AJBA Blog

Whilst Japan and Australia have enjoyed a fulfilling bilateral relationship for 20 years, both nations are experiencing significant changes. These include economic changes, changes in political leadership and changing strategic perspectives. Professor Jenny Corbett from The Australian National University spoke candidly about these developments and her predictions for the future of the Japan-Australia relationship on February 27, at our first cocktail function for 2008. 

While Australia has been an above-average exporter of services, Japan’s imports in the service sector are less than average due to the high restrictions. Economic challenges, such as those posed by the service sector, have the ability to impact on bilateral relations. Professor Corbett suggested that Japan is currently experiencing a ‘political crisis’, with potentially damaging effects for Japan-Australia relations. In regards to responsibility for the future of the relationship, the Professor placed the ball in Japan’s court, citing internal structural reform and a positive outcome from the Free Trade Agreement negotiations as integral to future success.  

Problems in Japan’s political structure pose significant challenges to its ability as a partner in a changing world. Professor Corbett noted in particular that the political structure appears stagnant and lacking in strength, limiting reforms and complicating the passage of legislation. Professor Corbett felt that prospects of visionary political reform in the foreseeable future were unlikely.   

It was stated that the key question now challenging those with a stake in the Japan-Australia partnership is: ‘How do we maintain the focus on Japan as a partner as its share as a trading-partner declines?’ 

The answer lies in rethinking the very nature of the relationship. Whilst the emphasis to date has been largely economic, it is essential that we now turn to importance of Japan as a strategic partner. However, Professor Corbett stressed the comparative difficulty in conveying the importance of so subtle a message to those used to focussing on the bottom line.

Several suggestions were put forward for revitalising bilateral relations. First, there is a need to regenerate Japan-Australia meetings and forums, such as those organised by the AJBA. Second, more independent research into Japan is required. Finally, it is important to renew the focus on Japanese language study in schools. In this way, we can look forward to taking the Japan-Australia relationship from strength to strength into the next decade.  

Written by Laura O'Loughlin who recently completed an internship at the Australia Japan Business Association.     

             In part three, we consider how to find good salespeople in Japan.

            Once you have the makings of a management team in Japan, building a sales team may be your next task. It may also be your most difficult.

            More than any other position, I’ve found it necessary to use personal connections to hire good salespeople, and today all of my sales staff hires are recommendations from existing members of the team. So your best bet here may well be to see if your management team can bring some salespeople with them, and then to have those people recommend former colleagues. It is worth being generous in rewarding staff for their recommendations, because you can easily spend tens of thousands of dollars in a fruitless search on your own.

            In Japan as elsewhere, remuneration is usually the key incentive for sales staff. As always, you’ll have to find a balance between the base and the incentives. Japanese are very concerned with job and life security, so go too low on the base, and candidates won’t be interested, and may not trust your incentives or targets. But go too high, and you may have someone who is happy to coast. I’ve found that a base just enough to cover living expenses combined with healthy commissions that kick in from the first sale has worked best.

            If personal recommendations don’t work, one approach to hiring sales staff is the “temp-to-perm” arrangements offered by temp staffing (called haken in Japanese) companies. You can try out the salesperson for a few months on a temporary arrangement, and if you like them, switch to full-time, with a commission that often decreases based on the number of months they have been working as a temp staff. The only problem with this is that it can be hard for the staffing agencies to find candidates themselves, so you’ll need to be vigorous in pushing them.

            In future entries, we’ll look at some of the costs and other issues associated with employment in Japan.

            In part two of this entry, we look at some ways to deal with the challenges we covered in part one.

As an Australian company looking to setting up shop in Tokyo, your first hire is quite likely to be a country manager. You may be tempted to use a recruitment agency. But whichever path you go, you will very likely be presented with some candidates who might look quite good on paper: mid 40s, good university, reasonable English skills, years of experience at one or maybe two substantial Japanese companies. Be very careful here. It is very unlikely that these candidates are not being put forward to you because they have an urge to work for a small Australian office. Rather, chances are they have hit a career brick wall at their Japanese employer and have been encouraged to leave. You’ll often find that these candidates, name university and employer notwithstanding, are not good performers, will not adapt well to a new corporate culture, will lack initiative and motivation, and will not have the skills to run your office. Alternatively, you may find yourself looking at a resume with a candidate who’s moved from company to company. Again, be careful. Job hopping in Japan is a stronger warning sign than it is in Australia. Of course, you might get lucky with either of these candidates, but I recommend a thorough vetting process.

