(Re)Open for Business

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

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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.

“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.”

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

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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.”

Stronger Together

The ACCJ promotes US, Japan, and regional collaboration for economic security

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The US–Japan partnership is the cornerstone of peace, security, and stability in the Indo-Pacific region, and the alliance got a boost in May when US President Joe Biden, visiting Tokyo, launched the Indo–Pacific Economic Framework for Prosperity (IPEF) with a dozen initial partners.

The launch came soon after the introduction of the Economic Security Promotion Bill in the Diet in February and was a welcome development for the American Chamber of Commerce in Japan (ACCJ), which believes that Japan’s efforts to promote economic security represent an important opportunity to further strengthen the vital bilateral partnership.

IPEF is built on four key pillars:

• Connected economy
• Resilient economy
• Clean economy
• Fair economy

The ACCJ was honored to be present at the launch, with leaders in the room with Biden, Japanese Prime Minister Fumio Kishida, and Indian Prime Minister Narendra Modi, while officials from 10 other IPEF member nations joined online.

In announcing IPEF, the White House said in a fact sheet that “the United States and our partners in the region believe that much of our success in the coming decades will depend on how well governments harness innovation—especially the transformations afoot in the clean energy, digital, and technology sectors—while fortifying our economies against a range of threats, from fragile supply chains to corruption to tax havens.”

In addition to Japan and India, those partners are Australia, Brunei, Fiji, Indonesia, Malaysia, New Zealand, the Philippines, Singapore, South Korea, Thailand, and Vietnam. There is an open invitation to other nations to join.

Task Force on Economic Security

Along with entry restrictions, digital economy, healthcare, and sustainable society, economic security was one of the ACCJ’s five key advocacy pillars in 2022.

With the Diet taking up the Economic Security Promotion Bill and IPEF approaching launch, in February the chamber formed a Task Force on Economic Security, led by Chair Arthur Mitchell and Vice-Chairs Shuichi Izumo, David Richards, Eric Sedlak, Megumi Tsukamoto, and Toshiki Yano.

On April 12, in support of the efforts by the Government of Japan (GOJ) to promote Japan–US economic security in the context of further strengthening the US–Japan partnership, the task force announced six principles to maximize the contributions of foreign companies to further enhance Japan’s attractiveness as a place for business to invest, innovate, and grow. These are:

• Maintain commitment to economic growth and free market principles.
• Work with partner countries and ensure a level playing field.
• Define critical infrastructure, equipment, and services narrowly and clearly.
• Ensure transparent and fair processes.
• Leverage global best practices.
• Reinforce US–Japan economic collaboration.

The first notes that the promotion of competitive and efficiently regulated markets, as well as open trade and investment, are essential to harnessing the dynamism of the private sector to drive economic growth, prosperity, and overall welfare in Japan. Ensuring predictability, consistency, and alignment across various regulations, while avoiding overly prescriptive, inconsistent, or duplicative measures that risk impairing market dynamism, is key.

The second points out that allowing new market entrants fair access and guaranteeing fair treatment of all market participants is critical. Any measures to introduce differential treatment on the basis of promoting economic security should be narrow, targeted, and not undermine the ability of companies from allied and like-minded countries to continue making important contributions to Japan’s economic welfare and economic security.

From left: ACCJ Economic Security Task Force Vice-Chair Shuichi Izumo, then-Economic Security Minister Takayuki Kobayashi, ACCJ President Om Prakash, task force Chair Arthur Mitchell, and Vice-Chair Megumi Tsukamoto

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The third requires that certain infrastructure, equipment, and services designated as critical be narrowly and clearly scoped, and not cover wide categories of offerings in Japan. This will help ensure that the right resources are applied to protecting the parts of the infrastructure that are most essential, and not extended to non-critical systems.

The fourth asks the GOJ to ensure ample opportunity for broad stakeholder engagement at all stages of development, implementation, and enforcement of rules related to economic security. Ensuring that procedures such as notification or reporting requirements are clear, simple, reliable, and appropriately scoped—and are informed on an ongoing basis by private sector engagement and expertise—will be critical, the task force says, to avoiding negative unintended consequences and achieving their intended goals.

The fifth notes that the adoption of global best practices will promote efficiency and sound regulation, thereby helping Japan benefit from innovation and expertise developed across the globe. By proactively engaging with like-minded countries, such as the United States, the GOJ can develop and elevate best practices as internationally recognized standards, including with regard to ensuring data free flows with trust.

The final principle calls for bilateral mechanisms for cooperation, such as the US–Japan Economic Policy Consultative Committee, established in January 2022, as well as multilateral groupings such as the G7 and IPEF, to be leveraged to share best practices and promote alignment and interoperability in each country’s respective mechanisms for promoting economic security.

Task force Chair Mitchell, Vice-Chairs Izumo and Tsukamoto, and ACCJ President Om Prakash had the honor of discussing the principles directly with then-Economic Security Minister Takayuki Kobayashi on April 21.

With the passage on May 11 of the Act for the Promotion of Ensuring National Security through Integrated Implementation of Economic Measures by the Diet, IPEF underway, and Japan set to host the G7 Summit in Hiroshima in May, economic security will continue to play a key role in ACCJ advocacy throughout 2023.

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Read the full ACCJ Principles for Promotion of Economic Security.

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CO2 Punch!

On the road and in the air, companies are charting a more sustainable future for transportation and travel

Electric propulsion enables small, zero-emissions aircraft that have the potential to bring sustainable flight closer to home.

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Those old enough to remember road trips in the days before handheld video games, televisions mounted in headrests, and smartphones will recall the myriad ways in which we entertained ourselves as the miles went by. Some games involved punching each other when a (gas-powered) Volkswagen Beetle was spotted. Others required finding out-of-state license plates. And then there were those about numbers.

Today’s numbers from the road are a bit less fun. Globally, 14 percent of greenhouse gas emissions originate from the transportation sector—and that jumps to 27 percent in the United States. Cars aren’t the only culprits. The aviation industry is also concerned about its share of carbon dioxide (CO2) going into the atmosphere. On our way to a sustainable, carbon-neutral future, bypassing such pollution is a must.

The ACCJ Journal spoke with companies in the automotive and aerospace sectors to take the pulse of transportation and find out where future journeys might take us.

Hit the Road

Everywhere you turn, there’s a car. And most are still burning gasoline. But as climate change becomes a more urgent problem, the tide is turning. The compound annual growth rate of the electric vehicle (EV) market is now at 24.8 percent, and sales are projected to reach $980 billion dollars by 2028, up from $185 billion in 2021.

The move by California to ban the sale of new gas-powered cars and light trucks by 2035 is sure to accelerate that change, at least locally.

While it might feel as if electric cars are a rather new invention, they’ve been around for a long time. The first was Scottish inventor Robert Anderson’s motorized carriage around 1832, more than 50 years before German engineer Karl Benz rolled out the first gas-powered car.

So, what’s old is new again as EVs drive their way to the head of the pack and cut greenhouse gas emissions in the process.

Tesla may be the first brand that comes to mind when asked to name an EV, but there are many options on the road today, ranging from the very affordable Nissan Leaf to GMC’s powerful-but-expensive Hummer EV pickup. Chevy has even announced an all-electric Corvette. What would Florence Jean “Flo” Castleberry have to say about that? These are all changing the way we think about automobiles.

“Similar to the way the smartphone turbocharged the use of the internet, pushed it to become fully mobile, and instigated many new services—and industries—EVs are digitally transforming the transportation industry as a conduit for new mobility technologies that go beyond simply using an electric power source,” explained Karma Automotive LLC’s Chris Sachno, who will speak about electrifying mobility at an event hosted by the American Chamber of Commerce in Japan Information, Communications, and Technology Committee on October 6.

The senior vice president for e‑mobility, cloud services, and innovation said this is summarized by the CASE model of automotive technology megatrends. An acronym for connected services, autonomous vehicles, shared mobility, and electrification technologies, CASE is providing a superior user experience with groundbreaking technologies, Sachno explained. “There are economic benefits, as well, such as lower total cost of ownership and reduced emissions, which encourage economic activity within communities,” he added.

The Karma GS-6 54 Edition

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Karma has developed a commercial solution called Powered by Karma which enables existing internal combustion engine (ICE) vehicles to be converted to electric powertrains.

“This dramatically reduces the complexity of the drivetrain by 90 percent, from more than 1,000 components to fewer than 100,” Sachno said. “Installing an electric powertrain into an existing commercial vehicle also extends the life of the vehicle’s other parts, such as the body, chassis, brakes, and interior. This reduces the emissions created during the production of a new vehicle, or from scrapping or recycling the old vehicle.”

The Powered by Karma electrification solution, which utilizes the company’s OEM experience and automotive grade technology in providing top-quality engineering, design, electrification, and contract manufacturing, delivers a total cost of ownership reduction of up to 48 percent.

“We believe this provides a unique proposition for the commercial vehicle space by offering electrification solutions for existing vehicles, rather than relying on the replacement of existing ICE vehicles. Substitution will take considerable time, especially given the long lifetime of commercial vehicles,” Sachno said.

The Irvine, California-based EV startup also designs and manufactures its own vehicles. The Revero GT is powered by dual electric motors that offer extended range and embody Karma’s goal of offering leading technology with a luxury experience. And last year, Karma introduced the 536-horsepower GS-6, which Sachno said “looks amazing, is incredibly fun to drive, and is packed full of cutting-edge technology.”

While building such vehicles, Karma is dedicated to sustainability and, in 2021, joined The Climate Pledge, which was co-founded in 2019 by Global Optimism, and ACCJ corporate sustaining member Amazon. As a signatory, Karma has committed to become net-zero by 2040.

“This commitment encompasses our production facility, supply chain partners, and product lineup, which includes vehicles powered both by hybrid and pure electric powertrains and propulsion systems,” Sachno explained. “Karma continues to align with partners that share the same philosophy on protecting the environment and investing in research and development projects that have a positive effect on the planet. We look forward to collaborating with other Climate Pledge signatories on research and development of green technologies in the automotive space to advance and attain the goal of becoming net carbon neutral.”

Take Flight

The ground can only get you so far. Air travel is essential to life in the 21st century. In our tightly knit, global community, the movement of people and goods is key to a healthy economy, quality of life, and support of those in need following disasters and during humanitarian crises.

The coronavirus pandemic may have curtailed travel, but the statistics from 2019, the last year before the appearance of Covid-19, demonstrate the importance of air travel. In that year, according to the Geneva-based Air Transport Action Group, 4.5 billion people flew, $7 trillion in goods were exchanged, and the aviation industry supported 87.7 million jobs.

The environmental impact of aerospace will again increase, what with global travel now recovering as border restrictions and testing requirements are lifted. Japan, one of the only countries still limiting the number of tourists it allows in, announced on September 23 that it will fully reopen on October 11.

In 2019, the airline industry generated 900 million tons of carbon emissions, accounting for 12 percent of transportation-related emissions and 2.6 percent of all emissions globally.

Two companies with which The ACCJ Journal spoke explained the steps they are taking to reduce their carbon footprint.

Boeing, also an ACCJ corporate sustaining member, designs and manufactures some of the most widely used passenger planes. It put additional emphasis on sustainability in 2020 by naming a chief sustainability officer, reviewing the composition of its board-level subcommittee, and explicitly incorporating sustainable aerospace into the company’s values and strategic objectives.

There are four pillars to Boeing’s sustainability activities:

• People
• Products and services
• Operations
• Communities

“Today, all our stakeholders are increasingly concerned about sustainability and, specifically, the environmental impact of aerospace,” said Will Shaffer, president of Boeing Japan and an ACCJ governor. “We recognize climate change-driven risks and the need to decarbonize aerospace for sustained long-term growth, as well as stakeholder trust and preference.”

Everything for Zero

Boeing’s vision for future flight is embodied in the company’s Everything for Zero initiative, which comprises four strategies to get to zero-climate-impact aviation:

• Fleet renewal: replacing older models with more efficient ones
• Operational efficiency: leveraging data, digital tools, and modifications to reduce emissions
• Renewable energy transition: utilizing sustainable aviation fuel (SAF), renewable electricity, and green hydrogen
• Advanced technologies: intersecting fuel sources with advanced-technology flying machines

Also, part of the initiative is verified offsets—midterm, market-based solutions for matters which cannot yet be sufficiently addressed.

“Boeing has invested more than $60 billion over the past 10 years to improve sustainable product lifecycle, including innovative technologies such as the digital thread, carbon composite materials, and advanced high-bypass-ratio engine designs,” explained Shaffer. “Other aerodynamic improvements include a natural laminar flow that reduces drag to improve environmental efficiency.”

These efforts have led to planes which provide significant efficiency gains. Each generation reduces fuel use and emissions 15–25 percent, as demonstrated by the Boeing 777-9, which has 25-percent lower CO2 emissions compared with previous planes. The 777-9 is slated to enter service in 2025.

Airlines flying Boeing planes are taking advantage of these new technologies as they move along their routes to net-zero.

“Many customers have accelerated the retirement of older airplanes during the pandemic to optimize their fleets with the latest, most-efficient models,” Shaffer said. “Our latest Commercial Market Outlook forecasts that 49 percent of the 41,170 planes needed will be fleet replacements. Boeing will continue to invest in efficiencies that reduce fuel use and carbon emissions.”

Given that those airplanes will use current propulsion technology and be flying for the next 20–30 years, SAF will play a big part in realizing the aviation industry’s ambitious goal of zero carbon by 2050. Boeing and the world’s airlines recognize the importance of increasing SAF production and promoting its use. In fact, this year Boeing procured 2 million gallons of SAF for its own operations at its factories in the United States. And in Japan, it recently joined ACT for SKY, a voluntary organization of companies from the airline, engineering, and biofuel industries, among others, that works to commercialize, promote and expand the use of Japan-produced SAF.

Sustainable Flight Challenge

Fellow ACCJ corporate sustaining member Delta Air Lines, Inc. is one Boeing customer that is assisting with the development of new technologies and solutions.

In April, Delta’s most fuel-efficient plane at the time, the Boeing 737-900ER, made a flight powered by a fuel blend that included 400 gallons of SAF. It was part of the Sustainable Flight Challenge hosted by the SkyTeam Alliance, a group of 18 airlines that operates more than 10,000 daily flights over 1,062 destinations in 170-plus countries. The flight was part of Delta’s ongoing efforts to reduce its carbon footprint—a goal to which the airline is devoting significant resources.

Delta now has even more fuel-efficient planes in its updated fleet, including the Airbus A350-900 and the A330-900 neo.

Airbus A350-900

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“In 2022 alone, we are expecting to have reduced fuel consumption by more than 10 million gallons through operations and fleet modifications, including reducing aircraft weight, modifying landing approaches, and optimizing flight speed,” according to Victor Osumi, managing director and president of the Atlanta-headquartered airline’s operations in Japan.

“We’re also funding top minds to accelerate new innovations through our pension fund’s co-investment with the TPG Rise Climate Fund.” This fund opened in early 2021 and closed its inaugural fundraising in April of this year, having brought in $7.3 billion. The primary climate investing strategy of global alternative asset manager TPG, it focuses on five climate sub-sectors:

• Clean energy
• Enabling solutions
• Decarbonized transport
• Greening industrials
• Agriculture and natural solutions

To support the exchange of knowledge and generate investment opportunities, TPG formed the Rise Climate Coalition. Some 28 companies, including Boeing, are part of the alliance, and Delta announced its involvement in March. Delta Vice President of Sustainability Amelia DeLuca said in the announcement that “investing in TPG Rise Climate is the next step … as we work to decarbonize our operations while supporting promising solutions for the future.” All these efforts are important parts of how Delta is pushing the industry forward.

“As we reshape the fundamentals of aviation, we are dedicated intently across these areas to making immediate progress and to investing wisely in disruptive solutions,” explained Osumi, who is also an ACCJ governor. “A portfolio of short-, medium-, and long-term actions across the industry are essential to achieving net-zero aviation.”

Start Me Up

Electricity could be one solution. Might it serve as a power source for aircraft, as it now widely does for cars? Osumi said that, as of now, electric-powered aircraft appear to be an option for smaller, shorter-haul flights. “But as investments and innovations continue, that could evolve,” he added. “We believe that there are many paths that could help accelerate us to a more sustainable future.

Renewable electricity is part of Boeing’s Everything for Zero initiative. The company and its joint venture partner Wisk Aero LLC announced on September 20 a roadmap for the deployment of an electric vertical take-off and landing (eVTOL) solution for urban commuters.

“Boeing and Wisk are developing a two-passenger eVTOL air taxi, which has flown more than 1,500 successful test flights since 2017,” explained Shaffer. “Wisk’s sixth-generation eVTOL aircraft will represent a first-ever candidate for the certification of autonomous, all-electric, passenger-carrying aircraft in the United States.”

And in January, GE Aviation announced the selection of Boeing to support the flight tests of its hybrid electric propulsion system—a big step forward in exploring ways to reduce carbon emissions.

Boeing has been exploring and developing concepts for advanced aircraft that can meet specific energy-efficiency, environmental, and operational goals.

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Hydrogen High

Given the success of transitioning cars to electricity, it’s no surprise that the same ideas are being applied to aircraft. But what about the universe’s most abundant chemical substance? Could hydrogen one day be used to zip air passengers around the globe?

Osumi said that hydrogen is one of the options being explored by Delta for next-generation aviation. The company has partnered with Airbus to study hydrogen-powered aircraft as well as the ecosystem required at airports and beyond as a way to reduce aviation emissions exponentially.

Boeing is also innovating with hydrogen. Shaffer noted that they’ve been developing hydrogen and fuel cell applications on board aircraft for more than 15 years, carrying out six hydrogen technology demonstrations with crewed and uncrewed aircraft using hydrogen fuel cells and hydrogen combustion engines.

“We benefit from green hydrogen for any version of the future,” he said. “Green hydrogen is used to produce SAF and it has the potential to be used in future propulsion systems, when the technology is ready.”

A new Japan Research and Technology Center, focused on sustainability, that opened in August is just one of the investments Boeing is making to find sustainable solutions in Japan. As part of this, Boeing and its Japanese partners will pursue research into zero climate impact aviation under an agreement with the Ministry of Economy, Trade and Industry. In addition, it also announced a partnership with Mitsubishi Heavy Industries in July that will involve the study of hydrogen as well as other sustainable technologies.

New Heights

Osumi said he and Delta look forward to fostering collaboration with the industry, academia, and startups to accelerate the sustainable future of flight. “We’re optimistic about early-stage companies pushing the boundaries with futurist thinking on aircraft, propulsion, and more.

