Foreign Competition in Japan

Human Resource Strategies

Robert Ballon

• Publisher: Routledge
• Year: 2010
• ISBN:
  9781136929427
• Edition: 1
• Topic: Business
• Subtopic: International Business
• Index: Business

The Japanese market is an attractive and challenging one. It is essential for foreign companies wanting to establish a growing presence to build operations which are suited to the Japanese. This book focuses on three particular areas: the labour market, the workplace and the market-place. The management of human resources plays an important part in a company's image in the market. A strong corporate presence is vital to inspire confidence among consumers and the career opportunities and job stability offered by a company reflect its strength. Using case studies and covering topics such as the labour market, corporate organization, decision making and business transactions, this book outlines the way the Japanese organize their companies; it analyzes the approach of foreign firms and stresses the strategies they should adopt to enhance their competitive image. The comprehensive analysis of the Japanese work environment together with its focus on foreign competition will make the book essential reading for all those interested in international business, human resources, marketing and Japanese studies.

Part I
The labour market

Especially after World War II, Japanese society has been providing its industry with human resources of a high and uniform quality. The hallmark of this industry is an employment system whose norm is, but which is not always the case, stability; this means that employment is, whenever and wherever possible, a long-term consideration. The Japanese competitor hires employees not so much for their immediate use but for their potential in the long run. Training and development thus becomes vital to the work environment, a major responsibility of the company itself. In general, relations between management and the workforce have been conducive to a congenial corporate environment.

For such a thriving economy, the number of foreign firms, in any category, is surprisingly small, Employing 2 per cent of the labour force, they have established a narrow niche in the labour market, with little overall appeal. Although the individual foreign firm does not have much control over its situation, it contributes to its own dilemma by pursuing ‘foreign’ policies. Even when working conditions are comparable to those of Japanese competitors what is often missing is a work environment providing satisfaction commensurate with the expectations of the local workforce.

1
Society and economy

In terms of modernization and industrialization, what the West taught Japan and Japan adopted from the West is indeed impressive. From the recorded accounts of the twentieth century, the following events reveal the extent of Japanese progress:

• In the 1900s, Japan brought Western imperialism to a halt in East Asia by defeating Russia, which was then a Western power;

• In the 1920s, world trade, at the time largely dominated by Western nations, was challenged by Japanese products copied from Western products and sold at lower prices;

• In the 1940s, Japan terminated Western colonialism in its part of the world, albeit by attempting to impose its own brand of colonialism;

• In the 1960s, Western technological superiority was challenged by imported technology which was being improved to meet world market expectations;

• In the 1980s, by becoming the no. 1 creditor country in the world, Japan put an end to Western financial hegemony.

This is indeed a remarkable record for ‘the first non-Western country to industrialize’ based upon the Western model. It also represents a phenomenal transformation of Japan itself. Considering its progress, it may well be that Japan is developing some alternative model altogether. Surprisingly, its success was achieved by a country whose only abundant resource was people. Unlike other manifestations of modernization, as in clothing or hair-style, Japan did not respond to the development of its human resources by a mere imitation of the West. This was achieved by turning to its own dynamic values and practices.

HUMAN RESOURCES

Human resources affect economic performance not so much by the number of individuals and their individual qualities, but by the interaction of these individuals within the institutions they create. In the case of Japan two criteria are especially relevant, educational level and social dynamics.

Level of education

Contemporary Japan is about as developed and organized a society as one can find today. It is a society of employers and employees, where educational credentials and educated skills are central to employment, promotion, and general social status. Japan is a meritocracy shaped by educational competition. And this is fitting, for Japan is a nation which, lacking natural resources, must live by its wits. (Rohlen 1988:25)

Under the present system, compulsory education (nine years) terminates upon completion of junior high school (age 15). ‘Japanese children attend school about 50 more days each year, which means that by high school graduation they have been in school the equivalent of three to four more years than their American counterparts’ (ibid.). There is little reluctance in attending school, to the point where drop-outs and illiteracy are practically nonexistent. Since textbooks and curriculum are nationally approved the level of education is uniform, which allows all children in each grade to study essentially the same lessons at the same pace throughout the country.

The students within one class are divided into small groups of mixed ability. In this way the quick learners are able to help the slower learners. When called on by the teacher to answer a question, a student usually will turn to his or her neighbors to check the answer before responding. This style of answering by group consensus is considered not only acceptable but the norm…. In Japan students generally are promoted en masse. It is considered the responsibility of the fast learners to teach the slow learners. Responding to the needs of both types of students are the increasingly prevalent special private schools called juku, attended after the regular school day and on weekends. Here the remedial learner can get extra tutoring, while the advanced learner can move ahead…. The qualities hoped for in a Japanese child…are cooperativeness, diligence and perseverance. (Green 1989:3 and 6)

Secondary education ends with the completion of senior high school (three years). Such schools are ranked academically or according to specialization—for example, commercial or technical high schools. Entrance examinations are required for admission. Education beyond the high-school level takes the form of vocational schools, junior colleges and universities. Attending a university, of which there are close to 500, is a full-time proposition generally ending with the degree of Bachelor of Arts (BA) or Sciences (BS), the average age of graduates being 22–3 years.

In March 1989, 2.9% of junior high school graduates took a fulltime job. Of the senior high school graduates 35.6% entered the labor market and over one-half went on to continue their education (JIL 1990b: 3).

In 1987, among the latter,

18% entered a 4-year university, of whom 1/3 were female;

12% entered a 2-year junior college, of whom 94% were female, and

27% went to vocational schools, of whom 39% were female.

