C Bryan Jones 1/19/23 C Bryan Jones 1/19/23

(Re)Open for Business

It isn’t easy to do business when you’re standing outside staring through the window. But that’s the situation so many found themselves in during much of the pandemic, thanks to some of the world’s most stringent border restrictions. Japan finally reopened its borders to mostly normal travel, including visa-free entry in October 11. We look ahead at the journey past and ahead.

Japan’s long journey to open borders and what lies ahead for business and education

It isn’t easy to do business when you’re standing outside staring through the window. But that’s the situation so many found themselves in during much of the pandemic, thanks to some of the world’s most stringent border restrictions. Japan’s reluctance to allow non-citizens to enter the country, slowness in loosening the reins, and insistence on complicated and costly requirements once the trickle was allowed to start put both domestic and non-Japanese companies in a tough spot.

Getting these policies eased became a centerpiece of advocacy for the American Chamber of Commerce in Japan (ACCJ) and other foreign chambers in 2021, and the efforts continued in 2022. It took most of the year to get the desired results, but Japan finally reopened its borders to mostly normal travel, including visa-free entry, just months ago, on October 11. And now we look ahead to 2023.

Long Road

When Japan placed visa restrictions on travelers from 38 countries at midnight on March 21, 2020, no one imagined the journey back to normality would take so long. There was still the feeling that this would be a short-term measure to minimize the duration of the pandemic, which itself was expected to pass within months if strict steps were taken. But by May 27, the list had grown to 111 countries, including the United States, and it had become clear that Covid-19 wasn’t going away anytime soon.

The ACCJ, other foreign chambers, and the European Business Council in Japan set out on a long advocacy journey calling for fair and equal treatment of foreign residents. Eventually, two of the most influential domestic lobbies—the Japan Business Federation (Keidanren) and the Japan Association of Corporate Executives (Keizai Doyukai)—added their voices, and on November 8, 2021, the Japanese government temporarily loosened restrictions on business travelers and students.

The move was welcome, but many agreed more was needed. The ACCJ continued to push for change in 2022, and the chamber’s advocacy received broad exposure in media, with coverage by Bloomberg, Kyodo News, and Nikkei Asia, and in Japanese through the Mainichi Shimbun and NHK.

On March 3, Japanese Prime Minister Fumio Kishida announced that the daily cap on entrants would be raised from 5,000 to 7,000 on March 14. More phases played out as small-scale tours were allowed and the daily arrival cap raised to 20,000 in June. Another rise to 50,000 came in September, and the country fully reopened in October.

“Our experience during the pandemic demonstrated that the ACCJ remains the single most important vehicle in Japan for its members to address shared concerns with Japanese and US leaders and with the media,” Christopher J. LaFleur told The ACCJ Journal. LaFleur, who was ACCJ chair when the pandemic began and later served as a special advisor, often spoke to media on behalf of the chamber about the border issue and advocacy positions.

“We also demonstrated our unique capacity to bring together like-minded organizations to amplify our impact. Moving forward, the chamber should continue to monitor travel policies as it focuses on other high priority issues, such as economic security and digital transformation.”

Then and Now

Just before the November 2021 announcement, ACCJ members shared with The ACCJ Journal how the strung-out restrictions had impacted their businesses.

Kenneth Lebrun, a partner with the law firm Davis Polk & Wardwell LLP in Tokyo and co-chair of the ACCJ FDI and Global Economic Cooperation Committee, said his business had been impacted in two ways. “First, we have been unable to bring new employees to Japan, whether internal rotations from our US offices or external hires, because the government is not issuing new long-term work visas. This has impacted the ability of professional service firms to provide services to Japanese clients concerning their overseas operations,” he explained.

Revisiting these issues now, Lebrun said that the Japanese government’s resumption of issuing business visas in 2022 allowed the firm to bring new hires and rotations from its US offices to work in Tokyo and thus return normality to its services.

He also feels optimistic about M&A recovery. “As Japanese companies typically desire to conduct site visits and meet face-to-face with the management of potential acquisition targets, the easing of border restrictions has encouraged many Japanese companies to resume their overseas acquisition activities,” he said while noting a caveat.

“The rebound of outbound M&A has been tempered by the strong yen, which makes foreign assets more expensive, but I am optimistic that cross-border M&A will return to pre-Covid levels during 2023 as the macroeconomic and demographic trends underpinning Japanese companies’ desire for overseas growth remain unchanged.”

Catherine O’Connell expects that increased business activities involving non-Japanese companies and entrepreneurs will boost her own law practice, Catherine O’Connell Law. Co-chair of the ACCJ Legal Services and IP Committee, O’Connell believes that demand for fractional general counsel support for businesses will expand.

