Despite Japan’s lack of growth in recent decades—a situation set to be exacerbated by its shrinking population—it remains the world’s third-largest economy, and one that no multinational company (MNC) can afford to ignore. MNCs operating in Japan can face a multitude of challenges, from sometimes seemingly impenetrable markets to unique business practices and opaque regulations.
One puzzle that MNCs must solve is how to attract, retain and get the most out of the local labour force. The successful integration of domestic management into international teams adds layers of complexity. As Japanese companies looking abroad for growth must learn to rely further on local management, so must multinational companies in Japan.
The aim of this report, written by the Economist Intelligence Unit and sponsored by British American Tobacco, is to assess how non-Japanese MNCs are coping with the challenges of hiring and retaining talented workers in Japan and integrating local management into their workforces. The report looks at the skills required by MNCs, whether local hires are fulfilling those needs and what the companies can do about it when they are not.
The findings are based on a survey conducted in November 2011 of 180 senior executives from multinational companies with operations in Japan. Some 21% of respondents were from the manufacturing sector, 19% from financial services, 12% from professional services, 11% from IT and technology and 7% from the healthcare, pharmaceutical and biotechnology sectors. The respondents were C-level executives and board members (32%), directors, vice-presidents, department and business unit heads (42%) and other senior managers responsible for hiring. Around half the respondents were from companies with global revenues of over US$5bn.