TOKYO – Not many companies headquartered in Tokyo can boast about their diversity. Twenty years ago, when I founded Rakuten as an ambitious Internet and e-commerce startup, we were just like most Japanese firms – small, and dominated by mostly male Japanese talent. But today, with over 10,000 employees – 40% of whom are women – from 70 countries, we are among the largest online retailers in the world. It is our diversity that has made us so successful.
As recently as five years ago, Rakuten was still predominantly a Japanese team. But in March 2010, in a move I believe was key to our subsequent growth, I announced “Englishnization,” a plan to make English our corporate language within two years. The goal was to lay the groundwork for global expansion in an industry that competes aggressively for Internet-savvy talent.
When I announced Englishnization, only 10% of our workforce was proficient in English. Unsurprisingly, some on my team were apprehensive; others, especially those outside the firm, thought I was a little crazy. But, just seven years later, titans of corporate Japan are seeking our advice in how to build a global brand headquartered in the Japanese capital.
As we tell them, opening doors to international talent has been a game changer for us. And it could have a similar impact on other Japanese companies.
Consider the experience of the United States, to which Japanese companies have long looked for inspiration. I was fortunate enough to study in the US, and grew up admiring American creativity, entrepreneurship, and, above all, the country’s openness to outsiders.
In particular, the diverse and dynamic Silicon Valley, where many tech leaders and thinkers are immigrants themselves, is a powerful engine of innovation for our company. Drawn by the region’s culture and expertise, Rakuten opened its US headquarters in the San Francisco Bay Area in 2011.
Today, however, the values that have made the US a paragon of diversity and entrepreneurship are being challenged. President Donald Trump is attempting to cut immigration, including by building a wall on the border with Mexico, all while employing distressing rhetoric against Muslims and other minority groups. This is not the way to a brighter future.
As for Rakuten, while we will continue to invest heavily in our US headquarters, we are also investing in growth at home, in order to lure more foreign talent to an open and Internet-savvy Japan – one that, in some ways, is moving in the opposite direction of the US. In fact, Trump’s position on immigration is already encouraging smart young Asians and Europeans to look to Japan as an alternative “land of opportunity.” If Japan opens its doors to more of these workers, the country and the world will benefit.
The challenge posed by Japan’s declining population is well known. The number of Japanese living in the country fell for a sixth straight year in 2016, declining by 299,000, to 125 million people. In this context, Japan needs more foreign talent to help sustain economic growth.
But there remains some resistance to such openness. Throughout history, the Japanese people have viewed foreigners as sources of social unrest and threats to national identity. The Japanese word for “foreigner” – gaijin – comprises the words for “outside” and “person.” The implication is that non-Japanese people can never truly understand Japanese culture.
Nonetheless, some progress has been made. Last year, Prime Minister Shinzo Abe’s government expanded the types of jobs that skilled foreign workers could hold in Japan, and the annual inflow of foreign residents to Japan has since increased. An estimated 136,000 foreign residents moved to Japan in 2016, a 40% jump from the year before. And over the last half-decade, Japan’s expatriate population has surged to 2.4 million, an increase of 500,000 foreigners.
While these figures are impressive, they remain insufficient. The Japan Association of New Economy, which I helped to establish, has concluded that if Japanese companies are to compete internationally, they need to be able to recruit from a larger pool of talent.
There are a number of useful options to advance this goal and boost workplace diversity in Japan. One would be to simplify procedures for talented foreign nationals to obtain resident status. Another would be to create new visa categories to enable foreign entrepreneurs to reside in Japan and build their businesses. Additionally, entrepreneurs and engineers who possess skills essential for Japan’s growth could be offered bold income and resident tax breaks. Finally, corporate tax breaks, such as long-term carryover of net losses, could be offered to foreign entrepreneurs establishing companies in Japan.
I founded Rakuten as a Japanese company, fueled by a desire to use the Internet to empower retailers of all sizes from throughout the country. But today, my company is part of a Japanese vanguard working to attract more foreigners. About 80% of our new engineering hires are non-Japanese. Their ideas, skills, and energy are vital to Rakuten’s global push.
Japanese society must take a page out of America’s (old) playbook, and warm to the idea that immigration and integration are vital to our future. Over time, other Japanese companies will have no choice but to follow Rakuten’s path by broadening their own hiring practices. Trump’s America may be willing to wall itself off from the world, but in Japan, where talent is in short supply, our only option is to tear the walls down.
Hiroshi “Mickey” Mikitani is Chairman and CEO of Rakuten.
Copyright: Project Syndicate.