ACCJ Journal October 2008 by Paradigm

짜800 / October / 2008

Crackdown on

Amnesty cuts collusion, but sanctions too soft. Speak your mind Asia CSR confab Who wants ESTA?

SPECIAL ADVERTISING SECTIONS

GUIDE TO MERGERS & ACQUISITIONS GUIDE TO BUSINESS CONTINUITY PLANNING

Volume 45 / Issue 10 / October 2008

TONY MCNICOL

Contents

特集 Features カバーストーリーカルテルに対する厳しい取り締まり

何十年にもわたる外圧の末に、日本政府は価格協定

や談合など不公正な取引慣行に断固たる対策を打ち出し、驚異的な成果を挙げている。アンソニー・H・ローリー

自己主張せよ

堅苦しさを捨て、スタッフの積極的な自己主張を奨励

することは、効率化、競争力強化につながる。マーティン・フォスター

変わりゆくアジアの風景

ソウルで開催されたUNEP初会合の主要議題は、持続可能な財務体制、責任ある投資、企業市民活動。アラナ・R・ボンジ

ESTA最新動向

米国土安全保障省（DHS）は、ビザなし入国が認められている旅行客に対して、近いうちに電子渡航認証システム（ESTA）の義務化に踏み切る。ジェフ・ボッティング

Cover Story Crackdown on Cartels 12 After decades of foreign pressure, Tokyo declares war on price fixing, collusion and other unfair trade practices, yielding surprisingly good results. By Anthony H. Rowley

Express Yourself! 22 Encouraging staff to be more assertive and less formal is boosting efficiency and competitiveness. By Martin Foster

Asia’s Changing Landscape 32 Sustainable finance, responsible investment and corporate citizenship top the agenda at an inaugural UNEP conference in Seoul. By Alana R. Bonzi

ESTA Update 38 The American Department of Homeland Security will soon implement the mandatory Electronic System for Travel Authorization (ESTA) for visitors currently allowed visa-free entry. By Geoff Botting

Cover illustration for the ACCJ Journal by Russ Willms

October 2008 / ACCJ Journal / 1

Contents

Volume 45 / Issue 10 / October 2008

Departments Note from the Editor 9 President’s Message 11 Media Watch 20 Sumo economics. Tokyo Tower. Hotel woes. Salaryman pocket money.

On the Spot 28 G-Shock watch designer Kikuo Ibe, chief engineer, Casio Computer Co., Ltd., Timepiece Division, is interviewed by Julian Ryall.

Opinion Leader 30 Robert N. Stavins is Albert Pratt Prof. of Business and Government at Harvard University’s John F. Kennedy School of Government, and co-director of The Harvard Project on International Climate Agreements. ロバート・N・ステービンズハーバード大学ジョン・F・ケネディ行政大学院アルバート・プラット教授

Casio Computer Co., Ltd.

（経営学・行政学）、「国際的な気候協定に関するハーバード・プロジェクト」共同ディレクター

Classic Journeys 46 Ikegami’s famous O-eshiki festival climaxes in a spectacular parade of 10,000 lanterns during an annual pilgrimage by the Lotus Sect of Buddhists. By Vicki L. Beyer 28

FDI Portfolio 53 Shimoda hotel. Financial center cluster. Mini-MBA. LA boutique. Asian face. Designer collaboration. By Nicole Fall

Business Profile 56 Andrew Silberman’s title of Chief Enthusiast says it all about this global thinker and business motivator. By Tony McNicol

Advocacy Update 58 ACCJ Viewpoints

Diamond Charity Ball 62 Behind the Book 63 The Back of the Napkin: Solving Problems and Selling Ideas with Pictures by Dan Roam, reviewed by Tom Baker.

Kaoru Miki

In the Final Analysis 64 By Samuel H. Kidder, ACCJ Executive Director 46

2 / ACCJ Journal / October 2008

ACCJ Leaders President Allan D. Smith AIG Companies, Japan and Korea Chairman Charles D. Lake II Aflac Japan Vice Presidents Michael J. Alfant Fusion Systems Japan Co., Ltd. Laurence W. Bates General Electric Japan, Ltd. William R. Bishop, Jr. Bishop & Associates Michael D. Bobrove (Kansai) Nihon Medrad K.K. Kumi Sato Cosmo Public Relations Corporation Mark F. Schwab United Airlines, Inc. Michael D. Weenick (Chubu) PAE Design & Facility Management Treasurer Nasir Majid PricewaterhouseCoopers Brett Jensen (Kansai) Colliers Hallifax Steve Burson (Chubu) H&R Consultants ACCJ Governors Vicki L. Beyer Morgan Stanley Japan Securities Co., Ltd. Charles M. Duncan Continental Airlines Christopher K. Ellis Chrysler Japan Company, Ltd. James Foster Microsoft Japan Harry Hill (Chubu) Oak Lawn Marketing, Inc. Tad Johnson Pratt & Whitney Aftermarket Japan KK John Kakinuki GE Consumer Finance Co., Ltd. Jiri Mestecky Kitahama Partners L.P.C. Sharon Baker Morin State Street Trust and Banking Co., Ltd. Douglas L. Peterson Nikko Citi Holdings Inc. Nicole W. Piasecki Boeing Japan Jay Ponazecki Morrison & Forester LLP Jim Weisser Weisser Consulting Ira Wolf Pharmaceutical Research and Manufacturers of America (PhRMA) ACCJ Executive Staff Samuel H. Kidder Executive Director Aron Kremer Deputy Executive Director

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ACCJ Committees American Auto Industry Randy Krieger Architecture, Construction & Real Estate Kevyn Johnson/Michael P. King Asia Business Philip C. Jones B2B Sales Karl Hahne Banking and Finance Thomas Clark/Ernfred Olsen Capital Markets Douglas Hymas Charity Ball Barbara Hancock Competition Policy Task Force Robert Grondine Corporate Social Responsibility Patricia Bader-Johnston Direct Marketing Joseph Peters Environmental Naoki Arai Financial Services Forum Charles D. Lake II Food and Agriculture Collin Benson Foreign Direct Investment Nicholas Benes Government Relations Andrew Conrad Healthcare Steve Plunkett Human Resource Management Chris Lamatsch/Ken Somers Independent Business Doug Jackson Information, Communications & Technology Darren McKellin Insurance Jonathan Malamud/Grant Tanabe Intellectual Property David Case International Education Patricia O’Keefe Investment Management David Monroe Legal Services Arshad Karim/Eric Sedlak Corporate Counsel Clair Chino Marketing Programs Dominic Carter Membership Relations Andrew Silberman Privatization Task Force David Hoover Retail Victor Luis Special Events Barry Bergmann Young Professionals Group John Ghanotakis/Daniel Lintz Taxation Jack Bird/Michael Shikuma Toiletries, Cosmetics & Fragrances Yukiko Tsujimoto Transportation and Logistics Jeff Bernier/Mitsuyo Teramura Business Aviation Task Force Gary Konop Travel Industry Kayoko Inoue/Vincent You University Briefing Program Richard May/David Satterwhite Kansai Chapter Business Programs Jiri Mestecky Community Service Kojiro Dan External Affairs Kiran Sethi Living in Kansai Barry Louie Membership Douglas Schafer Women in Business Mari Nogami Chubu Chapter Community Service Steve Burson Independent Business Jeremy Cowx/Jason Morgan Living in Chubu Lowell Sheppard Membership Relations Chris Zarodkiewicz Programs Steve Brown American Chamber of Commerce in Japan Masonic 39 MT Bldg. 10F, 2-4-5 Azabudai Minato-ku, Tokyo, Japan 106-0041 Tel: 03-3433-5381 Fax: 03-3433-8454 www.accj.or.jp / www.ecentral.jp

.&3(&34 "$26*4*5*0/4 t '*/"/$*"- 01*/*0/4 "%7*403: 4&37*$&4

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Publisher Vickie Paradise Green paradise@paradigm.co.jp Editor-in-Chief Simon Farrell simonfarrell@paradigm.co.jp Senior Editor David Umeda Art Director Paddy O’Connor Graphic Designers Akiko Mineshima, Mayumi Ohara COLUMNISTS Tom Baker, Robert Cameron, Nicole Fall, Mark Schreiber CONTRIBUTORS Vicki L. Beyer, Alana R. Bonzi, Geoff Botting, Martin Foster, Justin McCurry, Darren McKellin, Tony McNicol, Anthony H. Rowley, Julian Ryall, Catherine Shaw, Richard Smith, Jeffrey Tanenhaus PHOTOGRAPHERS / ILLUSTRATORS Tony McNicol, Jeremy Sutton-Hibbert, Darren Thompson, Russ Willms Published by Paradigm President Vickie Paradise Green Creative Director Richard Grehan Advertising Sales Eileen Chang, Sarit Huys, Helene Jacquet, Leai Kubotsuka Kamiyama Ambassador 209 18-6 Kamiyama-cho, Shibuya-ku Tokyo, Japan 150-0047 Tel: 03-5478-7941 Fax: 03-5478-7942 e-mail: inquiries@paradigm.co.jp www.paradigm.co.jp

Published monthly in Tokyo, on the 25th of the month, since 1964. Indexed in the PAIS BULLETIN. All rights reserved. The views and opinions expressed herein (other than editorials from the ACCJ itself) are solely the opinions and views of their authors. The ACCJ is not responsible or liable for any portions thereof. Subscription rates for non-ACCJ members One year ¥9,000; two years ¥15,000; three years ¥22,000. ¥800 per copy. Rates include domestic postage or surface postage for overseas subscribers. Add ¥7,500 per year if overseas airmail is preferred. Please allow eight weeks for changes of address to take effect. Subscription requests should be sent to info@accj.or.jp The ACCJ Journal welcomes story ideas from readers and proposals from writers. Letters to the editor may be edited for length and style. The ACCJ Journal is produced entirely on Apple computers

Note from the Editor

When Advocacy Works

usiness in Japan has for decades been hampered by the restrictive business activities practiced by cartels that collude to fix prices and stifle competition. So it’s great to report that the authorities are, at last, recording considerable success against such monopolistic behavior (see cover story). Wielding more carrot than stick, the Japan Fair Trade Commission has collared an impressive list of offenders, recouping more in financial penalties imposed last fiscal year than its annual budget — and illustrating how effective advocacy can be. A longstanding core activity of the ACCJ, advocacy policy positions are communicated to the Japanese and U.S. governments and external organizations in documents, such as White Papers, press releases, and Viewpoints, the recommendations of which now appear every month in the Journal. Each Viewpoint is the result of a meticulous and transparent process of consensus, approval, translation and dissemination by ACCJ leaders, members and staff. Naturally, some are rather technical and may only interest those in certain industries. But I encourage you to read these

Viewpoints (page 58) to better grasp ACCJ policy positions, and to benefit from the incredible hard work — much of it voluntary — that goes into these vital advocacy documents. Kansai Walk-a-Thon Although the monthly Leadership Forum is an off-the-record, closed event, I can share one item from September’s agenda with you. The ACCJ Kansai Chapter invites all to its 3rd Annual Charity WalkA-Thon on Saturday, October 18, at Kobe Meriken Park. Sponsorship is a great way to further promote your company to a huge, festive crowd, and there’s no better way to walk than for charity. Following a key Chamber theme in 2008, recipients of funds raised will be NPOs involved in “Improving the Environment for Working Women in Kansai.” Details at: www.accjwalkathon.org/

simonfarrell@paradigm.co.jp

By Allan D. Smith / President’s Message

CSR: The ACCJ in Practice

s part of the ACCJ’s 60th Anniversary, we ran a special symposium on September 10 focusing on Corporate Social Responsibility. The symposium showcased four different aspects of CSR, including diversity, authenticity, the environment and corporate collaboration with NPOs/NGOs. The symposium provided an excellent opportunity to celebrate our achievements in corporate responsibility and sustainability in Japan over the past 60 years, and enabled us to look ahead to the challenges of the future. The ACCJ pursues CSR initiatives through community-based fund-raising and charitable activities, such as the Community Service Fund, the annual Charity Crystal Ball in Tokyo, and Walkathons in Chubu and Kansai. As a member-run organization, we interact daily with members — our main stakeholders — through our programs, mailings and our Web site. We also reach external stakeholders in the Japanese and U.S. governments through our advocacy program, sharing our views and values through those communications. The ACCJ strives to apply good corporate governance and embody our values in our actions and behavior, practicing diversity and inclusion in our employment and membership activities. At the symposium, we launched a new ACCJ Taskforce to demonstrate our commitment to diversity as an organization. The Soft Landing Taskforce was created to

implement a unique ACCJ effort in support of Japanese government initiatives to help women return to the workforce after career breaks through retraining and placement programs. As I have noted on this page before, from our earliest days, ACCJ members have been leaders in gender and age equality, and cultural and ethnic diversity in their employment practices. While our companies have benefited from the ability to hire from a larger pool of candidates, and select and promote employees based on their capacity to contribute, they have also served as an example to domestic employers of the advantages of more open employment practices. The Taskforce provides an excellent opportunity for member companies to demonstrate this commitment to diversity, while accessing a pool of talented individuals who are motivated to prove themselves in the workplace and who might not otherwise be offered the opportunity. Given Japan’s demographics, firms that create a corporate environment proactively welcoming such talent are placing themselves at a competitive advantage. The launch follows a pilot conducted by a small number of ACCJ member firms earlier this year. The firms collaborated to provide graduates of Japan Women’s University with practical business training in English résumé writing, interviewing skills and logical thinking. The pilot program

conducted a separate résumé support workshop with professional HR consultants and also gave participating corporations the opportunity to interview graduates for job placements. Mariko Nakazono of Shinsei Bank and Adam Kassab of Mercer Japan Ltd. are chairs of the new Taskforce in Kanto and Mari Nogami of Proctor & Gamble is chair for Kansai. They will be exploring additional ways of collaborating with participants in the government initiatives and determining how the ACCJ can provide an effective platform for member firms to benefit from these talented candidates. Also, the ACCJ Kansai Chapter will be providing a scholarship as part of their efforts. I encourage all ACCJ members to participate in this important initiative. The necessary commitment is small. The member company merely needs to agree to receive and review résumés, interview qualified candidates for existing HR openings and hire any whom the member company determines are the best choices among available candidates. I also encourage members to join the Soft Landing Taskforce, and to participate in the seminars and other rewarding and worthwhile activities it will be sponsoring.

asmith@accj.or.jp Allan D. Smith is ACCJ President.

October 2008 / ACCJ Journal / 11

COVER ILLUSTRATION FOR THE ACCJ JourNAl BY RUSS WILLMS

Crackdown on Cartels Despite amnesty success, more stick needed.

he Japan Fair Trade Commission (JFTC) has been “getting tough” recently on the cartels and monopolies that have long been woven into the fabric of Japanese business — and it plans to get tougher still under new legislation introduced before the Diet in March and which is expected to pass into law before long. Under the proposed legislation, penalties for engaging in “unfair business practices” will be toughened, the scope of surcharges imposed on offending firms widened, and the amount increased. The JFTC also is planning to expand its global reach, not only drawing into its net foreign firms operating in Japan, but

12 / ACCJ Journal / October 2008

also involving itself in the oversight of developments overseas perceived as hampering business competition. “Because the globalization of corporate, cross-border cartels is increasing, we need to take cooperative action with other countries to deal with such cases,” JFTC senior planning officer, Koichi Nishikawa, tells the ACCJ Journal. The JFTC imposed penalties in 24 cartel and monopoly cases during the fiscal year to March 31, 2008, involving total surcharges of ¥11.3 billion — a sum amounting to more than the agency’s annual budget, according to Nishikawa. “These cases show that there has been active and strict enforcement of

the Anti-Monopoly Act, mainly involving large-scale cartels,” he says. The JFTC has become much more proactive in pursuing restrictive business practices since Kazuhiko Takeshima took over as chairman in 2002, and especially since the Anti-Monopoly Law was amended in 2005, giving the commission considerably increased powers. A long-time Finance Ministry bureaucrat and former commissioner in Japan’s National Tax Agency, as well as former assistant chief Cabinet secretary, Takeshima has raised the profile of the commission internationally, as well as in Japan. During his six-year tenure, the JFTC has conducted raids on

By Anthony H. Rowley / Crackdown on Cartels

At home, the JFTC has exposed major bridge-building cartels handling business worth trillions of yen and involving many of Japan’s leading steel and construction groups. the Japanese offices of global corporations, such as Microsoft and Intel, in search of evidence supporting anti-competitive dealings — proving that the commission is prepared to take on international business giants. At home, the JFTC has exposed major bridge-building cartels handling business worth trillions of yen and involving many of Japan’s leading steel and construction groups. Since 2006, there also have been cases involving bid rigging on tunnel ventilation facilities, dams or river water gates, and gas pipes, such as along the Nagoya City subway (a criminal investigation). Pricefixing actions have been pursued, meanwhile, in exotic areas such as the supply of calcium silicate board. A major feather in the JFTC’s cap was uncovering a huge cartel involving Japanese and foreign producers of marine hose pipes. The marine hose cartel, to which the JFTC issued an order in February of this year, is involved in “the first substantial case where the JFTC reached out for non-Japanese companies,” noted the specialist journal, Global Competition review. “In response to [this case], non-Japanese firms, especially those with a significant presence in Japan, are strongly advised to take precautions and increase the level of compliance [with] Japanese antitrust legislation,” the journal added. Takeshima, meanwhile, set out his broad philosophy when he hosted a meeting of the

International Competition Network (ICN) in Kyoto earlier this year. “There can be no economic growth without competition,” he told 500 regulators from 76 competition authorities around the world. “The JFTC has engaged in vigorous enforcement against hard-core cartels, including bid rigging and international cartels, and has been actively involved in discussions at various international fora to establish cooperative and effective relationships with foreign competition authorities. “In April 2005, we amended the Anti-Monopoly Act,” said Takeshima, “and realized significant increases in surcharge rates, the imposition of 50% higher rates on repeat offenders, provision of criminal investigative powers to the JFTC, and the introduction of a leniency program. “The JFTC has been utilizing those new measures effectively,” he continued. “Based on information from leniency applicants, we have taken legal measures in 14 cases, including an international cartel case where dawn raids were coordinated with several foreign competition authorities.” The JFTC’s “leniency” program actually went into operation in January 2006, and involves a kind of partial amnesty to firms that voluntarily disclose to the commission the cartels in which they are involved. The whistleblowers still face a penalty, but the fine or surcharge imposed on “informer” companies is significantly lower than that levied on



