Japan’s Firms Get Wise To Global Talent

“The Japanese economy has been expanding through the competitive advantage of excellence in manufacturing, but that has changed,” he said. “We need to globalize our businesses.”
Hiroshi Mikitani, founder and CEO of Rakuten

With increased competition making the global business world more cut-throat than ever before, the leaders of Japan’s top corporations have recognised the need for their firms to up their game.

Japan’s well-deserved reputation for quality, efficiency and the application of cutting-edge technology to create world-beating products and services is no longer sufficient. Which is why the most visionary companies here are investing heavily in their most valuable asset: their people.

Hiroshi Mikitani, the founder and CEO of online commerce giant Rakuten, stunned corporate Japan by announcing in February 2010 that English was to become the official in-house language and that all his staff would be required to become sufficiently proficient to communicate with their colleagues around the world.

Rakuten was already expanding rapidly, even though it remained a primarily domestically focused company. From day one, however, Mikitani told a recent press conference that his vision was to become a world leader in the online sales sector. And of all the problems he faced, the language barrier was the most formidable.

“As we moved on, I felt that we were missing something,” he said. “We had to use translators to talk to employees at our foreign subsidiaries. And then I had an ‘a-ha’ moment and thought that we should all communicate in English.”

The imperative is not only for his own company, which is today the world’s third largest e-commerce firm by revenue, has 76 million members in Japan alone, operates in 23 countries and market capitalisation of a healthy $13.9 billion.

“The Japanese economy and our GDP need this,” said Mikitani, pointing out that Japan accounted for 12 percent of the global economy in 2006, although that will have shrunk to 8 percent in 2020 and a mere 3 percent by 2050.

“The Japanese economy has been expanding through the competitive advantage of excellence in manufacturing, but that has changed,” he said. “We need to globalise our businesses.”

Rakuten is busy hiring non-Japanese staff – who already make up 30 percent of its total employees – and Mikitani envisages a company that makes the most of the Internet to function as a single entity rather than a headquarters office that is distant from its foreign subsidiaries.

This new-found demand for language skills – and, in particular, English – offers plenty of opportunities for specialist UK firms.

Pearson PLC has already cracked the market with its Versant computer and telephone-based learning system, while the Open University has teamed up with a local company NetLearning, to offer its online MBA courses in English here.

SoftBank Corp., one of Japan’s largest mobile phone companies, is also aware of the importance of being able to communicate.

The company has taken a 70 percent stake in the US cellular phone firm Sprint Nextel Corp. as part of its strategy of embedding itself more deeply in overseas markets, but management in Tokyo has decided the firm needs to bridge the language divide if the new venture is to prosper.

SoftBank has introduced an incentive scheme that will pay ¥1 million (£5,915) to staff who score 900 points on the international Test of English for International Communication (TOEIC), which has a maximum score of 990 points.

Employees who score 800 or more will receive ¥300,000 (£1,775) after the company concluded that hard cash was the best way to encourage them to learn the language.

There is also a growing understanding in Japanese firms that another huge asset is being under-utilised at Japanese firms: women employees.

The government has set a target of women accounting for 30 percent of managers at Japanese firms within the next five years, with Prime Minister Shinzo Abe underlining the importance of the drive by making the promotion of women one of the key elements of his “Three Arrows” of economic reform.

And the potential benefits are colossal, analysts suggest.

Research by Kathy Matsui, head economist at Goldman Sachs in Tokyo, indicates that if the female labour participation rate can rise from 62 percent, where it stands at present, to equal the 80 percent among men, then there would be an improvement in the national GDP of as much as 15 percent.


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Article by Julian Ryall, March 2014