EURObiZ Japan May 2010

ALSO INSIDE //

IMPRESSIVE FIGURES

Win-win 05

Success for porcelain art brand Lladró Japan

ROOTS OF JAPANESE CULTURE Delving deep into bonsai

The €147 billion joint jackpot from an EU-Japan economic integration agreement

2010

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

COVER

COLUMNS

8 Win-win

7 From the Editor

An economic integration agreement would be a €147 billion opportunity for the EU and Japan, reports Tim Kelly.

Duco Delgorge tells writer Justin McCurry about the EBC’s new Sustainable Development Committee – and how sustainability is a defining issue of our time.

21 Upcoming Events

FOCUS

Europe and Japan business-related events.

14 Foodex Japan 2010 Alena Eckelmann is tempted by a cornucopia of European fare at Asia’s largest food and drink show.

CHAMBER SPOTLIGHT 2

May 2010

18 Talking EURObiZ

24 Q&A Julian Ryall talks to political analyst and blogger Jun Okumura who takes a close look at the DPJ’s first six months in power.

22 The Finnish Chamber of Commerce in Japan is one of the smaller European chambers of commerce, but also one of the most active.

26 Investing in Japan Lladró Japan sells porcelain art from Spain. Despite recession in other luxury industries, the company has increased its profits for a fourth year in a row.

29 Event Report Kai Kurosawa reports from the EU-Japan Centre for Industrial Cooperation where the EBC recently hosted a seminar on Business Continuity Planning.

30 In Committee In 2008, Japan imported ¥89 billion worth of EU makeup, fragrances, shampoo and other cosmetics products.

But trade barriers are a fly in the ointment, finds Geoff Botting when he talks to the EBC Cosmetics Committee.

33 Green Biz Waseda Environmental Institute is a small company set up to market innovative green technology developed at the university. Christopher S Thomas reports.

44 Culture Shock Valentin Brose is delving deep into the traditional and rigorous world of bonsai gardening. Rob Gilhooly visits the young German at his workplace in Tokyo’s Edogawa ward.

46 Lens Flair Days of sake and sakura cherry blossom viewing in Japan.

34 Who’s Who Directory

48 Work Place

Management Consulting in Japan

Dirk Rebel imports all kinds of Dutch goods into Japan.

43 Executive Notes The Economist Group’s Dan Slater believes Japan should be more like Greece.

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

May 2010

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Publisher Vickie Paradise Green

European Business Council in Japan (EBC)

paradise@paradigm.co.jp

The European (EU) Chamber of Commerce in Japan

Editor-in-chief Tony McNicol

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

tonymcnicol@paradigm.co.jp

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

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

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

Published by Paradigm 4-18-12 Takanawa, Minato-ku, Tokyo, Japan 108-0074 Tel: 03-5447-8831 Fax: 03-5447-8832 www.paradigm.co.jp Published monthly in Tokyo. All rights reserved.

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

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

Subscription rates are: one year ¥9,000; two years ¥15,000; three years ¥22,000. ¥800 per copy. Rates include domestic postage or surface postage for overseas subscribers. Add ¥7,500 per year if overseas airmail is preferred. Please allow eight weeks for changes of address to take effect. Subscription requests should be sent to eurobiz@paradigm.co.jp If you prefer not to receive this magazine, and for all matters related to distribution, please send an e-mail to eurobiz@paradigm.co.jp EURObiZ Japan welcomes story ideas from readers and proposals from writers and photographers. Letters to the editor may be edited for length and style.

Contributors Tim Kelly reports on why Japan and the EU need an EIA – page 8 Resident in Japan since 1996, Tim writes mostly about business in Japan as a contributing editor for Forbes magazine, as well as a weekly column, “Tokyo Dispatch,”

Rob Gilhooly is a UK-born photographer and writer based in Japan for 15 years. He has contributed to publications worldwide including Time Asia, the New York Times, the Guardian and The Australian. He is a former staff writer at The Japan Times and in 2005 completed post-graduate studies in photojournalism under the tutelage of Vietnam War photographer Tim Page.

“Looking at bonsai trees, it is difficult not to feel contemplative, relaxed and not a little

Dan Slater writes the Executive Notes column – page 43 Dan Slater has spent almost 15 years in Asia covering the region’s leading business and financial news. As deputy editor and China correspondent for FinanceAsia, he worked out of Shanghai, Beijing, Hong Kong and

for the Forbes website. Before turning to magazine and newspaper journalism, Tim worked for several years at newswires in Japan, including a six year stint at Bloomberg News as the Tokyo bureau’s chief government correspondent.

“Writing this story I soon realised how politically sensitive trade issues are. But in my opinion free trade forces corporations to be more competitive. The ultimate winners are consumers with more choice and better products.”

Rob Gilhooly interviews bonsai student Valentin Brose – page 44

in awe of the amount of care and dedication required to nurture and shape them.”

Taipei to cover the extraordinary story of the rise of China. He also spent two years in Japan covering the country’s efforts to achieve international competitiveness, before joining The Economist Group in September 2009.

“It’s been strange to come from China with 10%+ growth to Japan with consistent negative or barely positive growth. I’m not sure if the model in Japan is “wrong”, or a response to a specific situation. But it does confirm that, in fiscal and monetary affairs at least, Japan is right at the cutting edge.”

FROM TH E EDITOR

“Hana yori dango” Navigating the happy cherry-blossomviewing hordes in Ueno Park (as I did for this month’s photo story) who would guess the population of Japan decreased by a record 183,000 people over the last year?

The economy’s timid recovery is equally deceptive. Much of the recent commentary on Japan has been as gloomy as the (supposedly) spring weather in Tokyo. The Financial Times headlined one story “Japan’s false dawn”. The Washington Post reported how US university undergraduate recruitment from Japan has fallen 52% since 2000. Japan’s not-so-splendid isolation is worsening.

And as Dan Slater points out in his column this month (page 43), if Japan isn’t staring into the fiscal abyss yet, with a public debt of historic

proportions, it is certainly ambling towards the edge. He isn’t alone in suggesting that without bold action, Japan could stumble into an economic predicament to make the last two recessions seem a walk in the park.

Commentators agree that Japan cannot continue this way. But as our cover story shows (page 8), the EBC

has a practical proposal for change and growth – an economic integration agreement between Japan and the EU. Tim Kelly describes an agreement that could benefit businesses and consumers in Europe and Japan to the tune of €147 billion.

In this issue, we spell out the convincing arguments for an EIA. But as the Japanese saying goes, hana yori dango – “rice dumplings rather than flowers”. We all know that Japan desperately needs not flowery words, but something real to chew on.

Tony McNicol Editor-in-Chief

tonymcnicol@paradigm.co.jp

Win-win The â‚Ź147 billion in shared gains from an EU-Japan economic integration agreement Text TIM KELLY

8

May 2010

COVER COPENHAGEN ECONOMICS, ASSESSMENT OF BARRIERS TO TRADE AND INVESTMENT BETWEEN THE EU AND JAPAN

Until eight years ago, Japan was the second-biggest foreign market for goods manufactured in the European Union. Burgeoning trade with the emerging economies of China, Russia and Turkey has since pushed Japan into fifth place, but that alone doesn’t explain Japan’s slide down the trade rankings. Rather, its decades’ old regulatory barriers are still stunting trade between the world’s largest and third-largest economies. animal health products that have the team of economists estimates.

Remove those rules, predicts a already passed a battery of safety tests Eliminate them, and European pharNovember report, for the European in Europe must undergo similar trials maceutical companies, medical device Commission, on trade and investment in Japan. His company, he quips, “needs makers, service industries and food by economic consultancy Copenhagen a van” to send dossiers of information makers, among others, stand to gain Economics, and exports to Japan would requested by Japanese health officials. handsomely, reckons Collasse, a 40-year surge by a half, or €29 billion. Remove And the time it takes to complete the veteran of Japan who is president of tariffs as well and EU exports to Japan testing can impede medical advances in Chanel’s Japan unit. would jump another €14 billion.

Japan for years.

With an estimated further €33 billion Eprinex is one those delayed improveincrease in EU national income, the ments. A treatment developed to kill benefit to the EU could be an astonishEU tariffs Japan welfare roundworm, lungworm, mites, lice and ing €76 billion. €14 billion effects other parasites in cattle without That’s why most European busi€18 billion tainting the meat or milk from nesses in Japan are urging EU dairy cows, it won approval in officials back home to begin Japan tariffs Japan last year more than a meaningful talks with Japan on €25 billion decade after sales began in an economic integration agreeEIA benefits Europe. Until then Japanese ment, a pact to do away with EU welfare effects farmers had to do without, unnecessary testing and restric€33 billion explains Lachaussée, former tions that former president of chairman of the EBC Medical the European Business Council Diagnostics Committee and the in Japan, Richard Collasse, EBC Animal Health Committee. describes as “old fashioned, and EU non-tariff measures For vaccines, the testing hurdle lacking in transparency.”

Japan non-tariff €29 billion is even higher, says Lachaussée.

As a tool to keep out foreign measures It can take years of testing and cost competition, the regulatory fence €28 billion half a million dollars, making it “nearly has worked well. As a percentage of impossible to bring some of them in,” all goods sold in Japan, those made he says. It’s why Merial, which is Japan’s overseas account for a mere 6% of the second-largest seller of animal health total, much lower than the correspondproducts with a 9% share of a $1 bilMichel Lachaussée, president of ing 17% of products consumed in the lion market, focuses mostly on other animal health firm Merial Japan, is EU, says Copenhagen Economics. The pharmaceuticals. frustrated by the added cost that cost of complying with local regulations But, Merial’s persistence is more the duplicate testing imposes on compaadds up to a de facto tariff of as much exception than the rule, according to nies doing business in Japan. Like drugs as 70% for food makers, 30% for medical Collasse. “There are manufacturers and devices used on human patients, device suppliers and 10% for carmakers,

€147 billion

May 2010

9

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COVER

WE WILL HAVE TO GIVE GROUND IN SOME SECTORS TO GAIN GROUND IN OTHERS Michel Lachaussée

Change on the way?

Yet, there are signs of change. Japan, it seems, is no longer the trade bugbear it once was. Its domestic market is contracting as a greying population saps consumer demand. Meanwhile, Japan’s businesses and government have been transformed into eager backers of economic integration. The lure of extending trade ties with the 27 EU member states covering a market of 500 million people has made the Japanese more willing than ever to lower their own access barriers in exchange.

Copenhagen Economics predicts a trade pact would add as much as €25 billion to the value of goods Japan ships to EU member states if tariffs are fully removed, plus €28 billion if non-tariff barriers are removed, and €18 billion in welfare savings – €71 billion in total.