“As borders open, people need experienced, bilingual lawyers to ensure full compliance across all their business activities,” she said.

“Long before the pandemic, I was well placed to service corporate clients who need efficient, competent, and practical legal advice, tapping into a network of specialist Japanese lawyers to cover all aspects of the law. This has only gotten better during the pandemic for me, so I have full confidence the work will be consistent and rewarding.”

O’Connell, who serves as independent audit and supervisory board member for Fujitsu Limited—the first foreign woman to hold the position—also sees benefits in other areas as a result of the pandemic.

“Performing my outside board roles has also become far easier and acceptable to do remotely outside Japan when necessary—yet another pandemic silver lining,” she explained. “In my view, the border closure has not impeded the advancement in board governance as companies continue to hire directors and statutory auditors who are based overseas for part of the year.”

Learning Again

Another sector significantly affected was education. Matt Wilson, president and dean of Temple University, Japan Campus (TUJ), expressed concerns to The ACCJ Journal in November 2021 over the impact on TUJ’s students and Japan’s reputation.

“Because of the borders being closed, we have had some long-term, degree-seeking students who decided they were going to attend other institutions, take an indefinite leave of absence, or simply abandon their plans to study here in Japan,” he said. “Our concern is that the patience of our current students who are unable to enter Japan will run thin, and they will burn out on online education at strange hours in their home countries. They could decide to take a leave of absence or pursue other opportunities.”

Fortunately, the situation has improved greatly, he said when asked how things have progressed. “The reopening of the country to educators and students in March 2022 has turned the tide, and students seeking an international experience in Japan have flocked to our campus since the reopening while expert faculty from our main campus in Philadelphia have started asking about short-term teaching opportunities on our campus,” he explained.

“And due to a major influx of overseas students and increased interest among domestically based students, TUJ’s undergraduate program has soared to new heights, reaching a record 1,841 students. In 2020, TUJ’s undergraduate enrollment was about 1,250.”

Mark Davidson, a board member of TUJ as well as the U.S.-Japan Bridging Foundation, which awards scholarships to US undergraduate students to study in Japan for one semester or an academic year, said, “I’m delighted to say that inbound student mobility is back to pre-pandemic levels.”

Davidson, who also serves as vice-chair of the ACCJ Education Committee, is a strong advocate of internships and helped the ACCJ—together with the Embassy of the United States, Tokyo, and the US–Japan Conference on Cultural and Educational Interchange (CULCON)—to launch an online portal in 2019 where ACCJ member companies can post internship openings. He hopes the progress made on reopening entry into the country for students will spur development of more internship opportunities.

“In the post-pandemic world, I hope that both foreign-based and Japanese companies will redouble efforts to offer substantive, US-style internship programs to Japanese and foreign students alike,” he said. We need to get beyond the one-size-fits-all, lockstep shukatsu system and promote more flexible, practical, and innovative approaches to hiring. A serious internship program will help companies to win the war for talent and also contribute to cultivating the kind of globally talented young people that every company—and Japan as a whole—needs to succeed and prosper in the 21st century.”

TUJ’s remarkable recovery certainly points in a positive direction for young talent in Japan’s future. “With the borders open, TUJ is seeing strong demand for 10 undergraduate degrees and short-term study abroad programs from the United States and around the world,” Wilson explained. “In 2023, we anticipate that this will continue so long as Japan continues to prioritize entry for students and educators. Based on a weaker yen and issues with China’s approach to the pandemic, now is a prime time for Japan to attract students seeking higher education.”

MGM Resorts’ Osaka integrated resort concept. Image: MGM Resorts International

Have Ticket, Will Travel

Perhaps the most noticeable impact of the border closures was the end of tourism. Some 32.5 million tourists visited Japan in 2019, and the government had set a target of 40 million for 2020. But just 2,900 foreign nationals arrived in April 2020, down 99.9 percent from the same month a year before. It was the first time since 1964 that the monthly arrivals figure had slumped below 10,000. And it’s been a slow climb out of that hole.

Now that tourists can once again enter the country, ACCJ Vice President-Kansai Jiro Kawakami, who is vice president and chief of staff at MGM Resorts LLC, is positive about Japan’s prospects for a robust tourism recovery.

“The signs are starting to emerge in the form of high occupancy and rates at hotels, large crowds at tourist sites in Tokyo and Kyoto, as well as popular attractions such as Tokyo Disneyland and Universal Studios Japan,” he said. “China was the largest source of inbound tourism before the pandemic, and we should see some of that segment return as their government eases outbound travel restrictions.”

