EURObiZ Japan June 2010 by Paradigm

Bubble economy Ad

Andrew Tone Lush Japan Director

European lifestyle cosmetics enjoy the sweet smell of success ALSO INSIDE //

TOMORROW’S SHOPPER The all new Japanese consumer

7 HEAVEN

A driving passion for UK sports cars

2010

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

RICHARD GREHAN

FOCUS 8 Tomorrowâ&#x20AC;&#x2122;s shopper Once consumers in Japan would pay a premium for quality and convenience. Today frugality, online shopping, and eco-friendliness are the order of the day, finds Rob Goss.

CHAMBER SPOTLIGHT 4

June 2010

12 Entering the market Food retail is one of Japanâ&#x20AC;&#x2122;s most challenging business sectors. Justin McCurry talks to European companies determined to enter the market.

16 Bubble economy Alena Eckelmann learns how European lifestyle cosmetics are enjoying the sweet smell of success. Cover photograph Jeremy Sutton-Hibbert

24 The German Chamber of Commerce and Industry in Japan is part of a worldwide network with 120 offices in 80 countries.

COLUMNS 7 From the Editor 20 Talking EURObiZ Japan should open its defence and transport markets to European companies, argues Michel Théoval, president of Thales Japan.

23 Upcoming Events Europe and Japan business-related events.

26 Q&A Justin Ryall speaks with Ambassador Hugh Richardson, outgoing head of the delegation of the European Union to Japan.

35 Event Report

49 Executive Notes

European Council president, Herman Van Rompuy, visits Tokyo for the EU-Japan summit.

How to monetise creativity, asks Dan Slater of the Economist Group?

36 In Committee Japan’s animal health products market is worth more than ¥80bn, and crucial to the wellness of both animals and humans. Geoff Botting talks to the EBC Animal Health Committee.

39 Green Biz

Logistics and Supply Chain Management

54 Culture Shock Volker Finke is the manager of the Urawa Red Diamonds soccer club. Sean Carroll travels to Saitama to meet the German veteran of the beautiful game.

Toyama is the latest of 65 cities around the world to host the Cyclocity bicyclesharing scheme. Christopher S Thomas talks to organisers MCDecaux.

56 Lens Flair

40 Who’s Who Directory

58 Work Place

30 Investing in Japan Caterham Cars Japan offers a quintessentially British driving experience.

50 Special Advertising Section

Membership clubs

Photographer and author of “Drainspotting”, Remo Camerota, documents Japan’s unexpectedly fascinating manhole covers.

Thomas Jonsson has two jobs: life science ambassador and scuba diving instructor.

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

June 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

Now with even more support just when you need it

Designer/Illustrator Akiko Mineshima

Laura Schmelling Production and distribution Yumi Mitsuyama Herman Francesca Penazzi eurobiz@paradigm.co.jp

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Fred Varcoe reports on Caterham Cars Japan, page 30

Fred is a freelance reporter covering cars, sport, music and travel. He is an auto and sports writer and previously the Asian contributing editor for Automobile Year

Sean is an English freelance writer currently researching a book on football in Japan. He is a correspondent for the-AFC.com and has written for When Saturday Comes and Football Punk. This summer he will be part of The Guardian Fans’ Network for the World Cup. “I am a huge fan of Japanese football and think it has enormous potential. I am also aware of the problems here though, and speaking to Volker Finke, a fellow European

Remo Camerota photographs Japanese manhole covers, page 56

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Remo runs Tokyo-based Whitewall Studio, which creates concept realisation, graffiti,

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.

and editor of nissankuruma.com. He was formerly the sports editor for The Japan Times and a feature writer for London-based magazine Home and Away. “I remember going to the Lotus and Aston Martin factories in 1985 when I was writing a series of articles called ‘Best of British’. They were almost like cottage industries, but I felt a certain amount of national pride in the beautiful cars they produced. In the 21st century, the Caterham 7 is a little bit of lunacy that frankly we need more of.”

Sean Carroll meets Urawa Red Diamonds manager Volker Finke, page 54

with a central role in the game and many opinions about it, was thoroughly enjoyable.”

multimedia, illustration, video, photography, design and sound for both new and moving media and print mediums. His vision is to challenge and inspire with new ideas, from concept to completion. “Japan is the only country in the world that sports full-colour manhole covers of over 6,000 different designs. Drainspotting has become quite a phenomenon now with people travelling far and wide to visit these manhole covers.”

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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

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FROM TH E EDITOR

Cautious consumption When I arrived in Japan a few years after the bubble economy, it wasn’t uncommon for English teachers to virtually furnish entire apartments from the “rubbish” left out by their neighbours. Ever so slightly distressed (but perfectly usable) furniture and crockery – even stereos and TVs – were there for gaijin magpies. There are thin pickings for anyone except the crows today. After years of recession and deflation, Japan’s consumers are wary of waste, and have switched from conspicuous to cautious consumption. Out with over packaging, over pricing and rapid replacement. Shopping needs to be cheap, easy and eco-friendly. How can European companies take advantage of this new mindset, we ask

But as Andrew Tone of Lush Japan points out, while value for money is now essential, other things haven’t changed. The Japanese penchant for quality and detail is as strong as ever. There’s a reminder of that from an unlikely source in this issue. Take a look at Remo Camerota’s “Drainspotting” photo story (page 56). The manhole covers are as lovingly and imaginatively crafted as any designer product. What country in the world but Japan could turn drains into art? in this issue? Rob Goss looks at some of the social and economic trends (page 8), while Justin McCurry and Alena Eckelmann talk to European players in the supermarkets (page 12) and toiletries (page 16) sectors.

Tony McNicol Editor-in-Chief

tonymcnicol@paradigm.co.jp

CORRECTION In our May issue Who’s Who on Management Consulting in Japan, Rick R. Cogley’s name was spelt incorrectly. We apologise for this error.

Tomorrow’s shopper

RICHARD GREHAN

Selling to the postrecession consumer Text ROB GOSS

Recession, the internet and social change have transformed the world’s second-largest retail market. Once prepared to pay a premium for quality and convenience, shoppers are now looking for bargains and cutting back on spending. The result is an increasing number of consumers turning to lower cost private label goods, such as the own-brand food and drink sold by supermarket chains. More people are also taking their lunch to work – a trend that has spurred the term bentodanshi (lunch-box man).

June 2010

Exemplifying these changes, over 50% of respondents in a September 2009 MyVoice survey said they were ready to “spend time to save money”. Only 13% would still “pay to save time”. Meanwhile, of the 14,000 consumers polled, over 70% said they were either economising or resisting buying nonessential items. And though value hunting has its roots in recession, it will likely survive any economic recovery, says Brian

Salsberg, principal at management consultancy firm McKinsey & Company Japan. “When consumers finally make the leap to value, their internal compass for these things tends to get permanently reset,” he says. But spending habits aren’t the only thing being reset. Changes are afoot in the way people shop too. Taneo Moriyama, managing director of Insight Inc., a Tokyo-based market

FOCUS intelligence firm specialising in food and distribution, says today’s consumer is increasingly consuming online. “Japanese consumers now have more options for shopping and more ways of getting and sharing information on products and services,” says Moriyama, who is also the Japan representative for market research firm Planet Retail. Professor Michiko Sano of Takachiho University, a member of the Japan Association for Consumer Studies, says the shift has helped drive sugomori – the recent trend for Japanese to stay at home. Besides shopping online, common sugomori behaviour includes opting to rent a DVD instead of heading to the

cinema, or calling for a delivery dinner rather than go to a restaurant. In part this is a cost-cutting reaction to the lingering economic malaise, but Sano says it is also a result of consumers turning their homes into comfortable spaces to feel shielded from the stresses of modern life. But sugomori isn’t the only social change affecting consumption – Sano believes a generation gap is coming to the fore. “You can think of today’s consumers in terms of two groups: those who have experienced high economic growth and those – born after 1970 – who haven’t,” she says. “Those born after 1970 tend to be conservative

Coca Cola Japan’s successful ILOHAS bottled water

June 2010

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FOCUS

A COST-CUTTING REACTION TO THE LINGERING ECONOMIC MALAISE, BUT ALSO A RESULT OF CONSUMERS TURNING THEIR HOMES INTO COMFORTABLE SPACES TO FEEL SHIELDED FROM THE STRESSES OF MODERN LIFE

in the way they consume, while past generations would consume regardless of whether they could afford to or not.” “Younger Japanese are happier with more simple things – they are less materialistic,” adds Moriyama. They are more environmentminded too – something which hasn’t gone unnoticed by one of the most recognisable European companies operating in Japan. “People are much more critical about material choices and their environmental impact,” says Lars Petersson, president and CEO of IKEA Japan. “The traditional view of Japan as a country where everything is overwrapped, for example, is diminishing. For both cost and environmental reasons customers increasingly appreciate simple, functional packaging.” The success of Coca Cola Japan’s ILOHAS bottled water is a case in point. Launched in 2009, the recyclable bottle weighs just 12g, 40% less than normal bottles, which reduces the amount of C02 produced in Coca Cola’s manufacturing process by an estimated 3,000 tons annually. Additionally, the water is bottled locally to reduce the environmental burden of transport, while the reduction in material also cuts waste. Those eco-friendly selling points have helped make ILOHAS Japan’s top-selling single-serve bottled water. Incentives to go online So what can companies do to benefit from these changes? To begin with, they can embrace the internet, says Ernest Higa, chairman and CEO of Higa International, which operates Domino’s Pizza Japan. Doing so would allow them to tap Japan’s 31 million broadband

subscribers, a figure that makes Japan the world’s second-largest broadband market behind the US. It would also help them penetrate a domestic internet retail market expected to expand from under $20bn to anywhere between $40bn and $60bn by 2015. “People in Japan are getting more comfortable using the net – how you can leverage that is the key,” says Higa. “First you have to incentivise people to go online. We did that initially by

Domino’s Pizza Japan were quick to develop an iPhone app.

offering a 5% internet discount on orders; then we realised we needed more added-value.” Now Domino’s uses the internet to better highlight its range of products, and has made ordering online an interactive experience. It also has a GPS system customers can use to track their orders online. Today, over 35% of Domino’s orders are via the net. Higa says the company

has been able to use its online presence to create and target new market segments without cannibalising its traditional customer base. “Our traditional telephone customers are housewives, but now we can also better reach young male customers through their PCs and young women via their cell phones,” says Higa. In a recent McKinsey report on Japanese consumer trends, Salsberg suggests that with Japanese consumer behaviour moving closer to that of shoppers in Europe and the United States, retailers and manufacturers should look to those markets. As well as online shopping, he says, that could mean experimenting with such things as new-for-Japan store formats. It could also include new ways to build and retain customer loyalty. Some notable examples are McDonald’s Japan with its 17 million member-strong mobile phone-user database, and Amazon Japan’s Amazon Prime membership programme. Other companies operating in Japan have even started taking advantage of the growing popularity of social media to build new communication channels and loyalty with consumers, says Sano of Takachiho University. Many companies are tapping into Mixi; with 28 million users it is the most popular Japanese-language social networking service (SNS). Noodle maker Acecook, for example, has set up a Mixi community through which it gets instant noodle flavour ideas and marketing slogans from members. Yahoo! Japan reaches 244,000 followers through its account on Twitter.jp. Even Japan’s politicians are using SNS to engage with the public. Prime Minister Yukio Hatoyama regularly tweets to almost 600,000 followers.

