Terrie's Take 777 -- Over-staffing as a Cultural Habit. E-biz news from Japan.
terrie at mailman.japaninc.com
Mon Oct 20 01:50:45 JST 2014
* * * * * * * * TERRIE'S TAKE - BY TERRIE LLOYD * * * * * *
A weekly roundup of news & information from Terrie Lloyd, a long-term
technology and media entrepreneur living in Japan.
General Edition Sunday, October 19, 2014, Issue No. 777
- What's New -- Over-staffing as a Cultural Habit
- News -- Uh-oh, weak yen could be a big problem
- Web Content/Tech Job Vacancies -- Community Manager position
- Upcoming Events
- Travel Picks -- Mt. Ontake in Nagano, Senbei in Miyagi
- News Credits
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+++ WHAT'S NEW
Pressure of population and the resulting competition has meant that
Japan has always been a tough country to do business in. Despite that,
because it has such a large market and a population that loves to
consume, the country nonetheless continues to attract plenty of
foreign punters who are hoping to strike it big here. Not many do, but
those who have are generally those who have patented products,
over-whelming technical superiority, or international brand cachet,
and thus have managed to carve out a place in the consciousness of
their consuming public or corporate customers. As a result, companies
as varied as Coca Cola for beverages, Stryker for surgical implants,
and GSK for drugs, are reaping tremendous ongoing returns.
But apart from these gifted few, not so many foreign start-ups succeed
here. Mostly the new entrants try for a couple of years then give up,
or they decide right from the start that Japan is too hard to tackle
and instead hand the keys to the future over to a local partner. This
fact is well reflected in inbound foreign direct investment numbers
put out by the Japan External Trade Organization (JETRO) every year.
Last year for example, JETRO said that in the ten-year period from
2003 to 2013 it facilitated more than 10,000 investments into Japan.
However, only 1,136 of these resulted in the foreign company taking
the plunge and setting up for themselves here -- that's just 10%
coming in under their own steam. Or put another way, in 90% of cases,
the foreign party decided for whatever reason (but mostly, according
to surveys, because "Japan is too hard") not to set up for themselves
OK, so maybe JETRO's managers don't get to see every deal coming into
Japan, and so to give them some benefit of doubt, we can imagine that
possibly there are about another 100-200 foreign companies setting up
here that don't make it to JETRO's statistics -- but probably not more
than that. Indeed, Teikoku Data Bank, Japan's D&B, says that as of
last year there were only 2,921 foreign companies (i.e., those 30% or
more controlled by foreign owners) in all of Japan. In contrast in HK
last year there were about 7,000-9,000 foreign firms (not all are
active), and Singapore claims that in 2012 alone, more than 12,000
foreign-owned companies were registered.
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We've mentioned in earlier Takes that among the reasons foreign
companies don't want to set up in Japan, taxes and over-regulation
feature as top complaints. Abe has said a number of times that he
plans to reduce corporate tax to somewhere in the "twenties"
(percent), although when that will happen exactly is still up in the
air, and further that his government will be setting up special zones
that will allow foreign firms to bypass some of the hindering red tape
they have to deal with now. We have our doubts whether three
generations of bureaucrats can unlearn their regulation-spinning ways
in just a year or two, but at least Abe should get some points for
Beyond taxes and regulation, probably the next biggest factor that
hinders the entrance of foreign companies into Japan is the lack of
appropriate human resources. The reasons for this situation are many,
but include the following:
1. Lack of appropriate best-of-class professional training in the
schools, universities, and adult eduction institutions.
2. Japanese workers, and especially managers, are conservative and are
motivated by brand and security. That means they are attracted to big,
traditionally-run (but not necessarily traditional industries)
Japanese companies, and seldom to foreign firms other than those with
strong brands. Foreign start-ups? Forget about it.
3. A distinct lack of transportable skills among experienced workers,
due to how young Japanese graduates are inducted into the arcane
methods and values of their first employers, stunting their ability to
develop externally-marketable abilities.
4. Foreign language inferiority complex.
5. Conservative parents, especially mothers and mother-in-laws,
telling young hopefuls, "Don't trust the foreigners, they'll fire you
at a moment's notice." Strange how they don't notice that Japanese
firms are doing the same, by forcing people into non-permanent
6. Culture gap, where Japanese can often see hard work as a
demonstration of sincerity, not necessarily results. And to
demonstrate such an important value, the more successful players spend
copious time binding themselves socially to their customers,
colleagues, and other supporters.
