Losing the Lag

Rob Claar’s quest to bring lifesaving innovations to Japan

Rob Claar became interested in healthcare at an early age. Watching his father work on the government-program side of insurance and talking to him about the industry, Claar came to understand some of the issues surrounding public and private systems. But as he entered Yale University to study art history, he did not envision a career helping healthcare innovators from the United States and elsewhere bring their lifesaving drugs and devices to Japan. A twist of fate, however, led Claar to become a champion of Japanese doctors, working to connect them with international peers and innovation.

Ahead of his presentation at a March 13 luncheon hosted by the American Chamber of Commerce in Japan Independent Business and Healthcare Committees, the HekaBio K.K. founder shares his journey from childhood in Detroit to Tokyo, where he helps companies gain regulatory approval for healthcare innovations.

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An extended version of this interview is available on The ACCJ Journal Podcast or by streaming from the audio player above.

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How did you get involved in healthcare innovation in Japan?

Claar: I came to Japan basically out of cultural interest. This was in 1987. I was 23, had just graduated from college, and decided that I wanted to see Asia. I was interested in the culture, art, and language, particularly of Japan.

I forced myself not to come to Tokyo to begin with. I thought Tokyo would be an easier place to survive with English, and I wanted to push myself to learn Japanese as quickly as possible. So, I landed in Nagoya and immersed myself in studying the language. I thought I was going to be good enough at Japanese after one year to move on to my next destination and call my Japan experience a success. That didn’t happen.

I was studying Japanese at the YWCA in Nagoya, and it was going very well. But, as you know, it takes a lot of time. After one year, I was still not where I wanted to be. I gave myself another half a year, and I started really enjoying being in Japan and speaking Japanese.

Then I got a job as a Japanese-to-English translator for Brother Industries and moved into their dormitory in Nagoya. They were setting up manufacturing operations in Malaysia and elsewhere, and I was translating manufacturing and line instructions. That was interesting and a good experience but, once I got good enough at Japanese, I decided it was time to either go home to America and start the rest of my academic career or go up to Tokyo and see what I could do. I decided to move to Tokyo and was lucky enough to get hired by a think tank called Sanwa Soken.

They were essentially a research arm for the government. The day after I joined, a huge project came in from the Ministry of Health. I was put on that project and got to learn all about the healthcare system. I traveled around Japan, met doctors, and began to understand how serious they are about patient care. I really started to fall in love with the idea of the Japanese healthcare system [and] how a national single-payer system can work wonderfully.

What did you discover that led you to want to help innovators?

Claar: As I met doctors, I began to understand their struggles. They wanted to be considered among their international peers as studying, researching, and being able to speak in an international forum on the greatest innovations worldwide. But their frustration was that their research was one generation too late in many areas. I became aware of the innovation lag and wanted to see what I could do to make an impact.

I realized that Japanese doctors struggle to get their hands on up-to-date innovations from around the world. There’s a lot of talk about drug lag and loss, and the same thing is happening on the device side, where innovations that are getting approved in the United States and Europe are not making it to Japan.

There are a few reasons for this, but I thought that if I could focus on how to help these very sincere, wonderful doctors in Japan, then that was going to be a way for me to potentially make a career here and have an impact on society.

So, I left Sanwa Soken to start my own company, Junicon. We would go around and interview doctors, and we found a way to sell those results to large pharmaceutical and medical device companies in Japan, Europe, and the United States.

I also started spending my spare time helping doctors translate their papers from Japanese into English so that they were better able to speak at international conferences. It was a minor thing, but being helpful to Japanese doctors is a way that I got into things and maintained those relationships.

What’s stopping overseas companies from entering the Japanese market?

Claar: Small companies are doing more and more of the true innovation around the world, and they have no bandwidth to start thinking about Japan. So, how do we get more innovative companies to think about Japan? That’s what we’re really focused on at HekaBio, and that’s my personal interest.

Japan is far away, and these companies don’t really know what goes on here. They have this outdated image that Japan is very hard to get into and the regulatory process is super opaque. They’re never going to get regulatory approval on their own, or they’re never going to form the right commercial relationship. I think this is a really outdated image of Japan that many companies have. We’re trying to help solve that. Our doctors and their patients are waiting for these innovations. We want to see if we can bring them in and arrange the capital.

The Japanese government is doing a great job right now with new programs that they’re introducing. They’re making clinical trials easier to get started and operate in Japan, both on the drug and the device sides. They’re welcoming first-in-human studies to be done in Japan, which has not been the case until recently. They’ve eliminated the requirement to have a Japanese principal investigator on international studies. And they’re also offering pricing incentives for programs that get submitted in Japan within a certain number of days or months of the submission in the United States. In some cases, we’ve had an approval in Japan before the United States, even though we started at the same time.

How many companies have you helped get regulatory approvals in Japan?

Claar: More than 50, including at our former subsidiary unit, which was a clinical research organization called Vorpal Technologies. We’re very proud to have been involved in getting those launched and into the market.

What is that process like?

Claar: At the beginning, we do market research. We want to confirm that the doctors who we want to be behind the program are really behind it. We’ll find out who has done the presentations and who has published how many papers in that area. Who’s in the medical society? Who’s on the board? All these different things. The worst thing we could do is partner with an overseas company that doesn’t have the health economics and an appreciation for the Japan system in mind.

Once we do that, and we understand the strength of the clinical data that the company has produced overseas—and whether the Pharmaceuticals and Medical Devices Agency (PMDA) will accept it as valid in Japan—then we start talking with the PMDA to understand the regulatory process [for the specific innovation]. Once we get buy-in from the regulators, then we go forward with the clinical trial. If no in-Japan clinical trial is required, which is often the case for devices, then we can just go forward to the submission and review period, which typically takes 12 months.

Sounds straightforward. Is there something else holding back innovation from overseas?

Claar: What remains is the question of reimbursement price. If companies have no idea until the very end what the reimbursement price is going to be, then it becomes difficult for them to want to invest the time and money. So, that’s part of the upfront market research that we do. What does a comparative product look like in terms of reimbursement? What can you expect, based on your experience in overseas markets, in terms of the ability for the Japanese health insurance system to pay?

If there’s no comparative product, if it’s a new category, then you submit your cost accounting information. The PMDA really wants to see everything in a very transparent way.

What we would like to see in Japan is more clarity. New categories, where nobody knows what the pricing is going to be, is a situation in the market that most people have to deal with. I think that if the government were able to give better guidelines up front, in a consultative process, and you could go to the Ministry of Health, Labour and Welfare and tell them what you are thinking about, more of the issues around the drug and device lag and loss could be solved. But they won’t give you anything in terms of a response with any responsibility associated with it. They’ll listen and tell you yes or no, but their answer is not a promise.

Japan’s healthcare system is the best in the world. I fully believe that. And we all have the responsibility to make sure that Japan’s great healthcare system can survive. We know that the government is fearful of healthcare costs growing. They’re looking for ways to cut the costs of [things such as] long-selling drugs, devices, and in vitro diagnostic tests. But we would like to encourage them to think more long term about some of the things that can be done in terms of digital health solutions for early diagnosis of particular conditions.

What opportunities do you see for ACCJ member companies? Can they replicate the success you’ve had?

Claar: Absolutely. And I hope so. I think we’ve come up with a great business model, and we’re happy for anyone to copy it, because we think it really works for bringing innovations into Japan.

HekaBio is focused, for the most part, on pharmaceutical and device interventions for acute illnesses, hospital treatments, and serious diseases. What we’re not working on are things such as chronic diseases, which are a huge burden on the healthcare system. [Monitoring] chronic diseases with at-home digital health [tech] would also work in our business model.

If somebody wanted to exactly copy our model and go right into exactly what HekaBio is doing in serious acute disease identification and treatment drugs and devices, then be my guest. We’ll be happy to have them [replicate] our business model with no worry.