June 2010

Entering the market European companies take a nibble at food retail in Japan Text JUSTIN MCCURRY

June 2010

FOCUS TONY MCNICOL

t comes as little surprise that for decades, foreign supermarket chains shunned the opportunity to set up shop in Japan. They faced a formidable list of obstacles, not least a close-knit, labyrinthine network of suppliers and distributors, and notoriously picky consumers. Many of those obstacles remain in place. While Japanese consumers have long had a penchant for foreign luxury brands, they cling to the belief that cheap unfamiliar groceries from abroad are synonymous with poor quality. The challenges facing big-name retailers from the US and Europe have been magnified by consistent falls in supermarket sales, stagnant consumer spending and the return of deflation, all of which have made Japan’s consumers even more cautious. Yet, foreign supermarkets have cause for optimism. Far from giving up on Japan, retailers such as Tesco, Wal-Mart, Costco and German wholesaler Metro Cash & Carry are expanding

their presence and battling Japanese rivals for a stake in the world’s second-biggest consumer-spending market. They have the advantage of being able to learn from the mistakes made by the French supermarket giant Carrefour, which beat a retreat from Japan in 2005 with accumulated losses of $264 million. Carrefour did not seek leverage via a Japanese partner and soon fell foul of wholesalers when it attempted to source products directly from manufacturers. “It was a bold attempt that eventually created tension and conflicts with wholesalers,” recalled Laurent Levan, a Carrefour executive at the time who is now a group director with the Singaporean supermarket chain NTUC FairPrice. “Carrefour lost the battle and its credibility, and the suppliers never really forgave it for trying to bypass them.” Carrefour’s hypermarkets were the targets of a litany of complaints from Japanese shoppers: they were too big, their

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A CLOSE-KNIT, LABYRINTHINE NETWORK OF SUPPLIERS AND DISTRIBUTORS, AND NOTORIOUSLY PICKY CONSUMERS shelves too high, their aisles too wide and their trolleys cumbersome. “The right thing to do is to take over a domestic retailer, as Wal-Mart and Tesco did,” said Levan. “We failed to appreciate the uniqueness of the Japanese market compared with other Asian countries in which we had a presence.” Tesco, Britain’s largest retailer, has trod a much more cautious path. It bought its first 80 Japan stores in 2003 after acquiring C Two-Network, an operator of smaller supermarkets in the Tokyo area under the Tsurukame brand. Four years later, Tesco – whose own-brand produce and signage had been largely absent from the Tsurukame stores – came out of its shell with the opening of its first Tesco Express in Tokyo’s Oizumi Gakuen neighbourhood. Tesco has since dotted the capital with more Express stores, each about 300 square metres in size. It has offered more own-brand items and opened two large supermarkets in Kanagawa and Chiba prefectures, bringing its total outlets to 128, according to the company’s website. Tesco Japan was unavailable to comment for this article. Local competitors are surely watching carefully for Tesco’s next move. “Japanese supermarkets were happy as long as Tesco stuck to the smaller stores, but big Tesco supermarkets are definitely now seen as a threat,” said Roy Larke, professor of international marketing and Japanese business at Rikkyo University. Tesco’s tactic of sandwiching its own-brand products between pricier and cheaper private brands is proving a clever piece of retail psychology, he added. “The fact that Tesco is still here means it is not unhappy with Japan,” said Larke. “Having said that, firms like Tesco and Wal-Mart don’t yet have the scale to really make Japan work. The question is whether they can build that scale through acquisitions of companies that

already have large premises and supply chains.” Wal-Mart, the world’s biggest retailer, has used its impressive buying power and global network to take on Japan’s inefficient supply chain and expand its presence in a notoriously fragmented market. Wal-Mart took a stake in struggling Seiyu in 2002, later increasing its interest to make the Japanese partner a wholly owned subsidiary. It revamped Seiyu’s distribution system, closed unprofitable outlets, trimmed the workforce, and implemented other cost-cutting measures. Wal-Mart used its contacts with global suppliers to drive its Every Day Low Prices strategy, and now runs 371 retail units in Japan. Although Wal-Mart Japan suffered seven straight years of losses, now it is poised to return to the black. “Since Seiyu became Wal-Mart’s wholly owned subsidiary in 2007, we have been saying that will accelerate the reforms at Seiyu and position it for profitable growth,” said Kumie Wama, a spokesperson for Wal-Mart Japan. “This year we are ready to take the next step in our expansion.” While foreign retailers have learned the hard way about Japan’s structural impediments, that still leaves the tricky question of whether consumers are warming to cheaper products from overseas. “We think that Japanese consumers are more price sensitive than before, but they will not sacrifice quality,” said Wama. In any case, said Larke of Rikkyo University, the near-stasis in incomes during Japan’s two decades of economic turmoil has not yet been reflected in dramatically lower food prices. “The reduction in food prices over that time hasn’t been that great,” he said. “Food should be cheaper than it is, so if you are a low-price retailer with good stores, cheap products of a high quality, and reasonable branding and supply, then now should be a great time to be in Japan.” June 2010

Bubble economy European lifestyle cosmetics enjoy the sweet smell of success Text ALENA ECKELMANN

ix some Sweet Lemon and Wild Cherry, add a little Double Happy and Sexy Dynamite and season with Provence Aroma and Immortelle. Voilà, a magic potion that has opened the hearts and wallets of Japan’s female shoppers on their eternal quest for Beauty. These are products from The Body 18

June 2010

Shop, LUSH and L’Occitane, three European brands that have carved out a niche in the world’s second-largest cosmetics and toiletries market after the United States – one that was estimated at ¥2,223bn in 2009 by Fuji Keizai, a Japanese business research firm. The United Kingdom’s Body Shop celebrated their 20th anniversary in Japan this year. From a single Tokyo store, franchisee AEON Corp, Japan’s largest

retailer, has expanded to 176 outlets generating annual sales of ¥11.7bn (2009 estimate). The Body Shop did well to enter the Japanese market with body care first, says Kikuko Fujita, communications manager at The Body Shop Japan. “Japanese women are very nervous about their skincare regime,” she explains, “They believe that their skin is different from [that of people in]

FOCUS other nations and, hence products by Japanese makers suit their facial skin best. However, the skin of the body seems a different matter; for body care they are not that concerned, and happy to try imported brands.” LUSH, also from Britain, entered Japan in 1999 and now has 140 cosmetics and toiletries stores here. “We differentiate ourselves with handmade products using fresh ingredients such as fruits and vegetables,” says Lush Japan director, Andrew Tone. “We sell many products by weight, and package them as little as possible, keeping value inside the product, not around it,” adds Fumie Miyairi, PR

Manager. “When we entered the market, no one here thought that cosmetics could be fresh, with a sell-by date, and hand-made with a note of who made it for traceability, just like food.” Japanese people are said to dislike strong fragrances, explains Miyairi. “Many people were shocked by the products at first,” she recalls, “however, research amongst our users showed that the main reason they like LUSH is actually the unique scent.” “LUSH fanatics promote our products on MIXI (Japan’s main social networking site) and we follow their comments and requests closely. As a result we can create new products and bring them to

the shops on a monthly basis.” Nevertheless, even the best market entry plan and local partner can’t always guarantee success. Boots, Britain’s largest drugstore chain, and Sephora, the French cosmetics retailer, came to Japan the same year as LUSH. Boots opened four stores in Tokyo, and Sephora seven. But within two years, both companies had packed up and left. On the other hand, L’Occitane en Provence, another French cosmetics brand, entered Japan in 1998 and currently runs 76 boutiques and two cafes in prime city locations. Nikkei Report estimated 2008 sales at ¥15bn. June 2010

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FOCUS

Lush soaps use fresh ingredients and are sold in a similar way to food

Japan cosmetics & toiletries – category sales in 2009 (¥ billions) Fragrance ¥34.1 Men’s care ¥102.7 Body care ¥114.3

Hair care ¥479.8

Skincare ¥990.3

Total ¥2,222.9

Makeup ¥501.7

Main channels sales in 2009 (¥ billions) Department store ¥194.7 Drugstore ¥615.1

Door-to-door ¥213.2

FUJI KEIZAI

Mail order ¥253.5

Total ¥1846.9

Local cosmetics shop/ pharmacy ¥278.4

Discounter/ Supermarket ¥292

Above: L’Occitane and The Body Shop outlets in Shibuya

Cleaning up? It seems that even in a climate of economic crisis – or perhaps because of it – women still want a little luxury, but at an affordable price. L’Occitane, positioned at the premium-end of the mass market, is taking advantage of that. “I buy L’Occitane products as presents because every woman likes them,” says Ayako, a professional in her 40s. “They are a luxury which makes you feel proud and happy to receive them.” Nicole Fall, consumer trends analyst at Asian intelligence research and innovation agency Five by Fifty, suggests the clothing retail market may offer hints to European cosmetics retailers. “Japanese people often think of European cosmetics as luxury products that are too pricy,” she says. “If European cosmetics retailers offer a unique product at an affordable price, similar to the trend that is currently experienced in “fast fashion”, then it is likely that these products will be picked up on the kuchikomi (word-of-mouth) cosmetics websites and blogs.” Online communication and sales are already an important part of

the Japanese cosmetics market. While boutiques are still L’Occitane’s main sales channel, 20% of sales are online. A recent study by McKinsey & Company amongst Japanese women who shop online found that about 25% of them had bought health and beauty products, including cosmetics, online in the last six months. And in an ominous trend for the store-based cosmetics trade, about 30% to 40% of online cosmetics shoppers said that they do not even buy at high-street shops any longer. For the time being, however, The Body Shop, LUSH and L’Occitane are doing well in a vigorously healthy body care category, estimated at ¥114.3bn. The sector experienced growth in 2009 even while the overall cosmetics and toiletries market remained sluggish, according to Fuji Keizai. “Doing business in Japan is about building relationships with customers over the long term,” says Lush’s Andrew Tone. “Quality in a broad sense of the word is what the customer here wants, as opposed to say low prices or convenience, and that takes time through word-of-mouth.”