SNAPSHOT



A Global Competition Review survey of lawyers, academics, consumer groups and economists in July said Japan’s Fair Trade Commission received nearly 80 leniency applications from cartelists in 2007 that admitted anticompetitive behavior in return for softer penalties. South Korea’s Fair Trade Commission handled dozens of cartel and abuse-ofdominance cases, in industries ranging from energy to food. The survey says crackdowns on anticompetitive business practices had reached a global all-time high. The U.S. Federal Trade Commission, the UK’s Competition Commission and the European Commission were the most efficient enforcers. Improved performances were reported in several countries with only a recent history of effective antitrust enforcement, the survey says, such as Slovakia, Russia, the Czech Republic, Japan and South Korea. “The world’s younger and lessresourced competition authorities are catching up with the leading enforcers in both capability and commitment,” it concludes. Analysts suggested pressure from the Organisation for Economic Co-operation and Development and the World Bank may be behind the improved performances.

others party to the cartel. “Because of this system, we have been able to uncover cases that would not otherwise have been discovered,” says Nishikawa of the JFTC. “Before this system was introduced in Japan, there was some doubt as to whether it would be compatible with Japanese practice and way of thinking because, in a way, it requires companies to betray their cartel partners,” he acknowledges. “However, the

October 2008 / ACCJ Journal / 13

The introduction of the leniency program has “changed the entire landscape of cartel regulation in Japan.”

results so far have been better than expected. “Up to three companies belonging to a cartel can apply for leniency,” Nishikawa says. “This can mean that their surcharges will be reduced. The percentage of reduction varies according to the order of application. “There have been 200 applications for the leniency system so far,” he says. “We will not say whether foreign companies are included in the 200. But we can say that the leniency system made it possible for the JFTC to discover international cartels.” The introduction of the leniency program has “changed the entire landscape of cartel regulation in Japan,” according to Global Competition review. “One of the most notable changes was that, unlike past investigations, post2005 Amendment investigations tend to target large corporations. “Before the 2005 Amendment it was rare for large companies to become the subject of cartel investigations,” the journal says. “The assumption was that [the large companies] took a much more serious approach to complying with competition law and succeeded in eliminating all cartelistic activity. Perhaps, under the old system where leniency information was not available, the JFTC was only able to access cartel information when cartelists failed to keep all the participants happy enough to buy their silence. “Such a failure typically happened when too many small

14 / ACCJ Journal / October 2008

to medium-sized companies were trying to collude,” continues Global Competition review. “In contrast, collusions between large companies tended to be better organized, involving smaller risk of leaks, and maintaining a cartel had a clear appeal offering greater benefit than dropping out of it. Now, after the introduction of a leniency programme, many large companies choose to obtain immunity through a leniency application rather than make efforts to hide secretive collusions the stability of which is never guaranteed.” Before the introduction of a leniency program, companies had little incentive to contribute to the JFTC investigations, and fines were imposed on companies with little regard as to their response to the investigations. Since 2005, even after the investigation has commenced, companies have been granted an option to cooperate with the JFTC for their own benefit (provided that the leniency positions are still available). “Clearly, close cooperation by target companies motivated by leniency positions enables the regulator to collect underlying evidence more easily and deal with investigations more speedily,” the journal adds. Another change was the granting of criminal investigative powers to the JFTC. Before the 2005 amendment, as soon as it became clear that the cartel was criminal in nature, upon the filing of a JFTC complaint, the Public Prosecutor’s



SNAPSHOT



The main objective of the 2005 Amendment to Japan’s Anti-Monopoly Act is to strengthen the regulation of cartels, which was previously considered weak compared with that in the U.S. and the EU. The changes include: ■

■

■ ■

■

Leniency programs granting immunity and reduced punishments Significantly increasing percentages of turnover used in the calculation of fines Heavier fines for repeat offenders Granting criminal investigative powers to JFTC officials Permitting investigations to go back three years rather than the previous one year

Office was brought in to conduct criminal investigations. Under the post-2005 system, the JFTC is empowered to engage in criminal investigations directly and, once an investigation is concluded, bring the case to the Public Prosecutor’s Office. The JFTC’s approach is not all about leniency, however. In order to “pursue more effective and rigorous enforcement,” the JFTC submitted to the Diet in March a bill for further amendments to the Antimonopoly Act. These changes include imposition of 50% higher rates on ringleaders of illegal anticompetitive activity and enlargement of the scope of anticompetitive activities subject to a surcharge. There also is an extension of the three-year statute of limitations (joseki kikan) for administrative orders to five years so as

Crackdown on Cartels

Japan’s approach to dealing with illegal restraints to competition in business is likely to remain lenient in certain respects, relative to other jurisdictions, some experts say. 

SNAPSHOT



The EU-Japan Competition Law Symposium at the National Graduate Institute for Policy Studies, Tokyo in April concluded: ■

EUROPEAN COMMISSION, CARTELS DIRECTORATE

■

to facilitate, say industry experts, coordination with foreign authorities in the investigation of international cartels. The new (2008) regulations also will specify rules whereby the JFTC exchanges with overseas antitrust authorities any information necessary for cartel investigations. The legislation furthermore will introduce provisions stating that business secrets are excluded from the scope of disclosure, as also the copying of evidence submitted during the JFTC appeals process. Citing specific examples of the enlarged powers that the JFTC is seeking, Nishikawa says the commission wants to be able to deal with cases of “private monopolization,” or the use of monopoly power by one company to dominate the market.

Private monopolies already are illegal in Japan; but, at present, they are not subject to surcharges by the JTFC, notes Nishikawa. The proposed amendments presented to the Diet are expected to be discussed and approved in the fall session of the assembly, says Nishikawa. Yet, even if (as expected) the JFTC secures the extra powers it is seeking, at the end of the day, Japan’s approach to dealing with illegal restraints to competition in business is likely to remain lenient in certain respects, relative to other jurisdictions, some experts say. The average fine that the JFTC imposed on companies involved in bid rigging or cartels in 2007 was about ¥200 million. By contrast, the average European Commission fine was about €74

■

Fight against international cartels has become increasingly effective Cooperation between international competition authorities has led to more transparency and legal certainty Still need for improvement to achieve the maximum outcome for all parties involved (authorities, immunity/leniency applicants, undertakings etc.) Each authority is best placed to determine its leniency program and sanctions that work most efficiently in its jurisdiction

million, or around ¥12 billion — a level that indicates how seriously the EU takes its check on cartels. For example, last year, the European Commission handed down a €150 million fine to Japan’s YKK Group over an international cartel to fix rates for zippers. The illegal practice had been conducted by YKK’s subsidiary in Germany. In Japan, only the subsidiary in question would be punished in such a case; but the European Commission regarded the parent company as liable, and calculated the penalty in accordance with the YKK Group’s total sales. Meanwhile, the number of Japanese companies facing penalties for violating antimonopoly laws abroad has been on the rise. Japan Airlines said in April, for example, that it would pay

October 2008 / ACCJ Journal / 15

Areas of Practice: International law and the following â&#x20AC;&#x201D; Administrative law and regulation; Antitrust; Arbitration and dispute resolution; Asset acquisition; Banking; Bankruptcy and dissolution; Capital market transactions; Civil law; Commercial law; Communications and media; Corporate law; Corporate reorganization; Debt issues; Employment and pension; Entertainment law; Finance; Franchises and distributorships; Information technology; Insurance; Intellectual property; Investment trusts; Joint ventures; Leasing; Lending; Licensing; Mergers and acquisitions; Pharmaceuticals; Product liability; Quasi-judicial proceedings; Real estate and development; Securities and derivatives; Securities transactions; Securitizations; Tax; Telecommunications; Trade regulation.

Kioicho Building, 3-12, Kioicho, Chiyoda-ku Tokyo 102-0094, Japan Tel: +81 3 3288 7000 Fax: +81 3 5213 7800 Web: http://www.noandt.com/ Email: info@noandt.com

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Crackdown on Cartels

“In Japan, the impact of a cartel on the market is the key element in deciding penalties … But in Europe and the United States, once a cartel is confirmed, the authorities can impose punitive sanctions or fines.” 

SNAPSHOT



2008 Amendment proposes (among other changes): ■ Treat all entities within a company group as a single party for the purpose of leniency applications ■ Increase number of available leniency positions from three to five ■ Extend from three to five years the time limitation to retrospectively catch past cartel activities ■ Specify rules whereby the JFTC exchanges information necessary for cartel investigations with other overseas antitrust authorities ■ Introduce provisions clarifying that business secrets are excluded from the scope of disclosure, as is the copying of evidence submitted to the JFTC appeals process

the U.S. Justice Department a $110-million fine after admitting involvement in a cartel that fixed

rates for international cargo shipments. The European Commission also has been conducting an investigation into a possible cartel involving air cargo shipments to and from European cities. Japan also is more liberal than other jurisdictions in the definition of what constitutes a punishable offence in the sphere of business cartels. “In Japan, the impact of a cartel on the market is the key element in deciding penalties for firms involved,” notes Hiromitsu Miyakawa, a lawyer in the Tokyo office of law firm Jones Day. “But in Europe and the United States, once a cartel is confirmed, the authorities can impose punitive sanctions or fines on companies involved.”

Each country, of course, has a different economic situation and business customs; therefore, complete harmonization of cartel and anti-monopoly laws is not easy to achieve, observes the JFTC’s Nishikawa. “However, because of globalization, crossborder cartels are increasing and we need to take cooperative action with other counties to deal with such cases.” The JFTC actively has been seeking such international cooperation, Nishikawa notes. “There are information-exchange agreements between Japan and the U.S., and Japan and the EU. If a case damages the Japanese market, the JFTC will investigate not only Japanese companies, but also Japanese branches of foreign companies.” JFTC Chairman Takeshima, meanwhile, draws encouragement from the fact that, as he put it at the ICN meeting, “public awareness of competition law and policy has been growing in Japan. I am hopeful and confident that people in Japan will further support the ongoing development of competition law and policy to secure the benefits of free and fair competition in today’s global economy.”

Anthony H. Rowley is Tokyo correspondent for the Singapore Business Times and field editor (Japan) of Oxford Analytica.

October 2008 / ACCJ Journal / 17

StrengthsFinder Assessment Strengths Coaching Strengths Team Development A NEW & UPGRADED Edition of the Online Test from Gallup's NOW, DISCOVER YOUR STREGNTHS

PUBLICITY

The Power of Employee Strengths Investing in employees is a potent way to boost their performance — and corporate earnings By John H. Fleming and Jim Asplund, authors of Human Sigma: Managing the Employee-Customer Encounter

umanSigma performance is a critical vital sign that shows whether a company’s human systems are performing adequately. If they’re not, its financial systems soon may not perform adequately as well. HumanSigma tools — including employee and customer engagement measures — are leading indicators of the financial performance a company hopes to achieve. One of the keys to boosting a company’s performance is to increase employee engagement. In our research, we’ve found that when employees are engaged — or emotionally and psychologically committed to their company — they feel a stronger sense of ownership of the firm’s successes and failures, and want to contribute to its improved performance. And one of the best ways for a company to boost its employee engagement is to help employees discover their strengths, then learn to use them to become more successful in their work. We conducted a survey in 2004 that examined what happens when a manager ignores employees or focuses on an employee’s strengths or weaknesses. We found that when an employee is ignored by his/her manager, the chances the employee will be actively disengaged, or profoundly disconnected from his/ her work, is 40%. When a manager focuses on his/her employees’ weaknesses, the chance an employee will be actively disengaged is 22%. But when a manager focuses his/her employees’ strengths, the chance an employee will be actively disengaged drops to one in one hundred.

Focusing on Strengths Reduces Disengagement If your manager primarily … Your chances of being actively disengaged are … POLL

Ignores you

Focuses on your weaknesses

Focuses on your strengths

40%

22%

This result mirrors the psychology of raising children. Being invisible is the worst thing that can possibly happen to children, especially at school; even negative attention from a teacher or other students feels better to children than no attention at all. Similarly, employees would actually feel better if their managers went from ignoring them to focusing on their weaknesses because then, at least, the manager would be paying attention to them. No one wants to be invisible at work. Most of us feel more powerful and productive when we’re doing things we enjoy and are good at. And Gallup’s data reinforce that this is more than just a feeling — employees really are more productive when they know what they do well, then apply those talents to their work: • In a study of 1,874 employees, many of them in sales roles, productivity was 7.8% higher among employees who received any form of strengths education than among those who didn’t learn about strengths. • In a study of 530 business units, most of them in retail or manufacturing organizations, productivity was 12.5% higher among work teams whose managers received

any form of strengths education than among those whose managers did not learn about strengths. When managers successfully engage employees, their companies benefit. Engaged teams are 18% more productive, 12% more profitable, and 12% better at engaging customers than teams that are disengaged. Engaged employees are also 51% less likely to leave (in low-turnover companies) and 31% less likely to leave (in high-turnover companies). And companies with high employee engagement significantly outperform companies with low engagement on a key business metric: earnings per share. When compared with industry competitors at the company level, organizations with more than four engaged employees for every one actively disengaged employee saw 2.6 times more growth in earnings per share than did organizations with a ratio of slightly less than one engaged worker for every one actively disengaged employee. Investing in employees’ strengths is much more than a nice-to-have item for businesses: It’s proven to be a powerful way to boost employee performance — and corporate earnings.

Economics of Sumo Despite several major scandals in 2007 — including the suspension of top-ranked Mongolian yokozuna (grand champion) Asashoryu for malingering, accusations by a weekly magazine regarding rampant bout-fixing, and the death of a 17-year-old apprentice after a severe beating meted out by senior wrestlers — professional sumo still managed to turn a profit of ¥1.05 billion. The Japan Sumo Association, moreover, has come under fire following revelations it had accumulated ¥7.3 billion in deferred assets — an amount considered excessive for a zaidan hojin, in this case a sports foundation sponsored by the Ministry of Education, Culture, Sports, Science and Technology. With so many professional team sports falling deeply into the

red, how does a scandal-ridden traditional sport manage to stay in the black? Easy, reports business magazine Shukan Diamond (Aug. 2). Even though the 700 sumo practitioners number about the same as pro baseball players, only the top-ranked 70 wrestlers actually draw fixed salaries. Even among these few, the system is set up so that any time a sumo wrestler performs well and earns a promotion, his pay increase is offset by a rival whose ranking drops commensurately and thus earns less. “Basically, sumo has no system for trades or free agency, so there’s nothing to drive up salaries,” points out Waseda University Prof. Yasuaki Muto. “It’s set up like a corporation, with each heya [stable] functioning as a department.”

Takanobu Nakajima, a professor at Keio University and author of The Economics of Sumo (Toyo Keizai Shimpo-sha), supposes that it may take a crisis — such as fans abandoning the sport, or a lack of new recruits — to make any dents in the current system. The association has not raised wrestlers’ salaries since 2001, when a 3% raise went into effect. Last July 1, the upper-ranked grapplers had demanded a salary boost to keep abreast with inflation. “We’d like to have salaries upped by about 10%,” Asashoryu said.

Sky-high Prices Here’s a bit of trivia: About one-third of the steel used to construct Tokyo Tower, which was completed in 1958, was stripped from 90 U.S. Army tanks that had been damaged in the Korean War and sold for scrap. Come July 24, 2011, the Tokyo Sky Tree — or the New Tokyo Tower, as most of the capital’s inhabitants prefer to call it — will assume the function its predecessor has performed for the previous half century, as it begins broadcasting terrestrial digital signals from Mukojima in Sumida Ward. But the new tower, which many have opposed as being unnecessary, is running into cost complications. The existing Tokyo Tower, despite being 8.6m taller than the Eiffel Tower (32.6m more if the TV antenna is

20 / ACCJ Journal / October 2008

included), only weighs about 4,000 tons. Contrast that, reports weekly magazine Shukan Bunshun (July 31), to the new “tree” weighing in at 30,000 tons — over seven times the weight of its predecessor. The problem is that, since the project received the green light, the cost of materials has increased year-on-year by 7%, with the price of steel alone up 40.1%. Tobu Railway Co., Ltd., which owns the land on which the Sky Tree is being built, is expected to make up for any cost overruns. “Even if the building materials have already been procured, I suppose costs will continue to spiral,” an unnamed business journalist remarks to the magazine. “The principals may become preoccupied with funding.”

Media Watch

Crunch Hits Hotels The short-lived mini-bubble of prosperity had encouraged several foreign luxury-class hotel chains to jump into the Japanese market. Nikkan Gendai (Aug. 1) reports that the hotels, which would include the Grand Hyatt Tokyo in Roppongi and The RitzCarlton Osaka, are said to be running at a 60-70% room occupancy rate, a source in the hotel business is quoted as saying. However, when these hotels opened, their management had been confident about maintaining close to 90% occupancy. The chief villain in declining demand appears to be the subprime crisis, which has led to major corporate cutbacks, not only in business travel, but also for hosting conferences and parties. “The Peninsula, Park Hyatt and other top-class, foreign-affiliated hotels charge ¥50,000 a night,” says a fund manager. “But even at those rates they don’t make much of a profit. If you consider their

turnover on the basis of floor area or labor costs, they need around ¥100,000 a night. If the economy continues to decline, they might be confronted with the choice of either converting the building to office use, or selling off the hotel.” Nikkan Gendai also notes that Japan’s domestic hotel operators are restructuring operations. On May 30, the Hotel Okura and Royal Hotel chains announced a management tie-up and shares swap. Tokyo’s venerable Imperial Hotel is now under the umbrella of Mitsui Real Estate Sales Co., Ltd., which is in the process of developing the Hibiya district.

Home Sweet Uchi In 1990, at the peak of Japan’s economic Bubble, a salaryman’s average monthly kozukai (pocket money) reached ¥76,000. But considering that wage levels have been nearly unchanged for the past two decades, Dime (Aug. 5) is skeptical pocket money ever rose to that level, and if it actually did, it was certainly an aberration. In any event, pocket money bottomed out at ¥38,300 in 2004, and then reached ¥48,800 before declining once more this year to ¥46,300 (Source: GE Money).

Data from the National Tax office show that average wages have declined every year since the Bubble, reaching ¥362,412 in 2006. What made life tolerable for Japanese households has been the lowest increase in consumer prices of the five major countries. With food costs rising across the board, this is now likely to change, though. Dime considers what occurred during two previous periods of inflation, in the wake of the 1973 and 1979 oil shocks. It was an era when people began spending

more time at home, where family members shared leisure activities and family ties became closer. A survey by hair restorer preparation maker Reve 21 asked married women two questions: “Which family member gives you the greatest sense of relief?” and “With whom do you want to share happiness?” For both queries, “my husband” led the replies, at 19.6% and 44.0%, respectively. This, Dime suggests, may be an indicator that husbands can manage to get along on a leaner budget.