“And we’ve proven that the infrastructure exists to make sustainable aviation fuel, or SAF, accessible to every major airport on the East Coast by leveraging our partnership with Colonial Pipeline.” This company operates the largest pipeline system for refined oil products in the United States.

With the evolution of next-generation technologies, he expects to see new designs for planes and a completely transformed client perception. “Even now, on Delta planes, the customer experience is beginning to look more sustainable, with refreshed onboard product offerings such as artisan-made amenity kits, recycled bedding, reusable and biodegradable service ware, and premium canned wine.” Together, these products will reduce onboard single-use plastic consumption by approximately 4.9 million pounds per year—roughly the weight of 1,500 standard-sized cars—and significantly increase Delta’s support of minority- and women-run businesses.

Boeing aims for much the same.

“Our common goal is to have zero impact on our planet while maintaining and growing the societal benefits of air transportation,” concluded Shaffer. “To ensure the benefits of aerospace remain available for generations to come, we have work to do. We’ve made great strides since the beginning of the jet age, but our greatest accomplishments are yet to come. We believe the future of flight will take ‘everything for zero.’”

Individual Matters

Companies put diversity, equity, and inclusion at the center of return-to-office policies

Offices in Japan have seen a revolution over the past two years or so, with the pandemic having ushered in the need for remote work. Despite being largely unfamiliar with the practice, companies across the country stepped up to the challenge. But, as living with Covid-19 has become standard, many businesses have back-pedaled or adapted their approach as they navigate a return to the office. Others have come to see the new normal as an opportunity to reflect on where, when, and how employees work, to foster greater productivity, and expand their diversity, equity, and inclusion (DEI) efforts.

The ACCJ Journal spoke with leading companies in various industries to explore the lessons they have learned from the pandemic vis-à-vis work and what the future might hold for employees in Japan.

Starting from Behind

When Japanese enterprises were slow to respond to the government’s request, in February 2020, to allow 70 percent of employees to telework to help contain Covid-19, they came under fire. Critics said companies’ working cultures were outdated and being held back by a focus on presenteeism and physical administration tools such as hanko (seals).

A study by Tokyo-based brand consultancy Riskybrand Inc., however, shows that Japan was simply behind the curve. Only five percent of the country’s workforce was practicing telework pre-pandemic (compared with 32 percent in the United States and 27 percent in the United Kingdom), making remote work an abrupt switch for Japanese companies.

Still, many were able to implement the recommendation quickly. According to a Riskybrand survey of some 1,700 businesspeople in Japan, in May 2020 almost 40 percent were working remotely at least three days a week, of whom 20 percent were doing so daily. The larger the company, the more extensive the implementation, with 30 percent of large organizations (those with more than 3,000 staff) offering telework compared with 14 percent of small and medium-sized enterprises (SMEs), defined here as having fewer than 50 employees.

Managed talent services provider MESHD, a brand of Tokyo-based HCCR, was among those to respond swiftly. On the declaration of Covid-19 being a pandemic, the enterprise shifted from office-based work to a compulsory work-from-home model across its Japan and India offices.

“On the whole, the company responded positively to the changes, and we saw no visible dips in performance and limited impact on team dynamics,” said Chief Executive Officer Sean Travers. “We felt the team was working as effectively remotely as they [had been] from the office.”

“Covid-19 and the workstyles adopted to mitigate it have boosted understanding of, and a desire for, greater DEI in business.”

Following the government’s first state of emergency declaration, healthcare company Novartis Pharma also introduced remote work for all staff, unless it was absolutely necessary for them to go to the office or attend critical customer visits. To support employees affected by the closure of schools and childcare centers, Novartis provided additional childcare services until the end of 2020.

Coca-Cola (Japan) Co., Ltd., meanwhile, encouraged employees to work remotely in the early days of the pandemic, before closing its office for a time in March 2020 and asking all staff to telework. On reopening, the organization capped office attendance at 25 percent to ensure employees were allowed to access the office for critical work of specific needs.

From those early days, the uptake of remote work by companies with white-collar workers has continued to rise—and increasingly so with the emergence of the highly contagious omicron variant of the coronavirus. By fall 2021, 52 percent of enterprises in Japan were offering telework, according to statistics portal Statista.

Office Allure

With Japan now well into the third year of the pandemic, many companies are returning to the former status quo.

In a survey of 6,500 companies by Tokyo Shoko Research, Ltd., 27 percent of those offering telework during the height of the pandemic had stopped doing so as of June, up from 21 percent in October 2021. Only 29 percent of those surveyed now offer the option of remote work, down from 37 percent in October 2021. Large enterprises were more flexible (57 percent offered telework) compared with 24 percent of SMEs.

And it is not only companies that are trying to go back to the former normal. About one-quarter of those offering teleworking said only 10 percent of their staff were using the option as of June 2022.

The reasons for this are unclear, especially as 80 percent of employees surveyed by Teikoku Databank Ltd. in February 2022 said they wanted to continue teleworking, citing reasons such as saving time on commuting, having freedom to care for family members, or gaining greater work–life balance.

But the past two years have shown that teleworking can pose difficulties for some groups, including those without an adequate office setup or a conducive working environment at home, which may make returning to the office appealing.

From the early days of the pandemic, EY Japan recognized that not everyone would have the ideal environment for telework and supported staff financially by purchasing display monitors, microphones, and other equipment for their use at home.

The company’s DEI leader, Megumi Umeda, said the move acknowledged the potential of remote work to “enhance the workforce by welcoming working mothers, people with disabilities, and others who have limitations on their workplace and working hours.”

Patrick Jordan, vice president of human resources for Coca-Cola Japan & Korea at The Coca-Cola Company, also found that not all staff were equipped—physically, mentally, or emotionally—to work from home, noting that the company’s implementation of telework was “a great learning experience” regarding employee needs.

“While we wanted to ensure the safety of our employees from Covid, we also recognized we have to ensure their safety in many other ways, such as mental health,” said Jordan, adding that staff with medical concerns or who were uncomfortable working at home were allowed to return to the office, while undertaking thorough infection control measures.

For MESHD’s Travers, only a few months of telework brought to light issues for new hires. “New joiners were really struggling with their onboarding,” he said, noting that he “underestimated the impact of them not being in the same room as senior members” who could guide them in phone interactions, exchanges with fellow employees, day-to-day queries, and so on.

Learning Lessons

As the advantages and disadvantages of telework have become more apparent, so too have some successful approaches to future workstyles. Many companies have been finding out more about what employees want and giving them the choice to work in ways that suit them, all the while offering a hybrid work model.

Coca-Cola removed the office’s staff capacity rate of 25 percent in June and monitored attendance to see if there were any changes. When the number of staff working in the office didn’t rise, leaders had a sense of validation, believing that staff “didn’t want to return, didn’t see value in returning, or were not sure how to return,” explained Jordan.

However, the subsequent introduction of flex guidelines, to enable teams to choose how to work virtually, has resulted in an organic increase in attendance to 30 percent capacity. This shows that “clearer instructions are needed to help people settle into a more balanced hybrid way of working,” he added.

He also pointed out that survey data is critical for gaining better understanding of the desirable elements of hybrid working, as well as people’s concerns about working at the office or at home.

Flexibility is also key at Novartis. The company offers a framework called Choice with Responsibility, which was implemented in July 2020 in the belief that the pandemic would last longer than the world anticipated.

“This evolving framework asks employees and leaders to continue redesigning the way we work and make the best choices for high-impact hybrid work—not just for the individual but also for the team,” explained Chanel Leitch, country head of people and organization for Japan at Novartis.

Novartis has a new space for individual work which can be easily converted for small group discussions or medium-sized group short meetings.

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While the company continues to restrict the number of staff working at headquarters to 50 percent of each division at any one time, other limitations, such as the number of face-to-face attendees in meetings, have been relaxed to give staff autonomy over their workstyle. As a result, “each employee is now used to making sound decisions as to how they can best produce outcomes as an individual and a team in a hybrid working environment,” said Leitch, adding that the approach is “a key driver of engagement and continued retention.”

Similarly, EY Japan’s recent people survey also shows that continuing to offer telework options has resulted in improved engagement and inclusivity.

Since introducing this workstyle in 2018, the company launched its Flex and Remote Program in 2020 as a commitment to employees. EY Japan has promised to continue offering staff flexibility regarding where and when they work, regardless of the Covid-19 situation.

“Each person’s schedule is unique, considering the needs of the individual, the project they are working on, and the needs of the client and the team,” and therefore requires flexibility, Umeda said.

A new volunteer program was implemented to provide financial support to employees who wanted to move outside central Tokyo and work remotely from the suburbs. This supports employees desire to live outside Tokyo and contributes to the larger community.

Big Picture Thinking

Looking ahead, the future of work is likely to focus on how and why people work, as much as where and when they work. For many companies, the pandemic has shone a light on what work traditionally has been and has prompted or accelerated discussion on what work could be after some out-of-the-box thinking.

“As an organization, we need to think about the reasons we want our team to spend time together in the office,” said Travers. “It needs to go beyond just working at your desk.”

Indeed, with staff now able to conduct meetings online and do “deep work” and other individual-based tasks remotely, companies are keen for office-based time to focus on interactive activities, such as mind mapping and team building.

Coca-Cola has redesigned one floor of its headquarters as the Coke Collaboration Center, an experimental initiative to encourage teamwork via hot desks, lockers, meeting spots for different groups, and phone booths for individual or remote meeting participation.

EY Japan’s Umeda agrees that the role of the office has changed, noting that it should “become a collaboration space for colleagues, clients, and business partners, not a workspace.”

And, given that online employee social events “could never really be a substitute for an in-person, on-premises event,” office time should also be used for staff to spend time together and build relationships with each other, said Travers. For MESHD, a key reason for the hybrid work model is to forge a strong company culture and sense of community via employees’ in-office time.

Jordan agrees, noting that “the need for social interaction is very important.”

To encourage it, Coca-Cola has begun offering events at the office such as free lunches in the cafeteria, a summer festival that includes employees’ family members, and a bar serving alcoholic beverages.

“Each employee is now used to making sound decisions as to how they can best produce outcomes as an individual and a team in a hybrid working environment … the approach is a key driver of engagement and continued retention.”

Most important though, Covid-19 and the workstyles adopted to mitigate it have boosted understanding of, and a desire for, greater DEI in business.

EY Japan’s Umeda said people’s own challenges during the pandemic had made them “recognize the importance of inclusiveness, equity, and respect for others.”

The Novartis Choice with Responsibility framework has enabled the company to further embrace diverse needs and “look for ways to progress in building an inclusive environment,” said Leitch.

And at Coca-Cola, the hybrid work model is fostering inclusivity. “Returning to the office is all about inclusion,” said Jordan. “Each [employee] has developed personal habits which interact with their professional habits … so we need to be mindful of each individual’s needs and not treat everyone the same.”

MESHD’s Travers also has staff front of mind. The pandemic has enabled him to “come to the realization that it’s the employees who will dictate the future of work, irrespective of companies establishing regulations,” he said.

Indeed, the pandemic has increased employees’ willingness to change employers if they are not satisfied with their workstyle. In June, the JLL Workforce Preferences Barometer found three out of four of the 4,000 office workers surveyed would reconsider their involvement with their company if they wanted greater work flexibility.

Setting up suitable work models and fostering DEI has, therefore, never been so important for recruitment and retention.

Certainly, Travers notes, companies investing “time, money, and resources into their employees’ skills, emotional wellbeing, and job satisfaction will reap the rewards in the future.”

Digitizing Women’s Health

Startups and entrepreneurs leverage tech to improve care and equality for women in Japan

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In recent years, Japan has seen a boost in femtech. The portmanteau of female and technology refers to services using tech and products that help improve women’s health. Government support and media coverage have enabled femtech business offerings to move from niche to mainstream. But how soon might the fledgling industry take off as it has in the United States and Europe? The ACCJ Journal spoke with experts to explore prospects for femtech in Japan.

In 2021, the word femtech was nominated for publisher Jiyu Kokumin Sha Co., Ltd.’s Word of the Year, an annual award for language best representing life in Japan over the previous 12 months. The word eventually lost out to phrases related to US-based baseball superstar Shohei Ohtani, who made a splash in 2021. Yet the nomination alone is significant.

Awareness of femtech has remained low in Japan since the term was first coined in 2016 by Danish entrepreneur Ida Tin, founder of period- and fertility-tracking app Clue. But 2022 might see that change.

A February 2021 survey by Sompo Himawari Life Insurance Inc. shows that only 1.9 percent of its 1,000 working female respondents recognized the term. Once it was explained to them, however, more than half said they were “interested in” or “hopeful” about the concept.

Fast-forward to year-end, and 47.5 percent of respondents said they were aware of the word femtech. Though this is positive for the market, a Statista survey of 3,068 girls and women carried out in December 2021 and January 2022 also shows a long way to go, as just 15.3 percent of those polled report knowing the meaning.

Raising Awareness

Still, the increase is welcome for industry players. They say the market can grow only with an uptick in public awareness of, and willingness to talk about, women’s health—a topic that remains taboo in Japan. Progress over the past 12 months has been attributed to the launch of new products and services, exposure in media and social media, events, and other activities that support conversations about women’s health.

In March 2022, awareness-raising events Femtech Japan and Femcare Japan were held in Tokyo, while Japan Sports Week 2022, an industry event held in May, saw an area dedicated to femtech products and services supporting women in sports.

Promotion has already begun for Femtech Tokyo, an inaugural event to be held October 20–22 at Tokyo Big Sight, Japan’s largest international exhibition center. It will usher in what are expected to be annual trade fairs, designed to welcome the general public and businesses interested in “solving various problems in women’s life stages,” according to organizers.

“The term femtech is getting more recognition among women in Japan than ever before,” said Yoko Fukata, investment director at Sony Innovation Fund, which supports femtech startups in Japan. “Women want to know how their body works, such as its rhythms and hormones, and [want] to live better lives … exposure of the word and its different solutions will catch women’s attention.”

Indeed, consumers have been quick to notice femtech offerings entering the market. Almost 80 percent of some 10,000 working-age women in Japan said they knew of at least one femtech product or service, according to a 2021 Statista poll. Most familiar were sanitary shorts (48 percent), cloth sanitary pads (47.9 percent), ovulation test kits (40.9 percent), period tracker apps (40 percent), and sleep bras (38.3 percent).

These products are the result of several early stage femtech startups that emerged in 2019 and went on to release products and services in 2020 and 2021 in what can be considered “the first movement of the femtech industry,” according to Tomoko Minagawa, founder of industry association Femtech Community Japan and a leading investor in the femtech domain.

Improving Gender Equality

Now many players in Japan, including enterprise companies, are starting to launch new femtech businesses, Minagawa explained. Their motivation has been boosted by policies from a national government that sees the femtech industry as one method of addressing the country’s poor record in gender equality.

Japan ranks 120th among 156 nations in the World Economic Forum’s 2021 Global Gender Gap Report, far behind its G7 counterparts (which place between 11th and 63rd) as well as many of its Asian neighbors. The study, which tracks gender equality in four areas, evaluated Japan highly in health and education, but very low in economic participation and opportunity, as well as political empowerment.

Minagawa said the main reasons for Japan’s ranking are the lack of:

• Support for women in balancing their professional and private lives
• Consciousness of the very deep chasm between the experiences of men and women

She added that femtech can empower women by exposing the gap between the need for, and availability of, femtech products and services, and by leading discussions on femtech’s necessity and advantages for society.

Indeed, Minister of State for Gender Equality Seiko Noda, in her message on International Women’s Day 2022, listed “promoting femtech” as a government measure to improve Japan’s gender equality performance. Boosting women’s health by supporting the femtech industry is part of its efforts for “the realization of a society in which women live with dignity and pride,” one of the Japanese government’s four pillars in its Fifth Basic Plan for Gender Equality.

Government support includes the Subsidy Project for Demonstration Projects for Femtech and Similar Support Services that distributed a combined subsidy of ¥150 million to 20 femtech companies in 2021. According to the Ministry of Economy, Trade and Industry, which runs the program, the goal is to prevent events, such as the unwanted turnover of working women (triggered by life turning points, including pregnancy, childbirth, and menopause); to improve the well-being of individuals; and to increase the diversity of human resources at companies.

A healthy femtech industry, therefore, supports not only a societal need, but an economic one.

Business Cost

Loss of productivity, resulting from improperly treated health issues experienced by women working in Japan, is estimated at ¥2.7 trillion ($20 billion). According to Minagawa, the figure includes ¥323 billion ($2.4 billion) from menstruation, ¥672 billion ($5 billion) from fertility, and ¥1.75 trillion ($13 billion) from menopause.

With employees’ physical and mental health front of mind due to the acceleration of new work styles stemming from the pandemic, many companies are looking to the femtech industry for solutions to some of Japan’s long-running problems.

Kathy Matsui, general partner of MPower Partners, Japan’s first global venture capital fund focused on environmental, social, and corporate governance, told The ACCJ Journal that health and well-being has “become the priority” for more companies, particularly during the pandemic.

Startups have responded well. For example, lots of them have emerged that measure employee stress—now a legal requirement for companies in Japan. In the area of mental health support, companies are offering services, such as the outsourcing of care for children and elderly parents, she added.

Yuko Kidoguchi, operating officer and head of communications at life science company Bayer Holding Ltd. (Japan), which is active in women’s health policy advocacy, is also seeing more companies supporting the health and well-being of staff. Some are providing education on women’s health topics, including infertility treatment for women and men. Others are connecting female employees with gynecological care or providing financial support for women’s health treatments.

It’s all part of improving productivity and carrying out healthy management, Kidoguchi said.

Gradual Growth

With the needs and demand for femtech in Japan firmly established, what does the future hold? Japan’s femcare and femtech market grew from ¥57.5 billion ($428 million) in 2019 to almost ¥60 billion ($448 million) in 2020, and further development of the market is projected to generate an economic impact of about ¥2 trillion ($14.9 billion) in 2025, according to Statista.

In global terms, though, Japan’s market is tiny, with Asia accounting for only eight percent of the world’s femtech companies. Compare that with North America, which is home to 55 percent.

Sony Innovation Fund’s Fukata predicts that Japan’s femtech market will “grow gradually, not exponentially,” in part due to there being fewer female founders and investors than in the United States and some other countries.

Still, the industry consensus is that women femtech founders can make a big impact in both this industry and the wider healthtech domain.