As Nippon Keidanren, Japan’s leading business lobby points out in a paper released in November, Japan has concluded economic partnership agreements that have lowered trade barriers with 11 other economies. Yet combined, they represent only 20% of Japan’s overall trade. An agreement with the EU alone would account for another 15%. In order to keep its economy growing, Japan must “ensure a liberal trade and investment environment,” the Keidanren paper states, adding that the EU “stands as an urgent challenge for Japan.” Contributing to that urgency is a trade pact agreed last year between the EU and regional rival South Korea, which the Keidanren worries will put Japanese companies at a “serious competitive disadvantage.”

With a 10-year action plan for cooperation drawing to a close, the EU and Japan have been circling each other’s wagons for a decade without any trade agreement to show. In the meantime, 70-odd bilateral trade agreements have

Product range when exporting to Japan?

Much smaller than other Asian markets

COPENHAGEN ECONOMICS QUESTIONNAIRE TO MANAGERS OF EUROPEAN FIRMS THAT EXPORT TO JAPAN (ALL SECTORS)

who do not attempt to deal with the non-tariff barriers. They simply focus on easier markets,” he says. Copenhagen Economics agrees, estimating that 60% of European firms doing business in Japan offer a smaller range of goods here than they do in other Asian markets.

The limited range of European foods on offer is one example. As wells as tariffs such as 38.5% on beef and up to 40% on cheese, EU food exporters have to contend with a range of nontariff barriers. As a result, Japanese consumers aren’t spoilt for choice when they visit their local supermarket, says Benoît Chauvel, president of food importer Nichifutsu Boeki.

Complex regulations governing the use of additives deter most EU food companies from bothering to sell in Japan. Those that do limit themselves to simple products, which explains why it’s easy to buy European jams, chocolates and tomato sauces in Japan, but near impossible for consumers to get a taste of anything like ready-to-eat meals.

Even importers who take great care to meet Japan’s food rules can run into trouble. Six years ago Chauvel had to recall thousands of red curry meals after they tested positive for polysorbate, which came from inside one of the ingredients but hadn’t been declared by the supplier. It cost the company and its supplier €130,000 to fix. What made the episode more ludicrous and annoying for Chauvel was that Japan approved the common emulsifier as safe just three years later. Harmonising the rules on food additives would, Chauvel says, lower costs, dissipate risk and give Europeans full access to Japanese supermarkets.

“The EU should offer to make Japan the 28th member state,” he jokes.

39%

Somewhat smaller than other Asian markets

21%

Similar to other Asian markets

20%

Larger than other Asian markets

6%

Much larger than other Asian markets

6%

Don’t know

8%

been concluded among Asian economies as the region binds itself through economic cooperation. Japan knows it can no longer afford to be left behind by insisting on regulations that handicap Japanese companies in need of success overseas.

Gordon Hatton, who runs the construction management business of Bovis Lend Lease Japan, points to regulation that prevents Japanese contractors tapping growing demand for energy-efficient sustainable green buildings. Though competing standards exist, the United States green building system, dubbed Leadership in Energy and Environment Design, or LEED, is fast becoming the global standard, he explains. Talks aimed at bringing competing systems into line are already underway in Europe. Yet, Japan is sticking to its own green construction code and risks falling behind, says Hatton, who also serves as the chairman of the EBC Construction Committee.

Harmonising regulations is, he says, “a two-way street.”

In addition to Japanese foot-dragging, European intransigence poses a serious obstacle to a trade pact – something that stems from the nature of trade between Japan and the EU. Half of the Japanese goods shipped to Europe are cars, trucks and electronic

May 2010

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COVER

THERE ARE MANUFACTURERS WHO DO NOT ATTEMPT TO DEAL WITH THE NON-TARIFF BARRIERS. THEY SIMPLY FOCUS ON EASIER MARKETS Richard Collasse

devices. On the return journey, ships carry a more diverse cargo: medical devices, processed food, pharmaceuticals, cosmetics and machinery, among other products. To persuade the Japanese to lower their regulatory wall and grant more access to European food makers, drug makers and chemical conglomerates, the EU will have to give ground on Japan’s big-ticket item – namely, lowering or eliminating a 10% tariff that Japanese automakers pay on every car that passes through a European Union port.

Many European business people think it’s a price worth paying. “We will have to give ground in some sectors to gain ground in others,” says Merial’s Lachaussée. “There are a lot of benefits for us in giving up European tariffs on cars and electronics in exchange for mutual recognition of standards, norms and accreditations.”

EU automakers could also gain, since Copenhagen Economics reports that non-tariff barriers add an extra 10% when vehicles are brought into Japan.

Removing those barriers would help EU automakers expand their reach outside the limited luxury car market.

Nevertheless, the EU automakers don’t relish a change that could increase competition and lower car prices in Europe. Badly dented by the worst recession in most people’s memory, Europe’s carmakers are in no mood to accept a level playing field for their Japanese competitors. Car production in Europe is at its lowest level in 16 years, down 17% in 2009 from 2008. In a sign of the kind of resistance Japanese trade negotiators can expect, the powerful European Automobile Manufacturers

Association is already busy fighting a rearguard battle to sink the trade deal provisionally signed by the European Commission and South Korea in October last year. The automotive lobby is calling on EU member states not to ratify the agreement, citing the risk it poses to the automotive sector “and their millions of employees.”

Trade talks also face a headwind of protectionism. Politicians under pressure to provide jobs are tempted to sacrifice the longer-term economic benefits of free trade for the short-lived political gains of erecting barriers to foreign competition. Global trade is already creaking under the weight of recession. In 2009 the movement of products around the world slumped by an unprecedented 12%.

The dead end of protectionism Huddling behind a shield of protectionism would, however, be a mistake, warns Michio Ohkawa, who for two years led a taskforce of Japanese businessmen

engaged in dialogue on trade with their European counterparts.

Ultimately, “you can’t protect companies with tariffs,” he advises.

In January last year, Ohkawa, a former senior executive at chemical manufacturer Toray and now advisor to the company, also headed a study group in Japan that was asked to come up with specific proposals for bolstering trade between Japan and Europe. The group concluded that harmonising standards is of “paramount importance”. But it also emphasised that eliminating tariffs remains “the most basic and important issue” for both sides.

Nonetheless, the Japanese business group recognises that the tariff deadlock will be difficult to resolve and wants to focus for the time being on “building trust,” says Ohkawa. To do so, it has proposed a series of pilot projects that for specific products would eliminate or lower Japanese regulatory hurdles. A future trade agreement could cover a wider range of sectors, from telecommunications, intellectual property rights and retail to taxation, shipping, medical equipment and even cut flowers. Those negotiations, believes Ohkawa, could probably be completed within a few years.

Sitting back in his seat, Ohkawa smoothes the lapel of his European suit between finger and thumb. “After all,” he muses, “the Japanese like European products.” Will he and his fellow Japanese be buying more of such products in the future? That may well depend on how much ground both Europe and Japan are willing to give to realise the huge shared potential for growth.

May 2010

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May 2010

FOCUS

Foodex Japan 2010 EU importers at Asia’s largest food and drink trade show find Japan’s tariffs and complex regulations hard to swallow

T

Text ALENA ECKELMANN Photos TONY MCNICOL

here were generous cuts of Iberian ham, sweet-smelling Gouda, succulent German sausages and rich Tuscan olive oils. Visitors strolled past exquisite Brussels pralines, sumptuous Linzer tortes and fresh-baked French viennoiseries, not to mention a spectacular range of wines.

The gastronomic kaleidoscope provided a veritable culinary tour of Europe in a day.

Held at Makuhari Messe convention centre in Chiba prefecture, the 36th annual Foodex food and drink show attracted 73,556 visitors over four days in March. Helping present this

COMPILED BY JETRO USING TRADE STATISTICS FROM THE JAPANESE MINISTRY OF FINANCE

Imports by category (2008) Seafood Grain Meat Oilcake seeds Vegetables Fruits Processed feedstuffs Coffee, cocoa, tea, spices Beverages Dairy products/eggs Other processed foods Animal/veg. oils & fat Sugars Nuts Live animals

feast were 400 exhibitors from 16 EU member states.

Food is, in fact, the number three EU export to Japan after the automotive and chemicals sectors, and the largest food exporters by value are France, the Netherlands and Germany.

Nevertheless, the EU only has a 16% share of Japan’s food imports, well behind the United States’ 25%. Since the EU’s share of total world food imports is 21%, there is much unfulfilled potential for exports to Japan, concludes a recent study by economic consultancy Copenhagen Economics.

Meeting Japan’s strict traceability and food safety regulations could boost EU food exports to Japan, but

the case of EU beef strongly suggests other considerations are at play when Japanese food policy is set. Despite European beef exporters actually meeting all Japanese government requirements, the ban on EU beef remains in force.

One glimmer of hope, however, comes after a study tour by the Japanese Ministry of Agriculture, Forestry and Fisheries (MAFF) and the Ministry of Health, Labour and Welfare (MHLW) to France and the Netherlands last December. According to the Netherlands Embassy, the Japanese government is considering lifting the ban; although, it seems, only on a country-by-country basis.

High tariffs on certain products – such as pork, wine, cheese, butter and chocolate – also unfairly penalise European food importers. Lowering these tariffs would quickly facilitate more trade. But non-tariff measures arguably constitute the larger obstacle.

In the area of processed foods, these barriers include rules for food additives, food safety, packaging and labelling which are either incompatible with EU rules, too strict or simply not clear.

EU exhibitors at Foodex Japan highlighted food additive rules as a

May 2010

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FOCUS

Clockwise from top left: Gábor Paksy, Far Eastern sales consultant for Hungarian sweets maker Felföldi Bernard de le Court, managing director at Lutosa Japan, a potato product importer Cristina Asenjo Cebrián, export manager at Food & Drink from Spain Visitors to Foodex enjoy a taste of Iberian ham from Spain.

particular problem. Felföldi, a family-run Hungarian sweets maker, wants to enter the Japanese market, but has stumbled over Japanese rules for food colouring E120. What is simply E120 in the EU is categorised further in Japan based on different component chemicals, only some combinations of which are permitted.

Gábor Paksy, a Far Eastern sales consultant for Felföldi, comments, “Rather than changing our E120 food colour to fit the Japanese requirements, we are considering buying the approved colouring agent from Japan to use to make products for the Japanese market.”

Not only newcomers to Japan face these problems; established food companies can suffer just as much. Lutosa Japan, a Belgian importer of potato products, has been doing business in Japan for 30 years. But Bernard de le Court, managing director at Lutosa, thought his company was out of luck when he heard of recent MHLW plans to remove 125 substances from the list of allowed food additives.

“One of these substances is said to be pepper extract, a very basic additive that does not pose any problems in Europe,” he explains. “If true, this will affect a number of our products in Japan. We will need to adapt production procedures and the additional costs will only be justifiable if sales are big enough.”