June 2010

Michel ThĂŠoval EBC senior vice-chairman, president Thales Japan Interview and photo TONY MCNICOL

June 2010

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

first came to Japan for the 1970 Osaka Expo 40 years ago, and we are also celebrating THALES in Japan’s 40th anniversary here this year. For 13 years I have been president of Thales Japan, which is part of the Thales Group and produces electronics for aerospace transport and defence. Our company started selling to Japan in 1898, and our first customer was the Imperial Japanese Navy. Now our business is divided fiftyfifty between defence and civilian. Our industry customers include both major Japanese airlines, civilian public services, plus financial and construction companies for railway projects abroad. Every military boat, ship and plane in Japan probably has “something on board” made by Thales. One target business area for us is air traffic management; the current equipment is very out of date, so the Japanese government is working on a new system. Another target is space. We are looking to cooperate with Japanese space companies. The Japanese side is not aware that their air traffic management systems are so out of date; it is getting more and more difficult for planes to land in Tokyo, and of course there is a safety issue too. People in Japan tend to think that the number of runways is most important, but actually it is the way the planes are managed in the air. Look at the efficiency of the Shinkansen system where trains run every few minutes; a similarly advanced system is needed for air traffic. Many other Asian nations have modern integrated systems, and they have tried to improve the system here, but you can’t fit a jet engine onto a zero-fighter, and a new system is necessary. The train sector is a closed market, and the problem is that all suppliers face a so-called “safety clause”. It is almost secret, known only to Japanese companies and essentially an excuse for them to refuse foreign suppliers. It is not a cost issue, it is a question of habit; the suppliers are always the same small group of Japanese companies.

We have similar issues in our defence business. Japan’s first choice is Japanmade defence equipment; if that’s not available, they go to US makers – and after that, if necessary, they turn to Europe. Ninety-five percent of Japan’s defence spending goes to domestic companies and, of the rest, 87% goes to buy US imports. Having said that, maybe there is a chance for European companies? The first reason is technical: Japanese products look very good on paper and they are an engineer’s dream. But, nevertheless, they are not based on actual combat experience.

YOU CAN’T FIT A JET ENGINE ONTO A ZERO-FIGHTER US products are very good because the market is huge – 50% of the world defence market – but they are designed for that enormous defence system. The US market is very competitive, yet the manufacturers are also quite complacent because the market is so huge. Japan needs defence products for a medium-sized military with a shrinking budget, just like Europe. The second reason there is an opportunity for European companies is a financial one; because of the size of the European market, prices are constrained. Japan is used to high prices, yet generally Europe is cheaper for better quality. Austria is a good example, where even though the country is small, they are very competitive thanks to technical ingenuity and low prices. In my opinion, Japan and the US are not drifting apart – that’s just an idea journalists have invented. Even if it were true, Japan would have no way to survive without the strong support of the US. Having said that, it is better to have two legs than one. The US and Europe do not make the same products, and Japan would benefit from doing business with both. Japan wants to protect

its industry – which is fine – but they still need to push their companies to make alliances with EU countries. Before this stint in Japan, I worked in Moscow, and before that in Paris as a sales manager for Asia. The biggest deal of my career was when I sold a FrancoGerman short-range air-defence system to the Pentagon for bases in Germany. When I came to Japan for the Expo, I was just 25 years old and I worked parttime looking after visitors from overseas. The very first time I came here was to prepare for the Expo actually. I remember it well; it was Christmas, cold and wet – my first impression of Japan was of my own utter powerlessness. Since I could not speak the language, read or write, I had no idea what was going on. Before that I had discovered Japan through the films of Ozu, Mizoguchi and Kurosawa, and like many Frenchmen I practised judo when I was young. We decorated our dojo with huge images of sword-bearing samurai. But when I arrived, Japan was a completely different place to what I had imagined, already a very modern country, in fact, accepting modernity with zeal. But at the same time Japan was guarding its unique cultural identity, and that hasn’t changed. Our Western companies work for profit. But in spite of what Japanese businessmen say to their guests, they don’t work for profit, they work for market share; Japan is the only capitalist country with such a feudalistic approach. Reform in Japan is very difficult, and the reasons are political. There are many rules which prevent foreign imports, and which have little purpose except to benefit bureaucrats. The government has put politicians at the head of each ministry over the bureaucrats, yet I am sure change will take some time. We will not feel the effects of that for a while. Japan is certainly in a bad situation, but remember that Japan has immense resources and still has a very sturdy system that is resistant to many things. Japan could successfully reform itself, and become a tough competitor to China, or it could accept decline.

June 2010

PROMOTION

There is no better way to fly The A380 inaugural service between Japan and Europe by Lufthansa

Lufthansa’s first A380 arrives in Tokyo from Frankfurt on 12 June, and represents the first airline to operate Airbus’ brand new aircraft between Japan and Europe. Tokyo is the first Lufthansa destination for its A380. There is room for more than 500 passengers aboard Lufthansa’s threeclass concept aircraft – on the upper deck are the new, exclusive First Class with eight seats and the top-quality Business Class with 98 seats; on the main deck is the comfortable Economy Class with 420 seats. The new RollsRoyce titanium engines and increased outer-skin thickness translate into a quieter interior. Lufthansa’s A380 is also environmentally friendly with its high-tech paint coating that saves on weight and thus lowers fuel consumption: just 3.3 litres of fuel to carry a passenger 100km, whilst emitting less CO2! There is a new First Class on board the Lufthansa A380. An impressive sense of open space is created by a generous seat pitch and individual lockers instead of the typical overhead bins. The automatic air humidification system – the world’s first on a passenger airline – creates a pleasant

cabin experience. The sophisticated interior design of Lufthansa’s First Class lounges and terminal is carried over seamlessly into the First Class cabin. The new, fully adjustable First Class seat provides superb comfort thanks to its ergonomic design – which can be converted into a complete bed on request. Lufthansa’s network offers daily direct flights between Tokyo and Frankfurt*, Tokyo and Munich, Osaka and Frankfurt, as well as Nagoya and Frankfurt four times a week. The summer 2010 flight schedule, commencing on 28 March, provides access to 205 cities in 82 countries. www.lufthansa.com

You will find further information about the Lufthansa A380, and the chance to take a virtual tour through the new Lufthansa flagship aircraft at lufthansa.com/A380

*Now: LH710 Frankfurt to Tokyo and LH711 Tokyo to Frankfurt daily flights with B747-400 From 11-12 June: A380 will be operated 3 days a week; • LH710 departing from Frankfurt on Tuesdays, Fridays and Sundays) • LH711 departing from Tokyo on Wednesdays, Saturdays and Mondays From 4–5 August: all flights will be operated with A380

EVENTS

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

BLCCJ Mid-Year Party 17 June, Thursday, from 19:00 Venue: Embassy of Belgium Fee: TBD Contact: info@blccj.or.jp

Finnish Chamber of Commerce in Japan

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

Networking: Aperitivo della Camera* 17 June, Thursday, from 19:00 Venue: Bar del Sole (Roppongi) Fee: Free (ICCJ members), ¥1,000 (ICCJ non-members) Contact: iccj@iccj.or.jp

“Why Finns work much shorter hours than Japanese do and seem to enjoy life, yet still stay at the top rank in international competitiveness” 22 June, Tuesday, 12:00-14:00 Speaker: Takehiko Tanaka, author of “How to get home from work at six – the Finnish style of working” Venue: Hotel Okura, Kensington Terrace Fee: ¥6,000 (members), ¥8,000 (non-members) Contact: fccj@gol.com

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

Luncheon Meeting: Patent Filing Strategies in Japan: How to Achieve an Edge over your Competitors 24 June, Thursday, 12:00-14:00 Speaker: Felix-Reinhard Einsel, Sonderhoff & Einsel Law and Patent Office Venue: Shangri-La Hotel Tokyo, Ballroom Fee: ¥6,000 (members) Contact: events@dihkj.or.jp by 17 June

Ireland Japan Chamber of Commerce www.ijcc.jp/

Farewell Event for Irish Ambassador Brendan Scannell and Counsellor Gerard Keown, Embassy of Ireland in Japan 7 July, Wednesday Contact: www.ijcc.jp

* Light buffet, cash bar (¥500/drink)

Swedish Chamber of Commerce and Industry in Japan

www.sccj.org/

June Club Evening 15 June, Tuesday Venue: Restaurant Stockholm Contact: office@sccj.org

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

Meishi Exchange Party* 10 June, Thursday, 18:00-20:00 Venue: International Convention Hall, Tokyo CCI Fee: ¥6,000 Contact: sccij@gol.com

JULY S

* Co-organised with the German, Polish and South African Chambers of Commerce.

16 June, Wednesday afternoon Venue: EU-Japan Centre, Tokyo Contact: www.eu-japan.eu

Farewell Dinner for H.E. Ambassador Fivat & Mrs. Fivat

* Organised by the EBC in Japan, with support from the EU-Japan Centre

14 June, Monday, 18:45-21:30 Venue: Ukai Toriyama Fee: ¥10,000 (plus ¥2,000 charter bus from/to Shinjuku, 17:30) Contact: sccij@gol.com

Reception in Honour of the Visit of SCCIJ Kansai Event Minister Ryan 14 June, Monday Contact: www.ijcc.jp

www.fcc.or.jp/

Luncheon Meeting:

JUNE

25 June, Friday Venue: LED company, Osaka Harbour, FTEPA & Networking Contact: sccij@gol.com

EU-Japan Centre for Industrial Cooperation www.eu-japan.gr.jp/english/

Practical Information on Japanese Immigration Policy*

EU Renewable Energy Policy and Recent Developments: Introduction of Policy & Research Initiatives by EU Member States* 30 June, Wednesday, 16:00-18:00 Venue: Pacifico Yokohama Contact: www.renewableenergy.jp * Co-organised by EU-Japan Centre, UK Embassy in Japan

Challenge towards World-Class Manufacturing 28 June-2 July Venue: EU-Japan Centre (and other locations for site visits) Contact: www.eu-japan.eu

June 2010

German Chamber of Commerce and Industry in Japan Deutsche Industrie- und Handelskammer in Japan Sanbancho KS Bldg., 5F, 2-4 Sanbancho, Chiyoda-ku, 102-0075 Tokyo, Japan Tel: 03-5276-9811 • Fax: 03-5276-8733 E-mail: info@dihkj.or.jp

www.japan.ahk.de

BOARD MEMBERS President:

Arno Tomowski, ThyssenKrupp AG

Vice-President:

Otto F. Benz, Lufthansa German Airlines

Vice-President:

Gerd Tellbüscher, Wagner Spraytech Japan Ltd. Ulrich Sieler, Evonik Degussa Japan Co., Ltd. Manfred Hoffmann, Delegate of German Industry and Commerce in Japan Hiroshi Akai, RATIONAL JAPAN CO., LTD. Claudia Buholzer Rosenkranz, Munich Re Japan Services K.K. Dr Ulrich Hanfeld, Otto Japan Inc. Dr Karl Roeser, Merck Ltd. Thomas Seidel, Freudenberg Representative Office Asia Michael Spatz, C. Illies & Co., Ltd. (K.K. IRISU) Dr Reinhold Otto Stapf, Dräger Medical Japan Ltd. Herbert A. J. Wilhelm, Schenker-Seino Co., Ltd.

