ACCJ Journal April 2009 by Paradigm

¥800 | April 2009

Journal Time for Real

Tax Reform

Japan needs a simpler, fairer system for all.

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ACCJ Mission Further the development of commerce between the United States of America and Japan, promote the interests of U.S. companies and members, and improve the international business environment in Japan.

CONTENTS

Volume 46 | Issue 4 | April 2009

Features COVER STORY 14

Time for Real Tax Reform With the world’s highest corporate tax rate, a faltering economy, an aging population, and the largest fiscal deficit of any major nation, does Japan’s tax system need reform? By Julian Ryall 今こそ真の税制改革を

世界で屈指の高水準にある法人税率、青息吐息の経済、高齢化社会、主要国の中で最大の財政赤字を抱える日本。今こそ税制改革が必要だ。文／ジュリアン・リアル

ACCJ Event Using the Unconscious as a Creative and Idea Resource. By Nicole Fall ACCJイベント

無意識を創造性や発想の源泉として活用する。文／ニコル・フォール

HR Roundtable Industry experts debate retrenching staff and other issues in a tough recession. Moderated by Geoff Botting 「人材活用」円卓会議

厳しい景気後退期の人員整理などの課題について業界のエキスパートが熱い議論を交わす。司会／ジェフ・ボッティング

ACCJ Event Leadership, not Management, in Uncertain Times for the SME. By Catherine Shaw ACCJイベント

中小企業にとって先の見えない時代は、マネジメントよりもリーダーシップが物を言う。文／キャサリン・ショー

April 2009 | The Journal | 3

CONTENTS

Volume 46 | Issue 4 | April 2009

Tony mcnicol

DEPARTMENTS 9

Note from the Editor

Letters to the Editor

President’s Message

Media Watch Second-wedding business. Profiting from recession. E-selling to China. Kansai airport woes. Office cost cutting. Mixed bathing. Conbini CSR.

On the Spot Hatsuhisa Takashima, President and CEO of Japan International Broadcasting, is interviewed by Richard Smith.

Opinion Leader Yasuchika Hasegawa, Vice Chairman, Japan Association of Corporate Executives, on a new style of Japanese management to realize successful Japanese corporations and a prosperous nation.

オピニオンリーダー「強い日本企業を実現して国家繁栄に貢献する「新・日本流経営の創造」について、経済同友会副代表幹事・長谷川閑史氏が語る。

Out and About Speakers, members and guests photographed at recent ACCJ events.

Behind the Book Billion-Dollar Lessons: What You Can Learn from the Most Inexcusable Business Failures of the Last 25 Years by Paul B. Carroll and Chunka Mui, is reviewed by Tom Baker.

Events Line-up Selected business and leisure-related happenings in April. By David Umeda

FDI Portfolio Love hotels. EU-Japan cluster forum. Finnish design expansion. MLB diner. Green IT. By Nicole Fall

Business Profile Deborah Hayden, Managing Partner, Kreab Gavin Anderson, Japan, talks about corporate communications during a recession. By Tony McNicol

Core Advocacy Principles

Advocacy Update ACCJ Viewpoints

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

4 | The Journal | April 2009

ACCJ Leaders President Thomas W. Whitson KPMG FAS Co., Ltd. Chairman Allan D. Smith AIG Companies, Japan and Korea Vice Presidents Michael J. Alfant Fusion Systems Japan Co., Ltd. Laurence W. Bates General Electric Japan, Ltd. William R. Bishop, Jr. Nippon Becton Dickinson Co., Ltd. Michael D. Bobrove (Kansai) Nihon Medrad K.K. Kumi Sato Cosmo Public Relations Corporation Mark F. Schwab United Airlines, Inc. Chris Zarodkiewicz (Chubu) Cezars International K.K. Treasurer Nasir Majid PricewaterhouseCoopers Brett Jensen (Kansai) Colliers Hallifax Steve Burson (Chubu) H&R Consultants ACCJ Governors Andrew Conrad Aflac International, Inc. Christopher K. Ellis Chrysler Japan Company, Ltd. Bruce J. Ellsworth Johnson & Johnson Family of Companies 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. Patricia Oâ&#x20AC;&#x2122;Keefe USC International Offices-Tokyo Douglas L. Peterson Nikko Citi Holdings Inc. Nicole W. Piasecki Boeing Japan Jay Ponazecki Morrison & Forester LLP Mitsuyo Teramura Federal Express Corporation Jim Weisser PBXL ACCJ Executive Staff Samuel H. Kidder Executive Director Aron Kremer Deputy Executive Director ACCJ Committees American Auto Industry Rick Brown Architecture, Construction & Real Estate Kevyn Johnson/Michael P. King Asia Business Philip C. Jones B2B Sales Karl Hahne/Craig Saphin 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 Ira Wolf Healthcare Steve Plunkett Human Resource Management Chris Lamatsch, Adam Kassab Independent Business Doug Jackson Information, Communications & Technology Darren McKellin, Ann Rollins Insurance Nate Graddy/Jonathan Malamud Intellectual Property David Case International Education Patrick Newell Internet Economy Task Force Yoshitaka Sugihara Investment Management David Monroe Legal Services Arshad Karim/Eric Sedlak Corporate Counsel Clair Chino Marketing Programs Dominic Carter/Koichi Hama Membership Relations Andrew Silberman Privatization Task Force David Hoover Retail TBA Soft Landing Task Force Adam Kassab/Mariko Nakazono 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/Jeremy Goldstrich Travel Industry Kayoko Inoue/Vincent You University Briefing Program Richard May/David Satterwhite Kansai Chapter Business Programs Pabel Delgado Community Service Kojiro Dan External Affairs Kiran Sethi Living in Kansai Barry Louie Membership Paul Dupuis Women in Business Mari Nogami Chubu Chapter Community Service Steve Burson Independent Business Chris Oostyen/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 The ACCJ is an independent membership organization with no affiliation with any government or other chamber of commerce. The ACCJ is a member of the Asia Pacific Council of American Chambers and values its relationships with Japanese, American and other nationsâ&#x20AC;&#x2122; business organizations.

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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

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NOTE FROM THE EDITOR

For a more prosperous nation …

ith the shrinking economy in mind, the Journal tackles some key issues and offers a few solutions this month to help weather the storm, starting with what we all love to hate: taxes. From corporate and consumption taxes, to duties on gasoline, automobiles, pensions and overseas earnings, along with refunds for SMEs and deductions for home loans, the ACCJ and politicians are eyeing an area affecting us all that is ripe for reform. Changes in taxation would not just promote social prosperity and commercial growth, but also simplify and streamline a convoluted and outdated system that, critics argue, is too often tied to special interests. Also for the sake of a more prosperous nation, our Opinion Leader on page 32 advocates a new style of management, written by no less than the Vice Chairman of the Japan Association of Corporate Executives. Perhaps the trickiest and most immediate issue for many employers

right now, though, involves retrenching staff and coping with the inevitable tensions caused by downsizing. Understandably, some people prefer not to openly discuss this delicate subject with far-reaching social ramifications, but we managed to gather five of the HR industry’s most knowledgeable leaders

to put their heads together for employers and employees alike on page 26 in an ACCJ Roundtable. And what’s the difference between leadership and management? If you work at an SME, our second ACCJ Event report on page 34 delves into exactly that; more importantly, though, it suggests why leadership supplants management in what it calls these “uncertain times.” With a review of a book on lessons to learn from some of the most spectacular business failures of the last quarter century (page 39), and expert advice on crisis communications in our Business Profile (page 46), we hope this issue offers some solutions to today’s most pressing concerns. Finally, don’t miss this issue’s special Who’s Who in Media and Communications in Japan standalone delivered with the Journal—the first in a series of comprehensive Simon Farrell industry listings of key compa- simonfarrell@ paradigm.co.jp nies along with a selection of informative, related articles.

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letters to the editor

Seen something in the Journal you’d like to comment on? This is your page to have a say.

Narita piece “spot on”

Major eco-building disincentive After reading “More than Being Seen Green” in the March ACCJ Journal, I believe there is a very important point that the business community should know. The Ministry of Land, Infrastructure, Transport and Tourism created in late 2008 a major disincentive to build new green buildings by announcing they would “look into” and introduce special incentives (specifically mentioning floor area ratio bonuses, tax benefits, and a low-interest financing system) for new green buildings, thus creating the extremely unfortunate scenario in which it pays handsomely to wait. This shouldn’t be a non-starter given the length of such projects, but the costs of not accounting for future regulatory changes in a project’s initial planning and design phases can be significant and the cost of not accounting for them at all is potentially enormous. Anyone considering building or investing in a green/ sustainable building project should choose a project manager, developer, general contractor, consultant, etc., who fully understands the economic ramifications of the current situation and alerts them to it up front.

Thanks very much for the well organized and thoughtfully written cover story on Narita Airport in the February Journal. I thought Julian Ryall did an excellent job of taking a complex subject and translating it into terms that are understandable to the wider business audience of the Journal. He carefully checked and rechecked his facts and quotes and as a result helped the Transportation and Logistics Committee articulate one of our key advocacy points. I recently met with senior officials of the airport management company and they let me know they had read the article. The fact that they wanted to debate some of the details of the article clearly demonstrated that it hit all the key points. After that discussion, I reread the article and reminded myself that it was “spot on.” Mark Schwab United Airlines, Inc. Tokyo

Ethics questioned

Jeff Graves Index Consulting, Inc. Tokyo

Useful FDI information I found the “FDI Clock Turns Back” feature by Martin Foster in the February issue of the ACCJ Journal to be most interesting, accurate and timely. As Japan representative of Think London—the official not-forprofit, private-public funded global partnership that offers a free FDI service to help connect international business to London, and a lecturer on FDI at Keio University—I think the article conveyed some very useful information on the current FDI situation.

I have always had a high regard for the ACCJ’s promoting U.S. business in Japan. However, I am concerned about an ACCJ event entitled “Labor of Love: The Plan to Revolutionize an Overlooked Japanese Industry” held on January 21 (see page 43), which essentially sanctions the sleazy industry that depends on prostitution and promiscuity. I find it difficult to reconcile the ACCJ Constitution that promotes “responsible corporate citizenship, including valuesbased behavior,” with promoting the love hotel industry. The “positive comments” the ACCJ said it received about the event makes me question the moral values of people who would make such comments. It seems a sad commentary on those involved in this event that we would promote an industry that manifestly degrades the moral values of our society. Bob Austenfeld Hiroshima

Graham Harris, OBE The Harris Consultancy Tokyo

April 2009 | The Journal | 13

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President’s Message

ACCJ Initiatives—making sense of the Internet Economy.

t has been many years since Al Gore invented the Internet. Now the ACCJ Internet Economy Task Force is finalizing the ACCJ White Paper on the Internet Economy for Board review in April before a June release date. We will roll out this White Paper in Japan and also during our Washington Doorknock in June. As we all know, or should know, the Internet operates and innovates at near light speed. Governments, institutions, and regulations that have thoughtfully evolved over eons have real difficulty “catching the wave” of changes that the Internet has brought about in communications, relationships, and societies. The Internet has made an end run around many business models that relied on proprietary knowledge and physical infrastructure. It has eroded some of the privacy that people have prized in their lives and made policing copyrights and protecting intellectual property more challenging. The Internet has weakened traditional controls over business and personal behavior. However, the ACCJ believes that the Internet Economy is one engine to pull the world out of its current financial recession and we want to ensure that the Internet business environment in Japan enables our member companies to take advantage of the opportunities that arise. So, what is the Internet Economy? We are defining the Internet Economy as “the product of all transactions with economic value through markets whose infrastructure is based on the Internet and the World Wide Web, encompassing three sectors: Business to Business, Business to Consumer, and Government to User.” Opportunities for ACCJ member companies will arise from the way the Internet

ACCJ leaders exchange views with Japan Fair Trade Commission Chairman Kazuhiko Takeshima during the ACCJ Diet Doorknock in February.

is transforming government, commerce, healthcare, and education. Other ACCJ member companies will generate opportunities from promoting content and entertainment via the Internet. Our key regulatory concerns include standards setting, network neutrality, spectrum policy, competition policy, dominant carrier regulation, and internet governance. Since the Internet is a virtually borderless phenomenon, a convergence of laws and establishment of a regulatory authority are of great interest to all ACCJ members involved in any form of Internet commerce. The various key ACCJ members who are participating in this Task Force demonstrate the pervasive effect the Internet has on modern business. The ACCJ Internet Economy White Paper is professionally researched. It presents an international viewpoint

and references international best practices that set our agenda to develop and promote the Internet Economy in Japan. Task Force members are available to meet with ACCJ industry committees to discuss the key issues the White Paper raises and to explore how the Internet will affect specific industries. Contact Internet Economy Task Force Vice Chair Jim Foster (jafost@microsoft. com) or Internet Economy Task Force Chair Yoshitaka Sugihara (yoshitaka.sugihara@intel.com) to arrange this. The breadth and complexity of Internet policy issues could drive ACCJ Advocacy efforts for many years to come and we Thomas Whitson is ACCJ President. want ACCJ member input to twhitson@accj.or.jp ensure that this effort benefits your companies. ■

April 2009 | The Journal | 15

Time for Real

Tax Reform a simpler, fairer system for business, society. By Julian Ryall Photos Tony McNicol

he government of Japan has already committed itself to far-reaching reform of the country’s taxation system— a promise that the ACCJ has welcomed and commented upon in a recent Viewpoint issued by the ACCJ Financial Services Forum, entitled Tax Reform for Enhanced Financial Competitiveness and Sustainable Economic Growth (see page 50). But in a time of political and economic uncertainty, ACCJ members have expressed a keen interest in what the opposition Democratic Party of Japan (DPJ) might have lined up should

16 | The Journal | April 2009

they be successful in wresting power from the Liberal Democratic Party. With elections due by the end of 2009, the ACCJ Government Relations and ACCJ Taxation Committees invited Keiro Kitagami, a DPJ member of the House of Representatives, to give a mid-February presentation outlining his party’s reform plans. The timing was appropriate, with many experts clamoring for change in the domestic taxation system. Figures suggest there is plenty of room for improvement in this vast and complicated arena. Japan’s tax system, for example, brings in revenues of just

26% of GDP, one of the lowest returns among members of The Organization for Economic Co-operation and Development (OECD). The World Bank recently rated Japan in 105th place in the world in terms of the simplicity of paying taxes. That is down from 98th place in 2006 and 89th place the year before. This poor return and complexity of the process is set against the backdrop of an ever tightening, vicious fiscal circle in which Japan finds itself. Demographically, fewer children being born means a reduced pool of workers in the near future, which leads inevitably to a decline in the amount of tax revenue.

