EURObiZ Japan July 2010 by Paradigm

Core business Areva Japan and the future for nuclear power Rémy Autebert Areva Japan president

ALSO INSIDE //

RINGING THE CHANGES Telecommunications services and equipment

MR YEN

Eisuke Sakakibara on deflation and exchange rates

2010

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

TONY MCNICOL

FOCUS 8 Ringing the changes

14 Getting social

Japan’s telecommunications equipment sector accounts for 12.5% of total industrial output, and its telecommunications services are among the world’s most advanced. Yet European companies operate in a closed and highly regulated market, reports Martyn Williams.

David McNeill investigates Japanese business’s burgeoning love affair with online social media such as Mixi, Facebook and Twitter.

CHAMBER SPOTLIGHT 2

July 2010

19 Seeking permission The Permits Foundation lobbies for open work permits for expatriate partners. Kai Kurosawa talks to the NPO.

24 The Belgian-Luxembourg Chamber of Commerce is proud to have one of the most international memberships among foreign chambers in Japan.

Cover photograph Benjamin Park Morin

COLUMNS 7 From the Editor 20 Talking EURObiZ Glen S. Fukushima, president and CEO of Airbus Japan, talks about selling aircraft in Japan and an industry that is slowly opening up to foreign companies.

23 Upcoming Events Europe and Japan business-related events.

26 Q&A Tim Kelly speaks to well-known economist Eisuke Sakakibara about deflation, currency exchange rates and prospects for the Japanese economy.

28 Investing in Japan Todd Crowell visits the Japan subsidiary of French energy multinational Areva and hears about the company’s close cooperation with its Japanese partners.

31 Event Report

47 Executive Notes

Organised by 15 foreign chambers, “Meet the Ministers” was a rare chance to hear from senior ministers and bureaucrats whose portfolios impact European business in Japan.

Give politics a chance, says Dan Slater of the Economist Group.

32 In Committee Geoff Botting talks to the EBC Legal Services Committee about issues facing Japan’s approximately 350 foreign lawyers.

Nicolas Soergel runs a 140-year-old umeboshi (pickled plum) shop in Odawara. He tells Rob Gilhooly how he plans to make umeboshi as well known abroad as sushi and tempura.

35 Green Biz

52 Lens Flair

Electric vehicle pioneer Better Place recently brought the world’s first commercial battery exchange station to Tokyo. Martin Koelling learns how the city is a promising market for electric cars.

36 Who’s Who Directory Advertising in Japan

49 Industry voice —Insurance 50 Culture Shock

Jeremy Sutton-Hibbert shares an inside look at a Nissan design centre, where tomorrow’s cars take shape.

54 Work Place Paul Goudeau is president and representative director of glass manufacturer Saint-Gobain HanGlas (Japan).

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

July 2010

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 Tony McNicol

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

tonymcnicol@paradigm.co.jp

Senior Editor David Umeda Creative Director Richard Grehan Art Director Paddy O’Connor Designer/Illustrator Akiko Mineshima

Chairman Tommy Kullberg Senior Vice-Chairman Michel Théoval Vice-Chairman Duco Delgorge Treasurer Erik Ullner Executive Director Alison Murray Policy Director Bjorn Kongstad

Advertising Sales Jay Isaac, Helene Jacquet, Laura Schmelling Production and distribution Yumi Mitsuyama Herman Francesca Penazzi eurobiz@paradigm.co.jp

Published by Paradigm 4-18-12 Takanawa, Minato-ku, Tokyo, Japan 108-0074 Tel: 03-5447-8831 Fax: 03-5447-8832 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.

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 If you prefer not to receive this magazine, and for all matters related to distribution, please send an e-mail 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.

Contributors Martyn Williams reports on telecommunications, page 8

Martyn is a Tokyo-based journalist covering the IT and electronics industries in Japan and South Korea. For the past 10 years

Martin is East Asia correspondent for the German financial daily Financial Times Deutschland. He also writes a weekly blog and features on Asian technology for the German edition of MIT’s Technology Review magazine. Over the years he has tested a few electric two- and four-wheelers, from Chinese electric bicycles to electric sports cars. “It’s fun to drive electric vehicles [EVs]; they have fast acceleration and are very quiet. They have a good future, but because

Jeremy Sutton-Hibbert photographs Nissan’s design centre, page 52

Jeremy was born in Scotland and is now based in Tokyo. He has worked on photo assignments for such clients as Time, Italy Geo, Le Figaro, The Guardian and Greenpeace International. In recent years Jeremy’s work

he’s been Tokyo bureau chief for IDG News Service, reporting on IT from around East Asia. “Regulatory reform was one of the big stories when I arrived in Japan in the midnineties. It’s interesting to look back and see how much Japan’s telecommunications market has changed. It’s much more open now and the services available are world class. But it’s also ironic to think that the same issues are still causing problems today.”

Martin Koelling investigates electric vehicles in Tokyo, page 35 of the limited battery range I can only see pure EVs in cities or small countries for the time being.”

has taken him to over 40 countries, as far flung as Antarctica and Outer Mongolia. His personal and commissioned work, for which he has received photojournalism awards, have been widely published and exhibited in Europe and the United States. “To see inside the Nissan design centre was a privilege. I was expecting small models of cars, and instead I got a life-sized Fairlady Z made of clay, in a pristine clean environment, perfect for photography. A great day’s shooting, and a fascinating insight into an often difficult-to-access part of an industry.”

PROMOTION

BIOM – Natural Motion by ECCO ECCO revolutionizes the running and walking market following the principles of “Natural Motion”

ECCO BIOM is not just a shoe range — it is a paradigm shift. With a new segmentation of runners by running speed, and a concept based on “Natural Motion”, this new running shoe collection is revolutionary in more ways than one. ECCO BIOM A, B and C take differences like training level, runner type and speed into consideration, allowing runners to choose a shoe that fits their needs. Combined with ECCO‘s core competences – directly injected PU (is longer lasting, has better cushioning capabilities and supports the foot in an anatomical way), highly technological advanced uppers (YAK leather upper that delivers superb strength and fit, technological advanced mesh upper for better breathability), and anatomically

shaped last (based on 2,500 scanned feet) – makes ECCO BIOM a perfect fit for a runner’s foot. All ECCO BIOM shoes are entirely developed according to the “Natural Motion” philosophy, which allows the foot to move as naturally as possible. Running is one of the most natural forms of human motion. Every bone and muscle, every tendon and ligament in our feet is designed for running; therefore the feet only need a minimum amount of external support. That is why BIOM shoes have no overprotection, excessive cushioning or motion control. The BIOM Project is inspired by research at the German Sport University Cologne, and through a collaboration between world-class triathlete Torbjørn Sindballe and ECCO. A combination of that knowledge enabled the Danish shoe company to develop a shoe for

occasional runners that consistently implements the philosophy of “Natural Motion“ in every detail. Due to overprotection and support in conventional running shoes, the muscular systems need to be strengthened and gradually adjusted when you start to use the BIOM shoe. ECCO strongly recommends starting with gentle training sessions and using training plan to make the transition simple and accessible. You can check out more information about the BIOM products at http://thebiomproject.com

FROM TH E EDITOR

Tackling the Japanese economy As you read this Japan may have already beat Spain to win the 2010 FIFA World Cup. Well, OK, but perhaps we can be permitted a little optimism? Japan has a new prime minister with strong public support; attention has refocused on the economy; and, at the time of writing, the Samurai Blues have just delighted the nation with a plucky win against Denmark. Meanwhile, debate has kicked off on an issue more important than even the football: fiscal reform. Both main parties are considering a hike in the consumption tax to 10%. It’s nowhere near the 20% that economists estimate is necessary to balance Japan’s books, but it’s a start. There is also discussion on lowering the corporate tax – a long-standing EBC advocacy goal.

In this issue Todd Crowell profiles Areva Japan (page 28), one of many major European companies with a strong business in Japan and big plans. We also talk to Glen Fukushima of Airbus (page 20) on challenges facing the aviation industry. Martyn Williams investigates Japanese telecommunications (page 8), another sector where European companies tackle non-tariff

barriers. Interviewees explain how the government urgently needs to create a level playing field in this competitive area. This story, like so many that EURObiZ covers, is a reminder of both the huge business potential in Japan, and how much remains to be done to open up the market here. But as so often in life, soccer offers sage advice. In the words of Welsh footballer Phil Woosnam: “The rules of soccer are very simple, basically it is this: if it moves, kick it. If it doesn’t move, kick it until it does.” Now, where did I leave that vuvuzela?

Tony McNicol Editor-in-Chief

tonymcnicol@paradigm.co.jp

July 2010

TONY MCNICOL

FOCUS

Ringing the

changes Text MARTYN WILLIAMS

Japan is one of the most wired countries in the world, and telecommunications equipment accounts for 12.5% of Japan’s total industrial output. Yet for foreign companies, this dynamic telecommunications market has always been a challenge. Mobile phone contracts (April 2010)

NTT DoCoMo 56,236,700 TELECOMMUNICATIONS CARRIERS ASSOCIATION

Targeting consumers has required extensive local knowledge and support. Selling to corporate customers has meant dealing with NTT’s dominant position. Meanwhile, equipment vendors are often faced with local certification or standards issues that can delay their entry to market. Over the last few years there have been some casualties among European challengers. The humiliating retreat from Japan by Vodafone and Nokia, both leaders in their own markets, were perhaps the most memorable. But it hasn’t all been bad and, while problems remain, the outlook appears good. The election last year of a DPJ-led government brought with it the possibility of significant change in the telecommunications services market. The government wants to expand Japan’s broadband network so 100% of households are accessing the internet via broadband by 2015. Right now about 60% of Japanese homes have a broadband hook up, so the goal

Total 112,714,800

Softbank 22,092,600

au 31,975,500

EMOBILE 2,410,000

represents a significant amount of business. A task force, established to figure out how to achieve the goal, soon began to focus on NTT and its position as both the owner of the access network and a service provider. That situation means that companies like SoftBank and NIFTY, which supply internet service to consumers, not only have to rely on NTT’s fibre optic cables

and switches, but also must compete with NTT to sign-up customers. “They are still strong and block competition,” said Yoko Ono, a senior market analyst at IDC, an IT market intelligence company. “SoftBank and other carriers who don’t have their own FTTH [fibre optic] facilities insisted that the government should split NTT.” NTT’s power doesn’t just affect local competitors. European telecom carriers looking to connect customers in Japan are also beholden to the company. “We’re reliant on [NTT] for price, terms and conditions, provisioning, repair time and supply time,” said Stephen Crisp, head of external affairs in Asia Pacific for British Telecommunications (BT). It also gives NTT a potential competitive advantage through inside information on the business done between foreign carriers and their customers. But things haven’t moved perhaps quite as quickly as the DPJ would have hoped.

July 2010

Tranquility and elegance in the heart of Tokyo

Sumitomo Realty & Development is proud to introduce La Tour Daikanyama, the latest in our line of exclusive luxury residences in Tokyo. This property combines state-of-the-art technology and amenities with a strong sense of traditional Japan, nestled in a quiet, charming neighborhood with easy access to central Tokyo. Come and experience for yourself this special place â&#x20AC;&#x201C; La Tour Daikanyama. Your tranquil and elegant home in the heart of the capital.