October 2008 / ACCJ Journal / 21

Citigroup

Express Yourself!

Japanese starting to speak up at work.

iji Otaka remembers the rambling way in which meetings were conducted when he worked at the Long-Term Credit Bank of Japan, otherwise known as the LTCB. Not only was the object of many sessions unclear, but also Otaka sometimes couldn’t figure out what had gone on. “I used to emerge from some meetings wondering what it was we had decided,” says Otaka, who is now a special assignments general manager in the Corporate Communications Division at Shinsei Bank, Limited, which was resurrected from the remnants of the former LTCB in 2000. Shinsei means “to be reborn.” The consensus-based decision-making process in place at many Japanese companies produces meetings that merely put the official imprimatur on decisions already determined in backroom negotiations — or are long, inconclusive and raise more issues than they solve. In the past many companies had no foreign employees, and even fewer had foreign managers. All Japanese staff were educated in the same system and imbued with a virtually homogenous set of values, thereby eliminating the need for dotting

22 / ACCJ Journal / October 2008

the i’s and crossing the t’s when communicating with each other in typical workplace scenarios. Also, the system of lifetime employment and promotion by seniority removed the urgency for employees to come forward and assert their views. “When the Japanese workplace was less globalized, things could be done in the traditional ishin denshin [non-verbal communications] style, where it’s not necessary to express oneself clearly,” says Rochelle Kopp, managing principal with Japan Intercultural Consulting in Silicon Valley. “There was a reliance on the power of shared knowledge and tacit assumptions, rather than on clear communication skills. “Now that there are more non-Japanese that Japanese people interact with, they need to express their opinions more clearly,” Kopp adds. However, some of the biggest names that had represented Japan on the global stage now have come under the control of non-Japanese companies. In addition to the LTCB, these include Nissan Motor Co., Ltd. (Renault), Chugai Pharmaceutical Co., Ltd. (Roche) and Nikko Cordial Corp. (Citigroup). At all levels of the leadership ladder,

By Martin Foster / Express Yourself!

“In order to give the gathering a more intimate feel and lower the barriers between audience and speakers, we sat bank executives on townhall-style stools — the kind you see on CNN.” management — which often was 100% Japanese — has been shaken up and international managers have been introduced. Bottom-up management practices common in many companies are being replaced with a top-down standard. Otaka says the way meetings now are conducted is, perhaps, the biggest change he has seen when compared to the way things were done at the LTCB. “Meetings have a clearer preset agenda,” he says. “And if you have something to say, you are expected to say it at the meeting — not afterwards.” In business communications, the focus has switched to efficiency and speed. “Managers need to be able to communicate more clearly,” says Donald Macintyre, head of the Corporate Communications Division at Shinsei Bank. In March 2006, the bank announced the creation of the position of Chief Learning Officer (CLO) who reports directly to the Chief Executive Officer (CEO,) and is responsible for all human and organizational development and continuous learning for all employees. Shinsei Bank was the first Japanese bank to create such a position. In December 2007, the CLO set up a bilingual Business Communication Design Team, which applies technology to internal communications, training and learning matters. According to Macintyre, the team made a slick 8-minute Flash presentation that succinctly explains the bank’s compensation and bonus system — a topic that might otherwise be quite dry and difficult to understand. “This is about doing something that is efficient, interesting and easy to grasp,” says Macintyre, “rather than just producing a booklet that nobody will have time to read!” Communication is a two-way process; and Shinsei Bank took a leaf from the traditional town gatherings of New England to establish quarterly townhall meetings where upper management, including President and CEO Thierry Porté, meet with staff to talk about hot issues in an engaging, stimulating manner. At a townhall meeting held on May 23, management needed to explain important issues, including financial performance, changes to business strategy



SNAPSHOT



People are either: 1. Aggressive — imposing their will on others to force them to submit 2. Passive — submitting to another person’s dominance 3. Assertive — half way between aggression and passivity, repelling domination defensively, not offensively

and the decision to sell the Shinsei Bank HQ building in downtown Tokyo, Macintyre says. “In order to give the gathering a more intimate feel and lower the barriers between audience and speakers, we sat bank executives on townhall-style stools — the kind you see on CNN,” Macintyre says. “The audience’s seats curved around the front of the stage, which was also free of the big tables in front of the speakers as seen at many Japanese sessions. “We also invited four employees to join management on stage and ask questions directly, so as to encourage participation from the audience, who still tend to be a little shy,” Macintyre adds. Townhall meetings at Shinsei Bank also are videotaped and made available over the intranet to employees who were not able to attend in person, or virtually at the actual time of the event. To be sure, consensus-based decision-making still has a part to play in Japanese business. “One of Japan’s strengths is teamwork and consensus-based decision-making, where Japanese companies work together as a team to get the expected results,” says Stephen Cronin, chief human resources officer, Nikko Citi Holdings Inc. “But it is sometimes difficult to get clear opinions or feedback due to the lack of a proactive and selfassertive attitude. “People tend to play low-key to avoid being perceived as aggressive or self-serving,” he adds. As corporate Japan is increasingly integrated into global markets, Japanese workers need to recognize that many companies, especially foreign ones, assess staff based on their oral skills, observers say. “Japanese employees get short shrift if they keep quiet,” says Bob Tobin, partner in the Tokyo-based Tobin Ohashi Group, which provides coaching and consulting services for senior executives. Assertiveness training goes back to the 1950s, when therapists started to devise ways of helping

October 2008 / ACCJ Journal / 23

Express Yourself!

“Often in Japanese culture, people act at one extreme or another — they let others walk all over them, or they lash out in anger and frustration.” individual patients who had serious problems in expressing themselves and in standing up for their rights. When it comes to individuals whose culture and upbringing dictate that they are more than likely to be passive and circumspect, it is extremely difficult to instigate a sea change to an assertive character possessing clearly expressed views. Tobin urges a little “self-belief.” “One place to start is to make people realize they have something to contribute,” he says. “Silence that inner voice that keeps on saying ‘keep quiet,’ and don’t use throwaway lines like ‘I know this is not so important’ or ‘maybe you already thought about this.’” Psychologists say assertiveness means being able to make overtures to other people, to stand up for oneself in a non-aggressive manner, to speak up when others make demands, and to make suggestions or requests to others in a group. Not everyone, however, understands the term in that way. The English-Japanese dictionary definition of “assertive” is probably closer to “aggressive,” says Andrew Silberman, president and chief enthusiast of AMT Group K.K., a Tokyo-based management training company. “Assertiveness values a person’s needs as equal to his or her counterpart’s needs,” he says. “Japanese people need to learn this in their heads, heart and gut.” “Often in Japanese culture, people act at one extreme or another — they let others walk all over them, or they lash out in anger and frustration,” says Kopp of Japan Intercultural Consulting. “Being assertive is a middle way that enables one to assert one’s rights, while also treating others respectfully.” Kopp`s company runs a course on feedback skills for Japanese businesspeople, and considers this the biggest development area for such clients. “Feedback is a skill that simply does not get honed in Japanese society,” Kopp says. “Giving negative feedback effectively is an important skill for being assertive.” Meanwhile, the consequences of failing to initiate more skillful communication techniques are dire. In Japan, “the recent prevalence of workplace



SNAPSHOT



The Bill of Assertive Rights, in When I Say No, I Feel Guilty (1975) by Manuel J. Smith, states you have the right to: ■ ■ ■ ■ ■ ■ ■ ■

Ensure personal rights are not violated Withstand unreasonable requests from others Make reasonable requests of others Deal effectively with unreasonable refusals from others Recognize personal rights of others Change behavior of others toward you Avoid unnecessary aggressive conflicts Confidently and openly communicate your position on any issue

problems such as ‘power harassment’ and depression can be directly linked to insufficient communication skills,” Kopp adds. Most observers concur that training and practice are required. “Anytime someone wants to get better at anything, they need to practice — preferably in a safe, nonthreatening environment,” says Silberman of the AMT Group. “Musicians rehearse without audiences, without critics, without their reputations at stake.” Japanese staff can be coaxed into offering their own views — even if their English is not fluent, says Akihiro Sumitomo, senior advisor to American Management Association International, who has over 40 years of global business experience. “Ask them a series of professional questions in a very specific way, instead of just asking, ‘What do you think of my message?’ or ‘Do you have an opinion?’” he says. “That will stimulate their pride and professionalism in such a way that they will respond — even in broken English.” English has become the language of international business communication, but Japan continues to rank near the bottom of some global benchmarks of English proficiency. Even for relatively fluent speakers of English, some phrases applied in negotiation settings leave far too much open for misunderstandings, often as a result of closely approximating Japanese expressions that have specific connotations not easily translatable. Phrases such as “We’ll think it over” or “It may be difficult” are used as expressions of negation, and run in the face of the “can do” attitude prized by many Americans.

October 2008 / ACCJ Journal / 25

Express Yourself!

All this inherent miscommunication acts as an obstacle to achieving transparency and accountability that would ensure decisions get made and results are achieved. Some Japanese people also maintain the tendency to speak English with the flat intonation of their native language, which also can be misconstrued — by those with a more colorful speaking style — as communicating disinterest, boredom or even sarcasm. All this inherent miscommunication acts as an obstacle to achieving transparency and accountability that would ensure decisions get made and results are achieved. Japanese executives may show greater awareness of the necessity to communicate in English in the face of increased ownership of Japanese shares by non-residents and expanded overseas manufacturing bases. But the reality is that the English they studied at school may take them only so far in the globalized workplace. The computer department at Shinsei Bank is staffed predominantly by Indians, including engineers from IT vendors in India. Otaka remembers Japanese staff who were attuned more to the cadences of U.S. or British English experiencing some difficulty when communicating with the computer staff during the early years after the takeover. “It was difficult in the period around 2000 and 2001,” he notes. “After that, people came to the realization that talking with people who speak

various types of English was also part of the globalization process, and accepted it.” In September 2005, Shinsei Bank started Englishlanguage learning programs at the bank. Initial enrollment, which was 68 staff, has risen to in excess of 400 employees attending private language lessons — not only in English, but also in Japanese and Chinese. The courses are at various levels of difficulty, including presentations in English, and there is a specialized course in capital markets and real estate terminology and concepts. Senior executives who have to interact with foreign managers and make pitches in English also enroll. It is not only Japanese companies that are placing more emphasis on English in the workplace. Since 1999, Renault has required white-collar recruits to post a certain TOEIC score, says Caroline De Gezelle, senior manager of the Alliance Communications, Global Communications, CSR and IR Department, at Nissan. Renault and Nissan hit upon the idea of creating cross-company teams, which bring together people from the two different organizations to explore synergy opportunities, propose joint projects and monitor their implementation. There often occur situations when French speakers communicate on a project with Japanese staffers via the English medium, using it as a lingua franca, and not as a culturally based organic entity. “People tend to be more direct, and get straight to the point when the language they are using is a functional tool, and not their mother tongue,” says De Gezelle. Renault holds a stake in excess of 44% in Nissan, while Japan’s third-biggest automaker has a 15% holding in Renault, making for an alliance in which both parties are careful to avoid clashes of personalities based on background. “Nobody is being asked to change their culture,” De Gezelle says.

Martin Foster is a freelance writer based in Tokyo.

October 2008 / ACCJ Journal / 27

On the Spot Kikuo Ibe

ikuo Ibe designed the very first G-Shock watch — the G stands for gravity — in 1983, taking off in a very different direction from the popular timepiece designs of the day. Twenty-five years later, Casio has sold more than 70 million G-Shock units around the world, and the design has been instrumental in introducing new technologies — some of which have hit the spot with consumers, some not — into watches.

How did the very first G-Shock come about? About 27 years ago, I had a very shocking experience when I dropped the watch that my father had given me. I treasured that watch, but it came apart when it hit the ground. That incident unleashed this incredible emotion in me, and I decided there and then that I wanted to create a watch that could function after impact. Was there no market then for rugged, shock-resistant watches? My idea went very much against common thinking at that time. Everyone back then was trying to make really thin watches. Even I was working on that until I saw my own watch break. I came to realize that it was not thickness that was important, but whether it would be durable enough not to come apart easily. By making the watch big and bulky, we were going in a very different direction from that of our competitors; but I felt strongly that people all over the world would appreciate a watch that was tough. G-Shock GW-9200 Riseman

28 / ACCJ Journal / October 2008

photos Casio Computer Co., Ltd.

Chief engineer, Casio Computer Co., Ltd.’s Timepiece Division, and designer of the G-Shock watch

How did you go about building and testing the earliest versions of the G-Shock? I did the first full tests from a window in an out-of-the-way section of our research facility. There was little impact from dropping the watch from the first floor, and even from the second floor I was not getting the conditions that I needed. But when I got to the third floor, I realized that was pretty high. It offered the measurements that I had set for myself. The basic test involved determining how much rubber needed to be wrapped around the watch so it would be protected in a fall. As I added more and more, it obviously got bigger and bigger; yet it was still not enough to protect the watch. Not until it got to the size of a softball did the watch survive on impact. Hard to market a watch that big, I imagine. Very difficult. I realized that I would have to create a completely new structure for the watch, something that had never existed before. That meant creating

By Julian Ryall / On the Spot

… the G-Shock had been regarded as high quality and tough, but now it was also cool.

individual layers to protect the watch in a fall. We built an independent case cover, metal casing, a rubber guard ring, a metal guard ring, a protective rubber shell, and then the engine of the watch. That gives us five layers of protection for the heart of the watch and, because we had removed a lot of the rubber, we were able to reduce the overall size.

We have experimented and tried to incorporate new technology into our designs and add new functions, such as cameras and MP3 players. We thought those watches would be really popular — and they did sell well for a while, but that soon tailed off. We were ahead of our time, and I think we have learned that we should only be a half step ahead of the times.

So that solved all your problems? The electronic components at the heart of the watch were still sustaining damage. As we fixed one element, another would break. It was very frustrating and I could not find a solution, so I decided that the only way to tackle the problem was to think about it 24 hours a day, seven days a week. I spent all my waking hours thinking about it — and it was even in my dreams. One day, I was in a park watching a girl bouncing a ball when suddenly the answer came to me: the engine of the watch could ”float” within the rubber ball. Before that, I had thought the thickness of the rubber would best absorb the shock of impact, but, in actuality, too much energy was still reaching the engine. By minimizing points of contact between the interior and exterior modules, the electronic components in effect floated within the outer case, and were thus protected.

in 1983, and Casio aired a TV commercial in the United States the following year in which a G-Shock watch was used as a puck in an ice hockey game. Some people claimed the action was faked, but this was proved wrong in demonstrations on a nationally broadcast TV program. G-Shock watches quickly became popular among skateboarders and young people who are conscious of street fashion in the U.S. Their photographs — looking cool and sporty — eventually appeared in Japanese magazines, and the watches suddenly became fashionable here around 1990. This was a huge turning point for us because the G-Shock had been regarded as high quality and tough, but now it was also cool. Adding fashionable to functional, sales here took off.

When did the watch evolve from being a rugged, reliable timepiece to a fashion statement? The watch was first launched

There are so many different variations of the watch, but have any versions failed to appeal to the watch-wearing public?

The original G-Shock, released in 1983.

What additional functions might future G-Shock watches have? The global market for watches has declined from a high set in 2004, primarily due to the popularity of mobile phones. We are continuing to work on developing watches with advanced technology that also tap customers’ emotions. Secondly, with the rise in the number of mobile phones, we aim to add more functions to our watches. There are all kinds of possibilities in the area of monitoring information, such as microchips in running shoes linked to your watch and those providing a person’s vital statistics. That technology will be commercially available in 2010. When you first designed this watch, did you expect still to be talking about it 25 years later? If I’d known that back then, I’d have done a better job of preparing for this interview.

Julian Ryall is Tokyo correspondent for The Daily Telegraph.

October 2008 / ACCJ Journal / 29

he Kyoto Protocol, which entered into force in 2005, sets greenhouse gas emission-reduction targets for countries of the industrialized world, the so-called Annex 1 countries, for the years 20082012. Although different

countries have different negotiated targets, in aggregate it works out to about 5% emissions reduction relative to 1990 for those countries. The strengths of the Kyoto Protocol are first of all its market-based approach, which means it is potentially costeffective. Secondly, it provides flexibility to individual nations to choose how they comply. Third, it appears to be fair, as it focuses on the wealthiest countries, the industrialized countries, which are, after all, responsible for most of the accumulated stock of greenhouse gases in the atmosphere above the level that was there before industrialization. Fourth, it is a political reality: It engendered enough support, from ratification by enough countries, to come into force. We must recognize, however, that some of the largest emitters are not constrained, and that includes China, India, Brazil, Mexico, Indonesia, South Africa and South Korea, the key developing, rapidly growing economies of the world. Second, the U.S. has not ratified the agreement. Third, because of its limited scope, there is great potential for emissions leakage. When

a limited set of countries take actions with this problem, they drive up the cost of producing goods and services within their borders in proportion to the carbon intensity of the production of those goods and services. So there is a shift, through international trade, of comparative advantage to the production of carbon-intensive goods and services outside the coalition of countries. And that means increased emissions from those non-coalition countries. In the industrialized world, tradable greenhouse gas permit systems are emerging as the favored approach domestically, for a significant set of countries, to reduce their greenhouse gas emissions. Among them are the European Unionâ&#x20AC;&#x2122;s Emissions Trading Scheme, and the U.S.â&#x20AC;&#x2122;s Regional Greenhouse Gas Initiative, which is a program affecting electricity generators in 13 northeast states. Norway and Switzerland run cap-and-trade programs. And we have the international emissions reduction credit program, the Clean Development Mechanism. The U.S. Congress will probably vote for a meaningful, national cap-and-trade program next year, which the president will likely sign into law. In addition, there is already a very ambitious, planned program, the Global Warming Solutions Act, in California that Views expressed in the Opinion Leader column are those of the author and do not necessarily represent the views or policies of the ACCJ.