But there are so many opportunities. For example, if they want to do something different, there are many new molecular entities, particularly for rare diseases. The PMDA has a list showing the status of those that are [only] available elsewhere. So, there’s no development risk, really, because you know that it works. It’s been approved in either the European Union or the United States, but it’s not available in Japan yet. Take one of those for a rare disease, buy the rights for Japan, and get it developed. You wouldn’t even have to build a big organization with your own infrastructure here. You could be a one-person company, get the rights, and then have a contract research organization do the clinical trial and be the in-country clinical caretaker on your behalf. Get it all through and then sell it to a pharmaceutical company once it’s done. That’s another business that could be not only very lucrative, but interesting and of societal benefit for Japan.

Charting the Course

ACCJ President Victor Osumi shares his thoughts on 2024 and the chamber.

Photos by Shelley Mae Photography

January 1 marked a change in leadership for the American Chamber of Commerce in Japan (ACCJ) as Victor Osumi, managing director and president of Japan operations for Delta Air Lines, Inc., was elected to guide the chamber in 2024.

Having served as a vice president last year, Osumi joined the board as a governor in January 2021 and has played an active role in chamber advocacy through the DC Doorknock visits to Washington and Diet Doorknock meetings with Japanese lawmakers.

The ACCJ Journal sat down with the former pilot at Delta’s office near Shiba Park to learn more about how his career took flight, how he became involved with the chamber, and the path he sees ahead as he takes the helm as president.

Tell me a bit about your background.

Growing up in a diverse, dual-culture environment, I spent most of my early years in Los Angeles, but I went to high school in Florida. My father was a Japanese expat. That’s what brought me to the United States. I also spent some time in school in Japan. I had dual citizenship, but Japan requires you to choose one by age 22. So, when I was 21 and joined the US Air Force, I chose to keep my US citizenship.

What led you to become a pilot?

I always had a passion for flying. After high school, I went to the Florida Institute of Technology and majored in aviation management, with a focus on flight technology and aeronautics. That led me to get my private pilot license, commercial pilot license, and flight instructor license.

I joined the Air Force because of this passion. I also thought that I could get a lot of flight hours, and that could create a path to joining a US airline as a pilot. But when my physical condition made it more difficult for me to fly, I got into management. Since I couldn’t fly, I decide to leave the Air Force.

Where did that course change take you?

When I shifted away from aviation, I joined a hotel company. That gave me experience in hospitality and an understanding of tourism, what it takes to be the best of the best when it comes to customer experience and service. I thought it would be for just a couple of years, but I ended up spending 27 years in the hotel industry.

That really gave me the backbone of where I am today. I gained knowledge through the financial side, customer service, and food and beverage. I also sat on the owner’s side of the property, which gave me additional insight into what a private equity company does, how they operate, and how they make decisions on investment in different countries.

Now, here I am back where my original passion lies: aviation and airlines. It took me a long time—almost three decades—but it came full circle.

How did you become involved with the ACCJ?

When I was assigned to Japan in 1998, I thought I would be here for five years and then I would go back to the United States. But I found that this country is where I belonged. At that time, most of the management at global hotel companies were American expats. They needed someone who could understand, speak, read, and write Japanese. And I thought that working in Japan for a global company gave me more opportunities for career advancement.

Ever since, either directly or indirectly, I have always been involved in chambers. I worked at Hyatt, then briefly with the IHG Group, and then twice at Marriott, which is a global, US-based company.

Being part of the ACCJ has given me a great opportunity to network and expand people-to-people relationships in the community.

Are there other career benefits you’ve felt from ACCJ involvement?

In the airline industry, we really value our relationship with the government, anywhere we go. I think it is the same for a lot of chamber members. They expect to have some type of advocacy dialogue, whether it’s with the US Embassy, the US government in Washington, or the Japanese government. We had a great opportunity in December during our Diet Doorknock to meet with lawmakers and officials to voice our mission and what we’re trying to accomplish.

And, of course, there is the education aspect. There are so many committees and forums at the ACCJ, and these offer great opportunities to learn more about a wide range of areas, from investment and finances to healthcare and pharmaceuticals—almost any area of business you can imagine. This has been a great experience for me.

Why did you decide to run for president?

It’s obviously a big commitment and will take a lot of my time. It’s a team effort. It’s not just me. At Delta, we value the presence of chambers commerce of commerce in each country. Particularly for Japan, the Atlanta headquarters recognized the importance of being part of the ACCJ and the value in me serving as president.

Of course, I have big shoes to fill following Om [Prakash]. But again, he and I are both ex-military, so he always said that I was second in command. Last year, when there were some times when he was not able to be present, I took the controls in a way. And having had that opportunity really helps smooth this transition for me, I feel.

Why is 2024 a special year?

It is the year of the dragon, but not just any dragon. Each of the 12 animals in the Chinese Zodiac has five types associated with the elements. This year’s dragon is the wood dragon, called kinoetatsu in Japanese. It only comes around every 60 years. The last time was 1964, when the Olympics were held in Tokyo, the shinkansen began operations, and I was born.

Kinoetatsu means this is a year when the energies of growth and adaptability associated with the element of wood in Chinese Wu Xing philosophy combine with the dragon’s qualities of power, prosperity, and transformation.

What do you see as the key initiatives and advocacy points for 2024?

My vision for the ACCJ this year centers on three main areas:

• Fostering partnership
• Embracing progress
• Bridging the future with excellence

The Indo-Pacific Economic Framework for Prosperity (IPEF) is an area I feel is especially important. It is key not only for Japan but the Asia–Pacific region, and the ACCJ must continue to be part of the discussions around IPEF.

Of course, diversity, equity, and inclusion will remain important, as will sustainability and cross-border investment.

One I see as especially big, as it impacts all the others, is digital transformation. Not just “going digital” as some people might see it, but the many aspects that can impact industries. In transportation, for example, one of the biggest issues is the free flow of data across borders. This would allow us create things such as paperless passports, with face-recognition technology used to ensure security. But there are still issues to resolve so that the US side has full confidence in Japan’s data security.

And as we talk about economic security, I think that data is going to be one of the biggest parts to bringing about economic security. It has tremendous value. But we need an agreement between the Ministry of Economy, Trade and Industry and the US Department of Commerce to make sure that we have cleared out the trust issues that impact digital transformation.

How important has US Ambassador Rahm Emanuel been to ACCJ advocacy?

We were missing an ambassador for almost three years. We always have great representatives and support from the US Embassy, but when Ambassador Emanuel arrived, he hit the ground running. He has been a tremendous help to the ACCJ and Japan. We really needed somebody like him to represent the United States in the Japanese community. I have very high respect for Ambassador Emanuel.

When he arrived, two years into the Covid-19 pandemic, there was pressure from many areas and organizations to get the borders reopened. The ACCJ played a part in making this finally happen, and Ambassador Emanuel and his staff were key. The chamber was able to speak up and serve as a conduit between our members and the Japanese government, and also the US government to get their help as they pushed from their end.

Ambassador Emanuel also visited Chubu last July in support of efforts to resume flights from the region to the United States. He met with ACCJ members from our Chubu Chapter and area leaders that included Aichi Governor Hideaki Ohmura, Nagoya Mayor Takashi Kawamura, and Riki Ishizuka, president and chief executive officer of the Chubu Centrair International Airport.

These are not only examples of his effectiveness, but how both the US and Japanese governments value the ACCJ’s voice.

What else would you like to say to members?

As we continue our celebrations to mark the ACCJ’s 75th anniversary, one thing I would like to ask is for everyone to help grow our membership. Word of mouth is very important. So, if there is someone you feel is a potential candidate for membership, please let me know.

Related to this is finding ways to make the chamber even more appealing. Advocacy, education, networking, and dialogue with the US and Japanese governments are important. If you have ideas for making these more effective, I would love to hear them.