An enquiry to the Japan External Trade Organization (JETRO) in Tokyo about the MHLW list shed little light on the issue. According to JETRO, the MHLW is said to be considering

deleting only “obsolete food Foodex Japan 2010 additives.” What exactly that Exhibitor numbers in country pavilions means, however, remains AUSTRIA 24 uncertain. It is this environment BELGIUM (FLANDERS) 12 of unclear and poorly stated CROATIA 1 policy that makes the Japanese CYPRUS 5 market so challenging.

FRANCE 60 Making sense of food additive GERMANY 12 regulations is no mean feat GREECE 18 – even for seasoned Japan IRELAND 4 experts. “The allowed usage of ITALY 223 certain food additives and their NETHERLANDS 4 maximum level of usage set by POLAND 3 Japanese authorities can create SPAIN 124 problems,” explains Benoît UK 4 Chauvel, chair of the EBC Food Committee. “The maximum limits for benzoic acid or potassium sorbate, for example, can differ depending even on the type of food, and in some cases are much lower than in Europe.”

Athanasios Fragkis is managing director of Nostimia, a Greek importer at Foodex. “I am constantly looking for new European food manufacturers to represent in Japan, but I am increasingly being refused on the grounds that Japan is more trouble than it is worth,” he laments. “I am told that up-andcoming markets like China and India are also attractive. So why bother with Japan?”

May 2010

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Duco Delgorge Founder of the EBC Sustainable Development Committee Interview JUSTIN MCCURRY Photo BENJAMIN PARKS

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May 2010

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

As founder and president of MIE PROJECT, Dutchman Duco Delgorge is using his 18 years’ experience in Japan to seize a sizeable slice of the expanding market in organic foods. Delgorge talks about his work and the newly established EBC Sustainable Development Committee.

Sustainable development is an excellent example of a cross-cutting issue, one that touches many areas of the EBC’s work. That is why it deserves its own committee. After all, sustainable development is arguably one of the defining issues of our time.

The committee will seek to help EBC member companies gain access to, and thrive in, the Japanese market. It will also identify where sustainable development is being held back by regulatory issues. One example is in construction, where we have leading European companies unable to develop as they would like in Japan.

European business is also working hard on sustainable development in environmental technology, automobiles and organic food. We intend to reach out to existing committees within the EBC, as well as other foreign chambers of commerce in Japan. We hope to work in close partnership with the Japanese government, bureaucrats, business groups and consumer groups to identify the important changes required to help environmentally friendly businesses and services flourish.

Organic food is a good example of where Japan’s isolation from the rest of the world, combined with unnecessary regulations and bureaucracy, has stunted market development. Japan is about 20 years behind Europe when it comes to organic food.

Organic food perfectly matched my experience in food and interest in sustainability, so in 2005 I established MIE PROJECT. MIE stands for meaning, inspiration and effectiveness, the company’s three core principles.

Sustainability and social responsibility

SUSTAINABLE DEVELOPMENT IS ARGUABLY ONE OF THE DEFINING ISSUES OF OUR TIME are its fundamental goals. Our products are available in department stores, upscale supermarkets, gourmet delicatessens, health food stores and fashionable cafés. Or they can be ordered online from our website.

Some potential distributors have said that organic products are too expensive, or that Japanese people don’t care about the environment. But more people are recognising that organic is coming. And, although there is a price issue, a growing segment of the market is interested in quality and taste, and in health and the environment.

Japan ranks ninth in the world by size of packaged organic food market, while it ranks 17th by per capita consumption. Yet, in 2008 the Japanese organic food market grew 19.5%, after years of single-digit growth. My company is more than doubling its turnover and distribution base every year.

I was born in Prague, to a diplomat father, and hold Dutch nationality. I spent two years in Prague, then two years in New York. Next, we went to Mumbai for three years. And when I was eight we moved to Sydney, where I later studied biomedical science and completed a business degree at

the New South Wales University of Technology.

I worked for companies such as Philips Electronics in the Netherlands, Unilever in the UK and Japan, and Kraft Jacobs Suchard in the UK. Before establishing MIE PROJECT I was, for over 12 years, managing director of the Japanese subsidiary of Puratos, a Belgian food ingredients company. I am a vicechairman of the EBC and was chair of its Food Committee for eight years.

My interest in sustainability was triggered in 1992 when I read Beyond the Limits. That was my epiphany. It explores all of the factors that show the limits to economic growth, so I decided I would love one day to work as part of the solution rather than be part of the problem. My work is just beginning, and hopefully will lead to things that allow me to fulfil my dreams.

Regarding sustainable development, if you think government is going to fix it all, forget it. If you think business is going to fix it all, forget it. The same is true for NGOs. Everyone has to play a part. Clever businesses are taking the initiative and will gain a competitive advantage. Hopefully, the Sustainable Development Committee can help to ensure that the EBC and European business play a role in sustainable development in Japan.

In this way, we can help fulfil the Bruntland Report’s goal of meeting “the needs of the present without compromising the ability of future generations to meet their own needs.” We have a moral obligation to try our best.

To join the EBC Sustainable Development Committee please contact ebc@gol.com

May 2010

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Summer Camps Their summer camps have gained acclaim amongst the expat and Japanese communities alike, and are the ultimate getaway for kids who are keen to have some serious fun! From canoeing and kayaking, hiking and rock climbing to overnight camping trips and mountain biking, Evergreen camps are really jam-packed outdoor adventure weeks. Based at beautiful Lake Aokiko, campers get to experience real camp life while living in lakeside cabins, assisting with camp cooking and other camp chores.

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Advocating structural and regulatory change to benefit European companies in Japan, as well as the Japanese consumer.

years 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

EVENTS

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

French Chamber of Commerce and Industry in Japan www.ccifj.or.jp/

Belux-France Golf Tournament 2010 27 May, Thursday, 9:24-17:00 Venue: Camellia Hills Country Club (Chiba) Fee: ¥21,000 (members)* Contact: n.yoshida@ccifj.or.jp * Includes registration & green fee, caddie fee, lunch with drink, reception buffet after the tournament and transportation costs

Fee: ¥6,500 (members), ¥8,000 (non-members) (incl. full survey report) Contact: www.fcc.or.jp/survey/lunch130510.html

German Chamber of Commerce and Industry in Japan

Luncheon Meeting: The Finnish Institute in Japan / HIRAMEKI Design Exhibition

German Asparagus Dinner 2010 in Tokyo 27 May, Thursday, 18:30-21:30 Venue: The Westin Tokyo, Galaxy Room, B2 Fee: ¥16,000 (members), ¥20,000 (non-members) Contact: Sayoko Kaneda, Member Services, 03-5276-8720 by 14 May

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

Networking: Aperitivo della Camera*

20 May, Thursday, 12:00-14:00 Speakers: Heikki Makipaa, Director, and Aarne Toivonen, Culture and Communications Manager – Finnish Institute in Japan; Mikko Kolhama, Managing Director, Design Forum Finland Venue: Hotel Okura, Atlantic Room Fee: ¥6,000 Contact: fccj@gol.com

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

Luncheon Meeting:

www.sccj.org/

“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, Terrace Fee: ¥6,000 Contact: fccj@gol.com

Foreign Chambers in Japan (FCIJ)

Business Confidence Survey Presentation 13 May, Thursday, 12:00-14:00 Venue: Shangri-La Hotel Tokyo, Ballroom (27F) Commentator: Richard Jerram, Head of Asian Economics, Macquarie Capital Securities

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* Light buffet, cash bar (¥500/drink)

Swedish Chamber of Commerce and Industry in Japan

Joint Club Evening with Young Chamber Network

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

Training Programmes for EU Business Executives “Japan Industry Insight”

20 May, Thursday, time TBC Venue: Rama, in Roppongi Contact: office@sccj.org

17 May-10 June Venue: EU-Japan Centre (and other locations for company/site visits) Contact: www.eu-japan.eu

Swiss Chamber of Commerce and Industry in Japan

Renewable Energy Policy and Initiatives in Europe

www.sccij.jp/

May Luncheon “Coaching: a must for managers” 13 May, Thursday, 12:00-14:00 Speaker: Philippe Grall, Executive Coaching and Trainer, Equilibre K.K. Venue: Hotel Okura Tokyo, Kensington Terrace Fee: ¥8,000 Contact: sccij@gol.com

30 June, Wednesday, afternoon Venue: Pacifico Yokohama (during “Renewable Energy 2010”) Contact: www.re2010.org

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

May 2010

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Finnish Chamber of Commerce in Japan 2-33-20-203, Tsurumaki, Setagaya-ku, Tokyo 154-0016 Tel: 03-5450-7207 • Fax: 03-5450-7208 E-mail: fccj@gol.com

www.fcc.or.jp

BOARD OF DIRECTORS President:

Marko Saarelainen, Honka Japan Inc.

Vice-President:

Hirokuni Yoshida, Outokumpu K.K.

Directors:

Kaj Forsell, Finland Trade Center, Finpro Masaoki Fujita, Coil Center Fujita Co., Ltd. Petri Hautakangas, Nokia Siemens Networks Japan Corp.

Tuomo Kuuppo, Stora Enso Japan K.K. Pekka Laitinen, Septem Partners Mika Mäkinen, mikAdvance Shigeyoshi Noto, Foresight Marketing K.K. Sakari Romu, FINNAIR Yoshinori Sano, Azabu Tax Corporation Veli Solehmainen, Vaisala K.K. Hiroaki Sugawara, Finn Corporation

A small chamber with lots of ambition With just 62 corporate and 16 individual members, the Finnish Chamber of Commerce in Japan (FCCJ) is one of the smaller European chambers in Tokyo. But like Finland itself (which has a population of 5.3 million people, three million less than in the 23 Tokyo wards), the FCCJ punches well above its weight.

The chamber is run by part-time executive director Clas-Göran Bystedt. President Marko Saarelainen modestly describes the chamber as a “one man show”, but they provide a raft of activities and services to rival much larger organisations.

Established in April 1999, the FCCJ took over from the Finnish Business Council, an informal gathering of Finnish business people in Tokyo. Finland’s trade-relations with Japan date back

to the 1920s with exports of Japanese pottery and silk. Trade in the opposite direction began with Finnish wood pulp in the 1930s, though it was another half century before the first Finnish companies established their own offices in Japan.

Finland’s main exports to Japan are still forest-based, including paper, board, timber, plywood and log houses.

Finnish forest companies have long had a leading position in

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L-R: FCCJ president, Marko Saarelainen and executive director, Clas-Göran Bystedt

22

May 2010

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CHAMBER SPOTLIGHT

FINLAND’S MAIN EXPORTS TO JAPAN ARE STILL FOREST-BASED, INCLUDING PAPER, BOARD, TIMBER, PLYWOOD AND LOG HOUSES

imports to Japan’s highly competitive printing- and packaging- paper market.

And Finnish companies have an even larger share of timber imports for construction and house building with their Nordic spruce and pine.

Yet, wood and paper account for 40% of Finnish exports to Japan, compared with 20% of Finland’s overall global exports. High-tech industry exports, for which the country has become well known worldwide, are less developed.