30 / ACCJ Journal / October 2008

illustration for the accj journal by darren thompson

Cap-and-Trade Greenhouse Gases

By Robert N. Stavins / Opinion Leader

will likely use a cap-and-trade system to achieve its targets. Australia is going to launch an emissions cap-and-trade system soon, and it appears likely that Canada will do so eventually. In Japan, there has been a diversity of opinion regarding cap-andtrade versus sectoral approaches; but in June of this year, thenPrime Minister Yasuo Fukuda announced that the country will move forward with a national cap-and-trade system. The cap-and-trade approach to greenhouse gas emission reduction can achieve a given aggregate target at the lowest overall cost. Although any climate policy is going to impose unequal burdens across different economic sectors, across different income groups and across different geographic locations— this approach can provide a means of compensating for those unequal burdens. Likewise, at least in the U.S., it is unlikely to be degraded by political forces, in terms of its environmental performance and its costeffectiveness. It also provides an opportunity to link and harmonize with other countries’ climate policies, a key factor if the threat of global climate change is to be addressed successfully. Robert N. Stavins is Albert Pratt Professor of Business and Government at Harvard University’s John F. Kennedy School of Government, and co-director of The Harvard Project on International Climate Agreements.

温室効果ガス削減にキャップ・アンド・トレード方式を 2005年に発効した京都議定書では、先進

減方式として誕生している。例えば、EUの排

国（いわゆる「附属書I国」）を対象に、2008

出量取引制度（ETS）や、米国北東部13州の

年から2012年までの温室効果ガスの排出

電力事業者が対象となる米国の地域温室効

削減目標を国別に定めている。目標値は国

果ガス・イニシアティブ（RGGI）がある。ノル

ごとに異なるが、 1990年を基準年とすると、

ウェーやスイスは、キャップ・アンド・トレード

この附属書I国全体として5％程度の排出削

方式を採用している。さらに、 CDM （クリーン

減になる。

開発メカニズム）という国際的な排出量削減

京都議定書の長所としては、まず第1に市

のクレジット認証制度も存在する。

場ベースの方式を採用しており、優れた費用

米国は来年、全米規模の本格的なキャッ

対効果が期待できる点が挙げられる。第2

プ・アンド・トレード型制度の導入を可決・成

に、目標値への適合方法に柔軟性を持たせ、

立させる公算が大きい。また、カリフォルニア

各国に選択の自由を与えている。第3に、産業

州でもキャップ・アンド・トレードを採用した

革命以来の温室効果ガスの蓄積について基

先進的な計画案があり、オーストラリアやカ

本的に責任を負うべき最富裕国、つまり先進

ナダでも同様の動きがある。日本では当初意

国に焦点が当てられており、その意味で公正

見が割れていたものの、今年6月、福田康夫

であると言える。第4は、政治の現実に沿って

首相（当時）が全国的なキャップ・アンド・ト

おり、十分な数の国々によって批准されるな

レード型システムを推進すると発表した。

ど、一定の支援を得て発効に至っている。

キャップ・アンド・トレードは、所定の削減

しかし、上位の排出国の一部が対象外に

目標を全体として最も低コストで達成できる

なっている点はしっかり認識しておかねばな

方式である。いかなる気候変動政策であれ、

るまい。具体的には、中国、インド、ブラジル、

経済セクター間や所得層間、地域間で生じる

メキシコ、インドネシア、南アフリカ、韓国と

負担の不均衡をまぬがれないが、この方式は

いった急成長を遂げている主要開発途上国

こうした不均衡を補う手段になりうる。同様

だ。2つめの問題は、米国が京都議定書を依

に、この方式に基づく制度であれば、政治的

然として批准していないことだ。 3つめの問題

圧力によって環境実績や費用対効果がなし

は、対象範囲が限られているため、排出リー

崩しにされることは、少なくとも米国では考

ケージを招く恐れが高いことである。限られ

えにくい。また、キャップ・アンド・トレードは他

た国々だけが排出規制を行った場合、それら

の国々の気候政策と連携・調整を図る機会

の国では、生産の炭素強度に比例して製品・

を提供してくれる。そして、地球規模の気候変

サービスのコストも上昇する。すると、規制を

動という脅威に我々が対処することができる

行わない国々が国際貿易において有利にな

か、その成否の鍵となるのは、まさにグローバ

るため、炭素集約的な製品・サービスは京都

ルな連携と調和なのである。

議定書参加国以外で生産されるようになる。その結果、非参加国からの排出量が増大す

ロバート・N・ステービンズ：ハーバード大学ジョ

るのである。

ン・F・ケネディ行政大学院アルバート・プラット教

先進国では、国内での温室効果ガスの排

授（経営学・行政学）「、国際的な気候協定に関する

出量取引システムが有望な温室効果ガス削

ハーバード・プロジェクト」共同ディレクター

オピニオンリーダーに掲載されている意見はすべて著者個人の意見であり、ACCJ の意見や活動を代表するものではありません。

October 2008 / ACCJ Journal / 31

photos UNINEO Co., Ltd.

UN Secretary-General Ban-Ki-moon addresses the “Changing Landscapes: Towards a sustainable economy in Asia” conference in Seoul last June.

Asia’s Changing Landscape Seoul confab debates responsible corporate citizenship.

f I were a director of an investment company, I would focus on climate change, water and the ecosystem,” advised Paul Clements Hunt, head of the UNEPFI (United Nations Environmental Program Finance Initiative), at a two-day conference held in Seoul last June. According to this year’s “State and Trends of the Carbon Market,” a World Bank report, the carbon market currently valued at $64 billion will be $150 billion in 2012. Furthermore, the Global Water Intelligence report estimates that the industrial water purification market is set to grow to $20 billion by 2010, up from $5-6 billion in 2002; and desalinization will be worth $75 billion in 2012. In “Economics of Ecosystems and Biodiversity,” an interim report commissioned by the European Union and the G8 Environment

32 / ACCJ Journal / October 2008

Ministers, estimates for the loss of biodiversity and ecosystem total $14 trillion, or 7% of the global GDP, by 2050. Within climate change lie the seeds for vast clean and green commercial opportunities and the ultimate planetary risk— such was the main theme running through “Changing Landscapes: Towards a sustainable economy in Asia.” This jointly held conference marked a first: The UNEP-FI, the UN Principles for Responsible Investing (PRI) and the UN Global Compact provided a forum for discussion among civil society, the financial sector and business on environmental, social and governance (ESG) issues. The focus was on the impact that these issues have on valuing investments, as well as their role in promoting good business and public-private collaboration.

The conference marked the continuation of a process that began in Kyoto back in 1997,was taken up in Bali in 2007, and finally will culminate with a carbon roadmap in Copenhagen in 2009. The roadmap is intended to be inclusive — pro-market, proinvestment and pro-sustainable development. With most of humanity living in Asia, the region was an ideal location for this inaugural event. As explained by Clements Hunt, Asia will be “the economic engine of the 21st century”; consequently, “economic opportunities and environmental challenges will be immense.” Presenters at Changing Landscapes in Seoul reminded us that strong early action is critical to reducing emissions, while any policy uncertainty delays progress.

By Alana R. Bonzi / Asia’s Changing Landscape

According to the WWF, we would need 3-5 planets in order to sustain our current patterns of consumption.

Tessa Tennant, executive director of the ICE Organisation, underscored the overwhelming urgency of the situation when she brought forward statistics from the World Wildlife Fund (WWF). According to the WWF, we would need 3-5 planets in order to sustain our current patterns of consumption. “Prosperity comes at a cost, and the gaping disparity of rich and poor, mass consumption and mass production are keys to current imbalances,” noted Jong Chang “Focus on climate change, water, biodiversity and ecosystem,” advised Paul Clements Kim, president of the Financial Hunt, head of the United Nations Environmental Program Financial Initiative. Services Agency in South Korea. And climate change is imbalance at meltdown. In Asia, ESG issues mainstream research, such as its most palpable. provides a structure to factor some product mix and geographic distriIn the past, attention has been of the traditional, potentially bution of assets. The consultancy focused on environmental and troublesome, non-quantifiable developed the Carbon Beta Risk social issues, separately from issues (e.g., materiality and quality (CBR), a measure to quantify a governance. But what is different of management relationships and company’s exposure to carbon risk. this time around, says Dr. Matthew networks) into the value of compa- The CBR uses the relation between Kiernan, founder and president nies, according to Professor Byong cost of compliance as a percentage of Toronto-based consultancy Ahn, director of the CSR Research of EBITDA (earnings before interest, Innovest Strategic Advisory Center of the Korea Advanced taxes, depreciation and amortizaServices, “is that governance has Institute of Science and Technology. tion) or profit. been joined with environmental While the public and invesGetting the policy framework and social issues to look at risk in a tors are increasingly demanding right about climate change issues more systematic way.” good performance on ESG issues, is also critical, especially for private During his speech in South Korea, combined with good financial capital to flow. he mentioned that the financial results, Dr. Kiernan is hoping to According to Tennant, Asia is sector is now waking up to the help the financial sector overcome moving in that direction — with importance of ESG issues albeit far “one deep-seated myth: the percep- policy environment frameworks behind the apparel and extractive tion that sustainability and profitsuch as the China Renewable sectors which, 30 years ago, had no ability are a zero-sum game.” Energy Target and the mandates choice but to do so. Bill Harnett, managing director of some sovereign wealth funds The ESG approach, alongside at Asia Pacific-Innovest Strategic (e.g., Singapore’s with a clean mainstream financial research, Value Advisors, in his presentation tech focus). In Japan, the Tokyo helps capture and assess informaat Changing Landscapes, advised Metropolitan Government recently tion, and form a multidimensional that it was important to examine voted in a municipal cap-and-trade picture of risk and opportunity. the quality of management and system; and starting this fall, emisInnovest proved just how valuof the board, as well as their level sions trading will be launched able this picture can be when of awareness of climate change — nationwide. In addition, next April, they foresaw the U.S. subprime and to combine that with more a stricter version of the Energy

October 2008 / ACCJ Journal / 33

There is “a clean-tech hunger among the younger generation of the super rich.”

Bill Harnett, managing director at Asia Pacific-Innovest Strategic Value Advisors: examine management and board quality and their awareness of climate change.

Conservation Law is expected to come into effect. But some actors in the financial sector have not always waited on policy to drive ESG issues. Pension funds with very clear polices for sustainable finance and a longer investing time horizon (e.g., 30-40 years) also push these issues along. At the Changing Landscapes conference, Dennis Johnson, senior portfolio manager from CalPERS (California Public Employees’ Retirement System), drew attention to the fact that the group actively seeks strategic opportunities with ESG issues as part of the mandate. CalPERS conducts risk-return analysis with an ESG framework built into its assessment. It engages at the board-level and with the leadership of exchanges and regulatory bodies to inform them of best practices. High net-worth individuals play their part in ESG issues, too. According to Clements Hunt, the

34 / ACCJ Journal / October 2008

next-generation rich “focuses on biodiversity, social needs, water.” There is “a clean-tech hunger among the younger generation of the super rich,” says Tennant. The YAWNs — the acronym given by London’s Sunday Telegraph to the “Young And Wealthy but Normal” — are acutely aware of climate change, and of widening gaps between the rich and poor. They make investment and lifestyle choices to reduce their carbon footprint and to promote sustainable development. According to the Cap Gemini/Merrill Lynch 12th Annual World Wealth Report, the super rich are continuing to be attracted to “green investments … with clean tech investments increasing to $11.7 billion — up 41% since 2005.” The fastest growth in the number of high net-worth individuals is in India and China. As a result, the war for talent is on. Wealth management companies looking for employees capable of building trust and relating to this new younger generation. Says Clements Hunt: “There is enough anecdotal evidence out there.” Basically, if you understand the impact of sustainability issues on the bottom line, then you’re hired. Asia is also home to a large number of savers. The best growth opportunity for asset managers, according to McKinsey, lies not in China with its $2 trillion, but in Japan with its $12 trillion in lowyielding investments and less than 3% in mutual funds. But there are, of course, still many challenges — as perceptions and fears present obstacles. In Japan, according to Masahiro Kato,

senior manager at Mitsubishi UFJ Trust and Banking Corporation, of the Mitsubishi UFJ Financial Group, Inc. (MUFG), the $8 billion Socially Responsible Investing (SRI) market makes up only 0.2% of the Japanese investment market. Masaru Arai, director and principal executive officer and chief investment officer at Daiwa Asset Management Co., Ltd. of Daiwa Securities Group Inc., mentioned that investors rely on mass media and business groups like Nippon Keidanren for information about SRI and ESG issues. There is also a perception that SRI funds do not grow. Another characteristic of the market is that it is mutual funddriven, with only one pension fund investing along ESG themes. Japanese customers are reluctant to invest in SRI funds due to a lack of quality information, a long investment history or incentives. This investor reluctance is indicative of the information silos that exist within companies — fragmented internal communications where information is kept within departments. Subsequently, the CSR department may understand the relevance of ESG issues to performance, but the Investor Relations department is unaware — and cannot adequately respond to queries. Also, companies are not sure what information to disclose, nor how to do so. As a result, their response rate to research questionnaires is low, and some asset managers rely on international indices for better access to companies. These fears are not singular to Japan.

Asia’s Changing Landscape

Japanese customers are reluctant to invest in SRI funds due to a lack of quality information, a long investment history or incentives.

In South Korea, according to Do Sung Choi, member of the Monetary Policy Committee at the Bank of Korea, SRI and ESG issues are warily synonymous with transparency and hostile takeovers. Social and governance issues in China, South Korea and Japan remain challenging to factor in, as companies sometimes find it difficult to embed human rights principles into their supply chain, or at home. Japanese companies excel in the environmental parameters, for example, but still have limited understanding of the materiality of social and governance issues, especially in their supply chains. There is a glimmer of hope, however, as some Japanese companies have begun to understand what investors are looking for, and are preparing to link the tangibles of ESG issues to performance. In Europe, problems occur when holding companies delegate their ESG responsibilities to individual companies in their group. France’s Bernard Icard, head of Proprietary Investments at Caisse des Depots, in his presentation mentioned that access to companies is one of the obstacles to good quality research. Icard and his team apply ESG parameters across the entire €20 billion portfolio of 150 companies in which his organization invests. The investment time horizon is 30-50 years, with a buy-and-hold strategy; and the organization has a preference for “soft activism” dialogue with top management. In France, Caisse des Depots enjoys a privileged relationship and finds it more beneficial to talk in private meetings. However, Icard reminded

the audience that, given the relative newness of ESG analysis in the financial sector, many researchers do not yet have the support — and cannot command the weight needed — to find out, or influence, the ESG issues that are critical to good performance. Outside its own jurisdiction, Caisse des Depots has its own challenges when dealing with governance issues — e.g., board members being allowed to have stock options in the Netherlands, but not being allowed to do so in France. Usually, Caisse des Depots uses the French standard as a guide. The ESG path is, indeed, full of difficulties. Prof. Roger Rauer, carbon market expert and senior faculty fellow at Wharton, recommended in his presentation that governments focus on target and environmental goals, and “let the market [economic instruments] take us there.” The carbon market is compliance-driven, and usually characterized by power plants seeking to meet regulations and offset their carbon pollution. But the current structure of the carbon market, combined with human nature, does not make this easy. Prof. Rauer spoke of two key examples: linkage and leakage. When Japan launches its Emission Trading Scheme next fall and “links” to global carbon markets, it will be possible to take advantage of “leaks” leading to a reduction of 10% in one market, matched by a 20% increase in other lessregulated markets. Creating national policy to structure how to cap and whom is also tricky. In Australia, according to



SNAPSHOT



In Asia, high net-worth individuals reserve 13% of their total investment portfolios to green investing and ultra-high networth individuals assign 14%. In the Middle East and Europe, the figures range from 17% to 21%; Latin America, 15% to 17%; and North America, 5% to 7%. The total wealth of high net-worth individuals valued at $37.22 trillion in 2006, and $40.7 trillion in 2007, is expected to grow to $59.1 trillion by 2012. The accumulated wealth of Asian high net-worth individuals is estimated to be $9.5 trillion; that of Japan’s 40 richest persons is $89.9 billion.

Amanda McCluskey, the government allocates free credits to certain sectors, while the agriculture sector, a sensitive and protected industry, has no caps. Nevertheless, the financial markets are realizing the “diamond” potential of the carbon market. There is an increased use of options and derivatives products, as well as more transactions and greater volatility on exchanges. Except for Japan, Asia is still a supplier of Carbon Emission Reduction (CER) credits, and there is opportunity in stimulating demand. China remains the largest supplier. With the 2008 Beijing Olympics, China planned to shut down industries in five provinces. But that is an episodic short-term plan; and Asia, in general, has institutional problems. What is needed, continued Prof. Rauer, “is change in real time.” His recommendations for China included tackling compliance violations — have the regulations and the teeth to enforce them, and adapt the monitoring technology.

October 2008 / ACCJ Journal / 35

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Asia’s Changing Landscape

IPCC researchers last December reported that 20–25% of the world’s greenhouse gas emissions come from changes in the way land is used. However, Prof. Rauer went on to explain that all of this should be done in an environment that fosters economic development — access to water, health, housing, education. Water, another sensitive and emerging market, entails a complicated task, as it deals with a fundamental public good in public-private alliances. In Asia, opportunities lie, according to Clements Hunt, in wastewater treatment, as 50% of the population lives in urban areas. By 2050, 80% of China’s GDP will be generated in three delta regions, according to Munich Reinsurers, placing each region at risk to rising flood and sea levels. Pictet and Company‘s Water Fund has been one of the few funds that seem to have gotten water investment right. The fund is valued at €4.6 billion, and focuses on four key drivers: “water supply, water technology,

packaged water, and environmental services.” It includes investments in Veolia Environment, the Suez, Nestlé and Tokyo’s Kurita Investment. Fund manager Hans Peter Portner said in a recent interview that the fund was looking in Asia for emerging opportunities. IPCC researchers last December reported that 20–25% of the world’s greenhouse gas emissions come from changes in the way land is used. The majority of those changes come from deforestation — clearing forests, usually for commercial purposes. Zoe Cullen, Conservation Partnerships program officer for Fauna and Flora International, spoke of her organization’s support of mechanisms for REDD (reduced emissions from deforestation and degradation) that are embedded in the Aceh project (see box). The most challenging aspect of the project was to estimate the value of the uncut timber, get the figure accepted,



SNAPSHOT



Asia is the location of the world’s first commercially financed Avoided Deforestation project, in Aceh province, Indonesia. The project involves Merrill Lynch, Australian company Carbon Conservation, NGO Fauna and Flora International, and “750,000 hectares of pristine forests.” The goal, according to Dorjee Sun, the director of Carbon Conservation, is to “avoid over 100 million tonnes of CO2,” which is the “equivalent of 50 million flights from Sydney to London.”

and transfer that to the communities in hard currency via protected livelihoods. The organization has been working on a Biodiversity and Ecosystem Service evaluative tool — Natural Value Initiative — with a Brazilian business school, Fundacao Getulio Vargas, and its experience with engaging local communities in conservation projects is key. Merrill Lynch is optimistic about this new market. According to the company’s April press release, it will be offering “carbon credits to clients in its investment banking, commodities and wealth management businesses later on this year.” Changing Landscapes was essentially about business as usual — defining policy, creating services and products, rolling them out on the market and making money. But there was more to it. Changing Landscapes was about taking care of business while taking care of each other and our environment. Or else — book the first space ship out of here. Alana R. Bonzi is an adjunct lecturer at Keio University and a consultant.