2 bedrooms to 5 bedrooms + guestroom From ÂĽ970,000 per month Visit our Information Salon

0120-128-200

Broadband Internet in Japan

COMPETITION CREATES WEALTH, EMPLOYMENT, INNOVATION, INVESTMENT AND CONSUMER CHOICE. BT BELIEVES IN EFFECTIVE AND INDEPENDENT REGULATORS THAT TREAT ALL PLAYERS FAIRLY

Unit: 10,000 subscriptions 3,500 3,000 2,500 2,000 1,500 1,000 500 2002

2003

2004

2005

2006

2007

2008

2009

The task force wants an extra year to study a potential split-up of NTT, while Communications Minister Kazuhiro Haraguchi is pushing for this to be done in six months. “We must reach some kind of conclusion by year’s end on ways to build a fibre optic network crisscrossing the whole country, as well as NTT’s possible management restructuring,” he said at a task force meeting in mid-May. Current thinking in the industry is that one of three things will happen: the access network will be put in a new division within NTT; it will be spun-off to a new group company; or it will be separated entirely. “This doesn’t mean you slam NTT into the ground, but you do allow for free and fair competition,” said Crisp. The talk comes 10 years after the last great restructuring of the telecom market, when NTT was broken up into three parts: NTT East and NTT West, each handling local services and access lines in eastern and western Japan, and NTT Communications handling international and some internet business. That early internet-era move is regarded as a success by many. An independent regulator European companies are also among those lobbying the government for the creation of a new regulatory body to take over the role of the Ministry of Internal Affairs and Communications. The ministry is unsuitable for this task because the government remains a major shareholder in NTT, say critics of the current status. In its 2009 white paper the EBC calls for the establishment of “an independent, well-resourced and empowered telecommunications regulatory authority,” and says it should answer

BENJAMIN PARK MORIN

MINISTRY OF INTERNAL AFFAIRS AND COMMUNICATIONS

FOCUS

Megumi Hasegawa, BT Japan

to the Japanese parliament, not the government. “BT believes in fair and open competition with low barriers to entry,” said Megumi Hasegawa, president of BT Japan. “It believes that such competition is valid and positive, whether it be service level, infrastructure level or a combination of both. Competition creates wealth, employment, innovation, investment and consumer choice. BT believes in effective and independent regulators that treat all players fairly.” Of course, getting better access to local lines or a new regulator won’t guarantee success. European carriers will still face tough competition from local operators. “The Japanese consumer prefers to buy Japanese,” said Franck Despouy, who works in marketing and business development at Orange Business Services in Tokyo. Foreign carriers will need to provide something unique if they are to capture the consumer’s attention, he believes, although Orange’s business-tobusiness sales in Japan are growing. If there’s one lesson from Vodafone and Nokia’s experiences in Japan, it’s that one size does not fit all and locally flavoured or produced options are a necessity. At the same time, there are signs Japanese companies are becoming more global in their outlook, at least for telecommunications services. “We’re starting to see approaches from Japanese companies looking for

global coverage,” said BT’s Crisp. “Some are much happier going to foreign companies than others. I think Japan is changing.” Things may also be changing in Japan’s large telecommunications equipment market. When carriers began building their current networks the equipment deals were dominated by Japanese vendors, said George Hoffman, group manager for communications at IDC. But things are changing as they begin upgrading to a new generation standard that will offer even faster data transfers. “With 3.9G and 4G you are seeing Nokia Siemens winning in partnership with a Japanese vendor, which is a pretty significant deal.” Nokia Siemens Networks developed a base station with Panasonic for NTT DoCoMo’s new “LTE” data network that is scheduled to launch this year. LTE is an add-on technology for today’s 3G that promises to eventually deliver download speeds of up to 300Mbps, around 100 times the speed of most cell phones today. NTT DoCoMo will launch an LTE network in Tokyo in December – early enough to make it the first LTE implementation in Asia, but not before some European carriers. TeliaSonera launched an LTE service in Oslo and Stockholm in late 2009, giving European companies an early look at the technology. Ericsson was also selected as an LTE vendor by NTT DoCoMo. July 2010

FOCUS

THE JAPANESE CONSUMER PREFERS TO BUY JAPANESE Franck Despouy, Orange

The Swedish company has been enjoying success in Japan with its 3G equipment. Last year it supplied the gear that enabled EMOBILE to launch Japan’s fastest 3G data service, at 21Mbps, in Tokyo, Osaka, Nagoya and Yokohama. But just as the market is receptive to European equipment makers, so it is getting easier for competitors from other countries. China’s Huawei Technologies has picked up contracts from EMOBILE and was selected as an LTE vendor by SoftBank. “That is a bit of a significant move. People didn’t think Huawei would succeed in making deals,” said Hoffman. Vendors still need to localise

equipment for the Japanese market. NTT DoCoMo’s LTE network will operate in the 2GHz band, a group of frequencies that won’t necessarily mean it’s compatible with services in other countries. The lack of international standardisation for wireless frequencies sometimes acts as a barrier to market entry because it requires that products be adapted for the Japanese market. The EBC is among groups pushing to have regulators and governments agree on common frequency bands for wireless equipment. Similarly differences in standards can also affect vendors of fixed-line equipment.

“For fixed line, the lower layer is dominated by Japanese vendors, mainly because it’s an NTT or KDD specification,” said Hoffman. “They may be using open standards, but it’s still largely proprietary technology being employed.” The good news for foreign companies is that years of pressure from European and American industry and government is paying off. The Japanese market is more open than ever to competition and foreign companies are winning deals. But the openness comes at a time when Chinese and South Korean companies are also entering the market. Competition too will be fiercer than ever.

July 2010

Getting

social More Japanese ﬁrms are using online social networks to promote their products and services

Text DAVID MCNEILL

wo dispatches from the outer reaches of Japanese corporate advertising – first from Ajinomoto. Last year in a bid to shift more of that boring old kitchen staple, mayonnaise, the food and seasoning giant hit on the idea of asking customers to make video clips of meals being cooked up using their product. The results were posted on the video-sharing website Nico-Nico Douga (www.nicovideo.jp/) proving a viral hit and hiking sales 5%. Kobe-based UCC coffee meanwhile tried another marketing trick last autumn on Twitter, programming software to automatically post responses to tweets about beverages. The result? A furious backlash from customers and a note on its Twitter account promising never to repeat the mistake (www.ucc.co.jp/gcs/twitter.html). Japan’s companies want to be part of the country’s burgeoning love affair with social network services, but the results aren’t always pretty. Like pensioners stumbling into a disco, many simply look clumsy and desperate as they fumble around for the right steps. As one blogger noted after the UCC debacle, the Japanese verb for tweeting – tsubuyaku, meaning to mutter or murmur to yourself – “seems oddly appropriate”. “Japanese firms are far behind European companies in the process of shifting advertising investments into the 14

July 2010

digital field,” said Yu Taniguchi, an editor at Senden Kaigi, the country’s most authoritative advertising publication. “There is a similar current in the usage of social media.” Still, corporate Japan faces the same question as everywhere else: What to do when a large slice of your potential customer base appears to be abandoning traditional channels of communication? Japan’s five main TV networks and most newspapers last year reported plunging revenues, as the recession worsened and the steady migration of viewers and readers online increased. Newspapers in particular face trouble because their readership is ageing, fast. Internet advertising, meanwhile, almost doubled last year and is expected to expand from more than ¥600bn in 2009 to about ¥900bn in 2014, according to the Nomura Research Institute. That accounts for slightly more than 12% of the total advertising expenditure in Japan. Much of the internet, of course, cannibalises existing media content, but not all. Consider the runaway leader in Japan’s social network market, Mixi, which claims 15m users and 9.2m unique visitors a month. A huge network of self-generating micro-communities, Mixi is just six years old but attracts more eyeballs than the big TV networks and newspapers – and 70% of those eyeballs are reportedly in their twenties or younger. “Mixi is just too huge to ignore,”

FOCUS How Japanese companies are using the web 74.7%

Corporate websites

26.7%

PR blogs

24.5%

MOBILE MARKETING DATA LABO, APRIL 2010 SURVEY

Twitter

18.7%

President’s blog YouTube mixi

10.1%

6.8%

Facebook None of the above

10%

3.0% 15.3%

20%

30%

40%

50%

60%

70%

80%

says Guillaume Hansali, CEO of web development and consultancy firm Wizcorp. Firms have taken note. Starbucks reportedly pays a substantial sum to advertise on Mixi, which now generates

roughly 85% of its income from such sources. Nearest rival GREE, a clubby invite-only mix of photo uploads, videos and blogs with 3m users, pales in comparison, and global social media behemoth Facebook, with 1.39m unique visitors a month according to NetRatings Japan, is barely in the running. Analysts have been surprised, however, by the startling success of another foreign upstart, Twitter. One estimate is that after a slow start, about 4.5m people here now use the micro-blogging service, and that 14% of the 50m daily tweets are Japanese. Senden Kaigi estimates that nearly a quarter of all companies here now have a Twitter account, and 18.7% of CEOs tweet. Japan, in other words, is twittering itself silly. One reason is that the San Francisco-based service is both free and far easier to use than other social networks, points out Hideo Yamazaki, senior researcher at the Nomura Research Institute. “Mixi is more conservative than Facebook or Twitter because it is by invitation only. It’s more difficult for companies to negotiate.” July 2010

FOCUS

Social media users Monthly averages, March 2009 – 2010 30mil

YouTube 25mil

20mil

15mil

Kakaku.com

10mil

2ch.net Mixi Nico-dou Twitter

attracted 300,000 hits – and that all-important “buzz”. But some observers remain unconvinced. “You’re seeing a lot of companies playing with Twitter, but it doesn’t really amount to anything,” says Steve Nagata, Tokyo-based tech specialist with Longfeld Consulting Services. Traditional media will continue to rule for some time yet, he believes. “The Yomiuri newspaper sells ten times more than The New York Times. That’s not going to fall for a very long time. Big companies will still have to use that platform.” As for their smaller counterparts, the murmuring could one day take over the world.

NETRATINGS

5mil

The EBC will hold an inaugural meeting in September of its new Information Technology Committee. Anyone interested in joining should contact Alison Murray at ebc@gol.com for more information.

0 03/09 04/09 05/09 06/09 07/09 08/09 09/09 10/09 11/09 12/09

1/10

2/10

3/10

Not surprisingly then, corporate Japan is jumping on the Twitter bandwagon, sometimes with quirky campaigns. Convenience store chain Lawson, for example, this year began trying to replace its traditional email newsletter with tweets supposedly from one of its lowly staff, Akikochan. Her job was to twit to her 10,000 or so followers about a Fuji TV show called Tokyo Little Lovers, which features a Lawson character. Suntory Beer, meanwhile, has taken advantage of a national pastime: drinking while chatting about the idiot box. Its site, www.horoyoi.com/ (roughly meaning “to be tipsy”), has been trying to build up a Twitter community around people who like to chat about their favourite TV programme. Does all this micro advertising point the way to the future? A 2009 report by Morgan Stanley Europe found that teenagers are consuming more media, but in entirely different ways, and are almost certainly not prepared to pay for it. “They resent intrusive advertising on billboards, TV and the internet,” it concluded. Yamazaki has identified a new generation of Japanese, born after 1996, who are comfortable with social networking and trust information filtered through virtual communities more than the old-fashioned media. He says astute companies are taking note, retooling marketing strategies to be less identifiably advertising and appear part of the “flow” (nori) of communication. That doesn’t mean these companies have forgotten traditional marketing, insists Wizcorp’s Hansali. “The internet is not replacing TV; it’s complementing it. A TV commercial lasts 30 seconds to one minute. The internet will keep the buzz going. Also, TV is one-way advertising – the viewer is basically hypnotised.” The Ajinomoto campaign points to the truth of that observation. As Hansali says: “It’s hard to create a buzz around food.” So why not target a group not known for its cooking skills – single men in their twenties – who are much more likely to congregate around online fare like Nico-Nico Douga than are housewives, the overwhelming buyers of mayonnaise? Online videos of their culinary creations

Mixi is Japan’s top social media service

July 2010

Join+ support

EUROBIZ ONLINE!

