Communications December 2011

Power of PR

Why Japanese firms abroad should adopt global standards of communications

With a falling population and fading growth opportunities at home, many Japanese firms will have to expand operations abroad to prosper in the long term.

The process is already well underway. Overseas mergers and acquisitions (M&A) are increasing and the trend looks set to continue. Japanese firms are also actively pursuing joint ventures, alliances and other models of overseas expansion.

This should ideally represent a win-win proposition. By investing more abroad, Japanese firms can meet their needs for sustained revenue and profit growth while bringing major benefits to foreign societies through deployment of the best Japanese business practices.

Unfortunately, however, corporate Japan—with some notable exceptions—remains ill equipped to meet the expansion-related challenges. Common problems include lack of a coherent globalisation strategy, inadequate English language capability, too few experienced managers to run global businesses, and less than world-class branding and marketing functions.

An additional problem is the lack of readiness to exploit the power of what in the West falls under “corporate public relations” or “corporate communications.”

It is not for nothing that public relations has no satisfactory Japanese translation. Japanese firms have traditionally embraced advertising (which translates easily), while relegating Western-style public relations to a limited and tactical role.

In the culturally homogeneous and relationship-based domestic market, in the past this approach may have served Japanese firms well. But it will not serve them well as they seek to expand abroad in the future.

In overseas markets, Japanese firms need to embrace a more strategic approach to communications—broadly defined to include corporate branding, reputation management, crisis management, internal communications, investor relations, media relations and other disciplines, as well as government relations and public affairs.

In overseas M&A situations, it is vital to roll out sophisticated communications campaigns to win support among all key stakeholders for the strategic, financial, political and social benefits of the proposed transaction. Key stakeholders include financial ones plus politicians, regulators, industry bodies, trade unions, NGOs and others, plus employees, customers and business partners of the target company. The list is long.

Such campaigns must be from the outset an integral part of the effort to conclude deals on the best possible terms. (It is a widely held view that Japanese firms engaging in overseas M&A have persistently overpaid in the past).

Media relations can play a critical role. Savvy local business media have great power to affect stakeholder perceptions of value arguments and the overall merits of a deal. Any overseas acquirer, Japanese or otherwise, must be equipped to fight for positive local media coverage.

M&A is just one example. To manage perceptions and nurture relationships with core constituencies as their overseas presence expands, Japanese firms will need to appoint top-class local communications and public affairs experts at a very senior level, and rely on their advice. They will also need to retain outside communications consultants who know every inch of the local terrain.

In crises and other critical situations they should be ready to ask communications experts not just “What should we say?”, but, rather, “What should we DO?”.

As numerous observers have noted, many Japanese multinationals should be clear global leaders in their fields based on standards of technology, manufacturing, quality and service. However, they are often held back by continuing to function essentially as holding companies for international subsidiaries.

To reap the full benefits of overseas expansion Japanese firms must aim to become truly global businesses, successfully integrating acquired firms and maximizing synergies and growth opportunities.

Adopting global standards of communications is one of the many challenges they must meet on the way to achieving that goal. This will be countercultural and extremely difficult. But it will have to be done. Necessity will eventually be the mother of adoption.