(MOE 1988:590–600)

Few university students go on to graduate school, mostly because of the industry’s eagerness in signing them up as new employees even before they graduate, a selection process which does not favour master’s or doctorate degree holders. (But it should be noted that about one-third of the 13,000 or so Japanese students in American universities are pursuing higher degrees.)

Science and engineering are the only branches of study in which graduate schools have developed for reasons other than apprentice training for the academic profession or to provide a haven for those who want to postpone choice of a career. Engineering masters do confer a career advantage, and do so increasingly as knowledge becomes more specialized and the R & D establishments of Japanese firms which look for masters and PhDs expand…. The advantage of getting recruits earlier at the BA stage, and starting them earlier on all the specific learning they had to do, was seen to outweigh the deepening and broadening of theoretical understanding which a Master’s course would offer. Some firms still hold the same view, but preference, and career advantage, is now increasingly given to holders of Master’s degrees—almost universally for those entering the R & D departments of large firms, less universally for those entering production departments. (Dore and Sako 1989:52 and 78)

By and large, compared to other industrial countries, Japan benefits from one of the best educated industrial labour forces. This is the reason why

the development of wide-ranged skills may be most effectively used for continual environmental changes. In the longer run, however, when technological progress necessitates changes in the design of machinery and process, versatility and a deeper understanding of the technological process on the part of workers may help them adapt to a new process as well as start a new process without being interrupted by a reorganizational interim period. (Aoki 1988:39)

Social dynamics

The other foundation on which Japan built the development of its human resources is the nature of its social dynamics. Japanese social behaviour is usually described as group-oriented but this needs to be understood from a Japanese point of view. First, let us take the Western ‘group’ which is based upon individuals according to the pattern

(1)+(1)+(1)+(1)+(1)+…=GROUP

The Japanese, however, view the ‘group’ as a community which has a different pattern:

COMMUNITY=1×1×1×1×1×…

Whereas the premise of the Western group, the individual qua individual, tends almost to deny the group, the dynamism of the Japanese community is reinforced by the individual qua member of the community. The key factor here is interdependence. Pressure on the individual to conform to communal norms is expected; yet the younger generation is seen as rebellious and anxious to display non-conformism. Some authors find this a valid reason for criticizing as shallow the democracy of postwar Japan. They contend that there are some coercive forces at work among the many aspects of education, corporate life, and social behaviour (McCormack and Sugimoto 1986).

One common explanation of Japanese social dynamics places significance on the fact that the cultivation of rice, given climatic and other conditions peculiar to Japan, was by necessity a communal affair.

There is no doubt that through centuries of agrarian experience up to as recently as a generation ago, the Japanese developed the customs of mutual help, collective coordination, risk sharing, ad hoc and flexible adaptation to continual and incremental environmental changes, diligent work habits, and penetration of communal life into the private sphere, which are now viewed as characteristics of modern Japanese factory life. (Aoki 1988:307)

In addition, such a close, if not closed, type of social dynamics has been greatly reinforced by at least three significant factors:

1 Throughout its long historical record, Japan has never been invaded, except in 1945;

2 From 1632 to 1854, Japanese were prohibited to leave the country and no foreigners were permitted to enter, with the exception of a few Dutch and Chinese traders; and

3 At the end of 1988, of the total population of about 125 million, only 941,005 (0,8 per cent) were registered as non-Japanese residents. This figure represents 677,140 Koreans, 129,269 Chinese, 32,766 Americans, 32,185 Filipinos, and 22,027 Europeans (JETRO 1990:132).

To be Japanese is much more than a reflection of statehood (nation is too recent an historical development to be used here, as most historians see this notion starting in the seventeenth century). The Japanese had been Japanese for many centuries before they acquired their so-called present-day, Western-inspired nationality. The Japanese self-identity, in order to survive through the centuries, required flexibility in adjusting to constantly changing circumstances. In Japan, the tradition was and continues to be, to change. It was then not Japan as a political entity that allowed the Japanese to survive but that they learned to rely on themselves. For instance, in the crucial decades that launched industrialization (1868–95), Japan did not rely on foreign capital but achieved it on the basis of domestic capital accumulation.

MODERNIZATION

A commercial economy thrived during the Tokugawa era (1600– 1868), but industry was almost nonexistent. The Meiji Restoration (1868) launched industrialization in the form of a national emergency in order to resist the threat of Western powers and continued in this manner to overcome the country’s lack of primary resources and maintain standards of living. But contrary to the Western example of modernization, industry was not promoted by the private sector but by the government. What was soon to become private industry, first began as a public mission. ‘Japanese spirit, Western techniques’ (wakon yôsai), the Meiji slogan of modernization, held implications for the Japanese that to remain Japanese they had to import Western institutions and techniques. More than ten centuries ago, when the Japanese decided to become modern it meant to adopt Chinese civilization. This was done on a grandiose scale, but not at the cost of becoming Chinese. In the last century, the process was repeated with regard to Western industrialism, but not at the cost of becoming Western. A surprising social capacity to absorb Western technology was revealed

1 In its selection of appropriate technology, starting with textiles, then heavy industry, and now knowledge-intensive industries;

2 In its adjustment to domestic factor proportions and development of human resources; and

3 In its improvement of technical applications, for example, miniaturization.

In recent years, however, not much technology remains to be borrowed from the West; Japan is now on its own. Since 1972, albeit on an annual rather...