 Good afternoon. This is Ray Tsuchiyama for All About Leadership on Think Tech Hawaii. We have a guest today who's based in Kobe, Japan, and has been interacting with Asia for much of his life, but also with Hawaii in that he spent some time in the late 1990s getting a business degree and MBA, in fact, at the University of Hawaii, at Manoa, now the Scheidler College of Business. And welcome to the show, Steve Zerker. Yes, thank you so much. It's a pleasure to be here, right? Now, thank you for taking the time out of your business and teaching activities to be with us today. And the reason why I'm so excited to have you on the show, Steve, is that we're going to talk about Japan and taking its pulse in mid-2018. This is July 11th. Pretty soon, 2020, August, I think, hot August will come to Olympics, as you know. Oh, boy. That a good time. Yeah, many people leave Tokyo in August. That's right, that's right. And they're all in Hawaii. Yeah, exactly. But the Olympics will make Tokyo the center of world media attention. I lived through that in 1964. I was in Yokohama. Oh, Yokohama, wow. That's right, that's how historical I am. So Steve, tell me what you do now. OK, well, I am a professor and a dean at Kansai Gaida University, which is in Hirakata, in between Kyoto and Osaka. I've been there since 2011. So I'm a business teacher. I teach entrepreneurship, marketing, project management, those types of classes. Kansai Gaida is well known in terms of supporting foreign students that come on exchange programs. For example, this fall we'll have about 340 students, primarily from America, but also from all over the world, coming to study. And those are my students. So I teach them entrepreneurship within a Japanese setting, marketing cross-culture class, and so forth. About two or three years ago, I also became the dean of the Asian Studies Program. I have to explain, before I became a teacher, I was a business person, manager, vice president, that type of thing. So when I first started teaching, I thought, oh, this is a nice life. I'll be just teaching. But that management habit kicked in again. And I guess they recognized some ability. So they promoted me to dean. So I've been running the Asian Studies Program as a dean for the last two or three years as well. So you're involved in an interesting situation. With Americans and, of course, people from Europe, from China, South Korea, from throughout Asia, throughout the world, as your students. But you're based in this university in north of Osaka. Yes, that's correct. As a student body, my class is mostly made of Europeans, Northern Europeans, Germans, and so forth. For some reason, that group tends to take business courses. Whereas the Americans are usually taking more anthropology or sociology type courses. But yes, it's within a Japanese setting. It's a Japanese university. It's run in a very Japanese way. So it's an interesting contrast between my student activity and then my leadership activity and my management activity within the university. And how long do they stay? These foreign students at Kansai University. Part of the idea when they started this program back in the 1970s was to adopt the Western schedule. You probably know Ray. Maybe your viewers don't know that the Japanese school schedule is actually offset from the rest of the world. It starts in April. April. Yeah, the string semester starts in April. So what we did is we followed the Western program because we were trying to attract American students. The next semester, we'll start in about the last week of August. And we'll run through mid-December. So that's the traditional fall semester. And we'll pick up again the last week of January and run until the end of May. And then, of course, they have the summer off. And you've been teaching these students for some time. Yes, I have. What motivates them to come all the way to Japan and Osaka to study for a semester or two? Yes, well, last year, according to Open Doors, which is this agency that tracks exchange students between the United States. You've heard of it? Yeah. Between the United States. Japan was number two in terms of growth for foreign students. Cuba had the most American students. I guess because Obama opened that up a few years ago. That's interesting. They were probably starting from zero. So it's easy to grow from there. Exponential increase there. Yes, exactly. But Japan had 18% growth year over year in the last year. So the number of American students coming to Japan is increasing. And why do they come? Well, most often, they get hooked on Japan when they're in grammar school. And it's anime and manga. Those are the things. It's kind of the soft arts of Japan that attracts the students. And I have to tell you, it's not just students. But I've also been hiring. And part of my responsibility is a dean. I've hired 20 professors over the last two and a half years. Yeah, Kansei Gaide is going on a hiring bid. And when I go back, I actually have eight more interviews in August. And even