EURObiZ Japan December 2012

Cautious optimism ISSUE thirty six // december 2012

Q&A with EU Ambassador to Japan Hans Dietmar Schweisgut

Flourishing in Yokohama – German Industry Park hosts multiple successes Globalisation and the salaryman – Q&A with sociologist Hiroshi Ono A blow for wind – Feed-in tariffs put Japan on alternative energy track

12

2012

THE MAGAZINE OF THE EUROPEAN BUSINESS COUNCIL IN JAPAN / THE EUROPEAN (EU) CHAMBER OF COMMERCE IN JAPAN

Rewards Price Match

Rewards Price Match

Deals

Deals

8

8 Flourishing in Yokohama German Industry Park hosts multiple successes

By Gavin Blair

14 Q&A David McNeill talks to EU Ambassador to Japan Hans Dietmar Schweisgut

18 Q&A David McNeill talks to sociologist Hiroshi Ono

26 A blow for wind Feed-in tariffs put Japan on alternative energy track

By Simon Scott

2

December 2012

18 26 48 14

Cover photograph Benjamin Parks

COLUMNS 7 From the Editor

30 In Committee

43 Upcoming Events

22 Green Biz

The list of asset-management issues is long and the stakes are high. By Geoff Botting.

Events for the European business community in Japan.

Special pumps cut oil consumption in Japan’s massive LNG tanker fleet.

By Julian Littler.

33 Event Report

43 EBC committee schedule

23 Executive Notes

With a 50% market share, CSM Japan deserves its Deshima Business Award.

By Alena Eckelmann.

44 EBC Personality

Dan Slater spotlights Japan’s real advantage in manufacturing: the local factory.

34 Culture Shock

25 Chamber Voice Nicholas Walters, president, British Chamber of Commerce in Japan.

By David C Hulme.

28 Investing in Japan Randstad finds the perfect partner to fast-track its ambition for Japan.

By Justin McCurry.

Claus Eilersen sees the world as it is, and takes it on. By David C Hulme.

Finnish anthropologist Martina Tyrisevä brings experience, energy and passion to helping the Ainu of Hokkaido.

By Alena Eckelmann.

46 Lens Flair

42 Shop Window

48 Work Place

Patches of excitement remain as shopping centre development slows. By Roy Larke.

Mark Slade, president and representative director of DHL Global Forwarding Japan, shows how to move things in a big way.

Jeremy Sutton-Hibbert captures visions of the fragrant world of incense-making.

The Mission of the European Business Council To promote an impediment-free environment for European business in Japan.

December 2012

3

Your Move. Our World.

Publisher Vickie Paradise Green

European Business Council in Japan (EBC)

paradise@paradigm.co.jp

The European (EU) Chamber of Commerce in Japan

Editor-in-chief David C Hulme

The EBC is the trade policy arm of the seventeen European national chambers of commerce and business associations in Japan

hulme@paradigm.co.jp

Senior Editor David Umeda

Chairman Duco Delgorge

Creative Director Paddy O’Connor

Senior Vice-Chairman Michel Théoval

Designer/Illustrator Iree Torii

Vice-Chairman Danny Risberg Treasurer Erik Ullner

Advertising Sales

Executive Director Alison Murray

Hélène Jacquet Akagawa, Tapo Mandal

Policy Director Bjorn Kongstad

advertising@paradigm.co.jp

Communications & PR Victoria Fang

Production and distribution

Subscription is free for members of the EBC and national European chambers of commerce.

Subscription rates are: 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 eurobiz@paradigm.co.jp

Yumi Mitsuyama Herman eurobiz@paradigm.co.jp

Published by Paradigm 6F West Park Osaki, 3-6-28 Osaki, Shinagawa-ku, Tokyo 141-0032 Tel: 03-5719-4660 Fax: 03-349-1202 www.paradigm.co.jp Published monthly in Tokyo. All rights reserved.

The views and opinions expressed herein (other than editorials by the EBC ) are solely the opinions and views of their authors. The EBC is not responsible or liable for any portions thereof.

Full Relocation Services anywhere in the world.

Asian Tigers Mobility provides a comprehensive end-to-end mobility service tailored to your needs.

Move Management – office, households, pets, vehicles Orientation and Cross-cultural programs Visa and Immigration Temporary accommodation Home and School search Tenancy Management Family programs Departure services Storage services Asian Tigers goes to great lengths to ensure the highest quality service. To us, every move is unique.

Please visit www.asiantigers-japan.com or contact us at sales@asiantigers-japan.com Customer Hotline: 03-6402-2371

If you prefer not to receive this magazine, and for all matters related to distribution, please send an email to eurobiz@paradigm.co.jp EURObiZ Japan welcomes story ideas from readers and proposals from writers and photographers. Letters to the editor may be edited for length and style.

Big in Japan: Kamikaze election

Contributors Gavin Blair visits the German Industrial Park in Yokohama, page 8

Gavin has been writing about Japan for about a decade and currently contributes articles to magazines, websites and newspapers in Asia, Europe and the David writes for The Economist, The Irish Times and The Chronicle of Higher Education and other publications. His new co-authored book, “Strong in the Rain: Surviving Japan’s Earthquake, Tsunami and Fukushima Nuclear Disaster”, has just been released worldwide.

“Discussion about trade between Japan and Europe has been going on for so long now that we’re all a bit sceptical about whether a deal can be reached. But I found

Simon Scott tests the breeze on wind power, page 26

Simon is a Tokyo-based freelance journalist and Japan correspondent for the New Zealand Herald. He is also a contributor to The Sunday Age, The Japan Times, the Korea Joongang Daily and other publications

United States on a wide range of topics, from business and politics to culture and entertainment.

“With the media regularly full of stories about the hollowing out of Japanese industry, and a lack of innovation damaging competitiveness, it was a pleasant surprise to see both foreign and domestic companies carrying out cutting-edge research and development at the German Industry Park in Yokohama, as well as having sizeable production facilities on-site.”

David McNeill interviews Amb. Hans Dietmar Schweisgut, page 14 Ambassador Schweisgut’s mix of confidence and realism very appealing.”

across the globe. He is a former Fairfax NZ staff reporter and has a Graduate Diploma in Journalism from New Zealand’s Massey University.

“The new feed-in-tariff rate set by the Japanese government for wind power is the highest in the world, and the sector has an opportunity to enjoy unprecedented growth.

Yet companies wanting to take advantage of the new scheme must not only cut through unnecessary red tape, but also overcome a number of challenges presented by Japan’s unique physical environment.”

Your home of INNOVATION Gambro has pioneered dialysis solutions for clinics, intensive care units and home patients for more than 45 years. With you and your patients as our inspiration, we are constantly seeking ways to advance the science of dialysis and provide new hope to patients and their families around the world.

You inspire We innovate

F rom the E ditor

Wishing you the best There is no doubt that a free trade agreement between the EU and Japan would unleash billions of euros’ worth of business opportunities and perhaps create millions of jobs. But, at what cost? Advocates and opponents occasionally become strident. We are honoured in this issue to have Hans Dietmar Schweisgut, ambassador of the EU Delegation to Japan (page 14), calmly presenting a diplomat’s view.

Meanwhile, many European manufacturers have made enormous strides in Japan. Gavin Blair (page 8) takes an incisive look at Yokohama’s German Industrial Park, finding one success story after another.

Having examined Japan’s energy mix and covered the prospects for solar energy and geothermal energy in recent months, we now take up the issue of wind energy (page 26), through a fine report by Simon Scott. Japan may not find it easy to tap wind power, but this form of renewable energy cannot be ignored.

Let’s now move to our Event Report

by Alena Eckelmann (page 33), which happens to touch on an increasingly raw nerve among EBC members. The Netherlands Chamber of Commerce in Japan (NCCJ) Deshima Business Awards are but one of a slew of chamber celebrations held towards the end of each year, honouring the extraordinary achievements of member businesses.

Time and again these awards demonstrate, with force, that the Japanese market is one that richly rewards innovation and imagination, courage and persistence. Global players that are here to adapt and compete can make this huge economy work for them as a business mainstay. Smaller businesses regularly uncover golden niches.

However, as chairman of the awards committee Leon Halders points out, European headquarters too often has eyes on “more exciting” markets. Growth in Japan is too seldom rewarded in ways that matter, such as with budget increases, new investment,

or the approval of locally generated expansion plans.

EURObiZ Japan therefore invites EBC members to voice their opinions and discuss this issue at a roundtable early in the new year, for publication in these pages. The question will be: What can we do, individually and together, to make headquarters sit up and take proper notice?

Finally, I know I can speak for everyone (editors, writers, photographers, designers, proofreaders and more) involved in bringing EURObiZ Japan to you, that we have thoroughly enjoyed the job this year – especially the part where your successes make great copy.

We wish you a Merry Christmas, happy holidays, and a wonderfully successful 2013!

David C Hulme Editor-in-Chief

hulme@paradigm.co.jp

Flourishing

in Yokohama German Industry Park hosts multiple successes Text GAVIN BLAIR

8

December 2012

F ocus

Trumpf family. The company specialises in building machine tools used to cut and bend sheet metal parts that are used in everything from household furniture to electronic equipment. The cutting process has been transformed by the use of lasers over the last couple of decades, and TRUMPF is one of the few companies in the field that makes its own lasers in-house. All its lasers for the Japanese market are manufactured at the GIP. The global sheet metal machine tool sector is dominated

by TRUMPF and Japanese rival Amada, each controlling about a 30% share.

“Japan is the home market of our world competitor, which makes it different for us compared to other territories, where we are a market leader. Here, we are a market chaser,” explains Pannen.

The rise of Japan’s electronics makers in the 1960s, and their need for machines that would cut the sheet metal for their products, gave TRUMPF its start in the rapidly growing economy back then. Japan remains the company’s biggest market outside Germany.

Some of the innovations developed to meet the needs of local customers, such as more compact machines for smaller-sized Japanese factories, have been well received also by companies TRUMPF supplies globally. TRUMPF also has learned Japanese manufacturing and quality-control methods, processes implemented in its own global operations, explains Pannen.

The oft-rued hollowing out of Japan’s own manufacturing industry, much of it to China, is providing TRUMPF with opportunities. As mass-manufacturing moves offshore, the

German Industry park

B

ack in 1984, a German industry trade show was held in Yokohama to attract Japanese consumers to German products, ranging from cars and high-end engineering hardware to beer and sausages. The idea for a German Industry Park (GIP) was born out of that event, with a mission to provide a base from which German companies could operate, offering steady and reliable rental contracts, along with easy access to the Shinkansen bullet train lines at Shin-Yokohama station. Built by a German investment fund, on land in Yokohama’s Midori ward provided by Kanagawa prefecture, the facility has so far been home to 50 foreign and local companies.

