EU-Japan cooperation takes many forms. Time and time again, we read news reports about agreements signed between the EU, or its Member States, and Japan, about trade missions and cultural events, about joint innovation and dialogue. But the question remains: Who are the people behind these efforts? What is their story and how did they become involved in developing international cooperation?
The EU-Japan Centre for Industrial Cooperation is happy to introduce the second installment in a series of articles introducing the individuals and organisations making EU-Japan collaboration a reality.
Q: What is your professional background? How did you first get in contact with Japan and its culture?
Marcus: Starting with my educational background, I have a BA in Business Administration from a three-year programme within the German dual education system that included an apprenticeship. Since then, I have always had an interest in living and working abroad, and often travelled to the former eastern bloc. I went to China in 1989, as a kind of study tour, and had the idea of continuing my journey eastward in the direction of Japan. Looking for a way there, I was accepted for a scholarship by the Carl Duisberg Society and combined language classes and an internship. I arrived there roughly one week before the fall of the Berlin Wall. Finally, I started my first job in the company that I had the privilege of supporting during my internship.
Q: In your previous roles with German companies, what challenges and opportunities did you personally encounter?
Marcus:My first employer, Docter Optic, was a manufacturer of aspherical lenses, which were used in car headlights and were at the forefront of technology at the time. As you can imagine, the size of the Japanese automotive industry attracted many German SME’s such as my company. One of my very first tasks was to establish business relations with its relevant counterparts. This was a huge challenge for me, being still very young, trying to understand the business culture and the decision-making process of companies. I learned that there is a different speed of business, a peculiar “Japanese speed”. In general, I found that cultural assimilation in Japan demands a lot of respect and understanding for how things work.
There is one experience about Japan being an island nation and Japanese customers relying on foreign business partners that I will never forget. Considering that Japan and Germany are so far away, what happens in the event of disruptions to the supply chain? This matter is hugely sensitive in Japan. When the Gulf War started in 1990, I remember there was a shipment near the Suez Channel, on its way to Japan. I received a phone call from one customer who had just heard the news on the radio that the war had broken out. They asked me if I could make sure that the shipment would arrive in Japan on time. I was wondering at the time how the customer could ask such a question. How shall I know? I understood with that phone call how sensitive customers are when they work with overseas suppliers, especially in industries where quality, reliability and punctuality are key. This was an important learning experience for me then, and it is still relevant today. When it came to providing an answer, I said: “Yes, of course. It will arrive on time” and planned for a worst-case scenario. At that time, I also learned how important personal relations are because the customer had observed that I was really trying hard to get the situation resolved, even though logically they were very much aware of the challenge of getting the shipment into Japan on time at all. As a result, as they have seen my commitment, it helped me in the long run to earn trust.
Q: What were the major hurdles for your second company while operating in the Japanese market, and what advice do you have for German companies wanting to do the same?
Marcus: When I started working for Kaeser Kompressoren, it was the leading compressor manufacturer in Germany and a key player in the compressed air business, globally. When the firm decided to start operations in Japan, the market was highly competitive. Japanese competitors were strong in the domestic market, but globally did not play a significant role – whereas Kaeser was globally well-established, but a no-name in Japan. This is true for most foreign companies entering the Japanese market – you might be well-known in your specific industry, but you must look at the circumstances in the country itself. German companies and technology are very well received, especially when it comes to machinery. In turn expectations are extremely high. You must understand the needs of your specific market, and even exceed the given requirements.
The market potential for Kaeser Kompressoren was huge since almost all factories need compressed air, but it was necessary to focus our activities. We observed the market mechanisms and found that for some machine series, sales occurred without the need for extensive consultation and only personal relationship was required. However, for larger machines and projects, thorough consultations were always necessary. This is where we excelled and successfully started to sell compressed air solutions into the market. We started approaching potential customers through direct mails, distributing flyers, telephone marketing campaigns etc. As a foreign company, we were basically free to go our own way and do things that Japanese competitors were not able to.
Q: Having been a member of the advisory board of the DWIH – The German Centre for Research and Innovation – for 5 years, could you elaborate on DWIH’s collaborations and initiatives in Japan?
Marcus: The DWIH connects stakeholders in innovation and research from Germany and Japan, through events and information services. It also serves as a platform for showcasing research and innovation. Since 2018, artificial Intelligence has been one DWIH Tokyo’s key topics and around 200 speakers have been brought together in several German-Japanese-French AI symposia. AI is a typical case of exponential development of a technology where the long-term impact can’t be foretold, so it is important to have a strong international network of researchers agreeing on similar values. Recently, DWIH Tokyo began focussing on early career researchers in Japan, promoting international exchanges and sharing information about Germany as a destination for research. The Japanese government has ambitious plans for enhancing international exchanges and strengthening the basis for international research collaboration. Technology transfer and support for the internationalisation of startups has become a very important topic in Germany as well as Japan, and for DWIH Tokyo. For several years, DWIH Tokyo has supported AHK Japan on holding TechBizKon, a startup pitch event. How technology transfer can be promoted further will be addressed in a dedicated workshop on “Technology Transfer” in December.