EBC members can not only learn about important changes taking place in Japan, but also play a critical role in inďŹ&#x201A;uencing change themselves.

<lifY`q%ag `j X dlck`d\[`X fecè\ dX^Xqè\ n`k_ Xik`Zc\j ]ifd k_\ dX^Xqè\# g_fkfj# jki\Xdè^ m`[\f Xe[ X i\^lcXicp lg[Xk\[ Ycf^% To join the EBC visit

8 mXi`\kp f] X[m\ik`j`e^ fggfikle`k`\j Xi\ XmX`cXYc\% DXep

www.ebc-jp.com

]fidXkj Xi\ jlggfik\[ `eZcl[`e^ jk`cc# Xe`dXk\[#

For more information please contact the EBC Secretariat. Alison Murray, EBC Executive Director. Tel: 03-3263-6222. E-mail: ebc@gol.com

i`Z_ d\[`X Xe[ m`[\f% N\ ZXe \m\e _\cg pfl [\m\cfg pfli fne fecè\ d\[`X ZXdgX`ê% =fi dfi\ è]fidXk`fe fi kf i\hl\jk X d\[`X gXZb ZfekXZk lj fe [kheX_p6fWhWZ_]c$Ye$`f

FOCUS

Seeking permission The Permits Foundation lobbies for open work visas for spouses of those assigned overseas

Text KAI KUROSAWA

ONE PROJECT MANAGER TERMINATED HIS ASSIGNMENT IN JAPAN AFTER ONLY TWO YEARS. HIS WIFE, WITH A BACKGROUND IN FINANCE, HAD HAD TO PUT HER OWN CAREER ON HOLD 45% are able to speak three or more languages, while 46% had obtained the equivalent of a master’s degree or higher. Yet, Yoshio Shimoda, managing partner at ILS Shimoda Office and a representative for the Permits Foundation, sees some signs of change in Japan. The government is planning a points system, based on education and experience, to help spouses attain an independent work visa. Nevertheless he believes unlisted companies may hesitate due to red tape. “Some companies don’t want to reveal their financial information during the application process,” he says. Since setting up a branch in Japan two years ago, the Permits Foundation has met with lawmakers from the present and previous administrations. But while politicians recognise the problem, they are unsure what to do, says Otsubo. Unlike in the Netherlands, for example, they are unwilling to grant open work permits to spouses of only higher-income migrants, quoting equality for all. This isn’t a problem for Otsubo, however, who believes Japan needs to open up to skilled, not unskilled labour. The Permits Foundation has also been successful abroad. It helped open

Profile of accompanying spouses and partners 120 nationalities working in 117 host countries Gender

85% women 15% men Martial status

93% married 7%

unmarried partners

civil and other partnerships

Education

hold high school diploma

10% hold vocational school diploma 36% hold bachelor’s degree 40% hold master’s degree or postgraduate diploma 6%

hold doctorate level/PhD qualification

Proficiency in foreign languages

21% speak one language 34% speak two languages 29% speak three languages 16% speak four or more languages Status of partner

86% are accompanying intra-company transferees 11% accompanying new recruits 3%

accompanying locally hired foreign staff

the L1/E1 visas in the United States. It has prompted change in France and Malaysia, and the territory of Hong Kong. In Europe, the UK and the Netherlands represent “best practice”, says Otsubo. “My next step is to involve Japanese companies,” he says, hoping that will help sway lawmakers. He is trying to engage Nippon Keidanren, the Japanese business federation. “If Toyota or Sony support us, it’s a completely different ball game.” July 2010

PERMITS FOUNDATION

he Permits Foundation is a not-for-profit organisation that lobbies for open work permits for expatriate partners, and numbers BMW, IKEA, Schlumberger and UBS amongst its sponsors. The organisation has targeted Japan as one of 10 countries for development; dependent status only allows ex-pat spouses in Japan to work 28 hours a week with permission, and they must be sponsored for an employment visa to work full-time. But many companies are reluctant to go through the sponsorship process, says Yujiro Otsubo, personnel manager at Schlumberger and the Japan representative for the Permits Foundation, because it is time-consuming, expensive and there is no guarantee that the visa will be issued. Giving a hint of the trade and investment potentially affected by this issue, almost 60% of spouses and partners in an autumn 2008 Permits Foundation survey said they would be unlikely to go to a country where it is difficult to attain work. The inability of a spouse to find employment can have a dramatic influence on their partner’s career. Otsubo recounts how one project manager terminated his assignment in Japan after only two years. His wife, with a background in finance, had had to put her own career on hold. “No company wants to hear such complaints,” says Otsubo. “It shouldn’t even be an issue in the first place.” Right now, an impressive talent pool is going to waste. Of the spouses who responded to the foundation’s survey,

Glen S. Fukushima President and CEO, Airbus Japan Interview and photo TONY MCNICOL

have been in Japan this time for 20 years and I’ve been president of Airbus here for a bit more than five years. The aircraft industry is a challenging one, but it is prospering in the sense that worldwide demand for aircraft is growing. Over the next 20 or so years there will be a need for more than 24,000 new passenger aircraft and 850 new freighters. The demand is being driven by population growth as well as the need for people to move for business and for tourism. And the cargo business is growing too; an increasing number of products are flown around the world. In Japan there are two large airlines, JAL and ANA, as well as a number of smaller ones. We estimate a demand in Japan for something like 570 passenger and freight aircraft over the next 20 years.

July 2010

There are now only two companies in the world that produce commercial aircraft of over 100 seats: Airbus and Boeing. For a variety of reasons, many of them historical, the Japanese airline companies have fleets that are primarily Boeing aircraft, so our challenge is to expand our small but growing market share in Japan. We didn’t establish a corporation in Japan until 2001, whereas our competitor opened an office here in 1953. JAL remains one of the few major airlines in the world that has never bought an Airbus aircraft. One of our challenges is to persuade JAL to buy Airbus aircraft. In Japan it’s often difficult to get into the market, but once you get in, it’s often difficult to dislodge the incumbent. Japan is important to us as a potential buyer of aircraft and as a partner for industrial cooperation. We have made some

TA L K I N G E U R O B I Z

IN JAPAN IT’S OFTEN DIFFICULT TO GET INTO THE MARKET, BUT ONCE YOU GET IN, IT’S OFTEN DIFFICULT TO DISLODGE THE INCUMBENT

progress in increasing industrial cooperation with Japanese companies. Our competitor has been working closely with Japanese manufacturers to produce aircraft in Japan. We also want Japanese cutting-edge technologies on board Airbus aircraft, and we believe technology transfer will benefit both Europe and Japan. For instance, there are 21 Japanese manufacturers engaged in producing the A380. There’s a lot of high technology in Japan, including in areas such as carbon fibre and composite materials. Low cost carriers Something else that might enhance our opportunities to sell in Japan would be if there were fewer regulations hindering the development of low-cost carriers. Airbus has been very successful selling aircraft to these start-up airlines in the

United States, Europe and, increasingly, in Asia; 62% of lowcost carrier customers have bought Airbus aircraft. But operating costs are higher here than in many other countries. There are also stricter requirements on pilots than in many places, and there are many regulations and requirements related to landing rights, slots, pilot training, safety certification, etc. that make it more difficult to start new airlines in Japan than in many other countries. The separation of Narita Airport, as an international airport, from Haneda Airport as a domestic airport has also created a disadvantage to Japan in terms of overall global air transport policy. There are many more direct air flights between Japanese regional airports and Inchon Airport in South Korea than there are between regional airports and Narita Airport. Thus, many Japanese are flying to Inchon, bypassing Narita, to catch flights to North America and Europe. Otherwise, they have to fly from their regional airports first to Haneda, then travel from Haneda to Narita. Luckily that will change in October, when Haneda starts allowing for regular international flights. I think things are headed in the right direction, and more strategic thinking is being devoted now than in the past to developing a globally competitive air transport industry in Japan. Yet much remains to be done. The growth areas for aircraft sales right now are China, India and the Middle East. We sell a lot more aircraft in China than in Japan; it depends on the year, but in some years we sell more than 100 aircraft in China. Actually, there are millions of people in India and China who have never flown in an airplane. Asia is also increasingly important as a manufacturing base – not just China, but also South Korea, Vietnam, Taiwan and Japan. The manufacturing of aircraft and aircraft components is a growing industry. So, in the short term, with budget deficits and demographics, Japan faces some challenges, but in the medium and long term, I’m optimistic that Japan’s economy will do reasonably well. There’s no question that the economic centre of the world is shifting to Asia. And Japan, with its strength in high technology and its cultural and geographic proximity to the rest of Asia, will continue to grow and prosper.

July 2010

EVENTS

Upcoming events British Chamber of Commerce in Japan

Ireland Japan Chamber of Commerce

www.bccjapan.com

www.ijcc.jp/

Networking: 51 night

Farewell event for Irish ambassador Brendan Scannell, and counsellor Gerard Keown, Embassy of Ireland in Japan

15 July, Thursday, 19:00-21:00 Venue: Trader Vic’s, New Otani, Garden Tower 4F Fee: ¥4,000 (members & non-members) Contact: 03-3267-1901 (tel)

Danish Chamber of Commerce in Japan www.dccj.org

Monthly stambord get-together 7 July, Wednesday, from 18:30 Venue: Izumi Garden Tower 3F Fee: no cover charge Contact: dccj@um.dk

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

FCCJ yakatabune Finnair-Honka code-share cruise 26 August, Thursday, 18:30-21:00 Embarkation: Funayado Amisei Fee: ¥8,000 (members or their guests), ¥12,000 (others) Contact: fccj@gol.com

Silver market in Japan 29 September, Wed, 12:00-14:00 Speakers: Dr Florian Kohlbacher, head of business and economics section, German Institute for Japanese Studies; and Jutta Immanen-Pöyry, head of R&D unit, SendaiFinland Wellbeing Center Venue: To be confirmed Fee: ¥6,000 Contact: fccj@gol.com

French Chamber of Commerce and Industry in Japan

7 July, Wednesday Contact: www.ijcc.jp

Italian Chamber of Commerce in Japan www.iccj.or.jp/

La cena della camera estate 2010: a mid-summer dinner under the stars 16 July, Friday, from 19:00 Venue: Curtain Call, Roppongi Hills Fee: ¥8,000 (members), ¥10,000 (nonmembers) Contact: iccj@iccj.or.jp

JULY S

AUGUST S

www.sccj.org/

Back to Tokyo (town) evening*

Swedish Chamber of Commerce and Industry in Japan

2 September, Thursday, 18:30-20:30 Venue: Exhibition Hall, Embassy of Sweden Fee: ¥4,000 (members, spouses, colleagues) Contact: office@sccj.org or 03-5211-2102 (fax) *Beer, wine, soft drinks and light buffet

Swiss Chamber of Commerce and Industry in Japan www.sccij.jp/

SCCIJ golf competition July 14, Wednesday, from 08:35 Venue: Mitsukaido Golf Club, Ibaraki Fee: ¥24,000 Contact: sccij@gol.com

SEPTEMBER S

www.ccifj.or.jp

Top business schools night* 8 July, Thursday, 19:00-22:00 Participants: CCIFJ members, alumni from the top French business schools, and representatives from Japanese universities Venue: Restaurant Le Petit Tonneau, Toranomon Fee: ¥6,000 (incl. light snack and drink) Contact: reservation@ccifj.or.jp *Organised by CCIFJ’s The Young Professionals Committee

July 2010

Belgian-Luxembourg Chamber of Commerce in Japan Dai10 Daitetsu Bldg. 5F, Arakicho 23, Shinjuku-ku, Tokyo 108-0073 Tel: 03-6457-8662 • Fax: 03-6457-8663 Email: info@blccj.or.jp

www.blccj.or.jp

BOARD MEMBERS President:

Fabrice Tilot (AAA Management)

Vice-President:

Jan De Bock (Trainspot)

Secretary General: Bernard de le Court (PinguinLutosa) Treasurer:

Paul Brettnacher (ArcelorMittal)

Directors:

Jean-Pierre Bernardino (Puratos Japan) Emmanuel Caeymaex (UCB Japan) Duco Delgorge (Mie Project) Pieter De Weerd (Mercure Hotel Ginza/Accor) Christophe Dubois (JTB-JAPANiCAN) Claude Strobbe (Strobbe Trading International) Olivier Vandercamme (BEA Japan) Els Verhulst (ELT Consulting)

At the centre of Europe “We are very proud to be founding members of the EU,” says Fabrice Tilot, president of the Belgian-Luxembourg Chamber of Commerce in Japan. Brussels, of course, is headquarters of the EU and geographically at Europe’s heart. “From Brussels, it’s an hour and a half to Amsterdam by car, two hours to Cologne, and two and a half hours to London and Paris,” says Tilot.