Actually, this last point really can be a major point of conflict. For
example, it is difficult for foreign senior management to understand
the need for a monthly entertainment budget per senior salesperson of
JPY300,000-JPY400,000 every month (in the IT sector, which sells big
ticket items, this kind of budget level is not unusual), especially
when the sales cycle might be 1-2 years long... A real act of faith is
needed by the head office overseas to justify this level of ongoing
Another point of conflict is a the Country Manager role, where most
smaller market entrants simply want a reliable and self-motivated
individual to kick-start the business in Japan. Yes, you might bestow
upon him/her the title of Country Manager (CM), and yes, you will
definitely be paying a high salary (e.g., in cloud-based IT) of
JPY12MM-JPY20MM per year. But if as a foreign boss you then expect to
be able to turn around and ask that person to work by themselves until
they get things up and running, they will probably resign in the first
couple of months. The reason is because most Japanese senior managers,
no matter how entrepreneurial, are educated and conditioned to work in
groups, and the idea of working alone doesn't feel to them like a
"real" company. Worse still, they may see it as being a sign of
weakness and fakery to the client.
This kind of cultural conditioning is deadly to smaller foreign firms,
who simply can't pay up the minimum 5-person overhead costs that most
CM candidates demand as their conditions for joining the firm. Those 5
people in an IT setting will typically include (the CEO of course), a
technology or pre-sales person, 1-2 sales staff, an office
manager-cum-secretary, and an accountant. Then there will occasionally
be more engineers, production staff, and/or merchandizers. Even this
relatively light investment will still cost the foreign company
JPY100MM in first year salaries and JPY50MM in company setup, office
build-out, and other costs in the same period.
So it's no wonder so few foreign companies are interested in setting
up or headquartering in Japan. It really is too expensive, but not
just because of the cost of salaries (although Japan is still about
30% more expensive for the same skills than Singapore), nor the cost
of office premises. No, instead, the costs stem from the insistence on
an expanded manpower approach that any Japanese CM candidate worth
their salt will push hard for. Unfortunately this is a cultural foible
that the Abe government can't really legislate against, unless it
wants to "reboot" the nation's education system...
...The information janitors/
----------- Come spend an evening with SAFECAST! ----------
[Ed: Safecast is an organization that was founded by concerned foreign
and Japanese residents of Japan, after the Fukushima nuclear power
station disaster. The group is technically very competent, and
provides the world with independent data on the radiation levels
around the country.]
As you may know, Safecast's funding has come primarily from
crowdfunding efforts like Kickstarter and GlobalGiving, with
occasional grants from philanthropies such as the Knight Foundation.
This is in addition, of course, to the many people who have
contributed their invaluable time and knowledge. We have never done a
fundraising event until now, but happily we were approached by a
concerned local businessman who offered to try to set one up for us in
Tokyo. We hope many of you can attend.
Date & Time: Tuesday, November 4th, 7:00pm
Location: Simmons & Simmons / TMI Associates conference rooms, 22nd
floor, Roppongi Hills, 6-10-1 Roppongi, Minato-ku, Tokyo
Food/Drinks: Light food and refreshments will be served
RSVP/Questions: Please contact rsvp at safecast.org
- Recruit snags JPY197bn in new funds
- Uh-oh, weak yen could be a big problem
- Whaling and slippery slope theory
=> Recruit snags JPY197bn in new funds
'Can't have too much of a good thing' seems to be the motto for
Recruit boss Masumi Minegishi. His company has not only successfully
rehabilitated itself from a scandal-ridden organization 20 years ago,
it has created a plethora of profitable media businesses and has now
just done the year's second-biggest local IPO. The stock surged 7%
after the listing. ***Ed: Minegishi has already indicated that a good
chunk of the new cash will be used to make further acquisitions,
perhaps similar to the deal to snag world-leader recruiting site,
Indeed.com several years ago.**
(Source: TT commentary from bloomberg.com, Oct 16, 2014)
=> Uh-oh, weak yen could be a big problem
Does the move to devalue the yen qualify as the biggest financial
mistake of 2013? It might do if analyst mutterings are anything to go
by. Now it seems that the nation's small- to medium-sized companies
are looking at a serious problem come next April, when their forward
currency contracts for imported materials run out and they are hit by
the squeeze between higher costs and still-falling domestic sales.