Finnish mobile communications giant Nokia did reasonably well in Japan during the 1990s, but faced with competition from advanced third-generation phones, they made a strategic decision to withdraw from the handset market.

Nokia Siemens Networks, however, remains a strong player in the Japanese telecommunications market. And recently Nokia’s luxury arm, Vertu, have begun selling their ¥20 million mobile phones here. Bystedt hopes that the release of fourth-generation phones

will enable Nokia to try the handset market again.

Business relations between Japan and Finland are good. “The Japanese are very easy for Finns to do business with.

We have many similar characteristics,” says Bystedt. “I tell newcomers to Japan that if they have ever done any business in America they should forget everything.” FCCJ President Saarelainen agrees, citing contracts as an example.

There’s little going back to the documents to niggle over details. “Once you agree,” he says, “that’s it.”

The huge size of the Japanese market, however, can be a challenge for Finnish companies. “The interest is sometimes bigger than we can respond to,” says Bystedt. Finnish companies may also undersell themselves out of eagerness to enter the Japanese market when first approached by large potential partners.

There are only 40 Finnish-affiliated companies in Japan, only one third of which are run by Finns. Consequently,

the chamber works hard to reach out to the Japanese companies that make up one third to half of their membership.

FCCJ activities include regular monthly luncheons with keynote speakers. A recent guest was Finnish Minister of Finance Jyrki Katainen. Upcoming speakers include J. Front Retailing CEO Tsutomu Okuda, who is the Honorary Consul of Finland in Osaka.

The chamber also participates in social events including a Japanese version of the Ryder Cup: The North America–Europe Golf Challenge in Japan. Europe won the last event, which the FCCJ helped organise, although the Americans are still one win ahead.

Last but not least, the chamber produces the most extensive business confidence survey of foreign business in Japan, collecting replies from over 400 overseas-affiliated companies.

“We expect the next report to show a significant increase in business confidence,” says Bystedt.

(top left) Apple stores, like this one in Ginza, use Finnish stainless steel extensively, (bottom left) Paper, and equipment for the paper industry, are major Finnish exports to Japan, (middle) Vaisala manufactures industrial instruments, including for weather measuring, (top right) FINNAIR runs 20 flights weekly between Europe and Japan, (bottom right) Finnish log houses, for leisure and residential use, have been sold in Japan since the early 1970s

May 2010

23

The DPJ so far Julian Ryall talks to political analyst Jun Okumura Photo JEREMY SUTTON-HIBBERT

Jun Okumura is a counsellor with the Eurasia Group, a global political risk research and consulting firm, where he covers Japan as a source of political risk.

He is also a prolific blogger on political affairs and previously served in the Japanese civil service for three decades, notably with the predecessor of the Ministry of Economy, Trade and Industry.

How do you assess the DPJ government so far?

We’re only six months in, this is the first regular Diet session, and most of the important legislative bills have not yet been submitted – so it’s not really fair to grade the administration.

They have also received bad press because they have gone back on many campaign promises. But I think the latter is a good thing as they have bowed to the realities of the economy and the fiscal situation, as well as the underlying difficulties of making multi-trillion yen budget cuts.

They have done a reasonably good job of taking real decision-making out of the hands of bureaucrats and placing 24

May 2010

Q&A

THEY HAVE DONE A REASONABLY GOOD JOB OF TAKING REAL DECISION-MAKING OUT OF THE HANDS OF BUREAUCRATS AND PLACING IT INTO THE HANDS OF POLITICIANS it into the hands of politicians – and, similarly, of divorcing themselves from the status-quo triangle of bureaucracy, business and politicians.

But they have also spent much of their political capital on the Futenma air base issue. And foreign policy and national security aside, I think they could have played their political hand much better. They should have told the public that the horrible mess left by the LDP was beyond what they had imagined, that banks in the United States had ruined the global economy, and that they would have to dial back some of the promises they had made going into the election.

The DPJ’s public support rating has been slipping recently…

Figures for measuring a cabinet’s popularity are notoriously volatile and a new administration almost always fails to live up to sky-high expectations. The cabinet’s support rate may be down, but the LDP is in the low 20s and most people remain undecided.

What is significant is that this precipitous drop was mainly not due to changes in policies or broken promises.

The issue of the Futenma base does not affect the daily lives of the general public, but it threw up serious concerns over the competency of this cabinet and the prime minister in particular. We see similar examples on economic issues.

Is the LDP breaking up?

So far, only fringe figures and others with political difficulties have left.

That said, it does look like cracks are appearing – and when institutions unravel, they tend to do so quickly.

There is a small, but not negligible, chance of the LDP crumbling. It is certainly more plausible than a major split in the DPJ, even should Hatoyama defy his critics and stay on.

Has there been perceptible change to Japan’s relationships with Europe since the election?

I see no noticeable shift in the relationship because basically it is an economic arrangement. We do not share Europe’s main security concern. For us, Russia is no longer a major security risk; it’s a country trying to sell us more natural gas than we can use. The most immediate national security issue is the small but plausible risk emanating from North Korea and the longer-term risk is China, but these are Japan’s regional threats, not Europe’s.

The government seems keen to develop closer relationships with China and Asia. But would that be at the expense of the United States and Europe?

The simple answer is “no” because Hatoyama and other people who make pro-Asia and pro-China noises are all pulled back by the force that is the Yoshida Doctrine. We turn to the United States when it comes to national security, and spend our time on the more important things in life, like the economy.

Hatoyama has recently started making it clear that the United States is Japan’s number one squeeze and all other relationships are based on that firm relationship. I probably worry less about China as a threat to Japan than do the majority of experts. We are both resource-deficient states that rely on the same sea-lanes and open global market.

We are competitors, not adversaries.

As a prominent blogger, do you feel blogging has had any impact on Japanese politics?

Blogs are not taken nearly as seriously in Japan as they are in the English-speaking world. There are some good blogs, even some on politics, but no real political blogosphere to influence public policy.

The Japanese people get their ideas about what is going on from the media, which is not influenced by bloggers.

What is the scale of the economic problem facing the DPJ? It’s on a scale that you wouldn’t wish on your worst political enemies: unemployment, deflation and two decades’ worth of public debt – between ¥800 trillion and ¥900 trillion depending on how you count, and almost twice the size of Japan’s GDP. The DPJ has tried to pay for its campaign promises, but it has been obviously much harder to find government flab than they had claimed.

And there was the global financial crisis, which was neither the fault of Japan nor the DPJ, so the DPJ really hasn’t been in a position to clamp down on borrowing.

It could be worse. At least we have borrowed the money from ourselves.

And we still have a world-class industrial base and lots of room for productivity gains elsewhere. With leadership and a coherent game plan, we can dig ourselves out of this on our own. Once the election dust settles, the DPJ will have three more years of a huge Lower House majority to work with.

And finally, who is going to win the election in the summer?

The DPJ can’t lose badly, no matter what happens, since dissatisfied floating voters have few other places to go. The Your Party and the Japanese Communist Party will each pick up a few seats and low voter turnout will benefit New Komeito somewhat. But who’s to say the LDP won’t lose even more votes?

Jun Okumura blogs at www.son-of-gadfly-on-the-wall.blogspot.com/

May 2010

25

Impressive figures Lladró Japan

F

ew sectors have been as badly hit by the recent recession as the luxury sector. However, one European company has not just staved off disaster, but increased its profits for a fourth year in a row.

Jérôme Chouchan, Japan president of porcelain art brand Lladró, attributes their gleaming performance to “product

26

May 2010

innovation, distribution innovation and advertising innovation.”

Lladró was founded in the Spanish city of Valencia in 1953 and today exports to 120 countries. The company started selling in Japan in 1986 through a joint venture with trading company Mitsui Busan, then in May 2008, set up a wholly owned subsidiary, Lladró Japan.

Today they have over 100 sales-points in Japan and anually sell over 50,000 items ranging in price from ¥10,000 to ¥16 million.

All Lladró products are made in Spain, but they now include a few designed specially for the Japanese market. One is a samurai doll figurine marketed as a present for Boy’s Day on 5 May. Despite

LLADRÓ JAPAN

Text TONY MCNICOL

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

the doubts of their distributors, who were convinced Japanese customers would prefer more typically European products, the figurine has been a hit.

Another popular Japan-inspired item is a young woman reclining under a cherry blossom tree. “We get inspiration from the Japanese consumer,” says Chouchan, “but we don’t make an imitation product; we really create a new thing – very Lladró, but also very Japanese.”

Lladró subsidiaries worldwide have even taken a lead from Japan. “In India, we are developing some Krishna pieces, which are selling well there and all over the world where you have Indian communities,” says Chouchan. “We are also doing something similar in China.”

In Japan, Lladró have broadened their distribution network, reducing a more than 90% reliance on department stores to around 75% by developing their website, and through sales in interior goods shops, their own shops, and selected catalogue shopping. Chouchan also made the bold decision to join the Japan Doll Association, a venerable and traditionally minded industry group.

The request for membership provoked an interesting debate. “On one side you had the centuries-old traditional doll makers who said the association should not accept foreign companies,” recalls Chouchan.

“But other companies were saying that the world has changed, that Lladró is making good products and respects the etiquette of Japanese culture, that they help the market develop because they invest a lot in media.”

The progressives prevailed and last September Lladró became the first foreign company to join the association.

As a result they can now sell their dolls in a range of traditional doll shops.

The company took a similarly radical approach to their advertising. First, they targeted customers in their thirties, rather than the more typical 50-something porcelain art collector.

They also placed adverts on TV, and

in newspapers rather than glossy magazines. Lastly, they arranged advertising tie-ups with well-known Japanese celebrities such as kabuki actor Koshiro Matsumoto.

New strategies were needed for Japan’s evolving luxury market, Chouchan believes. “It has gone from mass-luxury – say, where everyone buys the same bag – to a more European type of consumption, with each group or micro-segment wanting its own style,” he says.

“I think the Japanese are the most sophisticated consumers in the world.

They have gone through all the stages: bubble, deflation, recession. Now they have reached the stage of personal taste.”

Chouchan regularly talks with Lladró customers, as well as distributors.

Such feedback has proved invaluable.

“For example, some consumers had questions about the face of our Girl’s Day doll figure,” recalls Chouchan.

“I learnt that for the new model, we should have a face rounder and more typically Japanese.” Accommodating that preference helped make the figurine one of Lladró Japan’s most successful products.

In January 2009, Lladró became the sole distributor in Japan for Steiff teddy bears. But unlike the German company’s previous distributor, they sell the bears in the living and home sections of department stores rather

than specialist toy shops. The bears and other animals are sold not just as toys, but also as premium gifts, and even decorations. According to Chouchan, some in both companies wondered if two such unique luxury brands could work together. Such doubts were quickly dispelled when Steiff’s sales increased over 25% in one year.