“Women are often key decision-makers when it comes to household spending, and this is especially true in Japan,” according to Nuala Connolly, co-chair of the American Chamber of Commerce in Japan (ACCJ) Women in Business Committee and an ACCJ governor, as well as being head of talent, and the regional diversity, equity, and inclusion lead at AIG Japan Holdings. “Having women in leadership positions in startups and in femtech—and in every other sphere of business—means having leadership who represent this important consumer base and can innovate directly to optimally meet the needs of women. This, in turn, leads to the development of new products and markets, and boosts and elevates the overall economy.”

Fukata also cites the general population’s lack of deep understanding and the early stage of the industry as dampers on femtech growth, alluding to the fact that most femtech companies are focused on femcare, such as period underwear, rather than the technology aspect. She suggests this may be due to data that shows women are most concerned about period-related issues when it comes to women’s health. Alternatively, it might be due to the ease with which consumers can see, touch, and use such products.

“I think [femcare is] the starting point. Once they get accustomed to using those products and get to know more about the industry and the solutions there are in the world, there will be more people who want to focus on using femtech in different stages of their life,” she said.

Femtech Community Japan’s Minagawa agrees that most companies are providing non-tech products and services, but she is seeing some movement in the tech space, such as apps to track period cycles or to chat remotely with medical experts, as well as expansion into fertility treatments and early detection and support of menopause symptoms.

E-MCH

One area of women’s healthcare in Japan that is getting digital attention is the maternal and child-health (MCH) handbook, a printed booklet that can be obtained from a ward office or city hall which is used by doctors to track the results of pregnancy and post-birth health checks.

Lanex Co., Ltd. has developed an electronic version of the process—the E-MCH—an innovation for which the company won the From Japan and Beyond Award at last year’s ACCJ Healthcare x Digital competition.

“We analyzed the actual trend of existing digital healthcare solutions and found that most were not directly applicable to maternal and child healthcare, so we came up with the idea to digitalize the Japanese MCH,” explained software developer and project manager Boubacar Sow. “The E-MCH can play a significant role in tackling public health issues in both urban and rural areas of Japan. Our digital maternal and child healthcare system can collect and manage data from checkups during pregnancy, track the baby’s development, and enable women to communicate efficiently with their doctors and monitor their pregnancies.”

Sow said that femtech and supporting female entrepreneurship contributes to women’s empowerment and helps to achieve gender equality. “Specifically in Japan, femtech will boost the role of women in bettering healthcare and related activities. Femtech can be seen as one of the pillars of achieving gender equality in healthcare and bringing equal opportunities to women.”

The Road Ahead

There remains a long way to go, however. A full-fledged femtech market includes all kinds of hardware and software, including:

• Medical devices
• Wearables
• Telehealth and digital platforms
• Therapeutic drugs
• Vitamins and supplements

These items support everything from menstrual and reproductive health to pelvic, uterine, and sexual health to wellness and longevity.

Reaching that stage might not be smooth sailing, though, according to Dr. Amina Sugimoto, CEO of Fermata Inc., a platform and ecosystem designed to help domestic and overseas femtech companies enter the Japanese market.

Pointing to a lack of understanding, she explained: “People think there is nothing in the market and try to come up with their own services. But the problem is the market is not there.” She added that it is unlikely the 90 percent of women in Japan who choose sanitary pads during their period would be interested in a device to predict fertility if it requires insertion.

Consumers are also largely unaware of, or uncomfortable discussing, what their personal health issues might be, Sugimoto added. But she aims to change that with Fermata’s mission “to turn taboos into triumphs” by facilitating more openness on women’s health.

“If people could talk about [women’s issues] more freely, the market would slowly start to grow—companies and startups would get ideas to come up with new products,” she believes.

The public would also benefit from understanding women’s bodies better, said Kidoguchi, a vice-chair of the ACCJ Healthcare Committee and the brainchild behind Bayer’s gynecological health education program in Japan. Inspired by the country’s limited female health literacy and access to gynecological care compared with what is available in other nations, the program has been delivered to more than 50,000 students in 200 high schools, from Hokkaido to Okinawa, over the past seven years. Such schemes that educate both men and women can act as seeds for the future growth of Japan’s femtech market by creating more individuals who are open about, and understand, women’s health issues.

Minagawa said the current lack of understanding and cultural non-acceptance by investors, mainly dominated by men, is the structural impediment for investment in the femtech domain in Japan.

This was one driver for her to establish Femtech Community Japan, which connects investors, startups, enterprises, research institutions, government, and media for networking and discussion.

With the growth of such forums that support the development of an open conversation around femtech in Japan, it surely won’t be long before the term graduates from its current status as a year-end listing on language trends to being a topic of everyday conversation.

Sushi Singularity

3D printers offer a vision and taste of future food—but will consumers embrace it?

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Is this a glimpse of the future of food? Japanese scientists and companies are developing 3D food printers to produce sushi, wagyu, and a host of other foods. They say the technology holds great promise for personalizing food to meet nutritional needs, reducing food waste, and even providing something to eat during extended space travel. “I think there’s huge potential. Food itself will probably change,” said Yamagata University’s Hidemitsu Furukawa.

The soft and wet materials-engineering scientist is developing a 3D food printer dubbed the Laser Cook that heats and hardens liquid food poured into a mold. He envisions the equipment being used in convenience stores within the next 10 years to prepare custom-designed food for consumers. He is even in initial discussions with Seven & i Holdings Co. Ltd., the owner of the 7-Eleven chain, about doing just that.

As Japan’s population ages, the technology could also prove useful for feeding elderly people with specific nutritional needs or providing softer food for those who have trouble chewing and swallowing, Furukawa and other developers have noted.

The sushi and wagyu projects are still works in progress, and there are obvious questions about how receptive consumers will be to food that may seem industrial or artificially engineered. But already, 3D food printers are being used at universities, restaurants, and food companies in Japan and around the world. Developers predict they will become fixtures in household kitchens within a generation.

“We’re trying to create a competitive food culture for the 21st century,” observed Ryosuke Sakaki, who founded Open Meals, a venture backed by ad agency Dentsu Inc., which is pursuing seven projects that involve 3D food printers, including some that essentially squeeze sushi and wagashi (Japanese confections) out a nozzle.

Sakaki remarked that getting the taste and texture right have been huge challenges, and he has enlisted the help of sushi chefs in this regard. But he acknowledges that the results will never measure up to the sushi we are used to. “We’ll never be able to match that,” he admitted, adding that the fish or seafood portion of printed sushi may be crispier and may be placed on top of regular pats of rice shaped by a machine. “We’ll need to think of it as a new kind of sushi experience,” he concluded.

Still, Sakaki has high hopes. By year-end, Open Meals plans to hold an event at which printed sushi and wagashi can be eaten and the technology demonstrated. If it is well received, he hopes to open a restaurant serving the food in the not-too-distant future. The name? Sushi Singularity.

Mini Food Factories

These Japanese ventures aim to join a number of startups from Europe, the United States, and China that have taken the lead in this nascent business.

Food printers, which emerged 10–12 years ago, work in a variety of ways. The dispensing function operates like that of 3D printers with which we may be most accustomed. But, whereas the latter create plastic shapes, the function here causes capsules of paste-like or liquid food to be squeezed through a nozzle to produce a three-dimensional shape that can be eaten or baked. The method lends itself to creating cookies, cakes, chocolates, and other confection. Some dessert shops have already started to display them.

But many machines can also handle mashed vegetables and even minced meat. The Foodini, a 3D food printer designed by Barcelona-based Natural Machines, comes equipped with capsules that users can fill with almost any sort of food, as long as it’s relatively soft.

The technology is not as foreign or far-out as it might sound, Chief Executive Officer Emilio Sepulveda told The ACCJ Journal. And it is already widely used in food processing plants. “These printers use the same processes and same technology that major food brands use to create pasta or meat patties,” he explained. “It’s basically 3D printing, but no one calls it that.”

Tackling Food Waste

The Laser Cook printer being developed by Yamagata University’s Furukawa operates differently. It combines water with dehydrated, powdered food, which is poured into a vessel and then zapped with a laser to cook or harden it.

In this way, 3D printers can help reduce food waste, Furukawa and others have said. Instead of discarding food that isn’t sold at the supermarket—or the “ugly” vegetables that don’t even get to the store, because they’re not the ideal shape—it can be turned into powder and saved for future use. “If we think differently … and convert food into powder, it becomes an on-demand item and there’s little waste,” Furukawa explained.

There’s also potential here for use in space, he added. Transporting lightweight powder is easy. It doesn’t require refrigeration and it can last several years. “So, when we go to Mars—a journey that could take two or three years—this kind of food could be used. You can make it just by adding water.”

The technology is something the Japanese government is getting behind as well. One goal of the Cabinet Office’s Moonshot Program is to reduce food waste, and some developers, including Furukawa, are receiving government research funding.

Personalized Nutrition

Another benefit, scientists and developers say, is that ingredients can be customized to meet individual nutritional needs. That might include vitamins and other supplements.

It could be particularly helpful, in Japan and other developed nations, for the growing ranks of elderly people, who may not get enough nutrition as their stomachs and appetites shrink. Producing softer food can also help elderly people who have dysphagia, or difficulty swallowing, a common problem for those with Parkinson’s disease. “With this technology, you can make dense nutrition,” Furukawa explained.

Athletes and soldiers could also benefit from specially designed food. Perhaps during disasters, the technology could also be used to feed people who lack provisions, developers say.

“The opportunity and potential to use this in hospital settings, in homes for the elderly, where consumers need very specific nutrients, and where nutrients must be provided at specific times—that’s a huge market,” said Jennifer Perez, a venture capitalist at the $20 million Future Food Fund, established by online food delivery service Oisix ra daichi Inc., which invests in food-technology ventures.

So far, the fund hasn’t invested in any 3D food printing companies, but Perez sees great potential. “This technology is a dream of the future, but it’s starting to happen right now,” she added.

Synthetic Wagyu

Japan is on the cutting edge in one particular area: developing “structured” synthetic meat that contains ripples of fat, blood, and sinew, just like the steaks we might buy at the supermarket.

While food printers have been able to process fresh and synthetic ground meat for some time, Osaka University bioengineer Michiya Matsusaki is spearheading research and working with Shimadzu Corporation to develop chunks of synthetic, or cultured, wagyu, Japan’s famous marbled beef.

The complicated process involves injecting stem cells from fresh meat into a gelatinous bath. The cells are then exposed to stimulating chemicals to differentiate them. Some become tiny muscle fibers just 500-microns wide, while others become tissue, such as fat and blood vessels.

The muscle fibers are then assembled to create tiny pieces of meat—72 strands, for example, create a tidbit just 5 millimeters x 5 millimeters x 1.5 centimeters. Matsusaki has not been able to do a taste test yet, because he hasn’t received clearance from the university’s ethics committee. But his team aims to complete the project for demonstration at World Expo 2025 in Osaka, where they hope to offer visitors tiny edible pieces of such printed wagyu.

Matsusaki said he’s received inquiries about his research from a number of companies around the world. “We’re getting lots of interest from Singapore, Dubai, and the United States,” he shared. “Companies that make synthetic meat don’t have the technique to make this shape.”

Key reasons for the project include concern about the environment and the possibility that the world will face a shortage of meat in the future, making it difficult to feed the growing population, Matsusaki explained. Increasing the number of cattle—and expanding grazing land to meet their needs—would lead to the destruction of more forests. And cows produce a lot of methane, a potent greenhouse gas.

The equipment being developed with Shimadzu would allow consumers to manipulate the percentage of fat they want in their meat. “If you had one of these machines in your home, you could decide on the fat content and shape you wanted,” he observed. “Press a button and it would be done the next day. That’s the kind of future we’re trying to create.”

Very Analog

But how does such food taste, and will consumers go for it? Japanese are quite open-minded about robots and other applications of technology, but when it comes to food they have very high standards for quality, texture, taste, and freshness.

Tetsuya Nojiri, CEO of Oishii kenko Inc.—creator of the app that goes by the same name and who is not involved in 3D printer development—said he can see some positives in the technology, particularly for addressing nutritional needs of the elderly. However, he believes it won’t appeal to most Japanese consumers, and that it would take many years to be accepted. “Most people want food that is natural, safe, and tasty,” he stated. “That’s very analog, not digital.”

Aiming to contribute to health and healthcare issues through dietary management is the Oishii kenko app, which won the Empowering Patients Award and People’s Choice Award at last year’s American Chamber of Commerce in Japan Healthcare x Digital competition. The app’s name means “tasty health” and it provides recommendations for nutritionally balanced, delicious meals using artificial intelligence and Big Data.

Nojiri suggested that, if the equipment to make 3D printed foods is fun and easy to use, he can see some consumers using it to make niche products such as chocolates and other confections. He can also see it being put to work in larger-scale settings, such as hospitals and universities. “These printers have potential, but it’s hard to imagine that they would be used to prepare food for the ordinary person,” he added.

Perez of the Future Food Fund feels that more time and research is needed to gauge consumer receptivity. “Consumers are curious but, ultimately, it comes down to: Is the product going to taste good?”

Taste and texture are indeed very difficult, if not impossible, to replicate on a food printer. Chocolate and baked goods are easier on that score, but synthetic meat—or hybrid meat mixed with soy or other plant products—has generally proved disappointing. “It doesn’t really taste like meat yet, so that’s a problem,” Matsusaki remarked.

Price, Speed, Scalability

The 3D printers currently being used have built-in limitations on what they can produce, Sakaki explained. “Food made with certain ingredients will harden and taste good, but [made with] others will not. There are also limitations on how you can design the food to come out. And it takes quite a while to make each piece, so that raises the price.”

Yes, as with any new technology, price is an issue. Natural Machines’ Foodini sells for about ¥800,000 at current exchange rates ($6,000), although the company also offers less expensive subscription plans for set periods of time. The Laser Cook being developed by Furukawa costs roughly ¥1 million (about $7,500). Other machines being developed in Japan, such as the wagyu and sushi printers, do not yet have price tags.

Speed and scalability are other problems, according to Perez. Printing a simple round cake can take seven to 15 minutes, and making just one more complex structure can take 45 minutes to an hour. “When you compare that to what you can do on the standard factory line, it doesn’t make a lot of sense,” she said. “When you look at the logistics, it doesn’t quite work yet.”

On the flip side, once you have a successful product, it’s highly reproducible, Perez pointed out. And that data could be shared with other machines to create the same product on another continent—or in outer space.

Suraj Gujar, principal analyst for disruptive technologies at Meticulous Research in Pune, India, sees 3D printers as remaining a relatively niche product used by bakeries, caterers, hotels, and restaurants—but not the wider public.

The equipment is far too expensive, hefty, and slow to catch on among ordinary consumers, at least for the foreseeable future, he offered. Also, most printers don’t have a cooking feature, so that involves another step, adding more time and work. And some can be tricky to operate, he added.

“The consumer has to be tech savvy, because if you want to print food, it means you have to give a command to a machine. And if you want a customized design, then you have to program that into the computer,” Gujar explained. “If it’s for a cake, I would be happy to have it. But if it’s for daily food, I’m skeptical.”

To counter negative impressions that printers generate “plastic food,” Natural Machines’ Sepulveda said that, most often, fresh ingredients are used with the Foodini, several dozen of which are already being put to work in Japan at food companies, universities, hospitals and restaurants.

To win the trust of consumers in Japan, it’s important to work with established food brands, Sepulveda noted. Natural Machines is working with Hankyu and Dentsu. “Japanese corporates are super open and looking for partnerships that can bring them this extra value that they have not been able to develop on their own,” he added.

And demand in the region is on the rise: Asia has overtaken North America as the Foodini’s top market.

Despite the obstacles, developers say growing consumer awareness and concern about environmental, health, and sustainability issues are making them more receptive to this new technology. “Sustainability is getting more attention,” said Open Meals’s Sakaki, “including concerns about fish catch and resource use. 3D printing is one way to address that, so I think people will be receptive.”

State of Mind

How artificial intelligence is helping identify mental health concerns for better treatment

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For millions of people around the world who were already struggling with mental health issues, the past two-and-a-half years of the coronavirus pandemic have been a further trial. Isolation, a sudden shortage of opportunities to interact with friends or family in person, additional stresses in the workplace or the home, new financial worries, and difficulty in accessing appropriate mental healthcare have taken their toll, experts in the field told The ACCJ Journal.

However, in the battle against mental health complaints, this time of adversity has also served to fast-track development and adoption of a new tool: artificial intelligence (AI). While the technology may be relatively new to the sector, the potential is huge, according to companies that are applying it to assist physicians with diagnosis and treatment.

A Tool for Our Time

AI has come a very long way since the first chatbots appeared back in the 1990s, and early mental health monitoring apps became available, explained Vickie Skorji, Lifeline services director at the Tokyo-based TELL Lifeline and counseling service. And it is urgently needed, she added.

“When we have something such as Covid-19 come along on a global scale, there is inevitably a sharp increase in anxiety, stress, and depression. The mental healthcare systems that were in place were simply flooded,” she said.

“A lot of companies were already playing around in the area of AI and mental healthcare, but the pandemic has really pushed these opportunities to the forefront,” she explained. “If, for example, a physician is not able to meet a client in person, there are now ways to get around that, and there has been an explosion in those options.”

Not every purported tool is effective, she cautions, and there are going to be questions around client confidentiality and keeping data current. The clinician must also become sufficiently adept at interpreting a client’s genuine state of mind, which might be different from the feelings that are communicated through the technology. On the whole, however, Skorji sees AI as an extremely useful weapon in the clinician’s armory.

Voice Matters

One of the most innovative solutions has recently been launched by Kintsugi, a collaboration between Grace Chang and Rima Seiilova-Olson, engineers who met at the 2019 OpenAI Hackathon in San Francisco. In just a couple of years, the company has gone from a startup to being named in the Forbes list of North America’s top 50 AI companies.

Kintsugi has developed an application programming interface called Kintsugi Voice which can be integrated into clinical call centers, telehealth platforms, and remote patient monitoring applications. It enables a provider who is not a mental health expert to support someone whose speech indicates they may require assistance.

Instead of using natural language processing (NLP), Kintsugi’s unique machine learning models focus on signals from voice biomarkers that are indicative of symptoms of clinical depression and anxiety. Producing speech involves the coordination of various cognitive and motor processes, which can be used to provide insight into the state of a person’s physical and mental health.

In the view of Prentice Tom, chief medical officer of the Berkeley, California-based company, passive signals derived from voice biomarkers in clinical calls can greatly improve speed to triage, enhance behavioral health metadata capture, and benefit the patient.