Cooperation and partnership A distinctive feature of the German Chamber of Commerce and Industry in Japan (GCCIJ) is its part in a worldwide institutional German network for foreign trade promotion and corporate support. The organisation has 120 offices in 80 countries and provides professional services under the brand “DEInternational”. GCCIJ executive director, Manfred Hoffman also represents the main German business institutions in Japan. “We are a chamber made up of members,” he says, “but

at the same time we function as an official German service organisation offering support to companies, investors, business associations and other institutions active in the bilateral economic relationship between Germany and Japan. The strong advantage of that is being able to use the day by day experience of companies here in Japan to advise those not yet present.”

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CHAMBER SPOTLIGHT

The GCCIJ has nearly 500 members, making it the third-largest foreign chamber of commerce in Japan. The main industries represented in the membership include chemical, pharmaceutical, automotive, automotive suppliers and machinery. Hoffmann points to several sectors with particular potential for German companies, such as environmental technology, food and food processing machinery. Another is healthcare technology. “I think this is a very interesting field to learn from each other because both our countries have the same challenge of an ageing society,” says Hoffmann. At the heart of the chamber’s work is facilitating cooperation between Germany and Japan, even in areas where rivalry might be considered more usual, such as research and development. An example is the German Innovation Award, which is granted by a group of 12 major German companies to young Japanese researchers. “The idea is to increase cooperation between German companies and universities or other scientific organisations in Japan. It is in the interest of Japanese institutions to learn from the German side, to find partners to increase their network, to sell patents,” says Hoffmann.

“There are many fields where one nation is better than the other, or where one could learn from the other one. But of course, if you don’t identify a win-win situation, there will be no cooperation.” The chamber is also keen to encourage Japanese companies to visit Germany’s huge and numerous trade fairs which attract visitors and exhibitors from all over the world, plus hundreds of journalists. “Japanese companies can see their competitors; they can see the development of the market and the development of technology,” says Hoffmann. “And, of course, they can increase their network, using all those people from all over the world.” An important part of the chamber’s work is promoting Germany as a location for Japanese investment. Hoffmann identifies two main merits for Japanese firms. The first is location. Much like Japan is a hub for Asia, Germany has “perfect infrastructure and is at the geographical centre of Europe”. From Germany, companies can easily reach clients both in western and eastern Europe. The second is the strength of German research and development, and the chance to be near German universities and research centres. In the same way, the GCCIJ also

WE ARE A CHAMBER MADE UP OF MEMBERS, BUT AT THE SAME TIME WE FUNCTION AS AN OFFICIAL GERMAN SERVICE ORGANISATION Manfred Hoffmann

energetically promotes Japan to German companies. “The main advantages are reliability, of course – and a very strong and large market,” says Hoffmann. “Japan is still number two in the world.” “Another point, which is sometimes underestimated,” he adds, “is that being in Japan is not only important for the Japanese market, but also to prepare business with Japanese companies in other countries. For example, a German company that wants to do business with Toyota in Brazil would find it useful to maintain contact with Toyota here.” Globalisation – in a word – is also one reason why EBC membership is an important tool for the GCCIJ. “To underline the point,” says Hoffmann, “we recognise the EBC as our trade policy arm. We support the EBC in our role as a main stakeholder, and we recognise that all those lobby activities should be concentrated on a European level and not a national level. The EBC is an important partner for us.”

IFA 2009 (international consumer electronics show in Berlin)

June 2010

Changing times Julian Ryall meets EU delegation ambassador Hugh Richardson

Photo ROB GILHOOLY

Hugh Richardson is the outgoing ambassador and head of the delegation of the European Union to Japan. He has led Europeâ&#x20AC;&#x2122;s diplomatic presence here since August 2006, and was also involved in economic and commercial negotiations between Europe and Japan in the mid-1980s. He retired this May and is returning to Europe with his Flemish wife, Lisbeth, to indulge his passion for sailing. What was the biggest achievement of the delegation during your time here? There has not been a single thing as it has been more of a process. We have developed a fantastically collaborative relationship with the member statesâ&#x20AC;&#x2122; embassies and worked together to get the attention of politicians and civil servants. That was not always the case in the past. 28

June 2010

Was that hard to achieve? Logistically, it has been complicated. There are 25 member state ambassadors and embassies here and we meet at all levels, the political, financial, the ambassadorial and others. So it is very labour intensive. There is a huge amount of information sharing and consultation on the issues of the day. At the other end of the scale, Japan, when it is not navel-gazing

Q&A

AN ACTIVE PARTNERSHIP BETWEEN THE MEMBER STATES, THE EMBASSIES AND THE EBC

In what areas might you have hoped to make more progress? Non-tariff barriers, particularly in view of the summit in Prague in 2009, in which Japan and the EU identified four areas where, supposedly, quick progress would be easy: government procurement, car safety standards, medical equipment and wood product standards. On three areas there has been a little bit of progress, but if we measure the results in terms of trade flows then it has been zilch. That is a disappointment. What will be the biggest task facing the incoming EU ambassador? Putting in place a new framework for EU-Japan relations. That relationship is now based on the Joint Action Plan that was introduced in 2001 and runs until December 2011. We need to put something new in place, but there is huge debate over what it should be, and how it should be formulated. The current action plan is a non-binding series of commitments but, frankly, the results have been a disappointment. There is still not enough trade, cross-investment or collaboration in such areas as research and development aid.

â&#x20AC;&#x201C; which it spends a lot of time doing at the moment â&#x20AC;&#x201C; has its own preoccupations. Joint first on that list would be China and the United States, followed by the Koreas, North and South, and then the wider environment of the Pacific, East and Southeast Asia and Russia. So the European Union, even though for many Japanese it is the most important market and partner, is still fairly far down the list of priorities. We are constantly reminding both the Europeans and the Japanese that we are both democracies with free markets, a free press and good records on human rights, so we have a lot in common, particularly when you look at some of the neighbours here. This relationship is a rock of stability in a very stormy sea and we should develop and encourage it at all levels.

What changes have you noticed in Japan-EU relations during your time here? I was in Japan as the trade representative between 1984 and 1988. At that time, relations with Japan were tense and controversial. We had a tendency to trade insults. For example, one person referred to the Japanese as workaholics who lived in rabbit hutches. When I came back in 2006, I was really struck by a lot of change. First of all, the acrimony had gone out of the relationship, and the trade balance was less absurdly imbalanced. Then we had the election and just before the vote, Yukio Hatoyama published an article in which he demonstrated a significant level of knowledge of the EU. He explained how the EU works, and the subsidiarity principle, and how it could be applied as a model for East-Asian integration. Suddenly, we have a prime minister who has knowledge of and interest in the EU, and who wants to engage with the EU. Which areas have benefited the most from closer ties between the two sides? There are some specific examples of good collaboration; Afghanistan is one area where we are working together. The Japanese working in Afghanistan are being looked after by our member states. We are both off the coast of Somalia dealing with piracy and sharing information. We have close positions on climate change and greenhouse gas emissions, although we did not work closely enough in Copenhagen during the discussions. We are also working together in June 2010

Q&A

nuclear fusion research, at Cardache in France and Rokkasho here in Japan. Can you identify any turning point in the relationship during your time here? That would have to be the summit of April 28, where there was clearly extremely good chemistry between Prime Minister Hatoyama and Herman Van Rompuy, president of the European Council, and Jose Manuel Barroso, president of the European Commission. They have set up a high-level group that will release an interim report this autumn on a framework for the future of our relations. There is a genuine desire to relaunch and reinvigorate the relationship. What have we been able to learn from the recent economic turmoil in Europe? It has received a lot of attention here and that’s no coincidence because Japan has a lot in common with Greece, such as a high debt to GDP ratio and high levels of borrowing. But I don’t think Japan is in the same position as Greece because it is not having the same problems servicing its debt. What is the status of the talks on a free-trade agreement between Japan and the EU? This is part of what the high-level group will be looking at, but there is currently deep scepticism in Europe that Japan can deliver on non-tariff barriers following the failure of the four test cases. A lot of the next 12 months will be devoted to seeing if Japan can actually deliver. They want us to reduce tariffs on cars and electronic products; our objective is not tariffs but standards, certification procedures, customs procedures and so on. It would be very easy to sign an agreement on these issues, but there need to be measurable results and trade flows that show the results.

What has been the impact of the Lisbon Treaty on the EU foreign service? It is still early days, but I’m no longer the head of the commission delegation here, but of the EU delegation, which is quite a significant change. The EU now has an ambassador in virtually every capital city in the world. We operate under a new legal framework. My boss is Catherine Ashton, vice president of the commission, and she is answerable to both the member states and the commission. That’s a big legislative change and will mean that doing business with the EU will become easier. Now we know the chain of command and that the commission speaks for the EU. It also gives the member states more ownership. Away from your duties in Japan, how have you been able to relax? I understand that you are a keen sailor … I have a Japanese friend who invites me onto his boat but I’m looking forward to spending four months pottering around the Baltic after my retirement before returning to southern Holland. I’ve done a lot of travelling all over Japan, much of it by car because we have a Labrador, and I’ve skied all over northern Japan. If I had to choose a favourite place, I would say Nozawa in Nagano or the Shiretoko peninsula in Hokkaido. But I’m looking forward to getting back to the sailing. If you could give one piece of advice to your replacement, what would it be? You have to invest intellectually in this country. You have to empathise with and understand the country in order to operate effectively here. It is essential to acquire at least a minimal knowledge of the Japanese language. You must maintain an active partnership between the member states, the embassies and the EBC; that triangle is the key to success.

THERE IS STILL NOT ENOUGH TRADE, CROSS-INVESTMENT OR COLLABORATION IN SUCH AREAS AS RESEARCH AND DEVELOPMENT AID

June 2010

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

HEAVEN Caterham Cars Japan Text FRED VARCOE Photos PIERRE-LAURENT RIBAULT

FRED VARCOE

on shipping costs.” On arrival, the cars are put “We shifted 48 cars in 2009,” says Justin Gardiner through a pre-delivery inspection to check for any with a grin on his face. He’s not being smug. He’s faults before the dealer and the customer get hold just genuinely proud of the fact that in his first of the car. In terms of selling, Caterham’s sales year as brand manager with Caterham Cars Japan, arm in Japan doesn’t wait for blokes in tweed the company more than doubled its sales. “You caps to walk through the door and hand over could say we bucked the trend of the world auto ¥4 million; they import them from their UK base market, which, for example, saw Toyota sales in Surrey (at Caterham, of course) and go about plunge from 10 million vehicles to 6.5 million.” the usual process of looking for customers and Well, you could say that, but British firm promoting their product. Caterham Cars is not competing at the mega-volCaterham chose wisely when appointing ume range of Toyota, GM or BMW. In fact, they’re Gardiner as its brand manger. He was well known not really competing with them on any level – or, as an auto journalist and the thought of selling indeed, with anybody else. something as British as roast beef in Japan really Caterham Cars serves a niche market – a niche appealed to him. market of around ¥200 million in Japan. The “Being a thoroughbred company sells, in effect, British product is really one model of car: the a great selling point,” two-seater, open-topped emphasises Gardiner. Caterham 7, based on “Many dealers really go to the famous Lotus 7 of town on the ‘Britishness’ years gone by. In some of the product – they have ways, it’s the same car Union Jacks, old BP petrol that Lotus legend Colin pumps and British racing Chapman first put on harnesses.” (Japanese law the market in 1957. But requires that inertia-reel Caterham, which took belts are also installed.) over production in 1973, British racing green is has updated it, modernby far the most popular ised it and globalised it. Justin Gardiner sits in the cosy cockpit of a Caterham 7 colour for the car. In addition, Gardiner points out, The Caterham 7 is still the rip-roaring roadster it so much of the “British” auto industry isn’t really always was. It’s an analogue car in a digital world, British anymore. Rolls-Royce, Bentley and Mini are and its owners dedicate their lives to it. German; Lotus is Malaysian; and Land Rover and Gardiner says that Caterham owners are like a Jaguar are Indian. little club, a factor that restricted sales in the past. Ironically, a less attractive British factor – the The sales effort was so weak, there wasn’t even a UK’s faltering economy – has also helped to sell brochure for the car. cars in Japan. “There was no marketing and no advertising; “When we took over on 1 January 2009, we they were just waiting for customers to walk looked at the price of Caterhams in Japan and in through the door,” Gardiner explains. When that the UK, and saw a big gap,” explains Gardiner. “It happened, Japan would dial England, order up a was partly due to the exchange rate and partly car and wait for it to be sent over on a boat. because the previous company was looking at low “They were brought in one by one,” he says. sales and a higher margin. Bringing in the cars five “Now, we bring them in five at a time to save June 2010

