9S O C I E T Y by Robert Dujarric andAyumi Takenaka

Why Japan is not setting the global agenda

Japan’s virtual Berlin Wall
Robert Dujarric, a former Council Foreign Relations-Hitachi Fellow, is Director, Institute ofContemporary Asian Studies, Temple University Japan. He worked at a Washington DC thinktank and in finance in the US, Europe, and Asia. http://www.tuj.ac.jp/icas/staff.html. Ayumi
Takenaka, Associate Professor of sociology at Bryn Mawr and visiting faculty at Tohoku
University focuses on immigrants’ social mobility in Japan and the international movementsof skilled professionals. http://www.brynmawr.edu/sociology/Takenaka.html.

Japan’s invisibility in the world still surprises many of us who live here. The
world economy is in crisis, but we rarely
see Japanese in positions of power and influence overseas. How many foreigners could
name a Japanese figure who influences theirthinking? How many business persons outside of Japan have Japanese colleagues?
How many skilled immigrants dream ofJapan? A virtual “Berlin Wall” surrounds
Japan, growing ever-more solid as the world
moves in the opposite direction.
Ruling elite trained in seclusion
Japan trains its ruling elite in seclusion.
Those with elite positions have studied inonly a handful of undergraduate faculties
that remain nearly exclusively Japanese.
Foreign students, more than half from China,
have almost tripled to 132,000 in a decade,but very few are in the elite programs.
Additionally, most ambitious young Asians
enroll in US and British Commonwealthschools despite Japan’s proximity, while
only 1.4% of Japanese students (60,225 individuals in 2008) study abroad. This compares to 101,913 South Koreans, eventhough South Korea is smaller and not asrich.
Japanese Abroad
Japanese professionals abroad are generallyemployed by Japanese multinationals (orembassies and media outlets), often on ashort-term basis. Very few serve as executives in non-Japanese businesses or as professors in foreign universities.
Likewise, Japanese are seriously underrepresented in international organizations.
They make up less than 3% of the profes-

DECEMBER 2011

sional staff at the IMF and the World Bank.
At the United Nations Secretariat, they are
under 2% (compared to 3.5% for Italy), a
minuscule share for a country that is the second-largest funder of the organization. Noneof the groups that frame the discussion on
global issues, such as Greenpeace, Amnesty
International, the World Economic Forum,and Crisis Group, is based in Japan. All havevery few Japanese managers and executives.
According to a survey of the world’s thinktanks, there is only one Japanese institution
in the top 50, the Japan Institute ofInternational Affairs at number 46.
In the rest of Asia, national elites areoften foreign-educated and trained. But inJapan few are even fluent in another language. As Japanese see their homeland as
100% safe, they seldom own foreign realestate or stash money overseas, nor do theyseek foreign citizenship the way many other
Asians do. In short, privileged individuals in
Asia typically join—at least partially—aglobal/western-centric international mindset,
but not the Japanese. Interestingly, discussions with Japanese executives as well as
research indicate that fewer young Japanese
aspire to work in a foreign country.
Enduring Homogeneity
Japan ranks lowest among OECD countries
in foreigners’ share of the skilled labor force.
Senior positions are almost exclusively
occupied by Japanese either by nationality orethnicity (as few Japanese citizens are of foreign ancestry). A number of high-profile foreign CEO’s apart, foreigners are almost
invisible in the Japanese corporate world.
There is also little inward foreign direct
investment (FDI). With the FDI stock esti-

