Japanophile works on business ties

WHEN Japanese companies come to decide on the destination for their new investments, they also look at local living conditions and the environment that each potential host country offers their managers, says Peter Bohov, who is a true Japanophile. However, Bohov’s enthusiasm for the country and its culture began long before he became president of the Slovak-Japanese Chamber of Commerce. He studied Japanese language and culture and believes that geographical distance can be crossed in both business and cultural communication.

The Slovak Spectator (TSS): What do you believe are the most significant areas for business cooperation between Slovakia and Japan? What factors could potentially attract the interest of Japanese firms?

Peter Bohov (PB): Slovakia’s low wages and skilled labour still make production here interesting for Japanese firms. Thanks to the Sony investment, small and medium-sized Japanese companies have also come to Slovakia. Indeed, the core of the Japanese economy is not made up of large companies, but rather small and medium-sized firms, which account for more than 80 percent of it.

In Slovakia everybody has heard of Sony, Toshiba, Sharp, Toyota, and Suzuki, and tend to think of these as the workhorses of the economy. But the workhorses are actually small and medium-sized operations – it is these companies we should concentrate on if we want to attract further Japanese investments. More of the huge companies - such as Toyota in the Czech Republic, Sharp in Poland and Sony and Panasonic in Slovakia - will probably not come here.

TSS: Is there a chance for Slovak firms to break through into the Japanese market?

PB: If countries such as Bulgaria countries can penetrate the Japanese market with, for example, yoghurt products I see no obstacle to Slovak food firms succeeding in Japan. True, it is far away. But on the other hand, the advantages are huge. Japan also is a gateway to other countries in Asia and good products will find their way to Japanese customers since they are willing to pay for good quality.

Japan hosts the largest food exhibition in Asia: FOODEX, which is maybe the second- or third-biggest food exhibition worldwide. We would like to open a Slovak stand there in 2010. In March we plan to organise a mission of Slovak businessmen to Japan to allow them to do their own research. In Japan, the initial investment required may be bigger than in other countries. But if the right partner is found, there should be no problem for Slovak companies to break through.

TSS: Your chamber organised a mission in the autumn of 2008. What was the focus of the mission and what are the results you hope for?

PB: The focus of the recent business mission, Contracta 2008, was to introduce Slovakia and its regions, along with their investment potential, as well as to make investment connections between Slovak and Japanese participants. Our experience is that Japanese firms are considering Central Europe for investment but don’t have enough information about Slovakia; and if they do, they receive general information about the country as a whole or about Bratislava, but not about the regions. As a result, they make their decisions based on that information.

On November 17, in Tokyo, 54 Japanese companies attended a presentation; while in Nagoya on November 19, 18 Japanese companies participated. Four Slovak regions - Košice, Prešov, Nitra and Žilina - took part. We wanted the Japanese firms to have much more information, and not just about Bratislava. The result was that several of the companies attending indicated their interest in coming to Slovakia. There is no immediate effect of course. But if a Japanese firm wants to come to Central Europe, the firm now has a telephone number to call in Slovakia. Similar seminars have been organised by the Czechs, Hungarians and Polish two or three times a year, and it has shown some effect: there are about 75 production companies in the Czech Republic, about 80 in Poland, and in Hungary more than 100. In Slovakia there are 15 such companies.

TSS: What do you think are the strongest attractions of the Slovak business environment for Japanese firms and what are the greatest drawbacks or challenges?

PB: The relatively cheap and skilled labour is a huge asset, along with the infrastructure, for example in western Slovakia. If they can manage to get from Nitra to Slovenia, i.e. to a port, via a highway, this is a great advantage. And I think that such an advantage can be found also in the east. Except that Japanese investors are not always aware of the fact that they can get to Košice via a Hungarian highway. Our job is to explain that the eastern part of the country is not completely cut off.

I would mention two things that negatively affect the lives of Japanese businessmen in Slovakia: driving licences and visas.

If visas are required for people who will come to work here for a year, or even longer, then the issue is manageable: the visas can be arranged, and the Japanese are willing to wait. But the trouble is that Slovakia is not flexible enough towards Japanese employees of parent companies who come here to work here for two months, or two weeks, for example. Slovakia does not really have the type of visa that would make these types of business trips simpler.

Small and medium-sized companies’ view of the business environment is affected by whether they are able to come here without great difficulty, so that they don’t end up being expelled, and can easily arrange the documents they need, including drivers’ licences. For example Japan is not part of the Vienna Traffic Convention, and thus, the Slovak police issue international driving licences for Japanese citizens for one year at most, after which they must return to Japan every year to get them renewed.

Japanese companies, when deciding about large investments, look at the living conditions that a country offers their managers. They ask, for example, whether there is an elementary school for their children, whether there are enough Japanese restaurants, or a Japanese community.

As for schools, if more than 1,000 Japanese people lived here, the Japanese government would open a Japanese school here. Japanese elementary and secondary schools are slightly different in that children have to learn the symbols used by the Japanese language: if they do not learn them at elementary school then they have problems when they get to secondary school. It often happens that when an employee’s children get to a certain age, his wife and children leave for Japan.