“Everyone knows Belgium as the land of chocolate and beer,” says Bert Winderickx, general manager of the BLCCJ. But as he points out, chemicals and pharmaceuticals actually make up the largest proportion of Belgian trade with Japan, and are also the biggest Belgian employers here.

LE@K<; B@E>;FD

E<K?<IC8E;J

9iljj\cj

><ID8EP Clo\dYfli^

=I8E:< L-R: Bert Winderickx and Fabrice Tilot

July 2010

JN@KQ<IC8E;

CHAMBER SPOTLIGHT

While the products of brewer AB Inbev and chocolatier Godiva are renowned worldwide, Janssen Pharmaceutica, part of the Johnson & Johnson Group, employs 1,800 people in Japan, and pharmaceutical company UCB 300. Luxembourg is known for its financial services, but is also home to steel giant ArcelorMittal. The modest size of both countries means they depend on international trade to offset limited domestic demand, says Tilot. At that they have been highly successful; Luxembourg boasts the highest GDP per capita in the world, with Belgium not far behind. There are some 700 Belgians and 20 Luxembourgians in Japan. The joint chamber relationship dates back to the Benelux economic union between the Netherlands, Belgium and Luxembourg. Since then, there has been close cooperation between businesses on both sides of the BelgiumLuxembourg border. In many countries Belgian embassies also represent their Luxembourg counterparts.

The Belgian-Luxembourg community in Japan doesn’t have different social and business organisations,” says Winderickx, “so the chamber fulfills both those functions. Most of our social and business events are open to all nationalities, as well as non-members. Friends of friends are also welcome.” “I like to think we have a social role,” adds Tilot. “We know the wives, boyfriends, girlfriends and children. It’s always nicer to do business in a social environment.” Events range from the mid-year garden party and the end-of-year black-tie gala ball, to more informal ones such as a regular Belgian beer gathering. The BLCCJ has three priorities, says Tilot: “networking, networking and networking.” By that, he doesn’t just mean deal making. “As you know, Japan is mostly a business-card box. It helps to have a lot of different advice from different people.” Newcomers, especially, can find advice on everything from a secretary’s salary to tax deductions and sales channels.

MOST OF OUR SOCIAL AND BUSINESS EVENTS ARE OPEN TO ALL NATIONALITIES, AS WELL AS NON-MEMBERS. FRIENDS OF FRIENDS ARE ALSO WELCOME. Bert Winderickx

The BLCCJ has a number of programmes in place to promote Belux trade with Japan, and to enhance visibility of Belux companies and products here. In 2009, for example, the BLCCJ organised a one-week product fair in Yokohama, as part of celebrations for the 150th anniversary of the opening of Yokohama’s port. Sales of Belgian and Luxembourg consumer products at the fair totaled almost ¥4m. Other events include business seminars on a variety of topics, notably the annual “Delighting Customers in Japan” seminar, held seven times. One main initiative is the biennial YES [young executive stay] Program, that brings young businesspeople from Belgium and Luxemburg to Japan. “In the past, participants have gone back to Belgium or Luxembourg after their week here with a contract for their products or new Japanese partners,” says Winderickx. The chamber also organises a biennial Nippon Export Award, given to a company from Belgium or Luxembourg that has shown remarkable progress in the Japanese market. The 2009 award was won by Agfa Gevaert for their success in selling eco-friendly printing technology in the Japanese market.

The 2009 Nippon Export Award was won by Agfa-Gevaert

July 2010

Dealing with deflation Tim Kelly talks to economist Eisuke Sakakibara

Photo ROB GILHOOLY

Waseda professor, Eisuke Sakakibara, earned the nickname Mr Yen as viceminister for finance between 1997 and 1999. He shares his views on deflation, the health of the Japanese economy and currency exchange rates. What is causing deflation in Japan? Traditional macroeconomics works on a kind of closed model, where central banks control prices to a substantial degree. However, if under globalisation corporations operate outside their national borders, then things are quite different. It becomes increasingly difficult for central banks to control prices within their own borders, and that is true of any country. Even the United States and 26

July 2010

Europe have been affected by countries like China and India, so that their price inflation is much lower than 10 years ago. They are in a state of disinflation [extremely low rates of inflation]. Why among the worldâ&#x20AC;&#x2122;s industrialised nations has Japan been affected most by falling prices? Japan is being increasingly integrated with Southeast Asia, and East Asia has

become a sort of huge factory. A crossborder division of labour [spreading production through several countries] has developed in China, Thailand, Malaysia and Indonesia. Parts are produced in Thailand, for example, by importing materials from Japan and then sending those parts to China for assembly. This cross-border division of labour occurs all over East Asia. One proof of that is intraregional trade

Q&A

I WOULD EXPECT DEFLATION TO CONTINUE FOR SOME YEARS, AT LEAST FOR THE NEXT FIVE OR SIX YEARS

most developed among the ASEAN+3, so Japanese prices and wages tend to come down, while Chinese wages and prices go up. How long will deflation last in Japan? I would expect deflation to continue for some years, at least for the next five or six years. But this is mild deflation; we have not experienced any rampant deflation, or a deflationary syndrome connected to the deflation of asset prices. The Nikkei is all right and real estate prices have not really come down that much. I sympathise with (Bank of Japan) governor Shirakawa because he can’t do much, and he knows that. How do you define mild deflation? Let’s say between zero and minus two. Staying within that range, Japan at this moment, in terms of real growth rate for GDP, has the highest among developed countries. I wouldn’t say this is the most desirable state of affairs, but at least Japan is less ugly than the United States or Europe. We have recovered to the of pre-Lehman-shock level.

in East Asia [ASEAN 10 plus China, South Korea and Japan], which has exceeded 57% of all the trade of the 13 countries. This is a big number. It was 40% in 1990. If this trend continues over the next five to 10 years, intraregional trade will reach 60%. The EU’s intraregional trade has been hovering around 65%, so 60% is quite a big number. We don’t have institutional arrangements yet, but markets and corporations have been driving integration in this area. Naturally, when two or more countries integrate, prices and wages tend to converge. Japan is the

How should the Japanese government manage the economy? We are in the process of recovery, so I wouldn’t mind seeing an expansionary fiscal policy continue to support the recovery. As far as government debt is concerned, we should not worry about it for at least another three to four years. Accumulated government debt is very large, close to 190% of GDP, but the financial wealth of the Japanese household is 300% of GDP in gross terms. Even in net terms it is around 240%, so we still have room to finance government debt. The Japanese purchase 94% of Japanese government debt, so this is not an unhealthy situation at all. It is much healthier than the United States

situation where close to 70% is being purchased by foreigners. However, the Japanese savings ratio has come down; it is below 5%, and the amount of government debt is increasing much more rapidly than savings, so we cannot have this kind of situation for long. Maybe within the next five to 10 years we need to have fiscal consolidation. Within the next five to 10 years we should raise the consumption tax. What do you think of the government’s plans to raise benefits, including a monthly child allowance? I think that is the right decision. Look at France; they have numerous child allowances. I think the best growth policy is to increase the population, and I think France has succeeded in that. We should create conditions where people feel that having two or three children would not be too difficult. Why not a big government? Japan has a small government. The smallest government is in the United States. It’s something like 37% of GDP. In Japan it’s 42% or 43%. In France it’s 60%. Japan is like the United States in terms of the size of government, so they could increase more. The government should tell the public we will follow the European way, not the American way. Do you think the current yen rate is fair? It’s not unfair. Japan has been experiencing deflation and other countries have been inflating, so some kind of appreciation is inevitable. Ninety yen to the dollar at this moment is probably the ¥110 or ¥115 of 20 years ago. So I think Japanese companies can compete fairly well at this rate. For the time being, the yen-dollar will probably stay in that range but, if anything, the Japanese yen will appreciate against the euro and the yen-dollar rate may head to ¥85 slowly. July 2010

Core business Areva Japan Text TODD CROWELL Photo BENJAMIN PARK MORIN

July 2010

I N V E ST I N G I N J A PA N

ANTICIPATING A WORLDWIDE EXPANSION OF THE NUCLEAR POWER INDUSTRY, AREVA IS RAPIDLY ENLARGING ITS GLOBAL OPERATIONS Areva’s MELOX plant as “mixed oxide” (MOX) fuel, and ships it back to Japan. After delays of several years, the programme got underway this year when Kansai Electric Power and Shikoku Electric Power each loaded MOX fuel into one of their reactors. The MOX programme has proven to be more controversial in Japan than it is in France, with residents near some of the targeted reactors voting not to allow the use of MOX fuel in their plants. “The local people are being very cautious, but we believe that MOX provides no extra risk and that one by one other utilities will follow. At this moment in Japan there is electricity being produced from recycled fuel, which would otherwise be wasted,” Autebert said. Long-term relationships Three huge Japanese companies – Toshiba, Hitachi and Mitsubishi Heavy Industries (MHI) – build nuclear power plants, so there is little opportunity for Areva in this field locally. But, for its worldwide reactor construction projects, the French company sources many components from Japanese suppliers. “We have our own facilities, but we like Japanese quality and it always helps to diversify sources,” he said. Areva buys a lot of materials from MHI, which is currently supplying from its plant in Kobe a large component for the reactor that Areva is building in Taishan, China. Areva also has a long and close relationship with Japan Steel Works (JSW) in Hokkaido, which has a near worldwide monopoly on the forging of very large reactor components. In 2008 Areva signed a long-term contract with JSW, which enabled it to greatly expand its forging capacity. Meanwhile, it has a 50-50 partnership with MHI to develop a new kind of reactor called the ATMEA. It is essentially a smaller