But, in fact, Chouchan isn’t fond of the word “luxury” to describe Lladró’s products. “We describe our porcelain art as ‘emotional premium products’,” he says. Japanese customers have a special relationship with the Lladró products they choose. After all, the figures are unusual among other luxury products – say bags, watches or perfume – in that they have no immediate practical use.

“Each of our products has an evocative name, a meaning and a soul,” says Chouchan. “Customers have a unique relationship with each creation ... it is an emotional link.”

TONY MCNICOL

WE DESCRIBE OUR PORCELAIN ART AS ‘EMOTIONAL PREMIUM PRODUCTS’

May 2010

27

Kenichi Ohmae Graduate School of Business MBAグローバリゼーション専攻

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EVENT REPORT

Security and safety EBC Business Continuity Planning Seminar 29 March 2010, EU-Japan Centre for Industrial Cooperation Text and photo KAI KUROSAWA A violent earthquake, a security system breakdown, the death of a CEO. These are events that every company fears, and when they suddenly occur, industry giants can be brought to their knees. That’s why Business Continuity Planning (BCP) is essential. So to mark the establishment of a new Business Planning Committee, the EBC held a seminar, at the EU-Japan Centre for Industrial Cooperation, on BCP and safeguarding critical information during emergencies.

“One of the problems that follows loss of information is damage to the reputation of an organisation. It is a loss of competitiveness,” said head of security and fraud risk for HSBC Japan, Jeff Seay. Before his current role at HSBC, Seay worked for 20 years in cyber-operations and counter-intelligence with the United States Naval Criminal Investigative Services, and then with Deutsche Bank and Deutsche Securities. Today he is responsible for HSBC Japan’s administrative, technical and physical security controls.

One HSBC security control to counter data theft is a simple clear desk policy. “There are more potential information leak problems with what’s sitting on someone’s desk than almost anywhere else,” said Seay. Employees are required to remove all items with client and partner information, including business cards, before they go home. The policy has met some resistance, however. “That two metres square becomes the person’s own, they don’t want to be told how to deal with it,” said Seay.

But security threats can come from unexpected directions.

Recently, an employee of a well-known bank in Switzerland walked out and slipped French tax authorities information on 24,000 accounts. And it is not only a company’s employees who pose a risk. “If someone really wanted to exploit your location, where’s the best place to go?” asked Seay. “They could probably just find out who you hire for your building maintenance, and ask them to go in,” he warns. After all, cleaners are the most invisible people in the building.

HSBC uses trusted vendors to dispose of confidential information, transporting it in armoured vehicles when required.

But even they don’t deal with the most confidential information, which is instead shredded internally. Unfortunately, this is where BCP can come into conflict with environmental policy. “A good shred cannot be recycled,” said Seay.

Seay also noted that, “Good security is inconvenient by its very nature.” Nevertheless, employees must be able to work.

The information employees access, and how they use it, is closely monitored both by computer and staff. But HSBC tends to adopt a “reactive” rather than “proactive” approach to suspicious transactions. “The fact is that people need to be able to use information to conduct business,” he says.

L-R: Jeff Seay, head of security and fraud risk, HSBC Japan, and Dr. Yukihiro Masuda, assistant professor at Waseda Institute for Advanced Studies

Protected business districts In 1923, the Great Kanto Earthquake ripped through Tokyo, killing over 100,000 people, and wiping out residential and commercial infrastructure. The damage was widespread and complete. The very real threat of another quake, therefore, is a concern for every business in Japan.

Dr. Yukihiro Masuda, an assistant professor at Waseda Institute for Advanced Studies, said that Japan needs “a highly protected and independently secured business district to provide protection when the worst happens. Japan must assure the world of measures taken to deal with this threat,” he said.

According to Masuda, the protected business district should be 100 hectares in size, covering large swaths of Chiyoda, Shinjuku and Shibuya wards. The district would have a stable supply of energy and water, telecommunications equipment, a data centre and accommodation.

Masuda’s group has also developed technology to install in Tokyo buildings, such as a “cockpit” control room. “Whether there is an earthquake or a strong wind, the cockpit can immediately tell you what’s going on,” said Matsuda. Several buildings have already been tested, though with the immense number of buildings in Tokyo, it could be a difficult system to implement.

Yet – in one of the world’s most densely populated, typhoonbattered, earthquake-prone cities – surely no amount of preparation is too much.

May 2010

29

Cosmetics// Good foundations, future opportunities Text GEOFF BOTTING

Japan’s cosmetics market is an extremely lucrative place for European brands. In 2008, Japan imported ¥89 billion worth of EU makeup, fragrances, shampoo and other cosmetics products, accounting for more than half of all such imports.

Over the years, the world’s secondbiggest market for cosmetics products (¥1.5 trillion in annual sales) has gradually become more accessible to foreign companies as Japanese officials loosen some regulations and streamline others.

Yet, despite the relatively rosy situation, a number of serious barriers remain for European and other foreign manufacturers and marketers. As Bruce J. Ellsworth, chairman of the EBC Cosmetics Committee, puts it: the companies continue to grapple with “insufficient regulatory transparency, a low degree of harmonisation with standards used in other parts of the world, and unnecessarily complex approval and manufacturing requirements.”

One problem area concerns cosmetics such as creams that smooth out the appearance of wrinkles around the eyes.

Boasts about their benefits in Japan are limited to a list of 55 “efficacy claims” permitted by Japan’s Ministry of Health, 30

May 2010

Labour and Welfare (MHLW). But the committee wants the list expanded to reflect claims now commonly accepted in Europe.

Another issue concerns quasi-drugs.

These drugs have only mild effects on the body and, as such, can be sold over the counter without a prescription.

THE WORLD’S SECONDBIGGEST MARKET FOR COSMETICS PRODUCTS (¥1.5 TRILLION IN ANNUAL SALES) HAS GRADUALLY BECOME MORE ACCESSIBLE TO FOREIGN COMPANIES

But it has been difficult to find out exactly which ingredients are approved for use in quasi-drugs and which aren’t.

In the past, this posed a dilemma for the industry, since the MHLW had agreed not to disclose data that could potentially lead to the leakage of corporate secrets.

Now, however, “companies want more transparency,” says Ellsworth, who is director of government affairs at Johnson & Johnson. “It just got to the point where companies said ‘this is going too far.’ Basically, keeping the information secret became more of a cost than a benefit.”

The ministry responded in December 2008 by working with the industry to publish a list on its website of approved ingredients.

While the committee welcomes the move, it also wants the ministry to lengthen the list to include a broader range of ingredients. The ministry should also give more details on what product types the ingredients have been approved for, says Ellsworth.

Yet, the committee’s agenda isn’t limited to demystifying regulations. In at least one other area, the committee wants the existing regulations implemented more thoroughly.

This issue involves parallel imports.

These are products brought into Japan without the knowledge or permission of the manufacturer. If you live in Japan, you’ve probably seen fragrances or other cosmetics products being sold at cut-price rates by discount

IN COMMITTEE

retailers, sometimes operating from street-side stalls.

It’s not the cheap prices per se that irk the committee, but how these importers are able to make light of Japan’s regulatory process, even though the law requires grey-market operators, like manufacturers and registered importers, to monitor their products for safety and quality.

“If there are problems, say with allergies, then that comes back to us,” explains Serge Grebert, president and representative director of Bluebell Japan, a registered importer of fragrances and cosmetics. “We often end up bearing the cost of it – and the cost in terms of image if something goes wrong.”

The potential for such problems is very real, as the parallel importers usually don’t handle or check their products carefully. “All these products [cosmetics and fragrances] degrade over time if they’re not stored properly,” says Grebert. “That’s how they can sell their products so cheaply – because they don’t have the associated costs. There are costs involved in doing things the right way.”

The committee is calling for all importers to be made subject to the

Top 5 European exporters of cosmetics to Japan in 2008 France

¥9.79

Germany

¥3.14

Spain

¥3.05

Italy

¥1.56

UK

¥1.56

¥ billions

Sales of cosmetics (domestic and imports) in Japan by category in 2008 Skin products

¥662

Hair/scalp products

¥415 ¥356

Makeup Perfume/ ¥5 cologne Speciality products

¥69

¥ billions

same rules. “We want to make sure that everyone has the same regulations to abide by and the same costs associated,” says Grebert.

Expanding efficacy claims, increasing quasi-drug transparency and clamping down on parallel imports are but three of the advocacy recommendations on the committee’s list. The committee also wants improvements in the approval process, the setting up of standards for non-animal testing, and to avoid misleading numerical carbonfootprint labels on products.

The committee has been gearing up for a busy spring season of advocacy. Meetings with the Ministry of Economy, Trade and Industry, as well as the MHLW, took place in early April.

In addition, the committee planned to meet separately with several individual members of the Diet.

The committee also planned to spend much of the spring finding areas for cooperation with the Japan Cosmetic Industry Association and then using what its members learned during the spring to reformulate its strategy by the summer, according to Ellsworth.

“If our recommendations could be implemented, it would help us bring more of our global products to customers in Japan in a cost-effective manner without compromising safety,” says Ellsworth.

May 2010

31

The American School in Japan

goes Green!

This is the story of how our school is going green!

Led by students and teachers ASIJ began a series of Eco-initiatives in 2008 with the goal of becoming a leader in environmental responsibility. With student and parent groups, faculty, and administration working together our aim is to significantly reduce our carbon footprint...

Our compost program means waste from the cafeteria helps us grow more in the Elementary School gardens!

look how much power we used!

2007 2008 2009 2010

ES & MS students did the kids’ iso 1400 audit of their own energy use

We have “no heat, no cool” months in October and april, which save a lot of energy and raise awareness

Installing solar panels on the roof helped reduce our carbon footprint even more.

These old lights are a real power drain!

We can save more energy with These new LED lights.

They can last 15 years and only use 6.9 watts!!

No need for aircon now!

Putting LED lights in the HS and new 30% energy efficient lights in other areas will significantly reduce our energy consumption

Students are taking the lead in many ways with a middle schooler driving our participation in Earth Hour this year.

He convinced Japanese companies to join Earth Hour and As a result Tokyo joined other major cities in turning off lights and power for an hour on March 27th.

these initiatives reduced our carbon footprint by 10% compared to 2007. This year our aim is to cut CO2 by a further 8%. To do this we need everyone’s help. Here’s how we’ll do it...

this reflective silicon paint makes a real difference. It’s not only cold to the touch up here, but the temperature in the rooms below is up to 5ºC cooler in summer!

Resurfacing our roofs with this special GAINA paint will help us stay cool in summer and help cut our energy use too. This could reduce power consumption by 10% in elementary and 6% in the Middle School.

I should really use a SIGG bottle...

Reducing our waste and Encouraging everyone to be responsible and Recycle is just the start!

With the help of student groups, we’ll Add more greenery to campus - not only to improve our school, but to help us learn about the environment

At ASIJ we’re serious about learning to be green and this is just the start of our story...