The GIP’s mixed-use nature consists of offices on one side of the building, with the other side providing space for clean-room research and production processes, heavy-duty manufacturing and storage facilities. It is a rare find in the Kanto region, according to Hartmut Pannen, head of local operations for Germany’s TRUMPF and a resident since the GIP opened in 1987.

“Many companies have offices with good transport connections and IT infrastructure in one location, and the factory or storage facility an hour’s drive away,” he says. “To avoid that separation, this building is perfect. If you are a start-up company, you can rent a small space here; also, hiring local staff here is cheaper than in Tokyo.”

With a history dating back to 1923, TRUMPF was a classic example of the Mittelstand (Germany’s SMEs, often familyrun). But with nearly 10,000 employees, it has now outgrown that category. It remains family-run, though no longer by the

December 2012

9

Alfie Goodrich

focus

focus on smaller, high-end production lots, which Pannen refers to as “bespoke”, is where TRUMPF is best positioned. To that end, TRUMPF recently bought a Japanese company that specialises in software for such operations. It believes such capabilities will be increasingly in demand for years to come in Europe and the United States.

Another German-headquartered GIP tenant, Atotech, develops, produces and sells plating solutions for printed circuit boards and semiconductors used in the electronics industry, which makes up about 70% of its business. Atotech also produces coatings for automotive parts. While the company’s largest regional factory is in China, its Asian headquarters and research centre are at the GIP, where it has resided for about a decade.

“What makes the German Industry Park so advantageous is that we have the offices up here, and the research and development centre down in the basement,” explains Shozo Nishida, managing director of Atotech Japan. “It doesn’t have the look of a building where there are chemical laboratories, but we have full research capabilities here, using chemicals, which can be safely treated on-site for disposal.”

Nishida recently returned from a three-year stint at Atotech’s Berlin headquarters to take over the Japan operations. He says the move has helped establish a close working relationship with global senior management.

“The German Industry Park is now Atotech’s first standalone R&D centre outside Germany. Before that, it was a case of optimising products that were developed at HQ. We are now able to create solutions independently, based on our customers’ needs,” says Nishida.

Facilities for cutting-edge research laboratories, including a six-metre-high clean room, is what attracted Japanese startup Aqua Science to the GIP in 2003. After $30 million worth

of R&D, Aqua Science brought to market in 2010 its groundbreaking, chemical-free steam cleaning technology, used in the manufacture of semiconductors.

“I know of five other companies that have tried to develop the same technology, but all have so far failed,” reports Yoichi Isago, president and founder of Aqua Science, who started the company after buying the rights to the technology from US firm Lam Research, where he had been head of Japan operations. Aqua Science now has major customers in Japan, South Korea and Taiwan, and outsources supplies through factories in each of the three markets.

“I can’t see growth in the semiconductor sector in Japan, so our aim is to target the growing markets of China, South Korea and Taiwan with our technology,” says Isago, who is planning to relocate himself to Taiwan in the near future, but keep the main R&D operations in Yokohama.

Though manufacturers in Japan are increasingly setting up their production offshore and outsourcing various elements, a Zurich-headquartered maker of locks and other security devices, Kaba, has bucked that trend.

“We previously outsourced the manufacture of our lock cylinders, and our warehouse was also in another location. Last year, we brought that all in-house with an integrated production centre and storage facility at the GIP,” explains Satoshi Ueda, president of Kaba’s Japan operations. “If those facilities had been in different locations at the time of the earthquake last March, there would have been serious disruption; so it was a good move for us.”

Kaba’s flagship product in Japan is the dimple key, which the company developed itself and now sells through Miwa, the giant domestic key-maker. The company’s fastest-growing segment, though, has become security gates for public buildings and other facilities.

December 2012

11

Gianluca Testa VP Regional Manager Asia Alitalia

reads

focus

We are now able to create solutions independently, based on our customers’ needs

Alfie Goodrich

Shozo Nishida, Atotech Japan

Hartmut Pannen, TRUMPF

“With entrance gates, it is not only security, but also convenience of use for an ageing society [that] is becoming more of a consideration,” says Ueda.

While many of the companies in the GIP are start-ups or relatively small operations, chemical giant BASF opened its Engineering Plastic Innovation Center (EPIC) in the facility in January this year. First coming to Japan in 1888, when it began to look for opportunities to sell its denim indigo dye for use in colouring kimono and yukata, BASF now has annual sales of over ¥200 billion, with research and manufacturing sites across the country.

The Yokohama operations are the centre of its engineering plastics division, providing support to manufacturers of parts for applications ranging from blood dialysers to automobile engine components.

The EPIC allows BASF to collaborate closely with customers throughout every stage from concept to the design process, explains Matthew Stoelton, division head.

“The CAE [computer-aided engineering] facilities at Yokohama allow us to carry out predictive analysis, identifying design flaws and breaking points, prior to actually making products,” says Stoelton.

BASF has worked with customers to create various innovations, including plastic engine parts for vehicles such as air intake manifolds and engine mounts that were previously made out of metal, increasing fuel-efficiency through improved performance and being lighter. It remains essential to be able to achieve such advances locally.

“Even if the Japanese OEMs [original equipment manufacturers] are moving production overseas, we are still dealing with the companies in Japan that are deciding on the designs and demanding the same high standards as ever,” says Stoelton.

December 2012

13

Cautious optimism David McNeill talks to Hans Dietmar Schweisgut, Ambassador of the EU Delegation to Japan.

Photos Benjamin parks

Japan and the European Union (EU) are inching towards a comprehensive trade deal, and have agreed on negotiating terms that are now being discussed by EU member states. Expectations are positive, but after decades of trade friction and complex, difficult negotiations, nothing can be taken for granted.

Total foreign direct investment [FDI] into Japan is stubbornly lower than for any other developed nation, at about 3% of GDP [gross domestic product].

Why is that?

In the postwar period, you had two completely different models of economic development. One was a closed economy, based on capital formation, cheap credit, keeping investment mostly inward, and [tariff] barriers. The other was very much focused on promoting and stimulating inward investment, as we see in other Asian countries and certainly in China. In Japan, the former was, to a certain extent, fairly successful.

In the most recent past, the lack of inward investment was very much market-driven; European and American companies just had other markets that were of more immediate short-term, profitable interest than the long-term investment needed in Japan. So I think it would have been unrealistic, even if market barriers had gone away, to see

14

December 2012

a massive investment surge into Japan.

So the low FDI is a legacy of the developmental model of Japan over a very long period of time.

Why has South Korea been able to seal a trade agreement with the EU and become more like the kind of place you would like Japan to be?

Foreign investment into South Korea is not spectacular either. You cannot compare it to countries like China. South Korea was a relative latecomer, but they realised quite a bit earlier that it is in their interest to open up and liberalise the economy.

Are you optimistic that access to Japan can be improved?

Yes. We have moved a long way since the ’60s, when all the meetings were about trade friction and market access.

In 2001 we had the 10-year action plan, which set yearly targets in four baskets: political, economic, global issues, and

people-to-people contacts. The feeling was that we had exhausted this framework.

The reality is that Japan and Europe have become less relevant to each other.

In the early 2000s, Japan was EU trading partner No. 3, after the United States and Switzerland, and vice versa. The EU was also No. 3 for Japan as an export partner. Now, while the EU is still the third-largest trading partner for Japan, Japan has moved down to No. 7 for the EU. Many people would say that the economic potential is still there on both sides, [but] we have never been able to tackle market access problems in any meaningful way.

Can you cite some of the specific concerns about access to Japan?

The concern is that if we give up [European] tariff protection for the car and electronic industries, what do we get in return? The second point is that very often FTAs [free trade agreements]

Q&A

The expectation is that a decision will be taken before the end of the year to give the European Commission a mandate that will lead to a summit meeting next year

December 2012

15

leisure and relaxation at PaciďŹ c Islands Club Saipan

www.picresorts.com +1 670 234-7976 reservations@picsaipan.com

q&A

A trade and economic partnership would have to be complemented by a binding political partnership

are focused on tariff reductions, which are a lot simpler to achieve and are more measurable than non-tariff barriers [NTBs]. If you have to balance tariff reductions against the abolition of NTBs, it becomes a lot more complicated.

What kind of mechanisms do we have to monitor implementation?

Without going into the reasons, there are questions about access. For example, there are two companies sharing the world market for commercial aircraft.

Worldwide, the share of Airbus is slightly bigger than that of Boeing. Why is it that only in Japan the share of Airbus is in the low single digits, while it is more than 30% in the United States, the home market for Boeing?

Japan has every right to be concerned about food safety, and it is not a surprise that after the emergence of BSE in Europe and North America that Japan would close its market to beef imports.

But we negotiated in 2006 an agreement on procedures to lift this ban. We are now in 2012, and hopefully we will see admission of beef imports from the European market next year. But we’re not there yet, so you have people saying that even after six years of agreeing on the steps, the dossier sits for two-anda-half years on the desk of an official in a ministry, and nothing happens.

Obviously, people have concerns about Japan’s ability to deliver. This is natural.

You said you’re optimistic?

It was actually Japan that came up with the idea of negotiations on a free trade agreement, mainly inspired, it was suggested, by then-prime minister [Yukio] Hatoyama, and by the fact that the EU had concluded an FTA with South Korea. There was the fear that this would lead to competitive disadvantages. Korean car exports to Europe would not incur tariffs, while Japanese cars would.

We have said that a number of conditions would have to be fulfilled before an agreement could be concluded. First of all, we are not that

interested only in talking about free trade. A trade and economic partnership would have to be complemented by a binding political partnership.

Second, we’re not interested in starting discussions only on tariffs.

We would only be willing to negotiate on the understanding that both sides agree that we are aiming at a deep and comprehensive free trade agreement.

So we have been engaged in what we call a scoping exercise, or expert talks.

Both sides try to define the scope of an agreement, the rationale being that the Japanese side would be willing and able to address non-tariff barriers, government procurement, and other issues in a meaningful way.

We finished this scoping exercise before last summer. On this basis, the European institutions have drafted negotiating directives, which are now being discussed by member states. The expectation is that a decision will be taken before the end of the year to give the European Commission a mandate that will lead to a summit meeting next year. But there are some obstacles.

We need a unanimous decision by all member states. Some still have the feeling that we need to see further clear signs of the political determination in Japan to move in this direction.

But I am optimistic. There has been a series of welcome moves on symbolic issues, such as the granting of wholesale liquor licences to European companies, and the admission of European food additives. The fact that Japan has moved on those items underscores that these issues will be dealt with within the deadlines agreed. So at some stage, member states will have to ask whether it is worth postponing a decision.

Breaking News k EU decision On 29 November, the European Council approved the start of negotiations for an EU-Japan FTA/EPA. EU Trade Commissioner Karel De Gucht stated: “We now have a clear mandate – confirmed by all the Member States – which sets out Europe’s objectives.”

These include “like for like” elimination of duties and non-tariff barriers and the right to end negotiations after one year if Japan does not live up to its commitments on removing non-tariff barriers.