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

MANY DEALERS REALLY GO TO TOWN ON THE ‘BRITISHNESS’ OF THE PRODUCT – THEY HAVE UNION JACKS, OLD BP PETROL PUMPS AND BRITISH RACING HARNESSES Justin Gardiner at a time reduces the import cost and the need for a bigger margin, while the exchange rate for the pound has made an enormous difference. We gambled that the yen would stay strong, and it’s paid off. We reduced prices by 35% and more than doubled sales.” Other importers, Gardiner points out – this time with a quite obvious smug grin on his face – didn’t do that, and kept the price of their vehicles higher than they should have been. But Gardiner predicts that economic realities will change the picture in 2010 and sales are likely to decline from last year’s high. The collapse of the auto market last year had another spin-off effect that greatly benefited Caterham. At the 2009 Tokyo Motor Show in October, almost nobody else showed up. Well, nobody from overseas. “There was no BMW, no Ford, no Mercedes, no Volkswagen – the only foreigners to show up were Alpina, Lotus and Caterham,” recalls Gardiner. “It was a huge scoop for us because if the big boys had been there, none of the journalists would have come to our stand. Instead, every newspaper, magazine and TV station came over to ask why we were here. We said Japan is the most important overseas market for Caterham and they took pictures of the cars, wrote reports, put it on TV, and it paid for itself over and over.”

The Caterham 7 is still the “rip-roaring roadster” that started out as the Lotus 7 in 1957

In addition to general news outlets, Gardiner has used his media connections to great effect for Caterham. “I was able to get coverage from the high-end magazines down to the convenience store stuff,” says Gardiner. “We also increased our advertising. Now we are trying to cultivate connections with the fashion industry and men’s fashion magazines. Many people are into British things such as tweed caps, Paul Smith, etc. Old Minis are still popular, but the 7 is becoming an even cooler motoring icon. So we hope that paying attention to the fashion gurus will help to open up a new market, which up to now has basically consisted of men moving out of middle age.” “Cars are meant to be fun” Caterham operates a one-day rental system so that potential customers can try the car out without a salesperson looking over their shoulders, and they also organise track days at circuits such as Sodegaura in Chiba and Fuji Speedway in Shizuoka, where they teach people how to handle a high-performance car. (The 7 is one of the fastest sports cars in the world.) “The 7 doesn’t have traction control or servo-assisted brakes, and that can be a bit of a shock for people at first,” Gardiner points out. “The idea is to show that cars are not just a utility to get you from A to B; they are also meant to be fun. You should enjoy driving.” Gardiner jokes that he copied his sales tactics from London drug dealers. “It becomes an addiction!” he states. “The reality is we want to attract younger

drivers, but young Japanese guys are not so interested in sports cars.” Gardiner’s biggest coup to date was at last year’s Japanese Grand Prix when 2009 Formula 1 champion Jenson Button did his pre-race exhibition lap in a 7. “The TV announcer said: ‘There’s Jenson Button in a Lotus 7, the only road car to compete in a Formula 1 race, and they are still available today.’ ” There is, however, a possibility that they won’t be available tomorrow. Japanese crash laws are being tightened and in 2012 all sports cars in Japan will have to comply with pedestrian impact tests, something that the 7 – along with Ferraris, Porsches, Lamborghinis, Lotuses and others – will have difficulty doing. “Up until now, doing business in Japan has been easier than doing business in the UK,” Gardiner says. “I’ve been pleasantly surprised working with the authorities here. Everything’s been very straightforward and clear-cut.” The manufacturers of several sports cars have petitioned JETRO to make an exemption of the tests for certain sports cars. Should they fail, the 7 may be rarer than it is today on the roads of Japan. “We don’t sell the 7 on its looks so much,” Gardiner says. “It’s about the hardcore experience of driving and feeling the sports car battle the elements – and being able to outpace Ferraris and Porsches.” Gardiner smiles as he drives away with a roar from the exhaust and a twitch of the rear wheels pushing out the back end. If that’s a smug look on his face, it’s the look of a man in his element. June 2010

EVENT REPORT

words The essence of

Press conference by president of the European Council, Herman Van Rompuy 28 April 2010, Japan National Press Club

Text TONY MCNICOL Photo JEREMY SUTTON-HIBBERT erman Van Rompuy, president of the European Council, first permanent European Union head and former prime minister of Belgium, was in Tokyo this April for the annual EU-Japan summit. It was his first summit after taking up his new role in January, and at a press conference for local media, the noted haiku aficionado was choosing his words carefully. “Japan and Europe have a lot in common today,” said Van Rompuy. “We, as civilian powers, are both committed to the value of democracy and the principles of the market economy. Both Europe and Japan need to be not only global economic actors, but also global political actors.” For all Van Rompuy’s unflappable demeanour, a storm was already gathering in Europe over Greek debt. The EU president used the press conference to announce a meeting of eurozone heads of state to discuss the crisis. Van Rompuy also tip-toed around the hottest political topic in Japan, the Futenma air base relocation. “It would not be appropriate for me to comment on this delicate issue,” he said. Although, he did again note similarities

to the situation in Europe. “We are both in the process of redefining our relationship towards the United States, and vice-versa,” he said. He identified four major issues for the EU and Japan. First came trade, “the backbone of our relationship”. Another was foreign policy. Another was network security (threats to the free flow of goods, people and information). Lastly, came climate change, with Van Rompuy praising the ambitious CO2 reduction targets of Japan. With barely a hint of the smug or stuffy politician, Van Rompuy was impressively clear and precise. (Reportedly, his haiku are written to “penetrate the essence of words”.) Yet asked about a possible East Asian Community along the lines of the EU, he was reluctant to give advice. “I can only refer to the example of the EU,” said Van Rompuy. “What we have today is the results of 60 years of work.” He noted that the EU grew from something as mundane as an economic agreement on mining and steel production. “A cooperative partnership including Japan, China and South Korea would be a formidable breakthrough; a clear end to a long history of conflicts between your peoples,” he said. “Is it possible? Well, at least, it is not impossible.”

June 2010

Animal Health// Bringing the latest veterinary medicine to Japan Text GEOFF BOTTING

eeping animals healthy is a critical job, not just for the sake of the animals, but for us humans too. Healthy livestock means a safe food supply, while healthy pets enhance the lives of their owners. The welfare of animals is underpinned by a market for animal health products, which in Japan is worth more than ¥80 billion a year. This market consists of products that fall into two main categories: pharmaceutical (conventional veterinary drugs) and biological (products based on biotechnology, such as vaccines). Although the market for animal health products in Japan has seen steady, consistent growth in recent years, the EBC Animal Health Committee continues to try to convince the Ministry of Agriculture, Forestry and Fisheries (MAFF) to harmonise and streamline its approval requirements so that farmers and pet owners can get access to the best and latest European products. “We’ve made a lot of progress over the past 10 years or so,” says committee 38

June 2010

chairman Dr Tadashi Nagata. He also notes, however, that foreign products can require extensive testing – even after they’ve been proven safe and effective in Europe and elsewhere. A related issue is industry’s good manufacturing practice (GMP). This means that MAFF must accredit factories in Europe that produce veterinary drugs for export to Japan before the product is approved. “Normally, we assume that if a product has been approved by a European authority, then it’s going to be OK. However, that doesn’t mean it’s going to be approved automatically by Japan,” says Nagata, who is a director at Merial Japan. That’s why the committee advocates harmonisation of Japan’s regulatory requirements with those of Europe, the United States and other developed countries. Efforts to accomplish this are taking place through the International Cooperation on Harmonisation of Technical Requirements for Registration of Veterinary Medicinal Products (VICH), a programme made up of government

agencies and industry associations from Japan, the United States and the EU. One committee member, who prefers not to be named, believes that MAFF officials could move more quickly to bring their requirements in line with those of other countries and predicts that eventually they will. “The standards have existed for some years,” the member says. “They have investigated the issue intensively, and I believe the time is right now to make a positive decision.” Yet, at heart the issue isn’t protectionism, according to the member. Rather, it’s Japanese regulators and other bureaucrats who prefer to remain in their comfort zone, shying away from bold action that could potentially disrupt Japan’s existing regulatory system. The committee points out that unique requirements here often mean that the latest innovative veterinary drugs never make it to Japan. For example, the committee member points to minor formulation changes that improve product stability or ease of application. In such cases, studies are required to prove the new formulation is

IN COMMITTEE

as effective as the previous one. In a typical case, a foreign manufacturer will gain approval for the changes based on internationally accepted trials in their home markets. However, Japanese regulators don’t recognise the results, and so the manufacturer is sometimes forced to redo the trials in Japan. How does this block the product’s entry into Japan? Because many companies simply don’t bother selling the newer formulations in Japan. The cost and time aren’t worth it. “They would have to go through a lengthy process – sometimes including unnecessary animal trials, and that for many is not acceptable, not from an animal welfare point of view and not from a business point of view,” says the committee member. “There isn’t much gain for the industry, although there would be a lot of gain for the farmer.” Globally, the market for veterinary medicines, vaccines and related products is split roughly between livestock (65%) and pets (35%), which industry people call “companion animals”. In Japan, the