Let’s work together to make 2024 a great year and the ACCJ’s presence bigger than ever before.

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Bishop Scholar

Matthew Trani, the first recipient of the Bishop Family Memorial Scholarship, shares what the opportunity means to him.

Trani performing at the ACCJ Charity Ball on December 2 at the Hilton Tokyo. (Photo: MediaSense K.K.)

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Last year, on Christmas morning, Bill Bishop, his wife Izumi, and their daughter Sophianna lost their lives. The tragic death of Bishop, a longtime member of the American Chamber of Commerce in Japan (ACCJ), shook the community. Over 50 years, the South Dakota native became a key part of the US business community in Japan and a devoted leader of the chamber’s Healthcare Committee.

In his memory, the ACCJ and the United States–Japan Bridging Foundation launched the Bishop Family Memorial Scholarship Fund in July. The scholarship supports students who will come from the US to study at Temple University, Japan Campus, where Bishop was a lecturer and board member.

The first Bishop Scholar, Matthew Trani, arrived in September and, in addition to studying at Temple, began his internship at the chamber. The ACCJ Journal sat down with Trani to learn about his path to Japan and where he hopes the opportunity will lead him.

Tell us about your background.

I’m from Long Island, New York, and have been living there for the past 21 years. I went to high school and college about 15 minutes from my home.

Originally, I enrolled in Hofstra University to study music and political science. I got into music about 13 years ago, being strongly suggested to do so by my parents. I joined a chorus and learned to sing. That turned into an overall love of music. In high school, my voice matured, and it was good, so I ended up singing at a lot of functions. I performed at Carnegie Hall and sometimes on TV. And just this month I got to perform at the ACCJ Charity Ball.

When it was time to enter university, I was shopping around for scholarships and got a decent-sized one, along with a grant, from Hofstra. So, I went there. But other than the fact that I was a performance major, I really didn’t know what my plans were from there.

What got you interested in Japan?

I had to choose a language course, and my mom had taken Japanese at Villanova University. She recommended that I take it. I ended up studying Japanese for three semesters. In my third semester, I decided to switch to a double major in Japanese and music while keeping my minor in political science. I intended to study abroad or work in Japan after college anyway, but I wasn’t sure how it was going to line up.

I was thinking about applying to several places like the University of Tokyo, Kyoto University, Waseda University, and Keio University, but I ran into Temple University, Japan Campus and ended up going there because the college transfer between US universities is much easier.

How did you become a Bishop Scholar?

My major adviser in the US recommended that I apply for the Bridging Scholarship through both the American Association of Teachers of Japan and the United States-Japan Bridging Foundation, which partners with other organizations in Japan, including the ACCJ. I got a notice of acceptance in mid-June. With it came an intriguing email from Tom Mason, executive director of the Bridging Foundation. He said: “I have an opportunity that I think you might like. Reply back with a time either tomorrow or the day after so that we can do a Zoom call.” There were no other details.

I thought, “What else could this be?” I already knew that I had been awarded the Bridging Scholarship. On the call, [Mason] explained that the ACCJ was looking to establish a new scholarship in remembrance of Bill Bishop. Because of Bishop’s activity as a board member and lecturer, the scholar was to be a Temple University student in Japan, and they wanted to award me the scholarship.

What are your first impressions of the ACCJ?

I would say the interactions are very community focused, even among staff. Everybody looks out for each other, and they want you to push yourself, but not too hard. I can learn a lot and be able to work in ways that I hadn’t previously. And I like that the chamber is not really partisan in any way. They’re about what they can do to best support member businesses in Japan and the lives of foreigners as a whole.

What do you want to focus on?

I have been very involved in assisting at events but, given my background in political science, I would like to be more involved in external affairs. Generally speaking, I want to get more people’s opinions on the organization and the greater business community in Japan. Events are the best way to do that, and I think I’m already there in some respects.

Has there been a favorite event?

I really enjoyed the How Technology is Driving Innovation in Healthcare event. I found it interesting despite not being involved in that industry at all. I think, sometimes, not being involved makes it more interesting, because you don’t really know what the new innovations in those industries are. The event gives you a glimpse into what’s being worked on that you otherwise wouldn’t know about.

What do you most want to gain from the internship?

Number one is making new connections. I think I’ve been doing that and, fortunately, I have a lot of time to continue doing so. Second is an understanding of day-to-day operations. I had never worked in an office environment before the ACCJ, and I want to get a sense of how that works.

Trani will intern at the ACCJ until April 2024 and is expected to graduate from Hofstra University in May after completing his studies at Temple University, Japan Campus.

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Juneteenth: Seeds of Hope (Audio)

Legacy Foundation Japan's LaTonya Whitaker shares inspiration and plans to celebrate this important American holiday and build bridges between the US and Japan.

Ahead of the Juneteenth holiday, we sit down with LaTonya Whitaker, executive director of The Legacy Foundation Japan, to talk about plans for the foundation’s Seeds of Hope gala at Tokyo American Club.

As an entrepreneur, the Mississippi native is well known to many in our community for Soul Food House, the comfortable and delicious oasis of authentic Southern food in Azabu-juban. But her work extends far beyond those flavors. In this interview, LaTonya shares her experiences learning about the history of June 19, the inspiration for the gala (now in its second year), and how the business community can get involved.

Learn more about the Seeds of Hope Gala
Learn more about The Legacy Foundation Japan

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Innovation Engine

CIC co-founder Tim Rowe shares his entrepreneurial journey and vision for collaboration in Japan.

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Like so many new graduates, Tim Rowe and his friends from the Massachusetts Institute of Technology (MIT) left their Cambridge campus with diploma in hand and took “ordinary” jobs. A few years later, in 1999, they quit those jobs to build
start-ups.

But they needed offices—not the easiest thing for young entrepreneurs to pay for in a town that’s home to two of the world’s most prestigious universities. So they decided to share a space near MIT and Harvard to lighten the financial load. At least one of their companies would make it, they thought.

The shared space led them down an unexpected path, however, as more companies moved in and they went from five to 10 to 50 to 100. The Cambridge Innovation Center (CIC) was born.

Fast forward two decades and CIC opened its first Asia facility in Tokyo, in the Toranomon Hills Business Tower. The ACCJ Journal sat down with Rowe in the bustling networking hub to learn more about how he went from sharing a space with friends to leading a community for entrepreneurs that includes more than 1,000 companies at centers in eight cities around the world.

How did CIC expand?

For the first 13 years or so, we just grew right there in Cambridge. I had little kids at the time and didn’t really want to travel as much. And Cambridge is an amazing place for start-ups. So, we just kept taking more space and filling it. It was really kind of a surprise to us. We didn’t set out to build a shared space for start-ups as a business. We were actually just
using it for ourselves.

My mother had been the ombudsman at MIT, and one of her friends who had been the provost of MIT, Mark Wrighton, had become the chancellor of Washington University in St. Louis, one of the top medical schools in the United States. She said, “Mark called and wants you to come to St. Louis.” I was about to give all the reasons why I didn’t know if I could do that, but then she was like, you gotta go. Okay, Mom. So, I flew to St. Louis and met with Mark Wrighton. He said, “Look, we want you here, and we’re going to help you figure it out.”

One thing led to another and we opened in St. Louis. A few years later, the federal government was looking for a home for the National Geospatial-Intelligence Agency, and they toured St. Louis. They came to our center and said this is the kind of vibe they were looking for. They actually testified before Congress that they selected St. Louis because of their experience at our center. It was a $2 billion investment, a big deal for the local economy. After that, as other people came and knocked on the door, we said, “Sure, let’s look into it.”

How has the view of start-ups changed?

