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Hi Blog. As Debito.org is a forum for voices that might not otherwise be heard, let me turn the keyboard to Debito.org Reader Nate Nossal, who shares his experiences at being an entrepreneur in Japan. As somebody who has also done the arduous task of founding his own company in Japan, I am simpatico. Over to Nate. Dr. ARUDOU, Debito
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JAPAN: A COUNTRY LARGELY OPPOSED TO FREE ENTERPRISE
By Nate Dossal Ph.D., Ishikawa Prefecture, Japan
Exclusive to Debito.org, March 25, 2016
Japan is a country which is largely opposed to free enterprise. As one who has studied economics and subscribes to the notion that the ability for individuals to do business is integral to a society’s wealth and commerce, as well as that society’s ability to solve problems generally, I find this condition amusingly shortsighted. As one who is living in and attempting to do business in Japan I find this condition depressing. After all, what is it that individuals can do best as entrepreneurs? We stand to make money by solving problems for other people. I will discuss some extraordinary barriers to business created by just a few layers of legal or bureaucratic excess which discourage or disable free enterprise in two examples of personal experience. It is assumed that there is some reason that people have gone through such troubles to erect these legal barriers, and I can only speculate what some of those possible reasons might be. On the microeconomic level, the effects of the clearly anti-business atmosphere created by those specific barriers are devastating. Businesses which could and should be thriving, multiplying, growing, and revolving multiples of yen back out into the local economy are stopped dead. Theoretically, all money gets spent somewhere, but inevitably some of that money which would have been spent in the local Ishikawa ken economy (where these stories take place) gets saved, sent away, or spent elsewhere and the greater Ishikawa ken economy suffers for this.
Case 1: Japan Advanced Institute of Science and Technology (JAIST) Souvenir Goods classic failure of lost opportunities on several levels… This writer did soon after beginning his graduate studies in a national Japanese university discover that something was missing. Despite searching high and low throughout the dingy offices and one store on campus, there was a peculiar, complete absence of any commercially available souvenir goods from that university. Not a shirt, not a cap, a notebook or a pencil with “JAIST” written on it was for sale. It was especially noticeable just for one very personal reason: I wanted to be able to send my dad in the U.S. a t-shirt. I always sent him a t-shirt from the companies or the universities of which I became a member. Indeed, this may seem very peculiar to any person who may have ever worked in the marketing office of any-sized university. The sale of such school “pride” items can be profitable in itself, but at any rate is costless to the university, even after taking into account the price of design and production, maintaining stock and administration for the sale of goods. Even a small market makes up for all of this since the target market is highly invested in the product, the supplier is decidedly monopolistic by nature, and the turnover from new staff and students assures some consistent demand for the products. All of that is of course aside from the main point–schools need name recognition and the sale of pride products is a major source of free advertising in this aspect.
As a graduate student I mistakenly saw this as a great opportunity to accomplish three related good deeds, and get a JAIST golf shirt made for my dad too: I would design and have produced several items that would surely be of interest to students and staff of the university, market and sell them–which would satisfy that same demand which I myself sensed. With no commitment from or involvement of the university required at all, except for their permission to do so, I could single-handedly increase my university’s name recognition in the community, and presumably around the world to some small degree. Finally, I could make some small profit as a reward for my efforts, which I would surely need to help support my research and living expenses. This was to be a slam-dunk. A no-brainer. BANG! What a bonanza, I thought. I engaged the staff I knew in this conversation, and a meeting was arranged for me to discuss this radical new idea being offered to them free of charge. I spent a couple of days researching suppliers for this kind of goods, and had some mock-ups of the proposed goods made, which I included with a bi-lingual proposal for a license to use the university’s existing logo and images. Six men and women came to hear my awkwardly foreign Japanese presentation, but they were all visibly impressed. At the end I was told that although no firm decision could be made by such a group of self-described office functionaries, they assumed that the benefits I was offering, and the price I was asking (zero) would make it a good idea for the university. Mere days later, I received an email from one of the lowest level office workers that the vice president of the university said “no.” I would be better off focusing my energies on my research rather than trying to help them solve the problems of the university.
