From:                              Robert Dujarric []

Sent:                               Wednesday, October 08, 2008 9:29 PM

To:                                   Hagiu, Andrei; Aisner, Jim

Subject:                          Here is the online text of our piece


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October 06, 2008
With Japan behind global eight ball, here's what to do
Country must take steps to maintain top-tier international standing, from promoting women in workplace to reforming immigration policies


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Although Japan's economy has rebounded from a slump that lasted more than a decade, it is increasingly out of step with the rest of the world.

The country continues to miss out on trends that underpin economic success in the 21st century: the growing percentage of female managers, professionals and academics; the increasing presence of immigrants among the business and scientific elite; and the international flow of ideas via cosmopolitan executives and academics with feet in two or more countries.

Some nations are more successful than others at riding these waves, but Japan is the underperforming outlier. Only 10% of Japanese managers are female, as opposed to over 40% in the U.S. Business magazine Forbes' 2007 list of the 100 most powerful women in the world includes 49 Americans and five Chinese, among others, but not one Japanese. At the elite University of Tokyo, only 19.5% of undergraduates are female (up only 1% in five years), whereas at Harvard College, women comprise 47% of the student body. The most dynamic Japanese women professionals work for foreign companies or overseas, shunning home-grown corporations.

Japan also scores low on the immigration and "brain circulation" front. With few exceptions, its top managerial and scientific echelons are exclusively Japanese. At the same time, Japanese are seriously underrepresented in foreign multinationals (outside Japan) and international organizations.

For example, although Japan contributes about 20% of the budget of the United Nations - second only to the U.S. - Japanese make up less than 7% of U.N. professional officers. And of some 100 top executives at U.S.-based Microsoft Corp., none are Japanese. Japanese academics rarely teach in foreign universities, while their ambitious students dream of going to work in London, Silicon Valley, Shanghai, Dubai, or Singapore rather than Tokyo.

Finally, Japan remains wedded to an industrial model in a post-industrial world. Although Japan's service sector accounts for 68% of the domestic economy, its productivity in that sector ranks near the bottom among industrialized countries, and its service businesses have failed to establish themselves overseas. From Sony Corp. to Panasonic Corp. to Toyota Motor Corp., almost all the country's star exporters are in manufacturing.

One of the least understood causes of this is the lack of adaptability to foreign markets. To be successful worldwide, service providers such as retailers, entertainment conglomerates, hotel chains and Web services must adapt themselves to local conditions, fashions and tastes - much more so than suppliers of industrial goods. Companies run solely by middle-aged men who speak only one language are at an obvious disadvantage.

Out with the old

Japan must take a number of steps to avoid the consequences of these outdated and economically harmful ways:

■It must adopt a new national human resources policy. In the 19th century, Japan, alone among Asian nations, successfully modernized itself by discarding the old personnel norms of the shoguns, which confined military service to a small hereditary caste and business to a few merchants. Now it needs a crash program to catch up with nations that have empowered women to reach their full potential. The government can start with the public sector, which has led "feminization" efforts in the West. Besides actively promoting women and female recruitment, it needs to alter the working habits of a bureaucracy used to long working hours - an element that makes a public-sector career impossible for those who bear a larger share of familial responsibilities. Enforcing paternity leave would also signal that the government wants husbands to do more at home.

■It needs to overhaul immigration policies ill-suited for today's global economy. Bringing in legions of unskilled workers with their families is unrealistic and unnecessary, but Japanese society could take in many more educated professionals from other nations as well as caregivers from overseas to help working families watch over their children as well as staff day-care centers and facilities for seniors.

■To end its intellectual insularity, Japan has to internationalize its universities. One step would be to establish a large Fulbright Scholar-like program to support foreign scholars teaching in Japan and Japanese professors in overseas institutions. Additionally, Japan's top universities could mandate, as Paris's elite Institut d'tudes Politiques has done, that students spend a full year studying overseas before receiving their diploma.

■Finally, Japan has to make its citizens much more adept in English. Even recent graduates of top colleges can barely speak the language, thus isolating them from the rest of the world -a problem that most top Chinese and Korean graduates no longer have. A selective immigration system that could bring qualified English instructors to Japanese schools and universities would help remedy this weakness.

Skeptics might argue that Japan will slowly sink into oblivion before these reforms can take effect. But rapid transformations are possible, as South Korea's high-speed metamorphosis into the modern era demonstrates.

What is missing in Japan is not the capacity for change, but rather the sense of urgency.

The rise of other Asian nations should convince the Japanese establishment that if they want their homeland to remain a first-tier competitive country, Japan must switch gears to pursue national renewal before it really is too late.

Robert Dujarric heads the Institute of Contemporary Japanese Studies at Temple University, Japan Campus. Andrei Hagiu is an assistant professor in the Strategy Unit at Harvard Business School.

Robert Dujarric     (
Director, Institute of Contemporary Japanese Studies (ICJS)
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