If you survey new college graduates, they often say the number one thing they want to do is go create a start-up. I think it’s good for the world, because what we’ve learned is that innovation has the power to make the world better in so many ways. But what we’re finding is that innovation gets into the world, is adopted and spreads much more quickly, through new enterprises rather than existing ones.

When we’re part of a larger organization, we want to respect all the rules that exist in that organization. Doing new things becomes rather hard. We hear things such as, “We tried that once and it didn’t work,” or “That sounds interesting, but that’s 1/1,000 of the revenue of this company, so we can’t prioritize it.” That’s normal, and it’s been well studied. But the bottom line is that existing enterprises find it very difficult to introduce true innovation.

“They understand that it’s not about them so, when there’s something really new and interesting that they have in their company, they push it out. It’s like asking your teenager to move out of your house. It’s time now, it’s time to go off.”

I think the smarter of the big organizations understand this. They understand that it’s not about them, so, when there’s something really new and interesting that they have in their company, they push it out. It’s like asking your teenager to move out of your house. It’s time now, it’s time to go off. They do the same thing and take those teams and move them out of headquarters.

Why did CIC choose Japan?

There’s a personal reason and there are professional reasons. The personal reason is that, in my youth, my dad said that if I studied Japanese for a while he would help me get an internship here. And my grandmother spent about 10 years in Asia in her youth, in the 1920s—mostly in China but some in Japan—and she taught me kanji when I was a kid. That all got me interested in Japan, and I was fortunate to do an internship here during high school.

Professionally, if you look at the most successful companies in the world—and you can use any measure, but one would be the Russell 2000 Index—all those companies were at one point start-ups. So, another way to look at that list is that it is a list of the 2,000 most successful start-ups ever. When you break them down by country, you find that the United States and Japan tie for the number of companies on the list adjusted by population. So, historically, Japan ties for number one as a place to build start-ups. That’s a reason to be here.

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Photos: ©CIC Tokyo

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Is the Japanese government doing enough to support start-ups?

Building a start-up ecosystem is a decade-long process. A piece can come from a supportive government, and it’s really terrific that the Japanese government is leaning in. Other governments that have leaned in, such as Israel, have done really well. It’s clear that a national policy that pushes in this direction can pay big dividends.

But it’s not the only thing that needs to happen. You also need the entrepreneurs themselves. And I think the Japanese innovation ecosystem is responding. These days, if you talk to young Japanese people—and this is a change, perhaps just like what started to happen a decade ago in the United States—you see many more who say they want to build a start-up.

I see Japanese universities leaning into this, which is important. They’re doing entrepreneur programs like those US universities started a decade or more ago. I see a growing awareness of, and interest in, what we call innovation infrastructure. This is things such as shared wet laboratories, the physical infra-structure that allows for new start-ups in, let’s say, the biotech field.

We’ve built shared workspaces focused on a number of industries. The largest so far is the wet lab for life sciences. We collaborated with others to found a nonprofit doing that in Cambridge. It’s called LabCentral and is, as far as we are aware, the largest shared wet lab on the planet. It’s over 20,000 square meters and has every possible piece of equipment you would need in life sciences. Then we figured out how to make that commercially viable and built a similar facility, a commercial one, called CIC Labs in Philadelphia. It’s the largest commercial shared wetland facility in the world, to our knowledge.

How can Japan and the United States work together?

The good news is that the interests are very aligned for Japan, for the United States, for Japanese companies, and for US companies in Japan. Everyone in this circle benefits when they figure out how to get these collaborations to work well, and set a different way.

If you aren’t out there working with new technologies, which are often coming from start-ups, then you’re at risk that you’ll be Airbnb’d or Uber’d. You’re in the hotel business and someone figures out another way to have lodging. You’re in the taxi business and someone figures out another way to get people around the city.

“If you aren’t out there working with new technologies, which are often coming from start-ups, then you’re at risk that you’ll be Airbnb’d or Uber’d.”

This is core to the ACCJ itself. Really, what you’re talking about is brokering conversations. You’re getting people to know each other and to talk about what they’re doing, and how they might help each other.

When I was a young person at the Mitsubishi Research Institute in the early 1990s, I was a member of the ACCJ, because I saw—and I convinced my bosses—that the connections that could be made were meaningful and important. I think it’s no less relevant today. And I think that, as many of these companies have evolved, one of the things they’ve come to realize is that, while the connections between larger organizations are important, the connections between larger organizations and smaller fledgling ones are also important. The challenge is figuring out how to find those little companies and how to know which ones to work with.

What’s next for CIC in Japan?

We were approached by Nishitetsu, the major private railway company in Kyushu. They said, we like what we see at CIC Tokyo and we’d like to work with you to build another one in Fukuoka. We have announced that we’re in a formal collaboration and will soon finish all the due diligence to make sure this will really work. Then we can announce if, in fact, we’re moving ahead with construction, but it’s looking very good and we’re excited to be headed to the second site.

We’re also in several conversations about building some of those shared wet laboratories, robotics laboratories, and other kinds of deep tech shared spaces here in Japan.

We’d love to hear from Journal readers on this; if they have ideas, they should let us know. We think there’s a lot of demand for this kind of innovation infrastructure. Not only does it propel start-ups, but it also creates an environment much like CIC Tokyo does, where larger companies can interact with, and find interesting, smaller companies. Those are our two main areas in the future: more in deep tech and more locations around Japan.

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Bridge the Gap

Bank of America’s Tamao Sasada shares her thoughts on DEI, ESG, and sustainable finance

Tamao Sasada says that her grandmother was her mentor. “When I was a kid, she always told me that I would need to have a career with a professional skill set,” Sasada shared. Her advice was based on experience gained as a woman doctor during World War II—something rarely seen during those days—that gave her this wisdom to share with the granddaughter who, one day, would lead Bank of America in Japan.

Sasada was already a career-minded student when she attended university in Japan in the early 1990s, but those words from her grandmother helped her find her path. She chose to study law.

But what should be her next step? Where should she work?

“Back then, some Japanese women who aspired to advance their careers chose to work for US or non-Japanese companies, as these were perceived to be more performance driven and gave women more opportunities to advance their careers,” Sasada explained. “So, after graduation, I chose to become a lawyer in New York.”

From there, her path took her into the world of banking and back to Japan. Today, as Japan country executive for Bank of America and president of BofA Securities Japan, she focuses on business growth for the bank and also devotes considerable effort to promote environmental, social, and corporate governance (ESG); diversity, equity, and inclusion (DEI); and sustainable finance at Bank of America.

Sasada spoke at a fireside chat hosted by the American Chamber of Commerce in Japan (ACCJ) Alternative Investment Committee on September 7, and she later sat down with The ACCJ Journal to share her thoughts on a number of topics, including how Japan can push the DEI and ESG agendas forward.

What are your memories of that first job in New York?

I made the decision to go there knowing that it would be a tough and competitive environment. And it was. I remember walking into meeting rooms and being the only woman—and a young Asian woman—there. That was not uncommon. There were a number of women lawyers at the junior level, but far fewer at the senior and partner levels.

But one thing that was quite eye-opening was the law firm provided a lot of training and development programs, which was something not so common in Japan back in the 1990s. They took time to really invest in junior people, which certainly gave me a solid training and allowed me to excel in my career.

How did you start to grow your career in finance?

The opportunity arose to work for Merrill Lynch, now BofA Securities, the brokerage and investment banking arm of Bank of America. I took a position in Japan.

I’ve been with the company for 24 years. Looking back, it was quite interesting to find that, even in a US organization, the work environment in Japan back then was quite male dominated. Of course, it is very different now. I found myself trying extra hard to make sure that I could deliver, and that people would not judge me on the basis of being a woman.

As an investment banker in Japan, part of the job is to bridge the gap between Japan and our global franchise, identifying clients’ needs and offering our full capabilities.