Having tested Japan’s seriousness in recent months, De Gucht added, the EU has been reassured by the removal of a number of key nontariff barriers up front.

December 2012

17

Globalisation and

the salaryman David McNeill talks to sociologist Hiroshi Ono 18

December 2012

Photos alfie goodrich

Q&A

Hiroshi Ono is an associate professor at Texas A&M University and a visiting fellow at The University of Tokyo and at Japan’s National Graduate Institute for Policy Studies (GRIPS). His research integrates sociology and microeconomics to study how foreign firms are shaping the behaviour of firms and individuals in the Japanese financial sector, and therefore perhaps the wider economy.

Tell us what’s distinctive about Japan.

Japan’s foreign direct investment [FDI] is notoriously low.

Japan has always had this nervous interaction with foreigners; this fear that foreign influence is bad. Personnel practice is one area where this is particularly ingrained. It’s not like they invented lifetime employment here, but they feel it’s a unique system, and that any foreign influence would undermine its strength.

Japanese companies operate an internal labour market.

They recruit everybody from below, straight out of university; train in-house, and internally promote. It works in most companies in Japan – but not [for those firms] in finance.

Companies like Nomura give excellent training, and as soon as their analysts are certified, they’re gone. The employees have excellent, transferable skills, and they’re proactive – they will contact headhunters themselves.

Lifetime employment famously breeds loyalty. Where does loyalty come from?

The cultural explanation is that it’s in Japanese genes. My hypothesis is that it is endogenous. Loyalty is created in Japanese firms. If you take the same person and put him in Sumitomo, he’ll be part of lifetime employment; if you put him in Goldman Sachs, he’ll start job-hopping. Japanese people working in foreign firms have a totally different career trajectory. They have much higher job mobility, better compensation, but their environment is much more risky. Those in foreign firms earn on average 10-15% more than their counterparts in Japanese firms.

In Japan, the tenure, or seniority effect, is huge. Someone who is working 20 years for Sumitomo has huge returns due to seniority. That’s what keeps them in these firms. If they leave, they lose all that. In the foreign firm, there is no seniority effect. It doesn’t matter if you have five or 10 years’ work with Morgan Stanley. What really matters is how much professional experience you have. Loyalty pays in Japan; it doesn’t pay on Wall Street.

You say that the influence of foreign firms on Japanese employment practices is growing.

FDI is strongest in the financial industries. About 10-15% of the people working in finance in Japan are foreign. Foreign firms bring employment practices that are more marketdriven and less socially embedded compared to the Japanese status quo. The co-existence of the foreign and the domestic in the Japanese labour market provides a fascinating test bed to examine how local firms adapt to global pressures, and how workers navigate the changing institutional environment.

If you work for a foreign firm, you are much more likely to stay. If you leave a domestic firm and join a foreign firm, you can’t go back to the domestic firm. There’s a stigma: “He’s a defector. He went for the money. He doesn’t have any loyalty.”

These guys were plucked away in the dozens by American and European investment banks at ridiculous salaries. The Japanese firms couldn’t counter offer because they had only one wage for everyone, with very little performance pay, and they couldn’t compete. For a long time, Nomura [Securities] did nothing. Finally, they started a completely separate professional track. The lifetime employment track is still there, but employees can opt for a package that matches the foreign firm: one-year contract, performance-based higher salary. It’s for people with experience; at some point they give you the option of something more risky than the lifetime system.

Do you see these changes you have noted in the finance industry spreading to the rest of the Japanese economy?

That’s the part that’s really hard to quantify. There is a link between globalisation and labour market flexibility, but it’s not clear. Some of the trading companies are starting to hire mid-career people very aggressively. That’s quite novel for Japanese firms. Livedoor and [Fast Retailing’s] Uniqlo are not foreign firms, but they behave in the same way as foreign firms. There is now a lot of foreign capital in Japanese companies. Foreign ownership in the Japanese stock exchange has

December 2012

19

Trained in Europe and the US Specializing in implants, esthetics, laser and Anti-Aging medicine RYO KITAMURA D.D.S.

RYO DENTAL CLINIC

Operating hours: Mon-Sat 10:00 a.m.- 1:00 p.m.

Mon-Fri 2:00 p.m.- 6:30 p.m.

tel: 03-3444-4200 fax: 03-3444-4202 3-25-2 Ebisu, Shibuya-ku, Tokyo, 150-0013 Japan info@ryodental.com www.ryodental.com

q&a

Companies like Nomura give excellent training, and as soon as their analysts are certified, they’re gone

gone up tremendously since the 1980s, from something like 5% to over 25% now. That kind of expansion is going to mean a lot of voice in the running of Japanese companies.

But what I found is that after the Lehman Shock [2008], the foreign financial firms in Japan are not as aggressive. There are signs that people are starting to migrate back to Japanese firms, looking for their jobs back. That’s previously unheard-of.

Are we moving towards a more US-style employment system, or is the core of the Japanese lifetime employment system going to survive?

The probability of getting into the lifetime employment system, what I call the core, is definitely shrinking over time, though not by much. It used to be 22-23% of the workforce; now it’s 18-19%. But once you’re in the core, the system will protect you; that hasn’t changed. The people affected are those at the bottom, the graduates who can’t get jobs. The Japanese stakeholder model has to transition to a shareholder model, with US-style governance. It’s undeniable that we are heading in that direction. As foreign companies increase their presence in Japanese companies, they’re going to get a voice in management.

You used to work in Sweden. What did that teach you?

There is a fair amount of mobility in Sweden – more than in Japan. People are not afraid to lose their jobs in Sweden because the system will protect you. Whereas in the US – and they’re proud of this – if you lose your job you’re screwed.

There’s no welfare state. In Japan, there’s a dependency

between the worker and the company. In Sweden, the dependency is between the worker and the welfare state.

You’ve also looked at something called the distribution of happiness.

Ultimately what I try to do is try to look at human behaviour, so I started to think about what makes people happy. I did an international comparison of happiness using a data set made up of 42,000 people in 30 countries. Surprisingly, the correlation between GDP [gross domestic product] and happiness is pretty weak. The biggest distinction at the national level was [that] if you live in an East European country, your life is pretty miserable.

There is a measurable index called public social expenditures [PSE]. Welfare states have high PSEs – about 30% of GDP. By coincidence, there was a report while I was doing my research that Denmark, Sweden and Norway have high happiness ratings. The media immediately responded with reports saying: “High taxes make people happy”. What I found, though, is that there is no correlation between high PSE and happiness at the national level. A Swede is just as happy as an American, if you look at the country level. But if you look at the individual demographic groups, the social welfare states are supposed to protect poor people, single parents, the unemployed and the [economically] weak. Generally speaking, those people are happier. But single people and rich people, they’re actually pretty miserable. So, it’s basically a redistribution of happiness from low-risk to high-risk people.

December 2012

21

G reen B i z

Saving fuel at sea Special pump cuts cost of shipping LNG Text and photo JULIAN LITTLER

T

he Dolphin liquid ring pump system now contributes to energy-savings on the high seas. Nippon Busch, the Japan branch of German family-owned Busch Vacuum Pumps and Systems (Busch), supplies vacuum pumps fitted with the new ultra steam turbine (UST) by Mitsubishi Heavy Industries (MHI).

They are planted in liquefied natural gas (LNG) tankers to help reduce fuel consumption by up to 20%.

The liquid ring pump was first patented in Germany in 1903.

Its robustness and the feature of allowing larger particles to pass through the vacuum chambers make it also popular for many other applications, according to Nippon Busch system division manager Ryuichi Inaba. The pump uses centrifugal force to create a liquid ring inside the pump, sealing the chamber and creating a vacuum. Using liquid also results in the vacuumed substance staying cooler; overheating can be a problem with some other types of pumps. The Dolphin liquid ring pump is built in England by Busch UK and exported to Japan, where the surrounding pump system is designed and built.

Japan is the world’s largest market for LNG. According to Bloomberg, the fiscal year ending in March 2012 saw Japan buy a record 83.18 million metric tons of LNG, an 18% increase over the previous year – a rise in demand due to the 3/11 triple disaster.

The use of the gas as a fuel also reduces the reliance on heavily polluting bunker oil

Ryuichi Inaba Japan also is completely reliant on tankers to transport LNG. Many of these vessels use steam turbine engine systems, whereby excess gas boiled from the carriers’ tanks is used to generate steam to help power the ships. This process saves on fuel and prevents wastage of the gas normally released to maintain safe tank-pressure levels during a voyage. The use of the gas as fuel also reduces the reliance on heavily polluting bunker oil. The gas-to-oil ratio is reduced to about 50:50, according to Inaba.

The 2011 Annual Report by the London-based Society of International Gas Tanker and Terminal Operators (SIGTTO) shows the current global fleet of LNG tankers to be 375 22

December 2012

Ryuichi Inaba supervises fine-tuning of a pump system

vessels. About 300 are oil-fired steam ships. Of the 85-90 LNG tankers on order, most will be equipped with the newer dualfuel diesel engine (DFDE) system. While the DFDE is becoming popular, MHI continues to develop steam technology. Its newgeneration Sayaendo (peas in a pod) LNG carrier cuts down on energy use through aerodynamic design and the new UST system, recycling excess steam back into the turbine system.

When the Japanese shipbuilder’s supplier shut down its pump section, Nippon Busch was ready to fill the void.

In 2006, Busch bought UK-company Graham Vacuum Technologies, renaming it Busch UK. The acquisition added the Dolphin liquid ring pump to the Busch inventory; the pump wasn’t introduced into the Japan market until two years ago.

“The ship can be built anywhere, but the steam turbine engine, especially the gearing system, can only be supplied by MHI and Kawasaki Heavy Industries. If a ship steam turbine engine is replaced, it will be done in Japan,” says Nippon Busch’s pump-system designer Inaba.

Sales secured so far are 40 liquid ring pumps to be installed in 20 LNG carriers. Every installation has different specifications, though, with a backup pump installed in each. Osaka Gas, for example, asked that Inaba design a system with each pump mounted individually. Another client’s pump system has both pumps mounted in a single framework.

Nippon Busch president Yoichiro Sasabe explains that many other pump suppliers sell only the pumps, without any systems consultancy, thereby engaging engineering companies that may not be familiar with the pumps. To avoid this approach, Sasabe hired Inaba. The German-owned, UK-built pumps – in Japanese-designed pump systems – will help reduce consumption of bunker oil across the globe.

EXE C UTI V E N OTE S

Hurrah for the genba

Spotlight on Japan’s real advantage in manufacturing I’ve always been curious about Japanese manufacturing. I grew up in an era when Japanese manufacturing was considered top-notch. In recent years, however, that positive impression has been undermined by the pathetic performance of companies like Sony and half a dozen other electronics companies.