After also having noticed that no student council had existed, three years later, I established one with the political assistance of my professor. Among the many reasons for establishing a student council, one of them would be to re-assess this weird lack of JAIST shirts and coffee mugs. The road to market was a barrage of nay-naying from surprising sources: a very provincial type woman belonging to the management of the single university store deigned to meet with me to discuss the possible placement of our Student Council brand official JAIST Goods in the store. I was expecting some discussion of division of profits and liabilities, a contract, some discussion of their standard business practices and process, maybe the need for some assurances or money. The first thing this lady said to me though was, irrelevantly enough, that she didn’t think Japanese students would buy those goods. In fact they did buy, and large quantities of goods were requested. Orders from Japanese professors and administrators of 20 and 100 came. The university president (Japanese, of course) wanted a golf shirt, a cap and a mug. But none of this would be made available with any help or assistance from the university store, or the university itself whatsoever. In fact, the Council received a threatening email from someone in the “labor management section” about infringing on the JAIST copyright. That person had been alerted to our proposed activities by none other than the anti-business store manager! Is it possible? That people would be so steadfastly in opposition to me making a few hundred yen while serving their own needs? Anyway, we enlisted the student body in a competition to design our own logo, to avoid any trouble with the now rabidly anti-business office staff. Even still, we received truly unending innocuous-seeming requests for increasingly invasive information (including financial information of the proposed private business, the names, contact information and prices of my suppliers, and my own personal financial information) from the office of student affairs apparently aimed at infringing upon or discouraging our entrepreneurship. It seems the university office workers were quite keen on ensuring that no student ever makes any kind of profit from any kind of sales of any kind of product on any national university grounds…Like, it was more abhorrent to them than the thought of consuming cherry vodka fanny bangers at a faculty disciplinary hearing. In the end, even our advisor and protector, the Dean of the school was disparaged, and we were kindly requested NOT to attempt to address this problem of no-JAIST-goods for them anymore. It was a mixed success: We managed to design, produce, market and distribute exactly one cycle of a much desired product, and I broke even on the venture. It would be the last time ever for this want-to-be capitalist at that institution, however. That was fine, anyway I would graduate soon and had bigger ideas to entertain.
Case 2: A friend of mine, a German pilot and safety officer for EU pilots would fly into Komatsu International Airport a couple times of year and stay for two or four days while his plane was prepared to fly again. During those days, he complained, he would have nothing much to do except hang around his hotel room, roam the streets in search of any intelligible (English) communication and inevitably drink copious quantities of hotel bar alcohol. What he and his company needed was some local person who could provide the kind of guidance I could give, and take the pilots to the beach or the mountains, maybe offer a bicycle rental. In fact though, it wasn’t just the pilots flying in and out of Komatsu. Since Kanazawa opened up its first Shinkansen train line last year, literally thousands of foreign, mostly non-Japanese speaking, illiterate and largely lost and out-of-place tourists have been wandering through the well-preserved feudal-era narrow streets of this place. I know this is true because I routinely hear the laments of my Kanazawa Hotel and Inn Association English students–they are so busy now; their rooms are always full; they need more staff; they need to hurry up and try to learn more English to cope with the many language problems that have resulted. The real test though is the Starbucks test. Not the economic barometer of disposable income, but this: ten years ago, it was often possible, but not at all guaranteed to encounter even one other foreigner at Starbucks. This year, Kanazawa Station Starbucks and M-za Starbucks are packed almost exclusively with foreign clientele of European descent. I am sure that none of these people live here, either. They’re all carrying cameras and backpacks, and most are of retirement age. These people desperately need no-nonsense, English speaking tour guides, and I am willing to bet that many of them would be happy to pay money for that privilege.
Over the last several months, I carefully developed a website to address this need and to help to those tourists who may want a little more help to navigate this unforgivingly non-English speaking corner of the north. They could also use my help parting with some of their much-needed money while they are temporary participants in this local economy. To do that, I need only impart a sliver of the bounty of knowledge of this place which I have amassed in 13 years of research, learning and teaching. They also need transportation, some equipment in case of going kayaking, skiing, or mountain climbing, for example, and of course oodles of accident and life insurance. I expected that much. What I didn’t expect was this: about the time I was really feeling ready, in fact overdue to launch that exact business, I was sternly warned by my wife who informed me of recent news reports of Chinese nationals in the Tokyo area who were arrested for operating a similar-type business without a license. While living in a country where I am aware that a license for serving tea exists, it quite honestly never for a moment occurred to me (or maybe to those Chinese business operators) that I could need a license to show people around my hometown. After being juggled around on the phone between several Japan legalese-only speaking tourism offices, I dutifully arranged an in-person meeting with my prefectural travel and tourism bureau.
I was welcomed by the panel of three officers–two from tourism and one from legal. The three were not personally difficult or offensive in any way. They even apologized for the fact that none of the the three of them, and no one in the national tourism offices ANTA and JATA could speak English. Pretty soon though, the air sucking through teeth began. “Mmmm, muzukashii…” That is the beginning of almost every un-scripted conversation foreigners have with Japanese standing behind a service counter. It is the calm but firm discouragement I suffer at every mention of trying to improve my station, assume a level-appropriate role in almost anything, or help to fix even the most obvious of problems. “It would be easier if you had a Japanese partner,” one said bluntly. I told him that while I appreciated his suggestion, I came to get the information on doing it myself, or with my wife. “Umm…” he stammered until the lawyer could help out “Well your wife has a job,” the lawyer said, “so it would be against her working conditions to engage in any outside business activity.” Which although it is true enough, if completely aside from the point. Let me tell this to you straight: after 13 years of working in Japanese schools and companies, there is no possibility of me having an equal partner. No matter what I do or how good I may be, I will always be held in lower regard than, and held back by my Japanese counterpart. They nodded in apparent understanding without need for example, and bit by bit laid out the separate processes as best as they themselves understood them. If I could do it, they said, I would be a pioneer.
