Recruitment & HR Development

What are the 3 challenges Japanese companies face in personnel affairs when entering Asia’s Market


With the acceleration of Globalization, many Japanese companies have advanced overseas. However, there are significant barriers that all Japanese companies face, regardless of their industry, size and the country that they expanded to. One of those barriers is human resource. Let’s check out the 3 issues in personnel affairs that is faced by Japanese companies entering Asia’s market.

The 3 challenges of Human Resource in companies when expanding in Asia

When considering the merits of expanding overseas, companies usually expect the development of a new market or to reducing production cost. However, to achieve this, it is essential to localize the business so that it fits in with the local political, cultural and religious environments.

Many Japanese companies that have successfully expanded overseas have localized themselves. However as of current, the localization of core positions is considered slow when compared to other foreign companies. Such Human Resource management issue can be summarized into the following three factors.

Challenge 1: Fostering local management positions

It is common for Western companies to leave overseas management to the local employees, known as on-site talent. On the contrary, many Japanese companies choose to staff their top positions with Japanese employees, creating a situation where local employees are not nurtured. 

Reasons are as follows:

 • It is hard to communicate with local employees 
 • It is very risky to trust local employees
 • Ease of working with Japanese co-workers

Although there are various other reasons, the crux of the problem lies with the Japanese defending Japanese methods such as organizational structure, personnel review and the salary system; lacking communication that seeks to increase understanding of local employees; lacking understanding of the local culture and insufficient preparation made before the expansion.

In order for companies to succeed during overseas expansion, it is necessary to not just make use of talents that is familiar with local environment and issues, but also nurture local employees to be able to take up managerial position and entrust them with the authority. 

Compliance awareness varies dependent on the country, due to factors such as lack of ethics and low security awareness. However, by changing the company’s internal structure and imposing penalties when rules are broken, it is possible to entrust local employees with authority. 

Challenge 2: Covering high employee turnover rate

There is a big difference between how Japanese and overseas employees think about career development and jobs. In Japan, various careers and ways of live have emerged since the lifetime-employment system collapsed and performance-based employment has spread. However, it is already a common practice overseas for employees to change jobs as part of career advancement. In short, the lack of local employees being appointed to managerial positions is one of the reasons for the high turnover rate.

Furthermore, in other countries, employees are evaluated based on their own performance. But in Japan, in addition to the individual performance, team performance is also considered when evaluating the employees. Such personnel evaluation system may be deemed to be opague by local employees and this may cause them to decide to leave the company.

To avoid these issues, there is a need to have regular meetings to improve communication and close the gap between the difference in approach to developing talents. 

Challenge 3: Low Productivity

In Japan, people think of employment as “joining a company”, but in foreign countries, they think of employment as “taking a job”. For that reason, in foreign countries, employees will be assigned jobs at the point of employment and they will focus only on those jobs assigned to them, not doing anything else that is not stated on contract. 

On the contrary, Japanese employees will coordinate and discuss with other relevant departments about the task at hand in order to accomplish the company’s objectives, even though the task is not stated in the employment contract. As such, this allows Japanese employees to be detailed in their work, but it also means that their productivity is compromised as they have to handle tasks outside of their job scope. 

The Japanese way of working is strange and unacceptable to local employees. As a result, the need to allocate tasks make it hard to proceed and there are also situations where the Japanese way of working can result in low productivity too. 

It is possible to fix these problems by having proper job allocation, personnel evaluation, reflective salary increment and clear conditions for promotion. This can result in increasing employees motivation which will lead to the improvement of productivity.

To solve the 3 issues and raise productivity of local employee

To increase the local employee’s performance, it is important to understand the local culture, customs and environment. Companies must also prepare their own localization plans in advance.  To achieve that, it is necessary to nurture Japanese staffs that are able to investigative local conditions before working there. 

The collaboration and cooperation with people of different cultures and values are inevitable when comes to increasing the productivity of local staff overseas. It is important to recognize overseas culture and environment and arrive prepared for localization. Since the company is going to expand overseas, it will be good to consider the above issues while planning detailly before entering the overseas market.

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