Prior to the pandemic, there was much talk of building Japan’s first integrated resort (IR), and a number of companies were competing for the license to do so. While tourism came to a stop due to Covid-19, the IR process did not. MGM Resorts and Orix Corporation were awarded rights in September 2021 and Kawakami said they are now in the process of applying for a license to develop Japan’s first IR in Yumeshima, Osaka.

“Osaka’s IR candidate site is the same location as the 2025 Osaka Kansai Expo,” he explained. “We look forward to hearing back from the Government of Japan in the near future. In the meantime, we continue to work closely with tourism and hospitality stakeholders in Kansai to develop Osaka into a global tourism hub leading up to the 2025 Expo and projected 2029 opening of the IR in Osaka.”

O’Connell is also confident tourism will rebound, and events such as the 2025 Expo may be well timed for what she expects to be a gradual recovery.

“Any tourist who traveled here for the Rugby World Cup in 2019 has Japan as their last fantastic, vivid travel memory,” she said. “So I believe Japan is a very hot travel destination and people will be desperate to return. That said, I’m happy if tourism is slower and more controlled than before to prevent overtourism of Japan’s scenic spots.”

Resolution

LaFleur said that, through its advocacy on travel restrictions over the past three years, the ACCJ helped its members and the broader foreign community in Japan secure fair treatment and a reopening of borders that sustains both public health and the economy.

“Covid and its aftereffects remain global challenges,” he added. “However, the ACCJ can and should continue urging Japan and its global partners to ensure their heath policies enable the fullest possible economic recovery, not least because stronger economies are crucial to ensuring our countries have the resources to maintain global peace and security.”

John Amari 3/30/22 John Amari 3/30/22

Life Beyond Covid-19

Since the first case of Covid-19 was confirmed in Japan in January 2020, the world as we know it has changed in many ways—not least of which has been a transformation in how we study, work, and socialize. In light of this, The ACCJ Journal spoke to professionals in business and education, as well as soon-to-be-graduates, to learn about the challenges they’ve faced—and the solutions they’ve implemented—in a period defined by the pandemic.

Listen to this story:

In light of this, The ACCJ Journal spoke to professionals in business and education, as well as soon-to-be-graduates, to learn about the challenges they’ve faced—and the solutions they’ve implemented—in a period defined by the pandemic.

They said work and study will not return to pre-pandemic methods, and agreed that employees and students in the so-called new normal era have different expectations than before about the future of work and education.

Flexibility Is Expected

For universities, the pandemic has led to changes in how they deliver courses and engage with students.

Matthew Wilson, dean of Temple University, Japan Campus, said that before the pandemic “remote work was not an option,” because all instruction was carried out in person. That has changed. Nationwide, social distancing rules encourage online instruction. In some cases, at Temple, teaching has been conducted from offices repurposed for remote lecturing, with some students—especially those overseas—being restricted to remote participation.

How has the university implemented the new rules? They began by identifying which departments could work remotely and which were better suited to on-campus work.

They settled on a hybrid strategic plan according to which some staff and faculty work from home while others remain on campus, depending on the needs of particular departments. Students have been studying exclusively from home, while others have been in the classroom.

Remote study, Wilson added, has been particularly challenging for the 1,400 students on the campus, all of whom suddenly were faced—for the first time—with having to learn online.

Looking back, he acknowledges that things will not completely return to pre-Covid-19 ways. “We realized how, in this environment, stability is key, and flexibility has almost become an expectation.”

Foreign Engagement

Like Wilson, Stephen Zurcher, dean of the Asian studies program at Kansai Gaidai University, faced severe challenges when Covid-19 hit. In his case, that meant facilitating hundreds of study-abroad students at the university on semester- or year-long programs.

Following a schedule common at institutions outside Japan, Kansai Gaidai University had started its winter semester when nationwide calls for remote work and teaching began in early 2020.

At that time, the university had only a handful of days to transition to online—and mostly remote—instruction, Zurcher recalled. By the next semester, when their foreign students had left Japan, instruction became fully remote.

One challenge was how to instruct students who were living across different time zones. To this end, some courses were delivered in real time while others were pre-recorded and made available on demand.

In hindsight, Kansai Gaidai University was ahead of the online learning curve: before the pandemic, they had incorporated remote instruction and study in collaboration with partner universities under a program called Collaborative Online International Learning (COIL), a cross-border learning initiative involving institutions, faculty, and students.