“Real-time data that augments the clinician’s ability to improve care—and that can be easily embedded in current clinical workflows, such as Kintsugi’s voice biomarker tool—is a critical component necessary for us to move to a more efficient, quality-driven, value-based healthcare system,” he explained. The technology is already in use in the United States, and Japan is on the waiting list for expansion in the near future.

Chang, the company’s chief executive officer, is confident that they are just scratching the surface of what is possible with AI, with one estimate suggesting that AI could help reduce the time between the appearance of initial symptoms and intervention by as much as 10 years.

“Our work in voice biomarkers to detect signs of clinical depression and anxiety from short clips of speech is just the beginning,” she said. “Our team is looking forward to a future where we can look back and say, ‘Wow, I can’t believe there was a time when we couldn’t get people access to mental healthcare and deliver help to people at their time of need.’

“My dream and goal as the CEO of Kintsugi is that we can create opportunities for everyone to access mental health in an equitable way that is both timely and transformational,” she added.

The Power of Data

Maria Liakata, a professor of NLP at Queen Mary University of London, is also the joint lead on NLP and data science for mental health groups at the UK’s Alan Turing Institute. She has studied the use and effectiveness of AI in communicating with the public during a pandemic.

Liakata’s own work has focused on developing NLP methods to automatically capture changes in individuals’ mood and cognition over time, as manifested through their language and other digital content. This information can be used to construct new monitoring tools for clinicians and individuals.

But, she said, a couple of other projects have caught her eye.

One is Ieso Digital Health, a UK-based company that offers online cognitive behavioral therapy for the National Health Service, utilizing NLP technology to analyze sessions and provide data to physicians. And last October, US-based mental and behavioral health company SonderMind Inc. acquired Qntfy, which builds tools powered by AI and machine learning that analyze online behavioral data to help people find the most appropriate mental health treatment.

“There has definitely been a boom over the past few years in terms of the development of AI solutions for mental health,” Liakata said. “The availability of large fora in the past 10 years where individuals share experiences about mental health-related issues has certainly helped in this respect. The first work that came to my attention and sparked my interest in this domain was a paper in 2011 by the Cincinnati Children’s Hospital. It was about constructing a corpus of suicide notes for use in training machine learning models.”

Yet, as is the case during the early stages of any technology being implemented, there are issues that need to be ironed out.

“One big hurdle is the availability of good quality data, especially data over time,” she continued. “Such datasets are hard to collect and annotate. Another hurdle is the personalization of AI models and transferring across domains. What works well, let’s say, for identifying a low mood for one person may not work as well for other people. And there is also the challenge of moving across different domains and platforms, such as Reddit versus Twitter.

“I think there is also some reluctance on the part of clinicians to adopt solutions, and this is why it is very important that AI solutions are created in consultation with clinical experts.”

Over the longer term, however, the outlook is positive, and Liakata anticipates the deployment of AI-based tools to help with the early diagnosis of a range of mental health and neurological conditions, including depression, schizophrenia, and dementia. These tools would also be able to justify and provide evidence for their diagnosis, she suggested.

To Assist, Not Replace

Elsewhere, AI tools will be deployed to monitor the progression of mental health conditions, summarize these with appropriate evidence, and suggest interventions likely to be of benefit. These would be used by both individuals, to self-manage their conditions, and clinicians.

Despite all the potential positives, Skorji emphasizes that AI needs to be applied in conjunction with in-person treatment for mental health complaints, rather than as a replacement.

“The biggest problem we are seeing around the world at the moment is loneliness,” she said. “Technology is useful, but it does not give people access to people. How we deal with problems, what the causes of our stress are, how can we have healthy relationships with other people—we are not going to get that from AI. We need to be there as well.”

The Yen’s Fall from Grace

Who will stop it? When and why?

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The Japanese yen is on track toward a parabolic move, with global and Japanese macro players set to become increasingly aggressive in betting on an overshoot toward ¥150–160 to the US dollar.

Why? Because the same economic forces that pulled the yen out of the remarkably stable range of ¥105–110 to the dollar, in which it was boxed for the past six years, are poised to get even stronger in the coming months. No mystery, no magic, no speculative excess. We got to ¥128–131 because of a decoupling of monetary policy. With Bank of Japan (BOJ) Governor Haruhiko Kuroda digging in his heels and the US Federal Reserve now floating the idea of accelerating the pace of rate hikes to possibly 75 basis points a pop, it very much looks like the yen’s slide is just beginning.

Policymakers: United America versus Disjointed Japan

The United States is mobilizing an all-out attack on inflation—raising rates and cutting the central bank balance sheet while, importantly, policymakers, politicians, and opinion leaders are busy signaling that more aggressive monetary tightening will have to come. Nobody knows how many rates hikes are necessary, or when the US monetary brakes will start to cut into demand, but everyone agrees that a strong dollar is good for the United States’ fight against inflation. After all, it reduces import prices.

Japan, in contrast, has a central bank that goes out of its way to keep on buying 10-year government bonds, determined to assure markets—through both action and talk—that nothing has changed, that deflation is still viewed as a bigger threat than inflation.

More importantly for investors looking for clues about the yen’s direction, neither the BOJ nor the Ministry of Economy, Trade and Industry, the Ministry of Finance (MOF), politicians, nor pundits agree on whether a weak yen is good or bad for Japan. Yes, everyone does agree that imported inflation is bad inflation, but many hope that a cost-push shock is just what is needed to break Japan’s deeply entrenched deflationary mindset and expectations. Remember: not so long ago, Nobel Prize winner and chief US economic commentator Paul Krugman, along with others, argued that an inflation target of seven to eight percent may be necessary to snap Japan out of deflation.

“Neither the BOJ nor the Ministry of Economy, Trade and Industry, the Ministry of Finance (MOF), politicians, nor pundits agree on whether a weak yen is good or bad for Japan.”

Personally, my work and investments away from macro theory, hands-on deep-dives into Japanese companies dealing with corporate chief executive officers and institutional chief information officers, and direct policymaking engagement with Japan’s industrial structure and demographic realities all have me convinced that inflation/deflation in Japan is not much of a monetary phenomenon, but primarily a regulatory and structural one.

Specifically, capital markets here are more or less explicitly designed to function far differently from the capital return-maximizing axioms underlying most of monetary policy theory in general, and the transition channels from central bank action to private capital allocation in particular. In my view, Japan Inc. works more in spite of monetary policy rather than because of it. Japan’s elite is far too pragmatic and realist than to entrust allocation of capital to some textbook theoretical models or economics dogma (particularly when they come from Chicago … just kidding).

But what may be true for the economy is not true for the currency. The yen is very much a slave to the masters at the BOJ and MOF. (Arguably, the yen is the only major capital market in Japan where, after decades of deregulation and liberalization, capital does flow relatively unencumbered. For example, it follows neoliberal market principals much more so than is the case in the bond, credit, or even equity markets. This has led to a relative loss of control, with both institutional and retail investors now much less influenced by “administrative guidance” than they were in previous decades.

An Asymmetric Risk

So, right now, if your job is to make money investing in currency markets, the contrast between a united US policy elite beginning to act—and poised to do so more aggressively (on the monetary front)—and a disjointed Japan elite only barely beginning to build consensus on a potentially necessary change, you’d be a bold trader to go against the rising US rates; and stable Japan rates equal weaker yen trade.

That’s why I think an overshoot toward ¥150–160 to the dollar is more probable than a return to the ¥105–110 range seen until a couple of quarters ago. Speculating against the yen has an asymmetric risk–reward profile now.

How long will this last? What forces could break the current dynamics? Yes, eventually Japan will follow the US lead. The BOJ always does. The one time it did not—and insisted on a decoupling from US policy—Japan got its bubble economy. Nobody, least of all Prime Minister Fumio Kishida, wants to go through that again.

Photo: gintsivuskansphoto/123RF.COM

Can Kishida Change Kuroda’s Mind?

Probably not. At least not until it becomes clear that Kishida is here to last. There is an upper house election in July. After that, yes. Kishida gets to appoint Kuroda’s successor early next year. If, by then, inflation becomes a political problem, Kishida may be well advised to pick an inflation hawk. That, however, is at least six to eight months away—an eternity for currency markets.

Again, the contrast between the United States and Japan is striking. For President Joe Biden, inflation is an immediate danger—a key reason for his continuing drop in popularity. Against this, Kishida’s popularity keeps climbing, and inflation running at barely one percent is far from becoming a political make-or-break issue. However, if, against the odds, the prime minister were to pick an open fight with the BOJ before the election, he is more likely to add to a yen-depreciation speculative frenzy.

Why?

First, Kuroda is both intellectually proud and politically pragmatic. He won’t risk his historic legacy of being the governor who beat deflation without seeing firm evidence of genuine demand-pull inflation. He does not want to go down in history as yet another BOJ governor who tightened too early. And, politically, he understands more than anyone the risk that rising interest rates pose to Japan’s fiscal flexibility. With public debt at nearly 2.5-times national income, public finances will be the biggest loser if and when interest rates go up too early (i.e., before domestic demand has entered a self-sustaining upcycle).

Second, markets want to see action and facts, not talk and debate. Show me the money. And with most forecasters now predicting an outright economic contraction during the latest quarter, it’ll get even harder to deny that Japan is indeed at the opposite end of the business cycle from the United States. Again, it is difficult to argue against the yen depreciation momentum accelerating in the immediate future.

When the Facts Change

But what about longer term? What structural dynamics might unfold that could trigger a reversal of fortune for the yen? Here are five primary moves that can or will force a change of direction from yen depreciation towards appreciation:

• The United States or China accuses Japan of starting a currency war
• The United States falls into recession
• Global investors, corporates, or tourists start buying Japan assets
• Japan’s investors and corporates start buying yen assets
• The BOJ starts following the Fed

From Fears of a Yen-led Currency War

Right now, the risk of Japan being accused of starting a currency war is low. If I am right and the US elite is indeed united in fighting inflation, it will continue to welcome a strong dollar and weak yen.

But what if China were to complain about excessive yen weakness? They did so the last time the yen weakened past ¥135–140 to the dollar in mid-1998. At that time, China successfully persuaded the Clinton administration to publicly abandon the strong-dollar policy that the United States was running at the time.

But times have changed. In 2022, Chinese complaints are unlikely to get much of a hearing in Washington. In 1998, the United States was focused on getting China to join the World Trade Organization and was happy to try and be helpful. Today, the United States regards China as its principal competitor, while Japan’s position as its principal ally in Asia is firmly reestablished. The more you believe the New Cold War rhetoric as an overarching US policy priority, the less you will worry about China triggering an end to yen depreciation.

US–China Agreement on Renminbi Devaluation?

However, rather than being lulled into a false sense of security by mainstream rhetoric, a pragmatist investor will constantly evaluate actual policy developments. Specifically, the latest overtures to China made by US Secretary of the Treasury Janet Yellen, suggesting US readiness to negotiate on reducing punitive tariffs still placed on US imports, is a potentially very significant about-turn in US–China economic policy.

Will US economic policy pragmatism prevail after all? Because, yes, Americans spend almost four times more on imports from China than they do on imports from Japan ($541 billion versus $140 billion in 2021). If a weak yen and strong dollar are good news for US consumers, a weak yuan is potentially four times more powerful.

No matter what the new cold warrior rhetoric says, given the deceleration of China growth and threats from asset deflation, the immediate economic policy (and domestic political) goals of China and the United States are now complementary—China wants inflation, the United States wants deflation.

Although very much a long-shot, given Biden’s industrial policy priorities—less from China, not more—a restart of US–China trade negotiations may set the stage for a devaluation of the yuan implicitly tolerated by the US Treasury.

Of course, for Japan and the yen, renminbi devaluation tolerated by the United States would add new fuel to the yen’s decline. So, while the risk of the United States accusing Japan of currency manipulation and engaging in a currency war is low, the possibility that it would tolerate the start of a currency war in Asia may well be underestimated as a next trip wire for dollar strength.

From a Strong Dollar to the Next US Recession

Of course, dollar strength will not be in the United States’ best interest forever. The turning point will come when US recession and deflation risks overpower the current inflationary pressures. More specifically, that point comes when Fed rate hikes begin to cut into US asset prices in general, and US equities in particular.

Never before has the combination of rising rates and falling corporate profits not brought troubles to Wall Street—a bear market at best, a crash at worst. And nothing will focus the minds of the US policy elite like the specter of asset deflation.

The numbers speak for themselves. With just about 40–45 percent of US listed-company earnings coming from global sales, a strong dollar forces weaker earnings. So, while a strong-dollar policy is a welcome tool in the fight against consumer price inflation right now, eventually a switch to a weak-dollar policy will become necessary.

Of course, we can debate whether, in the United States, “this time is different”; whether the threat of stubbornly high consumer price inflation cutting the purchasing power of the people is more important than the loss of capital gains on Wall Street. The Main Street versus Wall Street debate is very real. However, in practical terms for investors, a crash on Wall Street is poised to deliver an about-turn in Fed priorities faster than you can say “American dream.” This is how the dollar’s strong run will end.

US Stagnation Fueling Protectionism in the Run-up to 2024

The bad news is that reality probably won’t be that clear-cut. It is easy to imagine what will happen in the extremes of an inflationary boom and a deflationary bust. What about something more real world, more messy, less clear-cut? Many serious forecasters are predicting a US stagnation scenario—i.e., stubborn but no-longer-accelerating inflation, with growth (and Wall Street) not crashing, rather just meandering and going nowhere.

What are the policy options then?

In my view, the US stagnation scenario will also make it tempting for politicians and policymakers to begin advocating a switch to a weak-dollar policy. The potential windfall to help turn around corporate fortunes is one reason. A more worrying dynamic is that US stagnation is poised to fuel a next wave of protectionism.

Blaming “unfair” cheap imports, pointing to China, Mexico, and Japan, then accusing them of taking jobs from US workers becomes a more tempting narrative the longer stagnation depresses any feel-good factor among US voters. This isn’t likely now, in my view—not for the 2022 mid-term elections (inflation is the more immediate problem this year)—but it becomes a credible scenario for the 2024 presidential fight.

Personally, I worry more about stagnation feeding populism more so than inflation. Under inflation, there are winners and losers. But under stagnation, all you get is an increasingly corrosive disillusionment among every part of society. The American dream very much depends on the celebration of winners; maybe that’s why stagnation will not be tolerated for long. But to get out of it, promises of radical, populist, “only I can fix it” extremist solutions are bound to gain political currency.

Be that as it may, as far as global currency markets are concerned, the higher the US stagnation risk the greater the risk of the United States abandoning its current strong-dollar policy. Moreover, who will want to buy—or even hold—dollars if US interest rates, equities, and real estate prices are going nowhere?

Who Will Buy Japan Assets?

So, it looks like it will become easier to argue for selling US assets as the United States cycle flips from inflationary boom to either frustrating stagnation or deflationary bust. But for the yen to strengthen, investors will have to buy Japan. Why, and when, will this happen? Who will do the buying?

The last point is key, in my view. There is plenty of great analysis demonstrating Japan is cheap. Here are just some of the highlights:

• Japanese equities trade on a 13-times price-to-earnings (PE) multiple, which is cheap against its own 30-year history as well as against the 22-times PE you pay for US equities (TOPIX vs SPX500)
• Japanese labor costs are now down to half (!!) of US ones, $34,000 in Japan versus $69,000 in the United States
• A Big Mac costs ¥399 in Tokyo versus $5.30 in LA, so a US tourist could get two for one

Or at least they could if Japan allowed free travel. Personally, I think the most immediate and impactful way to begin creating new marginal demand for yen is for Kishida to open Japan’s borders. Inbound tourists spent about ¥5 trillion per annum before they were shut out. Although small in absolute terms, relative to the roughly ¥500 trillion daily currency market transactions, creating net new demand for yen is poised to have a positive impact. Markets thrive on new marginal demand.

Welcome to the World, Japan Service Sector Workers and Entrepreneurs

Structurally, the fact that relative Japanese labor costs have fallen so dramatically does open opportunities for more substantial global arbitrage, creating demand for yen. Here, don’t think industrial workers, but rather computer coding, information technology, and other location-agnostic service workers. A yoga class via Zoom with a teacher in Tokyo is now almost half the price of one taught by a Los Angeles- or New York-based yogi.

In fact, several US and Israeli venture capital firms have begun scouting for software engineers based in Tokyo, Fukuoka, or Osaka to do work they had originally planned to have done in Vietnam. Again, Japan engineers are now about 30-percent cheaper than their Vietnamese competitors—never mind Silicon Valley ones.

“Japanese labor costs are now down to half (!!) of US ones, $34,000 in Japan versus $69,000 in the United States.”

Clear speak: The combination of relative cheapness and the realities of remote work and Zoom-based individual services having become more acceptable suggests there is a real chance the world will begin to buy more Japanese services. More specifically, the entrepreneurial opportunities for Japan here are enormous as a much broader section of the service sector transitions from local-only and non-tradeable to global and tradeable. Bonzai classes from a true bonzai master, anyone? This is true not just for traditional Japanese expertise but, more importantly, for newly created Japanese deep tech, patents, and all forms of intellectual property-based innovation. I expect a buying spree by US venture capitalists, snatching up previously hidden innovation bargains created by Japanese private and public scientists and engineers.

Soft Onshoring? Yes. Hard Onshoring? No.

Against this, it is highly unlikely the world will begin to build factories here in Japan. Labor costs are one factor in deciding where to build a factory, but much more important is proximity to market and suppliers. Just look at how difficult it was for the government to persuade Taiwan Semiconductor Manufacturing Company Limited and Sony Semiconductor Solutions Corporation to commit to building a new factory here in Japan.

Labor costs matter in the service sector much more so than in the industrial sector, where capital costs, stakeholder and supplier proximity, and end-market reach are the much more dominant factors. So yes, soft-onshoring—global service sector companies raising their Japan-based footprint—absolutely; but hard-onshoring by industrial companies is unlikely, in my view. Watch for a pickup in inward direct investment, with more service sector global giants buying into Japan, following PayPal Holdings, Inc.’s $2.4 billion acquisition of Tokyo buy now, pay later startup Paidy last September, and the growing success stories of Salesforce, Inc., Amazon Japan G.K., Yahoo Japan Corporation, and law firm Morrison & Foerester LLP here in Japan, to name just a few.

Clear speak: in the coming months, I shall watch carefully for signs of a pick-up in cross-border merger-and-acquisition (M&A) flows into Japan for a possible source of new marginal demand for yen that could help break the current depreciation trend.

