nus lecture "japanese businesses in singapore"

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Japanese Businesses in Singapore

“Growing Together”

02 April 2014

Michiaki Lee

Today’s Agenda

1. Introduction

2. Japan Economy Snapshot

3. Rising Sun & “Lost Decades”

4. Japanese Businesses in Singapore

5. Current Challenges of Japanese Corporations

6. Emerging Entrepreneurial Business from Japan

7. Wrap Up - Growing Together

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1. Introduction

Introduction – Who am I ?

Korean origin

Born and educated in Japan

Worked for US and Japanese companies

Moved to Singapore in 2011

Corporate Education / Leadership Development

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Question 1

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2. Japan Economy Snapshot

Global Macro Economy

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Japan is the 3rd largest country in GDP

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Question 2

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3. Rising Sun & “Lost Decades”

Japanese Economy – Past Trend

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Xxx

Xxx

Lost Decades Bubble Rising Sun

Nikkei Stock Index (JPY)

Fact - Students’ Voice

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Most Respectable Japanese Company

N=74

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Rising Sun ～ “Bubble” Economy(Before 1990)

Fact - Students’ Voice

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Strengths of Japanese Companies

N=72

Rising Sun ～ “Bubble” Economy(Before 1990)

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Short Movie

Rising Sun ～ “Bubble” Economy(Before 1990)

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Success Factors

Growing Demands

– Population Increase / Wage Increase

People

– Highly Educated Workers / Team Work / Hard Work

– Diligence

Efficient Process

– High Security (Safest Country)

– Life-Time-Employment System

Highest Quality Products and Services

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Global Companies Leaned from Japanese Method

5S

– Sorting (Seiri)

– Setting in Order (Seiton)

– Shining (Seiso)

– Standardize (Seiketsu)

– Sustain (Shitsuke)

Kaizen

– "improvement" or "change for the best"

Rising Sun ～ “Bubble” Economy(Before 1990)

Many Countries Learned from Japan

Management Style in 1970-80’s

Japanese “Legacy” Management Style

– Life Time Employment

– Seniority

– Hard Work / Long Work

– Well Organized Structure

– Patience

– High Context Culture / Mono Culture

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Those Worked !

Japanese Economy – Past Trend

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Xxx

Xxx

Lost Decades Bubble Rising Sun

Nikkei Stock Index (JPY)

Bubble Collapse

What was Happening?

Speculative money

Real estate values were extremely over-valued

Large amount of loans

Large number of defaults

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After the “Bubble” Economy (After 1990)

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“Lost Decades”

Over Valued Assets (too much investment)

Over Capacity / Financial Deficit

Decreasing & Aging Population

Lower White-Color Productivity

Global Competition

Deflation, Minus GDP Growth,

Unemployment

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Question 3

Paradigm Change During the “Lost Decades”

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Limited Japan Domestic Market Growth

Rapidly Growing Asian Markets

New Technology

Advanced Information and Communication Technology

Globalization

Low Cost Labors Outside

China and other Emerging Countries

Customer-Centric World

Consumers are more “Savvy”

“Hard” to “Soft”

“Product” to “Services”

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Question 4

Fact - Students’ Voice

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Weaknesses of Japanese Companies

N=75

Rising Sun Again

“Abenomics” (December 2012 ～）

Quantitative Financial Easing

– Pushing up prices

Fiscal policies to stimulate demand

– investment in public works and renovation of infrastructure

Deregulations and creation of sustainable growth

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During 2013, Nikkei Stock Index

went up by 56%

Will it be Sustainable?

How Japan Should Change

To Retrieve Competitiveness…..

Focus on specific industries / functions

Deregulation (Accepting more foreign business)

More global adaptability

– Accept more foreign talents

– Language

– Diversity

Enhancing Productivity

Encourage Entrepreneurial Businesses

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Now, Many Things to be Learned from

Singapore Pracitice

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4. Japanese Businesses

in Singapore

Globalization of Japanese Companies

Overseas Revenue Share is Increasing

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Japan Bank for International Cooperation N=625

Globalization of Japanese Companies

# of Japanese Companies in Singapore

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Ministry of Economy, Trade and Industry

Strategic Focus on Singapore

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Examples of “Singapore Shift”

• Transferred metal resource trading HQ from Japan to Singapore

• Moved the headquarters of its procurement and logistics

operations from Osaka to Singapore

• Developed “SONY University” in Singapore

Variety of Industries

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Especially Consumer Goods & Services

Do you want to work for Japanese

Companies?

Why?

Why not?