In terms of the Japanese community in Slovakia, there are slightly more than 200 Japanese here. I think that three months ago it was about 216.

TSS: How has the arrival of Sony changed Japanese investors’ perceptions of Slovakia and vice versa: what impact has the presence of Sony had on the Slovak business environment?

PB: I would be very glad if Slovak firms would take the same line on corporate responsibility that Japanese firms do. When a supplier to Sony comes to Slovakia the branch must become a green partner of Sony. That means that Sony inspects its production processes and procedures before they grant a certificate allowing them to become a green partner of Sony. Slovak companies which want to become suppliers to Sony also have to go through a slightly tougher process. Approval is not automatic, but they certainly know that they can become the partner of a Japanese company if they stick to certain standards.

TSS: Your chamber has organised a seminar on Japanese business customs and habits. How do Slovak and Japanese businesses bridge their cultural gaps?

PB: We invited along Japanese lecturers who explained elementary things about how to act when someone meets a Japanese firm for the first or second time: things like how to hand over a business card. In fact, you have to present your business card with both hands and with the inscription facing your partner so that they can read it. This is not unique to business cards: Japanese are taught at elementary school that when they hand over a test to their teacher, it must always be presented so that it can be read, not the other way around.

Very often, Japanese businessmen have a budget to entertain business partners and are very hospitable to their guests: they take them out for dinners, to clubs. But Japanese hate to speak about bribes and they never give them. Even in Japan, if a domestic company gives a gift, it does not expect to win a competition because of it. Japanese companies avoid bribery and do not want to be involved in conflict.

As for differences in working habits I will tell you an example which I heard from a Japanese man who works for the Makino company: he said that he noticed that if a Slovak is running 5 or 10 minutes late on his way to work, he still arrives in leisurely manner.

When a Japanese employee is late, he hurries. Japanese employees identify strongly with their company and regard it as crucial for them. If they work in a good company, they take huge pride in that. In Japan, if they graduate from a good college and find a good job, they are taken care of for the rest of their lives. It is no problem for them to work 10, 12, or 13 hours a day. The whole society understands that.

TSS: In which areas could Slovakia use the Japanese experience?

PB: I have heard that there is a plan to build a broad-gauge railway across Slovakia. Here, Japan has enormous experience. It has the densest network of railways, including the Shinkansen high-speed railway network, which may not be the fastest in the world but since it has trains departing every 5 minutes probably carries more people than any other. In Japan, almost all biggest cities are inter-connected like this. Why not learn from this transport model? When I was in Japan recently with other Slovaks they were amazed that to travel by train from Tokyo to Nagoya, which is 366 kilometres, it took us 1 hour and 40 minutes. And if we took the fastest train, we would have been there in 80 minutes. These trains leave every 5-10 minutes.

TSS: Is the language barrier between Slovaks and Japanese considerable and what are the means of crossing it?

PB: The language barrier is a huge problem: it is possible that a top manager who comes here will speak English; but when more Japanese staff come here to work at the level of quality control, or in other positions, many of them - especially the older ones - do not speak English. Also whenever they leave Bratislava, even English can become a problem, not to mention Japanese. Whenever a Japanese company comes to Slovakia, the first thing they ask me is if I can find someone who speaks Japanese, which is almost impossible. Slovakia has a lack of qualified Japanese translators. Maybe seven or eight people in Slovakia speak Japanese well enough or at a communication level.

Some of them lecture at university, some are in Japan. Then there are students, who know the language – or those who have spent several months in Japan. But to be able to speak Japanese and to be able to communicate are two different things. If you spend six months in the USA you can make yourself understood and communicate. In Japan, if you do not know the culture, you cannot communicate with the Japanese. You have to understand the context of the situation.

I would be very happy if Japanese companies were to recognise that they will need Japanese-speaking people and so start to help schools and colleges teach the language. For example, I studied Japanese at Comenius University, which has problems finding Japanese lecturers. Maybe there is room for Japanese companies to start supporting this department a little bit more, and thereby also help themselves in the future. The scarcity of people speaking Japanese creates trouble for firms.

According to the latest statistics, Japan was visited last year by 800 Slovak tourists; at least half went to visit somebody who was working or studying there. So in terms of tourist trips from Slovakia we have the second-lowest numbers per capita after Poland among the V4 countries. The reason is that it is a distant country and it is not sufficiently promoted by our travel agencies.

TSS: What are the main activities of the chamber?

PB: We provide help, especially to small and medium-sized businesses, to enable the smoothest, fastest and most flawless transit possible to Slovakia. We even have a small incubator: when a Japanese company comes to Slovakia, and does not have an office or even anything at all, it can use a room with us free of charge for one month, where it has internet access, a printer and can run its business from there, until it finds its own office. We thus help companies to move from one country to another.

Marta Ďurianová contributed to the report.