“Diversity matters because it brings different perspectives. At Bank of America, we believe that the more diverse we are, the stronger and better we are.”

BofA employees join the firm in driving DEI and environmental efforts, such as the Arakawa River Cleanup.

Also, one of the key challenges working for a US company in Japan is that you need to make sure that the Japan franchise is visible and has strong presence, not only in the eyes of clients but also in the eyes of the headquarters in the United States. I believe this is a challenge for everyone who works in a gaishikei (multinational organization) in Japan, regardless of gender.

So, even today, I still think about how best we can serve our clients in Japan and connect the dots between what our Japanese clients need and what we can offer globally. On top of that, navigating the organization and connecting people through business and social relationships have always been important aspects of how I built my career.

Why does diversity matter when building teams?

Diversity matters because it brings different perspectives. At Bank of America, we believe that the more diverse we are, the stronger and better we are. When we connect our diverse backgrounds and perspectives, we can better meet the needs of our colleagues, clients, and communities.

For us, DEI is action oriented. Our chief executive officer, Brian Moynihan, and all members of the management team are very focused on building an inclusive culture where our employees feel comfortable being who they are and bringing their whole selves to work, knowing they have equal access to opportunities regardless of their differences such as gender, ethnic background, or other such factors.

Such a culture has allowed us to attract and retain more diverse talent, and I find this to be true when we recruit in Japan as well as other parts of the world.

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Are there aspects of DEI unique to the financial sector?

In banking, it’s important to bring in different perspectives and skill sets. Our clients are diverse, so we need to be diverse. Also, much of our business is cross-border in nature. For example, in mergers and acquisitions (M&A), our Japanese clients are buying and selling not just in the domestic market but also abroad.

Due to this, we need to work with a lot of colleagues outside Japan. Building connectivity—that’s the term we use—around the organization is important to growing trusting relationships.

So, for a global bank, DEI becomes very important because we need to understand that our clients and colleagues come from different backgrounds with different thought processes. Embracing these differences and removing any unconscious bias is critical for successful outcomes.

That’s why I feel that our company is stronger when we are more diverse in thinking and mindset, and creative in how we bring the business together and leverage the people and platform we have. Clients appreciate this because this allows us to better meet their needs.

How can companies strengthen their DEI?

Our commitment to DEI starts at the top. Our management team sets the diversity and inclusion goals of the company. Each management team member has action-oriented diversity goals, and they are reviewed by the board every quarter.

Our Global Diversity and Inclusion Council, consisting of senior executives from every line of business, meets quarterly to discuss DEI objectives and the progress we are making at each level of the company.

I have been a part of this council as one of the two representatives from Asia, having worked very closely with this leadership team. Over the years, I have witnessed how passionate our leaders are and how hard our company works to narrow the gap in any diversity spectrum.

From a gender perspective, 50 percent of our workforce and more than 30 percent of our management team are women, and we have a very ethnically diverse board. At the end of 2021, our company was one of only nine S&P 100 companies with six or more women on the board.

So, the statistics are strong, but what is equally important is to create a culture where people are given equal access to opportunities regardless of backgrounds, and to put people into their roles because of their capability.

What unique DEI challenges do Japan-based companies face? How can they overcome them?

I think Japan has come a long way. Particularly since former Prime Minister Shinzo Abe’s three arrows and empowerment of women initiatives, there has been progress, such as more women being put into managerial positions. But certainly, more needs to be done. The increasing pressure from investors on broader ESG goals, and the latest update to the corporate governance codes that requires companies to disclose their DEI progress, are all encouraging to me.

In addition, building an inclusive culture is really key to driving DEI. There are a few things that might be helpful in achieving better results. One is male advocacy. The terminology might not be familiar to some. It means men, or male managers, taking ownership of ensuring women are given equal access to opportunities and are supported, including through various programs. Say you have a very capable female manager who is a working mother. It is not uncommon for companies in Japan to offer benefits to support working mothers. What is important is how the male manager supports these colleagues’ career development and encourages colleagues to be understanding. If a company can follow this approach for a period of time, that will result in a robust pipeline of middle-level to senior women managers.

“As the country executive for Japan, driving business growth is one of my principal missions, but creating an inclusive workplace where people feel they can bring their whole selves to work is equally important.”

Tamao Sasada

The second is a strong mentorship and sponsorship program. Different companies might have different mentor programs, but sponsorship is something that may not be so common in Japan. A sponsor is usually someone influential and powerful in the organization who helps a rising talent succeed. They help the individual increase visibility within the company, speak up for them, and assist them through advancement opportunities.

Also important is building a meritocracy culture. Put people into the role because of what they can do, regardless of their backgrounds.

How did you overcome career obstacles?

Fortunately, at Bank of America, the culture has always been supportive. My motto is, when you are given the opportunity, always try to go out of your comfort zone and give it try.

When I was a junior banker, I was given the chance to become a coverage banker for one of our biggest clients in Japan at the time. It was unusual for a junior banker to be given such a big responsibility, but I believe my manager trusted that I could do the job and took a chance on me.

I worked extra hard to ensure I delivered for that client, who had a lot of doubts about me at the start.

This client aspired to expand the business globally. To help them, even though I was still junior, I fearlessly reached out to colleagues around the world to get help. That was a great opportunity to get to know people in the organization, understand what we could do globally, and deliver what the client needed.

This client was happy with the outcome and became one of my advocates.

So, the lesson learned was to go out of your comfort zone. There are always learning experiences that come out of doing so. And once you have experienced that, you can pay it forward.

Why is stakeholder capitalism important?

Stakeholder capitalism is a term defined by the World Economic Forum half a century ago, which has gained renewed focus in recent years. It essentially means companies must deliver not only for shareholders, but also for all stakeholders including clients, employees, and the wider community.

This is something our company really believes in, and it has been reflected in our corporate philosophy for many years. We have a corporate strategy called Responsible Growth, which states that we are here to serve wider stakeholders. DEI is always part of that strategic focus, and ESG as well.

How does DEI tie into ESG and sustainability?

DEI is part of ESG, which has been a long-term focus for us, even before the term became so prevalent.

This goes back to our Responsible Growth Strategy, delivering for all stakeholders. And that is really the core essence of the stakeholder capitalism that we talked about.

As mentioned, there has been a renewed focus on stakeholder capitalism in the global business community. Our CEO, who is a passionate advocate of ESG, has been chairing the International Business Council at the World Economic Forum, leading global companies in pushing ESG standardization forward.

In recent years, more focus has been put on the E, the environment, with more than 130 countries and many companies having pledged their net-zero goals.

At Bank of America, we announced our goal of achieving net-zero by 2050. The urgency is felt in both the private and public sectors globally. Just like our role in helping accelerate ESG in the global business community, Bank of America is taking a leadership role in the net-zero transition through sustainable finance.

About a year ago, we announced a $1.5 trillion pledge to mobilize capital to support clients’ ESG efforts. That’s $1 trillion for climate transition and another $500 billion to promote social inclusion, such as racial and gender equality, healthcare, and education.

What is sustainable finance? Why is it important?

We believe that the finance sector has a key role to play in providing and mobilizing the capital needed to drive the transition to a low-carbon, sustainable economy. A lot of our clients are making net-zero pledges, and they are working hard to come up with a roadmap to carbon neutrality. Our mission is to support them through sustainable finance, such as providing green loans, helping clients issue sustainability or green bonds, or advising on M&A transactions in the renewables space.

We do it ourselves as well. Bank of America was one of the first financial institutions to issue green bonds and sustainable bonds. During the past two years, we issued one of the first Covid bonds and sustainability equality bonds to help advance many of the social issues we saw in the past few years.

How do you see the future of DEI in Japan?

