Exchange Rate and Talent Shortage (2)

Let us think of ways in which Japan could get out of the bind that it’s in.

Until two years ago, the export sector was complaining about the adverse effects of strong yen. At the end of the last year, Germany’s Volkswagen emission scandal caused an uproar. The “company-wide” was thought to be responsible, and the reputation of the firm with the number one automobile sales in the world collapsed overnight, but this whole fiasco, to a Japanese, seemed all too foreign.

What about now? Japanese major electric company padding its performance, fabrication of condo construction data, and emission scandal of Japanese automaker were no doubt a yellow light for Japanese companies’ quality and reliability. The weak yen trend is shifting to slightly stronger yen, but that is also a double-edged sword. As previously stated, small and medium-sized businesses without direct exports do not benefit from weak yen.

Expanding the participation of foreign caretaker/nurse, which was riding on a lot of hope since a few years back, did not pan out as expected. The problem is not that they cannot read Kanji, Chinese character; the biggest problem might be that the benefit of them working in Japan is reduced because of weak yen, which reduces their earnings when converted into their own currency. Printing kana alongside Kanji is no substitute for financial incentives. These workers seem to be going to the U.S. and other countries in search for strong dollar. Paying foreigners in Japanese yen means that the value in dollar or their own currency is 60 to 70% of what it used to be.

Even if the number of visitors rises, as long as services are provided by people, the lack of quality in talent may pose a problem to the national goal of 20 million annual visitors. Construction and automobile industries, which are said to be doing well, can also be plagued with similar problems, and this could potentially lead to decrease in quality or productivity. The point is, it’s not that weak yen is good and strong yen is bad. A good balance is required for both the export-type businesses and businesses dependent on domestic market to succeed.

Japanese companies built a global reputation through its high quality products in the 80’s. However, the mistakes in development and marketing due to error in product concept are apparent, and Japanese companies cannot even compete globally in manufacturing, which is supposed to be their forte. Challenges are numerous: management strategy, compliance, and revitalizing employees. These things are all dependent on people and are only possible through supply of quality talent. However, the current condition is that talent is lacking, or even non-existent in some industries.

Our starting point is to recognize, once again, what we are. Not just through one perspective, but through multiple dimensions in order to provide a well balanced view. The merits and demerits of weak yen and strong yen must be weighed. Our most urgent task is to come up with a fundamental corporate strategy by balancing the merits and demerits. Our company is not responsible for the shift in the entire industrial structure, but procuring talent is becoming our biggest priority.

At the same time, for foreigners or foreign companies, there is a clear goal of establishing a win-win relationship with the Japanese market and Japanese companies that can survive only by expanding overseas.