Japan’s Dilemma of Attracting and Keeping Foreign Talent

Overworked and Underpaid

One evening during a rare stint of late-night overtime, a female employee in Shanghai’s financial district noticed workers at an adjacent Japanese bank silently toiling at their desks at 11 pm. The staffers gave no hint that they were getting ready to leave any time soon, prompting her to wonder why Japanese work such long hours. One of her coworkers had witnessed a similar spectacle a few days earlier and both young women became convinced that Japanese banks were scary places to work.

According to the 2016 White Paper on Japanese Companies and the Chinese Economy published by the Japanese Chamber of Commerce and Industry in China, there were 23,094 Japanese companies with operations in China and more than 10 million Chinese working directly or indirectly for Japanese enterprises at the end of 2012. Chinese have ample first-hand experience with Japan’s corporate culture. This, however, does not means that they have come to accept it. Indeed, the catchphrase Gongzuo yali tai da (There’s too much pressure at work) has become a common complaint among employees of Japanese firms in Shanghai.

There is nothing new about on-the-job pressure, but for Chinese the phrase expresses discontentment at working long hours at low wages. A 31-year old Chinese male employee of a Japanese chemical manufacturer sums up the sentiment, saying, “The benefits at Japanese companies aren’t bad compared to smaller local private enterprises, but that doesn’t mean I’m satisfied. What I really want is my company to stop asking me to do tasks that don’t fit my pay grade.”

Monthly salaries of office workers at Japanese companies in the Shanghai area average around 6,000 to 8,000 yuan, but can vary from 4,000 yuan at the low end to as much as 20,000 yuan (1 yuan is approximately 16 yen). Although the Chinese economy has undergone a dramatic transformation since the turn of the century, salaries at Japanese companies have stayed flat for the last 15 years. Workers in China are extremely particular about work benefits, and from the perspective of potential employees there is very little attractive about working for Japanese firms. In fact, the prevailing image of Japanese companies is of low wages, few holidays, and hardly any opportunity for promotion.

Disinterest in Japanese Companies

More than 670,000 Chinese live in Japan today, including many who work under the same contract terms as their Japanese counterparts. Yet Japanese companies are not exactly winning over Chinese employees with attractive remuneration packages. One 35-year-old woman working for an airline in Japan puts it this way:  “For now, things at my workplace are going well and I have developed some good interpersonal relationships. However, I am not so committed to working for a Japanese firm that I won’t head home in the blink of an eye if that balance is lost.”

Back in the 1990s many Chinese dreamed of working at Japanese brands like Toyota, Panasonic, and Sony. Over the years, however, such aspirations have given way to disenchantment. A Chinese male employee in his 20s at one of Japan’s top manufacturers expresses his frustration at the rigid, vertical structure inside companies. “We don’t exchange a single word with anyone from sections adjacent to ours,” he says. “I joined the firm because it was a global enterprise, but this isn’t the case as far as my positon goes. Thanks to cost cutting, only department and section managers take business trips abroad. I’m currently looking for a new job.”

Seeking Out Foreign Talent

The number of international students in Japan topped 200,000 in 2015, with Asian countries accounting for more than 90% of the total. Nearly half are Chinese, but students from smaller countries like Myanmar are on the rise.

Yokohama-based Altech Corporation is one Japanese firm that is actively recruiting talent from Myanmar. Founded in 1968 as a design office, Altech now specializes in dispatching engineers to clients. The company is not a standard recruitment agency, but hires promising applicants as regular employees, sending these out on assignments. The firm currently has around 3,000 workers, including numerous foreign-born engineers.

Aung Kyaw Phyoe, a 36-year old from Myanmar, has been working at Altech for six years. As part of the firm’s international section, he is charged with promoting business in his native land. “The last few years have seen a wave of companies from around Asia setting up operations in Myanmar,” explains Phyoe. “I have only ever heard positive things about Japanese firms and Japanese people. It has been a childhood dream of mine to join a Japanese company, so this was the perfect opportunity.”

Phyoe says he has stayed at Altech for six years because of the way the company looks after its junior employees. “I always feel that I’m valued.”

This supportive relationship between veteran employees and newcomers is a defining aspect of Altech. Half of international section staff are foreign nationals. Phyoe himself was hired based on what he says was his “consideration for others” while accompanying company staff during an onsite visit in Myanmar. “When we hire, we don’t distinguish between Japanese and non-Japanese candidates,” emphasizes Honya Tsuyoshi, head of Altech’s international section. “Rather, we stress their person-to-person communication skills.”

Altech is not the only company openly recruiting staff from Southeast Asia. Omtec, a Tokyo-based construction firm specializing in pile driving and foundation work, brought on 29-year-old Nguyen Minh Hoang of Vietnam in the spring of 2016 in the hope of grooming him for an executive position. Behind the decision was the Japanese government declaring the strategic goal of increasing infrastructure exports. Omtec has come to realize that the welfare of its operations overseas is dependent on the foreign talent it cultivates in-house.

For Nguyen, joining Omtec was a dream come true. He first came into contact with Japanese know-how while studying freeway design at Vietnam’s University of Transport and Communication. “I found out about bridges in Vietnam were being built using Japanese overseas development assistance,” he says. “I was eager to learn about the sophisticated technology.”