Time for Real Tax Reform

Such depletion in government coffers is compounded by an increasingly aging population that requires greater healthcare support and pension levels, which presently rely on tax contributions. The imbalance, according to Kitagami, is crystal clear. “The main purpose of any government is to promote social prosperity, and we have to put more focus and invest more resources on promoting growth,” he told ACCJ members and their guests. For businesses that operate in Japan, a significant area of concern is the oppressive corporate income tax rate, which stands at about 40%—the highest among OECD member states. Such a steep taxation rate renders Japanese companies less competitive in the global economy. The country also becomes less attractive to foreign companies, whether they be Japanese subsidiaries or from overseas. Reducing the corporate taxation rate would encourage new investment and catalyze innovative approaches to doing business that injects the Japanese economy with new impetus on the global economic scene. The DPJ’s policies in this regard seem to echo the ACCJ’s—although Kitagami was quick to point out that his party favors broadening the tax base as an initial step before lowering the tax rate. “We plan to revise special measures that affect corporate taxes, while, at the same time, perpetuating measures that are necessary, such as research and development outlays,” said Kitagami. “Many tax entitlements have been in place for a long time and have not been revised—or even discussed for a long time. “A lot of these special measures and tax entitlements are obsolete, and a lot are tied very closely to special interests,” he said. “We want to revise that.” Such reforms would broaden the tax base and enable the government to lower the statutory tax rate to be more in tune with levels in Europe and Asia, he suggested. At the same time, the heavy tax burden on small businesses—which

Michael Shikuma

form the cornerstone of the entire Japanese economy—would be lessened. When asked more specifically about revisions to the old and traditional system of special measures, Kitagami outlined areas that would be targeted for stimulation. “We have to revise many of the obsolete measures, while protecting those that work,” he said. “One area that is clearly vital is research and development, while the environment is another area where Japan is up and coming. “The government needs to be more strategic in other areas in which we are competitive,” said Kitagami, “such as nanotechnology or the life sciences. “At the moment, this is still slightly vague,” he admitted, “But we must identify where we excel and make them the focus of our efforts.” Another key area that the ACCJ considers ripe for reform involves the much-discussed consumption tax. Both leading domestic political parties have broadly agreed on the need for a tax percentage higher than 5% to meet the needs of an aging society. It is the ACCJ’s position that, although the current application of consumption tax meets global best practices for value-added taxes, there remain inconsistencies that have a direct and serious impact on Tokyo’s competitiveness as an international financial center.

Of particular concern, as pointed out in the recent ACCJ position paper, is that any VAT (value added tax) system should “uphold the principle of neutrality.” That is, the tax should be structured in a way that its application has no impact on how companies choose to structure their operations—which includes their distribution methods, choice of inputs, and so on. This principle of neutrality is important, the ACCJ contends, because it enables the market to function smoothly—in particular, by minimizing distortions, which helps companies to make business decisions that are efficient and are focused on the consumer. Presently in Japan, however, the sales of certain financial products through third-party agents fall under VAT, in contravention of the best practices sought by the OECD and the International Monetary Fund. Another area of concern is that the consumption tax is applied to intercompany transactions among members of an affiliated group. “This is inconsistent with the neutrality principal as it fails to allow VAT grouping, that is, treating related legal entities as a single taxable entity for consumption tax purposes,” Michael Shikuma, Co-Chair of the ACCJ Taxation Committee, told the Journal. Kitagami offered no comment on these areas during his presentation, although he did reiterate that legal revisions are required to make it absolutely clear that revenues from the consumption tax will be used solely for social security measures. He added that the present government’s failure to stick to the promise that funds would not be siphoned off to pay for any other output “explains the lack of trust that the Japanese public has in the consumption tax.” In addition, because it is very difficult for the taxation authorities at present to calculate how much a company has spent that is eligible for consumption tax, a comprehensive invoice system is required.

April 2009 | The Journal | 17

Democratic Party of Japan Member of the House of Representatives Keiro Kitagama outlines his party’s tax reform plans at an ACCJ event in February.

In a related move, the DPJ would abolish a number of other indirect taxes that effectively cause duplicate taxation on top of the consumption tax. The ACCJ advocates changes in the loss carry-forward period, which was extended from five years in the tax reform package introduced in 2004 and presently stands at seven years. “Many European countries—including Germany, France and Great Britain— operate indefinite loss carry-forward periods, while the U.S. and Canada set theirs at 20 years,” says Shikuma. However, the seven-year limit in Japan makes it, once again, a less attractive destination for foreign investors. “It is the Chamber’s contention that extending the period would encourage overseas investment here and increase access to the market, at the same time providing relief to domestic financial institutions—many of which have been hard hit by the global financial crisis.” Asked directly whether the DPJ has plans to extend the loss carryforward period, Kitagami stated that

18 | The Journal | April 2009

there had been discussions within the party on the matter, but that no final decision had been reached. “I think the reason is that if we look at the time limit situation, it is clear that enforcement of Japan’s tax laws is very lax—for example, there is no penalty for not retaining tax invoices—and so we need to have stricter enforcement of the laws and collection,” he said. “If we can do that, then I think we can extend the carry-forward period to meet the global standard, but we have to have a comprehensive approach.” Other sections of the taxation issue where the ACCJ is seeking changes include current policies that relate to the Defined Contribution Pension Plan, such as increasing the limits on tax deductible contributions, allowing employees to pay into the system, and permitting withdrawals before the policyholder reaches the age of 60 under certain conditions. Reforms to the financial and securities tax systems also could encourage a shift from the public saving their money to investing it back into

the economy. Stamp tax for documents, meanwhile, should simply be abolished. Appealing more to a domestic audience, the DPJ has unveiled a basic policy for fiscal 2009 that is built upon “five pillars of reform,” according to Kitagami. They are the revising of the Special Measures Taxation Law, shifting toward demand-led growth, support for small businesses, strengthening the activities of NPOs, and reforming the enforcement of tax laws and making sure more taxes are collected. “This is a special year,” said Kitagami. “The economy is screeching to a halt and we have to take measures that are conducive to economic growth. That means our emphasis has to be on supporting small businesses and increasing the disposable income of the Japanese people.” According to the DPJ, more than 80 separate items are classified as special measures under taxation rules; but many are obsolete and not transparent, meaning that a thorough review of all the areas is required. The party presently

Time for Real Tax Reform

Taxes that are applied to automobiles are also under scrutiny …

Supporting small businesses—which employ as much as 97% of the Japanese workforce—is a key plank of the party’s plans, as well as a means to buttress a sector that has been very hard hit by the global economic downturn. The DPJ proposes to temporarily lower the reduced corporate tax rate from the existing 22% to 11%—the LDP is similarly proposing a reduction, although only to 18%. At the same time, the DPJ wants to restore the system for refunds by a carryback of loss and by introducing measures to treat dividends received from overseas subsidiaries as non-taxable income. Taxes that are applied to automobiles are also under scrutiny, with the DPJ proposing to streamline the “very convoluted system” of seven different taxes into a far more efficient and simple system. At the same time, the tax on liquor and tobacco products would be raised, although Kitagami agreed that such a move would be deeply unpopular

CARTOON

SNAPSHOT Combined Federal and State Corporate Tax % Rates (2008) 1.

Japan

39.54

2. U.S.

39.27

38.9

Germany

4. Canada

36.1

5. France

34.4

6. Belgium

33.99

7. Italy

33.0

8. New Zealand

33.0

9. Spain

32.5

10. Luxembourg

30.38

12. UK

30.0

16. South Korea

27.5

30. Ireland

12.5

OECD

is developing a way to determine whether a measure is cost effective, whether its policy objectives have already been attained, or whether other subsidies already render it redundant. In order to promote growth that is led by domestic demand, the opposition party is proposing abolishing the provisional tax rate on gasoline, restoring the deduction measures for public pensions and the exemption measure for the elderly—a step that has proved “a heavy burden on elderly people,” he pointed out—and extending the application of the reduced tax rate for dividends and capital gains on listed shares. Other DPJ-authored measures would include increasing the deduction for housing loans on construction that is designed to make homes “barrierfree” and more energy efficient, as well as introducing tax incentives for the building or renovation of homes that do not require loans.

and thus meet stiff resistance. Still, he said, his party was committed to pushing ahead with the measure. Other proposals are for a unique numerical taxpayer identification number for each person, and the creation of a new revenue administration that would merge the National Tax Administration and the Social Insurance Agency—simultaneously reducing administrative costs. Reforms are also targeting the time limit on corrections to tax data, which is currently set at five years when the tax authorities make the request, but only 12 months when appealed by a taxpayer. With such a vast area to consider— and so many potential improvements and enhancements that could be introduced—it is clear that reform of all the elements of Japan’s taxation system will not happen overnight. The fact that both the LDP and the DPJ are informing the foreign business community here about their ideas and aims, and are apparently open to suggestions, indicates that change in some areas will not be too difficult to achieve. But there are likely to be Julian Ryall is The Daily more entrenched differences Telegraph’s Tokyo of opinion on other parts correspondent. of the taxation laws. ■

April 2009 | The Journal | 19

A combined history of nearly 60 years

THE HARUKI AND TOKYO-MARUNOUCHI LAW OFFICES Legal counsel to many prominent Japanese and foreign businesses throughout Asia, Europe and the U.S. on a full range of corporate and transactional matters Representation of companies in disputes regarding a full range of business, commercial and employment matters Significant bankruptcy, corporate reorganization, and intellectual property practice

Shin-Tokyo Building 2F, 3-3-1, Marunouchi, Chiyoda-ku, Tokyo 100-0005 Tel: 03-3214-2491

Fax: 03-3214-2494

www.tmhlo.jp

MEDIA WATCH

Second Time Around Last year, Yuriko and Tomomi Saya flew to Guam for a church wedding, accompanied by their teenage daughter, Ruan. For couples like the Sayas, who were moved to mark the occasion of their 10th wedding anniversaries with something special, sekando kyoshiki (second ceremonies) are coming into vogue, reports the JMA Marketing Journal (Jan. 14). Is there any potential for business opportunity? Perhaps. Travel wholesaler Kintetsu International has noted a surge of second honeymooners, couples in their forties and fifties, on its package tours to Australia and Hawaii—of which about 20% are said to include mature couples, and have been rebranded “romantic journey.” About two out of every three Japanese

couples are said to hold some kind of ceremony at the time they wed. With the nation’s birthrate in decline, however, the overall number is expected to decrease over the long run—setting the stage for new businesses. The Happoen wedding hall in Tokyo’s Minato Ward has launched a new plan in which a minister and choir will be dispatched to perform ceremonies off premises, at affordable charges ranging from ¥50,000 to ¥110,000. The service is aimed at those who never had a wedding the first time, or at those who desire to reaffirm their vows on the same spot where they were married. A spokesperson for Happoen says: “We also welcome use of our service by grown children who want to buy the package as an anniversary present for their parents.”

Recession-proof Business While business-related articles in the media of late have been full of gloom and doom, some businesses have managed to achieve growth—despite, or perhaps because of, the recession. The weekly magazine Spa! (Feb. 3) reports one such category of business is enterprises directly linked to the growing risk of bankruptcy, such as yonige-ya services that provide a quick and discreet pullout—with the aim of escaping creditors. The operator of one such firm, SRA (www.yonigeya.com/), told the magazine his firm began getting more inquiries from around last summer, with turnover last year doubling over 2007. “Some people can resolve their debts by retaining an attorney, and that way is likely to result in fewer suicides,” one operator, Takayoshi Uragami, is quoted as saying. Business has been so good, he’s already thinking of opening new branches around the country. Another consultant says that yonige-ya apparently also are being utilized by women who feel they can no longer rely on support from their husband and want to hitch up with someone else. Bankruptcy risk insurance policies are selling well. Called torihiki shinyo hoken, literally translated as “transaction trust insurance,” a policy will compensate the holder for all, or part, of losses incurred by a vendor because of failure to pay what it owes or to deliver the goods. Companies taking out such policies are required to

furnish the insurer with a list of all the companies with which it transacts—whose corporate performance then is verified via the Teikoku Data Bank. Cubicles at net cafés, the residence of choice for the down and out, are currently waitlisted. One 70-room establishment charges ¥1,800 for 24-hours in a cubicle the size of two tatami mats—and includes a TV set and personal computer. This particular shop originally was designed as a rental office, with a “just” 95% occupancy rate. Travel to South Korea is another beneficiary of the recession, due mainly to the declining value of that country’s currency, which, since November 2007, has fallen by nearly 50% from its peak. A spokesperson for the JTB travel organization says bookings on flights to Seoul showed year-on-year increases of 45% and 94% in December and January, respectively. Other hot items include designer brand goods for rent; netbooks, low-priced mini-PCs with 7-to-10in screens, selling for next to nothing if the purchaser subscribes to a broadband service; auctions on eBAY; small-portion frozen foods selling for ¥100; and so-called wake-ari products, sold below list price because they were damaged in transport or had passed their consume-by date.

April 2009 | The Journal | 21

Buying J @ Baiyijie The number of Internet users in China grew by nearly 42% in 2008, surpassing the U.S. at 298 million Web surfers. Now credit firms and online retailers in Japan have begun to set their sights on this burgeoning market, which was estimated to have generated revenues of ¥790 billion in 2007. The Nihon Keizai Shimbun (Dec. 26) reported that, from January, Chinese consumers would be able to make direct purchases of some 20,000 items— including watches, cameras, electric appliances, cosmetics and apparel—via a new shopping portal named Buy-J. com (www.buy-j.com/shop/). Buy-J (for buy Japan) is written phonetically using three characters bai-yi-jie (佰宜傑) meaning “leader-agreeable-excellence.” Some 100 Japanese firms—including such major retailers as Yodobashi

Camera, Matsumoto Kiyoshi, Cecile and Narumi International—were mentioned as taking interest in offering goods. Credit arrangements are handled by Shanghai-

based Chinese credit-card company Yin Lian (referred to as “Union Pay” in English), in a tie-up with the MitsuiSumitomo card. Yin Lian cards, of which some 1.8 billion are said to have been issued, are already widely accepted by goods and service businesses in Japan. Via encrypted registration, shoppers can order up to 5,000 yuan in goods (about ¥66,000 at the Feb. 1 rate of exchange). By requesting credit verification, the amount can be increased by up to tenfold. Items are shipped via Japan Post’s EMS service, which can handle maximum dimensions of 1.5m in length or 3m in girth including packaging, and weight not exceeding 30kg. Recipients are advised on the Buy-J site that they are responsible for payment of any customs duties on their end.