The news they had for me was not good: I need not merely to prove my financial worthiness to the state and present insurance certificates. I need to pass a national test for a travel agency. It’s only offered in Japanese of course, and full of Japanese legal jargon. Maybe I can get some help for this, but the test is offered only once per year! Once. That’s pretty bad. On top of that, if I am actually thinking of transporting people in my car (um, I thought that was what cars were FOR) then I can’t do that with just a regular passenger car license. I need a taxi driver’s license, which the tourism agency told me would be practically impossible for (a foreigner) to accomplish. “Oh, so all of those hotel van drivers have taxi licenses?” I asked. The panel of three gave each other those uncomfortable Japanese glances and the lawyer said no, that was different. Be that as it may, I thought how this touches directly on another issue, Japan’s reinterpretation of the Geneva Convention covering international driving privileges. I had a commercial 10 ton license with air brakes certification, and the chauffeur and taxi license when I came here, but I just didn’t have the extraordinary resources of time required for transferring all those licenses and testing and re-testing individually for each one of them after all I went through just to get my regular car and motorcycle licenses back. OK, so in order to take foreign people to the beach and get paid for it, I need a travel agent’s license and a taxi driver’s license, and I need to register my business (no kidding, a 14 part process) which includes depositing no less than 100,000 yen (about $9,000) cash with the Japanese government, presumably interest free, or maybe with negative interest. I also need to show and maintain a similar balance in my company account. No doubt, this is an extraordinary, if not cock-blockingly prohibitive set of artificial barriers to free enterprise. Some of this is understandable, as I said. Companies need insurance. If I were in a position to do harm to the environment or local population, some financial assurances (though probably not a “deposit” like as with some shyster landlord) would be expected. On top of all this, though, and I really don’t think I could ever invest 200,000 yen in licensure before ever even getting a company started to be honest, but on top of all this, at the end of my meeting in the Ishikawa ken cho I was asked in all seriousness where my office would be located. This is significant, the lawyer said, because for the lowest level of licensure (the 200,000 yen one) I could only do business within one municipality’s distance from my home office. After going the processes outlined already, and they are extreme, I would get a license that wouldn’t even include Kanazawa. The license for the type of small business I envisioned requires an 18 million yen commitment.
I go deadpan. I search in vain for the hidden cameras, wait hopelessly for the comedian in the yellow suit and giant bow tie to jump out laughing. This is real though. This is the anti-business environment they have created. It kills any small businesses before they could ever get started, and for what? What does all this process and licensure get for Japan? A few badly-needed interest-free loans? Probably that is an emergency of their own making. Is it enough to make up for the multiplied effects of dampening the business spirit? John Maynard Keynes wouldn’t say so. Does it prevent ill-intentioned or unqualified players from entering the market? Surely it must, since this condition would seem to prevent MOST players, qualified or not from entering the economy. With my PhD, my Global Human Resources doctoral certificate, and my advanced Japanese credential from a national university, as well as years of volunteer and professional service in the field which I would like to work independently, probably no one would say I am at all unqualified to take foreigners on local side trips, even for money.
I am not saying I was singled-out or unfairly discriminated against for being a foreigner necessarily. While this is a positively horrible set of conditions, and terrible treatment of a prospective entrepreneur who should be met with open arms, Japanese law and government treats its own citizens just as badly. The outright hostility of the Japanese government towards small businesses like these assure larger market share to larger entities–or else they just assure that some markets will simply never be, for lack of active, qualified and viable suppliers. The people at my former university will continue to want, and not get university logo-emblazoned items to send back home. The local citizens will continue not knowing what JAIST is, or even that it exists at all–possibly the most hilarious marketing failure in the country. And foreign tourists will sip a few coffees and walk themselves around downtown for a day or two and go on to Kyoto or home. Many of them will say how wonderful and enigmatic that dusty old Kanazawa town was, but it might be better. If they could have had a locally-educated English speaking guide to show them the most beautiful and meaningful places in the Ishikawa countryside, I would at a minimum explain the history of the Farmers’ Rebellion, the importance of the Shirayama Hime Jinja, Bassho’s passage, or the City of Temples. They also would be sure to spend more money while they were here, and that money could support not only me and my family, but the people I would have employed in the company that I fear now will never be.
-Nate Nossal Ph.D., Ishikawa Prefecture
ENDS
Doo-what?: An image that went viral on the Internet shows members of male doo-wop group Rats & Star and idol group Momoiro Clover Z blacked up backstage during the filming of a show for Fuji TV scheduled for broadcast on March 7. | THE JAPAN TIMES
