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Ancient Monozukuri philosophy still guides corporate Japan in the 21st century

Article - September 1, 2016

With a focus on a long-term vision rather than short-term results, Japanese companies push for sustainable growth, while adhering to age-old principles of craftsmanship and contributing to society

Although there is no direct translation for the term “Monozukuri,” the closest description in English is associated with the word “craftsmanship.” In Japan there has always been a focus on producing things in accordance with principles that have guided the society for centuries. While less formal in practice than in the past, the notion of “kata” or the “most proper” way of doing something still resonates with Japanese citizens today. The idea that a person should work at their craft with the aim of perfection centers on the importance of quality production rather than the person who created it or, like the American mentality, of “just getting it done.” The Japanese have a desire and concern for doing things right, however it may not mean short-term results or the fastest production.

Even the machines for manufacture themselves are created or improved to ensure high-quality results. “We use European machines because of their quality. We believe in importing those and slightly changing them to fit the demands of the Japanese market. At the end of the day, what is important is to satisfy the demand of the Japanese and amend the machines to fit the current needs,” says Gotaro Nakamura, President of NASCO Nakamura Sangyo, which specializes in food packaging.

In fact, as notable writer on Japanese culture Boye De Mente once wrote, “One of the aspects of the quality obsession of the Japanese is that it covers the whole product, including areas that are not ordinarily seen – the bottom, inside, and so on. Many Western products have failed the Japanese test for quality because they were not fully finished or detailed.”

Following “kata” can still be seen in interactions with Japanese businesses today. There are certain principles, manners and etiquette that are expected of foreign individuals wishing to conduct business with Japanese executives or in Japan. Being familiar with these customs is essential rather than a bonus when engaging in business, as it is a normal practice of the Japanese to study and become familiar with the customs, culture and language of their customers or partners.

At the same time, adapting to international practices has helped many Japanese companies learn more about the processes of their industries and expand overseas. Changes have been applied both in Japan and abroad, which have helped businesses like Ariake Japan maintain steady growth. The food manufacturer has been in business for over 50 years and expanded into the U.S. 26 years ago.

Chairman Kineo Okada explains, “We had to comply with the strict regulations of the FDA, which are much stricter than our domestic standards. We learned a lot during this process and were able to comply with the internationally acclaimed standards of food administration. This allowed us to gain the trust of our Japanese clients, which resulted in the growth of the company.”

And while the company continues to enjoy success at a time when others are challenged, one of the pillars of their management philosophy involves contributing to society because the goals of Japanese corporations focus on success beyond the immediate future.

“As Konosukue Matsushita, (the revered Japanese industrialist who founded Panasonic), said, ‘The real value of a corporation comes out when the economy is sluggish.’ This is a creed all managers in Japan know and this is what we embody. We cannot use the badly performing economy as an excuse for poor performance. It is all about efforts. Efforts always pay off,” adds Mr. Okada.

Kameda Seika Co., Ltd. is another company in the food industry that began the internationalization process some years ago, beginning with the United States in 1989. Chairman and CEO, Michiyasu Tanaka, explains that, “The domestic growth rate for rice crackers is 2-3%; however, growth in the U.S. is 10-20% per year. The market in Japan for these crackers is 260 billion yen ($2.56 billion); in the U.S. that same number is 36 billion, and in terms of scale, it keeps expanding.”

As they focus on the increase in purchase of the health food in the United States, Kameda Seika is holding true to Japanese standards of maintaining high quality and looking out for the long-term results.

In an interesting anecdote, Mr. Tanaka describes the Japanese mentality that is so steady amongst business practices: “Three weeks ago, a professor from Harvard Business School visited us in order to write a new case on Kameda. One of our subsidiaries in the U.S. engaged in selling traditional Japanese rice crackers has been losing money for nine years. The professor asked us why we are still running this business. I told him that we operate on a long-term basis rather than short-term. In the U.S., if you cannot get results within three years, you will give up and abandon the business; we are not like that in Japan.”

Other industry leaders like Soji Maeda, President of Maeda Corporation, a civil engineering and construction firm, have a similar viewpoint. “We put the needs first, not the company. We have always been striving to adjust to the needs as quickly as possible and that is how we have been expanding our company and contributed to society. To challenge new things, to keep on challenging, is within our DNA.”

Japanese companies also value the importance of giving back to their employees. In the case of Biken Techno Corporation, a building and facility management company, that entails offering training programs to its employees from Vietnam and the Philippines, whereby they come to Japan to acquire new skills and a technical license, all while earning a wage.

“In terms of the caring business, we started this strategic Technical Training System program in Asia. For example in countries like Vietnam and the Philippines, we invite local employees for training so that they can acquire the technical license. These people come to Japan, learn technologies, and earn money. Eventually, when we establish our offices in their home countries, they can go back and start working there. In 2011, we established our office in Singapore, which has about 68 employees. I am also planning to establish another one in Bangkok, Thailand,” says President Ryusei Kajiyama.

Expansion into foreign markets will remain a top priority for Japanese firms as they work to strengthen their global presence. However, cultural standards and the central idea of “Monozukuri” will continue to be a priority in the way things are made and done when doing business in and outside Japan.

Japanese values stress the importance of sustainability and long-term contributions to society. And while the Japanese will continue to press for internationalization, they are holding true to those values of high quality and standards that they believe will ultimately help to revitalize the economy.

Abe reelected, vows to accelerate Abenomics

Prime Minister Shinzo Abe came to power in December 2012 promising to lift Japan’s economy out of decades of stagnation, by implementing his bold three-pronged monetary, fiscal and growth strategy known as “Abenomics”.

Unfortunately many would argue that Abenomics has not had the impact that Mr. Abe envisioned almost four years ago. And many leaders in the Japanese business community, including Toshiyuki Kanda, President of Okada Aiyon Corporation, remain on the fence about the plan.

“Abenomics was implemented with three arrows. The first arrow touched upon monetary policies, which was approached with a very aggressive strategy that I believe has gone fairly well. The second arrow was about fiscal policies, and I believe this was positive too. The third arrow, growth strategy, has not been as successful as expected,” he says.

“It is still early to say, and we have to wait a bit for it to be fully implemented, but compared to the previous policies, I personally feel that we can get something out of the growth strategy plan if it is implemented well.”

While his economic revitalization strategy has not entirely convinced business leaders, Mr. Abe’s actions since coming to power convinced the Japanese people to reelect him in June, giving him a mandate to “accelerate Abenomics to meet the public’s expectations.” And in July, he announced a staggering 28 trillion yen ($265 billion) stimulus package to boost domestic demand and to stave off deflation.

So while Mr. Abe looks to push on with his agenda to elevate the economy, leaders in the pharmaceutical, real estate and food industries will continue to build long-term sustainable growth by applying the “Monozukuri” and “kata” principles, to which Japan has adhered for centuries.