Today he has done that and more. The experience he has gained in leadership roles at a number of construction sites in Tokyo and have raised his aspirations. “I have experience that is unique to my Japanese colleagues,” he says. “I want to continue to find better approaches to improve how things are done on site.”

Learning Opportunities at Japanese Companies

Many Chinese employees join Japanese companies out of a strong desire to gain valuable knowledge and experience in specific fields. Ping An, a 28-year-old Shanghai native, says she learned a lot during her time at GMO Brights Consulting, a firm providing strategic support to Japanese firms looking to protect their intellectual property rights.

Ping An focused on intellectual property rights while in Japan

At Brights Ping was charged with searching out and reporting on “suspicious” items on Chinese e-commerce sites at the requests of clients. As a college student in China Pin says she used to enjoy watching anime online. “In China it is assumed that everything online is free,” she explains. “It wasn’t until I came to Japan that I learned how problematic that attitude really is. The job taught me that intellectual property rights need to be protected.”

Ping studied diligently and went on to pass the second grade of Japan’s Intellectual Property Management Skills Test. Even with her hard-won qualifications, though, she has struggled to find a position back home where she can put her knowledge to use. “Unlike Japan,” she says, “China does not have patent lawyers specializing in intellectual property.”

While Ping’s experience in Japan has yet to lead to a career in China, there is real significance in having more people like her that have gained a true understanding of intellectual property issues.

More Than Speaking Japanese

At the campus of Temple University Japan in Tokyo’s Minami Azabu district, international students account for 65% of the student body. TUJ attracts students from around the world by providing them the opportunity to earn university credits from a US institute while studying in Japan. Increasingly, graduates are choosing to stay in Japan after graduating in the hopes of building a career.

Temple’s Career Development Office manager Sawa Kentarō, however, cautions that this may prove harder than many students may think. “There are still a lot of issues that need to be worked out in matching foreign graduates with Japanese companies.” Sawa points to Japanese language ability as one obstacle. “Firms expect candidates to have language skills equivalent to N1 of the Japanese Language Proficiency Test.”

As the aging and shrinking of the population pushes down the ratio of young people in the labor force, the Japanese government is working to entice more international students to the country and encouraging outstanding foreign talent to remain after graduation. To this end the Ministry of Education, Culture, Sports, Science and Technology (MEXT) launched a plan in 2008 that aims to bring 30,000 international students to Japan by 2020. Despite this and other efforts, language proficiency remains a barrier for recruiters and applicants, with Japanese companies remaining largely disinclined to hire non-Japanese graduates.

TUJ has joined forces with Sophia University to help remove this roadblock. The two institutes co-organized an English-language career fair in November 2016 as part of efforts to bring together companies that, as Temple’s Sawa explains it, “are not sticklers about the JLPT’s N1.”

Sawa acknowledges that improving Japanese language skills of international students is an important priority. However, he emphasizes that “more companies should evaluate and open doors to students according to other skills.”

Attracting Foreign Talent

Japanese companies looking to draw top foreign talent would be wise to listen to the voices of non-Japanese employees. Take for example a 33-year-old German worker who goes by the pseudonym Anna Petrova. Looking back on the training she received after being offered a job with a Japanese firm, Petrova, who has since returned home, says all that Japanese companies really want “is someone who looks like a foreigner, but behaves like a regular Japanese employee.”

One of her main criticisms is that her training did not take into consideration her foreign background, and instead appeared to be mainly focused on making her think like a regular Japanese employee. “I went along with it by telling myself that it was because our customers were Japanese,” she says. Petrova was frustrated by what she saw as a general lack of flexibility at the company. “There was a manual for everything,” she laments. “I’d heard that as a rule Japanese companies liked to rely on manuals, but I was shocked to the degree that this was true. I wanted to have more freedom in how I did my job, and at times I found the lack of it very frustrating.”

André Guillaume, the pseudonym of a 33-year old employee from France, also raises issues about working for a Japanese company, particularly with regard to how decisions are made. “In Japan everyone in the chain of command has to approve an action,” explains Giullaume, “starting with the person running the project and extending up to his or her immediate superior, the section manager, and the division director. You can spend two to three days just waiting around for everyone involved to sign off.”

That may be just another example of the Japanese insistence on hedging against risk, but this kind of cautious approach does not play well in China or other emerging markets. Ultimately, it gives the impression that Japanese companies are too slow to reach decisions and implies that they let business opportunities slip by.

Giullaume says that while Japanese culture is highly regarded in France, the French view Japanese companies in a less that flattering light. “The prevailing image is that employees at Japanese companies are workaholics,” he says. “It is hard for workers to take paid vacation in one lump the way you can at French companies. In addition, the office atmosphere can make it hard to even ask for time off.”

There is little doubt that Japanese companies in the face of globalization, an aging society, and falling birthrate need an influx of talented foreign workers. Yet it is far from clear whether firms can transform into the kind of enterprises that can attract top foreign talent. Perhaps Japanese companies should welcome more sharp-tongued foreign employees who can give them painful, yet candid advice.