“I don’t know how, but in the end, it all worked out,” Zurcher said. “We did a mid-semester survey of the students and, to my great surprise, the ratings of the classes and their interactions with the professors had jumped 15 points.”

While students, naturally, would have preferred in-person classes on campus, by some measures, student engagement with instructors had increased, he added, as had their level of satisfaction with remote learning.

Serving the Underserved

Zurcher’s experience is largely shared by Tom Mason, executive director of the United States–Japan Bridging Foundation (USJBF), a non-profit that provides sponsorship to underrepresented students so that they can study in Japan for a semester or a year.

Due to pandemic-related international travel restrictions, the USJBF exchange program was put on hold for about two years. But, rather than end it, the organization began online training programs, and these became a hit with students.

“We ran a webinar series called ‘How to find Japan-related careers.’ The purpose of that was to connect students to people who not only have found jobs in Japan, but also Japan-related jobs in the United States,” Mason explained.

Between 200 and 300 undergraduates participated in each seminar, suggesting that interest in Japan had not waned, despite the pandemic and restrictions on international travel.

However, Mason admits that most participants would have preferred in-person events. And industry experts acknowledge that, although remote learning—including interactive webinars and COIL—has expanded, it can neither fully replicate nor totally replace in-person cultural exchange.

“A lot of language learning is done by observing how people speak in real life,” he said. “And then there are the accidental interactions, which don’t really occur online.”

As the pandemic abates and international travel restrictions are set to be relaxed, the USJBF has launched online recruitment initiatives for its next batch of candidates.

“In the past, what we did was send them the finances and send them abroad. But now, we are able to run pre-departure orientations, as well as networking and mentorship opportunities, online.

“And, when they are in Japan, we can deliver supplemental infrastructure programs in person. Our students are based across Japan, from Hokkaido to Okinawa, so they’ll have networking programs in major cities—and we’re able to build that out because of remote working technologies.”

University Challenge

For students, the Covid-19 pandemic upended studying in ways previously unimagined. That was the case for Toshimasa Hatori, a fourth-year international business student and former student government vice-president at Temple University, Japan Campus.

Luckily for Hatori, he entered the university in fall 2019, just before the pandemic spread to Japan, and thus was able to enjoy some on-campus life, if only briefly.

Were there challenges when remote learning began? There were many. One was adjusting to online classes.

“Another was test-taking: the professors were concerned about plagiarism, which is a valid concern,” he explained.

And students were not really able to enjoy life on the university’s new campus, which had opened in August 2019, or use its facilities. “I was playing basketball, and I was the captain, but we couldn’t use our brand-new gym.”

Hatori recalled being a freshman. “Social gatherings were constrained; I couldn’t go to regular restaurants, nor could I hang out with my friends at a house party. We couldn’t even go to a supermarket at the outset of the pandemic.”

Without the opportunity to socialize in person, students chose, instead, to maintain friendships online via video platforms such as Zoom and the messaging app LINE.

However, this way of socializing has come at a cost. Jun Ikeda (not his real name), a fourth-year student based in Tokyo, said: “All conversations are now online, making it difficult to feel the other person’s emotions. This is especially true for people you meet for the first time.”

New Generation at Work

The so-called new normal has altered Hatori and Ikeda’s expectations of the workplace. When they start their jobs later this year, both expect hybrid options to be the norm, a change from their pre-pandemic expectations.

“Many friends of mine want a hybrid work experience,” Ikeda shared.

Despite the disruption that many students have faced during this period, some have found a silver lining in the Covid-19 cloud.

Miku Hashimoto (not her real name), a fourth-year student, told The ACCJ Journal: “I stayed in my hometown for a year with my family, thanks to the pandemic, and found that I like living in the country, where I can enjoy my hobbies and be close to family.”

Mark Davidson, director of government and external affairs at Amway Japan G.K., is sympathetic to the experience of students such as Hatori, Ikeda, and Hashimoto. Davidson’s own daughter had to navigate her university career during the pandemic.

“I have a daughter who is a university student. She did an internship in New York last summer, and it wound up being—except for two days—all online. That was not the best experience for her.”

A co-chair of the American Chamber of Commerce in Japan (ACCJ) Education Committee, Davidson believes that first-time hires will be challenged in new ways in a post-pandemic world. To succeed, they’ll need a diverse set of skills.

“More than ever, students will need a broad-based liberal arts background,” he predicted. “While they’ll need technical skills, more than anything else, they’ll need resilience and an analytical mindset to figure out problems—especially in this remote environment—that they may not have seen before.”

Young Professionals

But it’s not only students who have been challenged during the pandemic. Young professionals, too, have faced difficulties.