A recent ECN event tried to pinpoint the state of contemporary manufacturing. After an expert demolition job on Japanese electronics companies by a top business journalist, we were all feeling that Japanese manufacturing was indeed on the wane. The highly experienced and savvy reporter pointed out numerous management shortcomings at Japanese companies. For example, the fact that Renesas Electronics is so acutely loss-making, despite having a huge market share in an essential product (control chips for the motor industry).

He also gave a brilliant example of the Japanese craftsman whose small company had at one point been responsible for burnishing the aluminium back of truckloads of the early-model Apple iPods. His artisan skills were covered in great and admiring detail by NHK, the reporter pointed out – but personally, he thought that this admiration for a very narrow, old-fashioned skill obscured the towering triumph of Apple over its Japanese rivals. Indeed, Sony today has a market cap of around $12 billion. But Apple has a market cap of over $750 billion, and South Korea’s Samsung is around $500 billion.

However, the second speaker (and one of the best we’ve ever had), Prof Takahiro Fujimoto of the Manufacturing Management Research Center, helped provide some welcome antidotes to this message of gloom, delving deep into the guts of Japan’s manufacturing industry.

His argument is that Japanese industry has recently been looking bad because of the arrival on the scene of

China and India. But he argues that this is, first, a one-off and unrepeatable event; and, second, that this period is coming to an end. In other words, he agrees that Japanese companies have experienced enormous stress since the 1980s, after the end of the Cold War. Their profitability has declined sharply in the face of the Chinese onslaught.

Even when Japanese companies have improved productivity by 5-10 times in as many years – it’s just not enough when Chinese wages over the past three decades have been 1/50th-1/20th of Japanese levels. Japan was no longer competing against (and crushing) equally paid workers in Europe and the United States (as it was doing pre-1990), but against rivals with much lower labour costs.

Fortunately for Japanese companies, he believes, this unique period of ultra-low wages for Japan’s competitors is coming to an end – and as wages normalise, Japanese manufacturing expertise will again begin to dominate the global marketplace.

But what, really, is Japan’s manufacturing advantage? Does Japan have an inherent advantage in manufacturing?

Fujimoto argues in the affirmative.

He claims that the glory of Japanese manufacturing is not the HQ, but the local factory site, the genba. He is profoundly worried that senior Japanese executives, and indeed government officials, will swallow the story of Japanese manufacturing decline, and close down factories. He believes this would be a terrible mistake, as the communities around the genba are fiercely committed to survival – and ready to make almost any sacrifice for that goal. It’s at the local level that the stunning improvements in productivity have occurred, he says.

How so? Fujimoto says that for anything involving “weight” or physical mass (i.e., not the Internet or IT), the Japanese

Japanese factories did not benefit from massive immigration, as did the US, or internal migration, as did China have discovered productive manufacturing techniques, of the type made world-famous by the car sector. He says that Japanese factories did not benefit from massive immigration, as did the US, or internal migration (from the countryside), as did China. With a worker deficit during Japan’s high-growth era (since immigration was not allowed), line workers became superbly good at working together in a creative variety of different roles. This was utterly different from the highly specialised, profoundly boring (read: alienating) Chinese or US model.

Fujimoto calls this Japanese model the “soccer player” model (generalists), while the US/Chinese model he calls the “baseball” model.

Most encouraging of all, Fujimoto believes, the era of China as an ultracheap manufacturing competitor is ending – and, finally, a new dawn is breaking for Japanese manufacturing. Let’s just hope those trigger-happy executives don’t overlook Japan’s innate strengths, and offshore everything to Vietnam, just as everything is about to start looking up.

Dan Slater Director of the Economist Corporate Network in Tokyo

December 2012

23

british S pecial

Hays Specialist Recruitment Japan KK Email: info@hays.co.jp www.hays.co.jp

We believe the right job can transform a person’s life and the right person can transform a business.

Operating in 33 countries for 43 years, we have become the world’s leading recruiting experts. We have proven success in providing services to our customers for permanent positions, contract roles, temporary assignments and recruitment process outsourcing.

Our recruiting expertise spans Accountancy & Finance, Banking, Finance Technology, Human Resources, Information Technology, Insurance, Legal, Life Sciences, Office Professionals, Property, Resource Management, Sales & Marketing and Supply Chain.

GlaxoSmithKline KK http://glaxosmithkline.co.jp/ Tel: 03-5786-5000 (general affairs)

GSK’s challenging mission: to improve the quality of human life by enabling people to do more, feel better and live longer. We are one of the world’s leading research-based pharmaceutical firms headquartered in the UK. With the introduction of our innovative pharmaceuticals, vaccines and consumer products, and by collaborative efforts with global and Japanese partners, we will continue to fulfill medical needs in Japan.

24

December 2012

Jaguar www.jaguar.com/jp/

「ALIVE.きのうまでとは違う、 その先へ」 乗る人の人生を鮮やかに彩り、輝きに満 ちた日々を広げるジャガー。存在感に満ち た流麗なフォルムとモダンラグジュアリー を極めた最上の空間。究極のラグジュアリ ーサルーンXJ。先進的なスタイルと上質 な作りこみを貫いたインテリア。 スポーテ ィングラグジュアリーサルーンXF。本能を 駆り立てる圧倒的なパフォーマンスと美し

Savills Japan Co., Ltd www.savills.co.jp

Savills Japan Co., Ltd. was established in August 2004, and the depth and diversity of the Savills’ business model in Japan and across the Asia-Pacific region is evident in the services we can provide; from Tenant Representation and Office Leasing to Asset Management, Valuation, Research & Consultancy and Investment Advisory.

WEBでご確認ください。

Savills’ people combine entrepreneurial spirit and a deep understanding of specialist property sectors with the highest standards of client care.

Oxford Instruments www.oxford-instruments.com

Hotels.com jp.hotels.com/en

Oxford Instruments is a leading provider of high technology tools and systems for research and industry, turning our smart science into commercially successful products. Our instruments can fabricate, analyse and manipulate matter at the atomic level, and our expertise, technologies and innovation is focused on offering customers high-quality products and service. Established in Japan for 20 years, we offer a range of products and service for microanalysis, cryogenic tools and environments, plasma etch and deposition, and a range of analysers used in quality control and metals analysis.

Hotels.com offers the choice of over 155,000 hotels around the world. Our online hotel reviews help you find the best deal in the right location. Whether you are travelling last minute as a family, or need a hotel for business, we have the right hotel deal. We also have a 24-hour phone line if you prefer speaking to our staff.

く刺激に満ちたスポーツカーXK。 世界を魅了し続けるラインアップの詳細は

Welcome Rewards – our ten nights for one free is easily the best hotel reward system going. What’s more they do not have to be consecutive nights.

C hamber voice

Nicholas Walters

President, British Chamber of Commerce in Japan www.bccjapan.com

Nicholas (Nick) Walters credits the twoyear tenure of his predecessor, Philip T Gibb, for creating a solid foundation on which to build since Walters himself was elected in April as president.

In a whirlwind year, the British Chamber of Commerce in Japan (BCCJ) culminated its Tohoku-disaster fundraising efforts in March with the Road to Recovery event, hosted at the residence of Britain’s ambassador to Japan, marking a full year since the earthquake. More than 200 people attended, raising over ¥3.3 million. There is now a shift in emphasis.

“We continue to support the Tohoku projects we have been involved in, but we also want to refocus our CSR efforts back on projects where our members can more easily donate their time and efforts, supporting more easily accessible projects, to maximise the potential participation,” Walters explains.

A highlight of the year, one in which businesses embraced digital media on new levels, was the launch of a new and better BCCJ website.

“We believe that our communications channels are a key tool for attracting new members, who benefit from the ease of keeping up-to-date through our very accessible new website, our weekly round-up emails, and the regular Twitter and Facebook updates from our secretariat,” says Walters.

Another highlight was the annual British Business Awards dinner at the Conrad Tokyo hotel on 2 November.

GlaxoSmithKline Japan took the Company of the Year award for its fast growth that has made it one of Japan’s top-10 pharmaceutical manufacturers.

Though the chamber has seen a number of individual members leaving Japan, the BCCJ enjoys continuing growth across all membership categories, says Walters. That growth, he adds, comes from both new entrants into Japan as

well as long-term players, including large corporations and entrepreneurs.

“Rio Tinto [mining giant] and The Hobgoblin [British-themed pubs chain] are examples of new members that we have been extremely proud to welcome to the chamber recently,” he says.

To reinforce the BCCJ presence in Japan, the chamber is looking beyond Tokyo, through such activities as the recent International Meishi Exchange in Osaka.

“We have plans to expand our activities in the Kansai area, as well as in the rest of Japan,” says the chamber president.

“We hope that interested parties outside of Tokyo, whether they are currently members or not, will contact us to find out how we can work together.”

Another area of potential expansion for the BCCJ is in reaching out to Japanese companies who are investing in the UK. Relevance and value-added benefits are the keys to attracting new members, he says.

“We endeavour to use these qualities as the cornerstone of our events series,” adds Walters, listing categories such as Headliners, featuring world-class speakers; Inside My Company, offering insights from member-firm CEOs; Small is Great, a platform for entrepreneurs and small-business owners to build networks and leverage success stories; and various other social networking opportunities.

“These ensure that we are offering appropriate, relevant content and opportunities for our members to expand their businesses through networking with fellow members.”

Another pleasing feature of BCCJ membership, for Walters, is the variety.

“The British Business Awards showed the remarkably broad range of British business interests in Japan,” he says. “Our nominees and winners came from all industries and every size of business – from defence, mining, pharmaceuticals, recruitment, consulting, and cup-cakes!”

Paddy o’connor

Text DAVID C HULME

We have plans to expand our activities in the Kansai area, as well as in the rest of Japan This means that the BCCJ must keep an eye on all business trends, in every sector, in Japan. But Walters says the most important trend of all is the UK-Japan business relationship.

“We are proud to say that this relationship is going from strength to strength, and is as broad, deep and varied as it has ever been,” he states.

Walters sees the overall business climate as very encouraging, compared to a year or so ago.

“Japan is in a strong position today. The recovery from the triple disasters [3/11] continues, and we would hope to see those efforts continue,” he says. “Prime minister [Yoshihiko] Noda has been able to pass some difficult laws to help Japan get back onto a safer fiscal path, and we hope to see more progress in this direction as well.”

December 2012

25

A blow for wind Feed-in tariffs put Japan on alternative energy track Text Simon Scott

W

ind power is far from being a new technology – in fact, it is exceedingly old.

A musical organ powered by a wind wheel was the first winddriven machine, invented by the Greek mathematician Heron of Alexandria in the 1st century.

Even the technology of using wind to generate electricity is well over a century old. The first such windmill, built in 1887

by Prof James Blyth, powered his Scottish home for 25 years.

Having largely been sidelined in the modern era, wind power has

26

December 2012

been rediscovered in recent decades.