World Nuclear Power Reactors June 2010

USA

104

FRANCE

JAPAN

RUSSIA

SOUTH KOREA

INDIA

CANADA

GERMANY

UKRAINE

WORLD NUCLEAR ASSOCIATION

ou might say that France and Japan go together like electron and proton when it comes to nuclear power or, as the industry calls it in these days of climate change concern, “non-CO2 electric power generation”. The two nuclear energy super-powers are committed to fully exploiting the potential of nuclear from “front end” to “back end” – and at the nucleus of this collaboration is France’s Areva Japan. In the nuclear power business the front-end refers to activities that follow mining uranium: refining it, enriching it and fabricating it into fuel assemblies that can be inserted into a nuclear reactor. The back-end refers to reprocessing the nuclear fuel used in the reactor to reclaim unburned uranium and newly created plutonium, which can then be recycled into new fuel and put back into reactors to generate more power. For some 40 years Areva (a 92% stateowned concern formed in 2001 with the merger of the French nuclear fuel company Cogema and reactor manufacturer Framatome) has been intimately involved in all aspects of front- and back-end fuel production in Japan. As far back as the 1970s, Japanese nuclear power utilities began shipping their spent fuel to France, to be reprocessed at Areva’s plant in La Hague. (Some of the fuel has also gone to Great Britain, but mostly to France.) The main back-end activity of Areva has been directed at the Rokkasho reprocessing plant on the northern tip of Honshu. The plant was built almost entirely with French technology and help. It has been completed for several years, tested and is awaiting the first shipments of spent fuel. But operations have been held up by persistent problems in the last stage of the process, which happens to use Japanese technology. Rémy Autebert, president of Areva Japan, says, “We’re ready to help JNFL [Japan Nuclear Fuel, operator of the plant] surmount its difficulties.” More successful, to date, has been Areva’s participation in Japan’s “pluthermal” programme. This project recovers plutonium from Japanese spent fuel in France, combines it with uranium at

version of Areva’s flagship reactor type, the European Pressurized Water Reactor (EPR). While the typical EPR puts out 1,600MW of electricity, the newer model generates about 1,100MW. Autebert said the new model is aimed at markets – usually countries – that prefer a smaller version, possibly because they are newcomers to nuclear energy. “Some people prefer big cars; others prefer smaller cars,” is how he describes the marketing strategy. The reactor design is complete and marketing has begun. Only a few weeks ago Jordan put the ATMEA on the shortlist for its first nuclear power plant, the other two prospects being models from Canada and Russia. Anticipating a worldwide expansion of the nuclear power industry, Areva is rapidly enlarging its global operations, investing heavily in uranium mines and building more front-end operations in France, the United States and elsewhere. “We’re spending a lot of money,” Autebert says. Another company might raise new capital from a fresh public offering, but Areva is constrained by its being a state-owned enterprise and thus is not listed on the stock exchange. What to do? To raise capital, Areva recently sold its worldwide transmission and distribution network, which brought in about €4bn (Toshiba was an unsuccessful bidder). It is selling other assets, too, but is putting a lot of confidence in a recent decision, by the French government, in principle to open Areva to outside, private investment of up to 15% of total equity. Areva expects to invite investments from concerns with which it has had a long-term relationship, and that certainly includes many Japanese companies. July 2010

TOO MANY PEOPLE NOT CONTRIBUTING ENOUGH? TMT CAN HELP YOU. Staff Reduction is Not the Critical Part of Restructuring When most business people need to improve margins and profits, the first thing that comes to mind is headcount reduction. It’s obvious. It’s visible. There is no need to seriously look at how pay, benefits and personnel practices could be more productively administered. We miss the chance to find out why we have not attracted, motivated, and retained the kind of people we need. If we make a large, attractive extra severance package available to any staff who wants to take it, we will tend to lose our better people who can more easily find a new job. Such voluntary retirement programs are often oversubscribed with too many needed people leaving. As they resign, the firm’s fabric and corporate culture further weaken. It becomes even more difficult to attract good, dynamic people. We have not succeeded in pushing out the non-contributors who cling to their jobs.

Personnel Policy Consulting Rules of Employment - Set-ups and adjustments Staff Reduction and Cost Savings Programs Problem Employee Solutions Compensation and Benefits Union and Staff relations

Headcount reduction is not the critical part of a healthy restructuring. Yet staff reduction can be, and often should be, the trigger point to permanent, self-sustaining, positive change in personnel, Rules of Employment, and pay for performance policies and practices. If such a credible program of change management is carried out, effectively and fully communicated to all your staff, it becomes possible to quickly and smoothly secure the voluntary resignations of all your poor performers. This is because they see that life will be very different for them under the new appraisal and performance pay policies and practices. On the other hand, the majority of your average and good staff will be reassured that key players and the team will be sticking together. New and improved pay and human resource systems will be smoothly implemented. With proper packaging, communications, and some training, morale and corporate culture will immediately pick up. Your adjusted personnel and pay practices will discourage less talented people from joining your firm. At the same time they will attract, encourage, and energize a growing number of good performers. They are waiting, and looking to you for leadership. There are trackable reasons why some firms enjoy the winning edge. TMT has assisted firms like yours with this assessment for over 20 years. Implementation with TMT ‘s turnkey solutions is surprisingly quick and simple. If we still need to carry out the staff reduction, we will gain much more, and your staff will be reassured that such staff cuts will probably never again be necessary.

1990

1984

(Published by the Japan Times)

By Thomas J. Nevins, Author, Founder/President TMT Inc.

Receive Mr Thomas Nevins’ 2004 books at an initial consulting session. “Doctor’s Check” option also offered

Ichibancho KK Bldg. 13-8 Ichibancho, Chiyoda-ku, Tokyo 102-0082 Tel: (03) 3261 6471 Fax: (03) 3221-0601 info@tmt-aba.com www.tmt-aba.com

EVENT REPORT

Meet the ministers Reaching out to foreign business in Japan 2 June 2010, Canadian Embassy, Tokyo

Text and photo TONY MCNICOL

he timing of Meet the Ministers was either perfect or highly unfortunate. Organised by 15 of the foreign chambers in Japan including the EBC, it took place the same day beleaguered prime minister Yukio Hatoyama abruptly announced his resignation. Despite the political turmoil, government speakers at the Canadian Embassy were eager to explain the DPJ’s plans, and the audience equally keen to learn how foreign business would be affected. As the Canadian ambassador, Jonathan T. Fried, put it in his introduction: “A good hockey player looks where the puck is, a great hockey player where the puck is going to be.” Harufumi Mochizuki, a senior bureaucrat at the Ministry of Economy, Trade and Industry (METI) filled in at short notice for Minister Masayuki Naoshima. He acknowledged the economic “crisis” facing Japan, and offered METI’s Industrial Structure Vision released a day before as “a proposal for a way out.” The document identifies five strategic sectors for Japan: infrastructure (such as nuclear energy and rail); environment (smart grid, next-generation vehicles etc.); medical, nursing, healthcare and childcare; cultural industries (fashion, tourism, etc.); and frontier fields (robots, space, etc.). Japan has the same fundamental challenges as many other developed nations, including an ageing society and climate change. Addressing them would make Japan a “problem-solving nation” and provide a basis for future growth, said Mochizuki. Mochizuki also touched on foreign direct investment, admitting that Japan is being passed up. He noted a 15% gap in corporate tax rates between Japan and Europe that METI wants narrowed. But there is no consensus in the government on the issue at present, he said. Despite Japan’s shrinking population, growth in Asia should be leveraged to help Japan, Mochizuki said. Also, Japan should position itself to provide the technology to deal with the environmental problems accompanying the region’s growth. Japan’s clean coal technology is one example.

DPJ secretary-general Yukio Edano

A memorable day “Today is truly a memorable day,” said the next speaker, Masaharu Nakagawa, senior vice-minister of education, culture, sports, science and technology. “In just four days I will be fired.” His speech quickly took a more serious turn, however, as he attempted to allay concerns that budgetary constraints would hit government spending on science and technology. He gave detailed information on world-leading scientific research projects, and stressed the importance of environmental technology and the life sciences for future growth. How can Japan’s universities attract scientific talent from abroad, asked a member of the audience? Nakagawa noted that university remuneration structures need more flexibility. And he acknowledged that regrettably Japan has become “inward-looking”. Regulatory reform Minister of state for government revitalisation Yukio Edano apologised for arriving late – saying he’d been busy helping choose Japan’s next prime minister. (Six days after the event new prime minister Naoto Kan appointed Edano to the powerful post of DPJ secretary-general.) Regulatory reform is essential for Japanese growth, he said, stressing that the DPJ is as keen to enact reform as former prime minister Junichiro Koizumi. But he added that the DPJ would focus on consumers rather than the business and supply side. Special areas for regulatory reform have “not been fully utilised”, although a comprehensive special zone system is being further discussed. Edano reiterated the DPJ’s determination to attract foreigners for business, as tourists, and also to have them take advantage of Japan’s high level of medical care. Lastly – in a speech that most agreed was the most impressive of the night – he argued that Japan’s prosperity has long been based on trade and its relations with other nations. There is no reason that high-value products and services in Japan cannot also be provided by foreign companies, he said. July 2010

Legal Services// Modern samurai Text GEOFF BOTTING

“The concept in Japan of a bengoshi,” says James Lawden, “comes from a gentleman or samurai – one who defends people. The word bengo means to defend and shi means a gentleman, and that’s what the Japanese call lawyers. That’s the way of thinking here.” The idea of a lawyer as someone who actually handles large and complex business deals, on the other hand, is still a relatively recent and alien concept, according to Lawden, who chairs the EBC Legal Services Committee. As the committee states in the EBC’s 2009 white paper, “The status quo reflects the traditional position of lawyers in Japan as court lawyers.” “Bengoshi were not the sort of people expected to do due diligence on trillion yen deals or carry out the financial documentation for zillion-yen deals,” Lawden says, with a touch of hyperbole, “though this forms an increasing part of their work nowadays.” The common perception that lawyers belong in courts, not in corporations, helps explain an absence of a limitedliability regime for lawyers in Japan, unlike in other developed countries. This exposes lawyers involved in large 32

July 2010

corporate transactions to a huge amount of risk if deals go awry. “All foreign firms have massive amounts of insurance. That’s because a very small mistake at three in the morning can lead to losses of millions of dollars,” says Lawden, partner at the firm Freshfields Bruckhaus Deringer. Says fellow committee member Peter Kilner, “Other countries have generally recognised this and have accepted the idea of a limited liability partnership.” Pushing for the introduction of limited liability for lawyers is one of three main advocacy areas for the committee. The others are the registration process and experience required of foreign lawyers, and a restriction that limits foreign law firms, or joint ventures involving foreign firms, to a single branch. As for limited liability, the committee doesn’t expect to see any progress soon. Introducing such a change would radically shake up the legal profession and, Japan being Japan, making such monumental changes tends to take plenty of time. But on the issue of registration, a degree of progress, albeit gradual, has been seen.

Foreign lawyers (called gaiben in Japanese) are now required to have at least three years’ working experience in the law of their home jurisdiction, of which two must be outside Japan. That’s an improvement on before 1995 when the stipulated period for experience was five years, of which three had to be spent outside Japan. In addition, the waiting time for approval seems to be shrinking, and now is as short as three or four months, according to Lawden and Kilner. Yet regardless of how long the period, the requirement on experience doesn’t make any sense to the committee, as the lawyers in question have already been acknowledged by the qualification of their jurisdiction. What’s more, the registration process – during which time the applicant is not allowed to practice law – is timeconsuming and creates added cost to the law firm involved. “Big international firms now tend to move people around a lot. Many associates are moved in for two years. And if you’re spending a year of that time with the application, then it can be a nightmare,” says Kilner, partner at

IN COMMITTEE

the Clifford Chance Law Office. The other issue, over branches, also involves a rule that is clearly discriminatory. Japanese lawyers are free to form corporations, or hojin, thereby allowing them to open a number of branches. Gaiben, however, are barred from doing the same. The committee is expecting that new legislation will be introduced this year or next, eliminating this discrimination. Another source of frustration for gaiben is the involvement in the registration process of the rules and requirements of the Japan Federation of Bar Associations, which come on top of those of the Ministry of Justice. Gaiben are required to register with their local bar associations, and so have additional hurdles to clear. Ever since 1987, when foreign lawyers were allowed to work in Japan for the first time since the early 1950s, the association has been working out ways of accommodating the gaiben without actually fully accepting them. “It’s like some foreign body that gets into an organism, and then all the existing cells crowd around it and figure out how they can absorb it,” Lawden says