them, sometimes I ask them, why are you interested in Japan? And they'll kind of lower their head a little bit and say, anime. So I think that's one of the main desires. But I also think now that the Japanese economy is stabilizing. I know we're going to talk about this later. Some students are coming to Japan because they want to work. Yes. And this is something that's changed entirely in the last six years. When I started teaching, students would ask me, can I get a job in Japan? These are foreign students. And I would say, I'll do what I can. But don't get your hopes up. Now, Japanese companies are hiring foreigners at an unprecedented rate. So some students have learned that. And they're coming to Japan to study, learn the language with the hope of eventually working in Japan. Now, that has, of course, a correlation to demographics in Japan. Yes. Aging workforce, that's number one. Lack of immigration or some kind of government program to increase foreigners coming to Japan to work. And also, the need to globalize for a lot of companies, trying to sell or market goods or products and services outside of Japan. That's correct. Now, but also, you have your students who are genuinely interested in Japan and want to work there post-college. Now, that didn't really occur until just a few years ago. I mean, as I was mentioning before, there wasn't the opportunity. Japanese companies would tend to not be interested in hiring foreigners, but now they are. And I think it's snowballing. Japanese companies are hiring foreigners. Foreign students are coming to Japan because they know they can potentially, maybe in the first stage of their career, work in Japan. And yeah, some of the factors behind that is that other than the name brand companies that we all know, the majority of Japanese companies have always been focusing on the domestic economy, primarily, even though they may have products and services that could be exported successfully. But now, I think it's internalized throughout the business community in Japan that the future, in terms of growth, is outside of Japan. So how do you bridge between the Japanese domestic economy to the foreign economy, and the Japanese companies are beginning to recognize, well, maybe, I don't know if this is a long-term solution or not, but they're thinking, at least now, we'll hire foreigners to help us. Well, that's quite exciting, because barely 20 years ago, one pathway was the JET program. Oh, yeah, that's still very powerful. Young people came to Japan to teach English, and then they had opportunities to join the local prefectural office, city office, or companies in marketing and sales because to leverage English skills for a lot of small companies, say, in Sapporo, Fukuoka, or they did not have many English speakers to assist them. That was one pathway. So getting back to, where did they find the work? Is it a widespread of industries? Is it IT, pharmaceuticals, is a service? What would those key industry segments be? Yeah, well, you mentioned IT. As with the United States, there's a chronic shortage for IT programmers. And in Japan, if you have an IT background, some kind of computer science experience or degree work, it's very easy to find work. So a concept guide doesn't attract a lot of IT students. We get maybe out of the 340, we'll have maybe 15 or so. And it's very easy for me to help them to find a position. So that is a tremendous demand. There's a huge shortage of IT professionals. In fact, this is a problem Japan has over the longer term. Japan's always been somewhat weak in the software area. And as you know, now, software, as they say, is eating the world. So Japan has some catch up there. So that's one area where there's a definite need, but also tourism. Because now, foreigners from all over the world are coming to Japan, and hotels, restaurants, tourism agencies, and so forth. They're recognizing our clientele is changing dramatically. It used to be 95% Japanese and 5% foreign. Now it's 80% Japanese and 20% foreign. Three or four years from now, it'll be 50% Japanese and 50% foreign. So many students are graduating and going into agencies having to do a tourism. Or in some instances, it's products or services that are developed in Japan, like the sake industry, that is attempting to go global now. They recognize that they cannot just rely on the Japanese market to sustain their business over the long term. That's right. In fact, sake consumption has declined over the past few years. That's right. Yeah. It's like soy sauce, too. That's Kiko Monza's perfect example. Their biggest market is America. They made that move many, many years ago. They were in advance. So Japanese companies that didn't are now all addressing that. But the key to interaction, especially in the service industry and helping on tourism, is also language, Japanese language. Now with your students coming in, do some of them actively study Japanese or try to really get a really good hold of that for the work office? All of our foreign