October 2008 / ACCJ Journal / 37

Tony McNicol

Key industry players at an ACCJ meeting on September 1 to discuss ESTA included, clockwise, from top left: Naoko Shirane, of the State of Texas Japan Office; Kayoko Inoue, Managing Director of the Japan office of the Travel Industry Association; Vincent You, Director of International Sales at The Westin Tokyo and Chairman of the ACCJ Travel Industry Committee; Charles Duncan, Managing Director, Japan at Continental Airlines, Inc. and an ACCJ Governor; and James Foster, Director, Corporate Affairs, Microsoft Co., Ltd.

ESTA Update

Fears that new system will harm U.S. tourism.

hen Mari Yamauchi isn’t in Tokyo working as a temp office worker, she’s usually at some exotic location overseas indulging in her passion, yachting. Her latest trip took her to a small island off the coast of Venezuela. To get there, she had to transit through the U.S. In fact, ever since taking up her hobby a few years ago, she’s become a frequent traveler to the U.S., either for stays or to transit through. But in the future, she would prefer to skip the country all together, she says. Why? Because starting January 12, all Japanese nationals will have to be authorized by the U.S. government in order to enter the country — and she views the new rule as not just a hassle, but also an infringement of her personal privacy. The requirement is part of the Electronic System for Travel

38 / ACCJ Journal / October 2008

Authorization (ESTA) that requires holders of passports who do not need U.S. visas to go online to enter a range of information, including any criminal records or communicable diseases they might have, in order to be allowed to enter the U.S. “What’s the point of a visa waiver if you have all this stuff to deal with? I don’t want to tell a computer lots of information about myself,” Yamauchi, 39, says. “Maybe there should be a boycott of travel to America — maybe a boycott would be too extreme — but at least some opposition to this.” It’s that kind of sentiment about ESTA that has the U.S. travel industry on edge. Many industry officials have slammed the authorization system, saying that forcing tourists to go through the rigmarole of registering online may deter large numbers

of tourists from choosing the U.S. as a travel destination. The airlines, meanwhile, envision the prospect of turning away large numbers of their customers at check-in counters because they failed to obtain the authorization. ESTA was rolled out by the U.S. Department of Homeland Security (DHS), which says the system is needed to tighten border security and prevent terrorists from entering the United States. The system, which has been available as an option since August, affects travelers of the 27 visa-waiver countries, most of which are in Western Europe and also include Japan. “I’m afraid that we’re going to lose more Japanese visitors to the U.S.,” sighs Kayoko Inoue, managing director of the Japan office of the Travel Industry Association (TIA), which represents the U.S. travel industry.

By Geoff Botting / ESTA Update

… unless more PR efforts are done in Japan and in the Japanese language, the country’s departure terminals could be the scene of chaos and angry passengers starting January 12. Indeed, ESTA comes at a particularly bad time for the industry, which has seen steady declines in visitor numbers since 9/11. In 2007, the U.S. received over 3.5 million visitors from Japan, off 4% from the previous year and down by a staggering 30% from 2000, according to TIA statistics. The U.S. Embassy in Tokyo invited several hundred travelindustry officials to two meetings on July 29 to explain how the system works and also to calm the industry’s concerns over ESTA. The system really isn’t a hassle, they stressed, saying it’s no different from filling out the current I-94W form and that the process can be done conveniently beforehand. Charles Duncan, managing director for Japan at Continental Airlines, Inc., has different concerns. He’s worried that a large part of the Japanese flying public still doesn’t seem aware of ESTA’s impending introduction; and that unless more PR efforts are done in Japan and in the Japanese language, the country’s departure terminals could be the scene of chaos and angry passengers starting January 12. “If people show up at the airport and they don’t have the ESTA — our system will be linked back to Homeland Security and we’ll get a red light — we can’t board those customers. So they would have to very quickly find an Internet terminal and then fill out the form, which can take as long as 30 minutes. That’s going to be a real challenge,” Duncan says. Timothy Langley, president of

Langley Enterprise, K.K., a Tokyobased company that offers real estate, market entry and corporate advisory services, agrees that ESTA has arrived in Japan “like a submarine. It’s just too quiet.” As for the scenario of Japanese travelers scrambling to find Internet cafés at airports, Langley wonders why the U.S. authorities have no plans to offer a mobile Web site. “Everybody here is carrying their own Internet terminal in their pocket — their keitai,” he points out. Then there are the odd idiosyncrasies of the current ESTA Web site. At a meeting of the ACCJ Transportation Committee on September 2, several participants agreed that the site was generally confusing and less than user-friendly. For instance, phone numbers containing hyphens aren’t accepted, the URL is hard to remember, and passengers planning to travel on to other countries are asked to enter their addresses in the U.S. “I tried and it took me 30 minutes. It’s not easy,” Inoue said at the meeting. The TIA has asked that the system be delayed so that such problems can be ironed out. Barring that, however, the travel industry can only hope that by January the site will be drastically improved and also that the Japanese traveling public will be thoroughly educated about ESTA. If poorly executed, ESTA could well end up damaging the reputation of



SNAPSHOT



What is ESTA? It stands for Electronic System for Travel Authorization. The new system will require all visitors from U.S. visa-waiver countries to be authorized before they come to the U.S. Who is affected? U.S. visa-waiver countries include Japan and 26 other countries, mostly in Western Europe. What is the purpose of ESTA? To strengthen border security and prevent terrorists from entering the U.S. How do visitors get authorized? By applying online at the ESTA Web site (https://esta.cbp.dhs.gov/) When does the system become compulsory? January 12, although it’s been optional since August. How long before departure are travelers required to be authorized? In principle, no later than 72 hours, but last-minute changes are expected to be possible. What happens to visitors to the U.S. who fail to get ESTA before traveling? They will not be allowed to enter the U.S., and would likely be turned away at airline check-in counters.

the U.S. as a travel destination and a place to do business. “Since I’m a long-term resident of Japan, I would hate for the United States to be made to look foolish in any way,” Langley says. “It makes our business difficult. It makes selling American products a little bit more difficult. And that’s hard enough as it is.”

Geoff Botting is a freelance writer based in Tokyo.

October 2008 / ACCJ Journal / 39

Guide to Mergers & Acquisitions | Special Advertising Section by lorem ipsum / lorem ipsum

erger and Acquisition (M&A) activity in Japan has been growing steadily in recent years. However, according to data from MARR, the volume of M&A transactions involving Japanese companies in 2007 was 2,696 deals, down around 3% compared to 2,775 deals in 2006. Around 75% (2,021 deals in 2007) of these deals were domestic. In order to attract foreign direct investment (FDI), the Japanese government has been reforming the corporate code, commercial law and guidelines regarding M&A. Acquisitions of Japanese companies by foreign companies have increased from 180 deals in 2006 to 309 deals in 2007, according to MARR. Nevertheless, the value of M&A activity in Japan ($105.8 billion based on IMF official average exchange rate) was just 2.2% of the global value of M&A (approximately $4.8 trillion) in 2007—a remarkably small figure for the world’s second-largest financial market. Moreover, compared with other major countries, the level of FDI in Japan is still low. FDI accounted for only 2.3% of GDP at the end of 2007 in Japan, compared to 14.6% in the United States, 33% in France and 48.5% in the United Kingdom. As Japan faces an aging population and shrinking workforce, the Japanese government aims to increase the FDI ratio to 5% by 2010, and it has been making efforts in structural reforms to promote FDI. For example, triangular mergers were introduced on May 1, 2007. In a triangular merger or share exchange, a wholly owned Japanese subsidiary of a foreign parent company can acquire a Japanese target company using stock of the foreign parent company as consideration instead of only cash. To enable the parties to enjoy tax deferral in a triangular merger, the existing requirements for tax deferral were expanded to include the use of parent shares as the exclusive consideration. When Citigroup acquired Nikko Cordial through a wholly owned subsidiary of Citigroup in Japan, it was the first-ever triangular merger after the triangular merger law came into force. As such, the transaction has elicited considerable attention and established what may be a template for future deals. Citigroup conducted a tender offer and acquired approximately 68% of the voting stock of Nikko Cordial. Then, it conducted a triangular share-swap to acquire the remaining 32% from the minority shareholders of Nikko Cordial. In the 2008 tax reform, tax rules have been further modified in order to make a triangular merger or share exchange more practical. Another example of significant tax reform in Japan is the recent introduction of an independent agent exception to

The M&A Scene in Japan Reforms encourage better times ahead. the definition of agent-type permanent establishment (PE) in domestic tax laws. Furthermore, on June 27, 2008, Japan’s Financial Services Agency (FSA) issued two documents providing guidelines for investment fund managers on the independent agent exemption that are more in line with the internationally accepted standards in relation to agent-type PE under the OECD “Model Tax Convention on Income and on Capital.” The FSA believes this reform is an important step to heighten competitiveness in Japan’s financial markets. While the Japanese government is making efforts to boost FDI, many Japanese companies have established poison pill defense mechanisms and have increased cross-shareholdings to ward off any hostile takeover bid. Around 400 listed companies in Japan adopted such defenses in 2007. Such defensive reactions have added another layer of complexity to the M&A market in Japan. However, they are unlikely to have any long-term dampening effect on FDI activity here, any more than in other countries where, after all, poison pills and other sophisticated corporate defenses have been a longstanding feature of the M&A landscape. M&A activity in Japan is certain to increase. Yet, while instability in global financial markets continues, the majority of transactions here will likely be domestic deals. Nonetheless, inbound deals also will continue to grow; and as macroeconomic conditions improve, the legal reforms that are emerging in Japan should have a sizable positive impact. Yoshitaka Hasegawa Certified Public Accountant Partner, M&A Transaction Services Tohmatsu Tax Co., a member firm of Deloitte Touche Tohmatsu

Robert Rothenberg Attorney at Law (California, District of Columbia) Director, M&A Transaction Services Tohmatsu Tax Co., a member firm of Deloitte Touche Tohmatsu

October 2008 / ACCJ Journal / 41

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Law Firms Atsumi & Partners Tel: 03-5501-1166 (Bonnie Dixon) Fax: 03-5501-2211 www.apap.gr.jp Atsumi & Partners is one of Japan’s leading independent law firms and was the first Japanese law firm to admit non-Japanese partners, Ms. Bonnie Dixon, a New York lawyer; and Daniel Hounslow, an English lawyer — both with more than 20 years’ experience; our foreign partners are supported by five foreign associates. We operate as a fully integrated international team, providing advice on complex domestic and cross-border matters to the standards the modern business community expects. Atsumi & Partners has for some years been widely regarded as Japan’s premier law firm in the fields of securitization and structured finance, and now offers its clients a fullservice capability with international experience in finance, banking, real estate finance, private equity, investment funds, mergers and acquisitions, securities, syndicated loans, derivatives, public offerings, private placements, information technology, intellectual property, general corporate law, trust law, bankruptcy, insolvency, restructuring, due diligence, compliance, litigation and arbitration.

Nagashima Ohno & Tsunematsu Tel: 03-3288-7000 Fax: 03-5213-7800 E-mail: info@noandt.com www.noandt.com Nagashima Ohno & Tsunematsu, established in 2000, is widely known as a leading law firm in Japan, and a foremost provider of international and commercial legal services. We have successfully structured and negotiated many of Japan’s largest and most significant corporate and finance transactions, and have deep litigation strength spanning key commercial areas, including intellectual property and taxation. As of September 3, 2008, we have 313 lawyers (inclusive of 12 foreign-licensed lawyers)

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capable of providing our clients with practical solutions to meet their business needs. Having considerable M&A expertise and an unmatched track record, Nagashima Ohno & Tsunematsu is able to assist with its clients’ wide and varied legal needs, both in Japan or abroad. In M&A transactions, we represent clients covering virtually all business and financial sectors. We are familiar with an extraordinarily wide range of specialized legal situations, such as: M&A deals stemming from bankruptcy or insolvency proceedings; tender offers targeted at listed companies; M&A deals based on statutory mergers, stock for stock exchanges or spin-offs and combinations of each these. In all these instances, we stand ready to provide the most up-to-date advice. Contacts: Hisashi Hara, (Ms.) Yuko Tamai (Dai-ichi Tokyo Bar Association).

White & Case LLP White & Case Law Offices (Registered Association) Tel: 03-3259-0200 Fax: 03-3259-0150 www.whitecase.com White & Case LLP is a leading global law firm with more than 2,300 lawyers in 37 offices in 25 countries. Our Tokyo office, established in 1987, has a long and successful history, and is considered one of the pre-eminent and largest foreign law firm offices in Japan. We bring together a leading domestic practice and one of the largest number of registered foreign attorneys (Gaikokuho Jimu Bengoshi) of any law firm in Japan. Our foreign-qualified and Japanqualified lawyers work together through a registered association (Gaikokuho Kyodo Jigyo) to offer legal advice to both Japanese and international clients across key practice areas. White & Case’s Tokyo team is a market leader in Corporate/M&A services in Japan. Leading multinationals, major commercial and investment banks, entrepreneurs and smaller visionaries alike have turned to our team of foreign and Japanese M&A lawyers to structure complex transactions with precision and speed. They include intricately structured domestic and cross-border mergers and acquisitions, spin-offs, leveraged buyouts, mergers, joint ventures, strategic alliances and equity invest-

ments, including many multi-billion dollar deals involving multiple jurisdictions. The Tokyo office regularly advises on both public and private deals. With extensive experience in the international arena, our M&A and corporate lawyers have the knowledge, infrastructure, technical capability and strategic perspective that are invaluable in helping clients select, implement and coordinate their strategies around the world.

M&A, Financial Advisory & Tax Services Ernst & Young Transaction Advisory Services Co., Ltd. Tel: 03-5401-7100 www.eytas.jp The Japanese economy is undergoing major transformation leading to a wide range of opportunities and risks for domestic and foreign businesses and investors. Our Transaction Advisory Services (TAS) group is at the forefront of change, with proven value-added, cuttingedge solutions. Ernst & Young is a global leader in professional services. Our TAS group offers a range of financial advisory and other transaction-based solutions to help clients maximize the value of their businesses and investments, while mitigating the risks of transacting in the face of uncertainty. Our vast experience of advising on transactions in Japan enables us to offer valuable insights and innovative solutions, tailored to the country’s financial, legal and regulatory environment. Our team is part of a global TAS practice of over 7,000 dedicated professionals in 90 countries, advising on many of the most significant global deals. Our global network gives us access to an unprecedented range of experience dealing with complex technical industry-specific, and cultural considerations. Our team comprises bilingual, multicultural professionals, with industry experts specializing

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in private equity, banking and financial services, trading and wholesale, technology communications and entertainment, leisure and hospitality, consumer and industrial products, manufacturing, pharmaceuticals and healthcare. Contact Mike Buxton at 03-3595-8353 (michael. buxton@jp.ey.com), or Tobias Lintvelt at 03-3506-2423 (tobias.lintvelt@jp.ey.com).

Houlihan Lokey Tel: 03-4577-6000 Fax: 03-4577-6099 www.HL.com/jp Houlihan Lokey, an international investment bank, provides a wide range of services, including M&A, financial opinions and advisory services, and financial restructuring. The firm provides cross-border M&A advisory services, renders expert fairness opinions and is a leader in providing independent valuations for tax and financial reporting purposes. Established in 1970, the firm has over 800 employees in 14 offices in the United States, Europe and Asia. Each year the firm serves more than 1,000 clients ranging from closely held companies to Global 500 corporations. For more information on Houlihan Lokey’s services in Japan, contact Ryuta Fujino, Managing Director, at rfujino@ hl.com; or John McIntosh, Senior Vice President, at jmcintosh@hl.com.

Nagamine Accounting Office Tel: 03-3581-1975 www.nagamine-mri.com Since 1989, Nagamine Accounting Office has been assisting foreign-affiliated firms (nearly 80% of our clients are foreign-affiliated) expand their business operations into Japan by providing expertise in the areas of tax and accounting. NAO supports the business start-up process in Japan, thus offering payroll and cash management services. Our main areas of service are as follows: Transfer Pricing Consulting: Evaluating taxation risk based on client interviews and the analysis of internal information regarding related-party transactions. We offer the appropriate solutions on transfer pricing risk management.

Audit: When foreign-affiliated companies implement voluntary audits in Japan for the purpose of M&As or per request of the parent company, NAO can support with the proper handling of audits and due diligence. Tax & Accounting: NAO tailors all services to the needs of our clients, from routine bookkeeping to the preparation and review of financial statements in accordance with the IFRS or US GAAP. Payroll: NAO can provide payroll accounting and social insurance services for our client. Cash Management: NAO can also act as an expense clerk service; by giving authorization to wire vendors, we can perform the majority of back-office financial functions. For more information, please contact Shinya Nishi at nishi@nagamine-mri.com

Tohmatsu Tax Co. Tel: 03-6213-3800 Fax: 03-6213-3801 E-mail: tax.cs@tohmatsu.co.jp www.deloitte.com/jp Tohmatsu Tax Co. is a leading member firm of Deloitte Touche Tohmatsu, an international association of accounting firms with approximately 150,000 professionals in over 140 countries worldwide. We are a global provider of high-quality professional tax services tailored to the specific needs of multinational investors focusing on Japanese business opportunities. We have assisted our clients as tax advisors on some of the largest M&A transactions in Japan across a wide range of industries, and provide guidance to a number of Japan’s largest corporations in structuring and organizing their international transactions and tax affairs. In addition, we have extensive experience in advising on all aspects of cross-border transactions, including transfer pricing and global employee rewards planning. Our knowledge is more than theoretical; and with our wide-ranging practical experience of all types of tax consulting and compliance, we aim to get below the surface of the issues faced by our clients. With this approach, we can help you to identify and resolve problems before they become major stumbling blocks. For more information, please contact Yoshitaka Hasegawa or Robert Rothenberg at 03-6213-3800.