Key advocacy issues 1) Introduction of limited liability for lawyers 2) Shortening the registration process and reducing the minimum experience period for foreign lawyers 3) Removing a restriction that limits foreign law firms or joint ventures involving foreign firms to a single branch with a chuckle. “So they said, ‘Let’s treat them like lawyers, but a funny kind of lawyer.’ We are a sort of an exotic strain of bengoshi.” But for all the restrictions and discriminatory practices, Lawden and Kilner agree that the practice of corporate law in Japan is now very close to international norms. Post-war Japan, by contrast, had little need for corporate lawyers. “Until recently, more than 95% of the Japanese lawyers were court lawyers. None of the people staffing companies’ legal departments were actually qualified lawyers,” Lawden explains. Yet about a decade ago that situation

started to change. Japanese corporations are increasingly turning to law firms to help them with their deals. A gauge of the trend is the ever-increasing length of contracts and other legal documentation. “In the old days, contracts between Japanese companies would typically be about two pages long. But I think now the big Japanese law firms are adopting bigger and bigger business acquisition agreements, for instance, with lots of warranties by the selling company,” Kilner explains. Figures from the Ministry of Justice show a rapid increase in the number of lawyers. Numbering a mere 5,000 in 1950, there are now roughly 25,000 working lawyers in Japan, including an increase of around 5,000 in the last five years alone. The number of gaiben is now about 350. Before 1987, when Japan established the gaiben system, the number of foreign lawyers was tiny, limited to those grandfathered when the law changed in the early 1950s. “Things have certainly improved,” says Lawden, “but it’s a slow process.” July 2010

ARQIS Foreign Law Office is an international German law firm with additional offices in Munich and Dusseldorf. The firm is specialised on cross-border transactions between Germanspeaking countries and Japan. The Tokyo office is operating as a joint enterprise with TMI Associates, one of the 5 largest law firms in Japan. It is serving foreign investors, mainly from German-speaking countries, to Japan in all areas of corporate, commercial and business

law, with a particular focus on M&A, corporate reorganisation and corporate compliance. Together with the Dusseldorf office, ARQIS also advises Japanese companies investing in Germany and Europe. ARQIS provides businessoriented legal advice to a wide range of clients from various industries, including automotive, chemical, pharmaceutical, machinery and engineering, software and biotechnology, as well as international trade, real estate, banking and

Roppongi Hills Mori Tower 23F, 6-10-1 Roppongi, Minato-ku, Tokyo 106-6123 Tel: 03-6438-2770 Fax: 03-6438-2777 E-mail: Tokyo@arqis.com www.arqis.com

insurance. The unique combination of a German and a Japanese law firm offers first-class legal advice designed for today’s multinationals’ needs. Teams of legal experts experienced in crossborder transactions and proficient in the laws of their jurisdiction deliver business-oriented solutions of the highest standards in view of the client’s specific situation and industry background. Correspondence languages include German, English, French and Japanese.

TOKYO | DUSSELDORF | MUNICH

GREEN BIZ

Electric dreams BETTER PLACE Text MARTIN KOELLING

or Shai Agassi, the CEO of Better Place, a dream came true in April. “This is a monumental milestone,” he enthused, as next to him, at a launch event in the very centre of Tokyo, the first commercial battery exchange station for electric vehicles (EVs) recharged a taxi in just under a minute. He sees the world entering a new era of mobility, in which cars don’t burn oil, and his company leading the way. After a 90- day trial in Tokyo he hopes for a global roll out for his project, which promises to solve the biggest problems of EVs: restricted range and long charging. Agassi had good reasons for choosing Tokyo. At the moment, Japan is the world’s leading EV market, especially if you include hybrids like Toyota’s Prius that can also run on batteries. Mitsubishi Motors is already selling its EV i Miev, and Nissan launches its Leaf at the end of this year. Even Toyota has announced plans to mass-produce EVs. The Japanese government is also very supportive, having financed this battery station. Japan’s huge taxi fleets make it a promising market, and Agassi eyes them as a natural target. Tokyo alone has 60,000 taxis, more than London, Paris and New York combined. A switch to EVs would not only provide the necessary economies of scale to reduce EV costs, but also huge environmental benefits, because taxis emit 20% of Tokyo transport’s CO2. “With their high mileage and visibility, they can serve as a catalyst for

Shai Agassi, CEO of Better Place, at the launch of Nihon Kotsu EV taxis in Tokyo

this technology to transfer to the mass market,” said Kiyotaka Fujii, president of Better Place Japan. Also present at the April launch was Ichiro Kawanabe, CEO of Nihon Kotsu, Tokyo’s largest taxi operator. The former McKinsey consultant brought three Nissan-made taxis to the test. Eventually, he hopes to replace his entire fleet of 3,000 cars with EVs as a contribution to a sustainable society. “I am a third-generation taxi driver, and I want to work in this industry for at least another 30 to 40 years,” he said. Better Place’s battery exchange system promises to reduce EV downtime and increase the economic feasibility of electric taxis. Agassi is convinced of success. “This step today is proof that we are able to build a network of electric cars that can go and go,” he said, in answer to skeptics who warned that the battery exchange would never work. Yet, some critics say that, while the cars may not burn petrol, they risk burning money. Better Place is a big gamble and may yet end up one of innumerable stalled projects that line the long road of technological progress. The company has not seen a penny in operating revenue since its founding in 2007. Better Place has worked to build battery charging and exchange stations first, surviving on the goodwill of investors willing to buy into Agassi’s dream. Agassi has certainly had no shortage of success finding investors. His main backer, and now chairman of

JAPAN’S HUGE TAXI FLEETS MAKE IT A PROMISING MARKET FOR ELECTRIC VEHICLES … TOKYO ALONE HAS 60,000 TAXIS, MORE THAN LONDON, PARIS AND NEW YORK COMBINED Better Place, is Idan Ofer, chairman of Israel’s largest holding company, Israel Corp. Israel and Denmark have already entrusted Better Place to set up EV infrastructure from 2011; negotiations with other countries and cities are ongoing. In addition, the Nissan-Renault alliance has promised to build 50,000 EVs with exchangeable batteries for Israel and Denmark. In April, even the Chinese carmaker Chery agreed to collaborate with Better Place; Chery’s home market is one of the most promising for EVs. And the money keeps on pouring in. In January a consortium of investors lead by HSBC pumped $350m of equity into the company, with the bank taking 10% of company shares. “We are confident that Better Place has the technical and commercial solutions to allow for the mass adoption of electric cars in the near term,” says Kevin Adeson, head of global capital financing at HSBC. July 2010

Whoâ&#x20AC;&#x2122;s Who

Advertising in Japan

July 2010

any theories and books have been written about marketing, but, in essence, marketing is the process by which companies generate customer interest in their products and services. Marketing also is the means to identify the customer, to satisfy the customer – to keep the customer. But what happens if the customer can choose from among hundreds of similar products in a consumer-driven market, where information is shared instantly? Does this lead to a marketing war? After all, everybody wants to be different, innovative, cool, affordable, loved, talked about, consumed. There is much to consider. How to attract the attention of the consumer? How to segment and differentiate the market? How to promote the products and services? How to allocate the marketing budget effectively? How to balance corporate branding with product branding? For sure, regardless of the answers, companies have to respond extremely quickly to market changes because both consumer and technology are evolving at tremendous speed. The information jungle As a company, you master your proprietary products, services and ideas that you aim to sell as great choices to your target groups. But, at the same time, you are cognizant that your customers are influenced by products and ideas of many other savvy competitors. Very often in this information age, consumers have seen and heard it all before, creating an unprecedented challenge to product developers and

marketers to stand out. Consumers are more connected to what’s out there than ever before, and are calling the shots, and are able to sift through a vast range of products and services. More than ever before, it is crucial for a company to succeed in having the consumer choose its products and services. The objective of marketing is to be visible, to be noticed – to entertain and engage the consumer in the company’s own unique way. Yet, how do you expand your market? Or better put, how do you make sure more consumers begin to select your products amidst all those other compelling smart alternatives? Needless to say, it all comes down to finding the right marketing strategy, “different” from the competition. Even if you make headway, it is actually very hard to dominate the market because of increased consumer connectivity. Nearly everything is accessible through the internet – anywhere and anytime – and information is spread almost instantaneously. With all this sharing, it is extremely difficult to maintain your uniqueness, as competitors will definitely strive to emulate your success. With the pace of evolution in technology, we can be sure information will only become more accessible and the market even more competitive as more knowledge is shared. At the same time, the world will surely become more complex. Omnipresence A single medium is no longer satisfactory to attract the attention of the consumer, and traditional media channels are definitely losing impact due to overuse by competing brands. Yet, brands are compelled to be omnipresent, which requires integrated marketing strategies.

Who’s Who // Advertising

Fighting the attention battle

Jan De Bock Managing Partner trainspot KK

Brands are compelled to be omnipresent, which requires integrated marketing strategies. Consequently, marketing and communications agencies have to become multi-media, integrated solution providers to capture the interest of today’s consumer, anytime. After all, people still watch TV, read magazines, surf the web, meet friends and go shopping, but also maintain a facebook profile and have a twitter account. Imagine the situation of a consumer receiving a promotional flyer along a shopping street, with a digital coupon in his or her smart phone, standing in front of a multi-brand fashion select shop, having received a direct email of another summer sale, just meeting up with a friend wearing that great shirt – yet open to other possibilities. You better make sure that your brand is outstanding and appealing enough to rise above the clutter!

July 2010

Who’s Who // Advertising

Byte-size revolution

dland just didn’t see it coming. This is somewhat surprising as we all had earlier watched the music industry brought to its knees by the onslaught of the internet and file-sharing. But most wrote this off as an unfortunate and unique flaw in the music industry’s media model. But this was no one-off – it was what most cheesy ad executives like to now call a ‘tipping point’. The reason that the music business got hit first was very simple – music files are very small and easy to share even when bandwidth is narrow. As bandwidth expands, though, every traditional media sector becomes exposed to the same revolutionary winds; and, right now, it’s advertising and marketing communications’ time. Traditional advertising advocates are falling over themselves to tell you that the old industry formula still makes sense. ‘TV stills works!’, they protest. But it doesn’t. Not even close. If you spend $10 million on TV, say, it will have an effect – but that is because you just burned 10 million bucks, not because TV remains an effective marketing channel. Spend just 5% of that budget on YouTube – with the right creative and the right targeting – and you will see an incomparable ROI. Engage your most loyal customers via social networks, and watch them do your marketing for you. Your broadband-empowered consumer is the most powerful marketing tool you have ever had. And yet this is the one element at your disposal that the old guard of

July 2010

advertising wants to deny. It holds on to an ugly and distorted vested interest in the old world of media, where broadcaster was king and the viewer at its disposal. It still wants to push didactic marketing messages on what it perceives as an ‘unsuspecting public’. In the new media world, however, nobody cares and, what’s worse, nobody is listening. Today, the old certainties have been undermined and overthrown. Now, ‘share of mind’ and ‘share of voice’ have become the marketing equivalent of vinyl and the cassette tape, cute, nostalgic, but utterly irrelevant. So stop and think for a second about the billions of dollars that are being wasted every year on unnecessary advertising noise. It’s unwanted and it doesn’t even work. In today’s totally transformed marketing environment, continuing any traditional marketing strategy is no longer the ‘safe’ approach. Rather, it’s misguided and obscenely wasteful. Forget what you thought you knew about marketing. Relegate reminiscence to the next time you go and watch the Grateful Dead. The time has come to tap a new generation of creatives. And you can be reasonably certain they are not interested in a pencil-pushing job description.

Jonny Shaw Founding Partner Naked Communications Ltd. (Tokyo)

Your broadbandempowered consumer is the most powerful marketing tool you have ever had.

Who’s Who // Advertising

Dentsu Inc.