John W. Carlson III, for instance, transitioned to a new role at Novartis Japan in the summer of 2021, when the pandemic was raging. Carlson is co-chair of the ACCJ’s Young Professionals Forum (YPF) and the Healthcare Committee.

He is the new commercial partnerships lead and a senior strategic assistant at healthcare company Novartis Japan, where most of his work has been remote.

For new transplants like him, the early days in a company can be the most challenging. “Orientation is actually the hardest part, because you have to get people engaged with the company,” he explained.

“And the big challenge is not working within a department, but working collaboratively with colleagues—whom you would have met if you were working in the office—in other departments.”

Due to the pandemic, Novartis Japan began a redesign of the office, complete with remote-work technology which facilitates hybrid workstyles, according to Carlson.

“Essentially, employees get to choose which workstyle or format they wish to use.”

While the final redesign is yet to be seen, the expectation is that employees will split their work between office and remote locations.

“The office has become a place for collaboration, which requires more in-person work, while individual tasks, such as writing and analysis, lend themselves very well to remote work,” Carlson added.

In-Person, Remote, Hybrid

Despite the advent of new workstyles, challenges remain for young professionals. As many of them do not have a developed social network, feelings of isolation are common, as was the case with the students above.

“Mid-career professionals tend to have a house, children, family, and are more engaged with the business community, whereas young professionals are cut off from their university and have a relatively narrow network,” Carlson explained.

As a result, some young professionals in the YPF have had their health—in particular their mental health—adversely affected. It is a goal of the YPF to mitigate such isolation via in-person or hybrid networking events.

That said, Carlson recognizes that some young professionals have thrived under the prevailing online networking events held by the YPF.

Co-chair Anna Kimuro agrees.

Speaking personally, Kimuro, who is a client leader at IBM Japan, noted that remote work has allowed more young professionals than before to join online YPF events. One reason for the increase is that being remote negates the need to commute to a physical venue, leading to more time—and more opportunity—to participate remotely.

In a recent online event, members discussed how to expand their network informally within the ACCJ. One suggestion was to hold speed dating-style networking games where committee members meet chamber leaders.

But with the pandemic potentially waning, there has been a growing clamor for in-person events—or, at least, multichannel, hybrid ones—Kimuro added.

The New Normal

For companies, the pandemic caused major changes to internal and external processes. At Amway Japan, for example, all recruitment shifted to online-only processes from around March 2020, explained Hiroyo Aihara, the company’s human resources director.

“Everything changed: candidate meetings, job interviews, actual onboarding, orientation meetings with division heads, even how we present our company to candidates. All went online,” Aihara said.

The transition to digital-only was not easy for staff and new hires. In-person onboarding, for instance, became a singular affair conducted during a one-off visit to the office to receive key items, such as a work computer. And even then, the visit was socially distanced.

What’s more, there was a sharp learning curve to be navigated by staff, especially mid-career professionals experiencing remote work for the first time, Aihara admitted.

Which is not to say that remote work has been a cakewalk for recruits; it has not. That’s because many of Amway Japan’s new hires are returnee Japanese, or Korean and Chinese graduates settling in Japan from overseas.

For them, remote work was a double blow. “They usually live alone and need to find an apartment in Japan,” she explained. “But then, once they were ready for work, we had to tell them, ‘Please work from home.’”

That said, the transition to remote work was made easier because, even before the pandemic began, the company already had in place flexible workstyles, including some remote work.

“We were already allowing some employees to work two days per week from home, and we had initiatives such as dress-your-own-way,” Aihara added.

Her colleague, Davidson, who is also chair of the ACCJ’s Government Relations Committee, agrees. In the future, he said, companies will have to ensure that remote work feels personalized.

A version of the proverbial water cooler—the glue that holds companies and society together—will be required to garner comradeship among colleagues and students, whether that’s in person, online, or via hybrid solutions, Davidson concluded.

Julian Ryall 11/10/21 Julian Ryall 11/10/21

Lost Chance

Over the past 18 months, the vast majority of foreign and domestic companies that have received assistance from the Japanese government—to get through a period widely regarded as the most challenging for businesses in living memory—have been deeply appreciative of that support. Companies across the spectrum have struggled to keep their heads above water as the coronavirus pandemic has raged around the world, ravaging their operations and forcing too many to pull down the shutters. Yet there is one key area to which the policies of the Japanese authorities arguably have proved damaging.

How entry restrictions have impacted business and education

Yet there is one key area to which the policies of the Japanese authorities arguably have proved damaging.