Certainly, progress has been made. We must keep driving that culture of change. Within each organization, it’s important to follow up on initial efforts. Much has been done, but focusing on some of the things I mentioned earlier—meritocracy culture and initiatives such as a sponsorship and mentorship program—are definitely key steps. It’s great to have maternity and paternity programs as well as a support system for working mothers, but building a supportive and inclusive culture is equally important.

As the country executive for Japan, driving business growth is one of my principal missions, but creating an inclusive workplace where people feel they can bring their whole selves to work is equally important.

I look forward to seeing companies in Japan continue to drive these efforts forward and create inclusive cultures that will promote further acceleration of DEI.

In Defense of Strong Relations

ACCJ President Om Prakash shares his thoughts on 2022 and the chamber

Listen to this story:

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Those movies in which a fighter pilot steps into the role of president and leads everyone through challenging times are always inspirational. I’ve watched that story more than once, and as 2022 began I got to interview someone doing just that. Only not for Hollywood.

American Chamber of Commerce in Japan (ACCJ) President Om Prakash, also chief executive of Northrop Grumman Japan, is a US Air Force veteran who was a fighter pilot, test pilot, and vice wing commander of the 82nd Training Wing. His time in the service, as well as at the Pentagon, has given him important perspectives on the US–Japan relationship, experience ideal for guiding the chamber through the third year of the pandemic and bilateral challenges.

In a year filled with opportunities in a transformed world, The ACCJ Journal sat down with Prakash at the Northrop Grumman office to learn more about his background and thoughts on the path ahead.

What brought you to Japan?
I have lots of reasons to want to be here, but ultimately, I am here for my job. My company asked me to come here. But part of it is that I have a background that put me in a unique position to be particularly effective for the company. I studied engineering at MIT, and then served in the US Air Force for about 26 years. Early in my career, I was stationed in Aomori Prefecture, at Misawa Air Base. I was an intelligence officer back then, and that is the first time I lived in Japan for an extended period.

I spent most of my career as a pilot and test pilot in many of the United States’ worldwide operations over the past few decades. I gained a lot of experience working with Japan as an ally, including some time in the Pentagon, where I worked on industrial policy issues and with Congress. Previous to coming here, at Northrop Grumman, I focused on corporate and technology strategy. So, combat experience, a background in technology, and lots of policy experience with the government made me a very good match for taking over our operations in Japan, where our primary customer is the Japanese Self-Defense Force.

How did you get involved with the ACCJ?
Our company has been part of the ACCJ for several decades—we were one of the early members—so I was a member as our chief executive. Northrop Grumman is a defense company, so the Aerospace and Defense Committee was the one I had the most interaction with, most recently as chair. To me, the primary things the ACCJ does for its community are:

• Networking, getting to know other folks in the community
• Interaction with government to work on advocacy and clear opportunities for business in Japan

Those were the two main drivers that gave me passion for being involved with the ACCJ.

Has ACCJ membership helped push policy goals?
Yes, absolutely. There are some areas where, across sectors, we all agree. One of the most obvious, in the current situation, is that we all have been affected by the travel restrictions. That common voice from the ACCJ has been important in showing the pain brought to all types of businesses and in bringing about change.

Specific to aerospace and defense, with the other US companies, there are several times that we have had common ground to work on advocacy issues together. We’ve also had opportunities to talk with leadership from the Ministry of Defense and gain insight into their priorities for defending Japan. This year will be particularly interesting for aerospace and defense because Japan is in the midst of rewriting its national security strategy. It’s going to be a really important year.

“I feel very strongly that, if you look at the alliances across the world, the US–Japan alliance is the most important in all facets—military, economic, cultural—so, being a part of that for my company was something I was excited about doing.”

Has the chamber helped you?
On a professional level, I’ve known most of the folks in the aerospace and defense community already, but the ACCJ certainly broadened my network to other sectors. On a personal level, I love learning. I am curious about everything. So, getting to know more about the industries that are involved in Japan writ large has been both interesting and helpful. I’ve gained insights into the pain points faced by other industries. The pandemic has brought lots of opportunities for US businesses to share lessons learned and look for common support. And then, quite frankly, I’ve enjoyed making friends in the ACCJ, as well as participating in community events. In my first year here, I was able to go to the Charity Ball in person. It’s been virtual for the past two years. That was rewarding and fun at the same time.

Do other experiences stand out?
Well, the election has been pretty involving for me! It actually wasn’t something I was seeking—the Nominations Committee came and asked me to run—but it is my nature to always raise my hand and volunteer; and in this case I was especially happy to do so. Frankly, this is an exciting year we have in front of us, so I am thrilled at the opportunity. Going through that process gave me access to an even wider group of people, and learning more about how the chamber works to serve its members has been rewarding and fascinating. I’m sure it will be topped by the actual experience itself in the year ahead.

Why did you choose to take on the role of president?
In many ways, it’s a variation on the question of why I came to Japan in the first place. When I look across the globe at where there is potential for conflict, and where there are real issues between nations, it’s right here in this part of the world—who would have expected a land war in Europe? Think of what that means for us here, where tensions and stakes are in many ways much higher. I’m the type of person who likes to run towards a burning building, not away from it, to see what I can do. I feel very strongly that, if you look at the alliances across the world, the US–Japan alliance is the most important in all facets—military, economic, cultural—so, being a part of that for my company was something I was excited about doing; it felt like a continuation of my Air Force career. The ACCJ is a whole other level of that.

This year, in Japan, we have the administration of Prime Minister Fumio Kishida making major policy changes. There’s a new minister for economic security. They’re rewriting the national security strategy, the National Defense Program Guideline, which is going to govern how they spend the largest discretionary portion of their budget.

In the United States, we are still going through a full transition to our new administration. And we now have an ambassador in Japan, Rahm Emanuel. That’s going to make it a particularly dynamic and important year. There are lots of opportunities for the ACCJ to make a positive impact on the US–Japan relationship, do good things for business, and, more importantly, do good things for both our nations.

What is the focus for 2022 bilateral ties?
All nations have suffered impacts to their economies as a result of the pandemic, and there are probably inclinations to look inward. But these are the times when we need to rely on friends more than ever, and the United States and Japan have a special relationship. There have been periods in our history when we’ve viewed each other with less than cooperative eyes, and other times when things have been more open. I believe right now, in particular, we have to make sure we keep pushing for what’s good for both economies. It’s not just a one-sided thing for the United States; I think we can thrive together. It’s not a zero-sum scenario. We can grow opportunities for all. And when we look at some of the nation states that are potential adversaries, we can only succeed by cooperating and combining our strengths.

What are the ACCJ’s key initiatives and advocacy points?
Last year, we spent a lot of time focused on digital transformation; and there is still work to be done. I think that will be critical for tying the US and Japanese economies together. There is lots of work on regulatory frameworks and common operating standards, and a level playing field that we need to have in place so that our businesses can thrive. We can work together. That will be an ongoing topic for some time.

Something that I think will be new in 2022 is having our voice heard as Japan works on its national security strategy and economic security. That will have economic implications for several sectors, and we need to look clearly at how the ACCJ can get involved in making a case for things that will help both our economies and national security postures.

How is diversity and inclusion in Japan? Can the ACCJ help?
In Japan there is, of course, improvement to be made. That’s not just my opinion, there are many surveys and analyses of Japan’s economy and its record with inclusion—specifically related to women in the workforce. With an aging population, that’s an untapped potential resource. Coming from the United States also influences how I feel about the topic. When you get a diverse set of folks together, you get a better product no matter what it is you’re working on. The ACCJ should continue its advocacy in this area, and we have many examples of where inclusion has brought great outcomes.