YET, AT HEART THE ISSUE ISN’T PROTECTIONISM. RATHER, IT’S JAPANESE REGULATORS AND OTHER BUREAUCRATS WHO PREFER TO REMAIN IN THEIR COMFORT ZONE, SHYING AWAY FROM BOLD ACTION THAT COULD POTENTIALLY DISRUPT JAPAN’S EXISTING REGULATORY SYSTEM. ratio is skewed somewhat toward pets, which account for 40% of the total. The main reasons for the difference are Japan’s “pet boom” of the last decade or so, and the fact that the country’s small-scale farming isn’t well suited to handling large herds of livestock. Japan’s market for animal health products is extremely stable. “The market grows at maybe 1 or 1.5% over the long

term, as opposed to a world market growth of maybe 3%, or 3% to 4%,” says Eberhard Baehr, a committee member who serves as country division head of the animal health division of Bayer Yakuhin. “But, then, we don’t have to deal with any drastic downturns either,” he adds. The committee holds face-to-face meetings with Japan’s regulatory authorities several times a year. A meeting on 27 April was held with MAFF officials and a joint team of committee members and representatives of United States companies. As for future trends in Japan’s animal health market, look to human health, advises Nagata. Foreign drugs manufacturers here have long had to jump through the same kind of regulatory hoops as their counterparts in the veterinary field – but have also seen a lot of solid progress in recent years. Nagata says, “I don’t know how many years we’re behind, but we’re quite optimistic that what has been achieved in human medicine can be done for us in the coming years.” June 2010

GREEN BIZ

Business cycle MCDECAUX / CYCLOCITY Text CHRISTOPHER S THOMAS

WORLDWIDE, CYCLOCITY IS A PHENOMENON. ITS 42,000 BICYCLES IN 65 CITIES HAVE BEEN USED OVER 120 MILLION TIMES SINCE THE SCHEME BEGAN.

or local governments looking to ease traffic, revitalise their downtowns and promote healthy lifestyles, French advertising giant JCDecaux has a green solution. Its Cyclocity self-service bicycle-sharing scheme, begun in 2007 in Lyons, is thriving in 65 cities around the world. Now the company has brought Cyclocity to Japan, beginning in Toyama in March with 150 bicycles. Thomas Guedron, president of MCDecaux, the local subsidiary of JCDecaux, says, “This is a great solution – we set it up and run it, so the city gets inexpensive public transport, and the bikes are eco-friendly, healthy and cheap to use.” To access the bikes, which are available 24 hours a day, the user inserts a subscription card (¥500 a month) into the terminal to release a bike. After use, the bike can simply be returned to any of 15 docking stations in the city. The first 30 minutes is free; after that, the cost rises quickly – ¥200 for the second half hour, ¥500 for the third and subsequent half-hours. This is to ensure the bikes remain a “proximity transport system”, available for short utility rides and the “last mile” of people’s commutes, says Guedron. As a result, the vast majority of “rentals” are well under 30 minutes as people use the bikes to get to where they’re going, rather than for sightseeing or just riding around. The bikes and stations are arranged in a 300-meter grid to encourage this type of usage.

Thomas Guedron shows off a Cyclocity bicycle outside the MCDecaux office in Tokyo

The scheme is a winner for everyone. The city gets green cred and dozens of new jobs via an inexpensive and popular public transport system. Residents and visitors get convenient, cheap transportation, while local merchants benefit from greater access to their businesses. And JCDecaux, the world’s secondlargest outdoor advertising firm, makes tidy amounts of money (it doesn’t reveal how much) selling ad space on panels near each docking station. There have been a few problems, such as local merchants objecting to the ad panels in front of their stores. They tend to come onboard, however, after increased foot traffic boosts their sales. When the scheme began in France, there were problems with vandalism, theft and abandoned bicycles, but soon “people came to see the bikes as part of the community and those problems

largely disappeared,” says Guedron. He plans to eventually bring the scheme to Tokyo, though the challenges are daunting. “We believe both the concept and the business model could apply to Tokyo. The only issue [and this is true for many Japanese cities] is that, in order to cover the city centre with a 300metre grid, the number of stations and bikes you would have to install is simply gigantic.” Worldwide, Cyclocity is a phenomenon. Its 42,000 bicycles in 65 cities have been used over 120 million times since the scheme began. It has generated huge media coverage for JCDecaux, including enthusiastic celebrity endorsements. Though the Cyclocity business is still not a growth driver compared with the firm’s other businesses, “looking at the trend worldwide, this could change in the very near future,” says Guedron. And in the meantime, each year Cyclocity reduces humanity’s carbon footprint by an estimated 23,000 metric tons of CO2. June 2010

Whoâ&#x20AC;&#x2122;s Who

Membership Clubs in Japan

June 2010

PROMOTION

Who’s Who // Membership Clubs

Above all the rest Relax, network, dine

oppongi Hills Club, designed by Sir Terence Conran, provides an exquisite setting for formal business meetings, luncheons and dinners, or just a simple planning session over coffee. The main bar, “fifty-one”, is a favourite for after-dinner drinks, providing live entertainment and views of the city to enjoy for hours. Weekends at the Roppongi Hills Club are relaxed, where families, friends and colleagues can come to recharge for the week ahead in a sophisticated setting. Seven restaurants, two bars and three superb banquet spaces comprise the 51st floor of Roppongi Hills Mori Tower, home of Roppongi Hills Club. The wide selection of restaurants includes cuisine exquisitely prepared and presented such as teppanyaki, Chinese, Italian, Japanese, sushi, continental dining and elegant French fine-dining. All of the restaurants are located so that one can enjoy breathtaking views of Tokyo and the surrounding areas – including Mt. Fuji, Yokohama and Mt. Tsukuba on clear days. Roppongi Hills Club has created an environment in which members can truly relax, and offers them the option to choose entertainment according to their preference or needs. An elegant banqueting hall designed with a natural hardwood floor, “the club room I” features the artwork of Hiroshi Sugimoto – one of the world’s renowned artists of modern art. On either side of “the club room I” is “salon I” and “salon II”, respectively, for additional function space, or use as a foyer or waiting rooms. Flexibility

defines “the club room I” which can cater up to 150 guests for dinner or 250 for cocktails. Members also can choose to have their next event in “the club room II” or “the club room III”. The stylish mirrors in these luxurious banqueting halls reflect the elegant and delicious cuisine and create a striking contrast to the warm wood paneling. Beyond the expansive windows is a breathtakingly panoramic view of Tokyo. To accommodate larger events or meetings, “the club room II” and “the club III” can be joined. Roppongi Hills Club also has 17 other private rooms for dining or meetings. Members can choose among dining options available from all of the Roppongi Hills Club restaurants. Of special note, Roppongi Hills Club offers a wedding plan that is tailormade so that the best day of your life is a day uniquely created for you. From the flower arrangements and table coordination to the exclusive menu and cake, we prepare a stylish event with lavish production that will leave a lasting impression with your guests. The Membership team and the Banquet Sales teams are available weekdays, 9:30-18:30, to answer any questions you may have. Membership office, Tel: 03-6406-6060; Banquet Sales office, Tel: 03-6406-6077. www.roppongihillsclub.com While Roppongi Hills Club is conveniently located near Roppongi, Azabu Juban and Nogizaka stations, Roppongi Hills Parking P2 provides prioritized subterranean parking

Per Kredner General Manager Roppongi Hills Club

Seven restaurants, two bars and three superb banquet spaces comprise the 51st floor

spaces for Roppongi Hills Club. Parking tickets are conveniently validated at the Club Reception Desk. At Roppongi Hills Club, we aim to provide a unique environment for members to meet, network and entertain in a formal yet invitingly relaxed setting – whether for business or pleasure. For prospective members, we also hope that you will visit soon.

June 2010

Who’s Who // Membership Clubs

PROMOTION

A home away from home, and then some

or many young families settling into Tokyo from overseas, locating the comforts of home within the bustle of the capital is one of their prime concerns. Those hoping to maximize their professional and personal time often look no further than Tokyo American Club, an 80-year-old private institution that offers a dazzling array of business opportunities, as well as activities for the whole family. “We joined through my husband’s company,” says Claire Law, an England native and mother of two who moved to Japan in 2008, “as it was one of the benefits of his job and of us being in Japan. Lots of our friends from school were already members, so it was something that we wanted as soon as we arrived in Tokyo.” Among its nearly 3,500 members from over 50 countries, Tokyo American Club boasts some of Tokyo’s most elite corporate players and rising entrepreneurs across industries ranging from finance to advertising, along with well-known entertainers, artists and other notable names. The current facilities, situated a short distance from Shinagawa, house fully equipped function rooms to conduct meetings and gatherings of all sizes, a business center, as well as upscale restaurants ideal for wining and dining clients or hosting seasonal parties. A packed calendar of networking events provides ample opportunities to swap meishi, make new contacts and generate ideas. While career-minded members take care of business, there’s plenty on tap to keep the rest of the family

June 2010

active and engaged. The kid-friendly facilities feature a 25m swimming pool and baby pool, vast library and DVD-rental library, childcare center and family restaurant. In addition, there are fun-filled, energetic activities such as squash lessons, crafts workshops, organized pool parties and summer camp. “It’s difficult to know what to do with two young children in the height of a Tokyo summer,” 38-year-old Law says. “Having an outdoor swimming pool in the summer has been such a bonus.” Adults often can be found indulging in their own spectrum of pleasures, whether it’s a wine dinner or luxurious spa treatment. The fitness center, cultural classes, scheduled tours, cocktail parties, Women’s Group programs and one-of-a-kind events ensure even the busiest members can enjoy an inspired, enriching stay in Tokyo. In January 2011, Tokyo American Club is scheduled to open its new eight-story facility in Azabudai, serving as a luminous addition to the Tokyo skyline that includes nearby Tokyo Tower. Some of the highlights of this architectural gem, designed by world-renowned Pelli Clarke Pelli Architects, include a glass-domed rooftop pool, stylish ballroom set to surpass the finest Tokyo has to offer, plush guestrooms, a bowling center, and dining facilities that serve up tantalizing American classics and innovative cuisine from around the world. Members were a driving force behind many of the much-awaited additions in store, such as year-round swimming and a more distinctive

Michael Bumgardner General Manager Tokyo American Club

separation of the family and formal areas. Over more than a decade, the new clubhouse was developed to suit the variety of lifestyles and needs of the membership – for years to come. “The membership, as we understand it, is divided; there are permanent residents and then those who may only be here for several years,” says lead architect Bill Butler, “and so having an environment that works for both, as a kind of second home, is a great thing. That’s what makes clubs so special.” Regardless of location, the community within Tokyo American Club’s four walls seems to remain diverse and true to the club’s mission of sharing culture and fostering international friendships that last long after business is done. The expat lifestyle, according to Law and scores of others, gets even better with an exclusive membership to this vibrant haven in the heart of Tokyo.