Big Guns to the Rescue

When all is said and done, however, Japanese investors hold the key to the fate of the yen. Japan’s status as one of the major global creditors dictates as much. As long as Japanese institutional and retail investors refuse to invest in their own markets and, instead, continue to prefer global or US assets, the case for yen appreciation will be hard to substantiate.

Here it is interesting to recall the history of the world’s single biggest asset manager, Japan’s Government Pension Investment Fund (GPIF). The GPIF manages $1.7 trillion, of which about 26 percent is in global bonds and 24 percent in global stocks. In all the grandstanding about the merits or demerits of yen depreciation, it should not be forgotten that Japanese pensioners are thus a major beneficiary of yen depreciation: a 10-percent decrease in value of the currency should create a two to three-percent upside performance windfall profit (obviously depending on hedge ratios and equity/bond markets performance). I am not a public pension actuary, but some friends who are suggest it is quite possible that, at ¥140–150 to the dollar (and on current asset allocation), Japan’s public pension may actually become overfunded.

“Japanese pensioners are thus a major beneficiary of yen depreciation: a 10-percent decrease in value of the currency should create a two to three-percent upside performance windfall profit.”

Importantly, the GPIF contributed greatly to forcing the last major inflection point in the yen’s fortunes when it announced a major reallocation out of domestic Japanese government bonds into global bonds and equities during the early years of former Prime Minister Shinzo Abe’s administration.

Market participants remember well how the GPIF inflection lent credibility and broader confidence that decades of yen appreciation had come to an end. The GPIF showed the money (with Japan Post Bank and Japan Post Insurance adding welcome firepower).

Performance Pressure: GPIF Public Pension Fund Beats Private Managers

Yes, Kuroda’s BOJ launched an all-out attack on deflation in early 2013, but only when Japan’s (and the world’s) largest asset manager began to act and switched asset allocation did the yen’s fortunes inflect from decades of appreciation towards depreciation. In other words, the GPIF became the primary “agent” for transmitting monetary priorities into the real world.

No, this is not a conspiracy theory. Both the BOJ’s and the GPIF’s assets are owned by the same principal, the Japanese general public. What is interesting, however, is that Japanese private pension managers, whose principals are not the general public but company- or industry-specific employees and pensioners, did not follow the GPIF’s lead and, to this day, have maintained much more conservative allocations to global securities. In contrast to the approximately 50-percent allocation to non-yen assets by the GPIF, private pension managers have slightly less than 30 percent in overseas securities.

Given the now accelerating trend of yen depreciation, the relative outperformance of the public GPIF fund over the private, “independent” ones will, before long, add more pressure for long-overdue professionalization of the stewards of Japanese private-pension schemes. There is no question the GPIF is a best-in-class global steward of capital, while many private pension schemes here are still ensnared in clientelism, cushy amakudari (descent from heaven) positions, and a general lack of financial professionalism.

The $850 Billion Question

When will the GPIF cut non-yen allocations? The bottom line is this: When predicting the yen’s fortunes from here, the real focus for practitioners is not so much whether the US Treasury will agree to let the MOF sell its US-dollar reserves, but whether—or more specifically when—the GPIF will cut down on the global allocations that have served it so well since it started buying dollars in 2013–14, when the yen was ¥80–100 to the dollar.

Make no mistake: the GPIF has evolved into the de facto primary agent for BOJ and MOF monetary policy objectives and stands at the very core of Japan’s capitalism in general, and the transmission from savings into investments in particular. The yen will pivot and start appreciating when the GPIF announces a cut in its global allocation in favor of the deep value offered by yen assets.

When will this happen? My money is on right around the time of the Fed’s third rate hike—i.e., when equity markets have no choice but to admit that the risk-reward of buying stocks makes no sense. To wit, an equity earnings yield of five percent and falling (because earnings are in a downward cycle), and a risk-free rate of three percent and rising, will leave no other choice to the financial professionals at the GPIF and other institutions. Contrast that to an earnings yield of 7.5 percent and a risk-free rate of 0.2 percent in Japan, and you know not just where to hide but where outperformance is likely: here in Japan.

Clear speak: Japan’s deeply engrained reputation as an equity “value trap” will be corrected exactly when Japanese investors begin to recommit to their home-country risk-assets markets. If the GPIF were to lead this charge, fellow global long-term investors are bound to follow—sovereign wealth funds in particular.

But Japanese investors will have to show us the money.

Kuroda’s End Game

How can the negative correlation between the yen and Japanese risk assets in general—and Japan equities in particular—be broken? In my personal view, Kuroda is exactly right to force this realization onto local asset allocators by de facto encouraging a currency overshoot toward ¥150–160 to the dollar. The yen can—and will—be a key force to defeat the deeply entrenched bias against domestic risk assets that Japanese asset allocators have been insisting on for more than 30 years.

If I am right, the current policy decoupling between the BOJ and the Fed will lead to a much more fundamental parting. When Japanese investors begin buying Japanese risk assets instead of non-yen ones, Japanese equities will begin to rise in tandem with yen appreciation.

Although still a long shot at this stage, here is the real escape hatch for Japan from deflation. The long-established negative correlation between Japanese stocks and the currency must be broken. The fact that, for the past 30 years, Japanese equities only go up when the yen goes down while yen appreciation always depresses local stock markets.

“When Japanese investors begin buying Japanese risk assets instead of non-yen ones, Japanese equities will begin to rise in tandem with yen appreciation.”

For this to be supported by fundamentals, domestic Japanese profit margins will have to rise to above those earned from overseas operations and sales.

Here, Kuroda is doing his bit by encouraging yen depreciation, but his efforts will be in vain if Kishida and his stewards of industrial policy do not follow through. For Japanese corporate profits to rise despite yen appreciation, Japan needs a serious round of industrial reorganization and domestic investment.

This is because yen depreciation offers a potentially misleading path. At ¥110 to the dollar, Toyota Motor Corporation’s most profitable factories were the ones in the United States; at ¥130, the ones in Japan will reclaim that spot. However, this windfall is unlikely to last due to the inherent volatility and cyclicality of any exchange rate. As explained above, the moment the Fed changes direction as US recession risks rise, the dollar is set to fall.

From Kuroda’s Cost-Push Stock Therapy …

Sustainable improvements in productivity and profitability will have to be earned through business investment at the level of individual companies and industrial reorganization at the sector and macro levels.

In other words, Kishida and his team must focus on removing regulatory obstacles to industry consolidation, incentivize M&A, and push harder for technological upgrade and capital deepening. Importantly, the current round of cost-push inflation actually creates a strong tailwind for this, because companies with outdated technology and old-fashioned customer acquisition strategies are poised to be squeezed out and lose market share which, in turn, will force them to either start investing in better human and physical capital or have them seriously considering M&A.

To wit, in Japan’s various industries and sectors—from hairdressers to banks to machine tool makers—the top three companies in each command barely 15 percent of their market on average, while in the United States the top three control about 33 percent. This degree of excess competition is also born out when comparing listed companies. US equity markets are almost seven times larger than those in Japan (by market capitalization), but the number of listed companies is almost the same: 4,266 in the United States versus 3,754 in Japan. In other words, Japan Inc. is as good a definition of “red ocean” cut-throat competition as you’ll find.

… to Kishida’s New Capitalism

There is no question that, since the end of the bubble in the early 1990s, Japan’s model of capitalism became increasingly focused on trying to shelter local companies from the forces of asset deflation, technology-induced disruption, rising capital costs, or other forces of “creative destruction” by providing more or less free capital.

Twenty years on, the result is a capitalism marked more by zombie companies that drag down industry and macroeconomic performance, productivity, and financial returns rather than by global top performers. This is where Kishida’s promise of a new capitalism could have real meaning. If new capitalism marks a departure from this zombie capitalism, and actually seeks to incentivize sector-by-sector industrial reorganization and streamlining, then prospects for a sustainable decoupling of Japan’s financial performance from the exchange rate dependency will come into sight. I know this is a big if, but let’s give optimism a chance.

“If new capitalism marks a departure from this zombie capitalism, and actually seeks to incentivize sector-by-sector industrial reorganization and streamlining, then prospects for a sustainable decoupling of Japan’s financial performance from the exchange rate dependency will come into sight.”

Clear speak: if the current pain of cost-push inflation delivers long overdue industrial reorganization and the emergence of true Japanese national champions, the GPIF and other professional investors will be rewarded handsomely—not just from a tactically expedient increase in yen equity allocations because of a Wall Street downcycle, but from a strategic Japan overweight position where yen companies deliver rising returns independent of the currency’s fortunes.

Either way, the yen’s decline will stop and reverse exactly when Japanese investors begin buying their mother markets here in Japan. With a little luck, they’ll do so not just for fear of a US crash, but for realistic expectation that Japanese corporate leaders will not just sweat existing assets but begin to actually invest in both human and physical capital at home.

That’s the optimist’s view. Until then, a pragmatist should prepare for parabolic speculative overshoot towards ¥150–160.

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The Great Resignation

Could the change Covid-19 sparked in the United States occur in Japan?

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The pandemic has brought tumultuous change to the workplace worldwide, and in the United States millions of employees have decided to quit or change jobs in what has been dubbed The Great Resignation. Could we see a similar upheaval in Japan?

In several ways, we already are—although the changes may not be as dramatic or visible, for social, financial, and cultural reasons. Japanese workers aren’t quitting and changing their jobs en masse, but we are seeing more willingness to jump ship—particularly among the younger generation—as well as shifting priorities and expectations about one’s job, career, and employer that will probably transform Japan’s labor market, recruiters and experts have told The ACCJ Journal.

The Great Reflection

Suddenly finding themselves working from home, with extra time on their hands, many workers have had the mental space to think about their careers and broader purpose in life—something they often had been too busy to do previously. Some realized they weren’t satisfied with their jobs and work–life balance, and they began to explore new paths, such as volunteering, picking up side gigs, or changing jobs entirely. That’s a big step in Japan.

“Everybody is reassessing their values,” said Jeremy Sampson, managing director at recruiting company Robert Walters Japan K.K., which connects English-speaking candidates with foreign-affiliated or Japanese companies. “They’re reassessing their lives, their careers, and really wondering if they’re happy with what they’re doing.”

“It’s like stepping off the treadmill,” offered Simon Jelfs, managing director at FocusCore Group KK, which specializes in bilingual recruitment for US and European companies. “People have had a chance to step back, think, and reassess.”

Covid-19 has changed people’s priorities in evaluating a job. In a survey conducted by Robert Walters earlier this year, candidates said their top value was doing challenging and interesting work, followed by inspiring colleagues, corporate culture, and flexible working. Job security and excellent compensation were ranked sixth and seventh—well below where they had been in previous surveys.

“We’re seeing people wanting to change jobs for reasons around looking for something more fulfilling,” Sampson said. “Or because they realize life is short, and that they want to be doing something that makes them happy.”

Jumping off Kiyomizu

But changing jobs is hard in Japan. If you have special skills, such as English ability, as is the case with jobseekers being placed through FocusCore and Robert Walters, there is strong demand. But for most Japanese, switching jobs can be very risky—particularly for those in their forties, fifties, or sixties who have stable jobs and good salaries at major companies, and families who depend on them.

“Japan is less flexible in terms of your trajectory; you don’t have a lot of options to make mistakes and then pick it up and fix it,” explained Robin O’Day, a professor of anthropology at the University of North Georgia who has studied Japan’s youth culture. “If it doesn’t work out, it’s on you because you took a gamble.” In a business culture that values loyalty and is only gradually recognizing merit as a key hiring factor, there’s also not much professional incentive for mid-career employees to change jobs. In the United States and Europe, many who switch jobs can obtain higher salaries or promotions, but that’s usually not the case in Japan, according to Akie Nakamura, chief researcher at Rengo-RIALS. Some even see their salaries drop.

Surveys by the Recruit Works Institute show that, compared with workers in the United States, China, France, and Denmark, those in Japan express greater overall dissatisfaction with their jobs. But the lack of mobility discourages many from doing anything about it. “Changing jobs requires a lot of courage in Japan,” she remarked. “Sometimes it’s likened to jumping off Kiyomizu Temple’s high platform.”

The number of workers who change jobs has been rising in recent years, but fell over the past two years. During the pandemic, the figure fell to 2.9 million in 2021 from 3.5 million in 2019, government data shows. Still, those saying they would like to change jobs has continued to rise steadily, having reached 8.9 million in 2021, according to the government’s labor data, with those aged between 25 and 34 accounting for the biggest group, at 2.3 million. And a survey by Robert Walters of 800 employees across various industries registered with the recruiter shows that 60 percent of respondents were looking to change jobs over the next 12 months.

Generation Gap

Changing jobs is less risky—and a bit more common—among Japanese in their twenties and thirties. For these people, there is less to lose potentially in terms of salary, and more options from which to choose. Companies are also more likely to hire them. And increasingly, if young people are unhappy with their jobs or feel they don’t have much of a future there, they will look elsewhere.

Many in the younger generation have seen the often-grueling jobs their fathers (in most cases) held and aren’t necessarily enthused by the idea of devoting their entire career to a company, Professor O’Day said. They are thinking more in terms of how the company can benefit their career objectives, not the other way around, he and other experts agreed.

Some companies are shifting from the traditional organizational model, in which workers function as members contributing to the company’s overarching mission, to a self-directed model that gives employees more freedom to pursue their ideas and offers choices within the company, experts explained.

Over the past few years, we’ve been seeing some twenty-somethings at big brand-name companies switch jobs, which was virtually unheard of before, Nakamura noted. The top two reasons are:

• Fear that they won’t be able to do interesting work if they remain where they are
• A desire to work at companies with more growth opportunities

And research conducted by online recruiting agency en Japan Inc. shows that a growing portion of these young job-changers at big companies are going to startups, the ratio having risen to more than 20 percent last year.

Sampson sees that among his clients as well. “Younger people want to take control of their lives more,” he said. “They have more of an appetite for startup-type businesses, where people can take the initiative, are more responsible for their own actions and output, and are not just taking orders from above.”

Flexibility Assumed

Jobseekers’ demands and expectations surrounding job flexibility are also changing. The first question that candidates ask when considering a new opportunity is not about salary but work arrangements, Sampson shared. “Pre-pandemic, flexibility around work was a benefit that companies sold to attract talent, whereas now it’s a must-have,” he said. “And if you’re not [offering it], you’re basically deterring talent.”

While many companies still place value on employees coming into the office, partly to build corporate culture and network with colleagues, jobseekers are gravitating to businesses that offer a hybrid work style that allows them to work from home at least some of the time. After tasting work from home, some will accept only jobs that are 100-percent remote, FocusCore Group’s Jelfs noted.

Teleworking has been especially welcomed by working mothers, who say they are much better able to juggle their family duties. One single mother, whom Jelfs knows, loves working from home so much that, if her company required her to start coming back into the office, she would find another job that allows fully remote work.

These changing dynamics have driven another change: decentralization. Some people who live and work in Tokyo are moving to outlying areas—sometimes quite a distance away—either maintaining two homes or completely uprooting themselves from the city. One of Jelfs’s candidates moved from central Tokyo to Tsukuba, Ibaraki Prefecture, and once there switched to a local job. Others have moved to the beach town of Hayama, south of Yokohama, or Karuizawa, in the mountains of Nagano Prefecture, he said.

Covid-19 prompted Tokyo’s population to decline to just under 14 million last year, the first drop since 1996. If the trend continues, this could contribute to the spreading out of Japan’s population from urban centers, a long-time government goal.

“This is a shock to the system that Japan really needed to initiate this sort of change,” Sampson stated. “Even us as a company, we talked about more flexibility for years, but actually doing it was painful to think about. But when we ripped off the Band-Aid and did it, it actually became quite simple. Everyone adapted quite easily, and I think it’s benefited many people.”

More Stratification

However, this greater freedom and flexibility has not extended to Japan’s entire labor market. It is concentrated in white-collar workers with regular, full-time jobs—a steadily declining breed in Japan. Workers in blue-collar, delivery, and factory jobs that cannot be done from home, or at their convenience, have not seen this same sort of flexibility as a result of Covid-19, O’Day pointed out.

In fact, for some of them, work and life have become harder. Freelancers in Japan—mostly self-employed people with specific skills, such as photography, editing, or teaching music—have seen their work and income decline during the pandemic. And when the government offered financial aid to workers who had lost income, freelancers received less help than full-time employees. “To freelancers, that looked like a value judgment,” said O’Day.

The job market is also not very friendly toward them. When freelancers apply for full-time jobs, “many companies will discriminate against them—they think you’re somehow tainted or there’s something wrong with you,” O’Day added.

So, in some ways, Covid-19 has widened gaps in Japan’s labor market, where big businesses are increasingly relying on contract or part-time workers to cut costs. That’s given greater flexibility to companies, but not to contract workers, who have fewer benefits and less job security than those in the upper echelons of the labor market.

Shared Values

Covid-19 has also enhanced the desire among younger workers, including some college students, to join a company that shares their values and is doing something to contribute to society, recruiters said.

“Younger candidates are asking of companies, ‘What are they doing in terms of sustainability? What are they doing for the local community?’” explained Jelfs, who has been working in Japan for 24 years. “Ten years ago, it would have been more about salary and if it’s a prestigious company.”

Jobseekers in their twenties and thirties also place a higher priority on diversity and inclusion, and want to know how committed companies are to that, Sampson remarked. Likewise, they also are more concerned about whether companies are proactively adopting environment, sustainability, and governance standards, he added.

Businesses that aren’t able to offer more flexible work style policies or give clear answers to questions about their values, diversity goals, and contributions to society, may get shunned, recruiters warned. A Robert Walters survey shows that half the respondents would reject a job offer if the company’s values didn’t align with their own.

With more people working remotely, the entire job search process has become easier, recruiters said. They can search for openings online in the privacy of their homes and handle multiple job interviews in a single afternoon. They don’t necessarily need to commit a big chunk of time to visiting various companies’ downtown offices over several days for interviews, although some employers still want to meet candidates in person, which recruiters say is a good idea.

Talent War

All these changing dynamics are coming amid perhaps one of the tightest job markets ever in Japan, as the pool of workers contracts amid an aging and shrinking population. Companies are scrambling to get the best talent.

Even before the pandemic, capable candidates—from good schools, or with a few years’ experience in a desired field—who were looking to change jobs would receive many offers, Nakamura explained. “In the past, major companies could easily get graduates from top universities, but that’s no longer a given.”

Also, Japan’s tight immigration rules make it difficult for foreign workers to enter—a flow that has virtually ground to a halt during the pandemic.