Address

1-8-1 Higashi-shimbashi, Minato-ku, Tokyo 105-7001

Tel

03-6216-8042

Fax

03-6217-5515

s.kannan@dentsu.co.jp

Web site

www.dentsu.com

Year established

1901

Staff

6,724; Dentsu Group: 19,169 (as of 31 March 2010)

Company Activities / History The Dentsu Group has overseas branches and subsidiaries on four continents, providing seamless global communications solutions. Dentsu’s domestic subsidiaries and secondary affiliates define a synthesis unmatched in the world. Its diversified portfolio of more than 6,000 clients includes leading domestic and international corporations, with many of these relationships long-standing. Dentsu provides highly integrated solutions to client organisations that include advertisers, media companies and content holders. The Dentsu Group established a new corporate philosophy – “Good Innovation.” – in January of last year. Dentsu strives for “ideas that reach beyond the imaginable”; “technology that crosses the bounds of possibilities”; and “entrepreneurship that surpasses the expected”. These three sources of strength are driving its innovation, whereby Dentsu aims to bring positive change to people and society. Its deep experience, extensive know-how, and inspiring vision help clients not only in their communications domain, but also with corporate management issues and challenges in their business operations.

Most critically, Dentsu strives for a keener insight into the essence of changes in consumer behaviour and branding challenges facing companies. As a partner who always looks at the situation its clients are facing, defines each core issue and delivers timely solutions, Dentsu provides “Integrated Communication Design”. Dentsu addresses today’s challenges in the digital, global and solutions domains by designing, proposing and implementing communications that offer true solutions in an integrated way. The Dentsu Group places high priority on the establishment of a business management system that can respond rapidly to changes in the business environment and that emphasises compliance. With the aim of realising integrated risk management and promoting compliance, Dentsu established in February 2004 a Corporate Ethics Committee to make decisions on its activity guidelines and specific actions. As it has for nearly 110 years, Dentsu provides exceptional solutions relevant to each respective market it serves around the world. This is reflected in awards given by respected bodies in the industry, including Advertising Age’s 2009 “Agency of the Year”, won by Dentsu Group’s mcgarrybowen; six Cassies Awards, including “Best of Show”, at the 2008 Digital Marketing Awards; and being ranked 5th in Strategy’s Agency of the Year Creative Scores out of 50 companies (2008); to name just a few. In its effort to encourage excellence in the industry, Dentsu has organised the Dentsu Advertising Awards each year since 1948.

July 2010

Whoâ&#x20AC;&#x2122;s Who // Advertising

Great Works KK

Address

1-3-27 Shimomeguro, Meguro-ku, Tokyo 153-0064

Tel

03-5436-1305

Fax

03-3492-3462

contact@greatworks.jp

Web site

www.greatworks.jp

Year established

2008

Key contacts

Jun Inoue, CEO/President

Staff

Company Activities / History Great Works does not just give you what you asked for. Great Works does not just produce. Great Works invents. We are inventors, inventing new ways to communicate, new ways to engage people, new ways to have fun. Great Works is an interactive communication agency with offices in Stockholm, Barcelona, New York, Shanghai and Tokyo. In Japan, we opened an office in 2008. Being a part of the Japanese creative business company TYO, Inc., Great Works provide a wide range of creative solutions for clients to communicate to their prospects, customers and all other stakeholders via Internet and other media. Through its international office and group company network, the ever more complex demands of multinational brand clients can be effectively serviced in the best balance between global and local requirement. Great Works provide total communication services from strategy planning, creative concept work to implementation. In addition to our international brand clients such as Absolut, Carlsberg, Malibu, IKEA, Elecrolux and Nokia, we work with Absolut, Audi, H&M, and Shochiku in Japan.

July 2010

Who’s Who // Advertising

McCann Worldgroup Japan

A holistic integrated campaign for the Cadbury Stride new product launch using an ape man as the key visual. The flavor lasts so long that he has been chewing it since the beginning of time! We created a true multimedia approach—with the ape man appearing on TV, in person in cities all across the country, we had him being caught on camera and spread virally online; even tweeting on Twitter. This forged a deep bond with the target and as a result, the product became a huge hit.

Address

Shin Aoyama Bldg., East, 1-1-1 Minami Aoyama, Minato-ku, Tokyo 107-8679

Tel

03-3746-8111

Fax

03-3746-8247

pr@japan.mccann.com

Web site

www.mccann.co.jp

Year established

1960

Key contacts

Michael McLaren, CEO; Miyoko Ohki, Corporate Communications

Staff

550

Company Activities / History McCann Worldgroup is the world’s largest marketing communications agency network with 306 offices in 167 cities across 125 countries around the world and is the leader in multinational integrated communications, handling more global accounts across borders than any other network. Our mission is clear: to transform our clients’ brands and drive growth for their business. We deliver this growth through the power of our ideas and delivering unique and impactful integrated marketing communications solutions. McCann Erickson Japan is a key member of McCann Worldgroup, and is the only true international advertising agency represented in Japan’s top ten and the only one that can plan and buy media independently with a media neutral perspective. Accordingly, we have been awarded substantial business from major Western and Japanese advertisers over the past 50 years. McCann Erickson Japan will celebrate its 50th anniversary this year. McCann Worldgroup was created by uniting 7 best-in-class marketing communications disciplines under a common mission and vision.

With the renewal of L’Oréal Paris Elsève, a new stylish and elegant spokesperson (the up-and-coming actress Meisa Kuroki) was chosen for the campaign. The image presented by the actress was skillfully melded with the L’Oréal Paris brand, helping it to establish a strong presence in an extremely crowded marketplace. In addition to McCann Erickson, McCann Worldgroup is comprised of Universal McCann, innovative media planning/buying, and communications architects; MRM Worldwide, digital marketing and direct/consumer relationship management; Momentum, event marketing/sponsorship/sales promotion/entertainment marketing and retail marketing; and McCann Healthcare Worldwide, professional and DTC healthcare advertising; FutureBrand, consulting/design; and Weber Shandwick, public relations.

July 2010

Who’s Who // Advertising

Naked Communications

www.nakedcomms.com

Address

2-27-16 Jingumae, Shibuya, Tokyo 150-0001

Tel

03-5771-7171

Fax

03-5771-7180

matt_eaton@nakedcomms.com

Web site

www.nakedcomms.com

Year established

2007

Key contacts

Kaz Maezawa, Jonny Shaw, Matt Eaton, Nick Watanabe

Notable clients

Coca-Cola (Japan) Company, Sony, Tesco, Citibank

Staff

Company Activities / History Naked Communications was founded in the UK 10 years ago on the principle that, in a world of choice with a myriad of channels and ways to communicate with consumers, the current agency structure was incapable of servicing clients’ needs. By housing a family of eclectic big thinkers from complementary industries (as well as the occasional advertising heavy-weight) and working with best-in-breed execution partners, the Naked ‘wa’ is able to offer more relevant solutions, more creatively executed, for less budget. The Tokyo office was launched in 2007 on the same philosophy and offers breakthrough marketing solutions based upon insights, ideas and implementation.

www.nakedcomms.com 42

July 2010

Who’s Who // Advertising

trainspot KK

Address

trainspot factory, 3-24-3 Asakusabashi, Taito-ku, Tokyo 111-053

Tel

03-5829-6829

Fax

03-5829-6819

info@trainspot.jp

Web site

www.trainspot.jp and www.trainspotfactory.jp

Year established

2006

Key contacts

Jan De Bock, Managing Partner Malik Kusters, Managing Partner

Staff

Company Activities / History Trainspot is a creative marketing and communications agency living in – and with – concepts. We have invented creative concept marketing in the “attraction economy”! No joke. We are integrating print, web, video and experiences in creative concepts that bring brands and corporations to life. The firm opened shop in Tokyo in December 2006; and since then we’ve been on a rollercoaster of creativity, branding and communication – working with more than 100 private companies and governmental organisations. Our inspiration came from books, but our experience has taught us that ideas are only as good as their execution. That’s why we have gathered an engaging team of creative talent not only to come up with compelling and unique (brand) experiences, but also to execute them with passion and professionalism.

July 2010

Who’s Who // Advertising

Brandimage Co., Ltd. Address

Komiya Bldg. 3F, 1-11-19 Mita, Minato-ku, Tokyo 108-0073

Tel

03-5427-8001

Fax

03-5427-8003

m.tamura@brand-image.com or f.kendall@brand-image.com

Web site

www.brand-image.com

Year established

1992 (Tokyo); 1947 (Cincinnati); 1971 (Paris)

Key contacts

Fred Kendall, Managing Director; Makoto Tamura, Account Director

Staff

Company Activities / History Brandimage is an independent branding and design boutique with a global network of over 200 strategy, marketing and creative professionals. Created in 2008 by the merger of two renowned design firms – Desgrippes Gobé, an international design and branding agency headquartered in Paris, and Laga, a major innovation and design agency based in North America – Brandimage is a holistic branding expert that has successfully partnered with a wide range of clients globally. We help our clients reveal and strengthen the personality of their brands through products, services and retail environments that create unique brand experiences and strong emotional bonds with the consumer. Brandimage accomplishes this by creating a vision for our clients’ brands – leveraging the power of insight and design to create rich experiences that are emotionally compelling and unique. In order to create engaging brand experiences, we offer a wide range of holistic services – from brand strategy, innovation and consumer insight, to brand identity, industrial design, package design, web design, retail experience and architecture. Brandimage deeply explores and strives to discover innovative consumer insights that enable us to deliver best-in-class design across all brand expressions. We give life to brands.

I&S BBDO Inc. Address

Harumi Triton Square X, 1-8-10 Harumi, Chuo-ku, Tokyo 104-6038

Tel

03-6221-8523

Fax

03-6221-8641

prdiv@isbbdo.co.jp

Web site

www.isbbdo.co.jp

Year established

1947

Key contacts

Aya Miyashita, Director of Corporate Communications

Staff

463

Company Activities / History I&S BBDO is the Japanese arm of the BBDO Worldwide network. With over 450 employees in 10 key Japanese cities, we are the largest multinational agency in Japan. We focus on providing truly holistic communication solutions to our client – solutions we call “TotalWork”. Using our TotalWork methodology, we create world-class content that has one simple goal – to influence Japanese consumer behavior. In an independent survey of leading advertisers in Japan, I&S BBDO ranked number one across all measured categories, and in overall agency satisfaction. For a consecutive three years, The Gunn Report named BBDO Worldwide as the most awarded agency network in the world in 2009.

July 2010

Address

Hamacho Center Building 9F, 2-31-1 Nihonbashi Hamacho, Chuo-ku, Tokyo 103-0007

Tel

03-3663-5770

Fax

03-3663-5779

jinji_pi@pharma.co.jp

Web site

www.pharma.co.jp

Year established

1987

Key contacts

Masaki Yamagata, President

Staff

Who’s Who // Advertising

PharMa International Inc.

Notable Clients Abbott Japan Co. Ltd., Astellas Pharma Inc., AstraZeneca K.K., Bayer Yakuhin, Ltd., Banyu Pharmaceutical Co. Ltd., Bristol-Myers K.K., Chugai Pharmaceutical Co. Ltd., Eisai Co. Ltd., Eli Lilly Japan K.K., GlaxoSmithKline K.K., Janssen Pharmaceutical K.K., Nippon Boehringer Ingelheim Co. Ltd., Novartis Pharma K.K., Novo Nordisk Pharma K.K., Pfizer Japan Inc., ScheringPlough K.K., Wyeth K.K.

Company Activities / History PharMa International is a healthcare marketing and communications company specialising in the pharmaceutical, medical diagnostics, medical devices, and consumer healthcare fields in Japan. We are a full-service agency dedicated to creating influential advertising and communications delivered to doctors and other healthcare specialists to build successful brands. Our services areas include advertising, brand strategy and communications, design and development of digital and online marketing tools, e-learning programs, promotional materials, medical education, visual aids, patient education materials, and planning and production of seminars and conferences both in Japan and overseas.