Abandon Port The floating Kansai International Airport (KIX) in the inland sea, which opened in September 1994 with much fanfare, was actually big enough to increase the land area of Osaka Prefecture—up to that point, the smallest prefecture in Japan—to move it ahead of Kagawa, the second smallest. Just five months after its opening, the airport proved its robustness, surviving the January 17, 1995 earthquake that devastated Kobe and environs. Since last autumn, however, KIX has faced a major turndown; and the question on the industry’s mind now is whether the airport will survive the great business turndown of 2009. During the 2009 fiscal year, Japan Airlines and All Nippon Airways will be cutting back, or suspending services entirely, on numerous domestic and international routes. Aside from the overall business downturn, it seems that domestic travelers still prefer the old Osaka airport at Itami, which, like Haneda in Tokyo, is considerably closer to the city center. Osaka Governor Toru Hashishita, who last July was advocating shutting down Itami completely, subsequently has been obliged to retract his position; and now planners are discussing measures for buttressing the old highway and rail infrastructure serving Itami.

22 | The Journal | April 2009

Fears have arisen that, with the reduction of domestic service, KIX will lose whatever advantages it had as a hub serving nearby Asian countries. In addition to KIX and Nagoya’s Centrair, the small number of international flights handled by Japan’s regional airports in Honshu and Hokkaido are destined to get even smaller. This is partly due to the collapse of the South Korean won, which has discouraged group tours for golfing and visiting onsen. Another inevitable consequence of a decline in overseas travel from regional airports will be greater concentration at Narita and Haneda. This is the main reason the Tokyo Metropolitan Government is eager to get moving on opening up to civilian traffic the runway at Yokota Air Base. The Mainichi Shimbun (Jan. 31) reported construction being proposed for a new airport terminal adjacent to the base, in Fussa City, Tokyo.

MEDIA WATCH

Zero Emissions To foster true paperless offices, it’s becoming a given for companies to utilize both sides when photocopying. In the next phase of the economy drive, reports Nikkan Gendai (Jan. 27), wastebaskets are expected to vanish from the workplace. This already has

happened at Canon Denshi in Chichibu City—a move necessitated by businesses being charged for trash collection. Actually, Canon Denshi’s office doesn’t have many chairs either. Meetings are conducted with the participants, including directors, standing—a useful way to keep them brief. The arrangement also is thought to be to the benefit of employee health. Also, in 2001, the 1,063 computer terminals in the office were reduced to 743 units. One reason was that too many workers were using them for games and other personal use. Furthermore, old 40W fluorescent tubes were replaced by 32W inverter types, resulting in ¥520,000 in annual power savings. Placing shelves beside windows and other means of boosting efficiency in heating and cooling lowered utility bills by

another ¥11.7 million per year. By 2007, company outlays for office supplies were ¥6.18 million, a full one-ninth of 1999 levels. The quest for zero emissions has been taken even all the way to post-it-type memos. Nakabayashi Co., Ltd. recently launched mini-sized Memo Boards. Slightly larger than the standard post-it-size memo sheets, the reusable boards are composed of material similar to erasable white boards. If a user typically discards three ordinary memos per day, the worker will realize annual savings of approximately ¥1,300, while generating zero waste, the maker claims. Three varieties are available and include a writing pen. Coming in pink, green and yellow colors, the boards are sold at stationers for ¥609 (two-sided) and ¥483 (single-sided).

Mixed Bathing In a survey of 2,472 married individuals, ceramics manufacturer INAX asked if they wanted to get into the tub with their spouse for a nice soak. Nearly equal numbers said they wished to, or didn’t mind one way or the other (45.4% and 45.5%, respectively)—only 9.1% of husbands said they didn’t want to bathe with their wives. The wives’ replies, though, were less enthusiastic. While 25.2% said they indeed wished to scrub together with hubby, 37.1% were of mixed feelings. The largest response segment, 37.7%, said issho ni nyuuyoku shitaku nai (I don’t want to bathe together). Whatever the case may be, 89.8% of the survey’s respondents said they typically bathed alone on weekdays; and the figure actually went down slightly, to 88.1%, on weekends and holidays.

Random Access Adjacent to cash registers in Japan’s convenience stores, the charity collection boxes are demonstrating remarkable evidence of patrons’ generosity. Take Seven-Eleven Japan, whose 12,000 or so nationwide branches have contributed over ¥356 million to environmental causes. “When more customers began utilizing

Nanaco rechargeable prepaid cards, we expected collections would fall since fewer terminals were dispensing change, but actually the amount has been increasing every year,” a company spokesperson was quoted as saying. Some 8,500 participating Lawson outlets collected ¥250 million. Most of it

went to reforestation projects. Customers at FamilyMart’s 7,200 shops dug deep and contributed ¥167 million to four organizations. Circle K conducted three campaigns: for seeing-eye dogs, environment-related funds and UNICEF. Annual charitable contributions average out to about ¥20,000 per outlet. (Nikkan Gendai)

April 2009 | The Journal | 23

ACCJ Event Using the Unconscious as a Creative and Idea Resource. By Nicole Fall

earning to look inside our minds could provide solutions to business problems we are struggling to answer, said Lisa Morgan, founder of Future Seeing Ltd., a UK-based strategy and research consultancy established in 2004, at an ACCJ event on November 21. Morgan spent a decade working in Asia, and is author of VOICE in their own words, Teenagers Predict the Future (bilingual English/Japanese). She has been pioneering work in exploring unconscious expectations as a tool for future scenario and strategic development for international businesses, locally and abroad, for the past 15 years. There was an experimental session held at the Roppongi Hills Club for the ACCJ Marketing Programs and the Human Resources Management Committees. Morgan demonstrated techniques to stimulate the unconscious to generate ideas that both problem solve and strengthen collaboration within organizations. Participants at the luncheon workshop readily shared what was on their minds, particularly during this period of economic

24 | The Journal | April 2009

uncertainty. In an insightful event, people openly discussed their business fears—discovering they could harness this worry into a business strategy through visualization and other imagination-based techniques. They could explore, document and leverage their unconscious thoughts on what people report is happening. “We all know that the unconscious mind communicates with us through dreams. Some of you might have had the experience of a useful idea that sprung into your mind,” she says. “Or if not a personal experience, you might know of someone who has had such an inspiration.” Morgan cites a fascinating range of examples. Carl Perkins dreamt of blue suede shoes, and that inspired the song he wrote for Elvis. Archimedes more than likely was daydreaming in the bath when he worked out how to measure mass. Paul McCartney tells of the tune for Yesterday springing into his mind fully formed. “I’m going to talk about how we can call upon the unconscious to supply this creative inspiration at will. How we

ACCJ Event

can use our unconscious mind— “Remember those 11 million without waiting for it to break bits of information? Much of the through our dreams—to bring us unconscious processing concerns the useful creative ideas when we need senses—10 million of those bits are to have them,” she says. “But first concerned with processing visual I want to explain what I actually information,” she says. “What you mean by our unconscious mind and are looking at takes the lion’s share of how it operates.” your unconscious processing power. The unconscious mind is Much of the remaining 1 million bits referring to the part dealing with are processing other senses.” the mental processes below the level of This is an exercise Morgan uses when normal awareness. searching for insight. It helps teams get a “Some of you may think I’m referring to wider range of information with which to the sort of unconscious or ‘subconscious’ work. described by psychoanalysts like Sigmund “Take your thoughts back to the last Freud—full of repressed desires and time you went into a shop. Separate out anxieties,” says Morgan. “That notion the experiences of each of your senses— of a seething, steaming underworld of imagine what your eyes might say about the psyche is out of date. Neuroscience the experience, what your ears want to tell has shed light on how we think, and you,” she poses. “What your tongue would shown that most thinking happens in our say, and what your fingers might report.” unconscious.” Morgan cautions against trying to be Present and relatively conservative rational. estimates put the conscious mind’s “Trust what pops into your head and contribution to thinking at 5%; but some record it,” she says. neuroscientists believe the difference is This might seem fanciful, but it can reap much greater, according to Morgan. significant rewards when considering the Lisa Morgan “We are not talking about impact of your product. consciousness being the tip of the iceberg, “It helps retail companies understand but rather the tip of the tip of the iceberg. the total consumer experience of their To put it another way, when you make a decision to buy outlets,” explains Morgan. “Imagine how differently your eyes, something and take 10 minutes thinking about your decision, feet or hands experience a visit to a bank—compared with your unconscious perception and unconscious thought will your rational thoughts.” have processed approximately 6.6 billion bits of information, For example, when struggling with a problem, ask yourself: according to leading researchers in this field,” she says. “The “If I did know that answer, what would I do?” trick is to learn how to make best use of your unconscious “Allow your mind to come up with ideas. And relax if the processing power.” answer doesn’t come immediately,” she advises. “Allow your Morgan proposes a simple method for accessing unconscious to process—perhaps, even sleep on it—and then unconscious knowledge. It requires getting relaxed, ignoring all you have to do is be alert to the response when it comes.” the chatter in your head—and using a bit of imagination. And when that answer pops into your head—that’s when “Take a look inside your head. You can do this by imagining you have to use your conscious mind. being in there. Or you can shine a light into your head, and “If we make the space and time to deliberately visualize to start to get in touch with the images deep inside—in your find solutions, if we are alert to the messages in our metaphors, mind’s eye,” she says. “At first, when you do this, you might just take note of the multi-sensory information stored in our see black, or just get a daft sensation.” unconscious and flex our imagination just like a muscle,” According to Morgan, you can use this method to ask poses Morgan, “then we will achieve a much your unconscious questions—and watch what images and closer relationship with our own unconscious impressions appear in the answer. knowledge.” “Our unconscious is full of feelings,” she says. By recognizing the importance of the “Neuroscientist Antonio Damasio has written that feeling unconscious minds of customers, employees precedes thought. and colleagues, as well as ourselves, in shaping “The very fact that you think in images at all is a product of our business fortunes—and also consciously unconscious processing,” she continues. “One useful way the incorporating that understanding into our Nicole Fall is unconscious mind thinks is in metaphors.” business thinking—“we can make more a freelance journalist based Morgan suggests taking a moment to think about your effective choices in the strategies we adopt,” in Tokyo. current situation at work and what metaphor springs to mind. concludes Morgan. ■

“Allow your unconscious to process—perhaps, even sleep on it—and then all you have to do is be alert to the response when it comes.”

April 2009 | The Journal | 25

Hatsuhisa Takashima President and CEO, Japan International Broadcasting By Richard Smith Photos by Tony McNicol

Hatsuhisa Takashima is president and CEO of Japan International Broadcasting (JIB), a brand-new English-language private television service solely geared to non-Japanese people living outside Japan. Following a bill passed by the Diet last year to allow NHK to launch the service, NHK/JIB TV commenced 24hr broadcasting on February 2. Takashima talked to the Journal at the International Media Forum in Tokyo shortly after the launch. What are your news service’s goals? The main goals of JIB and NHK are to catch up with the international television broadcasting provided in other countries—such as China, South Korea, Qatar, or the UK and the U.S.—and to use television to actively transmit information from Japan. In addition, JIB as a private company, with participation from commercial TV networks and others, has a strong ambition to create an All-Japan program production team composed of those from the private and public sectors who can show Japan as it really is. This new channel will promote better understanding of Japan among other

26 | The Journal | April 2009

people in the world; and, indeed, a main goal is for people to understand Japan and, hopefully, become a fan of Japan. Another goal is to increase the number of people who want to visit, reside or invest in Japan. Who are the shareholders, and at how much is the company capitalized? By law, most of JIB’s shares are owned by NHK, and jointly owned by 15 other companies, including the commercial TV networks, trading houses and information technology companies. It is a small company; the total capitalization is ¥390 million, about $3.5 million.

SNAPSHOT Japan International Broadcasting ■■ Founded in 2008 ■■ Headquarters: Tokyo ■■ Employees: 40 ■■ Service: 24-hour English-language TV broadcast outside Japan ■■ www.jibtv.com (TV streaming not available inside Japan) ■■ www.nhk.or.jp/nhkworld (JIB programs not available on this Web site)

What model, if any, will you be following: BBC, CNN, or will the news service have its own unique style? We appreciate and highly respect our predecessors. BBC World is one of the role models for very high-quality international

ON THE SPOT

“We would like to show that news from Japan is as interesting as news from any other part of the world.”

BIOGRAPHY Hatsuhisa Takashima ■■ Born in Tokyo, September 1940 ■■ Since 2008, President and CEO of Japan International Broadcasting ■■ 2005-2008, taught journalism at Gakushuin University ■■ 2002-2005, press secretary at the Ministry of Foreign Affairs of Japan ■■ 2000-2002, director of the United Nations Information Center Tokyo ■■ 1963-2000, joined NHK and assumed various posts including Washington correspondent, London bureau chief, foreign editor, chief commentator and NHK News director-general, ending career with a three-year stint as host of the monthly program “Message for the 21st Century” ■■ Bachelor’s degree in politics from Gakushuin University ■■ Published in 2008 a book entitled Game Over: The End Of American Globalization (coauthor, Random House Kodansha) ■■ Wife Yoneko; children Nahurisa, 42 and Ayako, 39 ■■ Interests: Playing piano and guitar; fixing glitches in electrical appliances

news broadcasting; CNN International is a pioneer and doing very well; and French 24 is another one. We will be showing the Asian view—or the Japanese view—on various aspects of world events. That will add to the interpretation of what is happening in the world. How is the launch of such a medium an indication of Japan’s internationalization? Nowadays, 17 million or more Japanese travel every year to many countries, and Japanese companies and products are found around the world. You may see Japan seemingly in every corner of the world; but what is missing is what Japan is thinking, what Japan is doing, what is the Japanese view on current world affairs. This service will add to a better worldwide understanding about Japan. How many people will your service employ, and how many are foreigners?

My company has 40 employees, only one of whom is a foreigner. Nonetheless, the NHK’s overseas broadcasting section— which produces NHK news in English, as well as other English programs—has many foreigners among its over 200 employees. Is this news service to counter any notion of misreporting of Japan by foreign media, perceived sometimes by local pundits as not understanding the culture here? Let me give you one example. Last November in Washington, the meeting of the G20 nations was held to deal with the world financial crisis. Japanese Prime Minister Taro Aso attended the meeting and delivered a very strongly worded message from Japan. At the time, a leading UK newspaper published on its op-ed page a cartoon that showed the faces of attending leaders. We could see the French president, the German chancellor, the British prime minister, then-U.S. President Bush, the Chinese leader and the Indian prime minister. But Prime Minister Aso’s face was nowhere to be found. Japan is missing from the radarscope of that very prestigious newspaper. Well, we would like to show Japan as it is—through the comments, through the images, through the programs broadcasted direct from Tokyo to the world. We fully appreciate the work of foreign correspondents stationed in Tokyo, working very diligently to cover and send news; but I often hear that their headquarters’ news desks are not very interested in news from Japan. We would like to show that news from Japan is as interesting as news from any other part of the world. Hopefully, people will better understand what Japan intends to do and what Japan is doing. How do you answer critics who claim your news service will just be a propaganda tool for Japan?

