Carl-Gustav Eklund
Chairman of the Swedish Chamber of Commerce and Industry in Japan
Three months after I started my first job I went on a business trip to Japan. The company was a leader in shipboard refrigeration. It wasn’t a famous company, but it was the world market leader, and Japan was the biggest market in the world.
That was in 1978 and I remember it well. I landed in Haneda, but because Narita opened during my two-week stay in Japan, I left from the new airport. The reason I remember it so well is that there were around 30,000 police to deal with protestors.
I came to live in Japan a year later and I’ve been here ever since. I have worked with shipbuilding equipment, hydraulics machinery, vehicles and materials. Probably the biggest job I’ve had was six years as president of the Volvo Group in Japan. I was country manager and president of Volvo Trucks. Now I am with Höganäs, the world leader in iron-powder and metal-powder used mainly in powder metallurgy. Our products are used to make components for cars and industrial machinery. We have roughly one third of the market in Japan and more than 90% of all Japanese cars have our powder inside.
One of my biggest lessons in Japan has been the issue of quality. The standard example is packaging: in Japan you don’t deliver things that are broken on the outside because that’s a sign that what’s inside might not be perfect. Or take delivery: in Europe, we need to deliver accurately 98% of the time; in Japan, we’re talking zero mistakes.
It’s a challenge, but you can use it to your advantage. At our company, if we can manage for years and years not to miss a single delivery to important customers such as Toyota, we have really achieved something. And we can use Japan as a benchmark to improve the quality of the products back in our own factories.
My role has been, and still is, to make things work – to manage the expectations of both our Japanese customers and at headquarters back home. That is the strength of we foreign managers.
Japan has much in common with Europe. We are, and must be, knowledge driven economies. We must have knowledge driven companies with advanced and specialised technology. Those are our strengths.
The media has claimed that Japan is losing its technological lead, but it’s not really true. The iPad might not have many Japanese parts, but one Japanese company some years ago had a fire in its Shikoku plant – it turned out that the plant was responsible for 70% of a special resin used in certain electronic parts worldwide. So, when you really look inside products, there are many areas where Japanese companies are world leaders.
A more serious issue is so-called non-tariff barriers. One example comes from my own experience working with diesel engines and trucks. It costs huge amounts of money to improve engines to meet emissions standards. But because EU and Japanese regulations are different, it costs even more. Harmonisation of these regulations within the framework of an economic integration agreement would really be a win-win situation for the world.
The rules don’t even serve to protect Japanese industry. Actually, the biggest losers today are parts of Japanese industry. Because they have their own rules, they often spend most of the money to meet those, then cannot meet EU rules.
It is a matter of negotiation. Europe has to be united and strong. Japan is a well-organised, unified country – extremely unified. The challenge we have in Europe is that we are a grouping of member states with lots of different opinions. The practical challenge is to have a united European view and be effective in negotiations.
Japan and Europe share big opportunities in the growing Asian market. A stronger China means larger industrial and consumer markets. It’s a threat in one sense, but the benefits are much greater. If every country were like Japan and Europe, we would have a serious problem, because we would have no growth. We need growth in India, China, Brazil and other like countries.
People say that Japan must increase its domestic consumption relative to exports, but Sweden relies on exports four or five times more than Japan. So from our perspective, that’s not an issue. Our economy went into a nose-dive during the recent global recession. We had it as bad as Japan, but we recovered very fast.
Japan seems to be recovering now, but it needs to spend a lot more money on childcare so that women can go out into the workforce, and on elderly care. I think the new DPJ government understands that. They must be much faster setting up that infrastructure. There are a lot of new European products that could help, and it could happen much faster if we started on the path to economic integration.