Get

COMMITTEES Aeronautics,

Space & Defence Airlines

involved

Animal Asset

Logistics

& Freight

Materials

Health

Management

Automobiles Automotive

Components

Banking Business

Aviation

Construction

Some 300 of the over 2,500 aﬃliated local European

Cosmetics

companies and individuals participate directly in

Environmental

one or more of the EBC’s 29 industry committees

Food

covering a wide variety of economic sectors.

Human

Technology Resources

Insurance Legal

Liquor

Services

Media

& Communications Medical Diagnostics Medical Equipment Organic Products Patents, Trademarks & Licences Railway Retail Shipping Sustainable Development Tax Telecommunication Carriers Telecommunication Equipment

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

EXECUTIVE NOTES

Give Kan a chance

Economic issues need political solutions A few weeks into the job, sentiment regarding new Prime Minister, Naoto Kan, seems muted, at least among the foreign executives I have spoken to. But given that even the Japanese don’t seem so impressed, this is not surprising. “It’s a new face, but the system hasn’t changed,” one Japanese executive told me. “There is still no sense of fresh ideas and fresh blood entering Japan Inc., or the government.” Henry Tricks, The Economist bureau chief in Tokyo, said at a recent conference that he couldn’t believe how negative the Japanese are about their own future. Fatalism, or shoganai, seems to be the order of the day, he said. Of course, this is extremely unhealthy, since it strips everybody of the energy to work for reform. I noticed two things about recent events. As a Brit, I found it very odd that Yukio Hatoyama should resign despite his party having won 310 seats out of 480 at the last general election. This is an unbelievably strong mandate by Western European standards. A mandate means that you persuaded the electorate that you are the right person and party for the job. Nobody expects those popularity levels to last, but you are entitled to push your agenda until the next election, especially with such a huge majority. You don’t just resign when the going gets tough. Gordon Brown may have infringed the spirit of Britain’s political game when he didn’t call a general election after he took over from Tony Blair. But he was within the rules,

and he showed a sense of duty by pushing on in his role despite his rising unpopularity. Ultimately, a general election disposed of him, reflecting proper constitutional process, and the will of the people, after a proper debate. How unlike Hatoyama and Japan. Here, it’s the latest opinion polls which seem to determine a politician’s fate. Hatoyama’s resignation devalued the importance of general elections. He should have stayed on, or called a snap general election, or lost a vote of confidence in his cabinet. He should not have simply quit. The former is the correct way of doing things in a robust political system, but not, it seems, in Japan. The second thing I noticed was the absurdity of having an election for the upper house just nine months after a general election for the lower house. What is the point? No government can govern if it keeps getting secondguessed. Just like when a board appoints a CEO, it must then back off and wait for the CEO to prove himself. It can’t micro-manage him. The UK’s upper house has no power whatsoever, apart from the ability to occasionally make the government uncomfortable by delaying some piece of unpopular legislation. There are no elections for the upper house, and it is becoming increasingly irrelevant. The “will of the people” is enshrined in the lower house for a full four years, and the upper house dares not contradict it. Yet in Japan, we (effectively) have two general elections within one year. No wonder political parties

NO GOVERNMENT CAN GOVERN IF IT KEEPS GETTING SECONDGUESSED. JUST LIKE WHEN A BOARD APPOINTS A CEO, IT MUST THEN BACK OFF AND WAIT FOR THE CEO TO PROVE HIMSELF. IT CAN’T MICRO-MANAGE HIM. run around like headless chickens and carry out populist policies. What choice do they have, if they are constantly campaigning? And the final problem with these many elections is electoral funding scandals. If you are constantly campaigning you need lots and lots of cash to splash around. It’s not surprising so many parties resort to underhand methods. Japan’s economic issues need political solutions. Yet politics is treated with contempt in Japan, by both foreigners and Japanese. This has to change if things are to improve. It’s difficult for a system to reform itself when the governing and governance structures are so ineffective.

DAN SLATER Dan Slater is director of the Economist Corporate Network (www.corporatenetwork.com) in Tokyo, and you can reach him at danslater@economist.com.

July 2010

I N DUSTRY VOICE

Your trade risks under control

redit management has a crucial impact on corporate results. Account receivables make up, on average, 30 to 50% of corporate assets (retailers and certain other industries notwithstanding). The degree of certainty in collecting one’s receivables, however, greatly impacts not only corporate short-term financing and profitability, but also a company’s financial soundness. Another challenge of late is bankruptcies arising from window dressing and illegal payments’ practices. At a time when the screening of borrowers by local and mega-banks intensifies, cases of socalled corporate “sudden death” can be troublesome. In this context, outsourcing the management of account receivables and/or shifting the debt collection risk to a third party makes more sense than ever. Such outsourcing options, enjoying a great tradition in Europe, have still a ways to go before becoming common practice among Japanese firms, which still rely on, at least nominally, their credit assessment and management departments. Coface’s proprietary credit insurance offerings also include factoring, business information and rating services. An insured’s bad-debt losses may occur as a result of bankruptcy or payment default by its customers. Through credit insurance, Coface indemnifies the losses. Our protection covers the overall debt collection risk, including insolvency and late payment. Indemnification will take place regardless of whether the cause of loss is due to a political reason or, perhaps, a natural disaster. Generally speaking, Coface’s insurance protection would be extended on a whole-turnover basis. In effect, we would examine all your customers to be covered and set up a credit limit for each one of them. Your customers would be monitored throughout the period your insurance policy is in effect with us.

Such credit insurance coverage provides advantages to your company that are readily apparent. For example, there is early collection in case of bad-debt losses, enhancement and improvement of credit management functions, along with avoidance of huge losses by cost leverage. Furthermore, you enjoy tax write-oﬀ of insurace premium, and enhancement of corporate governance practices, particularly for consolidating internal control.

particular corporate needs. Coface’s mission is to facilitate global business-to-business trade by oﬀering our 130,000 customers four business lines to fully, or partly, outsource their trade relationship management. We also are capable of ﬁnancing and protecting their receivables – be it through credit insurance, factoring, ratings, or business information and receivables management. Our global localised service is delivered

Such outsourcing options, enjoying a great tradition in Europe, have still a ways to go before becoming common practice among Japanese firms. In terms of cost, premium amounts depend on the type of industry, number of customers and sales volumes. In export credit insurance, the country risk is also taken into consideration. In a nutshell, your premium is calculated by multiplying the corporate estimated annual sales by the corresponding premium rate. In most cases, 80% of the minimum premium is deposited at the time of policy inception, while the adjusted premium to be paid later is calculated at the end of the policy year. In addressing particular concerns, Coface also can provide single-risk insurance products to cover specific financial risks, linked to the political context in emerging countries. Coface fully customises such insurance coverage to suit your

by 6,600 staﬀ in 67 countries, whereby Coface’s services reaches over 45% of the world’s 500 largest corporate groups. Coface is a subsidiary of Natixis, whose share capital (Tier 1) was €12.7 billion (end December 2009). We demonstrated an early and strong commitment to the Japanese market, having established a local oﬃce in 1995, transformed into a fully licensed branch in 1999. Coface Japan remains a leading provider of credit risk management solutions. Jonathan Perez, Marketing & Communications, Coface Japan

July 2010

Text and photos ROB GILHOOLY When Nicolas Soergel became managing director of Chinriu Honten in March 2009, his objective was simple, yet undeniably ambitious. “My aim is for this company to become the Fauchon of Japan,” says Soergel, whose normally jovial nature suddenly becomes as sharp and serious as the goods he sells. “My dream is to open shops in London, Paris and New York.” And with that he unravels samples of the product he believes one day will wow epicureans worldwide: not green tea, sake, or Japanese sweets, but wrinkled, pinkish-red, mouth-puckeringly sour umeboshi – often referred to in English as “pickled plums”. “The French have a rich food culture and they have been extremely clever at marketing that,” says Soergel, who holds dual German and French citizenship, and has lived in Japan for eight years. “Japan, too, has a similarly rich heritage that goes beyond the sushi, sashimi and tempura popularised in other countries. I realised that our products are a real asset, an example of that rich heritage that we must preserve and grow.” Soergel began his professional life at Sony while still an undergraduate in Cologne and went on to start up Dyson Germany with a former Sony colleague. He was headhunted by Nippon Boehringer Ingelheim, which brought him to Japan, and then by T-Systems Japan, where he held the positions of president and CEO. By the time he left the latter in early 2009, the company had grown from 35 to 250 staff. A new challenge Still only 40, Soergel has now taken on an altogether different challenge – re-invigorating a traditional Japanese company that was established in 1871 by Monya Komine, a former head chef at Odawara Castle. Soergel’s connection with the company comes through his wife, Takako Komine, a classically trained pianist whom he met during her studies in Salzburg, and who in March became the company’s fifth-generation president. Signs of the company’s proud 140-year heritage are immediately noticeable inside the store where a display case houses 140 jars of pickled plums – one jar for each year of production. “For many years the jars stood on a shelf collecting dust, and the first thing we did when we took over was to spend a night cleaning them,” says Soergel, who is known by his friends as Mr Umeboshi. “It was then that I truly felt the heritage of the company and the responsibility to keep it going. The cleaning was also a symbol for what we are trying to achieve – to keep the core, 50

July 2010

the heritage, but clean up the dust from the past, and move on to make it all look new.” To that end Soergel has introduced new technology to improve company efficiency, and new products – such as ume (plum) jam, ume pie and a unique range of hand made ume-shu (plum wine) – to lure a more varied clientele, including younger Japanese and, ultimately, people overseas. To complement tasting events he is holding at a Tokyo restaurant, Soegel has started the country’s first multilingual web-portal dedicated to plum wine (www.umeshu-japan. ning.com). “Japanese pickles are well-suited to Western tastes, but selling Japanese products abroad is not just about selling a product,” he says. “It’s about selling the story and providing a product that lets people enjoy that story. “A lot of people overseas are fascinated by Japan, by its heritage, its culture, and I think there is a niche there for companies with a long history such as Chinriu. It will take time, but I’m working on it.”

C U LT U R E - S H O C K

IT WAS THEN THAT I TRULY FELT THE HERITAGE OF THE COMPANY AND THE RESPONSIBILITY TO KEEP IT GOING

July 2010

Taking shape These are the rooms and studios where Nissan car designers plan the next wave of cars to hit the streets of the world. Nissan design teams in London, San Diego, Harajuku and Atsugi work on automobile concepts taking into consideration local trends and preferences. The teams use digital sketches and data, computerised virtual reality simulations of yet-to-be-produced cars driving down Californian highways, and life-size clay models precision cut by machinery and honed smooth by Nissan fingertips. This is how the cars weâ&#x20AC;&#x2122;ll be driving soon take shape. New

July 2010

technologies and digital design processes have shortened design development and production times. As the Fairlady Z roams the streets and the zero-emission Leaf is readied for launch later this year, the designers in their Atsugi studios, and their colleagues abroad, are already poring over plans for next-generation Nissan cars.

Photos and text JEREMY SUTTON-HIBBERT See all the photographs at www.eurobiz.jp

LENS FLAIR

July 2010

WORK PLACE

Paul Goudeau President and representative director of Saint-Gobain HanGlas (Japan) Established in 1665, Saint-Gobain, the oldest glass company in the world, started selling to Japan in the early nineteenth century. â&#x20AC;&#x153;Today our glass is used everywhere here, from the Prada building in Aoyama and the Chanel tower in Ginza, to residential windows and roof solar panels throughout the country.â&#x20AC;? Photo TONY MCNICOL Picture taken in entry of the SG Building, designed by A. Abut 54

July 2010