That’s for viewers to judge. We believe that if the programming is viewed as propaganda, then we will lose our entire viewership. We would like to have as many viewers as possible, and that will be thanks to independent journalism and high-quality programming. ■

Richard Smith is a freelance journalist based in Tokyo.

April 2009 | The Journal | 27

HR Roundtable Moderated by Geoff Botting Photos by Tony McNicol

The global economic crisis, which has triggered rapid downsizing as markets shrink to record-low levels, has left human resources (HR) departments scrambling. Many companies have quick and massive layoffs in their sights. But is this the right approach? Once the global and domestic economies start to grow again, the task of HR managers will then be to repair the damage from all that retrenchment. Meanwhile, some of the few companies that want to hire are encountering a recruitment crunch, as mid-career managers are cool to the idea of job-hopping in today’s turbulent times. At the ACCJ headquarters on March 10, Geoff Botting spoke with five Japan-based HR experts about the extraordinary challenges they face during the economic downturn. The global economic downturn is having a profound effect on nearly everyone in every business field. How are HR departments being affected, and what are they doing about it? Mariko Nakazono: The market conditions are forcing companies to cut costs everywhere. So everyone is trying to figure out what’s really necessary and what isn’t. And that represents very difficult decisions that you have to make, difficult because some of the things (in the company) that aren’t strictly necessary could be bringing in lots of revenue. Keiko Suzuki: The market is forcing priorities to change constantly. Therefore communication has to be very transparent,

28 | The Journal | April 2009

just to keep the morale up. It doesn’t matter whether it’s good news or bad news. And the communication should be from top down. Still, everyone is facing difficulties; so to boost morale you can send the message of, “Let’s hang in there. The recession isn’t going to last forever. Let’s just do our jobs right.” One role of HR is to maintain morale, enthusiasm and motivation among your staff. Given the currently gloomy situation, how do you do that? Claudette M. Byers: It’s quite challenging in tough times when there is no good news.

HR RounDtable

Participants: Main photo, left to right Patricia (Tish) Robinson, Professor at the Graduate School of International Corporate Strategy, Hitotsubashi University Claudette M. Byers, Chief Human Resources Officer, Hartford Life Insurance K.K. Adam Kassab, Consulting Director, Culture Convenience Club Co., Ltd. Mariko Nakazono, General Manager, Office of Chief Learning Officer, Shinsei Bank, Limited Left Keiko Suzuki, President of Footsteps, an HR consultancy

We recently had a town hall meeting, and an employee asked the question, “How do you keep morale going?” And I said, “Everyone needs to keep their noses to the ground and focus on their jobs. Feeling sorry for yourself won’t do any good.” Suzuki: I think feedback is really important, so that your employees know you’re paying attention to them. That’s because good talented people are often being approached by recruiters. And maybe there are rumors, say, of your company going bankrupt. So if you want to retain good talent, you have to keep the communication flowing. Nakazono: Top talent is in demand all the time, regardless of the economic situation. Does the current situation, marked by ongoing layoffs and depressed markets, offer any opportunities to employers, in terms of human resources? Suzuki: The cost cutting may offer companies the opportunity to prioritize. Maybe there were jobs you had to do before; now you don’t have to do them any more. So now you can determine what’s important—and prioritize, prioritize. Adam Kassab: It’s definitely a buyer’s market at the moment, and this is enabling us to raise our standards. Demand for our services and products have been increasing recently, and we are continuing to recruit similar numbers of new graduates

as in previous years. In the past, MBA grads from Ivy League universities may have been drawn more toward global investment banks or consulting companies, but now they’re looking at attractive alternatives. We have also recently started an innovative Global Internship Program that is linked with other internal organization change initiatives, and have been amazed at the positive response we have had from overseas and Japan-based applicants. Byers: When we were looking for replacements, I thought it would be a buyer’s market. But it wasn’t. People were very cautious, and they’re checking companies out. They still have to feel comfortable about the organization if they want to move. You would assume that, in tough times, you could attract top talent; but that’s not necessarily the case. But doesn’t the labor market, like other markets, operate by the forces of supply and demand? And there certainly seems to be a big labor surplus at the moment. Byers: You can attract talent if those people happen to be out of a job. But if they’re currently employed, they’re going to be more cautious about job-hopping or leaving. But retaining has become easier. Our voluntary turnover has dropped significantly. The market is making the big difference there. After the economy picks up in the future, how should companies, in particular foreign companies with offices or subsidiaries in Japan, repair the damage caused by the downsizing they’re now doing? Suzuki: Companies should think in the long term when it comes to layoffs. Cutting too deep can really hurt the organization and its functions. I often questioned head office’s mandated cuts because Japanese labor pools are rather limited. In Japan, in particular, rehiring and retraining are very costly. I once saw an entire department cut—and then the rehiring had to be done two years later. It was a terrible mistake.

April 2009 | The Journal | 29

Hudson Tel: Fax: E-mail: Web:

HR Central K.K. 03-3511-5668 03-3511-5670 japan@hudson.com jp.hudson.com

Hudson (NASDAQ:HHGP) is one of the worldâ&#x20AC;&#x2122;s leading providers of professional recruitment, managed solutions and talent management services. Our clients include many Global 1000 companies, as well as small to medium-sized enterprises. Hudson has over 3,000 staff worldwide serving clients and candidates in more than 20 countries. In Japan, we have a successful track record of 10 years with companies of all sizes in all sectors, including Banking & Finance, IT & Telecoms, Manufacturing & Industrial, Consumer, Advertising & Communications, Healthcare, Accounting, HR, and Supply Chain & Logistics. Our multilingual consultants are specialists with the market knowledge and connections to source the top professionals our clients require. Our expert headhunting, combined with targeted Internet advertising and the strength of the Hudson brand, helps to ensure the consistent attraction of high-caliber candidates. In addition, Hudson has built up an extensive database of candidates and uses sophisticated search and selection tools to identify the right candidates. In the Asia-Pacific region, Hudson is one of the largest professional recruitment firms, and has been accredited with the ISO 9001 certification. In addition to Tokyo, we have offices in Shanghai, Beijing, Guangzhou, Hong Kong and Singapore, supported by the global resources of Hudson.

30 | The Journal | April 2009

Tel: Fax: E-mail: Web: Rec. Lic. #:

050-5806-9821 044-767-8021 inquiry@hrcentral.co.jp www.hrcentral.co.jp 14-ă&#x192;Ľ-300451

HR Central K.K. is a premier source for bilingual HR talent, careers and allied HR services, as well as Japan-focused HR information and resources. Primarily, we are a fully licensed search and recruiting consultancy specializing in mid- to senior HR-related roles covering the entire HR value chain across all industries in Japan. We also provide our clients other recruiting solutions such as individual and team assessments, and job profiling (DISC-based), talent market research, RPO and HR consulting. For our valued candidates, we provide services such as individual behavioral profiling (DISC-based), career counseling (Polaris Coaching), as well as interview and transition coaching to help them step-up their HR careers. As part of our social responsibility that we treat as an integral part of our business, we provide other value-added information and services to HR professionals through our HR publications, knowledge base, network and resources that are designed to help advance the practice of the HR profession in Japan. We are a founding member and an active advocate of The Japan HR Society (www.jhrs.org), a community of Japan-focused HR professionals worldwide, and the publisher of a monthly e-magazine called The HR Agenda (http://hragenda.hrcentral.co.jp). Please see our advert on page 9.

HR RounDtable

Nakazono: If layoffs are inevitable, they must take place as quickly as possible. And then you need to create a new organization and maybe hold a town hall meeting, where you tell everyone that they’re needed. Patricia Robinson: Head offices in the United States often face very different circumstances than their offices in Japan. Over there, you have much better labor mobility and you don’t have to do such things as finding bilingual employees. So in Japan, laying off and then rehiring can really put you at a disadvantage. Is that a common situation, though? Where overseas head offices don’t appreciate the basic issues taking place in Tokyo? Suzuki: Sure, and that’s when the local HR people have to step in to the business side and say, “Look, this is what we have. And is it necessary to cut so much? Certain things here have to be protected in order for us to deliver to the end users and stakeholders.” Is Japan a special case in that regard? Where downsizing can have particularly damaging and lasting effects? Suzuki: I think so, if compared with elsewhere in the AsiaPacific. Singapore, for example, is closer to how things work in the U.S. Robinson: Due to four criteria in the labor laws, I think a lot of Japanese companies are using the recession as an excuse to lay off their less productive workers—as they would otherwise be forced to use long performance records to justify such layoffs. I’ve heard grumblings from staff at certain foreign companies about how their offices are in the habit of parachuting in managers from head office without much, or any, knowledge of the Japanese market, let alone any ability in the vernacular. The manager usually requires a full-time bilingual assistant to squire the boss around. Is this a good arrangement? Nakazono: Global companies should have training programs to prepare these people. If not, then HR has to help them on the ground. Byers: It depends on the company. Some have lengthy programs, which teach language and cultures; and some just parachute people in—which can be a tragedy not just for the company, but also for the individual, who may never be accepted or understood. On the other hand, expats have that strong pipeline with headquarters, which is essential. Robinson: If you look at this from the perspective of headquarters, if the subsidiary is wholly owned and represents the company’s intellectual property, you want someone on the ground from headquarters who knows what its agenda is. So as far as having a “shadow person,” just think about it—if you were investing your own money in a foreign country, would you just fly your money in and hand it over to a group of strangers? Kassab: I have a slightly different opinion. In terms of communicating with the parent company, it’s great to have someone here who has the same mindset and speaks the same

“If layoffs are inevitable, they must take place as quickly as possible.” Mariko Nakazono

“language.” This can help to ensure global policy is implemented and relevant procedures are adhered to. But in terms of actually working with—or dealing and motivating and leading—a Japanese workforce, these types of people can often struggle. Having a strong local person who can understand, interpret and bring to life the vision can be vital for success. Does the Japanese Labor Standards Law serve as a hindrance to the hiring and laying off of staff? Kassab: You have to show that your decisions were based on rational criteria that have been fairly applied across the board, so that people don’t feel they have been singled out. Byers: You need reasoning and best argument, and you have to be willing to pay. Most importantly in Japan is that you have to treat people with dignity and respect. Kassab: I think Western countries have a lot to learn in that respect. The idea is to arrive at a positive outcome in consultation with employees—leading to a mutually acceptable agreement. Byers: You need to be willing to spend time with the employees and listen to their issues. Some people will sign on the spot, some after two weeks, and others after a few months. Whenever there’s a court case over dismissal, it’s almost always because the employee was treated unfairly. In terms of hiring, do foreign companies have access to top-notch Japanese executives? Byers: They do now, but not before. As late as the 1990s, it was very difficult for a foreign company to get a top-notch person from one of the Japanese financial institutions. But since 2000, that has no longer been the case. Robinson: Yes, but the question is what about now—now that foreign companies are the leaders in downsizing? Byers: We may see a reverse flow, back to the Japanese companies.

April 2009 | The Journal | 31

HR RounDtable

SNAPSHOT Companies considering retrenchment must: ■■ Have a rationale to explain why cutting staff is necessary, such as citing their sustainability in the case of financial problems ■■ Demonstrate they’ve explored and executed other ways of cutting costs, and that retrenchment is a last resort ■■ Provide a rationale for who should be targeted for termination based on performance, skill-set requirements, business decisions, etc. (Although HR directors concur that profit loss is the strongest rationale.) ■■ Prove procedural justice by providing evidence that sufficient communication took place with employees, so that staff clearly understood the situation

But is there still resistance, say for a top executive of NTT to go to a company like Yahoo or Google? Nakazono: It depends on the industries. The answer would be yes for the conservative industries. Suzuki: The old attitude used to be: “Oh, you’re working for a foreign-capitalized company! That’s unstable, isn’t it?” Robinson: But now, it’s even more unstable. How long is it going to take us to get an image of stability back? Right now, the foreign companies are the most unstable. Kassab: If you’re 45 in a good, stable job with your pension, etc., why would you want to move? Possibly, the main driver could be a desire to have greater independence and control, and the challenge of leading others.

Japan is facing a demographic time bomb, with social scientists predicting a severe shortage of working-age people in the near future. How are human resources departments dealing with this? Suzuki: One popular solution is to employ people beyond retirement age. I worked for a company that hired such people on a contract basis. That program worked really well.

