “balance-focused” men reported having more fun at work, being more focused on improving their position, feeling more of “a reason to get up in the morning” and being more proactive at work. The work-focused men were more likely to be frustrated and have more bitter or difficult experiences at work. This raises a whole host of interesting questions about male priorities and success at work.

Though a lot has been made of changing habits and priorities of Japan’s young males, Dentsu’s survey also reveals that the image of middle-aged Japanese men whole-heartedly devoting themselves to work might be changing as well. Men in their early forties were most likely to report being “balance-focused” while older men, those in their late 40s and above, were more likely to report being focused on themselves. Those in their late 30s, the youngest group surveyed, were most likely to say that they were work-focused.

White Coffee

With RTD coffee facing increased competition from other drink sectors (notably teas) and younger males shying away from the stuff, Asahi’s Wonda brand has created a novel concept that it hopes will bring some new drinkers into the fold.

“White Wonda” is a mild blend of milk and condensed coffee extract, giving the drink a light, off-white color. The drink targets consumers in their late teens and 20s, and was developed with the aim of helping them get acquainted with the taste of coffee, by giving them access to a very mild taste.

The RTD coffee market in Japan is highly saturated. Such drinks, especially canned coffees, have long been associated with older working males, with success in other demographics harder to come by. However, Asahi hopes White Wonda is the key to accessing younger consumers and increasing users of its Wonda line by converting non-coffee drinkers into new customers.

Nicole Fall is co-founder of Tokyo-based innovation and trend-forecasting agency Five by Fifty. She can be contacted at: nicole@fivebyfifty.com

]]> http://accjjournal.com/monitor-18/feed/ 0 http://accjjournal.com/filter-18/ http://accjjournal.com/filter-18/#comments Wed, 20 Jul 2011 03:33:38 +0000 ACCJ Journal http://accjjournal.com/?p=4709 Strategic Energy

News of Prime Minister Naoto Kan’s request to shut down the Hamaoka power plant raised new questions regarding the future of Japan’s dependence on nuclear energy. While some lauded the Prime Minister’s decision, some economic experts expressed concerns that the shutdown would exacerbate existing production disruptions from the Great East Japan Earthquake and stymie efforts from businesses seeking to shift production to the Chubu and Kansai regions.

Located in Shizuoka and operated by Chubu Electric Power Co., the Hamaoka plant supplies 3.6 million kilowatts of power to the Chubu region. Given that the Chubu utility has agreed to Prime Minister Kan’s request, total output at the plant is expected to drop down to 800,000 kilowatts, or 3 percent of normal capacity. Japanese business circles are concerned that the suspension may bring about rolling power outages in a region hosting production factories for major automakers such as Toyota, Honda and Suzuki.

The request itself is indication that safety concerns arising from the ongoing situation in Fukushima have had more impact than originally anticipated. In his first interview since March 11, Kan told The Financial Times that he hopes to prioritize conservation and natural energy as the new pillars of Japan’s energy policy. In particular, Kan emphasized that this was an opportunity for the Tohoku region to become a leader in pioneering wind, solar and biomass fuel technologies.

Despite Kan’s focus on alternative energy, the Ministry of Economy, Trade and Industry (METI) has stated that Japan remains committed to nuclear power for its long-term energy policy for 2030 to 2050. Various government officials, including DPJ Deputy Chief Secretary Yoshito Sengoku, have publicly echoed these sentiments. Similarly, Kan has expressly stated that his request for the shutdown of the Hamaoka plant is a “special case” due to its location over a major fault line and proximity to Tokyo, and that he will not request similar shutdowns from Japan’s remaining 54 nuclear power plants.

Capital Shift?

The numbers are in. A total of 7,354 companies in Miyagi, Fukushima and Iwate prefectures have been either damaged or destroyed as a direct result of the triple-disaster on March 11. Moreover, a Nikkei report revealed that in the two month period ending May 11, an additional 86 companies nationwide filed for bankruptcy. As summer arrives, the number of corporate bankruptcies is likely to rise and in addition to looming electricity concerns, many companies are considering temporarily relocating operations to other areas of Japan.

In Kansai, political and business leaders have voiced that it may be prudent to shift at least some of the capital’s responsibilities outside of Tokyo in case of another disaster. Since March 11, the Osaka Chamber of Commerce and Industry has reported it has received numerous inquiries from Tokyo-based companies hoping to relocate staff or computer equipment to avoid potential power shortages or inconvenient conservation measures such as the government’s target goal to reduce power consumption by 15 percent this summer. Companies based in regions covered by TEPCO or Tohoku Electric that are willing to relocate will be regarded as contributing to the government’s conservation goals—a fact that will undoubtedly encourage some to go west.