Recruitment Specialists Robert Half International Tokyo Tel: 03-5219-6633 Fax: 03-5219-6634 E-mail: tokyo@roberthalf.jp

Osaka Tel: 06-4560-5522 Fax: 06-4560-5523 E-mail: osaka@roberthalf.jp www.roberthalf.jp Founded in 1948, Robert Half International (NYSE: RHI) is the world’s first and largest specialized recruitment firm and a member of the S&P 500 Index. RHI is a recognized leader in professional consulting and recruitment services, and is the parent company of Protiviti®, a global independent internal audit and business and technology risk consulting firm. With over 400 locations throughout Asia, Oceania, Europe, North America, South America, and the Middle East, our dedication to outstanding service knows no boundaries. Built on a foundation of ethics and a dedication to discretion, we provide expedient solutions to unique and specific recruitment needs. We offer six specialized recruitment resources: • Robert Half Finance & Accounting provides accounting and financial recruitment services at all levels. • Robert Half Financial Services Group is dedicated to the special needs of banking and financial services companies. • Robert Half Management Resources provides financial professionals on an interim project or contract basis. • Robert Half Technology places IT professionals in a wide range of fields, including Web development, systems integration, network security and technical support. • Robert Half Sales & Marketing provides qualified professionals for sales, marketing and advertising positions across all industries. • Robert Half Human Resources provides qualified professionals for human resources roles across all industries.

October 2008 / ACCJ Journal / 43

Guide to Mergers & Acquisitions | Special Advertising Section

Inbound M&A in Japan Positive signs in the market, but still work to be done

he term M&A in Japan conjures up no shortage of opinions. M&A might be viewed as a positive force of change, bringing together complementary entities that combine to create value in the market and, ultimately, value for the consumer. Such was the case when Fujifilm Holdings acquired Toyama Chemical this year for $1.4 billion. Conversely, it might conjure up negative imagery of the aggressive foreign investor trying to acquire some of Japan’s most respected and venerable companies as was the perception when Steele Partners, in the name of improving shareholder value, sought to acquire Bulldog Sauce and Sapporo Holdings, or when The Children’s Investment Fund sought to take a significant equity position in J-Power. In these highprofile cases, the press and even the Tokyo District Court described the investors as “abusive” and as “vultures.” So how is one to view M&A in Japan? When evaluating the numbers, it is difficult to identify a clear trend or arrive at a definitive conclusion regarding the market size and potential. Thomson Reuters reported that the number of inbound deals increased from 162 transactions in 2006 to 244 in 2007, but as of June 1, 2008, the number of announced inbound transactions stands at only 68 deals. From a value perspective, 2006 inbound transaction value was $5.0 billion, which increased to $35.3 billion in 2007, but stands at only $5.3 billion as of June 1, 2008. With all of this in mind, what then is the state of inbound M&A in Japan? The M&A market in Japan is in the process of evolving and maturing, albeit on a trajectory and pace that is Japan’s own. There are a number of key trends that point to this fact, and I note three here:

Accounting Standard Convergence The Japanese accounting profession, in an effort to provide greater clarity to investors and to the general public, has moved toward converging Japanese accounting standards with International Financial Reporting Standards by 2011, with many significant accounting differences to converge beginning fiscal 2008. Such

44 / ACCJ Journal / October 2008

moves should have a positive impact in assisting overseas capital understand the underlying fundamental financial information of Japanese corporations. New Company Law The government has revised the Corporation Law, which was initially established in 1899 and will now allow companies to use treasury stock as merger consideration, referred to as a triangle merger. While the initial adoption of the new Corporation Law was delayed from being adopted in 2006 to 2007, the fact that the government is willing to sponsor such change should be viewed as a positive factor toward opening markets and allowing foreign capital to flow into Japan. Second thoughts about the Poison Pill In conjunction with the new Corporate Law, the threat of hostile takeover was perceived to be real by many Japanese corporations and, accordingly, many moved to adopt poison pill defenses. Such defense mechanisms quickly became “flavor of the month,” with 500 listed entities enacting poison pill mechanisms. The trend was further brought to the forefront during recent high-profile transactions involving activist investors, whereby the targets adopted poison pill tactics. These moves were widely criticized in the West as a major step backwards for M&A in Japan. However, this trend has been seen to be reversing and a number of companies have moved to abolish poison pill mechanisms. According to a recent Goldman Sachs research note, nine companies have removed such defenses, with Shiseido opting to remove the poison pill in April 2008. The re-evaluation of the poison pill may reflect management’s appreciation of the fact that the best defense is a good offense in the form of corporate value creation. Marching to its own beat Japan is maturing and taking steps forward to define and solidify the necessary foundation to create a robust and active M&A market, but one needs to be mindful of projecting artificial timelines and ideals of efficiency. Japan still marches to its own beat, and having capital and a business plan alone will not guarantee success for foreign investors. But recent signs in the M&A market have been positive and momentum for progress is there. Todd Kropp Managing Director Ernst & Young Transaction Advisory Services

Winning decision?

Finding the right deal. Negotiating the right price. Closing at the right time. Transactions are fraught with complexities. Understanding them helps you achieve the full potential of the deal. Our transaction advisory professionals have assisted some of the world’ s leading organizations, fastest-growing companies and most dynamic private equity ﬁrms with some of the largest deals. And with our 7,000 advisors worldwide, you can beneﬁt from our experience wherever and whenever you need it. What’s next for your business? www.eytas.jp Services • M&A Advisory • Transaction Support • Transaction Tax • Valuation & Business Modelling • Restructuring • Transaction Real Estate • Human Capital • Transaction Integration Ernst & Young Transaction Advisory Services Co., Ltd. Tel: +81-3-5401-7100 E-mail: marketing@jp.ey.com

Photos Kaoru Miki

Honmonji in Ikegami

Mecca for Lotus Sect Buddhists

ate September 1282. A frail and ailing Buddhist monk is crossing the Musashino Plain when he becomes too ill to continue. His companions take him to the nearby home of one of his followers, Munenaka Ikegami, the local samurai. The monk is Nichiren, founder of the Lotus Sect of Buddhism. Over the next three weeks, in spite of rest and care, Nichiren’s condition continues to deteriorate. Propped against a pillar in Ikegami’s home, he preaches to those who come daily to see him. But he is dying and he knows it. On October 13, 1282, reciting the mantra he introduced, namu myoho renge kyo, he passes to Nirvana. According to legend, a cherry tree in the courtyard outside the house bloomed in mourning. Fast forward to 2008. Ikegami, a prosperous farming community pre-dating Edo, has become a suburb of Tokyo, just 18 minutes from Gotanda on the Tokyu Ikegami Line. It’s a pleasant neighborhood that has retained its village feel, as well as its history and strong connection to Lotus Sect Buddhism. The main sights to take in are a plum garden, the site of Nichiren’s death, and the most important Lotus Sect temple in the country. To access the sights in that order, begin your

46 / ACCJ Journal / October 2008

visit from Nishi Magome Station on the Toei Asakusa Line. Leave from the south exit and walk south. After about 600m, turn left at a traffic light labeled “Honmonji.” Take the first right and you’ll see the entrance to Ikegami Baien (池上梅園) on the left. Open from 9:00 to 16:30, admission is ¥100. The garden has over 370 plum trees and over 800 azalea bushes. There are also three teahouses, one of which overlooks a tranquil pond. As you leave the garden, turn left and then left again. After 150m, you’ll find a lane to the left leading to a side entrance of Daibo Hongyoji (大坊本行寺), a temple built on the site of Ikegami’s house, where Nichiren died. Just inside the gate is a fenced-off cherry tree said to be the tree that bloomed when Nichiren died, and which still blooms every October. To the far left is a green-roofed house called Rinju no ma (the place of death). Step inside and you can see the pillar, wrapped in brocade, against which Nichiren leaned as he delivered his last sermon. From the rear of the house you can relax and enjoy the pond and garden. Leave the temple grounds from the main gate (not the side gate through which you came in), turn left and proceed up the stone steps of the

By Vicki L. Beyer / Classic Journeys

hill. On the left you’ll see a red stupa known as the Honmonji Treasure Tower, built on the site of Nichiren’s cremation. The current structure was built in 1830 and is currently being restored. At the top of the stairs, cross the road to the back entrance of Ikegami Honmonji (池上本門寺), a large complex of temples covering 21ha of land. Regarded as the main temple of the Lotus Sect, it was founded by Nichiren just before his death in 1282. In spite of the complex’s long history, most of the buildings were constructed after World War II — the site was badly damaged during the March and April 1945 fire bombings. Ahead, on the right, you will see the back of the main temple building. Turn right and walk toward the front of the structure. As you approach, you’ll see a building on the right housing a rotating library/prayer wheel called the kyozo. Built in 1784, this is one of only three structures to have survived the fire bombings. The gigantic main temple building is surprisingly serene. Having been rebuilt in 1964, it is also somewhat sterile. The central courtyard sits between the main temple building and the Niomon — gate of the guardian kings. The bell tower is on the right, while, to the left, down a lane through the cemetery, is the 29.4m pagoda. This jewel, built in 1608, is the oldest pagoda in the Tokyo area. Of special note are the carvings of the 12 animals in the Chinese zodiac, on the eaves of the lowest level — three on each side. Continue through the cemetery to the right from the pagoda for about 50m, to a walkway leading to the roof of the Ota Kumin Kaikan, a public hall that hugs the side of the hill. From this rooftop you can enjoy expansive views across the valley. If you’re lucky, you even can see Mt. Fuji. Return to the cemetery and take the first left. You’ll soon find yourself at the top of a flight of 96 stone steps, the main approach to Ikegami Honmonji. The gate at the bottom of these stairs is the third surviving pre-war structure. Leaving the gate, walk straight ahead, then cross the canal, and turn right at the lights and dogleg to the left onto Honmonji-dori, the street

leading to Ikegami Station. Like many temple approaches, this street is lined with shops and restaurants, many of which sell handmade treats that have some connection to the life of the temple. Take a little time to explore, and you’ll find something special to commemorate your visit to the Mecca of Lotus Sect Buddhism. O-eshiki From October 11 to 13, more than 350,000 followers of the Lotus Sect gather in an annual pilgrimage to honor their founder, climaxing in the spectacular Mando parade of 10,000 lanterns, from 19:00 to midnight on October 12. Proceeding down Ikegami-dori from opposite directions, the parade joins at Shin Sando, before heading to the temple. Lanterns atop tall poles are festooned with streamers of flowers looking like weeping branches of cherry blossoms. Drums, bells and whistles can be heard throughout the temple grounds. Vicki L. Beyer is a freelance travel writer based in Tokyo, an ACCJ Governor, and author of a new guidebook to Kamakura, 10 Temples on 2 Wheels, (www.scribblerspublishing.com). We are giving away two copies of 10 Temples on 2 Wheels. Simply e-mail editor@paradigm.co.jp by October 20. Winners will be picked at random.

October 2008 / ACCJ Journal / 47

Guide to Business Continuity Planning | Special Advertising Section

No Excuses Business continuity planning keeps you in control.

n this most competitive of markets, Japanese consumers demand the highest quality—consistently. Especially in sectors where QC is paramount to brand reputation, a crisis brought on by unexpected circumstance is no excuse for delays in delivery—or, worst yet, a drop in product reliability. That is why business continuity planning (BCP) can’t wait until a natural disaster strikes—be it a power outage or loss of data during a typhoon and electrical storm, or a halt to production when an earthquake strikes. Not to be overlooked are the inability of key personnel to reach their workstations because the trains have stopped running, and operations coming to a halt due to communications systems being crippled. Companies may place a high priority on security when it comes to protecting the privacy of their databases, or guarding against viruses. These same entities, though, may yet not have in place a BCP—or assume that bandage-type solutions such as off-shore backup systems are enough for now. Ironically, they may be the first to grumble about the transportation system in Tokyo when their staff are unable to get to the office on time because a sudden snowstorm stopped the Chuo Line—or, most recently, a monkey got loose in Shibuya Station. When it comes to sensible BCP, there are not only experts available who have the localized solutions addressing BCP in Japan, but also specialists who have developed the programs to pinpoint your vulnerability in times of disaster—in the context of how you prefer running your business. In other words, there are BCP professionals who can make sure that the way you perform following a disaster does not compromise your corporate mission and business strategy. But as we all know, good BCP requires timely execution and maintenance. In Japan, there are professionals who can manage your continuity strategy not only to optimize the

48 / ACCJ Journal / October 2008

results in times of crises, but also to maximize the synergy among all components—human resources and infrastructure alike—reliant on a proper continuity of business. The topography of this archipelago is such that the effects of a natural disaster can be quite isolated at times. That is why the locations of your offices and production sites require an exacting BCP, not a general nationwide strategy or one derived solely on what might be the scenario in Tokyo. Regional authorities and metropolitan hubs can work with you in ensuring that your business continues. What can be overlooked in the process is the value of being assertive in pinpointing your needs—being frank about your ways of doing business that are the most vulnerable should a natural disaster strike. Qualified, well-positioned, attentive BCP providers require accurate information from you in order to develop and execute a plan most suited to addressing your weaknesses, as much as sustaining your strengths, in times of crises. David Umeda Senior Editor ACCJ Journal

Business Consulting PM-Global K.K. Tel: 03-5159-2151 Fax: 03-5159-2152 www.pm-global.com PM-Global provides business performance solutions and services via four professional service groups: 1. Program Management Optimization 2. Governance and Compliance 3. Business Risk & Continuity Management 4. Business Performance Management Within our Business Risk & Continuity Management group, we offer a Next-Generation Strategic BCM solution. PM-Global’s BC3M® is a methodology of Business Continuity Management, based on integrated management, business resources control and risk-management framework linked to our VPC™ solution that allows you to continue business and realize immediate recovery in times of disaster. BC3M® provides a projected analysis for what possibly could happen in a disaster. We can help your organization develop a business strategy to establish a high valueadded business continuity structure based on the analysis, which subsequently enables you to discover a business opportunity with which to leap forward even in a disaster. PM-Global also provides full consulting support for testing, training, and maintenance of your program. For a free Business Continuity Plan (BCP) Maturity Level Assessment, please visit our Web site at www.pm-global.com/anqForm_E.htm For more information on our solution, please contact us at bc3m-consulting@ pm-global.com BC3M® • Business Continuity Management • Business Concatenation Management • Business Capability Management • Management Maturity Model

Human Engagement Consulting The Gallup Organization Tel: 03-5148-7031 Fax: 03-3544-3966 E-mail: rex_valentine@gallup.com www.gallup.com

Gallup has studied human nature and behavior for more than 70 years, employing many of the world’s leading scientists in management, economics, psychology and sociology. Consultants help organizations boost organic growth by increasing customer engagement and maximizing employee productivity through measurement tools, coursework and strategic advisory services. Gallup’s 2,000 professionals deliver services at client organizations, through the Web, at Gallup University campuses and in 40 offices globally. The Gallup Poll has built its reputation on delivering relevant, timely and visionary research on what humans around the world think and feel. Consultants assist leaders to identify and monitor behavioral economic indicators worldwide. Gallup Consulting is global researchbased, specializing in employee and customer management. Consultants draw on a suite of constructs and tools like HumanSigma to drive business performance. Gallup University is a leading provider of degree and non-degree programs in management education and leadership development—a complete curriculum on managing employee and customer assets, and the factors driving individual and organizational performance. Gallup Press educates and informs the people who govern, manage, teach and lead the world’s 6 billion citizens. In addition to books on groundbreaking management, social and political research, the Gallup Management Journal is a monthly online business publication with actionable insights for business leaders and serious management thinkers.

Telecommunication Services KVH Co., Ltd. Tel: 03-5772-5818 Fax: 03-5772-5685 E-mail: sales@kvh.co.jp KVH Co., Ltd. is a leading integrated communications and IT management service provider established in Tokyo in 1999. Through our facility-based optical-fiber networks and data centers, KVH provides comprehensive IT management solutions—developing and managing network and IT infrastructure through the entire planning, consulting, design, implementation and operations processes. KVH serves as a single point of contact and ownership for fully managed

regional network operations throughout the Asia-Pacific region, including a local presence through affiliates in China and India. In alliance with our global partners, KVH provides a value-added, strategic alternative for both Japanese and multi-national companies, by offering seamless and flexible solutions tailored to their important and specific IT needs. KVH solutions are implemented in an efficient operational structure using the latest technology incorporating global best practices, and are monitored on a 24/7 basis. In addition, KVH’s bilingual Service Desk associates respond to customer needs and inquiries on a 24/7 basis. KVH serves over 1,650 corporate customers in a variety of industry segments, including financial services, manufacturing, pharmaceuticals, media and e-commerce, meeting the operational needs of local and multi-national customers in the region.

Serviced Offices CB Richard Ellis Tel: +81-3-5470-8858 www.cbre.com CB Richard Ellis (CBRE) is the world’s largest commercial real estate services firm and has a specialized service line called the Technology Practice Group (TPG). CBRE’s TPG Practice Leaders are property professionals with the technical experience and skill-sets to assist clients with their disaster recovery and business continuity real estate needs. DR/BCP Real Estate Solutions include: • Market Research & Strategy Formulation • Feasibility Studies & Due Diligence • Site Selection & Risk Analysis • Transaction Management • Project Management CBRE leverages its relationships with data center providers to market future supply to firms requiring mission-critical facilities. NRI opened a data center in October 2007, which is now fully occupied, and are planning to construct a new facility by spring 2012. AT Tokyo opened a new data center in June 2008. KVH is constructing a new data center in Inzai, which is a region with low seismic risk and no known active faults. When it is completed in 2010, it will use environmentally friendly “green IT” technology and aims to become Japan’s first Tier IV data center, the highest classification by the Uptime Institute of the U.S. October 2008 / ACCJ Journal / 49

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For additional information about CBRE’s Technology Practice Group, please contact Paul Yutaka Morris at +81-3-5470-8858. or paul. morris@cbre.co.jp

Data Protection Iron Mountain Digital K.K. Tel: 03-6202-7547 Fax: 03-6202-7548 www.ironmountain.jp Iron Mountain Digital is the world’s leading provider of software and storage-as-a-service solutions for backup and archiving. The technology arm of Iron Mountain Incorporated offers a comprehensive suite of data protection, archiving and intellectual property management solutions to thousands of companies around the world, directly and through a worldwide network of channel partners. Iron Mountain’s award-winning LiveVaultR is the complete server data backup and recovery solution for remote offices of large enterprises and small & medium-sized businesses. Combining proven disk and online technologies, LiveVaultR radically simplifies the protection of all your company’s servers, including file, database, application and Exchange servers - virtually eliminating the risks and burdens of traditional backup methods. Traditional server backup methods are not always ideally suited to this challenge. Once-a-day backups leave you vulnerable to data losses and trouble recovering data quickly in the event of a data corruption, virus or other disaster. Lack of adequate IT staff can also result in inconsistent backup procedures and failed data recovery. Further, traditional backup tasks can be timeconsuming and keep your valuable IT staff from performing other mission-critical tasks to advance your business.