Chofu Campus: 1-1-1 Nomizu, Chofu-shi, Tokyo 182-0031 Tel: 0422-34-5300, Fax: 0422-34-5303 Early Learning Center: 6-16-5 Roppongi, Minato-ku,

... find out more at http://community.asij.ac.jp/green

Tokyo 106-0032 Tel: 03-5771-4344, Fax: 03-5771-4341 Email: <info@asij ac.jp> Web: <http://community.asij.ac.jp>

GREEN BIZ

Making money from energy saving WASEDA ENVIRONMENTAL INSTITUTE Text CHRISTOPHER S THOMAS

W

ith a strict new Energy Conservation Law here, businesses are working to reduce their carbon footprint. Most large firms are prepared, but many small businesses are worried. How much carbon do they produce? How will they know when they’ve reduced enough?

And just how do you reduce carbon, anyway? These are the questions that the Waseda Environmental Institute (WEI) is happy to answer.

Waseda University Assistant Professor Hiroshi Onoda established WEI while still a student at the university to spread green technologies developed there, as well as return some profit to both the institution and, most importantly, society.

Onoda describes WEI as a “social-profit organisation.”

The company’s bread and butter are energy management systems, which measure electricity consumption in offices and factories. Since April this year, companies must report on their efforts to conserve energy and show a schedule for reduction. WEI’s clients are mainly small and medium-size companies that lack the knowledge to comply with the new law.

The ultra-light vehicle (ULV), an 80kg single-person battery or fuel-cell powered electric car

“Our service can both reduce a company’s carbon footprint and save it a lot of money, typically a 10-20% reduction in its power bill,” said Onoda. WEI’s fee is a percentage of the savings.

ONODA DESCRIBES THE WASEDA ENVIRONMENTAL INSTITUTE AS A “SOCIAL-PROFIT ORGANISATION”

WEI’s home-use version of the service also encourages people to do their part for the environment. It is dubbed “469ma”, a phonetic play on the word for polar bear in Japanese, shirokuma.

Users input their electricity, gasoline use and other data on the Shirokuma Land (469ma.jp) website for an estimate of their home carbon footprint. The service is funded by the government.

WEI was created to market Waseda University-developed products and technologies in as green and sustainable a way as possible. One example is the ultra-light vehicle (ULV), an 80kg single-person battery or fuelcell powered electric car. “We think there will be diverse needs for ‘small mobility’, and for this development model in the future,” said Onoda. The ULV is good for both the environment and local economies, as its components were designed to be made by small, local parts factories. There are currently two prototypes of the ULV; full release is planned for 2012 to coincide with the opening of the Tokyo Sky Tree in Sumida Ward.

The firm has other ventures ready to go, including a point system for recycled car parts, which would help raise awareness among mechanics and dealers about the negative impact of car parts on the environment.

The future looks good for WEI, as the field of energy management is sure to get bigger. The company has about 30 corporate clients, and Onoda expects a two to three fold jump in earnings this year (from ¥180 million in 2009) due to the new law.

May 2010

33

Whoâ&#x20AC;&#x2122;s Who

Management Consulting in Japan

34

May 2010

O

utsourced IT management can be leveraged efficiently on an interim or longerterm basis to help your firm succeed in Japan. You may be familiar with IT outsourcing in general, where a firm hires an organisation to perform the entire IT function – from management, to user support, to engineering and programming.

However, this brief focuses solely on IT management of an existing or evolving organisation, when a firm has established specific goals to meet.

Drivers What are some of the characteristic drivers of interim IT management? It is common in cases of M&As, acquisitions, divestments or poor business performance to look inward and place a person in charge of IT on an interim basis.

Of course, this can be effective if the designee is right for the position and takes charge. But more often than not a feeling of resentment is bred due to the fact that the person has been tapped, but not for the actual right reasons.

Furthermore, the interim designee may have personnel-related baggage or be unsuitable to give the IT organisation the needed push in the right direction.

The biggest driver to hiring an outside IT manager or management firm is the desire to avoid having wrong decisions made regarding your IT systems, and in a potentially harmful opaque manner when IT is such an integral part of any business today.

So how does one tell when an enterprise might benefit from hiring an outside IT manager? You might consider such a move should you feel IT is not an

Who’s Who // Management Consulting

Making IT manageable

So you can build the business

integral part of your business strategies; when you’re producing software for software’s sake (much like in academia), not skillfully utilising your IT resources, or the system is, in general, opaque.

Well-targeted, vetted and transparent IT decisions are paramount at any time, and much more so during times of chaotic economic change on a global scale.

Tips from the trenches Outsourcing management of your IT can involve an interim CIO‚ working with existing IT staff or a mix of a client’s and outsourced staff, or outsourcing entirely.

Multinational IT departments often have trouble interacting on projects in Japan because of the local tendency to lob IT jobs at big vendors, and then simply accepting whatever the outcome without much management at all, leading to the necessity later to undo decisions. These situations occur because of well-meaning office coordinators who, nonetheless, lack IT experience, and IT vendors that are unfortunately biased towards selling their solution suite‚ instead of objectively acting in the client’s best interest.

Businesses leaning toward outsourcing IT management should have an experienced IT manager lead a mix of existing and brought-in trusted staff to work with the IT department back at headquarters. Besides being effective for general IT demands, businesses can use the team to test systems or software of interest that would otherwise have a significant impact if rolled out to the whole business.

As you define what you consider to be the success and integrity of an outsourced IT management scenario, you

Rick R. Colgey CEO eSolia Inc.

There is a solid focus on the results of implementing software rather than on the software itself.

can better monitor through established operational transparency, and also dismiss any ulterior agenda. Most critically, the answers you receive from your new IT team – though they might be a little painful to hear – are honest assessments that lead to the appropriate management of business risk vis-à-vis IT. There is a solid focus on the results of implementing software rather than on the software itself, and lots of small successes leading to bigger wins.

Your situation might very well be a good fit for outsourced IT management, so why not take the next step and initiate a discussion?

May 2010

35

Who’s Who // Management Consulting

Providing value to companies in Japan Innovation and implementation

A

s we begin to slowly emerge from the most recent worldwide financial crisis and ensuing recession, a great number of Western business leaders – both here in Japan and abroad – have begun for the first time to reconsider a fundamental question: “Why does a company exist?” While many strict adherents of the Anglo-Saxon pure-capitalist model continue to recite unwaveringly – to increase shareholder value – in Japan, most of Europe, and elsewhere, the answer is not so straightforward.

Shareholders are only one of the various stakeholders to whom a company must provide value. This has more of an impact on company initiatives in Japan in general – and management consulting engagements in particular – than is generally admitted.

Becoming more efficient through constant innovation plays a vital part in the survival and prosperity of the enterprise, which, in turn, provides value for its many stakeholders.

There are the livelihood of its employees and benefits to the community in which it resides, for example.

When delivering consulting services to companies in Japan, domestic or foreign-owned (which are still typically at least 95% comprised of Japanese employees), consultants require a deep understanding of Japanese culture, both corporate and non-corporate. Even the best-laid strategic plans do not ensure success. It is the details of implementation that bring frustration and, more often than not, prevent great, or even mediocre, strategies from being fully realised. In order to make a strategy work, a realistic cross-functional solution all the way to implementation must be achieved.

Even beyond strategic consulting, it is easy to recommend changes to corporate structures and processes, as well as those based on established Western management methods. But they do not stick when applied without regard to environment and corporate culture. For these reasons and others, “Western” management consultancies have had a lot of difficulties in Asia, generally speaking, and Japan, in particular, according to Extract Value from Consultants, a recently published book written by the partners of The RFP Company (consults on hiring consultants).

36

May 2010

Kevin Plastow, Director, Global Business Development, Japan Management Association Consultants (JMAC)

Again, as everyone is aware, implementing ideas is much more difficult than simply proposing them.

Continuous improvement (or kaizen as it’s known in Japan), as well as innovation (of process, products and people), continues to be vital to all corporations operating here, both foreign and domestic. Consulting firms will continue to be called upon to deliver value-added activities in Japan (including help with implementation), and will more than ever need to strike a balance between the management philosophies of Western and Japanese, incorporating the best of both. Again, as everyone is aware, implementing ideas is much more difficult than simply proposing them.

In Japan historically, domestic consulting companies have worked with client organisational task forces not only to analyze and make recommendations, but also to implement those ideas. The consulting company that does not offer and have the capability to assist in implementation puts itself at a disadvantage in Japan. While some companies may not need or want help in implementation, many others do, and expect it.

Who’s Who // Management Consulting

Transform Japanese employees into global leaders Walking the tightrope “Our business in Japan should be led by a Japanese person,” comments one of our European clients. And, in the same breath, they explain how hard it is to find an appropriate person. The client, a European consumer-goods manufacturer, recruited a Japanese male as their business unit general manager. He had worked for a renowned Japanese manufacturer, had produced marvellous business results there, and seemed to know the industry inside and out. “Six months after the assignment, he was still not demonstrating leadership. He turned out to be a big disappointment,” remarked the senior HR director back in the UK. Given the number of Japanese leaders who fail to live up to expectations in foreign organisations, it is unwise to quickly sum up the situation as a case of “bad hiring”. Assumptions unconsciously made by Western colleagues may be playing a part, and can seriously impact the success of Japanese leaders long after they have been hired.

One example concerns the perceptions of a “good leader”. Westerners often assume that effective leadership looks the same in Japan as it would in their home country. However, Japanese often perceive leadership quite differently from Westerners. For example, in a typical business meeting, a Japanese leader may speak the least and appear not to be leading the discussion at all.

Westerners may perceive such inactivity as a lack of initiative, or being irresponsible.

Yet, the Japanese leader believes this may be a way to empower his or her staff. When you ask the Japanese colleagues in attendance what they thought of their leader, you sometimes

may get a response such as “he/she is lacking leadership.” More often than not, however, you would hear responses such as “he/she trusts us, so we feel that we need to step up and do the job.”

So the best way to identify a “good” Japanese leader is to test your assumptions and dig deeper into understanding the impact and results of his or her behaviour – which, at first glance, may seem not to fit your definition of “good leadership”.

A balancing act Most organisations have requirements for acceptable and desired leadership behaviour for all employees. Thus, enabling a Japanese leader to leverage his or her past leadership successes into success for your organisation today helps a leader learn to walk a tightrope.

In effect, they need to take a balanced approach that considers the requirements for leaders from a local perspective, while, at the same time, demonstrates the values and behaviour of someone in a global organisation.

Providing support through executive coaching and global leadership training is a great way to help Japanese leaders interpret and demonstrate leadership in a way that is also aligned with your organisation’s expectations, yet remaining locally relevant and impactful.

Before assuming that Japanese leaders “should know better” or quickly dismissing unexpected behaviour as “bad leadership”, European organisations need to re-evaluate how their own assumptions may be a barrier to providing the support Japanese leaders need in order to effectively walk the tightrope between global and local needs.