students that come to study at Kansai Gaidae, it's mandatory for them to study Japanese. And I would say that probably a quarter of our students have fairly high level Japanese. So for them, it's much easier to transition into more traditional companies where it would require Japanese. But in the tourism industry, even those foreigners who do not have strong Japanese skills, maybe they're just conversational level, they'll be hired as well. Because if their clientele will not be Japanese, it'll maybe be Germans. So they'll hire Germans for that, or Koreans. So they're beginning to recognize that there's enough of a base of tourists from France, or Germany, or Russia, or wherever. Well, in the last 10 years or so, there's been a shift of English salespeople in Akihabara to Chinese, Mandarin, dramatically. Absolutely. That's a huge shift right there. Yes, exactly. And we've been talking about tourism and Niseko, a famous ski spot in Hokkaido. And now dominated by Australian and New Zealand entrepreneurs catering to a global market from Korea, Taiwan, China, and the US, and Australia. So if you're Australian, and you weren't one to work in Hokkaido, you can't. Oh, yeah. Because your clientele are Australian. So for me, I'd have to learn Australian. But I would never have thought of that. I know. Because I used to go there as a child because my mother's from Hokkaido. And again, that would be the last global place in Japan, to me. And Tokyo was it for decades as a center for dealing with foreigners and globalization. And can you say any tips for Hawaii people, entrepreneurs, to take advantage of this tourism boom? We seem to be focusing on this. So this is a good topic. You know, one huge trend in Japan right now is Hawaiian products. Right, right, right. So tomorrow in my entrepreneurship class in UH, I have Ed Schultz, who's the founder of Honolulu Coffee. That's right, yeah, yeah. He has established a partnership in Japan and has several stores there. And they're doing extremely well. Eggs, it was eggs and things? Yeah, that's right. They're in Kobe. Wow, of all places. I would never think of Kobe, yeah. Japanese people, as you know, they love coming to Hawaii and they go back and they miss Hawaii. So selling products and services in Japan for Hawaiian businesses, I think, would be a very realistic opportunity for them to think about. You're absolutely right. The data we have is like 500,000 to 600,000 people in Japan study the hula in Hawaiian music. There is no excitement. My father-in-law studied the ukulele. There's no segment like that in China, Korea, or other countries. Japan is unique. And I think there's also a tip that I'm also having an article in Hawaii business on these tips for Hawaii entrepreneurs is that the key to success is having a Hawaiian story, to a brand, to your product or service. Yeah. So in the case of Honolulu Coffee, that's very clear. The motif, the decoration when you go in, it's all Hawaiian. The menu includes Hawaiian products. And by the way, it tells me that the highest profit that they make is on the pancakes and the food. Even though it's named Honolulu Coffee, the primary attraction. And again, it's usually Japanese women who want to eat. They'll buy one, play it, and then share it. This is the recipe for success, according to Ed. We'll explore that even more after we take a break. This is Think Tech Hawaii, all about leadership. This is Think Tech Hawaii, raising public awareness. Host of Voice of the Veteran, seen here live every Thursday afternoon at 1 PM on Think Tech Hawaii. As a fellow veteran and veterans advocate with over 23 years experience serving veterans, active duty, and family members, I hope to educate everyone on benefits and accessibility services by inviting professionals in the field to appear on the show. In addition, I hope to plan on inviting guest veterans to talk about their concerns and possibly offer solutions. As we navigate and work together through issues, we can all benefit. Please join me every Thursday at 1 PM for the Voice of the Veteran. Aloha. Hi, we are back with a scintillating conversation on how Japan is changing just in a few years about tourism, all kinds of tourists globally who are coming to Japan, even to Niseko in Hokkaido. Even eggs and things opening up in Kope, which I would never have believed a few years ago. Intense interest in Hawaii, Hawaii products. But also, I think there's a human side how to develop young people to really take advantage and really make careers in Japan. And I think, Steve, you were talking about internships that really kind of make their pathway into careers in Japan easier. Right. So about four years ago, we had this idea to start internships for our foreign exchange students at Japanese companies. And nobody else. And actually, to this day, I don't think any other Japanese university is doing this. And frankly, when we started it, we had no idea if, number one, there would be interest from the students. And number two, the Japanese companies