Diversifying is helping drive growth in many sectors
Richard King is very aware of the wisdom of the old adage concerning eggs and baskets.
In 2001, when specialist recruitment firm Michael Page International began its Japan operations, the initial rapid growth reflected the expanding banking and accounting sectors.
Meeting demand in those areas is the company’s preferred strategy when entering a new market, according to King, managing director of the business here since January 2009. But the Surrey-based group knows that is only a stepping stone to broader penetration.
Fortunately, the firm began diversifying before the Lehman Shock. “The year 2007 was a boom one here in Japan on the back of the growth in the banking sector, but that all changed with the crisis triggered by the collapse of Lehman Brothers”, said King, 41, who is originally from Newquay in Cornwall.
“Our timing was good because we were already diversifying before that happened, and now we are providing experienced and qualified bilingual candidates in the areas of sales and marketing, engineering, supply-chain management, technology, human resources, legal and haken temporary and contract staff”, he explained. “The newest addition to the portfolio is healthcare and life sciences, where there is huge potential”.
Banking used to account for 75% of the firm’s business in Japan, but that has slipped to a mere 20%—although King is keen to emphasise that this is not an accurate reflection of the importance of the financial sector, but more a factor of the massive growth that Michael Page has seen in other areas.
The firm had its best-ever monthly results in Japan in February, April and May, and King is confident the figures for the full year will be the firm’s best here.
“I have been at Michael Page for 17 years—in the UK and Australia before Japan—and in all that time, I have not seen the recruitment business looking so good”, he said.
King believes there is a disconnect between people’s perception of the economic situation in Japan, and the opportunities that exist here for talented, bilingual professionals, even given the natural disasters that shook the nation last year.
“Despite what happened in March, 2011 was a very good year for us and the speed of the recovery after the disaster was staggering”, he said. “[The economy] was already picking up in April and May; it was that quick”.
And, right now, King would rather be operating in Japan than trying to place candidates in other countries.
“Japan, the third-largest economy in the world, is a market in which we can continue expecting to see growth, and profitable growth at that”, he said. “Michael Page is a UK-listed business, but getting growth out of the UK, US or Europe is very challenging at the moment. We are seeing single-digit growth there, but consider less than 25% growth for us here in Japan to be very disappointing”.
Michael Page International is being extremely aggressive in entering new markets. Having recently launched in India, Taiwan and Malaysia, it also is ramping up its coverage of China.
“The growth is aggressive but organic”, King said. “We do not enter a new market by acquiring other companies, as launching our own operations allows us to keep a high level of service.
“The key is hiring good people at the outset, training them and retaining them”, he added. “And those are all things that we do very well”.
There certainly are possibilities for opening new offices in Japan, with Osaka and Yokohama the prime candidates, he said, but the firm is reluctant to break away from its model of promoting from within to retain its best people.
Meanwhile, the firm recently launched a dedicated three-strong team for the healthcare and life sciences industry, and already is looking to hire further consultants.
“There is huge demand in this area and that is not going to slow down any time soon, thanks to the ageing population here”, King said. “We were already assisting the healthcare sector in the areas of IT, supply chain services, finance and so on, and they were asking us for experts in medical and regulatory affairs, clinical development, product marketing and sales. Even at the low point of the market, in 2008 and early 2009, there was constant demand in this area and we had to listen to our customers.
“That business is already booming”, he said. “Major customers are foreign multinationals that are coming into Japan to take advantage of the government’s increasing focus on supporting innovation.
“Although the early-stage R&D operations have been largely moved to China, Clinical and Regulatory Operations off-shoring cannot take place”, he added. “In banking, for example, operations can be sent offshore to lower-cost countries, but that is not going to happen in Japan’s medical industry because of the regulatory framework here—and that makes us very optimistic”.