Anyone in business knows that, by far, their most valuable assets are their people. But the government’s decision to impose stringent restrictions on anyone seeking to enter Japan—whether to return to a job, take up a new position, or begin a course of study—has added an extra layer of difficulty for many.

It was particularly galling for companies struggling with personnel issues to see those same restrictions relaxed for thousands of athletes, support staff, media, and VIPs arriving for the Tokyo 2020 Olympic and Paralympic Games.

According to the Japanese government, a mere 17,700 foreign nationals entered the country in September, a figure that includes anyone arriving for any reason. That total is down 99.2 percent from the same month in 2019, the year before the pandemic gripped the global community.

Road to Recovery?

With infection rates falling and the number of people fully vaccinated rising steeply, the authorities in Japan have begun to ease restrictions on people being out and about, while the Go To Travel scheme is expected to be relaunched to encourage domestic trips. The hope is that the gradual loosening of restrictions will soon be carried over to the international sector and borders will once again be open.

For many in business here, that cannot come soon enough. The failure to open to business travelers—with all the necessary precautions and caveats in place—has damaged companies’ operations, and it will take time for most to fully recover.

“The government restrictions on entry into the country have impacted my business in two ways,” said Kenneth Lebrun, a partner with the law firm Davis Polk & Wardwell LLP in Tokyo. “First, we have been unable to bring new employees to Japan, whether internal rotations from our US offices or external hires, because the government is not issuing new long-term work visas. This has impacted the ability of professional service firms to provide services to Japanese clients concerning their overseas operations.”

Mergers and acquisitions (M&As) as well as foreign direct investment (FDI) have also been affected.

“In addition, the blanket ban on foreign business travelers coming to Japan—and the quarantine requirements for Japanese residents traveling abroad, and then returning to Japan—has negatively affected the level of cross-border investment and M&A activity, which is a significant portion of our business,” said Lebrun, who also serves as co-chair of the American Chamber of Commerce in Japan (ACCJ) FDI and Global Economic Cooperation Committee.

Brain Drain

The entry restrictions have also caused headaches for staff and students at the Tokyo campus of Temple University, the Philadelphia-based institution which will be marking 40 years in Japan next year.

“At present, we have individuals in four key positions who are unable to make it into the country based on current restrictions,” said Matt Wilson, president and dean of the Japan campus.

“Not being able to have our chief academic officer, head of libraries and online learning, director of academic advising, and financial aid coordinator on site in Tokyo has been less than ideal,” Wilson told The ACCJ Journal. “Although they are working remotely from the United States and doing their best to actively engage and work with students, it is especially challenging as we have continued to offer in-person courses throughout the pandemic.”

The impact on the student body has been even more damaging, with the university forced to cancel four short-term study abroad programs in Japan, meaning that 500 students have missed out on opportunities to study here. There are concerns that the next intake of more than 150 students for short-term courses, which are due to start in January, may also be affected if Japan does not announce in November its willingness to reopen its borders to students.

Wilson explained that not only has the financial impact on the university been substantial, but they may lose students if the restrictions are not eased soon.

“If we have to cancel another short-term cohort, Temple and non-Temple students interested in the program may end up at another destination, such as at our Rome campus or one of our partner destinations in Europe or Asia,” Wilson said. “Or—more likely than not—they will simply abandon their plans to study abroad. I have spoken with many students who have been waiting and waiting, and now they are running out of time academically to study abroad as they prepare to graduate.”

In addition, more than 200 undergraduates are taking courses remotely, often at odd hours of the night, while waiting for the borders to reopen so that they can either resume their courses here or start their studies. “Our overseas students want to be in Japan, not attending classes remotely from their home countries,” Wilson emphasized. “Our concern is that the patience of our current students who are unable to enter Japan will run thin, and they will burn out on online education at strange hours in their home countries. They could decide to take a leave of absence, drop out, or pursue other opportunities.

“Because of the borders being closed, we have actually had some long-term, degree-seeking students who decided they were going to attend other institutions, take an indefinite leave of absence, or simply abandon their plans to study here in Japan.”

And it did not have to be this way, he pointed out. Many students who had applied to study in Japan switched to Temple facilities elsewhere, such as the school’s Rome campus.

Italy reported some of the worst coronavirus outbreaks in Europe, with close to 4.75 million cases to date and nearly 132,000 deaths. Japan, in comparison, has seen 1.72 million cases and just over 18,000 deaths, despite having more than double the population of Italy. Yet the Italian authorities chose to continue to host short-term study abroad courses throughout the pandemic. Similarly, while the United States kept borders open to foreign students—including those from Japan—the Japanese government refused to reciprocate.