“Japan is facing the greatest talent shortage, really, in its history, and it’s not going away with the shrinking population,” Sampson added. “There really needs to be a more streamlined process to accept and welcome foreign talent.”

Intense competition has emerged for workers with specific, highly sought-after skills, such as English ability or computer programming skills, recruiters said. Tech startups are appearing left and right, and established companies also need engineers to help them digitally transform their operations, so for them it’s a candidates’ market.

“Companies are looking for Japanese candidates who are bilingual, who have a stable background, a solid record of achievements in Japan, and are not a job-hopper. Once you factor all that in, supply is tight,” Jelfs explained. “Those kinds of candidates have three to five offers they can choose from.”

Businesses have become much more aggressive in trying to retain employees by making counteroffers in the form of promotions, transfers, or pay increases, according to Sampson. “Companies are aware that it’s far more difficult and expensive to replace somebody than it is to entice them to stay.”

Japan tends to change most dramatically in response to external shocks, and Covid-19 has proved to be a powerful catalyst, setting in motion changes that will probably permanently alter employee behavior, corporate practices, and even Japan’s business culture. “This is the beginning of what will be a long-term, big change in Japan for sure,” Sampson said.

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Stepping Up for Change

Companies move quickly as talent expectations evolve

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The global employment landscape has shifted dramatically during the past two years, with the coronavirus pandemic encouraging employers to be more flexible than ever in their arrangements with staff. Working from home, for example—virtually unthinkable for many companies not long ago—has quickly become perfectly acceptable and, often, expected.

Employees, for the large part, have seized upon these opportunities to improve their work–life balance, escape the drudgery of the commute, and spend more time with their families. And now that the genie is out of the bottle, it will be very difficult for many people to return to previously accepted ways of working—at least on an all-day-every-day basis.

Change Not Optional

While Japan has, in the past, been criticized for failing to keep up with changes in the job market, there are plenty of organizations here that have embraced different approaches to work. Human resources (HR) companies say they must if they want to continue to attract the best and brightest talent, with a dire shortage of candidates in many sectors giving skilled workers the luxury of choosing where they might go next.

Well before the pandemic, Japan already had been experiencing a worsening labor shortage, pointed out Bryce Conlan, president of Nagoya-based H&R Consultants K.K., which specializes in foreign staffing solutions. This shortage could be seen in a broad range of placements, from convenience store jobs to blue-collar positions to highly skilled artificial intelligence or information technology (IT) experts. The situation had been compounded by salaries significantly lower than those in the United States and even elsewhere in Asia.

“Another serious issue was the lack of innovation and flexibility in HR policies,” said Conlan. “Or, rather, a lack of willingness to change old habits and cultures, where long hours were the norm and the evaluation system was built around time spent rather than results achieved. The need to be seen to be working, rather than the need to achieve results.”

Accelerated Adaptation

There were signs of change before the pandemic. More companies had been introducing cultural and language training, and there was a new willingness to hire talent from abroad. But things have changed rapidly since the first cases of Covid-19 were reported in Japan in early 2020.

“One positive thing that has come out of the pandemic for Japan is an acceptance of the concept of remote work or working from home,” Conlan told The ACCJ Journal. “There has been more change in the way companies operate and people work over the past 24 months than over the past 10 years here in Japan. So many processes and old ways have been transformed, with things such as digital signatures now being more commonly accepted—reducing the need for faxes—and a greater reliance on email and document-sharing tools.

“This has allowed a totally new way of working and, I believe, has brought a huge increase in efficiency,” he said. “We have one client who has well over 60 IT engineers working from India, purely because they have not been able to get visas to enter Japan to come and work. They are now working full time remotely from India, something that would have been unheard of five years ago.”

Nancy Ngou, an associate partner with EY Strategy and Consulting Co., Ltd., shared that the pandemic has hastened changes that already had been taking place at some companies. These include:

• Changes to develop and retain younger employees who prioritize flexibility
• Removal of barriers to women’s advancement in the workplace
• Evolving workplace cultures to embrace change (e.g., inclusion, digitalization, global mindset)

And while some previously had been hesitant to take advantage of those changes, such as flexibility—managers because they didn’t believe it was feasible and employees out of fear such changes would negatively impact their careers—these perceptions began to erode when people were forced to work remotely, she said.

“Businesses are stepping up implementation of their globalization and digitalization strategies, and employees’ expectations of their work have changed,” she explained. “Employees have had time to reflect on their personal priorities and reevaluate expectations. They feel more emboldened to leave what they viewed as simply a job they did, for a more purposeful career or a job they want to do. Employees—and not just the younger generation or working parents—are seeking sustained flexibility, purpose, and balance.

“Both the business and employee factors are forcing an acceleration of many changes HR leaders sought before, but with the added focus on employee retention and recruiting,” she added.

Embrace Empowerment

The pandemic has, nevertheless, compounded what was already a candidate-short market, according to Charles Breen, associate director of recruitment company SThree K.K., which specializes in science, technology, engineering, and mathematics—or STEM—fields.

“Employees have always wanted interesting and challenging work with growth opportunities, but that’s something I see people focusing on more nowadays,” he explained. “With innovation happening faster across all forms of technology—whether that is engineering, IT, or biotechnology—leaders in their field want to work on cutting-edge projects.

“Work–life balance has shifted in definition for progressive companies, including my own,” he added. “With employees having more autonomy when it comes to scheduling their work, they can better engage more fully in all aspects of their lives. Companies that embrace this empowerment will attract the top talent in their field.”

Pay is as important as before and has not lost its relevance in the hiring process, Breen said. “But for the best employees, the company’s offering must go much further than just money. Top talent looks at potential growth, for the individual as well as the company, and whether their own values are aligned with those of that employer.”

Once in a company, every employee has a “different set of needs and values,” Breen added, noting that it us up to the employer to support those goals. But, he cautions, gimmicks such as beanbags and free food in the office are not very high on a potential new hire’s list of priorities.

Hire and Retain

Sean Lindley, business operations manager for Titan Consulting K.K., said the job market globally has become even tighter, as many of the best workers in their fields are already employed, are happy in their positions, and are not looking for a new job. The challenge for managers, therefore, is making sure that the person remains with the company.

“It is very clear from our experience that any company in Japan, when presented with a strong candidate, really should grab him or her, because the shortage of talent is so acute that any hesitation means that person will be gone,” he shared. “An employer needs to be agile and recognize the best people. That is where a trusted human resources partner is critical.”

Once aboard, an employee who feels valued, who knows that the company is growing and moving in the right direction, and who has “regular, meaningful conversations” with managers “about where his or her career is going,” is less likely to be looking to move, he added.

“The little things about a company’s culture and values make a big difference,” Lindley remarked. “People leave for reasons that we call the two Cs: compensation and culture. Compensation is easy to deal with, but it’s very important that a company work hard to ensure a good workplace culture.”

Driving D&I

There is also an increasing emphasis on diversity and inclusion (D&I) in hiring, said Sophia Plessier, business development manager for the company. In focus are concerns such as ensuring gender equality in the workplace, paternity leave, time off for people caring for elderly relatives, support for families or dependents, and identical opportunities for staff, regardless of race, religion, cultural background, or sexual orientation.

Titan Consulting recently launched a new service—its Spotlight Package—designed specifically to meet the growing demand for more women in senior management positions. New legislation in the United States mandates that 30 percent of a board be made up of women. Companies that have let diversity slide are now desperately seeking capable candidates, Plessier noted.

“The Japanese government did set a target of 30 percent of managers being female by 2020, but even now it is only 8 percent,” she explained. “That is disappointing, but we do see a changing mindset and expect demand for high-quality female candidates to rise.”

H&R Consultants’ Conlan agrees that a company’s requirements can often align very closely with those of potential candidates, and this must be emphasized to attract the best talent.

“Companies want innovation and efficiency,” he said. “To compete in the global market, not just in sales but in the ability to attract and secure the right talent, companies are realizing that they need to change. This means that what they expect from their employees is changing.

“Companies are also looking for diversity in their staff: different cultures, education, and languages bring a much wider variety of innovation, ideas, and thinking.” But, he added, they will also need experts in this area to manage a new, diverse workforce.

“And employees—especially the younger generation and those with an international mindset or foreign language ability, with experience studying or working abroad—have seen how other cultures work,” he added. “They have seen the opportunities and the diversity that exists.”

No Going Back

Asked what employees expect of their company today, Conlan counted off their priorities. As well as work–life balance and development opportunities, they do not want to see a rollback of the workplace flexibility that has been a byproduct of the pandemic. They also want their employer to commit to a strong environmental, social, and governance presence, and they want talent mobility as well as flexibility, and evidence of innovation.

With all those promises in place, he said, why would a valued and valuable member of staff look for opportunities elsewhere?

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Motivate Remotely

Tips for keeping your team engaged in a world where hybrid workstyles are the norm

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When the pandemic began, a sudden shift to remote work brought challenges to companies accustomed to having everyone in the office. Many leaders had to learn on the go how to hold their teams together and keep them engaged and productive.

Two years later, things are running more smoothly for most. But what at first seemed a temporary solution to a temporary problem has become an expected norm. Remote work is here to stay.

So, how do you keep people motivated in a world where some portion of your team will always be outside the office? The ACCJ Journal talked to three experts in training and team-building to learn which techniques are working for them and how we can all make remote and hybrid work models effective for the long term.

Overcoming Isolation

“We are social animals, and the group—particularly in Japan—is a very important aspect of work life,” said Dr. Greg Story, president of Dale Carnegie Training Japan and a certified Dale Carnegie master trainer. “How to maintain that group identity and keep good levels of teamwork will remain a difficulty during remote work. The office provides an avenue for socializing which remote work tends to take away. This can lead to people feeling isolated and lonely.”

During the start of the pandemic, he noted, all of this was new. There was the idea that this, too, would pass. “But now it is becoming more mainstream, and this is the new calibration. Not everyone is going to thrive in this remote environment.”

Michael Glazer, senior consultant at Tokyo-based People Focus Consulting, offered several recommendations for avoiding a feeling of isolation.

“Start or continue regular one-to-one meetings,” he said. “Most managers have felt some difficulty leading remotely, because they can’t physically see what’s going on. Some hesitate to get directly involved, because they don’t want to be misperceived as micromanaging. Others hesitate to give more autonomy, because they don’t want to be misperceived as not caring if their approach is too hands-off.”

Holding weekly one-to-one meetings is nothing new, he admits, but this can go a long way toward improving communication, as well as increasing engagement and motivation. Usually 20–30 minutes is enough time for these meetings.

“If managers aren’t talking, connecting, and getting information and feedback regularly, how are they ever going to lead and manage effectively?”

Story pointed out that remote work requires a lot more communication than when everyone is in the office. “We have trouble getting hold of people, and keeping people up-to-date with what is happening becomes more difficult,” he explained. “We need to overcommunicate, in fact. More sharing of information becomes crucial, be that through voice or text.”

Glazer also suggests making work more visible to managers and other stakeholders.

“Doing this makes it easier for others to support, recognize, and possibly redirect your effort,” he explained. “It can also spark collaboration and innovation. This can be done through group chat or other collaboration tools. I’ve also seen some people schedule their individual work in Outlook to keep their team members in the loop of what they’re working on.”

Katheryn Gronauer, founder of cross-cultural training and coaching company Thrive Tokyo and vice-chair of the American Chamber of Commerce in Japan Sales Development Committee, recommends virtual co-working.

“You can ask one to four people to join a virtual call with you for a fixed length of time in which you spend the first few minutes sharing what you plan to work on during that time,” she explained. “Then, you can go off video, on mute, and work knowing that there are other people there holding you accountable.”

She uses the technique herself. “It’s incredibly effective in helping you get work started that you might have been procrastinating on. Plus, you can tell people at home that you’re in a meeting, and that helps you avoid getting distracted.”

Building Team Spirit

Gronauer’s virtual co-working technique is one approach that can help build and maintain cohesive teams when members are scattered and working from their homes. It recreates, to some extent, an office environment in which the presence of others helps you stay on track.

Another key element of the workplace that was disrupted by the pandemic and has undergone significant change is the morning meeting. Story believes this must be maintained even in virtual settings, and there must be some ground rules for how it is conducted.

“The morning meeting is held in person in many organizations, and it is a good practice to recreate this as much as possible online,” he said. “Cameras must be turned on so that we can all see each other. Going through the why of what we are doing is a good daily connector to our joint purpose. Sharing information with each other is also a good practice, as it makes for a stronger team spirit when we know what everyone is doing, even if we don’t meet so often in person.”

Meetings such as this are only check-in points for the group, however, and managers need to ensure that communication continues throughout the day and week to strengthen the foundation of the team. It is also important to show your remote employees that you care about their well-being, ideas, opinions, and goals. How can you best do that when you have limited in-person interaction with them?

Gronauer believes that it is important for organizations to have a top-down approach to initiating conversations about well-being. “I have worked with employees who have shared that they hesitate to raise work–life balance challenges to their managers, either due to hierarchy or not knowing a new manager’s style due to remote work,” she said. “Scheduling quick catch-ups to talk not just about work but about work–life balance is helpful.”

Another recommendation she offered is engaging an external coach.

“As a coach, I feel that employees value being able to talk to a third party about work goals, personal life goals, and how to better manage themselves,” Gronauer explained. “It helps employees with their self-management without taking time away from a manager’s day.”

Show You Care

Expanding on well-being, Glazer said that “there’s a broad spectrum of actions we can take, from making small adjustments to how we interact with our team members to integrating the principles of well-being into corporate culture and systems.”

He offered three practical actions:

• Pay careful attention to language and behavior
• Express interest and concern directly
• Match the support you offer to what’s needed

“We might notice when a colleague, who has a reputation for managing time well, starts showing up to meetings a few minutes late, or starts asking for work deadline extensions. This could be a sign of stress or an early-warning sign of burnout,” he said. “Other subtle signs include a shift in mood or outlook, increased irritability, forgetfulness, or even just not using their webcam as often as usual.”

Glazer noted that research from Google’s Project Oxygen a few years ago found that “showing concern for success and well-being” is one of 10 behaviors that make managers great at Google. “Just as we would do in person, use empathy and active listening skills to share changes you have observed,” he suggested. “If you have a concern that someone is struggling with an assignment, is stressed out, or is starting to withdraw, check it out.”

And matching support to what’s needed can make a big difference in keeping a team member on board. “While offering heartfelt encouragement to take time off might seem like the supportive thing to do, researchers have found that people who are grappling with difficult feelings really need compassion and acceptance most,” Glazer explained. “Similarly, when the issue someone is wrestling with is a practical problem they’ve never solved, the underlying need is for tools, advice, direction, and assistance.”

Equipped for Success

By following the advice shared by Gronauer, Glazer, and Story, and exploring other ways of bridging the gap between the office and remote locations, leaders may find that the outcome of change forced by the pandemic is greater productivity and success for the company, as well as satisfaction with work and life for employees. While the shift we have been going through has been difficult, it represents digitalization in action and may well be one of the most positive legacies of Covid-19.

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Life Beyond Covid-19

Professionals, graduates, and new hires share how workplace expectations have changed

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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.

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.

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HxD Winners

Five finalists in the ACCJ’s digital healthcare competition show that innovation is alive and well in Japan

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As we enter the third year of the coronavirus pandemic, two societal needs have become crystal clear: healthcare and digitalization. These could be seen as distinct domains, and in some respects they are. But the combination of the two could bring some of the most impactful changes to Japan and the world by improving the quality of life, reducing the cost of care, and allowing society to better cope with future crises.

Bringing them together is exactly what the American Chamber of Commerce in Japan (ACCJ) has done with its Healthcare x Digital (HxD) initiative, which began in 2020 and reached new heights in its second year. HxD leaders Torsten Kanisch, Francisco Proaño, Christian Boettcher, and Yasuhiko Iida, with the support of the ACCJ’s Kansai chapter, followed up the very successful inaugural competition by boosting submissions 30 percent.

Ideas Day 2.0

Forty companies submitted entries and 10 were selected to participate in the Pitch Day virtual event on October 14. Five finalists then took part in the HxD Ideas Day on November 11, a hybrid in-person and virtual event with a panel of leading healthcare and pharmaceutical executives—all empowered to initiate business deals and new relationships on behalf of their global brands.

Opening remarks were delivered by AstraZeneca K.K. Representative Director and President Stefan Woxström, who welcomed the more than 300 online attendees and many others who attended in person.

After thanking the healthcare professionals and companies working to develop solutions and care for patients during the pandemic, he shared a bit of Innovation Infusion Japan’s background.

Known as i2.JP, the open innovation initiative connects healthcare professionals, local governments, academia, and private companies, helping them jointly work out collective, practical, and optimal answers to issues in the field of healthcare. The initiative was founded in 2020 and has rapidly grown from seven participants to 130.

“I want to emphasize that this is an open innovation network: anyone can join, it doesn’t matter where you are,” Woxström said. “You don’t have to collaborate with those who started the network, you can collaborate with anyone. That’s the beauty of it, and that’s why it is also starting to produce a lot of solutions for patients.”

He also noted that i2.JP has become a gateway through which startups are entering Japan. “Because they don’t know where to go, who to connect with, they contact i2.JP and find partners who help them come to Japan with their solutions.” He hopes it will flow the other way as well, with i2.JP assisting Japanese startups as they branch out globally.

Setting the stage for the finalist presentations, Woxström said: “What we are going to experience today is what happens when startups, academia, the private sector, and policymakers come together and start working, because that is what is going to create new solutions for the future of healthcare in Japan.”

Goals

Then-ACCJ President Jenifer Rogers spoke next, noting that HxD Ideas Day is “the culmination of a months-long efforts by healthcare leaders and innovators with a shared mission: to solve critical healthcare challenges and improve the lives of patients.”

HxD 2021, she explained, advances the goal of driving innovation in Japan’s healthcare ecosystem by focusing on three areas:

• Overcoming the urban–rural healthcare divide
• Reimagining the hospital of the future
• Empowering patients to own their healthcare

“These areas tie into the digital transformation of society and can help Japan continue to take care of—and provide even better care for—all its citizens,” she added. “Digital transformation [along with] sustainable society and healthcare were two of the ACCJ’s main strategic goals even before the onset of the Covid-19 pandemic, which has accelerated the need for digital and healthcare plans around the world.”

Professor Hiroaki Miyata, of the Keio University School of Medicine’s Department of Health Policy and Management, echoed the belief that the pandemic has driven greater understanding of the need for digital transformation and sustainable healthcare. Speaking after Rogers, he wore a shirt that mirrored the colors of the i2.JP logo, which he said was his way of honoring the diversity championed by the group.