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Ranka) Yes, very much 15%

b) Yes, some extent 27%

c) Neutral 44%

d) Not very much 13%

e) Not at all 1%

Percentage

Students’ Voice - Positive

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N=41

Students’ Voice - Negative

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N=40

Students’ Voice – Job Hunting Criteria

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N=66 (Multiple)

Students in Japan - Job Hunting Criteria

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DISCO (Multiple)

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5. Current Challenge of

Japanese Corporations

10 Issues of Japanese Companies in Asia

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1. Wage increase (71%)

2. Competitors’ market shares are growing (53%)

3. Skills and mindsets of employees (53%)

4. Quality of employees (47%)

5. Quality control (45%)

6. Difficulty of procurement (43%)

7. Difficulty in hiring future leaders (42%)

8. Price competition (40%)

9. Increasing material costs (40%)

10. No more room for cost cutting(40%)

JETRO Survey of Japanese-Affiliated Companies in Asia and Oceania

Attributes of Japanese Corporations

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Attributes Evaluation How to Solve?

Product Quality ◎

Innovative Ideas ○

Process Efficiency ◎

Work Attitude ◎

Costs × More Productivity

Diversity × Accept Foreign Talents

Speed & Flexibility × Stronger Leadership

International Adaptability × More Cultural Exposure

People Development is the Key

3 Challenges in Growing Asian Market

1. Large Diversity

• How to understand local market?

• How to unify in one team?

2. High-Speed Growth

• How to quickly execute ideas?

• How to catch up consumer demands quickly?

3. Ambiguous & Unpredictable World

• How to create new values?

• How to recover or learn from failures?

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How to answer all those questions?

HR Issues – Gaps and Challenges

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Attributes Japanese Co.

Customs

International

Employees

Expectation

Salary Slow Mid-Fast

Promotion Moderate Fast

Career Path Generalist Specialist

Job Scope Ambiguous More Clear

Appraisal Ambiguous More Clear

Workload High Mid-Low

Job Security High Mid-Low

Individualism Low Mid-High

How to respond to these gaps?

Best Practice 1: DAIFUKU Mechatronics

Promote locals to key

managements

Higher salary and bonus

than those of Japan HQ

Big empowerment

Freedom to try

Freedom to make decision

Direct communication

Internal promotion & education

MD as a strong supporter

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Best Practice 2: Mitsubishi Electric Asia

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Involve local GM to board meeting

as an Mgmt. Advisor

Hire and fire

Ownership – Everyone has cards

Rapid promotion – No seniority

Empowerment – Non-Japanese

make key decisions

Competitive Package

Team building – Frequent Japan Travel

To Bridge Gaps

Companies have to…

Know the different values

Think Globally & Adopt locally

Learn each other

Empower to key people

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Those are “Must” for success in Asia

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6. Emerging Entrepreneurial

Business from Japan

Emerging Japanese Businesses - Cases

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UNIQLO (Fast Retailing)

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Overview

Fashion Retailer (6.2% of Japanese Market)

Revenue USD11.4 Billion (27% outside Japan)

2,449 Outlets

Source: Website, 1USD=100JPY

UNIQLO – Success Factors

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Strong Commitment to Globalize

Rapid Decision Making / Strong Execution

Local Talent Management

Risk Taking – “Willingness to Fail” to Learn

Learn from Other Players

UNIQLO – Success Factors

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Overview

Internet Commerce Platform

“Online Shopping Mall”

Revenue USD5.2 Billion

90 Million Users

(93% of Internet Users in Japan)

41,996 Merchants

Portfolio Bank, Security Broker, Travel Agent,

Payment, Baseball Team

Source: Website, 1USD=100JPY

- Success Factors

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Technology

M&A, Diversification

Speed

Consumer Reach

Commit to Globalize (No more Japanese company)

Win + Win + Win

(Rakuten + Consumers + Merchants)

QB House

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Overview

10-minute Hair Cut

16 Million Customers

542 Outlets (79 outside of Japan)

Source: Website

QB House - Success Factors

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Low Price

Speed – Providing “Time Values” to Customers

Location - Convenience

Simple - Eliminating Processes

“Blue Ocean Strategy”

Take Away Points

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Strong Entrepreneurship

Opportunity Finding

“Willingness to Fail” to Succeed - Flexibility

Customer Centric

Clear Value Proposition

Creating Win-Win Situation

Global View

Breaking Language & Cultural Barrier

Speed

10% Idea, 90% Execution

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7. Wrap Up

Questions

Michiaki Lee 李 道明

Email:

michiaki.lee@gmail.com

Feel free to contact for any Japanese business related matters Feel free to connect

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