would actually allow us to put foreigners. It's kind of scary when you think about it. It is. And the Japanese work environment in our office. Yeah. Yeah. Picking up the phone, for example. There's a business etiquette. We actually teach them. So we announced it. And there were no applicants. We were getting worried. And typical students, all of a sudden, within the last 12 hours before the deadline, we had, like, 30 students applied. So we had enough. That was the first year. So we have students at Sumitomo Bank, at Komatsu, Kubota, Daikin. But those are big companies in the Kansai area, right? Mostly, yeah. Since our school is based in the Kansai area, and the affiliation between Gaidai and Sumitomo Bank is very strong. So this is the heart of the Kiretsu. So once Sumitomo Bank said yes to us, then they recommended us to all these others. So we started this program. And I was focusing purely on business internships. It's turned out to be a wonderful success for two reasons. First of all, the foreign students are just delighted that they're able to work in a Japanese environment. Because they get classroom instruction, but to actually work. It's a real life. And it allows this bridge to a career in Japan, what we were talking about earlier. And then also, the Japanese companies are delighted, too, because internships in Japan are considered to be kind of like introductions. And the Japanese students don't take it so seriously. But the foreign students do. Because internships are a bridge to employment in America. 50% of jobs after graduation are through internships in the United States. So it's turned out to be a wonderful success. So this summer, we had 52 students in internships. But getting back to the JET program, when I announced this, I did it with only a business context. They were knocking on my door. We're not interested in business. We want to be teachers in Japan. So can you set up an internship program with the local schools? So now, actually, of the 52, about 60% of the internships are done at local schools, which then allows them to put teaching at a Japanese school on their resume. And I now, since we've been doing this long enough, I get email from my students, I've been accepted to the JET program. And part of the reason why is that I've taught. And this will get them back to Japan. And then another pathway to maybe future business opportunities. There are so many JETs. My experience is in the IT industry. So many JET graduates that are in the IT industry. So the Mormon, there's a Mormon group that go to Japan. They're in business in large numbers, and also the JET group. And the government's beginning to recognize that the JET is a talent pool for business activity. And of course, you learn how to interact with other Japanese teachers, Japanese parents, Japanese language. So you really get a kind of intense introduction to Japanese society through teaching English. But yet, you really are in a societal communications kind of situation on a daily basis. Yeah, it builds the basis for those individuals who are teaching to become successful in business, because that teaching in business has in common. It's building relationships with people, and fitting them within the culture to be successful. So we have to ask my big question. Yes. So we're in the middle of 2018. 2017 was a pretty good year. Barely 1.5% growth. But to Japan, that's great. And we're in the middle of July of 2018. How does it look for the rest of this year going into 2019, which leads to the Olympics? Of course, there's a lot of construction for the Olympics, a lot of tourism. How the entire economy doing? Yeah, as you know, we're in multiple years now of economics. We've had the same prime minister now for quite a while. And he has come up with a formula to try and revitalize the Japanese economy. And from my perspective, I would say that the results have been mixed. Certainly, the Nikkei is up. Corporate savings, corporate reserves are up. Unemployment down very much? Unemployment's down. And that's a combination of business activity, but also demographics. As you know, every year, 500,000 people are exiting from the workforce. Right, right. It's a big number. So I think that's in part what's driving the unemployment numbers down. And the big thing was, when he got in, was to promote the role of women in the workforce. What has happened to that? Yeah, that was one of the tears. I think in that area, it's not mixed. In that area, frankly, it's been a failure. So his goal was to have 30% representation in the diet for women and also in management levels within Japanese companies. When he started, it was 8%. And unfortunately, today, it's 8%. It has not changed. They did the sneaky thing about a year, year and a half ago. Like on a Friday night, they announced that the target is changing from 30 to, guess what, number 8. Oh, we've succeeded. We've hit 8%. So that area, unfortunately, has been a little bit frustrating. As you know, I'm involved with the American Chamber of