How can the ACCJ best support members in 2022?
It’s hard to predict what the year will bring. I look at the term Jenifer Rogers served as ACCJ president last year, and the challenges she faced. We didn’t expect that the pandemic would continue as it has for another entire year. Right now, we’re on the Omicron variant, and there are still nine letters left in the Greek alphabet. I hope we have a better future in front of us. I’d really like to see 2022 be the year that we return to networking and meeting each other at in-person events. I think we crave that human connection on many levels, not just for the business impact, but socially for our well-being and effectiveness. I hope we’re going to see that in 2022. But if not, we’ve learned a lot over the past two years and will continue to improve our effectiveness as a chamber.

“Having those spirited debates, where we learn from one another and so attain better outcomes, those are exciting things to be a part of.”

What have we learned from the ACCJ’s digital transformation?
We have definitely learned how to run meetings more effectively using all the telework software that’s available, and we can carry that over to our businesses. My personal experience is that ACCJ meetings have run very smoothly. As we have more potential to host hybrid events, we need to be mindful that these come with their own consequences, for example in terms of staff needed to run them. So, we’re going to have to look at when it makes sense for an event to be hybrid versus being only virtual.

We’ve also learned that there are lots of things we felt we could only do in person but, having no choice, now do virtually. And now that we have a choice, let’s not forget the good things we’ve learned from hybrid and virtual scenarios, especially in terms of how much more inclusive we can be. Obviously, we don’t want the entire structure to be online-only all the time, but there are times when it makes absolute sense.

If we were hundreds of years in the future, there are a lot of things that maybe would be a given for how we do business. We had to get there a lot sooner, because we had no choice, which isn’t a bad thing. So, we’ll continue to evolve.

In what ways might changes to the ACCJ Constitution benefit members?
I know that Jenifer and the team last year focused a lot, as an advocacy issue, on governance reform in Japan. They reinforced that inside the ACCJ with reform of the chamber’s governance. I think that was the perfect example to set. Additionally, making the chamber efficient and able to represent and serve its membership is critical. I applaud the team last year for taking on a topic that is challenging, because we all have strong feelings. That’s one of the great things about the ACCJ. We are a volunteer group for the most part, so we’re putting in our time for things we feel passionate about. I look at those as great developments last year.

What might be the long-term effects of Japan’s border restrictions? Sometimes, when we consider this question, we may be too narrow in our thinking. There’s a political dynamic across the globe. Governments are responsive to their constituencies. If we look at it simply as a business issue or a science issue, we’re sometimes going to miss and talk past each other when we’re trying to be effective.

I feel the key when we talk about advocacy regarding entry restrictions is to focus on the business impacts. They are real, and some of them will be long term—especially when you consider things on a global scale and juxtapose the decisions made here with those of other nations looking to revitalize their economies. I think framing our advocacy in those terms will be more helpful.

Ultimately, however we come out of this, there will be a certain degree of feeling that we learned something as a species that we’re not going to unlearn. Maybe our tolerance to risk and how we approach decision-making have been forever changed. From what I understand of the 1918 flu pandemic, ultimately, you could say that it ended socially well before it came to a scientific end. It was more a change in our thought pattern for what risk we were willing to accept and how we were willing to operate. I won’t be surprised if we see something similar with Covid-19.

Anything else you would like to say to members?
It may be recycling something I said earlier, but everyone I’ve met in the chamber—especially those serving in positions of responsibility on the Board of Governors and as committee leaders—are so passionate about what they do. And that’s a great group of people to work with. We’ll have our differences, but we’re professionals and we’ll work through things. Having those spirited debates, where we learn from one another and so attain better outcomes, those are exciting things to be a part of. As I said, I didn’t seek this position, but I’m super excited about leading the chamber, especially given the events going on around us as a community, in the United States and Japan, and around the globe.

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Photos by Miki Kawaguchi/LIFE.14

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Spectrum of Benefits

Former AIG chief Robert Noddin shares what the ACCJ has meant to him

After nearly a decade as president and chief executive officer of AIG Japan Holdings KK, American Chamber of Commerce in Japan (ACCJ) member Robert Noddin retired this year. Among his numerous contributions as an ACCJ leader, he served as co-chair of the Education Committee, inspired many as a speaker at the ACCJ-Kansai Women in Business Leadership Series, and played a key role in the formation of the F500 CEO Advisory Council, which he served alongside Jonathan Kindred as one of the first co-chairs. As Noddin retires, The ACCJ Journal talked to him about his experiences with the chamber and why he encourages professionals to get involved.

How did you come to be part of the ACCJ?
During my second assignment to Japan with AIG (2002–06), I was initially introduced to the ACCJ via the annual fundraising gala, as a guest. I wasn’t in a senior position at the time, and folks such as Don Karnak were at the helm of AIG—so there really wasn’t a place for me. When I returned in 2009, to take on a larger role—first as chief operating officer of the American International Insurance Company, followed shortly afterwards as CEO—it made a lot more sense for me to engage. I started attending informational and exchange events, the Ordinary General Meeting, and things like that. Then in 2012, I moved into the AIG Japan CEO role, and that meant a chance to engage more visibly as the AIG representative to the ACCJ. That’s when things started to get interesting.

Why do you feel the ACCJ is important? Why should professionals become involved?
It doesn’t matter whether you’re the head of a small business in Japan or the CEO of a Fortune 500 company, the ACCJ vigorously tries to be of value to all its members in Japan. Whether issues are industry specific or cut across industries, the chamber is constantly striving to bring value to its members and to enhance the overall competitive environment for US companies—and, frankly, any foreign companies—in Japan.

The ACCJ continuously strives to bring value, working both internally with members as well as externally with local, prefectural, or national governments on issues in Japan, with state, embassy, and federal leadership in the United States, and with external advisors. That’s always been powerfully evident to me.

Why was the formation of the F500 CEO Advisory Council important? What was it like to play a role?
The F500 CEO Advisory Council was created in 2018, and several years before that I was approached at an ACCJ event by then-CEO of IBM Japan Paul Yonamine and Jon Kindred, who at the time was CEO of Morgan Stanley. They wanted to get my views on how to help the chamber persuade the large-company CEOs to become more actively engaged. They were of the view that those CEOs had gradually stepped away from direct engagement while folks such as their corporate or government affairs leaders became more active.

Right after that, I was approached about joining a CEO-led DC Doorknock, the annual visit by ACCJ leaders to Washington. I was intrigued and joined. It really impacted me and, to be perfectly honest, was one of the more interesting and fulfilling things I did during my entire 12-plus years as an AIG leader in Japan. That solidified, in my mind, what Paul and Jon had first mentioned to me, so Jon and I agreed to see if we could get the F500 Advisory Council started. The intent was to ensure that the large-company CEOs help bring support and substance to issues bigger than those of concern to any one company or industry. We felt it would help the ACCJ project a powerful leadership presence in advancing strategic agendas from which all members could benefit.

How have you benefited from the ACCJ?
My personal benefit was having the chance to exchange ideas and experiences with leaders from many industries and of several nationalities. It was incredibly helpful for me to understand challenges and opportunities across the spectrum of foreign businesses in Japan. I was also quite heartened during the Doorknocks to see how much support and interest US government leaders have for US interests in Japan. And, truth be told, I developed some fantastic relationships and friendships that, personally and professionally, really made my life and career in Japan so much more fulfilling.

Anything else you would like to share?
I would encourage members to be active on committees and maximize the chances to learn from, and provide assistance to, other members. I can’t imagine where else you could engage and benefit so richly from people who, on a daily basis, come through the ACCJ doors with the depth of experience and lessons they can share—whether virtually, at a function such as those held at Tokyo American Club, or at the ACCJ office.

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Do the Right Thing

Medline’s Tomo Hasegawa on the importance of ethics to business success

As the coronavirus pandemic unfolded in early 2020, supply chain disruptions put extreme pressure on many companies. The healthcare industry, in particular, struggled with a shortage of personal protective equipment (PPE), and procuring resources became a difficult—and sometimes risky—business for those in need, as some unscrupulous vendors took advantage of the situation.