According to the International Energy Agency, global wind-power capacity has grown at an average rate of over 25% in the last five years, making it one of the fastest-growing sources of renewable energy.

Japan has been slow to get on board and only ranks 13th on the wind-power league table. In 2010, wind power made up only 0.4% of power generated in Japan – 4.3 billion kWh out of an annual total of 1,090.8 billion kWh – according to the Agency of Natural Resources and Energy. Denmark, at the top of the chart, gets about 20% of its energy from the wind.

Now the picture is changing for Japan, with the introduction of a feed-in-tariff (FIT) scheme for renewables, including also solar power, biomass, minihydroelectric and geothermal energy.

When the FIT rates were rolled out in July, wind power was priced at a very generous ¥23.1 per kWh for a 20-year period for companies with a capacity of over 20 kW. For those producing below 20 kW, the rate was set at ¥57.75 per kWh. These figures are easily the highest rates in the world.

At the same time, however, the government decided to tighten regulations related to building wind farms. On 1 October, an amendment to Japan’s environmental law was passed that requires all wind farms of over 10MW capacity to be subject to the same level of

environmental impact assessment as nuclear power plants are. This restriction seems totally out of sync with the wider government policy on renewables, and is a disappointment for companies hoping to benefit from the new FIT scheme.

Danish company Vestas is the world’s largest wind-turbine manufacturer.

Since entering the Japanese market in 1995, Vestas has installed approximately 420 wind turbines – with a combined capacity of over 600 MW – and holds close to a 25% market share in Japan.

Its largest installation of 26 turbines, in Shimane prefecture, is the 78-MW Shin Izumo wind farm, owned and operated

by Eurus Energy.

Luke Eginton, managing director of Vestas Japan, says he is concerned that the law will burden developers with excessive start-up costs.

“Any wind farm should go through an appropriate level of environmental assessment,” he says. “But whether the quality of the assessment is improved by spending four years on it, rather than one year, is highly questionable. I don’t think there is any value added there.”

Eginton believes the problem is a bureaucratic one and is not an attempt by the government to deliberately hurt the industry.

“There just isn’t full alignment between the various regulatory bodies and government organs that control stuff like this,” he says.

Regulation aside, developing wind power in Japan is physically tricky,

F ocus

Whether the quality of the assessment is improved by spending four years on it, rather than one year, is highly questionable

especially since about 73% of the country is categorised as mountainous. A mountain wind farm offers a unique set of challenges.

“The more mountainous a site gets, the more complex it gets,” Eginton says.

“The more impact the terrain has on wind.” And that can mean increased wear and tear on the turbine.

“Any machine that is stopped and started, pushed and pulled – as opposed to a machine that is just kept running [at] a nice speed all its life – well, you will have far more issues to deal with in that machine,” Eginton notes.

“The reality of Japan is mountainous sites,” he continues. “The key for us is to understand fully the nature of the site and what we need to do to the turbine in terms of its operating parameters and settings in order to account for the vagaries of the site.”

Transporting components up winding mountain roads, with tunnels, can be a logistical nightmare. Turbine blades can be as much as 55m long. What can make the effort worthwhile, according to Eginton, is the dearth of other readily available power sources.

“The simple fact is, when it comes to traditional fuel resources, there are none in Japan. They have to use [the alternatives] that they have,” he says.

High population densities in flatter regions, especially on Honshu, makes scarce any suitable sites for large, onshore wind farms. It is essential, therefore, to improve efficiency and develop offshore wind farms.

Kyushu University’s Research Institute of Applied Mechanics has a long history of research into wind technology. The

Luke Eginton, Vestas Japan

kyushu university

institute is the birthplace of the wind lens, which employs a broad, inwardcurving ring called a diffuser shroud, surrounding the perimeter of the blades and focusing the airflow.

“If we can increase wind speed, by capturing and concentrating the energy locally, the power output of a wind turbine can be increased substantially,” says Professor Yuji Ohya, director of the institute and inventor of the wind lens. The diffuser shroud, he explains, increases wind velocity through a vortex effect.

“A low-pressure region due to a strong vortex formation behind the broad rim draws more mass flow to the wind turbine inside the diffuser.”

In Japan’s densely populated cities, the wind lens may be ideal to drive highly efficient smaller wind turbines. Also, noise pollution from the wind lens is much lower than from a conventional turbine using giant propeller blades, according to Ohya, making it more suitable for urban areas.

A relatively small wind lens is twice to three times as efficient as a conventional wind turbine of the same size. With a longer diffuser hood, efficiency increases

to as much as four to five times that of conventional turbines, says Ohya.

Because costs and wear and tear also increase, only the compact version of the wind lens is being developed for commercial use at present.

Eginton of Vestas Japan still prefers the larger turbines.

“The [wind] lens system does work on a small scale, but the big future development will be on the size of the rotor and the generator,” Eginton says. “The wind lens system becomes extremely expensive for the larger rotors. The economics of the system currently make it impossible for the lens to work on the larger rotor and generator turbines.”

Ohya says that development of the wind lens actually has entered a new phase that concentrates on applying the technology to larger turbines. He also pins his hopes on the wind lens forming the core of an integrated offshore electric-power generation farm. It would draw energy from the wind, sun, tides and waves. Solar panels and other equipment would be attached to hexagonal floating bases of the wind turbines.

Conventional offshore bases are mounted on the seabed, making waters surrounding Japan too deep for that. It is a disadvantage that Ohya says can be turned to an advantage.

“Japan is sometimes mentioned as having a small land area and a lack of natural resources, but the total area of its territorial waters and exclusive economic zone [EEZ] is the sixth-largest in the world,” he says. “The challenge is to make a high-density offshore electric-power generation farm a reality by utilising the very large EEZ.”

December 2012

27

From left to right: Hideto Aoki, Marjet Andriesse, Mamoru Inoue, Marcel Wiggers, Hiroshi Sakamoto, Taco de Vries

Randstad Japan Partners in quality Text JUSTIN MCCURRY Photo ALFIE GOODRICH

28

December 2012

I nvesting I n J apan

A

t first sight, a merger between a global leader in HR services and a Japanese local-oriented firm seems unlikely to succeed.

Yet, two years after the Dutch firm Randstad, the world’s second-biggest HR services company, completed its $161 million buyout of FujiStaff, executives say they are satisfied the alliance will reap dividends in Japan, the world’s number-two market for staffing services.

Before its August 2010 acquisition of FujiStaff, Randstad already had half a century of experience under its belt, including moves into other parts of Europe and the United States, driven by a belief in incremental expansion and close cooperation with local partners.

Since opening Randstad’s first office in Japan in 2006, Marcel Wiggers, chairman and CEO of the Japan unit, has presided over growth that has seen the firm attain an industryleading place in the market here, with 60 offices nationwide.

“When I came to Japan, I realised that the only way we were going to be successful was with a dual strategy – to grow organically and make an acquisition – because the market is too big to make much progress without local connection,” Wiggers says during a discussion with Randstad Japan’s Dutch and Japanese executives.

For four years, beginning in 2006, Wiggers worked with management at FujiStaff, which had begun in Tochigi prefecture 25 years ago, to ensure a smooth transition despite the diverse backgrounds of the two firms.

“We found that we shared the same values in terms of how we provide our services, and how we treat people inside the company, plus we had a shared belief that we should be stakeholders in society,” says Wiggers.

“Japan is a very important market for us. The profitability and the quality of service is very high,” he adds, “so it is clearly important in terms of our global footprint.”

Marjet Andriesse, a vice-president at Randstad Japan, agrees that shared core values are at the heart of a successful partnership.

“If you are in the people business as we are, if the companies’ core values are the same, it’s easy to connect and turn that into one company,” she says.

Nonetheless, the prospect of integrating with a much bigger overseas’ partner inevitably raised concerns among some FujiStaff employees, according to Mamoru Inoue, Randstad Japan’s president and COO. “Initially, I was surprised and a little concerned, because we are a Japanese company established in Tochigi prefecture – up until then our service was more nationally oriented,” Inoue says. Employees were reassured, he continues, by Randstad’s gradual approach to the acquisition. “Randstad had a longterm vision for Japan. Also, I was happy that our strong relationship with local clients created the basis for a successful integration – in addition to the fact Randstad brought us global client accounts.”

Still, Randstad has not shied away from implementing changes it believes will put the company in a better position to grow, not least by assisting Japanese multinationals to recruit overseas.

One of the biggest challenges is the language barrier, according to Hiroshi Sakamoto, the firm’s director and head of staffing for East Japan. Randstad is promoting global standards now by conducting regular weekly meetings in English and, in April, made English mandatory for senior management, providing regular learning opportunities.

Japan still has its distinct problems, such as employment laws that tend to restrict staffing firms. Hideto Aoki, Randstad’s operating officer and head of the business development department, expects some relaxation in the coming years to reflect changes in the economy and the increasing use of contract and part-time workers.

Japan is a very important market for us. The profitability and the quality of service is very high Marcel Wiggers “Large companies still maintain seniority systems and lifetime employment, which are putting the brakes on those changes,” Aoki says. “But I think there will be progress in five years or so. The biggest issue is the gap between regular and non-regular employees in terms of salary and employment conditions. We have to improve that.”

Due to the legacy of lifetime employment and large layoffs after the 2008 Lehman Shock, the staffing industry in Japan also still suffers from an image problem, concedes Taco de Vries, a vice-president at Randstad Japan.

“It still has a bit of a negative image here,” he says. “But that is also connected to salary and working conditions, and to companies recognising the quality of temporary staff.

Randstad is here to change the perception in society by introducing the concept of quality and sustainability in the market.”

For the bigger picture, Wiggers warns that forward planning is needed for industries here to avoid severe staff shortages due to the demographic change.

“There will be a big talent shortage, and if you don’t want companies to move out of Japan, you need skilled workers in Japan,” he says. “That’s where society needs to think about ‘skilled immigration’ and the participation of women in skilled work. But there doesn’t seem to be a sense of urgency.”

Andriesse notes that Randstad has prepared for those changes with a newly launched in-house diversity group.

“Women’s participation will be more important in the future, and we need to play a role in that at Randstad,” she says. “We should lead by example.”

Randstad’s Dutch executives emphasise that Japan is central to the firm’s expansion in Asia. They also believe that Japanese are more adaptable than generally thought.

“We found a lot of motivation to adapt,” de Vries says.

“There was no resistance to the way we wanted to work in Japan. Once the Japanese understand what you want to do, it generates a lot of energy. There is a strong feeling that we want to do this together.”

December 2012

29

Asset Management// Improving returns Text GEOFF BOTTING

W

hen it comes to issues and recommendations, the EBC Asset Management Committee claims an uncommonly long list.

“There are about nine that we’re currently looking at,” says committee chairman Douglas L Hymas, pointing at a hefty collection of materials spread out in front of him.