“If you’re 45 in a good, stable job with your pension, etc., why would you want to move?” Adam Kassab

Nakazono: I was involved in a similar program with an asset management company, which was selling its products to regional banks. The company needed to have employees who, at least, appeared to be senior [level] to talk with the regional banks. But those people, of course, also had the experience and connections. Robinson: Japan faces a decreasing population of people who are college age and MBA age. So universities should cater to people who are retiring; or use retirees, such as former business executives, for teaching. Kassab: I think the demographic situation is making our company’s HR think much more creatively. Our company is quite young, with an average age around 30; but there are some senior people as well, and that is making our HR think more about flexible job structures. For example, an employee with special skills could turn up for two hours at such-and-such a time, or work at home. Our client base and target client base are also changing, so this is also driving innovation internally in terms of business initiatives, processes and strategy. Robinson: The leading-edge Japanese companies have programs like flextime. But there’s a tendency toward more hiring part-time and temp staff when the economy becomes cyclical. Meanwhile, many of the homeless used to be Geoff Botting temp workers in construction, and so on; and it’s is a freelance hard to get re-hired in that industry when you’re journalist based 45. So I think Japan needs to think hard about its in Tokyo. employment systems. ■

April 2009 | The Journal | 33

Yasuchika Hasegawa The Japan Association of Corporate Executives (Keizai Doyukai) proposes a new style of Japanese management to realize successful Japanese corporations and a prosperous nation in the 21st century. In essence, we must identify and empower the strengths of Japanese companies, while not expending great energy on overcoming Japanese weaknesses. In addition, we should incorporate the strengths of U.S. and European companies, while minimizing any negative impact in doing so. Rather than the top-down management style of the U.S. and European companies, I believe a more appropriate management style for Japanese companies is the development of precise medium- and long-term plans that involve all relevant staff in the process. Japanese companies should develop personnel assessment systems that evaluate contributions to, and efforts made towards, the team. Compensation and remuneration systems should encourage a spirit

34 | The Journal | April 2009

of challenge and self-realization within a system that fosters individual employeesâ&#x20AC;&#x2122; abilities and loyalty to the organization. As a result of such efforts, companies will be able to retain superior human resources who contribute to the company over a long period through their valuable achievements. It is absolutely necessary for us to conduct highly transparent management, and build a system for promoting vertical and horizontal communications in order to maintain and strengthen the trust between employees and top executives. Group orientation and teamwork, which have been said to be a key strength of Japanese companies, surely will continue to be a driving force behind process innovation. However, it is necessary to utilize this tendency in a way that does not lead to a conformist mentality suppressing creativity. In contemporary corporate management, it is important that top executives take the lead in attracting outstanding global personnel, empowering all employees to realize their full potential and to maintain their optimum performance. To accomplish this, it is necessary to have a clear corporate vision or philosophy that executives can put into practice. For candidates with the potential for a future executive position, I believe it is essential to provide practical leadership and management experience through stints of at least

illustration for the accj journal by darren thompson

A New Management Style

OPINION LEADER

長谷川閑史新・日本流経営の創造 several years in both North America and Europe. The Japanese are good at assimilating beneficial aspects of other cultures, but they are sometimes not as adept in interacting and negotiating with persons of other ethnicities. Despite this—for Japan as a nation and for its enterprises to develop further—it is necessary that we be able to deal skillfully with diversification, as foreign cultures and people flow into the country. English, the language of global business, is an essential communications tool in becoming a more diverse society and organization. Reform of the Englishlanguage education system must be undertaken immediately at the national level, otherwise the lack of English skills will become more and more a serious handicap. Whenever faced with challenges, the Japanese tendency is naively to believe that things will turn out all right in the end. This is a weakness that needs to be replaced with critical thinking. To achieve this, it is necessary to assume that most of the phenomena that occur in business are nothing more than the result of hypothetical probability. And, based on that assumption, work out contingency measures in advance. This needs to be the norm for conducting day-to-day operations.

経済同友会では、21世紀において日本企業が

頭に立って取り組むことが重要である。そのた

あるべき姿を実現し、国家の繁栄に貢献するた

めには、明確な企業のビジョンやフィロソフィ

めの提言書として『新・日本流経営の創造』を

ーを持ち、経営者自らが実践しなければならな

発表した。本提言の要諦は、日本企業は自らの

い。企業の将来を担う可能性のある幹部候補

弱みを克服するのに多大な労力を費やすので

生にとっては、少なくとも米欧それぞれで数年

はなく、自らの強みを明らかにした上でそれを

程度、リーダーシップやマネジメントの経験を

強化していくべきだということである。

積むことが必要であろう。

日本企業にとってより相応しいマネジメント・

日本人は異文化の良い点を取り入れるのは

スタイルは、欧米企業のトップダウン型ではな

上手だが、異民族との交流や交渉は必ずしも

く、むしろ緻密な中長期の経営計画を立案し、

得意ではない。しかしながら、日本国、日本企

その策定過程で関連するメンバーを巻き込ん

業が更に発展するためには外国文化や外国人

でいくものであろう。日本企業は、チームへの

の流入による多様化にうまく対応しなければい

貢献や努力に対する人材評価制度を整備する

けない。国際ビジネス言語としての英語は、更

必要があるが、報酬体系も、チャレンジ精神を

に多様性のある社会、組織への脱皮を図る際

促し自己実現を通じて個々の従業員の能力向

に必須のツールであり、英語教育は国家レベル

上や組織へのロイヤルティ向上をもたらすもの

で改革する必要がある。対策が講じられなけ

でなければならない。これらの努力の結果とし

れば大きなハンディキャップとして圧し掛かっ

て、会社に対して長期にわたり貢献しうる優秀

てくることになろう。

な人材を保持することができるのである。

危機に直面した時に、日本企業にありがちな

経営陣と従業員の信頼関係を維持・強化す

のが天佑願望であり、日本人の弱みの一つとし

るためには、透明度の高い経営とともに、タ

て、これはクリティカル・シンキングに置き換え

テ・ヨコのコミュニケーションを促進する仕組

る必要がある。そのためには、ビジネス上のど

みを構築することが絶対的に不可欠である。集

のような情報であれ決して鵜呑みにせず仮説と

団主義やチームワークはこれまで日本企業の

して捉え、想定外の事態が発生した場合の対

強みの一つと言われており、今後もプロセス・イ

応策を予め考えておくべきであり、日常の業務

ノベーションを推進する原動力であり続けるだ

遂行に際しても当然のこととして捉えられなけ

ろう。ただし、創造性を抑制する横並び主義に

ればならない。

Yasuchika Hasegawa is Vice Chairman, Japan Association of Corporate Executives.

発揮させ、ベストのパフォーマンスを持続して

陥らないように運用する必要がある。最近の企業経営では、世界の優秀な人材を惹きつけて、一人ひとりの社員の力を最大限に

（社）経済同友会副代表幹事・企業経営委員会委員長長谷川閑史

達成するためには、トップ・エグゼクティブが先

April 2009 | The Journal | 35

ACCJ Event Leadership, not Management in Uncertain Times for the SME By Catherine Shaw

36 | The Journal | April 2009

Wall Street Associates japan

he 45-year-old financial specialist leads a troubled investment company in Tokyo. “Every morning before I leave for my office, I stop to look at my children … who are usually still asleep,” he says. “It helps calm my mind and reminds me how many people depend on me to hold it together.” When asked how he sees his role as a leader, he admits: “It’s the first time I’ve really understood what it means. My team watches my every move for cues on how to handle everything—like I am conducting an orchestra. “I know I must control my own fears,”

he adds, “or we won’t survive 2009.” The crisis in the global economy is forcing many firms to re-examine their leadership of people, and in the areas of sales and finance. It’s particularly difficult for small to mid-sized companies, according to Jon Sparks, COO of Wall Street Associates, a mid-career recruitment consultancy, speaking at an ACCJ Jon Sparks event on leadership in troubled times held on December 12. Many don’t have the experience to deal

with the issues they now face. “But there are plenty of people out there who have gone through this before, so there is no need [for you] to learn every painful lesson again.” There are practical steps business leaders can take immediately, reassures Jason de Luca, managing director of Smart Partners K.K., a consultant for small to mid-sized companies in the area of sales and processes. “Think and act every day as if you are going to lose your top three customers in 2009, and always go after new business. “Examine your existing client base and identify who should be key ‘targets,’

ACCJ Event

“It’s vitally important not to micro-manage.”

TONY MCNICOL

Devin McGrath

while also looking for ‘orphaned’ clients which you lost contact with as your business grew,” says de Luca. “Identify who your key client’s vendors are—and whether there are any opportunities to develop links with them to go after their customers, too! “Sales are the heart and finance the blood flow,” he adds, “so prioritize cash flow and consider giving small discounts for early contract renewal, bulk orders or longer-term agreements. Offer a discount for 100% payment upfront to get finances under control. “Offering modest incentives, such as extra vacation days or half-day Fridays, to staff who sign up new clients is also a highly effective way of stimulating new sales revenue,” says de Luca. Understanding the true nature of the problems you face, according to Joel Glasser, a senior management consultant for Smart Partners, is critical to effective

leadership. “Make sure you understand the numbers you are working with. If they are prepared in a confusing way, ask for them to be presented in a clearer form so you can manage successfully. Focus on timely information like accounts receivable, fixed expenses, sales per person, etc.” Glasser warns against overreacting by cutting costs in an unsustainable way. Instead, anticipate how it will affect your business in five to six months’ time. If a client is experiencing payment problems, try to work out a realistic payment schedule—and keep your sales team informed. It’s vitally important not to micromanage, warns Devin McGrath of Ascendant Business Solutions K.K., a business and technology service and solutions provider in Tokyo. “I once worked for a small business in Panama battling declining revenues because of new competition. External problems became internal problems, but the downward spiral accelerated primarily because the owner lacked transparency and micromanaged his employees. “Efficiency dropped because employees started worrying about their jobs, especially when his behavior was interpreted as a lack of trust,” he says. “This led to the loss of key staff, and the business was eventually put up for sale at well below its market value.” Foreign-affiliated firms in Japan face a similar challenge, according to McGrath.

“Language and cultural barriers can unwittingly create a vacuum of understanding that often fills with invented misunderstandings. “Leadership must fill this vacuum with tangible communications early on,” continues the consultant from Ascendant Business Solutions. “We now have All Staff Off-Site Events, where updated strategy and plans for the ever changing marketplace are openly discussed—to ensure our own leadership team has increased transparency.” Sparks agrees. A clear philosophy that guides your business plan is necessary to avoid losing your direction. “In Japan, it is likely employees will view even tiny changes in a positive way,” he says. “It also helps get employees into the mindset of cutting costs wherever possible. “Leadership is about upfront, honest and regular communication to ensure a culture of trust and a shared feeling that the firm is riding the waves of the market in the same boat,’ he adds, “pulling in the same direction.” A client’s online business was performing badly, de Luca recalls, and he would bark out new company initiatives, polices, action plans, course corrections and staff changes at the slightest negative movement in the market. “The sudden, knee-jerk reactions—and the lack of follow-up afterwards—caused smoldering panic throughout the small firm and sent many reaching for their

April 2009 | The Journal | 37

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ACCJ Event

résumés,” says de Luca. “No one ever knew what was going on, what to expect next; and their results suffered. It was like the captain of the ship changing course every few moments when they hit waves.” Keep course corrections “few in number, simple to understand, actionable and, more importantly, followed up consistently by management,” advises de Luca, “so everyone is clear as to where they are going and why. “Turn off news stations on the company TV and radio,” he says, “and, instead, try office-acceptable tunes selected by staff.” In difficult times, the fewer decisions, the better. Sometimes the best thing to focus on is what to stop doing, according to de Luca of Smart Partners, rather than just crank up panicked activity. “We’ve updated our services for 2009, and now offer a service for personal financial discipline [not investment schemes or pension plans] in basic household budgeting, personal coaching in spending less, setting cash savings targets and providing local Japanese tax advice. “Anecdotes from people who lived through the American Depression in the 1930s always had the same theme: focus on human relationships, a smart work ethic, simple pleasures; live within your

means and save something from every paycheck no matter how little is left over.” A significant increase in clients seeking discreet professional advice is noted by Justin Bridge, an international executive leadership coach. “The most challenging and draining task of leaders in difficult circumstances is [being able] to resist the allure of depression and find the strength to motivate and inspire people to adopt a positive and energetic mindset. “It’s important to keep calm,” he warns. “The defining characteristic of a leader is that they have a broader perspective, a longer-term view—so keeping the big picture in mind and believing the end result will be good is critical at a leadership level.” Bridge points to Harvard leadership guru, Daniel Goleman, who believes a leader’s most important role is to “set and manage mood.” This is not just about what they say and do, but also by the way they manage their own mood. A leader has a far greater ability to influence the mood of a group than anyone else in that group, observes Bridge, who recommends that, despite the increased demand for their time and expertise, leaders maintain their physical and emotional health. “You should be regularly asking yourself how you are feeling,” he advises, “and how

that is being communicated to the people around you.” For leaders who find their negative mood is draining energy, optimism or purpose from their employees: “It’s not about being dishonest about your feelings,” offers Bridge. “It’s about containing negative destructive behavior, so try to work from home—or if that is not possible, exercise during lunch, take time out to meditate or do breathing exercises. Listen to a favorite piece of music on your iPod, or go for a walk. “Return to the fray in a more positive state of mind,” he says. The delicate task of balancing honesty about your situation with controlling panic is perfectly illustrated in The Stockdale Paradox, named after Admiral Jim Stockdale, the highest-ranking U.S. military officer imprisoned in Vietnam. After eight years of torture, he believed his survival—despite so many others dying— was because he never lost faith in the conclusion to the story. “I never doubted not only that I would get out, but also that I would prevail in the end …” The optimists were the ones who didn’t make it out. “They were the ones who said, ‘We’re going to be out by Christmas.’ And Christmas would come and Christmas would go,” explained the admiral. “Then they’d say, ‘We’re going to be out by Easter.’ And Easter would come, and Easter would go. And then Thanksgiving, and then it would be Christmas again. “Then they died of a broken heart,” he said. Admiral Stockdale summed up the experience as follows: “You must never confuse faith that you will prevail in the end—which you can never afford to lose—with the discipline to confront the most brutal facts of your current reality, whatever they might be.” A salutary lesson for today’s business leaders can be derived from an understanding of these two seemingly contradictory notions: keep the vision, Catherine Shaw believe it will happen; is a freelance journalist based but never let your faith in Tokyo. cloud reality. ■

April 2009 | The Journal | 39

OUT AND ABOUT

Aron Kremer

ACCJ Event Highlights

TONY MCNICOL

Justin McCurry

Tantallon Research President and CEO Jesper Koll on February 25 gave an insightful and thought provoking presentation to ACCJ members and their guests about the global crisis and which country will take the lead to break the chaotic economic downfall. Koll spoke on the current situations and what he believes are the competitive advantages of the U.S. and Japan and how the economies have suffered in the past decade, especially in regard to a rising China.

The SME/Entrepreneurs Roundtable, moderated by Geoff Botting at ACCJ headquarters on March 18, was attended by (left to right) Kevin McAuliffe, President of Newport Ltd.; ACCJ Vice President Michael Alfant, President and CEO of Fusion Systems Japan, Co., Ltd.; and ACCJ Membership Relations Chair Andrew Silberman, President and Chief Enthusiast of Advanced Management Training Group. The Roundtable is featured in the upcoming May issue of the ACCJ Journal.

40 | The Journal | April 2009

Author and speaker Dr. Brian Underhill, CEO and founder of CoachSource, was the presenter at the ACCJ event, â&#x20AC;&#x153;What Really Happens in Coaching: Executives Tell All,â&#x20AC;? on January 13, at the Roppongi Hills Club.

