Japanese companies wrestle with foreign workers overseas

04/13/2012
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TOKYO (majirox news) — Many Japanese companies are looking at relocating some of their business overseas. The strength of the yen against other currencies, increasing numbers of mergers and acquisitions, and a diminishing domestic market all contribute to these moves.

It is not difficult for Japanese firms to attract foreign talent, but they face a challenge in retaining top-flight workers. Even the best of these workers see the boardroom doors of Japanese companies closed to them, as the result of traditional Japanese promotion strategies, according to Takaki Umezawa of A.T. Kearny

Koji Sakao, CEO of Veritas Consulting, said, “First of all, Japanese companies have to change their human resource management system, because most of the Japanese traditional companies have a seniority based system. It is difficult to change the system, especially for traditional companies because they have adapted to the seniority system for a long time, more than 30 or 40 years. But for the newly created venture companies it is relatively easy to change.”

He says even outside Japan, companies may still want to do things in “the Japanese way.”

“Most of the Japanese companies tend to have Japanese managers and executives even in foreign countries, and they like to manage in Japanese ways,” Sakao says. “Even if you are foreign you have to adjust to the Japanese management way of thinking, which is not straightforward.”

Japanese culture in these older companies also poses other problems – for example, longer working hours than are usual in other countries, and personal loyalty to superiors. Much Japanese communication at work is done by unspoken hints, which may not be understood by non-Japanese workers, according to Sakao.

Masayoshi Watanabe, director at Japan’s External Trade Organization, JETRO, which provides consultancy services to some 80,000 Japanese companies who are considering taking the plunge by going overseas and to 10,000 companies who have already moved, says wages are the major problem.

“The first problem is that in developing nations the blue collar workers want higher wages, but the Japanese companies don’t want to give it to them,” he says. “The workers strike and then there a labor dispute. The second problem is that small and mid-size companies in developing countries want talented white collar workers. But these workers want big salaries and the companies can’t pay it to them.”

Some Japanese companies who have located overseas have already recognized these problems, and have discarded much of Japan’s traditional workplace culture, at home and overseas.

One of them is Fast Retailing, operator of Asia’s biggest clothing chain, Uniqlo. In fact, Uniqlo is hiring more foreigners than Japanese, and English is set to become the company’s official language.

Fast Retailing successfully operates flagship stores in New York, London, Paris, Shanghai, Seoul and Taipei, and employs foreign staff in its Tokyo Ginza megastore. Other companies such as Rakuten, the largest Japanese online shopping mall and Internet business, and Takeda, in the field of pharmaceuticals, are also taking more global approaches to their businesses.

Christine Wright, managing director of Hays Recruiting in Tokyo, says, “Many Japanese companies are aware that they have to be culturally sensitive. The ones that don’t are the ones that are going to get left behind in the war for the global talent pool.”

Japanese companies are faced with a dilemma – on the one hand, they have used strategies that have worked well on their home ground for many years. On the other, circumstances are forcing them to play away from home, and these Japanese working methods, unlike Japanese products, do not always export well. Change may be needed, but it could well be painful for the older companies who have built up their businesses on traditional foundations.

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