That’s a number that will easily exceed the space limitations of the next EBC White Paper, and so the committee plans to carry just three issues: mandatory reporting of large shareholdings, the imminent introduction of investment accounts for individuals, and the grand scheme of promoting Japan as an international financial centre.

That doesn’t mean the other issues are any less important. In fact, topping the committee’s current agenda is one of the issues not slated for the white paper: the activities of the Financial System Council, an advisory group to the Cabinet. The council has been working on recommendations expected to bring big changes to the investment management industry.

“I have been working in this industry for 20 years so far, and the council’s discussions are the most interesting and 30

December 2012

momentous I’ve seen yet,” says fellow committee member Keiko Tamaki.

One of the council’s issues – and also one for the EBC committee – is the absence of standards on performance reporting for investment trusts. This refers to the figures that appear in the prospectuses of investment products, among other places, showing how well or how badly a product is doing.

Currently in Japan, different firms use their own reporting methods, often making it difficult for investors to grasp a product’s true performance or to make comparisons.

The committee has long advocated the introduction of such standards.

“We want the investors to understand, in greater depth, the returns and risks,” says Tamaki of Schroder Investment Management (Japan).

Another issue on the committee’s lengthy list is the individual savings account (ISA).

Perhaps a better name would be investment account, as an ISA offers a range of different investment products with higher returns (and higher risk) than a regular savings account. The ISA was prompted by the government’s concern that too many Japanese, young people in particular, have their money parked in a regular savings account, at interest rates earning basically nothing

Asset management Key advocacy points k Reporting of large shareholdings – Professional investors are required by law to make regular and frequent reports if their stake in a listed company exceeds 5% of its total stock. This requirement should not be applied to asset management companies that have no intention of gaining management control of the company in question. k Japan as an international financial centre – The government should develop a holistic approach in its efforts to promote Japan as a financial centre, encompassing tax and industry associations. k Individual savings account (ISA) – The government should raise the caps on ISAs and extend their investment period, to encourage individual investors to put significantly larger amounts in these new tax-exempt accounts. for the future. The committee welcomes the ISA product for its potential to tap a new segment of the financial market.

“Because of the tax benefit these products offer, we can target the younger generation,” Tamaki says.

Both the committee and the Financial

I n C ommittee

Services Agency (FSA), however, want changes in the proposed structure of an ISA, with a planned rollout in 2014. Under the government’s current proposal, the total amount investors can contribute would be capped at ¥1 million a year over a three-year period, with a 10-year maturity. For every year a contribution is made, though, a new account would have to be created.

The committee is calling for higher contribution caps and for all deposits to go into a single account. The fear shared by both the committee and the FSA is that the caps are so low that an ISA will not attract a sufficient number of investors to make any difference in the investment market.

“Although 10 years is a nice timeperiod, the total amount [¥3 million] doesn’t make it worth supporting,” says Hymas, whose company, ING Mutual Funds Management Company (Japan), would be expected to offer investment products for the accounts. “The FSA’s view is that the individual savings account won’t be offered by too many banks, and will be expensive and cumbersome to administer.”

Another issue is dividend practices.

In the past few years, investment trusts that pay regular dividends regardless of market conditions have appeared on the market. But as financial markets have

lately recorded less-than-stellar performances, fund managers quickly found out they couldn’t pay their advertised dividend amounts. Their solution? Dip into the funds’ principal.

“This would be extraordinary in other countries, but seems fairly acceptable [by the industry] here,” says Tino Moorrees, president of BNP Paribas Investment Partners Japan, although he adds, “We don’t think it’s in the best interests of the investor if capital is paid out to maintain a high dividend.”

The immediate problem was that many investors – as well as some of the banks and others who sold the products – had assumed that the funds’ principal amounts were protected. They were not, and as the hard truth emerged, the FSA was hit by a barrage of complaints.

Clearly, notes Moorrees, it was a problem of transparency.

“You need to be very transparent with the client over where his monthly payout is coming from,” he states.

Hymas says that the FSA has so far done very little to clarify the issue, or to come out with measures that would prevent a recurrence.

“They haven’t given an example of what’s good and what’s bad,” he says. “So now we don’t even know if it’s acceptable to offer such a fund to investors.”

The [Financial System] Council’s discussions are the most interesting and momentous I’ve seen yet Keiko Tamaki, Schroder Investment Management (Japan) As for the asset management industry as a whole, Hymas concedes that the years following the global economic crisis of 2008 were lean, but says that now he sees investor interest starting to pick up.

“On the institutional side, money did not flow for some time, but is starting to flow again. I think the investors have waited to see some measure of stability,” the committee chair says. This improvement also means that Japanese institutions are increasingly turning to asset managers of European and other foreign financial institutions for investment opportunities that can’t be found at home.

“That’s been good for our industry,” Hymas says. “We’ve been able to introduce products … that can offer investors a much better return.”

December 2012

31

EVENT REPORT

2012 Deshima Business Awards 11 October 2012, TEPIA Hall, Aoyama, Tokyo Text Alena Eckelmann Photos nccj

T

he 2012 Deshima Business Awards ceremony was all about seeing the potential of Japan and having the guts to engage in business here.

“It is remarkable to see many Dutch entrepreneurs who do not give a jot about the negative publicity that Japan has been receiving lately,” said Leon Halders, chairman of the Netherlands Chamber of Commerce in Japan (NCCJ) Deshima Awards Committee and president of DSM Japan, winner of the 2006 Deshima Business Award.

Established in 2000, with the support of the Embassy of the Kingdom of the Netherlands in Japan, the awards recognise the business achievements and contributions to society of Dutch companies in Japan, thereby raising awareness of trade and investment opportunities in Japan for Dutch enterprises.

A mirror award was established in the Netherlands in 2006 by the Dutch & Japanese Trade Federation (DUJAT), based in Amsterdam, to honour the accomplishments of Japanese companies doing business in the country.

A total of 14 NCCJ members and other Dutch companies were nominated this year in either of two categories: large companies or small/ medium-sized enterprises.

The winner in the large-company segment was CSM Japan, which markets the natural lactic acid and its derivatives manufactured by subsidiary Purac. CSM Japan has experienced average growth of 6% annually since its establishment in Tokyo in 1998, and now holds a market share of about 50% of the natural lactic acids and derivatives sold here. The company produces environment-friendly food ingredients and chemicals based on natural raw materials, combined with natural fermentation and recycling at the end of the products’ life cycle.

“This year became special for us. It is the 80th anniversary of the Purac

Winner of large-company award (left): Koji Nakamura (fourth from right), managing director, Purac Division, CSM Japan, and his team, with Netherlands minister of Finance Jan Kees de Jager (centre) and their Deshima Award in the large-company category. Winner of small/medium-sized company award (right): Shogo Tetsuda, managing director of Dick Bruna Japan (second from right) and colleagues with Netherlands minister of Finance Jan Kees de Jager.

business, and we received the Deshima Award. I am very proud of my team and their high passion and dedicated efforts to build strong relationships with external partners. We would like to ensure our customers’ further success in a sustainable way,” said Koji Nakamura, managing director, Purac Division, CSM Japan.

The large-company runners-up were Robeco Institutional Asset Management, Japan Branch; and AEGON Sony Life Insurance.

In the small/medium-sized segment, Dick Bruna Japan, a subsidiary of Mercis and the licensing agent for artworks by Dick Bruna, won top honours.

Bruna is the celebrated Dutch graphic designer who created the animated rabbit character Miffy, whose history in Japan reaches back to 1964, when the first Miffy picture book in Japanese was published. Since then, Japan has grown to become the biggest and most mature market for the character worldwide.

“We are honoured to receive the prestigious Deshima Business Award, thanks to the support of our many Japanese Miffy fans and business associates. We are pleased to participate in a mutual exchange of ‘good culture’ and thereby strengthen good relations between the Netherlands and Japan,” said Shogo Tetsuda, managing director of Dick Bruna Japan.

Small-business runners-up were

Hauzer Techno Coating, Scelta Mushrooms, and Wheelylift.com.

Honouring the awards ceremony with their presence – and joined by a large contingent of Dutch and Japanese business executives – were H.E. Mr Jan Kees de Jager, minister of Finance of the Netherlands, and H.E. Mr Radinck Jan van Vollenhoven, ambassador of the Kingdom of the Netherlands to Japan.

The Dutch business awards are named after a small artificial island originally built in the bay of Nagasaki, but now within the borders of Nagasaki city, which during the Edo period (1603-1868) hosted a flourishing Dutch trading post. “Dejima was the ‘window to Japan’ and our awards honour this tradition,” said Halders.

In a way, he adds, Dutch companies in Japan are at the frontier again, and he says he is “fighting a constant uphill battle of selling Japan to the DSM headquarters in the Netherlands, countering the gloomy picture painted by the BBC, CNN, The Financial Times, et cetera”.

“I am based here and I see every day that Japan is very much alive and by no means the ‘ghost town’ that these news media now suggest,” he emphasises. “The awards give Dutch companies the encouragement to come here and demonstrate that you can have success in Japan. It is difficult and not for the faint-hearted, but it is possible, and it can be very rewarding.”

December 2012

33

A Finn

with affinity Text ALENA ECKELMANN

C

ombine a passion for other cultures, a desire to travel and an aptitude for research, and you get the perfect anthropologist.

Finn Martina Tyrisevä, a researcher at Hokkaido University’s Centre for Ainu and Indigenous Studies, at the University of Geneva and Neuchâtel, and, until recently, director of the Finnish Institute, Hokkaido office, understood at an early age how language represents a culture. Born 34

December 2012

in Geneva, “the city of the UN”, to a Croatian mother and a Finnish father, she spent her childhood surrounded by people from different countries, wearing their national costumes and speaking their mother tongues.

In search of her ancestral roots, she spent time with the Sami, a people indigenous to the northern part of Finland, and travelled to Mongolia, where she lived with nomads and learned their way of life.

“How anthropologists do research was exactly my way of living and

travelling there. I realised that anthropological studies would match my passions and complete the circle,” she states.

Tyrisevä first heard of the Ainu, the indigenous people of Hokkaido, from her Japanology teacher at University of Geneva. The Swiss university has a partnership agreement with Hokkaido University, and after completing her MA in Geneva it was not long before Tyrisevä signed up for PhD studies in Japan.

“I did not think I would meet Ainu

C ulture S hock

Martina Tyrisevä with a tonkori, a traditional Ainu instrument, during an ecotour in Shiretoko, eastern Hokkaido.

I realised that anthropological studies would match my passions

Martina Tyrisevä

people quickly, but on the day I arrived at Hokkaido University, I was introduced to an ‘Ainu prince’,” she recalls.

Three people – Tyrisevä’s professor, an Ainu colleague, and the coordinator at the centre – took her along with them to Ainu festivals and ceremonies, and integrated her into the centre’s research projects.