Analysts are now saying that the weak yen will have a major impact on
these SMEs from next year, especially those in manufacturing. ***Ed:
Why don't they just offer every single SME in Japan employing 10
people or more JPY20m in new credit? That will cost far less than
current stimulus plans, and is much more likely to be passed on to the
employees as pay raises.** (Source: TT commentary from usatoday.com,
Oct 18, 2014)
=> Whaling and slippery slope theory
Very good analysis in last week's New York Times about why the
Japanese are still so insistent on continuing their whale hunt even
after the International Court of Justice decision to prohibit it. The
writer posits that the whaling obsession is not so much about whales
as it is about the Japanese concern that a whale ban will lead the
world to start banning the fishing of other commercially more
important species, such as Tuna. ***Ed: Also interesting to know that
the average consumption of whale meat per capita is just 24gms
annually.** (Source: TT commentary from nytimes.com, Oct 13, 2014)
NOTE: Broken links
Some online news sources remove their articles after just a few days
of posting them, thus breaking our links -- we apologize for the
+++ WEB CONTENT/TECH VACANCIES
=> Are you in web content, sales, or engineering- If so, this section
is for you.
** HIGHLIGHTED POSITION
- Community manager
www.japantravel.com's "special sauce" as a travel website is its
community. We are recruiting a bilingual person with an outgoing and
friendly manner to manage our 3,000-person community both in Japan and
abroad. The person will be involved in recruiting, contracting,
managing, and motivating the key leaders in the community, as well as
assisting with troubleshooting of downstream contributors and other
participants. Ability to multitask, show empathy, and yet maintain
discipline in terms of results are important attributes for this
position. Location of the job for the first 12 months will be in
Tokyo. Some travel around the country is also anticipated. JPY4M -
JPY6M base + incentives. We are interested in both Japanese and
foreign applicants. For language fluency, ability to listen, speak,
and read emails in your non-native language are necessary.
Interested individuals may e-mail resumes to: info at japantravel.com.
+++ UPCOMING EVENTS/ANNOUNCEMENTS
------------------ ICA Event - November 20th-------------------
Speaker: James Santagata, Founder and Managing Director of Career
OverDrive! and SiliconEdge.
Title: "I'm 40 Now!!!!! Is It Really Game Over For Me In Japan's Job Market ?"
Details: Complete event details at http://www.icajapan.jp/
Date: Thursday, November 20th, 2014
Time: 6:30 Doors open, Buffet Dinner included and cash bar
Cost: 4,000 yen (members), 6,000 yen (non-members) Open to all. No
sign ups at the door!!!!!!!
RSVP: By 4pm on Monday 17th November 2014
Venue is The Foreign Correspondents' Club of Japan
=> No feedback or corrections this week.
+++ TRAVEL DESTINATIONS PICKS
=> Nakasendo Hike & Erupting Mt Ontake, Nagano
Historic Road and Post Towns, Not Affected by Eruption
I know that some travelers who plan to visit central Japan are
worrying about any trouble by the eruption of Mt. Ontake, the
3067-meter volcano. It is a big tragedy that more than 50 climbers
died by the sudden eruption of Sep. 27. Mt. Ontake is popular for
climbers and also pilgrims who believe in its mountain religion, and
the eruption occurred at noon on a weekend of the peak hiking season.
Now, however, troubles by the eruption are limited. You are prevented
from entering ONLY the 4km-radius cautionary zone from the summit of
Mt. Ontake. This doesn't affect ordinary traffic and travel in other
areas. All trains, buses, roads in Nagano Prefecture are operating as
Tsumago, Magome, and Narai historic post towns of Nakasendo, which are
popular sightseeing spots with walking courses among foreigners, are
more than 30 km away from Mt. Ontake and can be traveled safely. On
October 11 (2014), I actually hiked between the Yabuhara and Narai
post towns via the Torii Pass, the highest point on the historic
Nakasendo highway that connected Kyoto and Tokyo in the Edo Period.
=> Sendai hand-roasted Senbei Crackers, Miyagi
Local senbei crackers make the perfect snack or gift
In any big city, no matter how long you have lived there, every once
in a while you'll come across something new. That experience happened
to me recently when I discovered Sendai Kouren Honpo. This is a
specialty store which makes and sells its own hand-roasted senbei
crackers. Located downtown just a few minutes' walk from Kotodai Park,
the location is perfect for a quick snack on the go or to pick up a
tasty treat for someone.
Unknown to me until a bit of detective work, this style of senbei
actually has a long history in Miyagi Prefecture. The technique to
create the senbei was invented over 600 years ago in nearby Matsushima
Zuigan-ji Temple. Since that time, the town's skill and tradition has
been protected and passed down through the generations. Sendai Kouren
Honpo was constructed after WWII, during the rebuilding of Sendai.
Around the same time, gyutan, grilled beef tongue, took Sendai's
culinary world by storm. Probably because of that reason, you won't
find this traditional snack featured on tourist brochures and many
locals may not even be aware of the store. What a pity, because they
are missing out on some of the best senbei in the capital of
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+++ ABOUT US
Written by: Terrie Lloyd (terrie.lloyd at japaninc.com)
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