John F. McNulty Executive Director People Focus Consulting

European organisations need to re-evaluate how their own assumptions may be a barrier to providing the support Japanese leaders need.

May 2010

37

Who’s Who // Management Consulting

People power — the key to your corporate success 7 keys to keep you and your firm on top 1. A nicer office can pay for itself. As expensive as office space seems, it is one-tenth or even one-fifteenth the cost of the payroll that sits on that floor. If ample space and an attractive office get people to be willing to join for 10% lower salary, you have paid for your rent! More importantly, some people, who otherwise would not agree to join your firm, will join if your investment and presence in Japan is impressive. Central location near a station is even more critical.

2. Desperate men will do desperate things. Yes, in this bad economy, you may be able to get professionals and staff to join your firm through advertising or your website’s “Careers at…” section. If applicants are out of a job, even a performancebased interview, where you do your best to scare them away with your high expectations, will not scare them off. They will join, even if they know it won’t last. But they have lost jobs before, and may be especially good at squeezing money out of past employers — and out of you! — when the axe falls.

Skilled Executive Search Recruiters, who approach candidates presently employed — and know how to do research, “name collecting”, scouting, and cross-reference checking among more junior people at a candidate’s company — in the long run, are a less expensive and more effective way to go.

3. The Rule of 3. Interview 3 people, at least 3 times, by 3 different company interviewers, and most importantly in 3 different settings or environments: in a conference room; over dinner or drinks; walking on the street to a station together; over golf if a player; with a Japanese interviewer if truly trusted, self-confident and not threatened; with more than one interviewer at the same time, etc. We must be decisive, and really “know one when we see one.”

4. Taking advantage of, and strengthening the probationary period. Especially with candidates out of a job, although we do not want to take advantage of people, it is easier to get them to join even with a longer probationary period. Perhaps you can go a step further. Back it up with a 6-month term contract, with clearly defined dates — not a separate contract — properly worded within the offer letter.

5. One young oak tree won’t do it — a pyramid of ages, local hire, and expat is best. Have a balance of head office, expat, or otherwise different career-path foreign talent in your firm, 38

May 2010

Thomas J. Nevins Founder, TMT Inc./ Glasford International Japan

Have a balance of head office, expat, or otherwise different career-path foreign talent in your firm. along with the strongest local Japanese executives and staff you can get. Make sure there are multiple voices and points of view heard by the head office, and more efficient ways to explain the direction regional or head office management wants to go.

6. Waste you can’t afford — don’t you wish you could set up your own benefits? In Japan, it is amazing how often I hear, “well, of course, we would expect local nationals to write the Rules of Employment and set up the benefit package” — especially among trusting and naïve USA’ers, as opposed to most Europeans and, I suppose, Chinese, Indians, etc..

7. Strategically smart Rules of Employment (ROE) that give more legal protection, and the tools needed to keep people on your team and on their toes. Do you have a transfer or job change clause that includes the ability to accordingly adjust people’s pay level? Do you have pay-cut language other than the Labor Standards Law maximum pay-cut of one-half a day’s pay or 10% of the pay during the pay period?

That one is for disciplinary action or a specific penalty. Since the power to reduce pay must come from the power of the contract — but ROE have legal precedence over the individual contract — it is important to also clearly write in the ROE that in case of underperformance for the position hired for or assigned, or based on contribution, a larger commensurate pay adjustment is possible.

CHPM

Address

Chiyoda House 301, 2-17-8 Nagatacho, Chiyoda-ku, Tokyo 100-0014

Tel

03-3503-1571

Fax

03-3503-1575

E-mail

info@chpm.co.jp

Web site

www.chpm.co.jp

Year established

1988

Staff Size:

15

Contact

Hiroko Sato

Who’s Who // Management Consulting

CHPM (CH Projects Management, Ltd.)

Company Activities / History As a consultancy firm established in Tokyo, we support mainly Swiss companies when setting up their business in Japan. We provide a broad range of services including the set up of representative offices, branches and subsidiaries, as well as accounting, tax, employment management, product registration and other operational assistance services.

We aim at developing long-term and close relationships with our clients, offering flexible, tailor-made solutions. We work in English, Japanese, French and German.

Our Japanese and international staff has a good knowledge and understanding of Japanese culture and values.

We work in close cooperation with the offices of Mr. Charles Ochsner, attorney-at-law, registered at the Bar of Geneva and at the Tokyo II Bar Association as a foreign attorney-at-law, resident partner of Python & Peter in Tokyo.

Chiyoda Partners and Associates (CPAA) Address

NK Uchi-Kanda Blg. 3F, 1-14-5, Uchi-Kanda, Chiyoda-ku, Tokyo 101-0047

Tel

03-3233-2911

Fax

03-3233-2900

E-mail

contact@cpaa.co.jp

Web site

www.cpaa.co.jp/

Contact

S. Kawasaki, Partner

Company Activities / History Chiyoda Partners and Associates (CPAA) is a professional accounting/tax office in Tokyo.

We serve our clients as their one-stop service center for financial sector services such as accounting, business management consulting and taxation issues.

Our mission is offering timely assistance that meets our clients’ various business scenes as follows: • To assist our clients in each/every stage of their growth • To support our clients in achieving their business goals • To provide efficient and flexible solutions to support the above • To utilize valuable network connection to clock up the above Our valuable professional network includes national/international lawyers, certified public accountants and tax specialists, Tax Authority-turned-specialist, public consultant on social and labour insurance, judicial scrivener and real estate appraiser, etc.

We have also capabilities to handle/assist your statutory government filings, payroll calculation, social security insurance application or labour insurance report, IPO, corporate realignment or revival, M&A activities, tax audit and dissolution of the business. Our Japanese/ English capability make communication with your head office smooth and compliance assured.

May 2010

39

Who’s Who // Management Consulting

eSolia Inc. Address

Otowa Bldg. 3F, 3-11-2 Otsuka , Bunkyo-ku, Tokyo 112-0012

Tel

03-5940-6880

Fax

03-5940-6881

E-mail

info@esolia.co.jp

Web site

www.esolia.com

Year established

1999

Staff Size:

20

Contact

Rick Cogley, CEO (rick.cogley@esolia.co.jp)

Company Activities / History eSolia is a globally minded Information Technology Management firm providing superior business-centric consulting, project and outsourcing services to a variety of blue-chip foreign and Japanese organisations in Japan and abroad. Our focus is on multi-cultural, multi-language organizational environments, with a vision to consistently provide our clients with just the right mix of helpful goods and services.

Founders Rick Cogley and Takumi Fukuoka have been delivering services together from Japan for 16 years. In 2009, we’re pleased to say that our firm eSolia has reached its 10th anniversary with a successful track record in handling complex, high-pressure projects, and providing creative problem-solving for our clients’ challenges. Whether it’s managing a Japan IT Department as an interim CIO or a fully outsourced IT team; providing end-user support directly or over the phone; managing projects coming from mergers, acquisitions, divestitures or joint ventures; or translating a software user interface, we have the confidence to find solutions for all your systems or process challenges.

Our concept is simple – our services are always standards-based, unbiased by maker affiliation, built and grown with an awareness of your business and culture, and are delivered by a team of experienced experts who act with the highest standards of ethics, professionalism and integrity. eSolia sows the seeds that help you build a strong foundation for your Japan business success and meet your commitments. Let us begin developing a long-term relationship with you today.”

Japan Management Association Consultants (JMAC) Address

JMA Bldg. 1F, 3-1-22 Shiba Koen, Minato-ku, Tokyo 105-8534

Tel

03-3434-4535

Fax

03-3434-6430

E-mail

kevin_plastow@jmac.co.jp

Web site

www.jmac.co.jp/

Year established

1942

Staff Size:

350 (Japan)

Contact

Kevin Plastow, Director, Global Business Development (090-1256-3821)

Company Activities / History JMAC is Japan’s oldest and one of its largest full-service management consultancies with almost 300 professional consultants in Japan.

Established by the government nearly 70 years ago, JMAC was instrumental in what Westerners refer to as the post-war Japanese economic miracle, raising quality and productivity standards across industries to have them become world leaders. The consulting arm of the Japan Management Association (with over 1,600 employees), JMAC is a household name in Japanese business known for its process innovation. Over the years, JMAC has worked with SMEs and the giants of Japanese industry alike to create many concepts now known the world over, including “Kaizen”, “5S”, “TPM”, and “Lean Thinking”.

From our beginnings in operational quality and productivity consulting, we have expanded to meet the needs of clients in Japan and overseas, and now provide a full range of management consulting services, from strategy creation to R&D innovation to supply chain management. JMAC does not simply consult; we partner with our clients to develop optimum solutions and help implement to ensure full impact and sustainability of results.

JMAC is also the only Japan-based consulting company with significant global reach. We currently maintain a presence in 16 countries overseas, including a strong presence in Asia and in Europe, as well as the Americas. Bringing the best of Western and Japanese management techniques together for our global clients, JMAC has consulting experience in over 60 countries worldwide.

40

May 2010

Address

Le Grand Harajuku, 3-12-8 Sendagaya, Shibuya-ku, Tokyo

Tel

03-5771-7071

Fax

03-5771-7072

E-mail

info@peoplefocus.co.jp

Web site

www.peoplefocus.co.jp/english

Year established

1994

Staff Size:

25 staff + 50 contractors

Contact

Jane Chen

Who’s Who // Management Consulting

People Focus Consulting

Company Activities / History People Focus Consulting (PFC), established in 1994, has served more than 300 companies, both Japanese and non-Japanese. We are regarded as the leader/pioneer in the practice of Organizational Development in Japan.

PFC has five focus areas to develop our client organizations: leadership, change and diversity management, as well as, team development, and corporate culture/values.

We are proud to have many Western companies in Japan as long-standing clients who appreciate and recognize our professional expertise, multi-lingual capabilities, and flexible, needs-driven approach.

We have trained thousands of Japanese employees to develop their business skills, enabled thousands of Japanese and expatriate managers to improve their managerial and leadership skills, coached many executives one-on-one, and facilitated numerous off-site meetings and workshops for multi-cultural management teams.

As always, we begin our relationship by analyzing the client’s needs. Then we partner with our clients to align and customize our services to meet their strategy and organizational needs.

We have a proven track record of assisting major global companies with the localization of their leadership development programs in Japan. We are recognized as a company that is flexible and creative. We are able to balance our clients’ need for global consistency with local needs to ensure programs are delivered in a meaningful and impactful way to Japanese employees.

PFC has a network of professionals in Asia Pacific and has a range of global services that we deliver throughout the world.