Who’s Who // Membership Clubs

The Foreign Correspondents’ Club of Japan

Information Address

Yurakucho Denki Building, North Wing 20F, 1-7-1 Yurakucho, Chiyoda-ku, Tokyo 100-0006

Contact

Wayne Hunter, Assistant General Manager

Tel

03-3211-3161

Fax

03-3211-3168

hunter@fccj.or.jp

Web site

www.fccj.or.jp

Number of members

2,000

Features/Facilities Located in the heart of Tokyo, the FCCJ is a widely respected club with a rich history whose place at the heart of reporting on Japan and Asia stretches back 65 years. The club caters to foreign and Japanese journalists, writers, businesspeople, diplomats, artists and a host of other professionals, and has grown in size and stature to host 150-200 press events a year. From the postwar Occupation chief, Gen. Douglas MacArthur, to modern-day leaders, the club has hosted countless politicians, diplomats, industrial and business leaders, academics and figures from the arts, sports and entertainment worlds. The FCCJ is where the news is made and then reported. Our extensive range of professional services includes a well-stocked library containing resources on Japan/Asia, and a reception desk to help members with their professional needs. Our dining facilities and social activities program are second to none. The Pen & Quill Dining Room, Main Bar, Masukomi Sushi Bar and multipurpose banquet facilities cater to all tastes. Our packed program of events, theme nights, excursions, concerts, book introductions and movie previews offers something for everyone. To reflect our diverse membership, we operate membership categories for journalists, nonjournalists, people aged under 35 and diplomats. Membership cards are available to members’ spouses and partners. June 2010

Who’s Who // Membership Clubs

Roppongi Hills Club

Information Address

Roppongi Hills Mori Tower 51F, 6-10-1 Roppongi, Minato-ku, Tokyo 106-6151

Contact

Kana Suzuki, Team Leader, Banquet Sales

Tel

03-6406-6001

Fax

03-6406-6002

banquet@roppongihillsclub.com

Web site

www.roppongihillsclub.com

Number of members

3,300

Features/Facilities Roppongi Hills Club is a dynamic Members Club that occupies the entire 51st Floor of Roppongi Hills Mori Tower, owned by Mori Building and managed by Hyatt. The Club boasts seven spectacular restaurants with two stunning bars and some of the most soughtafter banqueting and event spaces in Tokyo. Please visit the Roppongi Hills Club homepage to learn more about the activities, facilities and breathtaking views the Club has to offer. Please contact the Membership Office at 03-6406-6060 or via the Club’s homepage if you would like more details about becoming a Member. The Corporate Sales office at 03-6406-6077 will assist you for any meeting, wedding or event information. The Club Room I 350 sq.m: dinner 170 people, cocktail 250 people, seminar 140 people The Clubroom II • III 178 sq.m: dinner 80 people, cocktail 230 people, seminar 60 people

June 2010

Who’s Who // Membership Clubs

Tokyo American Club

Information Address

4-25-46 Takanawa, Minato-ku, Tokyo 108-0074

Contact

Mari Hori, Membership Office

Tel

03-4588-0687

Fax

03-4588-0330

membership@tac-club.org

Web site

www.tokyoamericanclub.org

Number of members

3,300

Features/Facilities There’s much more to the premier membership club in Asia than meets the eye. Tokyo American Club is a second home for a multitude of nationalities, including families from more than 15 European countries. Besides being able to forge friendships with people from across the world, members enjoy mingling with compatriots from the many vibrant smaller communities within the Club family. With its numerous restaurants serving healthy, seasonal cuisine and mouthwatering food that soothes the palate, a vast collection of blockbuster movies, an expansive library of bestsellers and kids’ reads, swimming pool and first-class sports, recreational and spa facilities – the Club is a haven of relaxation and leisure for all ages. The dizzying array of enrichment classes on everything from martial arts and yoga to Japanese art and photography, programs for youngsters, stimulating speaker events and regular winemaker dinners means that the members and their families are never short of opportunities to learn, unwind or just connect with others. Meanwhile, with the Club set to open the doors to its impressive, new facilities in Azabudai in January 2011, Club life is about to get even better. Visit us to discover how the Club’s dynamic community can add an entirely fresh dimension to living in Tokyo.

June 2010

Who’s Who // Membership Clubs

Yokohama Country and Athletic Club

Information Address

11-1 Yaguchi-dai, Naka-ku, Yokohama 231-8684

Contact

James Yamada

Tel

045-623-8121

Fax

045-623-1233

marketing@ycac.or.jp

Web site

www.ycac.or.jp

Number of members

750

Features/Facilities In 1868, just as Japan was being opened to foreign trade, a small group of English merchants formed Japan’s first cricket team, calling it the Yokohama Cricket Club. Located where the Yokohama Stadium now stands, the Club flourished. It was eventually moved to its present location in 1912. Some years later, following a merger with the Union Club, the name was changed to the Yokohama Country and Athletic Club, or the YC&AC. Throughout the years, the YC&AC has continued to expand and is now a full-scale sports club boasting almost 40 nationalities amongst its members and offering one of the most extensive sports and leisure complexes to be found in Japan. Truly a unique place, the YC&AC offers something for everyone – from recreational fun to serious sporting events, from casual family meals to formal dining and official functions for business dinners and meetings, for the young and old, work or pleasure. You’ll soon discover why so many have found the YC&AC the perfect place to be!

June 2010

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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.

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

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EXECUTIVE NOTES

Monetising creativity Japanese companies are more entrepreneurial than you might think What’s in a name? A lot, apparently. At a recent Economist Corporate Network event discussing “entrepreneurialism” it rapidly became clear that nobody quite knew what the word meant. This was all the more surprising with someone as experienced as the number two of Softbank Mobile discussing the concept, as well as the chairman of Qualcomm, not to mention William Saito, a top internet entrepreneur with experience in Japan and the US. The confusion emerged as the topic of “keeping a foreign company entrepreneurial in Japan” was being debated. Naturally, much of the attention was on Softbank’s founder, Masayoshi Son, as well as Qualcomm’s founder, Irwin Jacobs. We heard some excellent, close-up anecdotes about Son’s management style: the life-plan he drew up at the age of 18; the result of his first inspirational speech to his workforce (they both walked out), and his ability to take terrifying amounts of risk without blinking (the $20bn acquisition of Vodafone Japan in 2006). However, Victoria Bolam, the CEO of Kepner-Tregoe Japan, pointed out that the content of the speeches did not match the expectations raised by the title. Most foreign companies want to learn from the experience of Softbank in pushing innovation and financial success – but there are not many Sons to hire for their companies. In effect, the question becomes: how can you adopt some of the virtues of entrepreneurialism without some superman like Bill Gates, Steve Jobs and Masayoshi Son to force them through? Indeed, it’s clear that the common perception of entrepreneurialism is quite flawed: we think of it as rather collegial and cuddly, perhaps a bit like the Beatles – a bunch of friends meeting while they are quite young and stumbling onto something which changes the world through their passion.

But while that might be the first state of entrepreneurialism, it rarely lasts. If that first creative idea is to blossom, it quickly has to come under the control of a master businessman. With the Beatles, it was their manager Brian Epstein and the singer/songwriter Paul McCartney. At Microsoft, Bill Gates took uncontested control, as did Steve Jobs (eventually) at Apple. So successful entrepreneurialism (monetising the original idea) is quite different to early-stage entrepreneurialism. While it’s often considered “good” (or at least fashionable), one has to question whether early-stage entrepreneurialism is in fact desirable in a large company. Should you allow people free rein to work “creatively”? Does anybody even understand the creative process sufficiently to create the right environment? Are you really willing to undermine hierarchy, and allow people who are junior and unqualified to speak with an authority equal to recognised experts? In all likelihood, again, you are not. Whatever they say to the contrary in their recruiting and marketing brochures, Western companies of a certain maturity agree that formal systems and channels are essential. Superiors are gods And here is the other contradiction: while even Silicon Valley companies end up being run along generic, Harvard Business School lines, Japanese companies are different. Ironically, while entrepreneurialism is not associated with Japanese companies, some of the qualities of early-stage entrepreneurialism are very much present even in mature, large Japanese companies. Thus, while Western firms often control the firm in a top-down way, in Japanese companies, things are more bottom-up. Lower and middle managers need to be consulted, and a consensus

IT’S CLEAR THAT THE COMMON PERCEPTION OF ENTREPRENEURIALISM IS QUITE FLAWED: WE THINK OF IT AS RATHER COLLEGIAL AND CUDDLY

needs to be built up before any action is taken. This concept undermines the common view that Japanese companies are very hierarchical and strict. It is certainly confusing. Western companies (with the possible exception of Scandinavian companies) preach openness and collaboration, but are very hierarchical in practice. Japanese companies treat their superiors like gods – but these superiors tend to listen far more closely to their subordinates than their Western counterparts. Another intriguing point: Japanese technology is very creative, but often insufficiently monetised. That leads me to think that entrepreneurialism without money is actually craftsmanship, or art: done for its own sake. And money without art or craft, is speculation. You could conclude that entrepreneurialism strives to combine the two: to create something, as well as to make it lucrative. Does that conclusion help in managing Japanese employees at a foreign company? Yes, but the answer may be quite unexpected: be more Japanese in your management style, while keeping the Western focus on monetisation. Text DAN SLATER, THE ECONOMIST GROUP

June 2010

hipping and freight forwarding have very ancient roots dating back to the Phoenicians, the Cretans, the Egyptians, Greeks and Romans. These highly civilised peoples were mainly trading in the Mediterranean, before later extending trade routes to India as well as to the African coasts. Commercial maritime transportation further developed and flourished during the Commercial Revolution and later expanded even more during the Industrial Revolution. The latter saw the creation of the shipbuilding industries and the introduction in the mid-19th century of the first steel-made steamship line. Airfreight emerged at a later stage, in the early 20th century, progressing further after the second world war with the conversion of military aircraft into freight carriers. This brief historical reference is intended to highlight the tradition that is behind the freight forwarding industry. It is a tradition built on experience handed down through generations and, during transitional periods, adapted to modern times. The activities involved in the simple transferring of commodities from one place to another are not always so apparent. There remain variables in the import and export requirements, depending on the country of origin and/ or destination, plus what commodity is being transported. The role of a freight forwarder is to provide such information, to assist the customer during the process, and to guarantee the successful completion of the transfer. Extensive, consolidated

experience in the business and having a capillary network of sister companies located throughout the world are paramount. A company with many years of handling various commodities and types of shipments around the world are capable of becoming a logistics service provider. The logistics service industry, which has a much shorter history than that of freight forwarding, has been one of the most battered businesses these past few years. It is often considered as an accessory service between manufacturer and retailer. Economic difficulties and financial restraint surely call for a more prudent and wiser management of cost. However, both manufacturer and distributor/retailer should not interpret this as an opportunity to secure a “zero cost” logistics service. Fierce price competition and a tight market have combined to create a condition where, quite often, quality is the first casualty. It also has generated a situation where business sustainability could be seriously compromised, a condition that has led to a steep increase in alliances, partnerships or M&As. What often goes unnoticed, or not valued enough, is how efficient solutions, precise planning, reliable services, and timely support are value-added benefits provided by a quality logistics service provider. The customer can benefit from optimisation of inventories, thereby limiting supply overflow and avoiding product shortages. Furthermore, while assessing the cost of the service itself, not all customers take into consideration the savings that can be generated by an improved and efficient management of the supply

Logistics and Supply Chain Management

Freight forwarding & logistics services

Experience, eﬃciency

Guido Ghiselli Managing Director a. hartrodt (Japan) Co., Ltd.