“The pandemic is a turning point for civilization,” he proclaimed. “Particularly in Japan, in terms of digital, the country had ranked 27th or 28th in competitiveness around the world and had to face this situation.”

Noting that Japan, as an island nation, was long isolated from the world, he said that facing these challenges and being forced to embrace a connected world and digital transformation—to grow together in this ecosystem—is important. “In that sense, i2.JP and HxD [represent] growing together in the global environment, so these opportunities are very important for us,” he explained. “And all of you here are going to take a new step that is going to be important for Japan and the world.”

Expert Insight

Saving the finalist presentations—the highlight of the day—for last, the middle section featured a wide range of presentations from experts. Five keynotes followed Professor Miyata’s comments:

• Yoshihiko Izumida—a professor in the Saitama Medical Center’s Department of Endocrinology and Diabetes, as well as representative director of Saitama Medical and chairman of the Life Course Design Association—gave a presentation entitled Global Standardized IoT Platform for Promoting Open Science
• Ryosuke Fukuda—deputy director of the Health Policy Bureau’s Medical Professions Division and director of the bureau’s Planning and Coordination Office for Physician Training in the Medical Professions Division—talked about recent topics in online medical care guidelines
• Jun Miyagawa—general manager of Kansai growth strategy in the Growth Business Development Department of Sumitomo Mitsui Banking Corporation—shared a presentation entitled Accelerating the Formation of a Venture Ecosystem in the Kansai Area: Trends in Innovation in the Run-up to the Osaka-Kansai Expo
• Takeru Yamamoto—board director and chief operating officer at Welby Inc., talked about the current and future prospects for personal health record platforms
• Lei Liu, PhD—innovation partnerships and i2.JP director of commercial excellence at AstraZeneca K.K., recapped the open innovation initiative’s successes in its first year, looked ahead to the future, and introduced HxD and its achievements

After the keynotes, a panel discussion involving the keynote speakers, moderated by Liu, covered current trends in, and future prospects for, digital innovation in healthcare.

Next, the five finalists made their last pitches.

Medii, Inc

First to present was Medii, Inc Chief Executive Officer Hiroki Yamada, a rheumatologist who is himself a patient coping with an intractable disease. His own experience led him to become a specialist treating arthritis and other musculoskeletal conditions and systemic autoimmune diseases, and to search for a way to bring better care to patients and support local doctors across Japan.

Specialist doctors in his field, he explained, may be difficult to find outside of the largest cities. While there are 759 in Tokyo, 32 of Japan’s 47 prefectures have fewer than 75. “In terms of the population, there is a 50-fold difference in the distribution of specialist doctors. We have to do something about this,” he said.

“There are so many undiagnosed patients who are not receiving proper treatment—they are simply overcoming their symptoms. This is the challenge we are facing and that we must overcome.”

Medii would like to create a National Intractable Disease Center so that the latest and most effective treatments can be delivered to patients. About five percent of the people in Japan suffer from such ailments.

The company’s focus is on the issue of doctor’s knowledge about intractable diseases, because supporting local physicians is one of the best ways to help patients.

Medii is offering a service called E-Consult, a digital resource powered by artificial intelligence (AI) that enables the sharing of expertise about rare diseases with doctors who are not specialists.

Doctors in the local community who are trying to diagnose a problem, but who do not possess knowledge of these rare diseases, can be matched with an expert through E-Consult. More than 500 specialists are working with Medii to provide assistance through the service that is a bit like the LINE messaging platform, which is dominant in Japan.

Doctors can be matched on a real-time basis for one-on-one chats and images can be exchanged securely. A response is received within 42 minutes and the level of satisfaction has been as high as 93 percent.

“For instance, in the remote islands, the doctor may be working all on his own, and he has to take care of patients with many diseases,” Yamada explained. “And yet, by using our platform, even though he may be working on a solo basis, all these specialists can support him, and better diagnoses and treatments can be offered to his patients.

“We cannot do this alone, so together with the support of the pharma companies—and for the benefit of the patients and the doctors and the specialists—I would like to further grow this platform,” he continued. “Our team is putting all its efforts into this, and I hope you will all join hands together for this endeavor.”

Immunosens Co., Ltd.

Next, Hirokazu Sugihara, CEO, representative director, and president of Immunosens Co., Ltd., shared his vision for more efficient testing that can close the time gap between diagnosis and treatment.

“Our first target is cardiovascular diseases,” Sugihara said. “As the Japanese population ages, the number of patients with such diseases is on the rise, and treatment accounts for 20 percent of national medical costs.

“When your condition is poor, you go to a primary care physician to find out what is wrong and if there is a risk of disease,” he continued. “Various exams may be performed, and right now tests are outsourced.”

That time lag—typically one to three days—can make a big difference in the outcome for patients. At a minimum, it requires them to make an additional trip to the hospital or clinic and, in some cases, it may prevent the doctor from providing proper treatment.

Immunosens’s solution is a high-performance point-of-care testing (POCT) system that utilizes a technology that the company calls GLEIA, an acronym for gold-linked electrochemical immunoassay.

This lateral flow test technology uses a printed electrode to trap disease markers in the sample by immunoreaction and then sandwich the markers with gold nanoparticles. If a disease marker exists, it will gather near the printed electrode. Ultra-sensitive detection of gold nanoparticles on the printed electrode is achieved through an oxidation and reduction process. This electrochemical measurement can be completed with a single cartridge, enabling quick and efficient measurement with results in just 10 minutes. The easy-to-use, disposable GLEIA sensor is much smaller and cheaper than existing equipment, but detection sensitivity is equal to, or higher than, that of current processes.

The product weighs just 0.1 kilograms and costs between ¥10,000 for a model designed for home use and ¥50,000 for one aimed at clinics. Compare this with existing equipment, which weighs 10–100 kilograms, costs between ¥3 and ¥10 million, and takes as long as two hours to read a sample. Also, current equipment requires a 100–200 microliter sample whereas the GLEIA solution needs just 2–20 microliters.

The device for home use allows patients to measure their condition every four days if they are unstable, or every 23 days if stable. Currently, new measurements are taken once every six months, on average, at a hospital.

Steady development has been underway since 2018 and the first product is scheduled to be launched in the second half of this year. Mass production is targeted for 2025.

Oishii kenko Inc.

With a name meaning “tasty health,” Oishii kenko’s goal is “to contribute to health and healthcare issues through delicious solutions and dietary management,” explained Chief Executive Officer Tetsuya Nojiri.

Scientific evidence has shown that an optimized diet is key to reducing healthcare costs, preventing diseases, and supporting the treatment of existing ailments.

But, as Nojiri noted, controlling one’s diet is easier said than done. He explained that, while 80 percent of Japanese households prepare their own meals every day, it is challenging to plan a nutritionally balanced menu. And if you have dietary restrictions due to illness, doing so becomes even more difficult.

“To whom do you turn for help?” he asked. According to the company’s research, 85 percent of physicians say that they are consulted about diet by their patients, and 90 percent of that group admit that they lack the knowledge and time to provide such guidance. This is where Nojiri feels Oishii kenko can make a difference.

“There is a position called certified dietitian, but 84.4 percent of hospitals in Japan do not have anyone in this role. So, while patients want to improve their dietary life, there is no one whom they can consult,” he explained.

Oishii kenko believes that dietary management is possible in the home, and you don’t need a dietary specialist sitting next to you to make it happen.

“We need to trigger the understanding and desire to eat healthily, and that is what we want to provide through our personalized recipe and nutrition management app, supervised by a registered dietitian,” Nojiri said.

The AI-powered recommendations provide nutritionally balanced meal options, and a shopping list is created automatically. More than 60 health issues can be managed through the 10,000 recipes found on the app.

In addition, the app offers previously unavailable insight into the habits and preferences of people with similar health challenges. This is thanks to Big Data from more than 40,000 users that allows nutritional trends to be surfaced.

As an example, Nojiri shared that, according to the data, female diabetics may have a tendency to like spicy food, while male diabetics eat a lot of meat and dislike fish.

“This is different from the expected behavior of diabetics,
so using real-life data … and based on the preference of the individual, we can suggest good dietary management tailored to each person,” he explained. “Through the app, we hope to change behavior that helps pharmaceuticals to work their best.”

Lanex Co., Ltd.

One example of a traditional practice in Japan that could benefit from digitalization is the maternal and child-health (MCH) handbook. This printed booklet is used to track the results of pregnancy and post-birth health checks.

Lanex software developer and project manager Boubacar Sow shared the company’s electronic version of the process—the E-MCH—explaining that “we empower doctors to manage data generated during pregnancy through virtual consultation, interoperability, and maternal decision support.”

Under the current system, a woman who is expecting visits the doctor and receives a document which certifies that she is pregnant. She then takes this paper to the health center at the ward office and receives the MCH.

Using Lanex’s E-MCH system, she would register during her first visit to the hospital and receive a unique identification number issued by the local government. Login credentials are also provided so that she can download and begin using the system immediately.

At every checkup, data is added to the E-MCH and is accessible via the web portal and smartphone app.

“We believe we have a special system, because it is not simply a pregnancy tracker, but also an ecosystem to digitize maternal and child healthcare,” Sow explained. “We help the local government provide a unique identification number to better track those who are pregnant. It’s special because we have a knowledge base, the contents of which are provided by maternal and healthcare experts from Miyagi University.”

Lanex, founded in 1993, has offices in Japan, the Philippines, Australia, and the United States, and has been developing high-quality software for more than 28 years. It is targeting countries that are unable to meet United Nations Sustainable Development Goal 3: ensure healthy lives and promote well-being for all at all ages, as well as every medical institution that provides maternal and child healthcare in both developed and developing countries.

In May 2021, the E-MCH was adopted by the Japan International Cooperation Agency (JICA) as an innovative product to solve a public problem, and Lanex received financial support from JICA to conduct a survey in African countries.

The web system requires a small payment by the hospital, while the mobile app is free for mothers.

CardioCouple

The final presenter was Ayush Balaji, an 18-year-old from Japan, who is a first-year medical student at the University of York in the United Kingdom. He came up with the idea for a pulsatile percutaneous circulatory assist device for those with heart failure during his last year of high school in Japan.

“I’ve taken inspiration from nature—with animals, such as octopi, which have branchial hearts—and I looked at adopting a resilient network-based solution to heart failure,” he explained.

Cephalopods have two branchial hearts, one located at the base of each gill. The two branchial hearts push oxygen-depleted blood through the gills, thereby supplementing the function of the systematic heart, which pumps the oxygenated blood throughout the body. Similar systems are found in insects and other animal species.

“The biggest issue we have at the moment is heart failure, or cardiovascular-related diseases. There are 64 million cases of heart failure per year [worldwide], and cardiovascular disease is the most common cause of death,” he continued. “The only treatment available at the moment for heart failure is a heart transplant. Between diagnosis and transplant there is an extended waiting period, and during this time the quality of life for patients is significantly reduced.”

Balaji has designed a device called the CardioCouple that focuses on forestalling a reduction in the quality of life between diagnosis and transplant. The aim is to allow patients to lead lives that are as close to normalcy as possible.

He noted five problems with current surgical approaches:

• High rates of infection and complications
• Reduced patient mobility and access
• Hemolysis complications (destruction of red blood cells)
• Lack of resilience
• Foreign material contact and proximity to the heart

How does CardioCouple fix this?

A network-based approach uses small pumps in multiple location around the body to reduce fail rates, provide resilience, and increase mobility. No components come in direct contact with blood, which increases longevity of the devices and reduces the risk of hemolysis-related complications. And, while some surgery is required to implant the devices, major open heart surgery is not needed.

The result is improved quality of life and outlook, more time for physicians to plan further intervention, reduced cardiac afterload and stroke risk, and the ability of patients to resume normal life without the need to manage bulky external apparatus.

In terms of digital healthcare, dedicated software allows data from the device to be utilized, and physicians and patients to control the device in real time. The pump rate can be managed remotely, and physicians can set operational limits so that the patient can adjust the pump rate themselves when needed. Plus, physician access to real-time data on pump performance and patient parameters ensures the maintenance of the device and patient health.

“All these things come together to provide a more reliable, efficient, convenient, and cost-effective device, as it does not rely on significantly new advances in technology and the complication rate is not as high as what exists today,” said Balaji.

“This translates to a lower strain on healthcare budgets, improves profit margins for pharmaceutical companies due to lower complication rates, and provides patients with better control over their health.”

Impressive Breadth of Ideas

Following the presentations, Deloitte Touche Tohmatsu LLC Senior Partner Christian Boettcher moderated a panel discussion during which the five finalists talked with AstraZeneca’s Woxström and Eli Lilly Japan K.K. President and Representative Director Simone Thomsen.

“This year it was very impressive to see the breadth of ideas,” said Thomsen, congratulating the finalists. “I feel the true patient-centric passion is coming through, really making sure that [the focus is on] just one problem and how we can make it better. I think we are seeing an even greater breadth of what digital technology can do to support Japanese patients.

“As always, I continue to applaud you,” she added. “I know there is a lot of entrepreneurship needed, a lot of courage, to make it work. I assume all of you have faced multiple challenges so, by bringing it this far, you continue to impress me.”

Prizes

Ideas Day ended with recognition of the incredible innovation brought forth by the finalists.

Six honors were given:

• Empowering Patients Award and People’s Choice Award: Oishii kenko Inc.
• Hospital of the Future Award: Immunosens Co., Ltd.
• Bridging Urban Health Award: Medii, Inc
• From Japan and Beyond Award: Lanex, Co., Ltd.
• Moonshot Award: Ayush Balaji

The winners received monetary prizes and the chance to meet with senior executives from the organizing sponsors. They will also receive mentoring and support from healthcare professionals and executives of organizing sponsors.

All who took part in the HxD competition benefited from having their ideas reviewed, and the ACCJ thanks everyone who submitted pitches. Yet again, HxD proved that there is boundless healthcare innovation in Japan, and the 2022 competition is sure to reach new heights once more.

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Sponsors

President’s Circle Sponsors
Cisco Systems G.K.
Eli Lilly Japan K.K.
Google Japan G.K.

Organizing Sponsors
AstraZeneca K.K. | Bayer Yakuhin, Ltd. | Deloitte Touche Tohmatsu LLC | i2.JP (Innovation Infusion Japan)

Contributing Sponsors
Dentsu | Johnson & Johnson | K&L Gates LLP | Motorola Solutions | NRW Global Business | Omron Corporation | Trilations G.K. | Real Life Sciences | SoftBank Corp.

Supporting Organizations
City of Kobe | Embassy of the United States, Tokyo | Foundation for Biomedical Research and Innovation at Kobe | Global Venture Habitat | LINK-J | Osaka Innovation Hub

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Lost Chance

How entry restrictions have impacted business and education

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.

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.

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Attracting Global Investment

Ideas for making Japan a top financial center

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Two recent papers produced by committees of the American Chamber of Commerce in Japan (ACCJ) have highlighted the considerable opportunities that would result from changes to regulations that currently hinder Japan’s financial sector from attaining its full potential. And with the Japanese government committed to raising Tokyo’s profile as one of the world’s top financial centers, the committees are hopeful that regulatory authorities here might embrace some of the proposals.

The Investment Management Committee published a viewpoint entitled Relax or Eliminate Unrelated and Onerous Regulatory Requirements for Marketing of Offshore Funds to Professional Investors Conducted by Global Investment Managers, while the Financial Services Forum released a white paper headlined Reimagining Japan as a Global Financial Center, the latter proposing changes that would drive the nation’s long-term economic growth.

License to Sell

Japan’s financial regulations are designed to protect investors, both retail and institutional, which is a “worthwhile goal” according to David Nichols, executive advisor at EY Strategy and Consulting Co., Ltd. The type of investment is determined by the definition of the investment and the sales license held by the distributor.

“The licenses entail certain responsibilities—some fiduciary and some customer best-interest,” said Nichols, who also chairs the Investment Management Committee.

“While distributors do not have a fiduciary duty to their clients, they are holding their customers’ security purchases in firm accounts,” he added. “As such, the state of the distributors’ balance sheets can impact the client holdings. If the distributor goes bankrupt, clients may have difficulty accessing their investments.” As a result, the Type 1 license required by a distributor has capital adequacy requirements to safeguard investors.

While offshore funds fall under the definition of securities that can only be sold by distributors with a Type 1 license, the fund assets are not part of a distributor’s balance sheet and, therefore, are not impacted by the health of that balance sheet, Nichols pointed out.

“So, the reason the regulations are in force is that offshore funds have been classified as a security but do not hold the same dependency on the distributor’s balance sheet as a normal security does, since the fund assets are held by an independent custodian,” he explained, describing the situation as “an unintended consequence of regulations intended to protect investors.”

To correct the situation would require a root-and-branch revision of the 2006 Financial Instruments and Exchange Act, which would be a major undertaking and would require an amendment approved by the national Diet. Instead, the ACCJ is proposing some administrative changes that the Financial Services Agency can enact and “that would get us to materially the same place,” Nichols said.

Norihiko Tsukada, managing director and head of compliance at BlackRock Japan Co., Ltd. and vice-chair of the Investment Management Committee, identified “certain off-site monitoring items, including daily calculations of capital ratios” as one regulation that is unnecessarily obstructive, although he points out that regulations in Japan are broadly equivalent to those of other jurisdictions. In the United States, however, limitations are less of a concern, as the market there is sufficiently large to make it economically feasible to package investments in US onshore vehicles.

Lost in Translation

Distributors in Japan also face administrative hurdles and language requirements that make it more complicated to set up and run an asset management business. That should be a concern since Tokyo has designs on a larger role in the global financial services market.

The committee has recommended that regulations surrounding the offsite monitoring of investment management companies (IMCs) should be relaxed, as certain reporting items are not relevant to the activities of global IMCs, along with the initial registration process for distributors of standard Type 1 Financial Instruments Business (FIB).

“Tailoring regulatory requirements to address relevant business risks will not impact client protection,” the paper emphasizes, adding that “such relaxation of regulatory requirements would improve the appeal of Japan to foreign investment managers interested in establishing a presence in Japan, and would be consistent with the [government of Japan’s] objectives to promote Tokyo as a global financial city.”

The solution, the committee suggests, would be the creation of a new type of FIB, that might be called a “solicitation-only” Type 1 FIB.

Seize the Moment

Aaron Lloyd, director of Sompo Japan DC Securities Inc., said the regulations are not new, “but you could say that dissatisfaction has reached a tipping point, as many foreign investment management companies would like this regulation changed.”