PTS Consulting Address Tel Fax E-mail Web site Year established Staff Size Contact

Shinagawa NSS Bldg. 2F, 2-13-31 Konan, Minato-ku, Tokyo 108-0075 050-5532-7615 03-4496-5414 marketing@pts-consulting.jp www.ptsconsulting.com 1997 in Japan, 1984 in London 330 worldwide Jon Senycia

PTS Managed Services - (IT Solutions) Address Tel Fax E-mail Web site Year established Staff Size Contact

Shinagawa NSS Bldg. 2F, 2-13-31 Konan, Minatoku, Tokyo 108-0075 050-5532-7615 03-4496-5414 marketing@pts-consulting.jp www.ptsconsulting.com (parent company) 1997 in Japan 60 in Japan Frederic Delsaux

Company Activities

Company Activities

PTS Consulting provides world-class IT consulting, project management, and mechanical and electrical consultancy services to some of the world’s biggest names. Founded in 1983 we have built a strong reputation for “substance over style”. We are renowned for our impartial, vendor-independent advice, the quality of our processes and, above all, the friendly expertise of our staff. We are recognised as being the global leader in IT relocation projects where our experience, independence, professionalism and quality of service come together in the most demanding of environments.

Operating in Japan for over a decade, PTS Consulting is as well known for our technical competence as we are for our strategic thinking. We are also easy to work with – and for. We are not a ‘body shop’, but rather offer our clients a delivery model based on a ‘best of breed’ approach with strong project leadership.

PTS Consulting Managed Services (PTS MS) provides professional management solutions for the integration of processes within an organisation to improve the quality and efficiency of core business services. PTS MS utilises multi-disciplinary and scalable teams to manage activities and vendors within the built environment and, in turn, the impact upon people and the workplace.

With over 13 years of experience in Japan, PTS MS resources provide day-to-day management of a myriad of internal services including facilities management, IT management, and move management and support services (including IT), and supplier contracts (such as security, administration and travel). With an extensive pool of experienced and reliable resources (many bilingual and all with exceptional communications skills), PTS MS works to enhance the corporate working environment by attributing to the cost-effective realisation of strategic and operational objectives.

May 2010

41

Who’s Who // Management Consulting

TMT Inc. Address

Ichibancho KK Bldg., 13-8 Ichibancho, Chiyoda-ku, Tokyo 102-0082

Tel

03-3261-6471

Fax

03-3221-0601

E-mail

info@tmt-aba.com

Web site

www.tmt-aba.com

Year established

1978

Staff Size:

20

Company Activities / History TMT Inc.—Technics in Management Transfer—founded in 1978 by Thomas J. Nevins, is a unique human resource consultancy in Japan specializing in: 3 Executive Search 3 Labor/Personnel Policy • Rules of Employment (ROE) • Problem-Employee Solutions • Union and Staff Relations

• Staff Reduction/Cost Savings Programs • Compensation and Benefits

Tom Nevins, a labor consultant and headhunter, is also author of several books including Labor Pains and the Gaijin Boss (1984), Taking Charge in Japan (1990) – both by The Japan Times – Japan True or False (2004), and Gaijin Boss’s Power Pill (2010).

TMT represents Glasford International (GI) in Japan. Founded in 1996, GI is a leading strategic partnership of retained executive search firms working together to provide HR/recruiting solutions for global clients. It is now represented in about 40 countries, and growing.

Across diverse business cultures, Glasford’s mission is to provide consistent and personalized executive search solutions that deliver success for its clients, career opportunity for its candidates and profitable growth for its participating partners.

Get

COMMITTEES Aeronautics,

Space & Defence

Airlines

involved

Animal Asset

Health

Management

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Components

Banking Business

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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

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Resources

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& Freight

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Some 300 of the over 2,500 affiliated local European

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Services

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& 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

42

May 2010

eXeCutIVe NoteS

Japan is not like Greece – and that may not be a good thing Continental europe, scarred by currency battles and hyperinflation during the first half of the last century, has established systems to prevent hyperinflation. The biggest is the euro.

The euro is a simple concept: at heart, it strips national governments of the right to print paper and call it money.

Thus Greece, for all its economic problems, is being forced to live within its means, electorally doubtless very unpopular. Pre-euro, it’s likely that the government would have simply printed money and inflated away its debt, even at the risk of exposing the country to hyperinflation. It hasn’t been able to do that, so you could argue that the euro has sort of worked for Greece. Pain, but not apocalypse, lies ahead.

Despite Japan’s debt to GDP of 190%, compared with 125% for Greece, it’s fashionable to say that Japan is much the safer bet. In fact, the risk of hyperinflation in Japan exists to a far greater extent than in Greece, since the Bank of Japan (BOJ) is exposed to political pressure, and because of Japan’s more precarious fiscal situation.

Finance Minister Naoto Kan is a personal hero of mine, but he should not be asking the BOJ for measures which could undermine trust in the currency. Japan’s fiscal deficit (i.e., expenditure on normal outgoings plus the cost of servicing government debt) is as bad as Greece’s at 10% of GDP. Only the UK is worse within the OECD group of countries.

The BOJ may have “independence”, but it is also obliged by law to work in line with government policy. It’s that get-out clause which enables Kan and

Prime Minister Yukio Hatoyama to keep bludgeoning the BOJ with demands for further monetary easing.

Am I being alarmist talking about hyperinflation? When you look at Japan’s public finances, it’s hard not to wonder. What’s disturbing is the state of Japan’s primary balance. The primary balance is in deficit, which means that government income cannot finance ordinary government outgoings. Unlike the fiscal deficit, the primary deficit is net of government debt. So even without including huge government debt repayments, Japan is in deficit.

Debt spiral Think of it like an individual not being able to pay for meal and board, let alone service his large credit-card debt.

The individual goes further into debt (takes out more credit cards) just to pay off the debt on his first card. The debt income is not being used to increase the individual’s earning prospects, but simply generates more liabilities, which he has to repay by going even further into debt. The only way that downward spiral can be stopped is with bankruptcy.

The link between debt and hyperinflation is confidence. Historically, people immediately spend a currency they don’t trust. A race is launched to spend the money before it depreciates.

To compensate for holding bad money, people shove up their prices. A spiral ensues, which can ultimately wipe out the savings of the entire country.

Anybody with hard currency makes a fortune, as foreign speculators did in Germany during the hyperinflation period from 1919-1923.

AM I BEING ALARMIST TALKING ABOUT HYPERINFLATION? BOJ Governor Masaaki Shirakawa sees the debt monster lurking outside his door, and he’s anxious. He doesn’t want to be the one who oversees a return to hyperinflation. He’s doubtless begging the government to increase the “salary” portion of its income (i.e., tax).

That’s why Japanese worries about tax income being lower than debt income are so heartfelt. Once government debt income tips over into being larger than government tax income (as happened for the first time in FY2010 with just ¥37 trillion raised in taxes for a budget of ¥95 trillion), you are facing a world of pain. If debt spirals, the government would then have two choices: honour its debts by printing money, or declare itself bankrupt. No national government in history has ever chosen the second option.

What the Japanese government needs to do is, ironically, become more like Greece: bow to a superior impartial power (in Greece’s case, the euro), slash government expenditure, raise taxes, and remove the threat of hyperinflation.

A recession will ensue, but if that is the price of returning to reality, so be it.

Text DAN SLATER, THE ECONOMIST GROUP

May 2010

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BROSE IS A DESHI APPRENTICE. HE WORKS 30 DAYS A MONTH, 15 HOURS A DAY 44

May 2010

C u lt u r e - S h o c k

When Valentin Brose’s mother took him to a local yuletide fair near Stuttgart in 1992, it wasn’t the football shirts, toy cars or video games that caught the 11-year-old’s eye. It was a plant stall’s selection of bonsai trees.

“They fascinated me. There was a miniaturised tree taken from nature; a tree so small you could hold it in your hand.

It seemed like a perfectly formed microcosm,” says Brose. “Seeing my interest, my mum bought me one for Christmas.”

Through school and his subsequent horticultural apprenticeship, that fascination grew. So much so that, some 15 years after receiving that first tree, Brose moved to Japan from Germany to study under award-winning bonsai master Kunio Kobayashi at the Shunkaen Bonsai Museum in Tokyo. It was there that he discovered the true roots and traditions of Japanese bonsai.

“When I came to Shunkaen, all I was allowed to do for the first year was watch and learn, then wire trees to change or maintain their shape. I had potted 30 or 40 bonsai trees back in Germany as a hobby, but here I suddenly found myself working on trees more than 500 years old, and priced at millions of yen.

“It is a real honour to be allowed to work on such trees, such masterpieces of the bonsai world,” says Brose, “but it is also quite stressful.”

Another challenge was

Shunkaen’s traditional work ethic. Despite almost a decade’s experience of European horticulture back home, Brose was, and still is, considered a deshi apprentice. He works 30

days a month, 15 hours a day – all for a monthly stipend of ¥80,000.

Brose lives a stone’s throw away from his workplace in Edogawa ward. “During busy times the days are even longer, lasting from 4am until midnight,” he says, “but I would never think of finishing before the senior students.”

The hierarchical structure at Shunkaen is as rigid as at a sumo stable. “If we make a mistake, my master takes the blame, which he doesn’t like. Of course, we don’t want that,” says Brose. “But on the other hand, we are taught that it is by making mistakes that we can learn.”

Brose acknowledges he has much yet to learn, but believes he has already achieved personal growth and development through bonsai.

“Bonsai is different from European gardening in that the beauty is less obvious and more intrinsic. You need to show the character of the tree, its age and the severity of the environment it grew up in,” he says.

“You cannot create such a beautiful tree immediately.

You have to hold back and wait – to concentrate and keep an image of what you would like it to become.”

See all the photographs at www.eurobiz.jp

May 2010

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Days of sake and sakura Japan’s first cherry blossom viewing parties took place during the Heian Period (794-1185). Aristocrats, courtiers and poets observed the fragile beauty of the pale pink blossoms and pondered the exquisite poignancy of human mortality. What, I wonder, would they have thought of the happy hoards in Ueno park? On a Sunday at the peak of this year’s hanami season, modern revellers seemed keener to ponder the bottom of a beer can, or perhaps a convenience store bento – those, that is, who weren’t shaking the branches with their carousing, or sprawled out in a stupor on the ubiquitous blue sheeting.

After a tiring day among the bacchanalian crowds I headed home. On a whim, I took a short cut through a park near my house. Here, the celebrations were a little more sober as locals contemplated the yozakura (night cherry blossom). Couples, small groups of friends, and factory co-workers still in their green overalls sat quietly under the laden boughs. Maybe a little of the Heian spirit survives yet?

Photos and text TONY MCNICOL See all the photographs at www.eurobiz.jp

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May 2010

LENS FLAIR

May 2010

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WORK PLACE

Dirk Rebel CEO of Deshima Co., Ltd â&#x20AC;&#x153;Our company supplies Netherlandsthemed events with everything from clogs and traditional dress to street organs and windmills. We also sell Dutch natural cheese.â&#x20AC;?

Photo TONY MCNICOL 48

May 2010