So what to do? Consider an expat. There are many advantages. First, there are a lot of foreigners, including many from Australia, who have put in considerable time in Japan, speak the language, understand the culture, know their way around, and have held positions of responsibility. They’ll often have impressive personal networks and will be able to offer you helpful advice, from a compatible standpoint. With an expat, communication with head office is smooth, and they can act as an effective go-between with your local staff. If you hire your expat locally in Japan, you likely won’t need to offer outsize salary packages. But even hiring from countries like Australia, you’ll often find people looking for a chance to return to Japan with a more senior position, and the hiring costs can still be quite reasonable. And if you can offer career growth back in the expat’s home country, you can also enjoy real loyalty. Just one word of warning: one or two years teaching English in Tokyo does not make a Japan expert.

Even better, combine your expat with a talented local assistant manager. Japanese women have often be called the nation’s most underutilized resource, and while women are slowly being given more opportunities—out of sheer necessity if nothing else—there are still many who prefer to work at foreign companies where their skills are often better appreciated. Women in Japan will often have more overseas experience than men, and some good varied experience, including previous work with foreign companies. It is not difficult to find people with good language skills to go with cultural understanding, and a very strong work ethic. A position as assistant manager of a small office can often appear very attractive to someone who is not satisfied with the opportunities being provided by domestic firms. Even an assistant to the manager position can bring very qualified candidates who can provide excellent support to your country manager.

Another approach is to look for candidates with non-traditional backgrounds. I have in several cases successfully hired people who had spent their 20s working overseas in Japanese NGOs, often in positions that gave them a great deal more responsibility than they would have otherwise experienced. That background may not appeal to a lot of traditional Japanese firms, but it makes them ideally equipped to take on responsibility and pitch in with tasks in a small office.

            I referred in an earlier entry to the difficulties of hiring in Japan. In this multi-part entry, I’ll share some experience from hiring in Japan over the past 15 years and from running a recruitment agency in Tokyo. In the first part, we look at some of the challenges.                                                                          

            Ask any hiring manager: finding good people is tough. Finding good people at a senior level is even tougher. And finding them in Japan can define frustration. There are several reasons. Here are two. First, with the steady economic recovery over the past few years, the employment market has tightened. Now, while the headline Japanese unemployment rate doesn’t reflect underemployment, the quality end of the market is indeed very tight. A declining population doesn’t help. The second reason is that Japan’s best and brightest almost inevitably make their way into large Japanese companies or the ministries. Certainly there are some who want to work for a foreign company, but they will look first at the IBMs and Morgan Stanleys. Unless you are a global brand, you’ll find that foreign companies don’t rank very high on the list of potential employers.

            Adding to the headaches, the hiring process is very costly and the options are generally poor. Many recruitment agencies charge fees of 30%, principally because they have the same problem finding staff you do, and so work with other agents to widen the search and split the fees. Hiring staff with a 30% commission quickly becomes extremely burdensome, one reason why I set up my own agency. And don’t be surprised if your agency doesn’t put forward any candidates at all.

            There are recruitment websites, but if you are used to the $150 or so to advertise on the Australian ones, you’ll be in for a shock. In Japan, the major recruitment sites ask you to sign up for a month, allowing you to place either a limited or unlimited number of ads, and charge between $2500 and $6000 for the privilege. Responses will vary, and they can be good for junior or certain specialist positions, but they are weak with sales and senior slots and forget about IT. One good feature these sites offer is the ability to sift through the online resumes and send “scout” messages to the candidates. At times, this can help you find the person you want.

            In the old days, the classifieds in the Monday morning edition of The Japan Times, one of Japan’s leading English-language dailies, was a popular way for foreign companies to advertise. You would get a good response from expatriates and bilingual Japanese, some fairly senior. Rates were reasonable. Alas, in the Internet age the response now seems much poorer. The paper has its online version, but it is struggling to compete with the major recruitment sites and we haven’t had a good response from it. You could also advertise in one of the still huge local language dailies, paying thousands of dollars for a microscopic ad, but be prepared for a very poor response.

            All this means that to build a team without breaking the bank or losing your mind, you’ll need a little planning. The next two entries offer some ideas.

            Tokyo received its first decent snowfall for the winter as 80 or so expat Australians and local Japanese executives gathered at the venerable Imperial Hotel near Ginza for a breakfast with new Australian Trade Minister Simon Crean. The event was being hosted by the Australia New Zealand Chamber of Commerce in Japan.

            After a quick meal, Mr. Crean took to the podium with three messages for his audience: the Rudd Government’s commitment to developing the “enduring relationship” between Australia and Japan, its commitment to achieving a comprehensive trade and economic package, and its interest in forging stronger relationships at the bilateral, multilateral and regional level.

              A significant part of his talk focused on the second message, which referred of course to the ongoing free trade agreement (FTA) negotiations between Australia and Japan. And it was here that Mr. Crean delivered two messages that were the most important to come out of the morning. First, the Rudd Government puts top priority on a successful outcome to the Doha Round of WTO trade negotiations. Second, if Japan wants access to markets for goods and services, it will need to open up its sensitive agriculture sector.