Q: What would you say is the importance of research partnerships for industrial cooperation between countries?
Marcus: We have entered the knowledge society and research and innovation play key roles in securing economic growth and prosperity. Basic as well as applied research are the foundation of innovation. A lot of studies have analysed research partnerships and have found that international collaboration produces better research (= research published in frequently cited journals). Research partnerships are an important foundation for industrial cooperation. Jointly researching the same topics creates a common language and fosters the exchange of ideas and values. Research partnerships based on consortia that include both universities and private enterprises are also a significant driver of technology transfer. German and Japanese joint research can be reinforcing as well as complementary. Germany is Japan’s third most important partner in academic research (measured by the number of co-publications). Japan ranks no. 14 as a partner for Germany – but when excluding EU countries, Japan is the fifth most important research partner for Germany. This is closely mirrored in the strong industrial cooperation between the two countries.
Q: Since 2000, you have been working as COO and CEO for the German Chamber of Commerce and Industry in Japan (AHK Japan). Can you tell us about your mission and activities as an organisation?
Marcus: We are a bridge between Germany and Japan – the first contact point for German businesses in Japan, especially when they start expanding to the Japanese market. AHK Japan is also a huge platform for dialogue and exchange, and we provide a lot of services from a foreign trade promotion perspective. Being the official representation of German business in Japan, one of the key tasks that I must fulfil is keeping an eye on what the hot topics in both our countries are. This gives a lot of leverage to develop member related activities and services.
Q: What projects does the AHK Japan plan for the future? Anything special you would like to mention and promote?
Marcus: There are four points which I would like to mention. As you can easily imagine, after the Fukushima incident, energy-related topics have been on our daily agenda and extremely close relations between Germany and Japan have been built over the years. Germany and Japan agreed to further strengthen their bilateral cooperation for a successful energy transition. The established Energy Partnership Secretariat focusses on innovation, digitisation, and flexibility in the field of renewable energies, grid modernisation and the use of hydrogen. Another topic is vocational training. Vocational training is the cornerstone of Germany's vocational education and carries a global reputation. Typically spanning three years, this educational programme combines on-site and off-site training to achieve a successful learning and work balance. The first vocational training will be launched for automotive mechatronics. Finally, two topics that are more common from the European perspective – sustainability and diversity. German companies' perceptions of diversity and sustainability are largely positive, and we are promoting this by implementing targeted initiatives that position German employers in Japan.
Q: In the latest Business Climate Survey of AHK Japan, one of the most intriguing findings is the increasing potential for commercial cooperation in third markets. Why do you think there has been so much success in this area?(*)
Marcus: Already during my time at Kaeser, almost 25 years ago, we were talking about third country business, but we never used this term. In those days, under the guidance of general trading houses or general contractors, many Japanese companies were already setting up their factories in Asia or Europe. Projects with Japanese customers abroad require very good support in Japan, because key decisions are made in Japan, while the commercial implementation takes place in the third market. In those days, in addition to domestic sales activities, my role in Kaeser in Japan turned into a very strategic one.
Q: You have been involved in the Business Round Table for the last 3 years. What has been your biggest takeaway from the event?
Marcus: I think we are right now at a crossroads. I notice that the EU Japan BRT is a very high-level platform with a long history and access to high-level government authorities on both sides. However, the Japan side is represented on a much higher level than the European side hierarchy-wise, which also relates to the different business cultures. There is another issue. The BRT was established in 1999, when the EU-Japan relationship was focusing on trade issues, market entry, market access etc. Then, the Economic Partnership Agreement (EPA) was signed in 2018. While the monitoring of the EPA is an ongoing task, the main goal of the BRT has been achieved. The raison d’être of the BRT must be reviewed and aligned with current geo-political and EU-Japan developments.
Q: How do you see the current relations between Germany and Japan in the forthcoming years?
Marcus: Potentially very bright. Traditionally relations between Germany and Japan have always been very smooth and without problem, at times even quiet. The relationship has been revived after Fukushima and the subsequent energy discussions, but there is much more beyond. What we found out in the business climate survey is that like-mindedness has put Japan high on the agenda in board rooms around Germany. No one doubts the qualities of Japan, but for many companies the question is speed, market potential, where we can co-operate with Japanese partners. Without going into geopolitics, one big topic is being discussed: German industry is reviewing its China strategy by taking diversification into consideration. We are observing that companies are relocating some functions from China to Japan, such as managing their regional sales activities or sourcing from here. We have not observed any relocation of production to Japan so far, but we have seen an increase in "second or third investments" by German companies in terms of new factories in Japan.
Thank you very much Marcus, for sharing your insights and experience, it has been a pleasure.
(Interview held in August 2023)
Curious about the first interview with Sophie Bocklandt, General Manager of the Belgian-Luxembourg Chamber of Commerce in Japan (BLCCJ)? Click here!
(*) For more information about the EU-Japan cooperation in third markets, have a look at the EU-Japan Business Cooperation with ASEAN, Africa and Latin America Helpdesk (or the "EJ3A helpdesk") managed by the EU-Japan Centre.
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