BEHIND THE BOOK

Billion-Dollar Lessons: What You Can Learn from the Most Inexcusable Business Failures of the Last 25 Years By Paul B. Carroll and Chunka Mui Portfolio, 310 pp, $25.95 Reviewed by Tom Baker A mighty python can swallow a pig whole—but then must lie motionless while it digests. If a forest fire or a hunting party should come along, it’s curtains for the python. Some mighty companies have met the python’s sad fate after swallowing too much of another company in a merger or acquisition. You’ll find plenty of examples in Billion-Dollar Lessons, a study of major business failures, by Paul B. Carroll and Chunka Mui. Looking at the biggest U.S. bankruptcies and write-offs of recent decades—and setting aside those caused by circumstances beyond the companies’ control (such as the post-9/11 slump in air travel)—the authors attribute most failures to the adoption of any one of seven risky strategies. Several of these strategies involve acquiring other companies. There could be a quest for synergy— more often a slogan than a reality. The strategy may entail a search for economies of scale by rolling up a lot of small businesses in a single field. It could be a plan to branch out into a seemingly adjacent field, or an effort to stave off losses in a mature industry by consolidating with competitors. Most mergers and acquisitions do not generate the revenue benefits that the buying company expects, according to studies cited in the book. Nor do benefits in terms of purchasing power emerge as often as hoped; multi-company rollups rarely achieve overwhelming market share to dictate terms to suppliers.

Worse yet, combining several companies can actually create “diseconomies of scale.” The new entity struggles to consolidate and streamline multiple overlapping departments, which all have their own established ways of doing things. Another category of failure is “faulty financial engineering”—accounting techniques that, though legal, provide an unrealistic picture of a company’s health. Green Tree Financial Corporation, for example, enjoyed massive earnings in the 1990s while lending billions of dollars in up to 30-year mortgages for purchasing trailer homes. The trailers, though, “have a life span of [just] ten to fifteen years”—making a tsunami of defaults inevitable. Misjudging technological trends are two other categories of catastrophe. Committing to the wrong new technology is reflected in the case of Iridium satellite phones. Clinging too long to an old technology was committed by Kodak, which stubbornly stuck to manufacturing film even as it foresaw the emergence of digital photography. In contrast, Fuji “gave up its old business and moved into the digital world … Fuji developed technologies that were fundamental to flat-screen displays, which have been in great demand … In the same decade when Kodak lost three-fourths of its market value, Fuji’s market value increased.” The authors conclude with advice for avoiding failure. Their focus is on appointing an official devil’s advocate—on a rotation basis to keep the appointee from becoming a pariah—to critique Tom Baker is major strategies. a staff writer at The Daily The bottom line for would-be pythons? Examine Yomiuri. pig carefully before swallowing. ■ We are giving away 3 copies of Billion-Dollar Lessons. Simply e-mail editor@paradigm.co.jp by April 19. The winners will be picked at random. Winners of Judgment: Laurence Smith, GE Money Asia; Makoto (Mark) D. Kawai, Procter & Gamble Japan; Douglas L. Hymas, Wachovia Securities (Japan) Co., Ltd.

April 2009 | The Journal | 41

ÂŠ ART FAIR TOKYO

4th Art Fair Tokyo 2009

Monsters, Inc. Ride & Go Seek!

April 3-5 11:00-21:00 (4th: -20:00, 5th: 10:30-17:00) www.artfairtokyo.com

April 15 www.tokyodisneyresort.co.jp/

Expected to take part this year are more than 140 galleries, featuring a wide variety of genres: contemporary art, modern paintings, nihonga, Asian works of art and antiques. A second venue will introduce young galleries, focusing on cutting-edge contemporary art. Tokyo International Forum, B2, near Yurakucho and Tokyo Stations; and Tokyo Bldg. Tokia Galleria, across the street, toward Tokyo Station

Deep Purple

Grand opening of Tokyo Disneylandâ&#x20AC;&#x2122;s Monsters, Inc. Hide & Go Seek, a ride into a world out of this Disney/Pixar film. Mike, Sully and their monster friends are entertaining the human girl Boo; but the nasty Randall is trying to foil their fun. Board the Security Tram into Monster City, and see what happens in their lively game! Tokyo Disneyland, Chiba, Urayasu Station, Tozai Line

April 8, 9, 10, 12, 13, 15 www.deeppurple.com/

12th FABEX British rock band considered one of the most toured bands now includes founding member drummer Ian Paice; off-and-on-again (also Black Sabbath) lead singer Ian Gillan; bassist Roger David Glover; guitarist Steve Morse; and keyboardist Don Airey. International Forum (8th & 15th), near Yurakucho and Tokyo Stations; Shi Kokaio, Nagoya (9th); Koseinenkin Kaikan, Hiroshima (10th); Kanko Kaikan, Kanazawa (12th); and Kanko Kaikan, Osaka (13th)

42 | The Journal | April 2009

April 22-24 10:00-17:00 www.fabex.jp/ The World Food and Beverage Great Expo is the first dedicated professional exhibition for wine & spirits, gourmet & fine food, confectionery, food catering and foodservice equipment & supplies for the Japanese market. There will be 350 exhibitors appealing to an expected 60,000 trade professionals. The concurrent 6th

Dessert, Sweets & Drink Festival 2009 has 200 companies exhibiting along with the 1st Wine & Gourmet Japan. Tokyo Big Sight, East 1-4, Odaiba, Tokyo Waterfront, Kokusai-tenjijo Station, Yurikamome

Motegi Japanese Grand Prix April 26, 2008 www.mobilityland.co.jp/english/motegi/ Surrounded by a forest, with the Nakagawa River flowing by, the Twin Ring Motegi (1997) consists of the only oval super speedway course in Japan, built by Honda Motor for the American-style Indycar (open-wheel) Series, and the

Events Line-up

European-style Road Course for MotoGP (bike). On the latter course, some 21 racers compete in the 24-lap bike race. Twin Ring Motegi, 80km from Tokyo, bus from Utsunomiya Station to Motegi Station, then short taxi ride

Golden Week April 29-May 6, 2009

cum laude, Phi Beta Kappa, with a BA in Social Studies. Blue Note Tokyo, Minami-Aoyama, Tel. 03-5485-0088, south of Takagicho Crossing, east of Roppongi Street, Omotesando Station; Tokyo Metro Ginza, Chiyoda, Hanzomon Lines. Two sets each night (single purchase is for only one set): Mon-Sat, 19:00 and 21:30; Sun, 18:30 and 21:00. Dinner option; bar

National holidays fall on April 29 (Showa Day*), May 3 (Constitution Day), May 4 (Greenery Day), May 5 (Children’s Day) and May 6 (added holiday, only this year). * Birthday of the late Emperor Hirohito’s (reign 1927-1989)

Tokyo Kosei Wind Orchestra April 24, 2008 19:00www.tkwo.jp/english/regular/index.html

5th ICSE Japan April 21-23, 2009 10:00-17:00 www.icsejapan.com/eng/

Joshua Redman April 21, 2009 www.imnworld.com/IMN/tourdates///5/ One of the most acclaimed and charismatic jazz artists to have emerged in the 1990s, this tenor saxophonist (b. 1969) is the son of legendary saxophonist Dewey Redman and dancer Renee Shedroff. Though fully committed to his music career and having jammed and gigged regularly with some of the leading jazz musicians of his generation, Redman earlier graduated (1991) from Harvard College of Harvard University, summa

$65 billion, representing 13% of the world total. Some 1,400 pharmaceutical manufacturing companies employ over 200,000 people and account for 2% of Japan’s total manufacturing output by value. It is one of the few high-tech industries in Japan that runs a trade deficit—currently around $3 billion per annum. Tokyo Big Sight, East 5-6, Odaiba, Tokyo Waterfront, Kokusai-tenjijo Station, Yurikamome

The International Contract Services Expo is the largest on outsourcing in the Japan pharmaceutical industry—research, development, contracts, human resources and consulting. Last year attracted 423 exhibitors (229 from 23 countries). In 2009, 13,000 of the 15,000 participants are anticipated to be pharmaceutical manufacturers. Core buyers are 400 leading chemical manufacturers and firms. Concurrently running are the CPhI convention on pharmaceutical ingredients and intermediates, and the Pharmaceutical Machinery & Equipment convention. According to organizers, Japan is the second-largest drug market, with an ethical (by prescription) pharmaceuticals market worth almost

The 101st Regular Concert, Something Four “Old, New, Borrowed, Blue,” conducted by Ray Cramer. Music by Aaron Copeland, Steven Bryant, Vittorio Giannini, David Dzubay, Frank Ticheli, Johannes Brahms/Barbara Buehlman, Michael Daugherty and Peter Tchaikovsky/Ray Cramer. TKWO has released more than 300 CDs since its founding in 1960. Yokohama Minato Mirai Hall (2,020 seats), Minatomirai Station, Tokyu Toyoko/Minatomirai Line

Rainfall April 25, 2009 (Japan) A hit man looks to protect the daughter of one of his victims against CIA assassins. Film stars Gary Oldman (The Dark Knight, Harry Potter) and a Japanese cast including Kippei Shiina, Kyoko Hasegawa, Misa Shimizu (female lead in 1997 Palme d’Or-winning The Eel) and Akira Emoto (also in David Umeda is 2009 John Rabe). Dialogue Senior Editor at Paradigm mostly in Japanese, setting in Japan.

April 2009 | The Journal | 43

FDI PORTFOLIO

Gloria Barbian

ACCJ Event

An event on January 21 entitled, “Labor of Love: The Plan to Revolutionize an Overlooked Japanese Industry,” was sure to draw attention. Whatever your views on love hotels, the ACCJ Marketing Programs Committee had a captivated audience keen on hearing Stephen Mansfield, CEO, New Perspective (asset manager for Japan Leisure Hotels), explain the back story on an industry shrouded in myth. First fact: on any given day, 2% of the Japanese adult population visits a leisure hotel. (This is an estimate from extrapolating some other data, which the company tends to present as an estimate rather than fact.) Note the emphasis on the word “leisure,” not “love.” Love hotels are an established and accepted part of society. The Japan Leisure Hotels (JLH) could even become the “Starbucks of sexual liaisons,” commented Koichi Hama, vice-chair of the ACCJ Marketing Programs Committee—a jovial comment that actually referred more seriously to the JLH challenging perceptions on what is potentially a profitable yet overlooked area of investment inside Japan.

The facts speak for themselves. There are approximately 25,000 leisure hotels in Japan, each with around 22 rooms per property. Every room turns over, on average, about 2.6 times per day, and couples typically spend around ¥6,540 per visit—equating to approximately ¥4 trillion in annual sales. The entire domestic hospitality industry was worth ¥23 trillion in 2005, and approximately 18% of this figure— or 0.75% of the country’s GDP—was accounted for by the leisure hotels. “There is remarkable stability on the income of these hotels. Is it recession proof?” poised Mansfield, before adding, “The indication is yes. Historically there is consistency of demand.” The drawbacks to the industry are manifest. No single operator or owner controls more than 100 hotels; and, in fact, 90% of owners have five or fewer properties. Many are familyowned, leading to a lack of transparency; and with such fragmented ownership, there is a palpable lack of scale and negotiating power. “This provides significant opportunities

for consolidation, yet high barriers to entry,” explained Mansfield. In the lively Q & A that followed, the first question was on most people’s lips and related to the perception of leisure hotels being controlled by gangsters, or the yakuza. Mansfield tactfully replied that many industries were tainted by gangsters and that leisure hotels in Japan could be likened to Las Vegas in the 1970s. “It was a fragmented town run by dubious operators,” he said. “Jump forward 20 years and Las Vegas is still a town for gambling and partying, but also a family tourist spot, too.” The JLH strategy is simple, according to Mansfield. It buys poorly performing and rundown hotels below replacement cost; then renovates these properties to improve operations, efficiency and customer comfort; and re-brands them under its Bonita brand. JLH currently has six properties, and its goal is to open 200 properties—or control 1% of the market with a diverse portfolio that targets couples, as well as just friends, searching for a boutique alternative to a traditional business hotel.

April 2009 | The Journal | 45

Cluster Forum Last December, more than 40 representatives of European clusters from 14 European countries participated in the EU-Japan Regional Cluster Forum, the first-ever event of its kind to stimulate and facilitate the global outreach of European and Japanese clusters. The results of more than 80 face-to-face meetings, along with the actual forum and numerous speeches, now can be accessed via the Web site of the Delegation of the European Commission to Japan—proving to be a handy resource for those searching information on research and innovation. The impetus behind the symposium, held December 2-3 in Yokohama, was to bring together experts from Japan and the U.S. to discuss and share information about different management

Re-Print Marimekko Corporation is Finland’s leading textile and clothing design company, whose designs are instantly recognizable. It’s heartening in the current economic climate to hear that this long-term favorite manufacturer among fashionconscious buyers in Japan is expanding its base locally. The group’s international sales director told Reuters at Copenhagen’s Fashion Week—where the Finnish design group presented its autumn/winter 2009/10 collection—that high quality

46 | The Journal | April 2009

methods and cluster activities in the two regions—with the aim of bolstering collaboration. Supported by the Ministry of Economy, Trade and Industry (METI) and a host of other governmental bodies, the symposium discussed the impact of globalization of research and innovation by placing a new emphasis on the role of regional clusters to further their development. Clusters, wherever their geographical location, increasingly see the need to link with other clusters on the international level—building on complementarities in order to improve their global reach. With a combined population of 620 million people, the EU and Japan comprise less than 10% of the world’s population, but over 40% of the global GDP.

and the company’s design, which includes its signature patterns printed on clothes to kitchenware, are advantages during difficult economic times. “People are thinking about what they spend and why they spend it. And I think our values are more to do with sustainability,” says Päivi Lonka, international sales director. “That’s what you buy from Marimekko; you don’t just buy for the season. “Our design value is that whatever you buy, you can have for a long time,” he says. “There are 15 Marimekko stores at the moment in Japan, and from February and March there will be three more.” Marimekko was established in 1951; the company designs, manufactures and markets apparel, interior decoration textiles, bags and other accessories under the Marimekko brand, both in Finland and abroad. Its ready-to-wear collections focus on functional clothing for all occasions, including business, leisure and evening wear. The collections comprise woven fabric garments, knitwear and jerseys—which are chiefly made from pure natural materials: cotton, wool and linen.

FDI PORTFOLIO

Ballpark Dining Baseball fans rejoice. The world’s first Major League Baseballthemed restaurant is set to launch in Ebisu, September 17, offering meals found on the menus at MLB ballparks. Aside from offering specialty dishes particular to a given pro team’s regional cuisine, the restaurant’s main eating area will house a 500-in TV screen airing MLB games live. The Tokyo launch is literally the first—no such facility officially authorized by MLB even exists in the U.S.—placing importance on Japan as a fitting market worldwide to house the MLB concept. Located in front of Sapporo Breweries’ headquarters in Yebisu Garden Place, the restaurant will be operated by Sunrise Japan Co., Ltd., a Tokyo-based operation specializing in food services and tanning salons. “We’d like to make the restaurant the MLB’s information hub for the Asian region,” says a company official. The 1,600m2 restaurant will cover three stories and have around 260 seats; the centerpiece TV screen will be located in the main dining room on the second floor. Naturally, there will be

a store selling officially licensed MLB goods. Diners can expect dishes such as the Boston specialty clam chowder featuring a Japanese twist: locally popular burdock root—a theme that reflects the presence of pitchers Daisuke Matsuzaka and Hideki Okajima on the BoSox.