The main theme of her work and research concerns how to develop and integrate Ainu indigenous knowledge at Hokkaido schools and into their curriculum. She is part of a working group

that has compiled a reader at no cost to the schools and which they hope will become required reading in the future.

Japanese national history textbooks currently do not contain the history of indigenous people in Hokkaido. In fact, the Ainu were only recently recognised as a minority group in a resolution passed by the Japanese parliament in 2008.

“History is a point of view, and we are trying to re-write history,” says Tyrisevä.

“This is politically difficult [for the Japanese authorities] to accept.”

The Ainu Association in Hokkaido counts 23,000 registered Ainu, while unofficially there are said to be about 200,000 all together. The discrepancy is because many do not disclose their ethnicity, for fear of discrimination.

“If you are not friends with the [Ainu] people and gain their trust, you will not get access to their homes or their lives,” notes Tyrisevä. It took a full three years before some of her friends confided their Ainu heritage to her and she herself felt comfortable enough to officially interview them for her PhD thesis.

Culture is transmitted through language, but many Ainu parents of past generations had not taught their children their mother tongue in order to guard against discrimination. Tyrisevä feared that the Ainu language had become extinct, but a chance encounter provided new hope.

“A man took me by surprise when he narrated a story in fluent Ainu,”

she says. “Nowadays the Ainu are ‘Japanised’, and they speak Japanese.

But this taught me that elements of Ainu culture and language are indeed alive.”

Some young Ainu are trying to define their lifestyle by combining tradition with modernity, and they are not afraid of “coming out” as Ainu. Typically, they are musicians or artists who proudly present their culture.

Eco-tours are another consequence of the resurgence. Japanese and foreign travellers learn about Hokkaido’s natural landscape through Ainu cultural guides. In the process, Ainu re-discover their traditions and heritage.

“Discrimination has prevented some Ainu from finding employment,” says Tyrisevä. “Thanks to these tours, there is a chance for them to do something meaningful.”

Tyrisevä drew on the experience of her Sami friends from Finland to organise “language bath” workshops. They agreed to train the Ainu on how to conduct workshops. A number of families participated with their pre-school children, who spend an entire day in an exclusively Ainu environment, speaking only the Ainu language.

“I am not just studying these people.

They are becoming friends for life, and I am trying to help them,” says Tyrisevä.

“This is what I can bring in through my connections, but we need funding to include more features and more people, and to make the programme sustainable.”

December 2012

35

Join+ support EBC members can not only learn about important changes taking place in Japan, but also play a critical role in influencing change themselves.

To join the EBC visit

www.ebc-jp.com For more information please contact the EBC Secretariat.

Alison Murray, EBC Executive Director.

Tel: 03-3263-6222. E-mail: ebc@gol.com

Business Class Travel Luxury travel can begin en route to the airport.

Terminals catering to globetrotting travellers include dedicated check-in lines and lounges – inspiring passengers to come early and be pampered. Once on board, long-haul flights offer “hotel” accommodations, cuisine and entertainment.

Such is the art of Business Class.

Business Class Travel

Alitalia

Tel

03-3568-1588

Website

www.alitalia.com

Alitalia sets the standard for travel to Italy.

Passengers travelling from Japan to Italy can expect a highquality and uniquely Italian travel experience when flying on Alitalia.

During the past three years, the Italian carrier has invested heavily in new aircraft and the passenger experience – on the ground and in the air. On long-haul routes, Alitalia has completely redefined its inflight service, offering three distinct classes on flights operating with new Airbus 330 aircraft and newly refurbished Boeing 777 aircraft. There are Magnifica Business Class, Classica Plus Premium Economy that offers a private cabin with roomy seats configured to allow ample legroom and recline, and Classica Economy with special Italian touches.

Magnifica, Alitalia’s business class on long-haul routes, delivers maximum comfort and a sophisticated Italian travel experience. Service includes award-winning menus featuring regional Italian cuisine, designer linens and tableware, and an amenity kit with personal care items created by Bulgari.

Magnifica passengers also enjoy: • • • • • •

Seats that convert to flat-beds (180°)(193cm length)(54cm width) 1-2-1 cabin configuration (all aisle seating) Large 15.4 inch screens for on-demand entertainment Noise-cancelling headphones In-seat PC power, USB ports & satellite phones In-seat massage technology and privacy screens

December 2012

37

Business Class Travel

Air France

Tel

Tokyo: 03-5767-4143 | Osaka: 06-6341-2661 Nagoya: 052-551-4141

Website

www.airfrance.co.jp | mobile.airfrance.com

Air France is celebrating 60 years of service connecting Japan and France. Our new satellite in Terminal 2E at Paris-Charles de Gaulle airport has the largest Air France lounge to make your time at the heart of the boarding satellite all the more pleasurable. On board, our “À la Carte” meals for Economy and Premium Economy classes from Paris to Tokyo and Osaka offer a unique culinary experience of five choice options, from Tradition, BIO (organic), Une sélection LENÔTRE, to Italian or Ocean. The wine list is selected by a French sommelier champion, and La Premiere first class and Business class meals are supervised by famous French chefs Joël Robuchon and Guy Martin, respectively.

In the “Business” class cabin, your seat is designed to provide optimal comfort, and can be transformed into a spacious bed up to 2m in length, one of the longest on the market, that takes the shape of your body. The lie-flat shell allows for privacy throughout the flight. In-flight entertainment line up offers over 500 hours of on-demand programming. Working on board is made possible with a power plug, directional reading lamp, noise-cancelling headphones, personal satellite telephone. You’ll keep discovering surprising new flavours on our menus of simple yet refined main courses, and enjoy an exemplary culinary experience, from appetisers through dessert.

38

December 2012

Business Class Travel

Air Canada

Website

www.aircanada.com

Apart from Toronto, Air Canada connects Narita airport to Vancouver daily in 8½ hours, and flies three times weekly to Calgary in under 10 hours during the winter season.

Vancouver remains the closest airport to Japan on the North American continent, with convenient connections to U.S. cities and Mexico. Maple Leaf Lounge, at all major airports across Canada and key international locations, provides a serene escape before the flight, and an unrivaled level of service in a cozy setting. Executive First business class provides a personal space ideal for a good night’s sleep. Executive First Suite, which reclines into a fully flat bed, and the comfy pillow and duvet, and the latest in-flight amenities ensure passengers arrive ready to start their day, especially with Air Canada’s convenient departure and arrival times*.

Canada is an ideal winter vacation destination. Whistler/ Blackcomb, British Columbia, a two-hour drive north of Vancouver, offers a picturesque village of shops/restaurants, and skiing/snowboarding at one of the world’s top ski resorts. Banff/Lake Louise, Alberta, a two-hour drive west of Calgary, enjoys one of the longest ski seasons in North America, mid-November to late May. A single tri-area lift ticket gains access to Mt. Norquay, Sunshine Village and Lake Louise Mountain Resort, with free local transportation between them. * AC4 (daily) / Narita 19:00 p Vancouver 10:55 AC3 (daily) / Vancouver 13:55 p Narita 17:30 (following day) AC10 (Wed/Fri/Sun) / Narita 15:55 p Calgary 09:45 AC9 (Tue/Thu/Sat) / Calgary 11:35 p Narita 14:30 (following day) December 2012

39

Business Class Travel

KLM

Tel

Tokyo: 03-5767-4149 | Osaka: 06-6345-6691

Website

www.klm.co.jp | mobile.klm.com

KLM is increasing its summer schedule in 2013, from April, adding an additional flight per week on the TokyoAmsterdam route and three weekly flights connecting Fukuoka and Amsterdam, the first airline to offer direct flights between Fukuoka and Europe. Together with the Osaka service, KLM will be offering 21 weekly frequencies between Amsterdam and Japan. The Dutch carrier also connects Europe to the region, and its on board dining service reflects the destination with authentic Asian meals. World Business Class lets worries float away as you sink into the 190cm-long seat, reclinable at 170-175 degrees, with a massage unit and canopy for privacy, and personal entertainment system. The three-course menu prepared by top Dutch chefs is served on Marcel Wanders crockery and accompanied by a glass of fine wine or other beverage of choice. The Economy class seat ensures comfort in the air, and in the Economy Comfort zone, passengers can choose a seat with extra legroom or one in a row of two for an additional fee.

Along with the SkyTeam partners, KLM and Air France offer a network connecting 1,000 cities in the world. Not only can you take advantage of earning mileage through the “Flying Blue” Mileage programme, but also accumulate KLM and Air France “Bluebiz” points on the same flight – enabling corporate clients to save on cost and to ease travel planning.

40

December 2012

Business Class Travel

Kokusai Motorcars

Tel

03-5530-6001 (Japanese) +81-50-5532-9807 (Skype)

Email

reserve@km-group.jp

Website

www.km-group.co.jp

Kokusai Motorcars (km Group), established in 1920, is among the premier, longest-established private transportation providers in Japan. Our taxi, limousine and tourist bus service covers the Tokyo area with a fleet of over 3,700 vehicles, the largest in the industry. At a flat fare, our luxury limousines and sedan transportation service gets you to the capital city’s Haneda and Narita airports whether you’re travelling with clients or off to a leisure destination with friends. Our multilingual staff can arrange for a luxury ride in a Lincoln Navigator, chauffeured by an English-speaking driver.

Here are just some of the enticing flat-fare options using our service from Tokyo during the day. Travel in a limousine from Minato ward to Narita Airport for ¥42,000 (terms and conditions may apply). Travel by a km taxi from Chiyoda ward to Haneda Airport for ¥6,000, or to Narita Airport for ¥13,000.

We also can provide a sightseeing taxi service in Tokyo with a customised itinerary to meet your visitors’ particular needs.

Sightseeing in Tokyo (3-hour course) is for ¥12,750, with a surcharge extension (per 30 minutes) of ¥2,050.

Contact us today to make you and your visitors feel right at home in and around Tokyo. Reservations using Skype available in English, Korean and Chinese.

December 2012

41

SHOP WINDOW

Busy, buoyant shopping centres 3,500

14,000

3,000

12,000

2,500

10,000

2,000

8,000

1,500

6,000

1,000

4,000

500

2,000

Size m2

Number of SCs

SC landscape, 2001-2011

0 2001

2002 Total SCs

2003

2004 New SCs

2005

2006

Last year was a strong year for the largest shopping centres (SCs). The top 100 saw sales rise a combined 4.6% thanks to increased spending on fashion, food and lifestyle goods – and despite a 15% plunge in sales at Narita airport as visitors stayed away from Japan. More than 70 of the top 100 SCs increased sales, with 120 of the top 200 registering growth.

Although 2011 sales for all 3,090 SCs were estimated by the Japan Council of Shopping Centers (JCSC) to have fallen 1.3% to ¥27.44 trillion on a like-for-like basis, this was still a reasonable result from a difficult start (3/11 triple disaster).