For others, the crisis was a chance to show how strong ethics provide a solid foundation for long-term business success. One such company is Northfield, Illinois-based Medline Industries, LP, whose Japan president, Tomo Hasegawa, is scheduled to speak at an upcoming American Chamber of Commerce in Japan (ACCJ) event hosted by the ACCJ Independent Business Committee on November 4.

Topics he will discuss include supply chains and ethical sourcing, and The ACCJ Journal spoke with Hasegawa ahead of the event to find out how Medline weathered the Covid-19 storm of 2020 and what advice he has for leaders trying to make tough choices and guide their companies in a sustainable way.

Sudden Impact

Many of us watched the early days of the pandemic unfold on TV, as initial reports from China painted a confusing and grave picture, but one that felt far away. For Hasegawa, however, the reality of what Covid-19 would bring to the world was much closer.

“We were at the 35th Annual Meeting of the Japanese Society for Infection Prevention and Control, which was being held in Yokohama in February 2020,” Hasegawa recalled. “That was just after the Diamond Princess made its way into the port there. Having the ship right in the backyard of this major medical conference, which was all about infection control, made it very real.”

As the seriousness and widespread nature of the pandemic became clear, Medline began to look at how the situation might affect their business in Japan. Hasegawa said that their initial assessments underestimated the impact.

“We thought it might drive the sales of some PPE and were not thinking about changing what we would do in terms of strategy,” Hasegawa said. “Then, all of a sudden, the next stage of the crisis occurred and there was a business continuity scenario playing out. I don’t think anybody anticipated the entire country of China literally shutting down for two months.”

Supplies Stopped

China manufactures almost half of the world’s supply of PPE. With the source of so many medical supplies cut off, Medline had to quickly work with its Chinese partners to assess the situation and look at alternative ways of obtaining products, including qualifying new substitute PPE offerings.

Recalling the scramble for toilet paper that occurred in spring 2020, and the empty shelves that greeted panicked buyers, he said that Medline faced the same situation with medical supplies, as masks, gowns, and gloves “were literally being hoarded.”

As it turned out, the China supply situation, while acute and unprecedented, was just a harbinger of even bigger issues. China was able to get Covid-19 under control and mobilize its entire infrastructure so that, by the middle of 2020, most of its PPE factories had increased capacity to meet the ever-increasing global demand.

The real crisis turned out to be a shortage of examination gloves. Malaysia supplies 75 percent of the world’s nitrile (synthetic rubber) gloves. Unlike factories that manufacture non-woven PPE products, such as masks and gowns, those that produce examination gloves require significant capital investment and cannot increase capacity in a matter of months. Figuring out how to manage the supply chain was critical, but doing so was not as simple as finding a factory that could churn out PPE. For example, the nitrile gloves supply had a hard constraint and, despite all factories running 24/7, demand outpaced supply by 37 percent, according to the 2020 Personal Protective Equipment Market Report, published by the Health Industry Distributors Association.

“Medline is very proud of how we do sourcing to begin with. We’re very strong advocates of what we call ethical sourcing—we have a supplier code of conduct, for example—and there were certain companies and factories with which, even prior to Covid-19, we chose not to work,” Hasegawa explained.

“This is because we did not agree with how they went about producing products, making money, etc. Coronavirus literally brought out the best and worst of many companies. A lot of suppliers went into a mode that was pure capitalism—supply and demand at its extreme—as the demand skyrocketed,” he said.

Ethical Sourcing

Human rights issues in supply chains is a growing concern and is something investors consider when assessing how a company is doing in the social aspect of its environmental, social, and corporate governance, or ESG, efforts.

In August, Japan’s Ministry of Economy, Trade and Industry began a large-scale investigation into about 2,600 companies listed on the first and second sections of the Tokyo Stock Exchange to better understand where they stand on these issues and what support they need from the government.

Medline is a great example of how a company should approach the matter. Their Ethical Sourcing Program comprises 11 pillars, through which the company carries out its commitment to promote human rights. That involves setting expectations and requirements for its suppliers, assessing and investigating alleged violations, and empowering employees and suppliers with information and training.

The company undertook a comprehensive assessment of its policies and procedures in 2020, and its approach is guided by widely accepted international standards, including the United Nations Guiding Principles on Business and Human Rights.

Medline’s suppliers are obligated to ensure:

• No forced labor, human trafficking, and slavery
• No child and underage labor
• No discrimination and harassment
• Promotion of health and safety
• Minimal environmental impact

“These are standards that most companies would normally state, but I think the difference is that we put our money where our mouth is,” Hasegawa said. “We regularly conduct onsite social compliance audits, and we expand and update our supplier risk assessments on an ongoing basis.”

He added that there is a strong belief at the top of the family-managed business that the values which are important to the family should be important to the company. Medline’s stability and success show that the approach works. The company recorded $17.5 billion in worldwide sales in 2020 and has had 54 years of consecutive annual growth. In all but one, the growth was in the double digits.

Focus on Stable Supply

Hasegawa said that Medline’s strong buying power was a real asset during all of last year, as companies were scrambling to secure supply. Not only were they able to minimize price increases from various suppliers as the situation changed, but they were also able to secure much needed supply allocations for their customers.

“It certainly was challenging, not just for us but the entire industry,” he said. “The radical imbalance in supply and demand was unprecedented. Literally, on our supplier side, costs reached levels previously unimaginable. Masks went up by a factor of 16. Gowns and gloves went up by at least five times. That was our cost to procure the products. So, what do you do with that?”

As costs rose, Medline eventually did have to raise their own prices, but Hasegawa said that the way this was done makes him feel proud. “After making initial price adjustments to get the exam gloves business profitable again, we took a different approach where, if we got a cost increase of, say, ¥5 per glove, then we asked our customers to pay that same ¥5 increase. We did not take any incremental profit on top of that to our customer,” he said.

Covid-19 forced companies to make trade-offs. At Medline, the decision was to prioritize stable supply over growing the bottom line. “Our mission is to be a partner for healthcare providers so they can focus on providing care,” said Hasegawa. “We interpreted that as, ‘Don’t stop healthcare’ and focused all our energy on maintaining stable supply to our customers.

“In addition, multiple new customers were willing to pay a higher price to us for the much needed gloves. It was painful to turn away accounts who obviously needed help but we chose to prioritize protecting our existing customers over the opportunity to make more money,” he continued.

“Specifically for gloves, where the pricing truly went out of control all around the world, we saw some very unethical behavior; customers ended up getting something completely different than what they had ordered when they went outside the normal supply chain.” Customers purchased what they thought were medical-grade gloves from a new vendor and received substandard gloves. Even now, around the world, many hospitals are realizing they have stockpiles of inappropriate gloves and are having to replace them.

Medline, Hasegawa said, chose to protect their customers and make sure they did everything they could to ensure that customers received a steady flow of proper supplies. This meant minimizing, as much as possible, the financial impact of price gouging by unscrupulous vendors. This also meant educating customers on how to conserve usage of much needed PPE products such as examination gloves.

Making a Difference, Together

Japan is known for coming together in the face of adversity, and Hasegawa noted that there was very good cooperation among vendors and distributors. While most large companies moved to protect their own customer base, wholesalers worked together to ensure the supply was as stable as possible to hospitals.

“It was all about making sure we got life-saving equipment to the hospitals, to the doctors and nurses who depend on it,” he explained. “That singular focus on the mission to provide not just a service, but to protect the healthcare workers who were doing everything they could to save the lives of Japanese citizens, was very clear to us and, I believe, most of the industry followed suit.”

And that’s a big reason Hasegawa—who says he is fortunate that his personal values mesh with those of the company—believes so strongly in Medline and its role in healthcare. “That tone from the top makes it very, very clear that this is how we want to run the business. And waking up the next day, I always want to be proud of the decisions I made.”

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