Next-level Green U.S. President Barack Obama has begun promoting the “Green New Deal” with its focus on job creation within green industries, including a pledge to invest $150 billion over the next decade in developing renewable energy sources, such as solar and wind-power generation. In Japan, grass-roots movements are attempting a similar endeavor with information technology (IT). “‘GreenITers’ is for people who believe that IT will play a prime role in helping redefine the world we are living in,” explains Flavio Souza, founder of GreenIters.com, a Web-based community publishing clean technology news on its Web site. “Basically, we are a community of more than 170 members fast counting,

based in Japan, with a focus on publishing difficult-to-find news on green technology, sharing knowledge and best practices,” says Souza. “The idea is to take advantage of Japanese technological superiority in areas such as solar and hybrid in the hopes [that] someone can exploit this information to literally change the world.” The Brazilian national prefers the contemporary IT-oriented title, “‘syndic’”—a facilitator of Contact Nicole Fall at nicole@ ideas that are exposed fivebyfifty.com if and flourish via virtual you have ideas communities—rather than for this column. ‘founder’ of GreenIters.

April 2009 | The Journal | 47

Deborah Hayden Managing Partner, Kreab Gavin Anderson, Japan Text and photos by Tony McNicol

s the global recession bites, effective corporate communications are more important than ever, says Deborah Hayden, Managing Partner Japan of the newly merged leading public affairs, corporate and financial communications agency, Kreab Gavin Anderson. A difficult economy presents companies with equally difficult things to communicate, whether involving a sale of a subsidiary, downsizing, or even bankruptcy. “In this current climate we are really busy,” she says. “As the business environment turns increasingly pessimistic, and the talk of layoffs in the tens of thousands becomes commonplace, companies must reassure employees, customers and business partners that they are doing

48 | The Journal | April 2009

well—and those with challenging decisions must communicate these clearly.” Kreab Gavin Anderson’s clients span a wide range of industries, as well as organizations, individuals and even governments. As well as its core work of corporate and financial communications, supported by strong relationships with the Japanese media, this leading communications consultancy also helps companies reach the Japanese government. In addition, it offers crisis communications and media training. Since becoming Japan head last year, New Zealand-native Hayden has been leading a staff of 30 bilingual personnel. It’s a long way from her first experience in Japan, in Yamagata Prefecture in 1979. She spent several months in the deep north on a Lions Club exchange program,

BIOGRAPHY Deborah Hayden ■■ Occupation: Managing Partner, Kreab Gavin Anderson, Japan ■■ Home country: New Zealand ■■ Education: Otago University, New Zealand, Bachelor of Commerce (Hons); Postgraduate, Osaka University. ■■ First came to Japan: 1979 ■■ Other languages: Japanese, “bad French” ■■ Family: Married to Ian, IT Manager, Estée Lauder K.K. ■■ Hobbies and interests: Renovating their Meiji Era house in Nikko, skiing

which, she says, “engendered my initial interest in Japan.” Hayden returned to study in Osaka on a postgraduate scholarship. After stints as a personnel manager, analyst and as an auditor, her first PR job was with Kreab Gavin Anderson (then Gavin Anderson); that was in 1988.

Business Profile

“If a crisis could occur, what would it be, where would it be?” Then, when the storm breaks, “come out as honestly as you can, as soon as you can.” Snapshot Kreab Gavin Anderson ■■ Established: Kreab Gavin Anderson was created in February 2009, as the result of a merger of two strongly complimentary businesses. The former Gavin Anderson Japan office was established in 1985 ■■ Employees: 30 ■■ Location: Shibakoen, Tokyo ■■ Main business: Corporate and Financial Communications, Public Affairs ■■ Major clients: A mixture of Japanese and international firms spanning a wide range of industries. ■■ Web site: www.kreabgavinanderson.com ■■ Tel: 03-5404-0640

Over those 21 years the PR business has changed considerably. While Kreab Gavin Anderson’s base clients are foreign companies in Japan, they also include more and more Japanese companies that want to ensure their message resonates overseas, according to Hayden. Some domestic enterprises have foreign business partners and shareholders, and have come to realize that the previous practice of using direct translations of Japanese publicity material may not be effective anymore. Hayden illustrates the point by mentioning a comment overheard when on a recent overseas business trip, about how large the “Nippon Company” is. What the person commenting hadn’t realized was that Nippon means Japan, and that, say, Nippon Express or Nippon Steel are different companies. “When I hear comments like that, I realize there are an awful lot of fabulous Japanese companies with great technology, great people, and great products,” says Hayden, “that are not fully appreciated overseas.” Twenty years ago, the Internet was in its infancy. “We didn’t even have e-mail when I joined the company,” she recalls. “Our business has changed dramatically. Everything has got a lot faster. There’s a lot more opportunity for coverage, and there are many more places for people to air their thoughts about companies.”

Depending on a client’s needs, Kreab Gavin Anderson will contact bloggers along with the more traditional media sources. The World Wide Web also has made effective crisis management a crucial component, as situations escalate at Internet speed. “With the instantaneousness of the media now, you have got to have your messages ready—make sure you have a system in place,” Hayden advises. “You can’t wing a crisis.” It’s also not a good idea to wait until you contact your HQ in a different time zone; the crisis won’t wait till the morning. “Take a look at the particular vulnerabilities in your own industry,” says Hayden. “If a crisis could occur, what would it be, where would it be?” Then, when the storm breaks, “come out as honestly as you can, as soon as you can.” Hayden describes what it is like being a female senior manager in Japan’s maleoriented business world. “There are challenges associated with being a woman in business globally,” she says, “but in communications, it is probably an asset. “Women are by nature a little more empathetic,” says Hayden. “Perhaps we are easier to talk to.” There’s the advantage of novelty when talking to Japanese male journalists, she continues, and women may also be less threatening in many business situations. Outside of the office, much of her free time with her husband is devoted to their Meiji Era (1868-1912) second home in Nikko, about 125km north of Tokyo. “It’s a wonderful refuge,” says Hayden. “Over time we have been accepted into the local community.” Their neighbors are often popping in for a cup of tea. “I feel at home there and have learnt a lot. It’s been an inspiration to our stay in Japan.” Hayden’s enthusiasm for her work is equally infectious. When she arrives in the morning, she never knows what will be waiting for her on the desk. “You never know quite what situation you’ll have to deal with.”

One phone call can completely change your day. On numerous occasions, Kreab Gavin Anderson has had to station staff in client offices during a crisis in order to handle the media—often precipitated by urgent calls asking what to do about the TV crews camped out in their lobbies. Above all, she says, her business is about people. “The relationships that you build, the people that you meet, and the insights you get into how different industries work Tony McNicol are fascinating,” says is a freelance journalist based Hayden. “I learn somein Tokyo. thing new every day.” ■

April 2009 | The Journal | 49

Core Advocacy Principles The American Chamber of Commerce in Japan’s (ACCJ) mission is to “further develop commerce between the United States of America and Japan, promote the interests of U.S. companies and members, and improve the international business environment in Japan.” The ACCJ bases its overall advocacy efforts upon the following principles, which it believes are vital to further developing commerce between the United States and Japan and further improving the international business environment in Japan.

I. Commitment to Free Market Principles A healthy economy that contributes to the welfare of all requires government involvement as an effective regulator who is deeply committed to such free market principles as competitive markets and free and open trade and investment. A healthy economy that contributes to the welfare of all requires effective government involvement as a fair and transparent regulator to ensure the accountability of market participants and appropriate enforcement of sound regulation. Such involvement must be based on a firm commitment to free market principles, including competitive markets, open trade and investment, and effectively regulated financial systems. Such principles enhance consumer welfare by fostering innovation, expanding consumer choice, and making more efficient use of society’s limited resources. Even as governments are forced to take extraordinary measures amid crises, they should avoid more direct forms of intervention except when absolutely necessary to ensure or restore efficient, properly functioning markets. They should refrain from acting as a market competitor and from picking winners and losers in the market.

II. Level Playing Field Like market participants should be subject to the same laws in the same manner. A level playing field will enhance consumer choice by bolstering competition among existing market participants; allowing new market entrants fair access; and guaranteeing fair treatment of all market participants. Governments across the globe, in considering financial market stabilization and economic stimulus measures, should avoid policies that unfairly benefit domestic enterprises at the expense of foreign or new entrants to the market.

III. Transparent and Fair Process Transparency is essential to the regulatory process, improving the quality of rulemaking and enforcement decisions by ensuring fairness, clarity, and predictability. Transparency ensures that governments are held accountable for their actions, both formal and informal. Transparency is most meaningful when stakeholders are made aware of the regulations, procedures, and administrative decisions that affect their interests and can participate in their development. In addition, regulatory enforcement decisions are most effective when they are the result of a fair process, including adequate opportunities for parties involved in enforcement actions to be heard and a meaningful avenue of appeal.

50 | The Journal | April 2009

IV. Adoption of Global Best Practices Adoption of global best practices promotes efficiency and sound regulation and allows regulators, the business community, and consumers to benefit from innovation and expertise developed in other markets. The adoption of regulatory and business global best practices across a range of sectors enables regulators, the business community, and consumers alike to benefit from innovation and expertise developed across the globe. Global best practices require that companies operating in foreign markets adapt their operations to respond to the specific circumstances of the local market.

V. Corporate Social Responsibility As good corporate citizens, the behavior of companies should serve and support the communities in which they do business. They must take responsibility for the impacts they have, both positive and negative, and contribute to an effective social safety infrastructure as well as protect consumers to ensure the economic well-being of society overall. By offering top quality products and services; providing employment; and introducing innovation, while ensuring compliance with the law and engaging in philanthropic activities that benefit those in need, private sector corporations are a vital part of a thriving economy and sustainable communities.

Future Directions: U.S.-Japan Economic Integration Enhanced U.S.-Japan economic integration - including through negotiation of a comprehensive, high-standard Economic Integration Agreement - based on the foregoing core principles, is the most effective way for both nations to work in concert to bolster the global free-trade system, strengthen their international competitiveness, overcome their shared challenges, achieve sustainable growth, and maintain regional prosperity and stability. Japan and the United States have forged a strong bilateral relationship based on common interests and values, and this relationship is indispensable to bilateral and global prosperity and stability. For Japan and the United States, the key to their shared challenges, which include globalization and aging populations, and the path to increased international competitiveness, lies in robust international engagement, especially through further bilateral economic integration. Further integration should include the negotiation of a comprehensive, high-standard Economic Integration Agreement (EIA), an “FTA Plus” agreement that would serve as the best practice for the next generation of trade agreements and complement and strengthen, not replace, multilateral efforts at the WTO. A U.S.-Japan EIA could also readily “dock and merge” with other high-standard bilateral and regional trade initiatives in Asia, thus allowing Japan and the United States to jointly take the lead in shaping future Asian economic development through the harmonization of standards, regulations, product approval processes, and other business environment issues.

提言に関する基本原則在日米国商工会議所(ACCJ)は、「日米の経済関係のさらなる進展、米国企

IV. グローバル・ベスト・プラクティスの活用

化」をミッションに掲げ、活動している。ACCJが上記のミッションの実現に

ノベーションや培われた専門知識を活用することであり、効率を高め、有効

と、日本における国際的なビジネス環境の強化に資すると考える、以下の基

び消費者のすべてが、そのメリットを享受することができる。

業および会員活動の支援、そして、日本における国際的なビジネス環境の強向けた活動の一環として行う提言は、米国・日本間における経済関係の発展本原則に則って行われるものである。

グローバル・ベスト・プラクティスを活用することは、他の市場で実現したイな規制環境の形成を促進するという点において、規制当局、ビジネス界およ規制やビジネスの領域におけるグローバル・ベスト・プラクティスを、業種を問