Although the rate of new shopping-centre openings has fallen since 2008, it is still higher than in 2001. In both 2010 and 2011, 54 SCs opened. However, by midNovember 2012, the JCSC notes that only 25 new SCs were opened, suggesting that the total for the year could fall below 2001’s low of 43.

The leading firms in the development of SCs continue to be the JR companies led by JR East, alongside Aeon, Chelsea Property Group, Tokyu Malls Development, Mitsui Real Estate, Mitsubishi Estate, and Parco.

JR East is the second-largest SC developer, as well as the most efficient. It enjoys the highest average monthly sales density of ¥136,666 per square metre for its 16 SCs in the top 100. JR East’s high-traffic railway station locations and 42

December 2012

2007

Average SC size

2008

2009

2010

2011

Japan Council of Shopping centers

pro-active tenant management are key factors.

The SC with the highest sales per square metre in 2011 was Shibuya 109, at ¥247,785 per month. In recent years, however, its sales have been falling fast.

Although SC development has slowed, some exciting new developments within cities are due in the next few years. A huge new SC called Grandfront Osaka opens at Osaka station in 2013. Mitsui Real Estate will launch in 2014 the first stage of a plan to completely redevelop Nihonbashi into a mixed-use residential and commercial district. Work also is going on to spruce up the neglected areas around Ueno and Asakusa. JR East is developing a big tower and shopping complex to open in 2016 near the south exit of Shinjuku station, in the vicinity of Takashimaya Times Square, and other spiralling towers in Shibuya by 2027.

Roy Larke JapanConsuming is the leading provider of intelligence on consumer and retail markets in Japan. The monthly report provides news about, and in depth analysis of, current trends.

JC

JapanConsuming

For more information, please see www.japanconsuming.com or contact Sally Bedown at subs@japanconsuming.com

events

Upcoming events > Belgian-Luxembourg Chamber of Commerce in Japan www.blccj.or.jp

Belgian Beer Bonenkai 13 December, Thursday, 19:00-23:00

Venue: Belgian Beer Café Antwerp Six, Ginza or Shimbashi station Fee: Pay for what you drink Contact: info@blccj.or.jp

> Finnish Chamber of Commerce in Japan www.fcc.or.jp

FCCJ Christmas Luncheon 12 December, Wednesday, 12:30-14:00

Venue: Embassy of Finland Fee: ¥7,000 Contact: fccj@gol.com

> German Chamber of Commerce and Industry in Japan www.japan.ahk.de/en/

German Christmas Dinner in Osaka 10 December, Monday, 18:30-21:30

Venue: Hilton Osaka, Sakura Ballroom, 5F Fee: ¥16,000 (members), ¥18,000 (non-members) Contact: events@dihkj.or.jp

> Ireland Chamber of Commerce in Japan www.ijcc.jp

December S

M

T

W

T

F

Third Thursday Networking

1

17 January, Thursday, 19:00-21:00

Fee: Buy your own drinks Contact: secretariat@ijcc.jp

> Netherlands Chamber of Commerce in Japan www.nccj.jp

NCCJ Bonenkai 2012 12 December, Wednesday, 19:00-21:00

Venue: Diya, Roppongi Hills, Hillside, B1 Fee: ¥4,500 (members and family), ¥5,000 (non-members) Contact: nccj@nccj.jp

Economist Conferences Japan Summit 2012 – “Megachange 2050: New vision for an uncertain future”

S

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

26

27

28

29

30

31

January S

M

T

W

T

F

S

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

29

30

31

13 December, Thursday, 08:00-17:10

Venue: Hotel Okura Tokyo, Kamiyacho Station Contact: www.economistconferences.asia/ event/japansummit2012

Upcoming meetings R Animal Health

R Tax

7 December, Friday, 10:00-, off-site

14 December, Friday, 12:30-, EBC

R Environmental Technology

R Telecommunications Carriers Telecommunications Equipment

12 December, Wednesday, 08:30-, EBC

R Food

13 December, Thursday, 10:00-, EBC

Committee meeting dates are subject to change. Please contact the EBC secretariat for confirmation.

Tel: 03-3263-6222.

E-mail: ebc@gol.com

5 December, Wednesday, 09:00-, EBC

Compiled by David Umeda December 2012

43

Novo Nordisk Pharma Ltd.

Claus Eilersen Taking on the world Text DAVID C HULME

44

December 2012

T

he Sound, the strait separating the Danish island of Zealand from Sweden, is just 4km wide at the narrowest part.

Connecting the Baltic Sea and the Atlantic, it is one of the world’s busiest waterways.

As a child playing on the Danish beach, digging caves and building sandcastles, Claus Eilersen had the constant flow of maritime activity right before his eyes.

“Being able to see another country across the sea, and the ships passing night and day, made me curious about the world outside,” says Eilersen, who currently serves as president and representative director of Novo Nordisk Pharma in Japan. “Then, during the Cold War, passing Warsaw Pact naval ships and submarines made a strong impression on me.”

As the son of a doctor, Eilersen’s earliest memories are of playing with the children of other doctors in the grounds of the hospital in which his family resided.

“Later on, I spent a lot of time in the forest, and racing soapbox cars and eventually I took up sailing,” he recalls. “I had many after-school activities, including Boy Scouts and choir.”

Filling in a background of surgery and medicine was the pharmacy run by his grandparents, and this is where the youngster first developed an interest in business.

“My grandmother introduced me to the finances of the business and gave me some commercial sense,” he says.

Most family friends were involved in business, and Eilersen was well aware of the vicissitudes of doing business in the struggling economy of the 1970s.

He became fascinated by the world of enterprise.

“I was curious about how certain businesses were doing well despite the difficult conditions. I thought it was clear that private business had the key to get society out of the sluggish situation,” he says. He began to develop a notion that sustainable growth would be the best way for business to prove its superiority over the system behind the nearby Iron Curtain.

The interest in business and economics was strong enough for Eilersen to earn a Master of Science in Economics from the University of Copenhagen.

With that under his belt, in 1980 he took a position as an analyst with the

E B C personality Confederation of Danish Industries (CDI).

The CDI, at the time, was on a mission.

“The Danish economy was on the verge of collapse, with wild strikes, and riots in the streets,” Eilersen remembers.

The CDI had a key role to play, especially in reforming Denmark’s dysfunctional labour market. The changes led to inflation falling from 14% to 2%. Eilersen was rewarded with a deep sense of engagement in the process.

“I look at my time there as a great learning opportunity and as a kind of community service,” he says. Again, though, there was a bigger world beckoning, and the purposeful economic analyst enrolled in New York’s Columbia Business School.

“I felt a need to build my business and leadership competencies and wished to do so in America,” he explains. “Until then, I had focused on EU business, but I wanted to see Europe from the outside.”

With an MBA from Columbia, Eilersen joined Novo Nordisk, based in Bagsvaerd, Denmark, in 1988, as an international management trainee. He has been with the healthcare company ever since. His broad experience there includes several years as director of new products and business in the diabetes care division, finance director in Tokyo, vice-president and group controller in Bagsvaerd, and president of Novo Nordisk Canada.

Based in Japan since 2005, he is also the company’s senior vice-president in charge of Korea.

He is kept busy, and he keeps fit, by cycling at every opportunity, skiing and occasionally playing squash. His love of sailing is undiminished since his first adventures with yachts off the sandy beaches of the Sound.

“I have done plenty of boat racing. In Denmark, there is hardly an island that you can’t race around,” he says. These races may take a few hours or a few days. “I have also raced on Long Island Sound and on Lake Ontario, in 30-footers with crews of four to six.”

The highlight for the part-time sailor, however, was being part of a crew in a race across the Atlantic.

“That crossing took 14 days and a few hours, on a 70-footer with a crew of seven,” he says, relishing the memory.

These days, on weekends that are not decimated by meetings and travel, Eilersen takes long bicycle rides as a way to exercise and to explore Tokyo.

Spending quality time with his many friends, he adds, is a key priority,

Do you like natto?

Title: President and representative director of Novo Nordisk Pharma in Japan Time in Japan: “12 years” Career highlight: “Unexpected achievements in Japan” Career regret: “Not spending a few years on the road as a sales representative” Favourite saying: “Never give up” Favourite book: “The Art of Japanese Management” Cannot live without: “Pickled herring” Lesson learned in Japan: “Regardless of culture and ethnic background, human nature is the same” Secret of business success: “Think ‘solutions’ and ‘win-win’ ” Do you like natto?: “When used to cheese so ripe that it moves by itself, then you got to like natto too.” especially since the tragic loss of his wife, Jette, last year, to cancer.

During holidays, the couple’s two daughters – Maria, who is a writer in New York, and Malene, who attends college in London – love to return to Tokyo.

“Both girls know how to take advantage of what the big city can offer,” notes Eilersen, “and they believe karaoke is the best invention ever.”

Most of the time, Novo Nordisk is Eilersen’s top priority, and the company won his admiration from the outset.

“It was a business for a good cause, with more than 99% of its sales overseas. The opportunity of working globally was very attractive,” he says.

More recently, Novo Nordisk has been voted a top place to work, as well as the “world’s most sustainable company.”

“Novo Nordisk has values that apply universally and that very much jibe with my own,” says Eilersen. “And of course it is gratifying to see how they motivate people, and the tangible outcomes of those values.”

In addition, what could be better than living in Japan? Eilersen appreciates the Japanese as “diligent, friendly and respectful, with well-organised, functional, clean and safe communities.”

Despite, as he puts it, “only rudimentary” Japanese language skills, Eilersen applies his insatiable curiosity to the discovery of Japanese culture.

“It is like peeling the layers of an onion,” he says. Eilersen also believes that the globalisation of Japan is accelerating, and concludes: “I think Japan still has far more to offer to the world”.

December 2012

45

Sense for incense Photos and text JEREMY SUTTON-HIBBERT

In a dim subterranean room, a layer of soot blackens everything, including the skin of a worker who scurries about between the sacks and palettes, breathing heavily through a facemask. In another room glass jars hold shells, lichens, barks and mysterious powders – the ingredients of a magical process. Welcome to the production rooms of world-famous incense from Awaji-shima, in Japan’s Inland Sea. The island has been famous for centuries for its incense production. In 2005, 15 companies formed a cooperative that now exports to Europe and the United States. The scent of Awaji-shima is steadily spreading to new international markets.

46

December 2012

L ens F lair

December 2012

47

W ork P lace

Mark Slade

President and Representative Director, DHL Global Forwarding Japan

DHL Global Forwarding Japan is the heavyweight air and ocean freightforwarding specialist of the Deutsche Post DHL group here. Having entered the Japanese market more than 40 years ago, initially to help foreign companies succeed here, the company has significantly increased its Japanese customer base as well over the past decade or so.

“I love this industry because we enable the physical process of international trade,” says Mark Slade. “It’s certainly never dull, and we constantly need to adapt ourselves to the ever changing demands of the market.”

Photo benjamin PArks

48

December 2012