Failure to seize this opportunity, he believes, may have lasting negative implications—particularly with Tokyo and Singapore competing to attract companies that might be considering leaving Hong Kong as a result of the Chinese government’s recent crackdowns in a city that, until now, has been the Asia–Pacific region’s preeminent financial center.

“Japan should introduce changes,” Lloyd told The ACCJ Journal. “The government should be making it easier for foreign asset managers to solicit their funds, not more difficult. With the costs of maintaining an investment management business high in Japan, it would be a boon to the industry if overburdening regulatory requirements were reduced.”

Driving Disruptive Innovation

The Investment Management Committee’s aims have a good degree of crossover with those of the ACCJ Financial Services Forum, which is confident that Japan can position itself as one of the leading financial gateways for Asia, and prosper were the region to become the leader in global economic growth.

“Financial services firms ultimately help grow capital markets and the economy, which creates jobs and a higher standard of living. They also help solve the financial wellness challenges of institutional and retail investors’ clients in a way that creates confidence and [encourages] participation in capital markets,” said Derek Young, a Chartered Financial Analyst charterholder who is president and representative director for Japan at FIL Investments (Japan) Limited.

Relative to its size and the diversity of its economy, at present Japan’s finance industry “punches far below its weight,” according to Young, who also serves as vice-chair of the ACCJ Financial Services Forum and is a member of Fidelity International’s Global Operating Committee.

Introducing more competition in this sector also helps to drive disruptive innovation in the pursuit of expanding Japan’s capital markets and helping Japanese investors solve the challenges that they face, Young added.

“Japan is the third-wealthiest country in the world, and is a super-aging society,” he pointed out. “The need for assets to last for longer and to provide income makes Japan a prime target for financial services firms that want to help solve that challenge.”

Roadmap

The Financial Services Forum has drawn up an extensive list of recommendations for the Japanese government that can be distilled into six main areas:

• Make it easier to live and work in Japan, as well as to enter and return
• Improve governance, transparency, and stewardship
• Address the need for more specialized professionals
• Broaden market participation for individual investors
• Address shortcomings in selected financial regulations
• Facilitate development of key financial infrastructure functions

In conclusion, the report states that, “Japan possesses the necessary attributes to achieve this goal: a highly educated and motivated population, a diverse and large economy and corporate base to support it, high levels of technological development and adoption, and a stable political environment underpinned by commitment to the rule of law.”

Critically, however, what has been missing to date is a coordinated commitment, across the government and corporate sectors, to address legacy structural shortcomings that are impeding the development of a financial center that leads rather than follows. On its current trajectory, Japan is likely to fall further behind nimbler centers.

“Many of the issues needing attention are challenging to address,” the report concludes. “Nevertheless, developing a more robust financial ecosystem in Japan demands that policymakers take up this challenge with a sense of urgency and determination. Doing so not only would establish Japanese leadership in global finance, but also make a vital contribution to Japan’s long-term economic growth.”

And Young is optimistic that change is in the air.

“One of the most encouraging facets of this white paper exercise was meeting with prominent Japanese government officials about the findings,” he said. “It’s clear that there is existing momentum to change the business environment in Japan, [and] to make it more friendly to foreign investors.

“Change is not easy—especially in a tradition-rich country such as Japan—but we met with very little resistance in a general sense and, instead, were greeted with a friendly acknowledgment that Japan is thinking about ways to improve its positioning as a global financial center.”

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Outside Options

Ways to invest as an expat in Japan

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Over the course of their career, many professionals will live and work in multiple countries. And as expats, they will find financial opportunities and face challenges that those who stay put in their home country may not. Making and managing investments can be complex, but experts interviewed by The ACCJ Journal shared ways to maximize resources, grow wealth, and navigate potentially higher taxes, investment restrictions, and language issues.

Alternatives to Consider

“The world of product opportunity for Asian alternatives has dramatically expanded over the past 10 years, and investors can now make lump-sum investments across a variety of single-purpose venture, hedge, and private-equity vehicles,” explained Edward Rogers, chief executive and chief investment officer at Rogers Investment Advisors.

There are a number of possible paths to follow for expat investors. “Many expats are investing in both onshore and offshore structures—in places such as the Cayman Islands and British Virgin Islands—that provide access to a full range of hedge-fund, private-equity, real-estate, and long-only options,” he said.

Argentum Wealth Management’s Martin Zotta, who shares the title of managing director and CEO with co-founder Lloyd Danon, said that many expats “tend to invest in a combination of monthly automated and ad-hoc lump-sum investments.” Monthly options, he noted, put excess savings from each paycheck to work, while lump sums are suitable for investing existing cash holdings and performance bonuses.

And Timothy Gregersen, head of cross-border transactions, investment sales for Japan at Cushman & Wakefield K.K. cited multiple options in real estate that can help expats build their portfolio.

Onshore/Offshore

One of the biggest concerns when choosing to invest is the tax burden that may be incurred. “Historically, the single biggest investment was probably offshore wooden housing structures that provided dramatic Japanese tax relief, but this option has been closed out by the Japanese government,” said Rogers, who founded his firm, in part, out of a desire to implement the Yale Model of endowment for his personal family investments. His first focus was to provide retail access to Japanese—and then broadly Asian—alternative investments, with an entry point of $100,000 per investment. Often, the required minimum would be $1 million.

While offshore was once a top choice, it is getting harder and harder, he said, with the new approach to anti-money laundering (AML) and know-your-customer (KYC) processes making basic retail banking—for individuals as well as small and medium-sized enterprises—very difficult. “Banks make less and less money serving these clients, and are offering them commensurately fewer and fewer services, with the excuse that AML and KYC have created barriers to relationships,” he explained.

With offshore being less attractive, Rogers identified two onshore options that can bring significant tax benefits:

• Buying or leasing aircraft
• Angel zeisei

The latter is an incentivized Japanese investment tax system, mainly aimed at individuals, that allows investors to deduct the higher of ¥10 million or 20 percent of their income.

Taking advantage of newer financial institutions can also be beneficial.

“Online banking is most likely the single most important concept for expats on an individual basis,” Rogers explained. “And as small business owners, it is easier to understand and to do so quickly. Large, traditional brick-and-mortar banks charge absurd sums to execute electronic transfers.” These costs should be understood and compared versus online options, he said. “Online wins pretty much every time.”

Property Profits

For those looking to invest in real estate, Cushman & Wakefield’s Gregersen said there are a few ways an expat can access real estate investments, depending on their overall financial objectives and level of risk tolerance. “The easiest option, executionwise, would be to access real estate via listed real estate investment trusts, or REITs,” he explained. “This can be accomplished with a relatively small amount to start, and can easily be added to or divested.”

Investment in direct assets, such as a condo unit or an apartment building, is an alternative path that Gregersen suggested. “This typically involves a larger ticket price, the use of leverage, and transaction costs. Real assets are lumpy—and generally less liquid than listed options—so they should be carefully considered.”

Another possibility that has recently taken shape via crowdfunding platforms is a hybrid of these two. “This could work for those who are looking for investments that aren’t correlated with the stock market and which don’t require as much capital as direct investments,” he said.

If one decides to go the direct investment route, a major obstacle for an expat will be securing financing, according to Gregersen. “Unless the expat has permanent residency, it can be very difficult to source financing at good terms,” he said. “It’s not impossible, but it will be quite challenging.”

He cited two matters that are likely to be more difficult for expats than for Japanese nationals:

• Transferring funds to close the deal
• Property, income, and withholding taxes

“Closing a real estate transaction involves transferring large sums of money, so it is important to confirm your bank’s policies and procedures in advance,” he said. “Further, if the expat intends to use funds from overseas, it is even more important to confirm with the bank to which the funds are being transferred what policies and procedures they have with respect to international remittances. Funds can get stuck in transit, and figuring out where they are and why this has happened is not a fun experience.”

Property owners whose primary residence is no longer in Japan will face logistical challenges, he added. “They will need to appoint a tax administrator to handle the payment of annual property taxes and to file income tax documents, in the case of investment property. Further, where owners live overseas and rental income is to be remitted, the funds will be subject to withholding tax at the source. This is also true in the case of a sale.”

Portability Is Vital

Some expats have settled in Japan and have made the country their permanent home. But for most, their time here will be limited, and the decision to pick up and move is outside their control. A promotion or shift in corporate priorities can lead to a sudden relocation.

“In general, expats are looking for portable, flexible solutions as regards access to capital and tax efficiency,” explained Argentum’s Zotta, noting that there is a wide range of international options available to expats, depending on their nationality and financial requirements. “Portability is vital, as most clients will not remain in Japan long term. A good solution for one client may not be suitable for another, so it is essential to clearly understand a client’s financial goals and objectives before presenting the most appropriate solution.”

Argentum specializes in international investment solutions and, for US nationals, US onshore solutions.

“We take a holistic approach to financial advice and our clients’ needs, and prepare recommendations to suit their individual situations,” explained Danon. “During a first meeting, we go through a general Q&A to understand, in detail, what will be the most appropriate choice. We have a broad range of solutions to meet the needs of all clients, and being locally licensed in Japan to offer advice gives us a comprehensive range of options.”

Language Barrier

Japan is well known for its paperwork, and more often than not documents are only in Japanese. Even if an English translation is available, ultimately the Japanese version will need to be completed and filed. Doing so can be challenging even for expats who are fluent in Japanese, as the language of such transactions is complex.

“One key way for expats to deal with the language barrier is to work with a bilingual agent on the purchase, and a bilingual property manager on an ongoing basis,” said Gregersen.

Rogers gave the same advice, saying that investors should learn Japanese, but also noting that simply speaking and reading the language is not enough. “The reality is that investors should be prepared—and willing to pay for high-quality translations of documents to make sure they know what they are investing in.”

Long View

Danon noted that those who intend to live in Japan for the long term should take special precautions. “You should prepare for your parents’ and your own estate planning needs, as Japan has an unusual way of treating and taxing estates between heirs,” he explained. “Estate planning is something our clients have reached out to us a lot more about recently, given Covid-19 concerns and restrictions on movement. Unfortunately, many expats are underprepared—or are generally unaware—of how Japanese inheritance tax laws will affect them and their immediate families.”

Rogers was more blunt. When asked what advice he has for expats planning to retire in Japan, he answered with one word: don’t. “There is no way you want to deal with Japanese inheritance taxes if you don’t have to.”

But for those who do want to settle down in Japan, and wish to put their money to work, there are many investment opportunities to be had. Leveraging the expertise of the foreign community through legal, financial, and advisory services, however, is a key part of successfully investing as an expat.

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My Leadership Journey

ACCJ-Kansai CEO Series: GE's Eriko Asai shares how to stay resilient during uncertain times

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Since 2015, the American Chamber of Commerce in Japan (ACCJ) Kansai chapter has hosted the CEO Series, an annual collection of speaker events featuring top executives from leading companies. The sessions are very popular due to their intimate and insightful nature, and the glimpses they offer into the lives of successful leaders. Attendees leave inspired and with actionable advice to help them improve their work lives, while the candid discussion is especially valuable for young professionals starting to build their careers.

On May 19, Eriko Asai, president of GE Japan and ACCJ chair, spoke at an event co-hosted by the ACCJ-Kansai Business Programs Committee and Diversity & Inclusion Committee. She revealed what she had learned on her way to becoming GE Japan’s first female president.

“Today, I’m going to share with you my leadership journey and some of the challenges I’ve experienced over the years that helped me develop my leadership skills and keep myself resilient during uncertain times,” she said.

The landscape has changed significantly since Asai took the helm of GE Japan in January 2018, and the company currently is undergoing its biggest business transformation of the past 128 years. “One of the most important jobs, as a leader, is to drive the cultural transformation and make a difference,” she noted.

Milestones

Asai opened her presentation with a slide labeled “Leadership Journey” on which she charted the major events in her life and career, beginning with her birth in the UK.

More than just a visual representation of education and job changes, the chart tells a story that Asai believes has great value. “I highly recommend that you write your journey like this, because it helps you reflect on who you are, your strengths and weaknesses, why you think about something a certain way, what you care about, what has been consistent in your career journey, and where you want to be in the future,” she explained.

One thing that this writing exercise brings to the forefront is self-awareness which, Asai said, is such an important part of the leadership journey. Noting that her rise to company president was a zigzag, not linear, she outlined her career progression and the skills she learned along the way—a particularly valuable way of looking at professional development and staying the course.

“It’s very important to be intentional about your journey, according to your life stage,” she explained, breaking down the phases of career progression by age:

• Twenties: challenge yourself
• Thirties: work–life balance and expertise
• Forties: leadership
• Fifties: investing in the next generation

When she moved to Japan at age three, to Australia at age nine, and then returned to Japan two years later—all due to her father’s work with a trading company—Asai learned three key skills that would help her become a leader:

• Survival
• Listening
• Adapting to change

Two more skills were added when she chose to study at a UK university, before going to work for Sony Europe in Germany—despite speaking no German:

• Being the minority
• Communication

When she began a series of transitions in her thirties—shifting first to government affairs with Microsoft Corporation, then to healthcare with GE Healthcare, during which time she also served as director of the American Medical Devices and Diagnostics Manufacturers’ Association, later expanding her role to energy and finally becoming president of GE Japan in her late forties—she added two more key traits:

• Self-confidence
• Resilience

Now that she is president, she has taken on roles that help her invest in the next generation. This includes serving as chair of the ACCJ. And, while she leverages her experience to help others grow, she finds herself also refining skills such as:

• Developing people
• Building teams
• Crisis management

“I have lived in many places, in five countries, and have always been a minority in those societies—so I know how it feels when your voice is not heard, how painful it is to be left out with no means to respond,” she said. “Although I didn’t know the word ‘inclusive’ when I was very young, I came to understand what inclusive leadership looks like through my experiences in the early part of life. I’m sure many of you have had similar experiences. It’s very good to reflect on those and think about how you can apply what you learned earlier in life to your workplace today.”

As she noted, her path has zigzagged, so it is important to remember that you can learn at any time. “Leadership is all about acquiring skills at any point in your life. If you didn’t have a particular experience—for example, a chance to live abroad—earlier in your life, you can always do something different in your current life and practice adapting to the change.”

Pandemic Leadership

Next, Asai talked about the current situation and the need for leaders and teams to work together when dealing with a crisis such as the coronavirus pandemic.

“This is a moment when leadership really matters,” she said. “We need to prepare for the worst-case scenario and make sure that people understand the guidelines we have put in place. This takes self-awareness and imagination.”

She said that, in such situations, it is important to follow up with employees who may be feeling left out, or who find it difficult to talk with a manager. “We need to be creative about supporting them in making the work-from-home experience comfortable.”

At the start of the pandemic, Asai set up the national crisis management team for GE Japan, to help it cope with Covid-19 and the potential disruptions to business operations. By working together, helping everyone understand the risks and importance of establishing and following safety guidelines, and listening to employee concerns so that they might feel comfortable and adapt, GE Japan was able to continue being productive and secure.

Once everyone had become accustomed to the new procedures and workstyle, she handed over related responsibilities to the business leaders, who then managed their units and teams on their own.

Strategy and Policy

Expanding on GE’s business transformation, Asai highlighted the importance of focus.

“GE has a 128-year history, but we have really changed our portfolio over the past couple of years,” she explained. “We used to have businesses such as capital, plastics, and even media. But we have divested ourselves of most of the non-core businesses and now are focusing on infrastructure.” The three areas of the strategy are:

• Energy transition
• Precision health
• Future of flight

In terms of policy, GE is working with governments around the world to implement rules and regulations that harness innovation while ensuring a sustainable future. Three key policy areas are:

• Decarbonization
• Decoupling
• Digital transformation

Highlighting the last of these, she reminded attendees that “the ACCJ just released the Japan Digital Agenda 2030 report, which provides comprehensive guidance as to how Japan should leap from here, given that the government is focusing on establishing a digital ministry and there are a lot of changes to come. It’s an important time for the ACCJ to be putting forth a position on this, and we are also doing so at GE.”

Building a Culture of Success

“To make this business transformation, one of the most important jobs as a leader is to drive the cultural change,” Asai said, explaining that, at GE, 50 percent of a team member’s review score is based on performance and 50 percent on leadership behaviors, of which the company has three:

• Act with humility
• Lead with transparency
• Deliver with focus

“When we talk about acting with humility, it sounds obvious. But it’s also surprising that we are talking about it at this point in GE’s long history,” she said. “We are very proud of our technology, but because we are so proud, we have become a little bit arrogant. So, the questions are: How can we become more humble? How do we behave with humility? What does humility look like? We need to discuss and debate this as a team.”

She added that humility is a very important starting point for leadership behavior. “If you think something is wrong, you should say so. We have to be open to this. It has to be a culture of welcoming feedback and acknowledging mistakes.”

Transparency, she explained, goes hand in hand with humility, because without transparency, people will not raise issues and you cannot solve problems. The worst-case scenario for a company is not having the bad things reported up to management level.

“Trust is the base of this transparency,” she said. “And this also goes for leaders sharing bad news with the team in a timely fashion, because, without leaders exercising transparency, the team will not have the courage to share bad news themselves. It goes both ways.”

Delivering with focus relates to our ability to manage the demands of modern life, where it is easy to become distracted or be drawn into doing a task that is not the highest priority.

“In a world where we have so much work to do, we really need focus and speed. And being able to focus on the most important thing is a continuous challenge,” she said. “It is about ruthless prioritization and practice, and I am continually struggling to do that myself. Priorities are so important.”

Takeaways

In closing, Asai recapped five points that she believes can lead to a successful and rewarding career—one in which you might also zigzag your way to the top:

• Leadership is about continuous learning
• Focus on building trust
• Embrace awareness and imagination
• Be mindful of how you use time
• Take control of your life and have fun!

“We live in an uncertain world, so constant change is the norm,” she said. “We are never going to be perfect, so we need to be humble and learn from others. The good news is that you don’t have to be perfect, and you don’t have to know everything, because there’s no way to know everything.”

Building trust, Asai noted, takes time. But “speed of trust,” as she calls it, is very important because when there is trust you can get work done faster.

Being mindful of how you use time also is critical, she said. “In my case, I need to spend about 20 percent of my time reflecting and really thinking deeply, without meetings, and 10 percent or more on people development, talking to people—especially young talent who have points of view to share—and spending time with them outside my work.

“And, obviously, sleep and exercise—all the things that keep you healthy—must be tended to, so it’s very important to carve out time in your schedule for that,” she added in closing. “Making sure you are healthy is, in the end, bringing a healthy spirit to work every day.”

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