わず活用することにより、規制当局、ビジネス界、そして消費者は、世界各国に

自由市場原則へのコミットメント

おいて達成されたイノベーションや培われた専門知識の恩恵を享受すること

的な市場や自由で開かれた貿易・投資等、自由市場原則への揺るぎないコミ

市場固有の環境に適応させることが重要である。

すべての人の福利に貢献する健全な経済を実現するためには、政府が競争

ットメントの下で効果的に関与することが必要である。

すべての人の福利に貢献する健全な経済を実現するためには、市場参加者の

アカウンタビリティーや妥当な規制の適切な運用を確保するために、政府が

ができる。ただし、グローバル・ベスト・プラクティスを活用する際には、地域や

V. 企業の社会的責任

良き企業市民として、企業の行動は社会に貢献するものでなければならな

公正かつ透明な方法によって関与することが必要である。そのような関与は

い。企業は自らが社会に及ぼす影響に対して責任を持ち、消費者保護や社会

ムといった、自由市場原則への揺るぎないコミットメントの下で行われなけれ

る一員としての責務を果たさなければならない。

限られた社会資源のより効率的な利用を通じて消費者福利を促進すること

経済の繁栄や持続可能な社会にとって民間企業が果たす役割は重要であり、

市場が効率的に機能するためには、絶対に必要な場合以外は政府の直接的

自らの利益に直接的に結びつく方法ばかりでなく、法令の遵守や社会貢献活

競争的な市場、自由で開かれた貿易・投資や、効果的に規制された金融システ

ばならない。こうした原則はイノベーションの促進、消費者の選択肢の拡大、

になる。経済危機下で各国政府が異例の対策を迫られている中であっても、な関与は避けなければならない。政府は競合者として市場に参加したり、市

的セーフティネットの構築をサポートすることを含め、自らが社会を構成す

最高の商品・サービスの提供や、雇用の創出、革新的な技術の導入といった、動などによっても果たさなければならない。

場の勝者と敗者を恣意的に選択したりしてはならない。

II. 対等な競争条件

事実上同一の市場に参加する全ての者は、同一の法律による規制の適用を受けるべきである。

対等な競争条件を確保することは、市場参加者間の競争を促進し、新規の参

入者に市場へのアクセス権を平等に与え、また、すべての市場参加者が同一

の基準の下に公平な扱いを受けることを保証することである。そして、それは結果として消費者の選択肢の増加につながるものである。各国政府は金融市

場の安定化や景気刺激対策に取り組むにあたって、外国企業や市場の新規

参入者に比べ、既存の国内企業を不公平に優遇するような政策は避けるべき

である。

III. 透明で公正なプロセス

透明性を確保することは、公正性、明確性、予測可能性を向上させ、有効な規

制環境の構築に資するものであり、かつ、規制を制定するプロセスにおいて

きわめて重要なことである。

透明性が確保されることによって、政府機関は自らの行動について公式・非公

式を問わず、その責任を負うことになる。また、透明性が確保されることのメリ

ットは、ステークホルダーが自身の利益に影響を及ぼす規制、手続き、行政に

おける決定などを知ることができ、その決定プロセスに参加することができる

今後の課題日米経済統合

日米両国が連携をとりながら、世界の自由貿易体制の強化、国際的な競争

力の向上、共通課題の解決、持続可能な成長、および地域の繁栄と安定の維持を達成するためには、前述の原則に則り包括的で高度な経済統合協定

の交渉等を通じ、日米経済統合をさらに推し進めることが、最も効果的な方法である。

日本と米国は、共通の利益や価値観を基礎に、強固な二国間関係を築いてきた。この関係は両国および世界における繁栄と安定に不可欠である。日米共

通の課題である、グローバリゼーションや人口の高齢化、激化する国際的競

争の解決は、更なる二国間経済統合をはじめとする強力な国際的取組みが鍵

となる。日米経済統合を一層促進するにあたっては、包括的で、高度な経済統

合協定（EIA）である“自由貿易協定（FTA)+α”の交渉を含むべきである。これ

は、次世代の貿易協定のベスト•プラクティスとして、また、WTOにおける多国間の取組みに代わるものでなく、それを補足し強化する協定である。

また、日米EIAは、アジア地域の様々な高いレベルの二国間および地域間貿易

イニシアチブと、ただちに結合もしくは統合できる。したがって、日米両国は、基準、規制、商品承認プロセス、その他のビジネス環境に関する問題への取組

みを通じ、将来におけるアジアの経済発展を形作る上で、ともに先導的な役割を担うことができるのである。

点にある。さらに、規制が最も効果的に適用されるためには、その規制の影響

を受ける者が意見を表明することができる機会や、抗議をするための有効な手段が与えられる等、適正な運用プロセスが整備されていることが求められる。

April 2009 | The Journal | 51

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. Tax Reform for Enhanced Financial Competitiveness and Sustainable Economic Growth ACCJ Financial Services Forum

Develop New Corporate Law and Taxation Procedures for the Conversion of the Japanese Branch of a Foreign-Incorporated Company to a Stock Company

Valid Through October 2009

Revise Portfolio and Business Transfer Provisions Under Japan’s Insurance Business Law Insurance Committee Valid Through September 2009

ACCJ Financial Services Forum Valid Through September 2009

Recommendation

The Government of Japan has committed to undertaking dramatic reform of Japan’s tax system, establishing, in its 2008 Basic Policies (Honebuto), a goal of reforming the tax system to best stimulate productivity and bolster economic growth. The American Chamber of Commerce in Japan (ACCJ) strongly supports this objective. In this Viewpoint, the ACCJ has outlined specific tax reform measures based on global best practices that, if taken, would help achieve the government’s goal of strengthening Japan’s productivity and economic growth as well as promote innovation and new investment. In addition, as the policy debate on reform of Japan’s tax system progresses, the ACCJ urges the government to ensure that the dialogue is open and transparent, providing meaningful opportunities for key stakeholders, including foreign businesses, to participate in the process. More specifically, the ACCJ calls on the Government of Japan to: • Lower the statutory corporate tax rate within a couple of years to below 30%, targeting a level equivalent to that of Germany and the United Kingdom; • Review the current policies regarding the Defined Contribution (DC) Pension Plan, including: • Increasing the limits on tax deductible contributions; • Allowing employee contributions; • Allowing withdrawals prior to age 60 under certain conditions; and • Introducing a DC pension for public workers. • Extend the loss carry forward period to greater than 10 years, targeting a length consistent with norms of other G7 countries such as the United States and Canada; • Consider comprehensive market-based reforms of financial and securities tax systems with the aim of encouraging the shift from savings to investments and enhancing the international competitiveness of Japan’s financial and capital markets; • Amend its law to ensure that its consumption tax regime is consistent

The American Chamber of Commerce in Japan (ACCJ) recommends that the Government of Japan, through the Ministry of Justice, the Ministry of Finance and other Ministries concerned, revise the Corporation Law, the Corporation Tax Act and other relevant laws and regulations to establish a new simplified procedure to convert the branch office of a foreign-incorporated company registered in Japan (Japanese branch) into a Japan-incorporated stock company (stock company) (kabushiki-kaisha under the laws of Japan). The present situation greatly disadvantages Japanese branches in terms of legal and taxation procedures when they incorporate as kabushiki-kaisha, compared with domestic companies doing the same. While foreignincorporated companies recognize their ability to continue to operate as a Japanese branch, the option to convert the Japanese branch to a stock company on terms equivalent to those accorded to domestic companies will greatly improve the flexibility of their corporate organization. To remedy the current situation, the ACCJ recommends the following: (1) Establish a new “quasi company split” procedure to allow a Japanese branch to convert to a stock company. The new procedure should allow the Japanese branch to incorporate into a stock company or issue new shares by transferring its business to such stock company without having to obtain consent of the creditors for the transferred business by implementing procedures comparable to the creditor protection procedures and other procedures for a company split. (2) Not require inspection by a court-appointed inspector for a quasi company split, similar to the procedures for a company split. (3) Allow the quasi company split to be tax deferred as a tax-qualified reorganization and establish measures to exempt consumption tax and reduce real estate acquisition, registration, and license taxes.

The American Chamber of Commerce in Japan (ACCJ) calls on the Government of Japan to revise the Insurance Business Law (IBL) in order to facilitate the efficient domestication of a foreignincorporated insurance company (“foreign insurance company”). Under the IBL, corporate transactions by domestic insurers are treated differently from foreign companies. Japan-incorporated insurers have procedures such as mergers (shinsetsu gappei), spin-offs (kaisha bunkatsu), policy portfolio transfers (houkatsu iten), and non-portfolio transfers of the company’s business (jigyou no jouto) available to them. However, the procedures available to foreign insurance companies are limited to only policy portfolio transfers and nonportfolio transfers of the company’s business. These procedures are also more complicated and costly compared to procedures available to Japanincorporated insurers. Having a more comprehensive menu of options for corporate reorganization procedures for foreign insurers would increase management options and could result in greater corporate transactions and increased investment in Japan. This is consistent with the Government of Japan’s recent commitments for better regulation and a doubling of foreign direct investment (FDI) by 2010. The ACCJ recommends that the Government of Japan establish new measures to allow for the transfer and domestication of a foreign insurer’s business on more reasonable terms. As part of the new branch domestication measures, the FSA should establish an “overnight” reorganization procedure which does not require a sales black out or individual notice to creditors, and that assumes the license of the branch to the local transferee entity.

Released ACCJ Viewpoints can be read in full in the Advocacy section of www.accj.or.jp 52 | The Journal | April 2009

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。

金融の競争力強化と持続可能な経済成長に向けた税制改革を ACCJ金融サービス・フォーラム 2009年10月まで有効英語正文

外国会社の日本支店を株式会社化

するための会社法制および税制の整備を

ACCJ金融サービスフォーラム 2009年4月まで有効英語正文

日本の保険業法に基づく包括移転規定および事業譲渡規定の改正を

保険委員会 2009年9月まで有効英語正文

提言

針）2008」では、生産性向上を促し成長力を強化するた

株式会社化するための手続きについて、現在日本の会社と

的な外国保険会社の日本法人化を促進するための保険

比べ、外国会社の日本支店は法律上および税務上におい

業法の改正を求める。

て不利な取扱いを受けていることから、簡素な手続きを新

保険業法上、日本の保険会社による組織改編と外国保

設するべく、法務省・財務省その他関係する省庁に対し、

険会社による同様の取引の取扱いは異なり、日本で設立

会社法、法人税法その他関連法の改正を要請する。外国

された保険会社は、新設合併、会社分割、包括移転、事

会社の日本支店が支店形態で引続きビジネスを行うこと

業の譲渡等の手続きを行うことができる。しかし、外国

ができることを認識する一方で、日本の会社が支店を株式

保険会社が行うことのできる手続きは、包括移転と事業

会社化する際と同様の条件のもとで、外国会社が日本支

の譲渡に限定されており、これらの手続きは日本の保険

社を株式会社化する選択肢を持つことは外国会社組織の

会社が行うことのできる手続きに比べて複雑かつ費用負

柔軟性を大きく改善することになるであろう。現状を改善

担が大きい。

するためACCJは以下の提言を行う。

外国保険会社の利用できる組織改編に、より総合的な選

(1) 外国会社の日本における事業所として登記した支店（

択肢を用意することは、経営の幅を広げ、取引の増加、引

以下「日本支店」）を株式会社にするための手続きとし

いては対日投資の増加につながる。これは、日本政府の

て「準会社分割」を新設し、日本支店が、債権者保護手

近年のコミットメントである、ベター・レギュレーションお

続、その他会社分割と同等の手続きを実施することによ

よび2010年までの対日直接投資を倍増するという計画

り、承継事業に係る会社債権者の同意を要することな

と合致するものである。

く、株式会社に事業を承継させ、株式会社の設立また

ACCJは、日本政府に対し、外国保険会社のビジネスを

は新株の発行を行うことができるものとすべきである。

より合理的な条件で移転および日本法人化することがで

(2) 準会社分割については、会社分割と同様、裁判所の選

きるよう手続きを整備することを提言する。新しい支店

日本政府の「経済財政改革の基本方針（骨太の方め、政府が抜本的な税制改革に取り組むとしている。在日米国商工会議所（ACCJ）はこの政府の方針を強く支持し、この意見書では、グローバル・ベスト・プラクティスに基づいた具体的な税制改革施策を提示する。この施策が導入されれば、日本の生産性向上や経済成長だけでなくイノベーションや新たな投資を増進することになるであろう。さらにACCJは、日本政府に対して、税制改革に関する政策議論を進めるにあたり、外国企業を含む重要なステークホルダーに有意義な参加の機会を与えるなど、議論のプロセスを公開し、透明なものとすることを要請する。日本政府に対する具体的なACCJの提言は以下の通り。

• 法定法人税率をドイツや英国並みの水準にすることを目標とし、 2、 3年以内に30%未満に引き下げる。

• 確定拠出年金に関する現行制度を以下の措置を通じて見直す。

• 非課税限度額を引き上げる。 • 従業員による拠出を認める。 • 一定条件下での、60歳前の積立金引出しを認める。 • 公務員に対して確定拠出年金制度を導入する。 • 米国やカナダ等のG７加盟国の基準に合わせ、欠損金の繰越期間を10年以上に延長する。

• 貯蓄から投資への移行促進と、日本の金融・資本市場の国際競争力強化を目指し、金融・証券税制に関する包括的かつ市場に立脚した改革を検討する。

在日米国商工会議所（ACCJ）は、外国会社の日本支店を

任する検査役の検査を要しないものとすべきである。 (3) 準会社分割については、会社分割と同様、税制適格組

在日米国商工会議所（ACCJ）は日本政府に対し、効率

の日本法人化手続の一貫として、金融庁は、販売停止期間や債権者への個別通知が不要で、支店の保険業法免

織再編による課税繰延を認め、また、消費税の非課税、

許を譲受人である日本法人に承継させる「即日」組織再

不動産取得税・登録免許税の軽減措置を設けるべき

編手続を整備すべきである。

である。

• 経済協力開発機構（OECD）や国際通貨基金（IMF）に代表される国際機関が定義し、英国、ドイツ、フランスなどの主要国が導入しているグローバル・ベスト・プラクティスに整合するように、日本の消費税制度を法改正する。

• 特に、第三者代理店を通じた金融商品の販売において中立性を確保するために、また金融サービス会社が完全子会社である場合にグループ課税制度を導入すべく、日本の消費税法および関連規制を改正する。

• 印紙税を廃止する。

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。 April 2009 | The Journal | 53

In the Final Analysis

FTA Frustration In last month’s column, I related the current economic uncertainty to driving in a tunnel and not knowing what the landscape will be like on the other side— the road ahead and behind looking much the same. Today’s stock market at 1997 levels seems like we’re in for déjà vu. It was 1996 and Washington Kidder asks Berra about Mazeroski. was falling out of love with trade negotiations and falling for trade enforcement. Bill Clinton was re-elected, the Department of Commerce was remodeling the International Economic Policy Bureau into the Market Access and Compliance unit and ACCJ was preparing “Making Trade Talks Work” (MTTW). American trade policy negotiators spent countless hours, doubled by the need for consecutive translation, in meetings that led to agreements on everything including the kitchen sink, which fell under the Major Projects Arrangement or should have. Our White Paper counted 45 major bilateral agreements from 1980-96. MTTW reported some success but it also detailed a lot of industry frustration that shifted the political balance from negotiating new agreements to enforcement of existing ones. In 2009, again reports from Washington indicate a renewed emphasis on compliance with less enthusiasm for negotiating new agreements. The Trade Claim Act of 2009 with co-sponsoring Senators Snowe, Rockefeller and Conrad would weaken USTR’s role in trade enforcement. And there is talk of taking a major hunk of USTR’s budget and giving it to Commerce’s Market Access and Compliance. Tim Rief, who served as head trade policy advisor to the Ways and Means Committee, chaired by New York Congressman Rangel, will take over as General Counsel at USTR. Rief is also closely associated with Michigan Congressman Levin. Rangel and Levin are authors of a letter to former President Bush last year criticizing the administration for initiating so few WTO trade actions. Now, there also is dissatisfaction with current agreements. A recent bi-partisan letter to President Obama catches the mood very clearly. Two of its authors are Michigan Democratic Congressman Mark Schauer and Illinois Democratic Congressman Dan Lipinski. But more importantly a third author is Republican Congressman Don Manzullo of Rockford, Illinois, a city that has seen better days for the American machine tool business. The letter is highly critical of “the failed trade policy status quo” and calls for renegotiating NAFTA and CAFTA and opposes the FTAs with Columbia, Panama and South Korea. And the letter’s authors ask the President to reverse the Bush administration’s decision to join in the Trans-Pacific Strategic Economic Partnership, a series of bilateral, high quality, agreements among APEC members that shows the best midterm prospect of a dock and merge strategy involving the U.S. as a major player in emerging Asia Pacific trade liberalization. There is no question that compliance must be Samuel H. mandatory and that frustrations with trade policy Kidder is are real. But the déjà vu of 1997 must not become the ACCJ Executive Director. déjà vu of 1930. ■

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