While Kansai may be the obvious choice for relocation for some, Hokkaido towns are also keen to use geography to their advantage. With temperatures up to 5 degrees Celsius cooler than Tokyo, Kutchan Tourism Association has offered discount prices this summer for rental condos and villas near the famed Niseko ski resort. The association has also set up referrals for companies to rent office equipment such as copiers, as well as cars.

Tourism Strikes Back

Japanese tourists opted for a quieter Golden Week this year as sentiments of self-restraint discouraged travelers from straying too far from home. Tourism to Hawaii, a Golden Week destination favorite, plunged by a staggering 28 percent in April. In Tohoku, some traditional sight-seeing hotspots saw up to a 90 percent decline in tourists, according to a Nikkei report. While the numbers are significant, the overall expected decline in tourism was buffeted by a surprise surge in last-minute reservations, signaling that the Japanese are ready to leave the shackles of “self-restraint” behind them.

Rumors surrounding radiation fears, however, have resulted in a noticeable dip in foreign travel to Japan. Most noticeable in the aftermath of the earthquake, was the lack of Chinese tourists who have made up a large percentage of tourists to Japan in recent years. Undeterred by the sharp drop in Chinese tourists, JTB Corp., one of Japan’s largest travel agencies, has announced that it has received permission from Chinese government officials to open business operations in Beijing. This makes JTB one of three foreign travel agencies licensed to arrange outbound travel tours for Chinese tourists; previously, foreign travel companies were only allowed to arrange inbound tours into China.

On the domestic front, ANA has also launched Japan’s first budget airline titled “Peach” after the fruit’s youthful and energetic image in Asia.

In another first, the airline will be based out of Kansai International Airport, and plans on beginning flights connecting Fukuoka to Sapporo in March 2012, with further plans to expand into international flights to Seoul by May of the same year.

Creative Conservation

While most companies are figuring out ways to curtail their summer electricity consumption, some are taking advantage of the situation to promote unique, eco-friendly products and services to beleaguered office workers.

Fujitsu has developed free, energy-monitoring software designed to automatically toggle computers between AC and battery power based on peak demand hours. In a similar vein, NEC Corp. has developed energy-saving software that will measure a PC’s power consumption to its usage, and claims it will allow companies to reduce annual power consumption by 30 percent. Meanwhile, Panasonic and Toshiba have upped their production of more energy-efficient LED lights. According to statistics from the Energy Conservation Center, as much as 20 percent of total office energy consumption comes from powering computers and servers.

Outside of the office, other Japanese firms are developing more creative ways to beat the heat. Hakugen Co. plans to increase production of its “Ice-Non” cooling gel pillow by 50 percent, while Kobayashi Pharmaceutical Co. expects demand for its cooling sheets to jump up as consumers seek alternatives to air conditioning. Similarly, Uniqlo has introduced pop-up stores in various train stations to promote its “Silky Dry and Serafine” underwear line. The two-month campaign allows commuters on their way to work or home to stock up on cooling clothes, and Uniqlo plans to donate 100 yen from each purchase to charity efforts in Tohoku.

Lastly, municipal governments are encouraging consumers to consider using more “natural” means of keeping cool. Both Itabashi and Katsushika wards in Tokyo have encouraged residents to grow “green curtains,” or climbing plants. The plants are reported to help reduce air conditioner usage by acting as a natural barrier to sunlight, and reduce room temperatures through the transpiration in plant leaves.

Fast Food Wars

Japan’s beef-bowl versus burger price war saga turned a new chapter as Zensho Co. dethroned McDonald’s Holdings Co. as the nation’s number one fast food chain operator.

Zensho, the operator of popular beef-bowl chain Sukiya, posted group sales earnings of 370.7 billion yen for fiscal 2010, compared to McDonald’s 323.7 billion yen. The shift in power comes as a result of the beef-bowl operator’s aggressive expansion plans over the past several years, including its acquisition of popular beef-bowl chain Nakau Co. in 2005. Additionally, whereas Zensho added 210 outlets in 2010, McDonald’s has in recent years sought to close outlets in an effort to increase profitability. Despite coming in second to Zensho, McDonald’s posted a 6 percent increase in sales figures worldwide, including 6.5 percent growth in its overseas business. Zensho may soon face more competition, however, as a Sankei report states that Yoshinoya Holdings Co. will launch a new campaign to include 5 more grams of beef, and 10 less grams of rice to attract price-minded consumers.