“The 14-day quarantine imposed by Japan was much stricter than [the quarantine of] other nations and, personally, I believe this quarantine period would have eliminated any potential problems of new students bringing Covid-19 into Japan,” Wilson said. He added that another tactic would have been to require all inbound students to demonstrate that they had received both doses of an approved vaccine as a precondition for receiving a student visa.

Forced Change

Businesses and other organizations with operations in Japan have had little choice but to adapt to the vastly changed circumstances, said Katheryn Gronauer, founder of cross-cultural training and coaching company Thrive Tokyo.

“For business-to-business clients, what impacted my work wasn’t necessarily the government’s entry restrictions themselves, but the attitudes of the companies I have been working with in response to the entry restrictions,” she said. “On the one hand, I have been able to do more work with companies that value online training and have trained not only those currently stuck overseas who will be moving to Japan, but also employees who will continue to be based overseas and communicate with Japanese colleagues.

“On the other hand, some companies have chosen to wait until their employees move to Japan before starting the training process in person, so work with those companies has been significantly delayed.”

Gronauer, who is a vice-chair of the ACCJ Sales Development Committee, has worked through the challenges by moving much of her operations online and increasing her wellness-related coaching to meet demand from companies that have staff working from home. She is optimistic that the changes that have been forced on businesses—such as the growing acceptance of online training sessions—will hasten digital awareness.

Lesson Learned?

Both Lebrun and Wilson said that their staff adapted quickly and efficiently to new ways of working in the early weeks and months of the pandemic. Lebrun called the efforts of his company’s current Japan-based workforce heroic, but said they hope that, in government, lessons have been learned which might enable the business community to avoid such problems should a similar crisis occur again.

“The Japanese government has clearly prioritized certain categories of travelers, such as visitors connected to the Olympics,” said Lebrun. “We think that issuing new work visas for long-term stays should have a higher priority, as such employees are critical to Japan’s competitiveness and economy.

“The longer the restrictions continue, the greater the long-term impact will be,” he added. “I am encouraged to hear that the Japanese government is looking for a gradual relaxation of restrictions beginning in November, and I hope they focus on restarting the issuance of long-term work visas for professionals.”

Temple University’s Wilson echoed this, adding that while Japan “has no higher priority than the protection, safety, and health of its citizens,” there was a need to better balance the different priorities and needs of society, which include education.

“Through the promotion and advancement of education, a country has the opportunity to elevate its citizens, improve society, enhance communication, and better prepare to tackle present and future challenges on a domestic and global scale,” he said.

“In today’s interconnected world, the pandemic has made it clear that many of our biggest challenges are global in nature. International education is vital. It builds lasting relationships, facilitates greater cross-cultural understanding, prepares future leaders, fosters innovation, improves competitiveness, strengthens economies, and ensures sustainable development,” he continued.

“Academic exchanges and study abroad are two important keys to international education. And I worry that the loss of study abroad students due to closed borders will have an impact for decades to come. International education opportunities have been lost.”

And the same goes for business.

Mikiro Suga 11/10/21 Mikiro Suga 11/10/21

The Power to Innovate

The Japanese public is concerned that domestic pharmaceutical companies have yet to launch a single Covid-19 vaccine. Some may argue that this is due to a low rate of vaccine confidence, as is seen in the national tendency to avoid the human papillomavirus (HPV) vaccine, which has, in turn, caused a problem for vaccine development.

Covid-19, mRNA, and government and private sector roles in healthcare

Although there may, indeed, be such a factor, this would not be the primary reason—especially not for the delay in the domestic development of a messenger ribonucleic acid (mRNA) vaccine.

It should be noted that Moderna, Inc., the US pharmaceutical and biotechnology company that has produced an mRNA vaccine to combat Covid-19, had been advancing cancer therapeutic vaccine development since well before the pandemic.

In Japan, however, initiation of development was delayed compared with other advanced countries, and efforts to develop products based on mRNA technology have failed to make significant progress. This is not because the environment surrounding a prophylactic vaccine is unfavorable but, rather, it is due to the lack of an environment in which companies can take risks and consider new modalities.

The Role of Government

The coronavirus pandemic has made me reconsider what the government should do to promote the development of innovative healthcare products. Among the various ideas I have come up with, I would like to conclude—even though this may be obvious—that the primary responsibility of the government is to create an environment in which innovative products are highly valued and the private sector can invest in a broad range of research and development (R&D).