mated at 4.1% of GDP compared to an average for developed countries of 24.7% and16.0% for the US, Japan is an outlier.
Research by William Carroll of theUniversity of Victoria indicates how
Japanese are marginalized in the interlocking international webs of company boards ofdirectors. Thus, surprisingly, Japan is outsideof the mainstream in many areas of the corporate world.
Root causes
Japan’s isolation is rooted in its triumphs in
the Meiji Era, reinforced by post-1945 highgrowth. By the early 1890s, Japan was amodern nation-state, a feat not replicated inAsia until a century later by South Korea. To
this day, Japan’s size makes it unique indeveloped Asia (Japan, South Korea,Taiwan, Singapore, and Hong Kong). Thus
Japan combines old and strong institutions
with a huge domestic economic base. The
system put in place in 1868-1890 has beenresilient. It has evolved in the past 120 years,
but without fundamental change to its core.
For example, elite Japanese universities,
sometimes older than the Statue of Liberty,
have provided generations of graduates withthe best jobs and networks. Many conglomerates have equally venerable pedigrees. The
national bureaucracy boasts a long history ofpower. The Diet has been in uninterrupted
existence since the Eiffel Tower was erected.
A few blue-blood parliamentarians trace
their lineage to a great-grandfather who sat
in the House.
When Japan had to catch up with theWest in the Meiji Era, and to a lesser extent
after 1945, foreign connections were highlymarketable. But today, Japanese fare better ifthey attend a selective college at home andthen land a position in big (Japanese) business or the civil service. Seeking recognitionand credentials in Japan, rather than abroad,is totally logical for them.
Another consequence of Japan’s success and size is its ability to set its own standards at home. A US insurance conglomerate executive in Japan once noted that they
had a set of global procedures and anothersolely for Japan. A professional at one of theworld’s largest Information Technology
firms explained that employees in Japan are
the only ones who are exempted from therequirement to master English and the Japansubsidiary has unique recruitment procedures incompatible with the normal corporate procedures. Thus, even if they work for
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foreign multinationals in Japan, Japanese are
the product of an insular system and ill-prepared for competing overseas.
Moreover, by 1965 when the UnitedStates and later Australia lifted racist restrictions on immigration, Japan was so wealthyand stable that few Japanese emigrated, incontrast to Indians, Koreans, Taiwanese,
Hong Kongers, and Chinese. Therefore,
Japan lacks the educated Diasporas that help
other Asians connect across borders.
An additional reason for this seclusion
is the lack of lateral mobility. The best jobs
go to those who join upon graduation andgradually climb the ladder. Leaving a
Japanese organization to move abroad isrisky for a Japanese salaryman if he ultimately decides to return home as re-entry
options will be narrow.
Dearth of “Ampersands”
Japan lacks what political scientist SamuelHuntington called “ampersands [&],” i.e.,
people who are simultaneously from country
A & B and connect business and academia
across national boundaries. They foster“brain circulation” and “brain globalization”
thanks to roots planted in several nations
through work education, or family ties.
Employers want these types of professionals, but Japan is excluded from thesetransnational flows, whereas other Asian
countries produce growing numbers of these“citizens of the world.”
Those who venture out of Japan find it
hard to re-enter tight-knit Japan, thus failingto serve as international bridges. NorieSekimoto, a professional at the AsianDevelopment Bank writing a book in her
personal capacity, observed that those rare
Japanese who successfully navigate in global circles often fear that they will be ostracized from Japanese society.
Demographic and Economic Costs
Although immigration alone cannot compensate for Japan’s low fertility, it can help.
Moreover, immigrants bring dynamism, ineverything from science to retailing, as canbe seen in the streets of London and the listsof Nobel Prize winners. But Japan’s virtual
Wall precludes this option.
Japan also misses out by not sendingout its own nationals to study, work, andestablish themselves overseas. For example,
many Asian technology enterprises owe theirsuccess to the experience their founders andmanagers gained in Silicon Valley, either as
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students or as young engineers. Not only
does the Wall keep immigrants out, it is also
one of the causes for Japan’s failure to attract
direct foreign investment, which could help
bring the country out of stagnation.
Another consequence of the Wall is its
impact on the service sector. Services and“soft goods” (products, such as software,that share many characteristics with services) are of growing importance. But service
conglomerates need a greater degree of managerial globalization to be internationallysuccessful. One of the causes for Japan’s
underperformance in the service sector is its
cultural isolation.
In the policy arena, insularity makes it
impossible for Japan to be heard in all fields,from economics to security.
Finally, one of the most insidiouseffects of seclusion has been to hinder theprogress of women in the workplace.
Women are tremendously underrepresented
in management compared to other developed
countries. Tokyo University’s student bodyis still 80% male, a dismal ratio that bodes ill
for the future. The majority of Japanese professionals at the UN are women, a testimony
to their skills but also of their desire to getout. Cut off from foreign influences, devoidof large numbers of foreign-owned businesses, Japan has been deprived of the contacts
with the outside world that could havebrought feminization to its shores.
Coping with globalization
Nomura Securities and others have used
overseas acquisitions to promote foreignmanagers. Rakuten, an online mall, is making English the official language. Japanesecompanies are now hiring Japan-educatedChinese to expand in China. Others havecommitted themselves to diversifying their
managerial teams. In an attempt to become
more globally competitive (and compatiblewith foreign norms), many large firms havealso tried to shed business practices longingrained in their corporate system, such as
the seniority-based wage system and lifelong employment. It remains to be seen,
however, if these efforts will bear fruit.
The government has also tried to remedy the situation. A part of this effort is the“e-Japan plan” to bring 30,000 foreign IT
experts by 2010 as well as “Asia Gateway”
and the Career Development Program for
Foreign Students But so far Japan has failed
to become a magnet for foreign talent.
Japanese universities, too, do their partby trying to bring in more foreign students
and scholars and offering more Englishmedium courses. Some, most notably theUniversity of Tokyo, have shifted, or considered shifting, the academic year to be compatible with the rest of the world (Japan’s
academic year starts in early April, making it
harder to spend a term or year abroad).
But Japan has not adapted at the samepace as the rest of Asia. South Korea in particular has morphed into a globalizing society. Moreover, in some cases, such as declining numbers of students overseas, Japan isregressing. Japan was the most open andinternational Asian society 130 years ago;
today it is among the laggards.
One reason lies in the way Japaneseinstitutions have coped with growing tides ofglobalization. By thrashing traditional big
business practices and a stable workforce,
Japan Inc. has produced more precarious
jobs without the flexibility of US-style labormarkets. Young Japanese, faced with a growing sense of vulnerability, are becoming
more conservative, less willing to take risks
or taking on adventures abroad.
As for the nation’s elites, they fear losing their position. A more open Japan would
be bad news for mediocre middle-aged (orolder) insular men suddenly faced with a
new competitive globalized environment
which would neither value their skills nor
respect their status. Many potential victimsof the Wall’s collapse are members of theruling establishment, thus it is not surprisingthat there is little movement.
As Meiji indicated, Japan is capable ofrapid transformation. But the institutions
built during that period are particularly
strong, as opposed to those of the collapsing
shogunate in the 1850s-60s. On the other
hand, the selection process to reach the topof the political, bureaucratic, media, andbusiness worlds weeds out those endowedwith the pioneering spirit that characterized
the rebels who overthrew the old regime in
the 1860s. And unlike the heroes of the1860s, outsiders in today’s Japan are too
weak to challenge the system.
How sustainable the system is, however,remains questionable, especially when thepopulation is declining and so muchprogress comes from interactions andexchange of ideas across borders.
Japan rose to the challenge in the 1860s
because it faced an enormous threat.
Hopefully change will now occur before
Japan is staring at the abyss.
DECEMBER 2011