As Japan looks to reassert itself globally as a business leader FleishmanHillard’s Shin Tanaka assesses how corporate affairs and effective communications can help spur this process
The corporate affairs space seems to be growing in Japan. What’s spurred this and how do you see it proceeding?
Shin Tanaka: From a practitioner’s point of view, I think there will be more and more opportunities. On the Japanese corporate side, there were two important incidents in recent years. The first was the Toyota recall: that took everyone by surprise because Toyota was supposed to be the most advanced global Japanese company and yet they totally failed to deal with the situation for the first six months. I think Toyota became a kind of best example case for most Japanese companies later on. But the message had been sent: if Toyota is in this state, how can the average Japanese company deal with this kind of crisis? And also around that time, Sony had a problem with personal information leakage from the United States. Now that strengthened the message because everybody saw Sony as the most global Japanese company. It created a sense of urgency among Japanese corporations about crisis situations.
And then there was Takata. That sent a strong message to the B2B companies. The Japanese economy is basically a B2B-centric economy and now it was clear that it wasn’t just B2C companies like Toyota and Sony that were exposed.
At the same time Japan is going through what I call Globalisation 2.0 Japanese companies became globalised at the end of the 1970s, the 1980s and maybe the early 1990s, most of them being B2C companies like Honda and Sony. After the 1985 Plaza agreement, the yen shifted up and all of a sudden Japanese companies realised they had the second-largest domestic market in the world.
So after 1985 you saw very few new brands coming out of Japan?
Shin Tanaka: Most of the companies focused on the domestic market because it was big enough to feed all of them. For thirty years, many companies lost interest in globalising. But now the market is not big enough, everyone is going global, and that is why people are starting to think more about how to deal with these sort of governance issues.
Is there a cultural reason why companies have been slow to engage externally?
Shin Tanaka: I think it’s more of an organisational issue. When Japanese companies globalised in the 1980s, there was no internet and the focus was regional. I used to work for Honda. Instead of establishing a headquarters function in Tokyo, they focused on localising their operations in North America, Asia or Europe, developing an organisation that optimised the regional thing. That worked out very well because in the 1980s, when a crisis happened, it would stay in the United States, for example. But now the world has changed, it’s all linked, so something that happens in the United States automatically spreads all over the world. But the problem with globalised Japanese companies, as you saw with Toyota, was they didn’t have a global headquarters function …
You have to have a centralised function to deal with a global crisis situation and Toyota learned a very hard lesson. Most globalised Japanese companies don’t have this headquarters communications function in Japan. They are trying to develop it but are still at the “trial and error” stage.
Many people grew up with old Japanese brands, but we don’t see a new generation emerging. What can be done in communications and marketing terms to help develop nascent brands that want to go global?
Shin Tanaka: When I was at Honda, we used to say that if you could sell a car in Japan, you could sell that car anywhere in the world in terms of quality, the technology – the Japanese are so demanding. And the competition in all sectors is very hard. So in the past 30 years, many companies that may not be known around the world but are quite big in Japan have been in training to go global. In terms of quality, financial structure, their business model, in terms of technology, they are very qualified to become global players. The only issue they face is they are not good at communicating those strengths to the world. So the challenge for these corporations is to try to think of communications as a strategic weapon, not just as a cost centre.
Can you think of any already established Japanese company that is about to make that transformation?
Shin Tanaka: I think there are going to be thousands of them! One of the biggest assets Japan has is the number of companies. You will see new brands coming from the retail side, distribution, manufacturing, suppliers, B2B, the entertainment side, digital gaming – you’ll see a lot of them becoming big brands. The trigger will probably be 2020. That’s not just the year of the Tokyo Olympics: every economic policy the government is initiating is targeted for 2020. Every Japanese company has a Plan 2020 and the core aim for most of them is globalisation.
So they have the right structure, the product quality, they will probably have the capital to invest, but communications is the weak link. What specifically do they need to do around that?
Shin Tanaka: It’s totally dependent on whether top management understands the importance of communications. I see more and more top managers who have more understanding of communications and more and more who have studied in the United States or who have been working overseas. They really understand it. In the next five years, there will be a shift in leaders at major Japanese companies and I think that is going to trigger the change.
We have seen the auto companies taking a bit of a battering. What do you think the industry can do collectively to restore confidence with consumers?
Shin Tanaka: I don’t know whether a collective effort really works in such a competitive industry. Rather I think the market will bring pressure on each company, because right now the auto industry is facing a new challenge because of newcomers. I mean Google is now a competitor in some ways! For a long time the auto industry has been protected by a very high entry barrier, but that is gone.
The new competition, the Volkswagen and Mitsubishi cases, these sent a warning to the auto companies and I think that will drive change. The biggest thing they have to do is change the mindset.
Like Akio Toyoda at Toyota: it took him five years but he admitted they had pursued quantity rather than quality and that people in Toyota including stakeholders like the parts suppliers and the dealers had to change their mindsets to focus more on quality.
Would you say the role of the communicator has changed in the past 10 years?
Shin Tanaka: Exactly, it has to be internal and external simultaneously.
And how do you overcome resistance? If the company is unwilling to change, does it simply learn the hard way?
Shin Tanaka: If top management doesn’t change, or even if they change but fail to change the rest of their people, they will learn through a hard landing. Japanese companies are in a transformation stage and it will be interesting to see whether they can adapt to make communications part of their strategy. Because that is going to determine their future.
Shin Tanaka is President of the FleishmanHillard Japan Group
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