Mount Fuji

All change in Japan 

by MATTHEW MACLACHLAN

A recent Australian government paper which examined the future of Japan made the point that the GDP of the Kanto region alone (the area around Tokyo and Yokohama) amounted to more than the combined GDP of Indonesia and Thailand. The GDP of Aichi prefecture in central Japan represents almost 3% of total world GDP. The late 1990s witnessed an explosion in the number of foreign companies moving into and upgrading their presence in Japan. Clearly Japan remains a force to be reckoned with — even taking into account the growing economic and political importance of China.

First glimmer of change

What we see shaping up in Japan now is significant historical change — the emergence of a country which must, if it is to survive, become truly international in its cultural, economic, political and business life. The evidence is beginning to show: long-overdue deregulation of key business sectors, most notably the financial sector, plus the need to cast beyond Japan's shores for greater foreign investment and know-how, means that Japanese companies are coming to the realisation that without deeper and closer ties with non-Japanese partners, the future of the country will remain bleak.

Organisations such as Merrill Lynch are examples of overseas companies now entering the Japanese market with renewed vigour: from a historical perspective, this key trend is an excellent example of what the Japanese call gaiatsu — or pressure from outside. The past shows that without external stimuli — such as that of China in the 6th century, the United States in 1853 and the Allied Occupation of Japan following the end of the war in the Pacific — nothing of momentous significance happens in Japan. Maintaining the status quo fits the Japanese societal preference for harmony but at the same time, it can cause complacency and stagnation — as we have witnessed in Japan for close on a decade. All of this is set to change — and the changes will undoubtedly gather pace.

What does this mean for non-Japanese working with the Japanese inside and outside Japan? Firstly, the potential for increased and closer co-operation has never been greater. Foreign companies setting up or enhancing their presence in Japan will face the challenges of importing new management concepts to replace those Japanese methods which have served the country well but which have no place in the global market of the 21st century. How is this going to be done?

Secondly, non-Japanese multinationals will need to examine how their Japanese partner companies can better fit a more global context. How do you get your Japanese colleagues to buy into and contribute to global business strategies? Thirdly, faced with difficult market conditions at home, Japanese companies which moved their operations abroad in the 80s and 90s will find themselves demanding more of their overseas affiliates. They will have to ask the questions: How can we get more out of our people — Japanese and non-Japanese? How can we make cultural differences a positive rather than a negative factor?

There are no simple answers but perhaps the starting point has to be mutual understanding between Japanese and non-Japanese partners, not only of the obvious cultural differences but perhaps more crucially, differences in business methodology. Many Japanese and non-Japanese business people believe that the best way forward is for the Japanese to buy into a kind of Euro-American business culture built on Anglophone, MBA-oriented precepts. I believe that this approach is crucially flawed. Firstly, many "internationally-minded" Japanese tend to equate the attainment of an international perspective with achieving fluency in English. Non-Japanese who work with this kind of person are lulled into a false sense of security: they mistake an American accent for biculturalism. Add to this the fact that many fluent English speakers amongst the Japanese are facilitators rather than decision-makers and you have a cultural time bomb just waiting to go off. You expect things to be done the way you requested them; your Japanese counterpart gives you the impression that they can carry out your requests — but at the end of the day, the monoglot Japanese bosses — the real decision-makers — shoot down the proposal. Result: a potentially dangerous mismatch of expectations.

What are the real issues?

Most Japanese companies with the notable exception of a few, are still locked into a mindset which tells them that conflict — born of cultural misunderstanding — is something that requires gaman (perseverance) in the hope that something miraculous will happen to solve the problem. They emphasise the need to be self-reliant: they do not want the help of outsiders to solve their internal human resource difficulties. Non-Japanese business people are less inclined to disregard the cultural differences, although many think that a good book on Japanese business etiquette — describing how to hand over one's business card with two hands, how one should not blow one's nose into a handkerchief in public, and how to hold a pair of chopsticks — will suffice. Quite clearly, both Japanese and non-Japanese business people working together now — and into the 21st century — need to spend time on getting into the real issues of working practices, of managing multi-cultural groups and of creating cultural synergies. This will mean the difference between achieving lacklustre and truly outstanding results.

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