            The Doha commitment is not surprising; it was signaled in Kevin Rudd’s pre-election foreign policy manifesto (printed in the February 2007 issue of The Diplomat), which called for a return to multilateral engagement after years of focusing on bilateral (read: U.S.) relations. As Mr. Crean pointed out, there is an opportunity to make progress on Doha over the next couple of months, but with growing protectionist sentiment in the United States in this presidential election year, there is also ample scope for pessimism.

            The comment on the agriculture sector suggests that the Labour government is going to take a harder line on this issue than its predecessor. Although elements of the Japanese government do want to see this sector open up, a wobbly Liberal Democratic Party is unlikely to risk offending its core rural constituencies, which remain staunchly opposed to the FTA. We have previously argued in favor of phased tariff reductions and deferred negotiations, pointing out that with Japanese farmers rapidly ageing Tokyo is going to have to look to imports in due course. Following last year’s Upper House election defeat, the Japanese government is even less likely now to bow to any insistence that Japan make immediate and substantial concessions on farm trade.

            Mr. Crean went on to call for the “revitalization” of APEC, pointing out that while his government recognized the ASEAN Plus Six grouping, APEC was broadly representative of the region and offered high-level meetings every year. He said he was in favor of bringing India into APEC. Japan has consistently supported Australian inclusion in any regional grouping, and this has been a key benefit of good relations with Tokyo.

            The hot topic of whaling was not mentioned during the talk or the subsequent Q&A, but it did come up in a doorstop Mr. Crean subsequently held for the assembled media. And so the Sydney Morning Herald filed its report on the event under its special whaling section.

            We’ll look at whaling in a subsequent entry. The important message for Australian business from yesterday’s event is probably this: don’t hold your breath waiting for an Australia-Japan FTA agreement.

Welcome to the AJBA blog. Regular visitors to this website will note the changes, which are quite substantial and include some useful new content. We’ve added a section advertising jobs related to Japan, content from The Diplomat magazine, a language corner with useful tips on Japan, and this blog, which we hope will provide you with updates relevant to Australia-Japan business. In this first entry, we take a quick look at some of the support available to Australian companies setting up an office in Japan. 

The majority of AJBA members and guests are Australian exporters. A fairly small minority maintain a physical presence in Japan. This reflects the larger bilateral relationship. DFAT reports that two-way trade between Australia and Japan at AUD50bn in 2006, with Japan buying more Australian exports than China and the United States combined. Yet, I recall reading a comment by Phil Ingram, Austrade’s former country manager in Japan, noting that only about 100 Australian companies had a physical presence in Japan as of early 2006.

In my view, this is unfortunate, because it keeps the Australian profile very low in the Japanese consciousness. That can’t help Australian exporters, and it makes it hard to get beyond the stereotypes Japanese have of the Australian economy.

Many Australian companies are reluctant to set up in Japan because of the perceived difficulties. Some of the perceptions do reflect reality—not least in recruiting, an issue we’ll look at in a future entry. Others are overblown. Recent reforms have made it very much easier to set up a company in Japan. Years of deflation have brought Tokyo and especially other Japanese cities back to the pack in cost terms. Japan remains an enormous, stable and very affluent market, with a number of emerging opportunities (vocational training, health care and eco-business, to name three). And doing business with Japan from afar can present its own hurdles, many resulting from a lack of understanding of local market conditions.

Sure, setting up an operation in Japan is a big undertaking. But getting started is a lot easier than it was, with some excellent support now available. We recently had the opportunity to visit the facilities of the Japan External Trade Organization. The services offered to companies trying to get established in Japan are impressive, ranging from fully-equipped temporary offices and facilities, available free of charge for 50 business days, through advice in areas such as tax and recruitment, to assistance in navigating Japanese laws. You can learn more about these services by contacting JETRO in Australia.   

Japanese prefectural governments also offer some excellent services and incentives. We met with the Tokyo Metropolitan Government, which offers advice, referrals and a business matching program, in which they will introduce you to local firms of potential interest. The local government in Osaka offers subsidies and tax breaks to foreign businesses. And the government of Fukuoka, a dynamic region in the southern island of Kyushu, does the same.  

Of course, Austrade can provide valuable advice on setting up business in Japan. And if you are visiting, don’t forget to check out the Australian and New Zealand Chamber of Commerce in Japan, or ANZCCJ, which also has office facilities for Australian business and holds regular events in Tokyo and other cities.  

On the topic of visiting Japan, the AJBA is planning a tour for members in 2008, designed primarily to help you make valuable contacts and learn about the market first hand. The tour is in the early stages in planning, with more details to be available in the first months of 2008. Right now, you can register your interest from the announcement on our top page. 

James