Logistics & Supply Chain Management Solutions Asian Tigers Premier Worldwide Movers Co., Ltd. Tel: 03-6402-2371 Fax: 03-6402-2305 E-mail: sales@asiantigers-japan.com www.asiantigers-japan.com 50 / ACCJ Journal / October 2008

Moving can create all manner of expectations. But it’s the best Asian service that we admire. The politeness, the manner in which people tend to your every need, the caring attitude and accompanying comfort are, for us, the most important. Combine this with a decisive action-oriented team that allows you the freedom to make decisions and plan your move. All so that you can have a better experience wherever in the world you choose to go. At a recent celebration honoring the company’s 10th anniversary, Managing Director Nick Masee said, “After 10 years of hard work by a very dedicated and talented team of professionals supporting all of our activities and competing head to head with long established competitors, we are the market leader here in Tokyo.” Our team members are masters at keeping everything under control. We can offer you services in English, French, German, Italian, Chinese, Japanese and Dutch in order to understand perfectly all your needs. We are able to provide you full services for all family members by extending special attention & care to your children and pets. Through our own Asian Tigers network and by our co-ownership with our OMNI network, we can take care of any move, to any destination in the world.

Daifuku Company, Ltd. Tel: 03-3456-2395 E-mail: terry_wagemann@ha.daifuku.co.jp www.daifuku.com Since 1937, Daifuku has become a global leader in the development of automated material-handling solutions for manufacturing, warehousing and distribution, operating in more than 16 countries. Our products range from simple utility carts to complete, fully automated warehouses, DCs, factories and cleanrooms. We provide a Total Solution, not just automated equipment. Total Design—We start by analyzing your total process. We have become a global leader not only by our experience, but also by dedicating ourselves to achieving a complete understanding of manufacturing and distribution logistics. Forming a partnership with our customers through each phase—interviews, analysis, concept, design, installation and operation—a Total Solution is realized.

Total Production—Under strict quality-control guidelines, we produce our products incorporating the latest technologies. Faster operation, higher density, improved working environments and greater productivity are your benefits from our commitment to constant improvement. Daifuku’s major production facilities are certified under ISO9001 and ISO14001. Total Support—Our customer commitment continues beyond installation and implementation. Global support and service are essential to delivering a Total Solution. As your needs change, our partnership makes it possible to help you more quickly achieve the results you need for success.

Nagahama City Office, Shiga Prefecture Tel: 0749-65-6520 Fax: 0749-64-0396 E-mail: syoukou@city.nagahama.shiga.jp www.city.nagahama.shiga.jp/ Nagahama City is extending a warm invitation to enterprises from overseas to establish your business here. If you are planning to expand into Japan, please consider Nagahama as your first-priority location. Compared with other areas in Japan, Nagahama has these six distinct reasons why you should choose us: • Nagahama, located in the heart of Japan and serving as the base for East Asia, offers a unique advantage as the nodal point of logistics. • The presence of a number of business partners allows you to find your perfect partner. • Strong support from the Nagahama Institute of Bio-Science and Technology introduces you to prominent professors who have abundant experience in enterprise situations, and are sure to be great advisers. • Attractive incentives include programs provided by Nagahama City and Shiga Prefecture. • Being a safe town, you can reduce your risk of damage from natural disasters, like earthquakes, typhoons or snowstorms. • A town rich in nature and history, Nagahama City ranked No.1 as the most comfortable place to live in Japan for three consecutive years (1995 to 1997), as surveyed by a leading business publisher. We are confident that we can offer you the best deal in Japan. This is our promise to you.

For further information, please contact + 81 3 3259 0200 or tokyoinfo@whitecase.com

White & Case LLP, a New York State registered limited liability partnership, is engaged in the practice of law directly and through entities compliant with regulations regarding the practice of law in the countries and jurisdictions in which we have offices.

Be inspired...

OFFICIA celebrates the opening of its brand new business center in the Shiodome Building. Conveniently located in Central Tokyo and built to a unique and unrivaled standard. We offer state-of-the-art serviced offices, conferencing facilities and virtual offices. Whether a single person enterprise, a growing team, or large business looking to optimize flexibility, OFFICIA will provide a serviced office solution tailored to suit your needs.

For more information on this unique opportunity, please contact: CBRE Japan K.K. Tel + 81 3 5470 8800 Email: officia@cbre.co.jp Visit: www.officiajapan.com We obtained the information above from sources we believe to be reliable. However, we have not verified its accuracy and make no guarantee, warranty or representation about it. It is submitted subject to the possibility of errors, omissions, change of price, rental or other conditions, prior sale, lease or financing, or withdrawal without notice. We include projections, opinions, assumptions or estimates for example only, and they may not represent current or future performance of the property. You and your tax and legal advisors should conduct your own investigation of the property and transaction. Governor of Tokyo (2) License No. 79583.

By Nicole Fall / FDI Portfolio

Accommodating Creativity Searching for an inspirational spot for an off-site meeting just got easier. The White Beach Hotel in Shimoda may be developing a reputation as the coolest party haunt in Japan on weekends; but during the week, it’s business as usual. Offering complimentary Wi-Fi throughout its 20-bedroom premises and laid-back communal spaces, brainstorming new business concepts is nothing short of effortless at this funky, foreignowned property. The brainchild of three bankers and architect Mark Dytham, from local practice Klein Dytham, Robusto K.K launched the hotel (http://whitebeachshimoda.com/en/home/) at the popular beach resort on June 14. The concierge can organize team-bonding activities, including fishing trips, organize geisha

to entertain guests, and at night lay on a fresh seafood BBQ. Utilizing the talent of a well-known international chef, the menu offers “Tokyo standard food, cocktails and a fantastic wine list,” says Dytham, co-owner of the hotel. “We’ve already welcomed our first corporate booking and hope to expand this business further.” The low-key vibe is sure to be a hit among creative companies aching for a cooler alternative to stuffy Tokyo meeting rooms.

Cluster for a Financial Center The globalization of research/ innovation and global competition is putting a new emphasis on the role of regional clusters. This buzzy business term essentially refers to the geographic concentration of a creative industry pooling together its resources in order to optimize the creation, production, dissemination and exploitation of creative works. Clustering activity eventually leads to a network and partnerships. To encourage the clusters and foster their development, the

Ministry of Education, Culture, Sport, Science and Technology and the Ministry of Economy, Trade and Industry have been promoting the Knowledge Cluster Initiative for the reinforcement of international competitiveness and development of the regions; and this will culminate in an EU-Japan Regional Cluster Forum to be held December 2-3 in Yokohama. By building cooperation between European and Japanese research and innovation regional clusters, the Regional Cluster

Forum hopes to stimulate global outreach of European and Japanese clusters, and increased mutual awareness of cluster policies, development methods and management practices. The gathering hopes to attract managers of Japanese and European companies working in the industrial and financial sectors. This forum could signal the start of a long overdue initiative to build Tokyo as a credible financial center of Asia, a position for which Hong Kong and Singapore are currently vying.

October 2008 / ACCJ Journal / 53

The 15th Japan Market Expansion Competition (JMEC) information seminar will be held at Temple University on October 1st, 14th and 23rd for those interested in learning how to write a comprehensive business plan, in a course dubbed a “mini-MBA in Japan.” JMEC, co-sponsored by the ACCJ and several wellknown companies, is held over about seven months each year. Client companies pay JMEC ¥990,000 for a business plan compiled by a team of students mentored and trained by experts in a series of JMEC lectures. Each team is given tasks to complete by certain dates before judges pick the best three plans, and the winning teams are awarded prizes. Client companies are then free to use the business plan. To be accepted, students must sign a confidentiality clause, have a few years’ work experience and

Parasolmedia

Mini-MBA

The JMEC 2007 winning team’s parasols now decorate various locations around Japan, such as these at Odaiba during Golden Week this year..

a degree, and pay ¥100,000. “Client companies are also welcome to attend these information seminars since they could potentially meet the people working on their business plans,” explains Beckie Cassidy, JMEC program director. Alumni will attend the information seminars to allow future participants to hear “real stories” of what working on JMEC business plans is really like, says Cassidy. www.jmec.gr.jp

Celebrity Style When Paris Hilton and the rest of the young celebrity pack go shopping in Los Angeles, inevitably the store where they are photographed buying the latest fashion styles is Kitson. Soon, Japanese celebrities and we ordinary folk will be able to do the same, because the Los Angeles-based boutique chain is set to launch its first international store in Asia next March in Tokyo, followed by two

54 / ACCJ Journal / October 2008

more locations in Japan during the ensuing 18 months. The stores will be licensed, an agreement that could see as many as 20 locations throughout the country. “Japan is a big market for us,” says Kitson owner Fraser Ross. The speciality boutique, which carries a selection of brand and private label merchandise mostly aimed at women in their twenties and thirties, has reached cult status. This has been attained by Kitson’s location on trendy Robertson Boulevard, close to Hollywood.

The Japanese public has picked up on the Kitson store-turnedbrand through the countless celebrity-filled magazines and Internet Web sites that cover the store through paparazzi images featuring their idols, and merchandise seen in some of Tokyo’s smaller speciality boutiques. Kitson currently has four locations in Los Angeles and one in Dubai.

FDI Portfolio

Asian Face First By positioning the brand as Asian, Shiseido’s shampoo Tsubaki overtook best-selling hair product Lux, manufactured by Unilever, to become Japan’s No.1 selling shampoo. Marketers took notice. In particular, they wondered if the days of selling products endorsed by Caucasian models to the Japanese could be over. The answer could be “quite possibly,” if Italian fashion house Giorgio Armani’s latest signing is anything to go by. Taiwanese-Japanese actor Takeshi Kaneshiro has become Armani’s first “Asian Face,” and

will front Emporio Armani’s autumn/winter 2008 marketing campaign. This marks the first time an Asian model has done so

for the label, with Armani noting that Kaneshiro’s international appeal will be an asset. “He has an inborn attractiveness, and looks so charming on and off the screen. His personality, as well as good looks, perfectly match EA’s style, and that’s why he is the very best man for the EA collection,” says the designer, as reported in the China Daily. Kaneshiro has been involved in other international marketing campaigns, including that for Prada, the Hyundai Elantra sedan and the French cosmetic brand Biotherm Homme.

Comme des Collaboration Japanese fashion designer Rei Kawakubo — the talent behind avant-garde fashion brand Comme des Garçons, which shows in the Paris collections — has signed up for a number of international collaborations exclusive to Japan. The legendary creator approached luxury brand Louis Vuitton, and has designed six handbags that will be sold exclusively in a temporary Louis Vuitton store at the Comme des Garçons flagship store in Aoyama this fall. The collection includes two “party” bags she designed, plus re-editions of two 30-year-old classics and customized versions of two current monogram

styles. The store was launched September 4, and marks a radical move for Louis Vuitton, which usually never sells its products beyond its own brand stores. In addition, Kawakubo has designed a concept for a red, pie-shaped shop to house her Comme des Garçons collection in its entirety for the Swedish retailer H&M at 20 select locations in early November. H&M Hennes & Mauritz AB, which opened its first store in the Ginza in September, smartly tapped Kawakubo for a one-off collaboration, a move sure to bring the chain store added publicity for its Japan launch.

Contact Nicole Fall at nicole@fivebyfifty.com if you have ideas for this column.

October 2008 / ACCJ Journal / 55

Developing Global Thinkers

Tears of anger, frustration, joy.

56 / ACCJ Journal / October 2008

PHOTOS TONY MCNICOL

ndrew Silberman’s office overlooks a large graveyard, but it would take more than that to dampen the atmosphere at his company. In fact, the memento-mori reminds Silberman just what it’s all about. “My Dad used to say that the mortality rate of the human race is 100%. What are we going to do between now and then? That’s the motivator,” says Silberman. As the president and “chief enthusiast” of Tokyobased AMT (Advanced Management Training Group) Silberman knows all about motivation. In a typical year, AMT runs training activities with 30 or so different companies, mostly foreign-owned multinationals in Japan. Often the boss will be nonJapanese and the staff local. They act as a “Learning & Development Partner” in the Asia-Pacific for their clients, says Silberman. “We help teams and individuals work better together,” he explains. Sometimes that can mean helping Japanese companies deal with foreign clients. Other times it can be smoothing internal communications in a multicultural team. “Usually, clients want their people to be more productive,” Silberman continues. “Either they have internal communication issues that they want to overcome, or they want people to make a better impact in meetings. On a higher level, what they want is a more energetic, passionate, productive workforce.” AMT employs seven fulltime staff and seven freelance specialist trainers. The permanent staff members mostly hold postgraduate business degrees and lend a hand with AMT management and sales. That helps them better understand clients’ needs, says Silberman.



BIOGRAPHY



Andrew Silberman ■ President and Chief Enthusiast, AMT Group ■ Born: May 16, 1962, Chicago, Illinois ■ BA, Political Economy of Industrial Societies, UC Berkeley, 1984 ■ Studied three semesters at Universidad Complutense de Madrid, Spain, 1982-83 ■ MBA, Monterey Institute of International Studies, 1988 ■ Languages: English, Spanish, basic French, Japanese ■ Co-founded AMT Group, 1992 ■ President from 1998 ■ Married, two children ■ Hobbies: Ultimate Frisbee, physical fitness, songwriting

Silberman began his career as a management trainer in San Diego. It was around the time of the Bubble economy and the course was popular with Japanese executives. Silberman decided to try his luck in Tokyo. After a short while working for a company, in 1992 he founded AMT with two partners and a mission of “Developing Global Thinkers.” Since 1998 he has been in sole charge of the company. AMT uses some unusual techniques in its training sessions — at least for Japan. “The techniques that we are using are not traditional Japanese techniques,” Silberman stresses. “It’s not a sensei coming up and lecturing to people. It’s not the sage on the stage ... we are not gurus, we are guides, facilitators and coaches.”

By Tony McNicol / Business Profile

The training can give people the courage to tough it out at a difficult company; sometimes it can help them muster the resolve to quit.



SNAPSHOT



Advanced Management Training (AMT) Group ■ Mission: Developing Global Thinkers ■ Established: 1992 ■ Employees: 7 fulltime, 7 freelance specialist trainers ■ Location: Chiyoda-ku, Tokyo ■ Main business: Management training ■ Major clients: About 30 mostly foreign-owned multinationals in Japan ■ www.amt-group.com ■ E-mail: info@amt-group.com ■ Tel: 03-3511-2960 ■ www.moonshots.net

An important tool is role-play. “As we say, it changes from role-play to real-play, because all the emotions come out as if they are real,” says Silberman. In another activity, trainees create advertisements for their companies (hence the boxes of wigs and props stacked in Silberman’s office). AMT also uses video cameras for presentation practice, mock videoconferences and sales training. Surely AMT’s most unusual freelance trainer is Maki Nakayama, an NFL Washington Redskins cheerleader. She met Silberman at a wedding party and soon suggested some kind of training involving cheerleading. In her sessions, executives create a cheerleading routine for their company. “She had us doing these cheerleading moves,” recalls Silberman. “It was one of the best offsite training sessions I have ever done — even if the thing that people remembered most was the cheerleader!” AMT employs personality assessments based on concepts such as personality type and emotional intelligence. They aim to develop “self-awareness” among executives — with sometimes-unexpected results. “We have had tears of anger, tears of frustration and tears of happiness,” says Silberman. They did one program on emotional intelligence and had people score themselves. After the program, one man said the course had improved his marriage. The training can give people the courage to tough it out at a difficult company; sometimes it

can help them muster the resolve to quit. Silberman tells of executives who were skeptical and uncooperative during the actual training, but came back later to say it made a huge difference. Silberman’s work gives him an acute perspective on the strengths and weaknesses of Japanese corporations. “The most obvious strength is cooperative spirit and a willingness to try things,” he says. “The weaknesses are the educational system of Japan, and an unwillingness to question authority.” Are these traditional Japanese companies ready for the, perhaps, jolting experience AMT may give their executives? “No, absolutely not ... but they know the results they want to get,” says Silberman. “It’s the same thing that Western companies want ... they want their guys to engage the clients better.” What about hobbies? “My life is very full,” says Silberman. “Luckily I enjoy all the stuff that I am doing.” But he still finds time to play guitar for his band “Moonshots” — a name that hints at “aspiration.” Silberman describes the music as “feel-good rock.” Do they play any songs about management techniques? “Only one,” says Silberman cheerfully. “It’s called ‘Much Harder to Do.’” As the song’s chorus goes: There’s always someone to tell you something And a lot of it must be true; It’s easy to talk But it’s much harder to do. Tony McNicol is a freelance writer and photographer based in Tokyo.

October 2008 / ACCJ Journal / 57

Advocacy Update ACCJ Viewpoints are the core products of ACCJ Advocacy. An ACCJ Viewpoint is a brief paper, generated by a committee, that expresses the Chamber’s official position on a specific issue. Viewpoints are primarily used to express opinions on current policies, policies under consideration by the Japanese and/ or U.S. governments, and policies under discussion in bilateral or multilateral forums. They are also used to raise new concerns about issues not currently on the Japanese government agenda. Maximize the Effectiveness of the Law on the Registration of Security Interests in Movables and Claims Valid Through May 2009

Ensure that the Kampo LifeNissay Cooperative Business Relationship is Consistent with the Privatization Law and Japan’s National Treatment Commitments Under GATS

Recommendation

The American Chamber of Commerce in Japan (ACCJ) supports the October 2005 changes in the law on the Registration of Security Interests in Movables and Claims (Saikenjoto no taikoyoken ni kansuru Minpo no Tokurei ni kansuru Horitsu; referred to in this paper as the Registration Law). To fully achieve its goal, however, the Registration Law should be amended or supplemented to (a) include not only security interests in movables securing loans but also certain other transactions financing the acquisition of movables; (b) contain a general rule that gives a registered interest priority over an unregistered interest; and (c) make other changes that would integrate the registration system with other rules.