Commerce. And how are American companies doing in Japan? Is the same issues from before about market access, about issues have changed? Totally. So just briefly, I joined the ACCH about five years ago. And then was three years ago elected to become the vice president of the Kansai region. It's a big place. Yeah, we have an economic engine for Japan. Yeah, it's number two. We have P&G and Lily and AstraZeneca, Bayer. Those are all major members of the ACCJ Kansai region. So I interact with the CEOs of Coca-Cola and Boeing and so forth. And the access issues that we've heard about historically in the back of the 80s and 90s, that is no longer the problem whatsoever. And replaced by what? Well, in some instances, obsessive regulation. But I'm sure Japanese companies would also complain about that. The farm industry is the management of the health industry. In Japan, since it's socialized medicine, it's much more granular than what American companies are used to in the United States. So there's some complaints along those lines. But in terms of access to the market and support of Japanese government for foreign entities in Japan, not an issue whatsoever. In fact, this is a dialogue that the ACCJ often has with the US embassy because the current administration were involved in trade negotiations with Japan. And some of that is kind of reactive in terms of that was what Japan was like maybe a couple decades ago. But if you talk to the business leaders, the people who are members of the ACCJ, Japan is a growing market in the pharmaceutical industry. Japan is a lot of foreign companies are doing extremely well. It's their number one growth opportunity right now. Longer term, they're investing in China. But Japan is just showing a remarkable growth. Insurance, the head of the ACCJ right now, Sachin Shaw, he is the head of MetLife insurance companies. And that's a huge area. AIJ. APLAC and other ACJ. APLAC is a member of the ACCJ. They're all doing extremely well. Very good market. So the people who are represented within Boeing, unbelievably well. So no complaints. The people who are represented in the ACCJ are very happy with how they're being able to develop their business in Japan. That is not an issue whatsoever. There are concerns longer term about Japanese growth and the issue of the number of Japanese people. It affects me as a professor and a dean. Our school has 13,000 Japanese students right now, so it's quite successful. It's quite good. But the number of high school graduates is going down every year. And the competition for students is increasing. That's right. And there's been many, many new colleges and all kinds of new. There was a huge expansion coming out of the 80s and 90s. And now there's over saturation. And many of these schools, frankly, are going to go out of business. How about immigration? Wow, that's a tough one. So I think still, because Japan is 98% Japanese, there's a sense that Japan belongs to the Japanese. My own personal story of working and living in Japan has been great. I never experienced any issues or any discrimination. I've had a wonderful career based in Japan and part in the rest of Asia. So my own personal story is a positive story. I was in the software industry, which is one of the street that's dominated by foreign companies. But overall, I don't think it's too much of an issue, frankly. And how about gambling? Oh, that's a big one. So when the ACCJ is involved in supporting that, since Osaka is probably going to be one of the sites that's selected. It's on a little island of Osaka? Yeah, there's an island that's always been developed. And it looks like Osaka is going to host the World's Fair in 2025. So those two things are kind of connected together. And a lot of flights in to a cankuu from Asia, from Hong Kong and Korea and China. So some of the American companies that potentially will be the winner in Osaka, they're ACCJ members, or they're also interested in education, hotel management and education, so I've been talking to them. The numbers that they talk about in terms of investment in Kansai, minimum $10 billion. This will be the biggest injection of foreign capital into the Kansai region that I can think of over the last 20 years. It will really dramatically change. And we're coming to an end. Yeah, we have to end on that note. Can we have more time? No, that's a whole nother show that we can do. It's very exciting. On developing that infrastructure for casino, hotel management that does not exist in Japan today and has to be imported. And there has to be a lot of training, education, a new class of casino managers that have to be developed. And we can talk about that on the next time. Yes, I'm working on that in Kansai guy, actually. It will be an interesting, fascinating area because of course, Hawaii loves Vegas. It's 70,000 former Hawaii residents in Vegas. So this is the end of this show with Steve Zercher from Kansai University on all about leadership. Ray Tsuchiyama, thank you very much. Thank you, Ray.