Eﬃcient solutions, precise planning, reliable services, and timely support are value-added beneﬁts provided by a quality logistics service provider chain and distribution system. In effect, visible costs are generating “hidden” revenues. In a world that is changing rapidly, it has become more and more necessary to maintain a flexible and efficient approach to the market, while holding to a proactive attitude to what the market can provide in terms of demand and opportunity. Japan has always proven to be a very competitive market with an incredibly high level of expectation in terms of services. Experienced providers take pride on having been operative in this country for years, and are here for the long haul. June 2010

Special Advertising Section // Logistics and Supply Chain Management

a. hartrodt (Japan) Co., Ltd.

Allied Pickfords Japan

Tel

03-3596-8170

Tel

03-5549-6200

Fax

03-3596-8160

Fax

03-5549-6201

Web site

www.hartrodt.com/

Web site

www.alliedpickfords.co.jp

Transport is our business. Founded in Hamburg in 1887, a. hartrodt has more than 120 years of experience in the international freight-forwarding industry, and is today a worldwide leader in freight-forwarding and global logistics solutions. Private and independent since its establishment, a. hartrodt has developed through the years its own network in more than 80 countries. Established in 1983 in downtown Tokyo (Minato-ku), with additional facilities around Japan’s main ports and airports, a. hartrodt (Japan) has over 26 years of networking here, and provides a complete range of services to over 2,000 Japanbased companies: - Sea freight and air freight import & export services - Project management - Supply chain management - Warehousing service (temperature control, dry) - Inventory management and local distribution - Customs clearance and consultancy - Cargo tracking/tracing, status reporting and statistics - EDI transmission - Cross trades Food & Beverage Logistics is the highly specialized division of the a. hartrodt Group. We work closely with our clients, offering logistics solutions, attending to the special requirements of short lead times, temperature control and purchase order management that high-quality and sensitive F&B products demand. Please contact Guido Ghiselli, managing director – CEO, Guido.ghiselli@hartrodt.co.jp; or Yasuhiro Ishizaka, Sales and Operations director, Yasuhiro.ishizaka@hartrodt.co.jp

At Allied Pickfords, we understand that you are not just moving your belongings from one place to another. Your life is changing before your very eyes. And, with everything you have to think about during your upcoming relocation, you shouldn’t have to worry about the move itself. Moving over 1,000 families every day in more than 175 countries, Allied is the largest, most recognized moving company in the world; and our experience and expertise will help you get through your move with the minimum of disruption. With local offices in both Tokyo and Kobe, our combination of highly skilled multilingual local and expatriate staff, supported by English-speaking move supervisors and trained packers ensures a trouble-free relocation, whether you are moving domestically or internationally. So relax a little! Let us help reduce the stress of relocating your life.

Asian Tigers Premier Worldwide Movers

Panalpina World Transport (Japan) Ltd.

Address

Nakata Mac Toranomon Bldg. 6F, 1-1-10 Atago, Minato-ku, Tokyo 105-0002

Address

Shiba Mita Mori Bldg. 8F, 5-13-15 Shiba, Minato-ku, Tokyo 108-0014

Tel

03-6402-2371

Tel

03-3451-7525

Fax

03-6402-2305

Fax

03-3451-7967

E-mail

sales@asiantigers-japan.com

E-mail

info.japan@panalpina.com

Web site

www.asiantigers-japan.com

Web site

www.panalpina.com

Full relocation and mobility services to and from anywhere in the world. Asian Tigers specialize in the art of moving. Our focus is on the customer’s wants and needs and, as we know from our experience, an international move involves much more than moving some furniture, no matter how valuable. It’s an emotional time for the whole family and, while we do not promise to make your move a pleasure, we can help to reduce the impact of this major disruption to your family’s life. We offer peace of mind – an attentive partner who takes care of the difficult details, while you do what matters most – taking care of your family. Asian Tigers are experts at working through the difficulties, complexities and variables of your move to keep the impact of your relocation to a minimum. Like our namesake, Asian Tigers is unashamedly proud to be protective and caring. We are prepared to go to great lengths to ensure the highest quality service is provided at all times. Every move is treated as a unique operation. Three Reasons 1. Specialists in the art of moving 2. No obligation, free estimate and quotation 3. Experienced and trusted movers

June 2010

The Panalpina group is one of the world’s leading suppliers of forwarding and logistics services, specialising in end-to-end supply chain management solutions and intercontinental air freight and ocean freight shipments. Thanks to its in-depth industry knowledge and state-of-the-art IT systems, Panalpina provides globally integrated door-to-door services tailored to its customers’ individual needs. The Panalpina Group operates a close-knit network with some 500 branches in more than 80 countries. In a further 80 countries, we cooperate closely with partner companies. Panalpina employs about 13,500 people worldwide. Our business is global supply chain management. We deliver compelling solutions that provide value to all customers – every time. No matter what the size, exact business and location is – we are always driven by qualitative, safety-related and environmental principles that best serve our customers.

Santa Fe Relocation Services

Address

2F EXOS Ebisu, 1-24-14 Ebisu, Shibuya-ku, Tokyo 150-0013

Address

2F EXOS Ebisu, 1-24-14 Ebisu, Shibuya-ku, Tokyo 150-0013

Tel

03-5449-7220

Tel

03-3589-6666

Fax

03-5449-5830

Fax

03-3589-0420

E-mail

InfoRequest@relojapan.com

E-mail

santafe@santafejapan.co.jp

Web site

www.relojapan.com

Web site

www.santaferelo.com

At Relo Japan we are professionals at helping people. Our international team of experienced, multi-lingual consultants is dedicated to providing the highest level of relocation support available. Our relocation service programs are designed to alleviate the burdens of international assignments, so you can focus on the things which are most important to you. We aim to go beyond what is expected, and more importantly, we are your first friends in Japan. Relo Japan is part of The H&R Group. The H&R Group offers complete coordination of any move to Japan, with support targeting not only the assignees and their families, but also the companies for which they work. Personalized and reliable service, clear communication, and cost-effective service programs set us apart as the leaders in Japan’s relocation industry. The H&R Group provides a wide range of real estate, relocation, and lifeenrichment services, ensuring an easy transition to life in Japan for all of our clients..

Get

Santa Fe Relocation Services is celebrating 30 years of service in 2010. We are a leading relocation company operating throughout Asia, providing high-quality services to individual and corporate clients. Our full-service capability provides home and school search, tenancy management, familiarisation programs, settling-in assistance, visa and immigration services, household-goods moving, and much more. Each year Santa Fe handles in excess of 10,000 relocations throughout the world, and is proud to be a major player in the global relocation industry. For all your relocation needs, Santa Fe can cover the world. We maintain one simple philosophy in delivering services globally: create and maintain service partnerships with the best providers. We know who the best partners are – which is one of our greatest strengths – and our clients benefit from their proven quality and dedication to service. Santa Fe owes much of its success to our focus and dedication to quality, and is firmly committed to global quality standards. We are recognized as the industry leader in terms of our investment and commitment to quality systems across all service areas. The mission of Santa Fe Relocation Services is simple: To provide premium relocation services to corporations and families in a manner that minimises costs, yet positively supports the goals of our customers.

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

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 June 2010

Logistics and Supply Chain Management

Relo Japan K.K.

Text SEAN CARROLL Photo TONY MCNICOL

June 2010

C U LT U R E S H O C K

YOU MUST HAVE SELFCONFIDENCE AND ALSO RESPECT ALL OTHER NATIONS, THEN YOU ARE IN A POSITION TO ACHIEVE SUCCESS. NOTHING IS IMPOSSIBLE.

fter calling time on his 16-year stint as head coach of Freiburg in Germany, Volker Finke thought he’d had his fill of football management. But watching Spain triumph at Euro 2008 – where he worked as a commentator for Swiss TV – was enough to prompt a U-turn. And before he knew it, the German had agreed to take charge of J.League giants Urawa Red Diamonds. A little over a year on, Finke is settled into his new job with the Saitama prefecture-based Urawa Reds, arguably Japan’s best known soccer club. But he admits to still being surprised by some aspects of the Japanese work environment, such as frequent staff changes. “In Japan many companies make staff changes every 1 April and this is unbelievable for me. In professional football you need continuity to build relationships between players, manager and head coach.” The 62-year-old refuses to complain though, pointing out that, “Many things change, but I go forward and I follow my idea of football. On the pitch, nothing has changed. It’s my job to decide the style we are playing and this is important to me.” The high esteem in which he holds Japan and Japanese football is clear and several more probing questions about the challenges of working in a foreign culture were respectfully swatted away. “I respect the Japanese way of life and I also try to

find something in the Japanese style which is good for professional football. If both sides are open-minded then you are on a good path.” The J.League has developed extraordinarily quickly since its launch in 1993. From just 10 teams in its inaugural year, the league now has 37 clubs spread over two divisions, with the top-flight attracting an average of nearly 20,000 fans per game. Not all the change has been positive, however. For instance, the money is no longer available for Japanese clubs to lure the biggest names to these shores. But Finke hopes he can assist the Japanese game in its next stage. “They want a profit from me and I will give it to them. I will change a little here, a little there and then I think it’s possible to come to a better level. Japan has to think about the development of players now. They must take care to educate good, young players – this is the big challenge they have now.” He is a big fan of the level of organisation and, particularly, the quality of the pitches in the J.League, which he feels are among the best in the world. “The logistics around the team are so well organised, sometimes over-organised! The green-keepers are very good here too. In Germany the pitches are sometimes unbelievably bad because they are also used for American football games.” As Japan heads for its fourth successive World Cup Finals, Finke is firmly behind the Samurai Blue with some sound advice for the team. “You must have self-confidence and also respect all other nations, then you are in a position to achieve success. Nothing is impossible.”

June 2010

Drainspotting

June 2010

LENS FLAIR

Japanese manhole covers boast a kaleidoscope of colourful designs depending on locality, use and manufacturer – and in recent years have caught the attention of many avid “drainspotters” around the world. There are now numerous photo-blogs dedicated to this cult pastime. Manhole covers often feature a symbol specific to the local area. For example, covers in Kora town, Shiga, feature a turtle (a symbol of wisdom and longevity). Other covers around Japan include local landmarks, festivals, trees, myths, fireworks, boats, rivers, fairy tales, fish, sea creatures, dinosaurs, anime characters and famous Japanese people. Remo Camerota is the author of “Drainspotting”, the first photo book on this topic (Mark Batty, publisher). His work is also available as an application for the iPad and on his blog, www.drainspottingbook.blogspot.com

Photos and text REMO CAMEROTA See all the photographs at www.eurobiz.jp

June 2010

WORK PLACE

Thomas Jonsson Life science ambassador and scuba diving instructor As well as representing 500 Swedish and Danish biotech companies of the Medicon Valley Alliance, Jonsson is founder of Japan Underwater Explorers. â&#x20AC;&#x153;I teach scuba diving every vacation and most weekends. I would go into space if I could. But underwater exploring is the most exciting thing on this planet.â&#x20AC;? Photo TONY MCNICOL 60

June 2010