The American Chamber of Commerce in Japan (ACCJ) urges the Government of Japan to take measures to ensure that the introduction of any new products and any expansion of business by Japan Post Insurance Co., Ltd. (Kampo Life) resulting from the recently-announced cooperative business relationship between Kampo Life and Nippon Life, Co., Ltd., (Nissay) is consistent with the requirement of Article 2 of the Postal Privatization Law (“Privatization Law”) to ensure equivalent conditions of competition between Kampo Life and other corporations engaged in like business operations and Japan’s national treatment commitments under the General Agreement on Trade in Services (GATS). The ACCJ also recommends that the Government of Japan implement measures that will ensure transparency, arms-length business practices, and effective enforcement of competition policy regarding the operations of Kampo Life.

The Japan Fair Trade Commission (“JFTC”) plays a vital role in promoting competition in Japan. The ACCJ supports the current ongoing review of the Anti-Monopoly Act (AMA) as important to the continuing success of the JFTC and its mission. The ACCJ respectfully urges the JFTC to consider very carefully the potential impact before imposing surcharges on a broader set of conduct beyond classic cartel price-fixing, including private monopolization and unfair trade practices. Because it is often difficult to assess whether unilateral conduct is anticompetitive or procompetitive, the imposition of surcharges in these cases may unintentionally lessen competition by deterring firms from aggressively competing. As the JFTC considers imposing stronger penalties for anticompetitive conduct, the ACCJ respectfully suggests that any such broader implementation of new penalties should occur only in conjunction with separately recommended reforms to the JFTC hearing and investigatory procedures so as to assure due process for firms and individuals subject to enforcement actions.

Banking and Finance Committee

Potential Negative Impact of Expanded AMA Surcharges Competition Policy Task Force and Legal Services Committee Valid Through February 2009

Valid Through June 2009

Released ACCJ Viewpoints can be read in full in the Advocacy section of www.accj.or.jp 58 / ACCJ Journal / October 2008

ACCJの「意見書」は、特定の問題に対してのACCJの公式見解を表明する委員会が作成した簡潔な提言書であり、提言活動の中核を成しています。現行の政策や、日本又は米国政府で検討中の政策、二国間もしくは多国間で協議中の政策についてだけでなく、新たな関心を高めるために現在日本政府の課題となっていない問題についても意見を述べています。

動産及び債権の譲渡の対抗要

かんぽ生命・日本生命の業務提

独占禁止法における課徴金拡大

件に関する民法の特例等に関す

携が郵政民営化法およびGATS

による弊害の可能性について

る法律を最大限に効果的なもの

下での日本の内国民待遇義務と

にするために

整合することを要請

競争政策タスクフォース、法務サービス委員会

銀行・金融委員会

2009年6月まで有効英語正文

2009年5月まで有効英語正文

2009年2月まで有効英語正文

提言

在日米国商工会議所（ACCJ）は、 2005年10月に行

在日米国商工会議所（ACCJ）は、先般発表された

公正取引員会は、日本の競争政策促進に極めて重要

われた、動産及び債権の譲渡の対抗要件に関する

株式会社かんぽ生命保険（「かんぽ生命」）と日本生

かつ建設的な役割を担っている。 ACCJは、公正取引

民法の特例等に関する法律（以下本文中では「特例

命保険相互会社（「日本生命」）の業務提携の結果

委員会とそのミッションの継続的な成功のために重

法」）の法改正を支持する。しかしながら、その目的を

として行われるかんぽ生命の新商品導入および事

要なものとして、現在の独占禁止法の改正議論を支

最大限に達成するために、特例法に下記の改正また

業拡大が、かんぽ生命の業務と同種の業務を営む

持している。ACCJは、公正取引員会が、旧来の価格

は補足をすることを、日本政府に要請する。(a) 貸付

事業者との対等な競争条件を確保するための措置

拘束カルテルの範囲を超えた、排除型私的独占や不

を担保する動産上の担保権のみならず、動産取得の

を講じることを求める郵政民営化法（「民営化法」）

公正な取引方法を含む広範な行為類型を課徴金の

ための他の資金調達も制度に取り込む(b) 登記され

第二条の規定および「サービス貿易に関する一般

対象とする前に、その潜在的なインパクトを極めて慎

た権利を未登記の権利に優先させる一般的なルー

協定（GATS）」の下での日本の内国民待遇義務と

重に考慮するよう切に要望する。単独行為が競争阻

ルを導入する (c)登記制度と他の法令とに統一性を

整合するための措置を日本政府がとることを要請す

害的か競争促進的か判断するのはしばしば困難を

もたせるような変更を行う。

る。ACCJはまた、かんぽ生命の業務運営に関して日

伴うために、これらのケースに課徴金を課すことは、

本政府が透明性、アームズレングス原則に則った商

企業の積極的な競争行為を委縮させ、意図しないに

行為、競争政策の効果的な執行を確保するための措

もかかわらず競争を阻害することになりかねない。公

置を実行することを提言する。

正取引員会が反競争行為に対してより厳しい制裁を課すについては、ACCJとしては、別途提言した公正取引委員会の聴取及び調査手続の改正と同時に行われる場合のみ、このような新たなそして広範な制裁の実施を行うよう切に要望する。これにより法執行の対象となる企業及び個人に対する適正手続が保障されることになろう。

ACCJが公表した意見書の全文は、www.accj.or.jp のアドボカシーセクションでご覧頂けます。 October 2008 / ACCJ Journal / 59

Advocacy Update Reform Corporate Governance by Requiring Listed Companies to Have Independent Outside Directors Foreign Direct Investment Committee

Promote Competitiveness of Japanese Financial Markets by Modifying the Information Sharing and DoubleHatting Restrictions that are included in Existing Firewall Regulations

Assuring Due Process: Central to AMA Reform Competition Policy Task Force, Corporate Counsel Subcommittee, Legal Services Committee Valid Through February 2009

Financial Services Committee

Valid Through March 2009

Valid Through December 2008

Recommendation

The American Chamber of Commerce in Japan (ACCJ) calls on the Government of Japan to formalize a policy requiring that Japanese stock exchanges: a) adopt listing rules requiring that at least onethird of the members of corporate boards be independent outside directors; b) promulgate standards consistent with global best practices that clearly define “independence;” and c) require detailed disclosure of all facts in the background of nominated director candidates that may affect independence of judgment or create potential conflicts of interest.

The American Chamber of Commerce in Japan (ACCJ) urges the Government of Japan to promote the competitiveness of Japanese financial markets by modifying existing firewall regulations. In particular, the ACCJ recommends that revisions be made to the information sharing and double-hatting restrictions that are part of the existing firewall regulations applicable to financial institutions and their affiliates in Japan.

The Government of Japan is currently reviewing and revising the Anti-Monopoly Act (AMA). We urge the Government of Japan to take this opportunity to establish standards of “due process” in the practices and policies of the Japan Fair Trade Commission (JFTC) for enforcement of the AMA, which are consistent with the standards applied elsewhere in the OECD, especially in light of the changes to the regulation of unlawful cartels and unfair trade practices in Japan. We believe that a respect for “due process” in administrative as well as judicial proceedings, consistent with the utmost commitment to the rule of law, increases respect for the law itself and encourages full cooperation in its enforcement. Accordingly, the current system must do more (i) to adhere to fundamental due process principles and transparency in investigations and (ii) to provide adequate opportunity by investigated firms to contest administrative decisions because the JFTC is positioned to act as “prosecutor, judge and jury” in reviewing decisions it has taken. We urge immediate reform to bring JFTC procedures into line with the standards applied elsewhere in the OECD and to allow all JFTC decisions to be appealed directly to an independent court. Competition is the lifeblood of an economy, and the government has a role in protecting and promoting it. But economic regulation cannot be at the expense of due process and a fair and careful weighing of opposing viewpoints. We will address in a separate communication concerns with certain substantive revisions of the AMA, specifically the expansion of financial administrative penalties to include certain “unfair” trade practices. In all of these areas, careful economic analysis is required and the potential impact on the market, targeted business and individuals can go far beyond the financial impact of the fines assessed.

60 / ACCJ Journal / October 2008

上場会社へ独立社外取締役の

現行ファイアウォール規制にお

独占禁止法改正の中核である適

選任を義務付ける企業統治の

ける情報共有および役職員兼

正手続の確保について

改革

務の制限の改正による日本の

競争政策タスクフォース、企業内弁護士小委員会、法務サービス委員会

金融市場の競争力の向上を

2009年2月まで有効英語正文

対日直接投資委員会

金融サービス委員会

2009年3月まで有効英語正文

2008年12月まで有効英語正文

提言

在日米国商工会議所は、日本の証券取引所が a) 取

在日米国商工会議所（ACCJ）は、日本の金融市場の

現在、日本政府においては私的独占の禁止及び公

締役会役員の少なくとも三分の一を独立社外取締

競争力の向上のために、現行ファイアウォール規制の

正取引の確保に関する法律（独占禁止法）の見直し

役とすることを義務付ける上場規則を採用し、 b) 「独

改正を要請する。特に、日本の金融機関およびその関

及び改正の作業を行っている。在日米国商工会議所

立」を明確に定義するために国際的なベスト・プラク

連会社に適用される現行のファイアウォール規制に

（ACCJ）は、特に、不当な取引制限及び不公正な取

ティスに沿った基準を公表し、c) 推薦された取締役

おける情報共有および役職員の兼務に関する制限の

引方法の規制の改正の観点から、日本政府が、この

候補者の経歴に関し、判断の独立性に対して影響が

見直しを提言する。

機会に独占禁止法の執行についての公正取引委員

ある又は潜在的な利益相反を生じさせるような事実

会の実務及び政策において、OECD加盟各国におい

を全て詳細に公表すること、を義務付ける政策を、日

て適用されている基準に合致した適正手続基準を確

本政府が正式に採択することを提言する。

立することを要請する。 ACCJは、法の支配の考え方と調和する司法手続及び行政手続における適正手続の尊重は、法の支配に対する最大限の義務に合致し、法の尊重及びその執行への全面的な協力を向上させるものであると考える。従って、（１）調査手続における必須の適正手続の原則及び透明性の確保、（２）公正取引委員会は裁判官及び陪審員として位置づけられていることから、被審人に対して行政処分を争う有効な機会の提供、を現在の制度において、実現すべきである。 A C C Jは、公正取引委員会による行政手続を OECD加盟各国において適用されている基準に合致させること、および、公正取引委員会のすべての判断に対して独立した裁判所に直接上訴できるよう、迅速な改正を要請する。競争は経済の活力源であり、政府は競争を擁護し促進する役割を有する。しかしながら、経済規制は、適正手続及び反対意見に対する公平且つ注意深い考察の犠牲のもとに遂行し得るものではない。ACCJは、特に、課徴金の対象を一定の不公正な取引方法にまで拡大することを含め、特定の具体的な独占禁止法の改正に関連する問題点について、別途提言を行う予定である。これらの全ての問題点は、念入りな経済分析を必要とするものであるとともに、事業活動及び個人に対する潜在的な打撃が課徴金による経済的な影響をはるかに超える分野である。

October 2008 / ACCJ Journal / 61

ACCJ Diamond Charity Ball / By Jeffrey Shimamoto

Diamond Charity Ball Major social event now ACCJ’s key fundraiser.

62 / ACCJ Journal / October 2008

ACCJ

s the biggest social event of the year for the foreign business community in Japan, the ACCJ’s annual Charity Ball is the result of many hours of voluntary work and two tragic events that helped change its name and direction, ushering in a new era of generosity and compassion. The story behind what was known as the Crystal Ball evolving into a major charity fundraiser began in 1995, when the Great Hanshin Earthquake struck the Kobe area. Much of the cash donated by the U.S. community in Japan — some ¥5 million — was funneled through the ACCJ, helping raise awareness of philanthropy at the Chamber and initiating the ACCJ Community Service Fund. The terrorist attack on the World Trade Center in September 2001 prompted organizers to consider a lavish celebration inappropriate that year. The Ball, it was later decided, would become an annual source of funds to the needy and vulnerable, without losing its traditions and formality. In 2003, the Crystal Ball was renamed the Charity Ball. For 10 years, Fred Harris, an ACCJ member since 1964, organized what was previously called the Winter Festival Ball. “It was the highlight of the American

ACCJ Winter Festival Ball, 1962.

community. Nothing was more important,” he says. Such was the occasion that Midori Purdy, whose late husband George was ACCJ president in 1972, recalls how local newspaper columnists would ask her what kind of gown she would wear; and the U.S. Seventh Fleet Band would perform. “Of course, the Color guards were also there,” she adds. Former ACCJ President Glen Fukushima has attended 17 of the 18 Balls since joining the Chamber. “The Crystal Ball was the biggest year-end party in Japan,” he recalls. “Over 1,000 people attended and some joined the Chamber for the sole purpose of attending the Crystal Ball.” Tom Jordan, president of the Chamber in 1994-1995, says the Crystal Ball got bigger and better every year. “The ACCJ’s major fundraising effort is the Charity Ball,” he says.

This year’s Charity Ball Committee is under the leadership of Barbara Hancock, who, like her predecessors, works closely with the ACCJ Community Service Fund. Among the VIPs who have attended in the past and are invited this year are the U.S. Ambassador or other senior U.S. Embassy representatives, top brass of the U.S. armed forces, foreign dignitaries, Japanese political leaders, and TV and movie celebrities. Jeffrey Shimamoto is a member of the Charity Ball Committee. The 2008 ACCJ Diamond Charity Ball is on Friday, December 5, at the Cerulean Tower Tokyu Hotel in Shibuya. Tickets are ¥30,000, and can be purchased at www.accjcharityball.org

Reviewed by Tom Baker / Behind the Book

The Back of the Napkin Solving Problems and Selling Ideas with Pictures by Dan Roam Portfolio, 278 pp, $24.95

ccording to legend, Southwest Airlines got its start on a cocktail napkin in a Texas bar, when cofounder Rollin King sketched the first route map as a simple triangle with Dallas, Houston and San Antonio marking the corners in 1967. The Back of the Napkin, by Dan Roam, uses this as an example of the power of presenting business ideas in visual form. When the compact triangle is placed next to the sprawling spider-web networks of competing carriers, Southwest’s appeal to in-state Texas travelers becomes clear at a glance. Unluckily for Roam, King told The Dallas Morning News last year that the napkin story was a myth. But, like an Aesop fable, it teaches an old moral that is independent of its facts: A picture is worth 1,000 words. The author, a management consultant specializing in “visual thinking,” shows that visually presenting ideas can help make you understood. As a bonus, drawing pictures and charts also can help you understand your own topic better by clarifying ideas that may have been otherwise vague. No artistic skill is needed, he assures. “A complete visual language is made up of a small

number of elements.” If you can draw boxes, arrows and stick figures, you’re set. Roam explains that visual communication often has a “precognitive” aspect. For example, when we look at a bar graph or pie chart, our eyes recognize the proportional relationships among its components before our minds can process what those components are. Moreover, he says, we “viscerally recall [the relative quantities] long after we’ve forgotten the numbers.” He makes his points systematically, breaking big topics into short lists. One list comprises five pairs of alternative ways visual information may be presented: simply or elaborately, in terms of quantity or quality, vision or execution, individually or comparatively, and in terms of change or status quo. Midway through the book, Roam challenges the reader to take up a pen and use these pairs to create 10 representations of their own idea. I chose an extremely simple idea, so my “simple“ drawing was a piece of cake. But for the “elaborate” one, all I could think of was showing how the idea might be implemented, or what competitors might be doing — images

better suited for the “execution” and “comparison” categories. In the end, I came up with only six different visuals. But this was more than I had expected, showing that Roam’s five category pairs are, at the very least, a helpful brainstorming tool. Another list covers six basic questions (“ways of seeing”) that can be answered by six basic visual aids (“ways of showing”): Who or what can be shown in a picture, how many in a chart, where on a map, when on a timeline, how on a flowchart and why on a multiplevariable plot. Roam’s techniques have the potential to make communication simpler and clearer — valuable qualities in workplaces where not everyone speaks the same first language.

Tom Baker is a staff writer at The Daily Yomiuri. We are giving away three copies of The Back of the Napkin. Simply e-mail editor@paradigm.co.jp by October 16. Winners will be picked at random. Winners of How Toyota Became #1: Robert Marsh, UPS; Makoto (Mark) D. Kawai, Procter & Gamble Japan K.K.; Dr. Jochen Legewie, CNC-Communications & Network Consulting Japan K.K.

October 2008 / ACCJ Journal / 63

By Samuel H. Kidder / In the Final Analysis

How Viewpoints, EPG Address Advocacy

rom last month we began including an Advocacy Update in the Journal. For the many members involved in the nuts and bolts of Chamber advocacy, this will be just one more place to read documents you’ve already spent hours writing or reviewing. But for those members whose interests focus on other ACCJ activities, please take a look each month to see the breadth of our concerns and the depth of our knowledge. Some of the Viewpoints can seem quite technical and apply to a single industry group only; others are cross cutting and have implications for many of our members’ businesses—the ACCJ stands behind them all equally. One area that promises to be on our advocacy agenda in the upcoming political season is the U.S.-Japan Economic Partnership for Growth (EPG). The EPG has been an important mechanism to address a wide range of reform-related issues between the U.S. and Japan. The EPG’s core elements include annual recommendations and an official report to the U.S. President and Japanese Prime Minister. This year, with changing administrations in both countries, it is important for the governments to take stock of the progress made under the EPG, document its many accomplishments and identify the work yet to be done. Providing the next administrations with a foundation upon which to prepare ambitious, forward-looking bilateral economic agendas is imperative. While we can be pretty sure what we will be advocating this fall, we are all curious to see to whom our attentions will be directed. In both the U.S. and Japan, as the weather cools off the politics will heat up. The crown jewel of this kanreki year will be the ACCJ Diamond Charity Ball on December 5 at the Cerulean Tower Hotel Ballroom. In last month’s Journal, Jeffery Shimamoto wrote an excellent description of the charities that will benefit from this year’s event. And I recommend you turn to page 62 of this issue to read his piece on how the Ball has evolved into the ACCJ’s most successful fundraiser and the biggest social event of the calender for the foreign business community here. Our anniversary slogan says we have been “Bringing businesses together for 60 years,” and that has meant bringing people together, too.

Samuel H. Kidder is ACCJ Executive Director.

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