I see that Operation Warp Speed—the public–private partnership backed by the US government to support rapid development of a Covid-19 vaccine—has had a huge impact. This underlines the fact that the Japanese government needs to invest directly in companies that can provide clinical research and manufacturing facilities, especially during a public health emergency.

Yet, under normal circumstances, it is fair to say that the private sector in Japan can make more efficient investments than can the government. It is extremely challenging for the government to pinpoint and invest in a promising company and product. Further, a massive direct investment by the Japanese government is unlikely, given the current budgetary issues.

By evaluating the history of mRNA technology, we can see how difficult it is to identify rising stars. Thanks to its wide use around the world to prevent Covid-19 infections, mRNA technology is now well known. Before the pandemic, however, only a few of us predicted such a quick, practical application. A researcher from Hungary, according to media reports, even struggled to have the merits of her research results recognized, despite years of studies.

Private Sector Stands Ready

I believe that Japanese and US companies in the private sector are willing to take risks and engage in R&D if they recognize innovative product candidates and can appropriately evaluate them under the right conditions.

But how can Japan create such an environment? I will be committed to accomplishing this once I complete my current assignment in the United States, and policymaking becomes my direct responsibility in the government.

US corporations are involved in the two mRNA vaccines currently in use, a fact that highlights US power to pursue innovation. The collaboration between Pfizer Inc. and BioNTech SE in Germany brought us a Covid-19 vaccine, thanks to the US pharmaceutical company’s attitude of aggressively seeking cooperation among companies beyond the borders that might restrain activity under normal circumstances. It has made me realize, once again, the importance of open innovation.

During the rest of my stay in the United States, I look forward to gaining further insight into what drives the US power to innovate.

C Bryan Jones 9/15/21 C Bryan Jones 9/15/21

Do the Right Thing

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.

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

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.”

Takehiko Hara 6/28/21 Takehiko Hara 6/28/21

Covid-related Financial Relief

As relief from economic and financial distress caused by the coronavirus pandemic, you may have received subsidies or grants from the national and/or local government. You may be wondering if you must declare this assistance on your income tax return. Here is a summary of tax treatment and revenue recognition timing published by the National Tax Agency of Japan.

What tax liabilities come with coronavirus help?

Presented in partnership with Grant Thornton

Non-Taxable

Payments received from the support fund set up in response to the new coronavirus (article 7 of the temporary special provisions of employment insurance)

Funds received from the allowance set up to support leave taken in response to the new coronavirus (article 7 of the temporary special provisions of the employment insurance law)

Special Fixed Amount Cash Payout (tentative name) of ¥100,000 per household member (article 4, paragraph 1 of the special measures concerning taxation regarding the coronavirus)

Special Cash Payout for Families with Children in Year 2020 (article 4, paragraph 2 of the act regarding coronavirus-related special taxation measures)

Emergency handouts to help support students (Article 9, Paragraph 1, Item 15 of the Income Tax Act

Temporary Special Cash Payout for Low Income, Single-Parent Households (Article 9, Paragraph 1, Item 17 of the Income Tax Act)

Provider Relief Fund related to the coronavirus (Article 9, Paragraph 1, Item 17 of the Income Tax Act)

Discount coupons provided as Support for Users of Company-Sponsored Babysitters (Article 9, Paragraph 1, Item 17 of the Income Tax Act)

Subsidy under the Babysitter Support Project of Tokyo (Article 9, Paragraph 1, Item 17 of the Income Tax Act)

Taxable

Treated as business revenue. Based on:

Payment decisions

Covid-19 subsidies (for those who are self-employed and sole proprietors)
Tokyo Metropolis Infection Spread Prevention Support Fund

Payment decision or expense incurment regarding:

Employment adjustment subsidies
Elementary school closure support
Rent support
Sustaining subsidies for small businesses
Business continuity subsidies for agriculture, forestry, and fishing enterprises
Subsidies for medical institutions and pharmacies helping to prevent coronavirus spread

Expenses incurred in connection with:

Relief provided under the coronavirus-related supplementary aid to offset interest payments

Treated as Occasional Income

Occasional income (revenue–expenses, maximum ¥500,000 special deduction). Based on revenue recognition timing.

Covid-19 subsidies (for employment income earners)

Payment decision

Go To Travel Campaign

At end of travel or on use of coupon tickets

Go To Eat Campaign

On use of meal tickets

Go To Event Campaign

On use of event tickets

Treated as Miscellaneous Income

Based on revenue recognition timing.

Covid-19 subsidy (for miscellaneous income earners)

Payment decision

For more information, please contact Grant Thornton Japan at info@jp.gt.com or visit www.grantthornton.jp/en