While the beef-bowl may have bested the burger this time around, burger chains are not yet down for the count. From June up until the end of August, Japan Airlines flights will feature Mos Burger hamburgers as their in-flight meal of choice on flights to New York, Los Angeles, Chicago, London, and Frankfurt. Dubbed the “Air Mos Burger,” the campaign is aimed at expanding Mos Burger’s reach into Europe and America. The popular Japanese burger chain expects to serve 80,000 meals in the three-month promotional period.

Social Media Invasion

Talking cars may not be so “futuristic” after all. Toyota Motor Corp. became the latest Japanese firm to forge a partnership with a U.S.-based tech firm in order to adapt social media to its product lines. In late May, Japan’s number one automaker announced it would team up with U.S.

Internet company Salesforce.com and Microsoft to build and develop “Toyota Friend,” a private social network that would allow Toyota owners to interact with their cars.

The service will initially be offered on Toyota’s electric and plug-in hybrid models in 2012, with a worldwide release set for later that year.

Built on open-source cloud platforms, the service will allow owners to receive email updates from their cars regarding annual check-ups, battery levels, and real-time locations of nearby charging stations. Additionally, these “updates” can be shared via Twitter, Facebook or with other Toyota Friend users. Toyota will invest a total of 442 million yen into the project; Microsoft will contribute 335 million yen with an additional 223 million yen from Salesforce.com.

Continuing its quest to gain a foothold in the Japanese market, Facebook has announced a new strategic partnership with Japanese telecom giant KDDI. The alliance will see a Facebook widget pre-installed on KDDI’s upcoming smartphone models. The widget will connect KDDI services such as “au portal one” music and shopping to Facebook’s social graphs. KDDI will also revise its smartphone’s user interface to better integrate Facebook usage when consumers manage their contacts.

Also in the smartphone arena, social gaming giant Gree acquired OpenFeint, a U.S.-based social platform, for $104 million. The acquisition is the latest in a number of aggressive global expansion moves by Gree, including a partnership with migg33 in Southeast Asia and China’s Tencent.

Japanese companies invest in renewable energy

Among renewable energy’s most vocal supporters, Softbank CEO Masayoshi Son announced in late May that Japan’s third largest telecommunications firm will invest billions of yen into a new project to advance Japanese solar power.

At a press conference, Son proposed a plan to develop ten, 20-megawatt solar power facilities at a price tag of 8 billion yen each. Reuters reports that Softbank would cover 10 percent of the building costs, with local governments providing 100 million yen per plant and the remainder coming from bank loans—however, the details have yet to be confirmed by Son himself. Son also revealed that he was working with 19 prefectural governors to push the plan forward.

Softbank is not alone in the renewable energy frontier. Toshiba Corp. has partnered with Unison Co., a South Korean wind power equipment manufacturer, to develop wind power generators. The deal, which was brokered for 30 billion yen in convertible bonds, will see Toshiba receive distribution rights over Unison generators worldwide, with the company hoping to reach sales of 20 billion by 2016.

Marubeni Corp. also plans on selling “power-saving” condominium apartments equipped with solar power generators to meet the government’s goal of a 15 percent power cut for the summer. The first of these condominiums is set to be built in Setagaya Ward in Tokyo, and will be able to produce 10 kilowatts of energy—15 percent of its communal lighting and air conditioning needs—from its solar power unit alone. In addition to the solar power generators, the condominium will be equipped with other eco-conscious features such as an electric car for carpool purposes, and indoor facilities for gardening.

]]> http://accjjournal.com/filter-18/feed/ 0 http://accjjournal.com/tokyo-our-best-kept-secret/ http://accjjournal.com/tokyo-our-best-kept-secret/#comments Wed, 20 Jul 2011 02:46:02 +0000 ACCJ Journal http://accjjournal.com/?p=4704 During the course of production, in nearly every issue our various contributors manage to deliver ever more surprising jewels of insight and analysis that help us all understand the Japanese market a little better. In this issue, real estate expert Seth Sulkin writes about the steps that can be taken to preserve Tokyo as one of the world’s most livable cities in the wake of the Great Eastern Japan Earthquake, and the subsequent nuclear concerns that have plagued the region (“Saving Grace,” page 16).

Seth’s words struck a chord with me personally. I’m a big fan of reading the various “livable cities” indexes that come out every year, and like many I enjoy pouring over the details that characterize why one city is supposedly more desirable than another. Some rankings favor convenience and the throbbing pulse of city infrastructure as a selling point, while others focus on the opposite, highlighting green spaces, open air, and a kind of measured, quiet atmosphere.

My hometown of New York City, often lauded as one of the best cities in the world for a number of reasons, is nevertheless seldom featured at the top of such livable cities lists. I dearly love my hometown, but I can understand why so many reviewers take pause when thinking of NYC as a wholly “livable city.” The crowded (and usually dirty) subways, the 24-hour raucous streets of Manhattan, service that sometimes comes with a frown rather than a cheery “thank you,” a persistent homeless problem that threatens to grow even as the city becomes richer, and a crime rate that, while lower in recent years, can be intimidating for newcomers, all make New York City a bit of a challenge for many unfamiliar with the city’s peculiarities.

Which is why, when I tell non-residents about life in Tokyo, I often frame the city as a kind of “best kept secret” hiding in plain sight. In many respects, Tokyo offers the fast pace and cosmopolitan trappings of the world’s major cities, but somehow manages to avoid the cynical disregard for “service with a smile” that typifies its counterparts, offering what may be the best example of how to run a crowded, always-on city that we have ever seen in modern history. In what other major city can you walk the streets alone at 3am while checking your wallet with such calm and security—certainly not New York, London or Paris, all cities that I love and have spent time in, but would be hesitant to behave in the same relaxed manner that I enjoy in Tokyo.

These are the thoughts that have occupied my mind as I’ve watched several good friends, often with longer tenure in Japan than myself, decide to bid adieu to Tokyo in the last few months due to safety concerns. I know that they know what they are leaving, and that the decision must have been a difficult one. So many of us live and work here—some more integrated into Japanese culture than others—and forget how special a place Tokyo is. The thought that the city might one day be unavailable is, for most, simply unthinkable.
To be sure Tokyo has its downsides, but as someone born and raised in one of the biggest cities on the planet, I feel confident saying that Tokyo gets “big city life” right far more often than any other city I’ve seen. As those of us living in Tokyo continue to work to help the city move back to normalcy, it might be wise to also use the events of the last few months to remember exactly how amazing this city is, and how lucky are all to be living in it, no matter how long it lasts.

Please contact us at: editorial@accjjournal.com

]]> http://accjjournal.com/tokyo-our-best-kept-secret/feed/ 0 http://accjjournal.com/presidents-message-13/ http://accjjournal.com/presidents-message-13/#comments Wed, 20 Jul 2011 02:43:36 +0000 ACCJ Journal http://accjjournal.com/?p=4699

Michael Alfant
ACCJ President
malfant@accj.or.jp

For this month’s ACCJ Journal, I thought I’d take a moment to update everyone on some of the notable initiatives that we’ve either recently completed or have currently underway in the Chamber.

First, the disasters of March 11 and ensuing nuclear crisis have challenged us in many ways; however, as with any crisis, they have also presented us with a valuable opportunity to learn. While the business and government responses to the crisis were solid, there are certainly areas where we can and must do better in the future.

With this in mind, I have established a working group within the Chamber to consider lessons learned from March 11 and invite your feedback in that regard.

The group’s objective will be to reflect on the disasters and issue a report to the U.S. government (and our members) on ways to improve a future disaster response, particularly as it relates to government-business communication during the crisis.

Our feedback will help the U.S. government better prepare for future disasters so I appreciate your contribution to this important initiative.
Next up, I’d like to talk about the recent Charity Walk-a-Thon organized by our Chubu Chapter. I had the great fortune to be able to attend this year’s event and I had a wonderful time, as did everyone I spoke with at the event.

Notwithstanding a minor monsoon, the spirit of the event prevailed and everyone I spoke with enjoyed the day. The final results are currently being tabulated, but I’m positive that we achieved our goal of raising ten million yen for charity. In addition, for the first time ever we had a “Golden Raffle,” which was a smashing success. The first prize was a Toyota Ractis. Almost 500 Golden tickets were sold at 10,000 yen per ticket and to make it even better, in the most sincere spirit of charitable giving, the winner of the raffle, Ms. Eiko Yamamoto from IMRA America K.K. donated the car to Tohoku. We had our largest turnout ever for this event, very appropriate given that this was the 20th year anniversary of the first Chubu Walk-a-Thon. There were over 300 volunteers and over 150 organizations involved making it a true community event. I’d like to especially thank our entire Chubu leadership team, led by ACCJ Vice President Chris Zarodkiewicz and Governor Jason Morgan for their extraordinary efforts in making this year’s Walk-a-Thon a fantastic success.

Lastly, by the time you’ve read this, we will have already had our June Board of Governors meeting. The Board decided to hold the meeting in Tohoku, both to show support for the affected citizens of that area and also to express our willingness to continue to contribute in the renewal effort currently underway. While the details are not yet finalized, we’ll be hosting an American style barbecue at one of the evacuation areas, connecting with U.S. military forces that are still in the region, meeting with local officials and residents, and of course conducting our standard ACCJ Board meeting. I’ll provide all the details in my next Journal article and would welcome feedback and suggestions from our members.