An Insider's comments on Japan's high tech business world

* * * * * * * * TERRIE’S TAKE – BY TERRIE LLOYD * * * * * *
A weekly roundup of news & information from Terrie Lloyd, a long-term
technology and media entrepreneur living in Japan.

General Edition Sunday, Nov 12, 2017, Issue No. 922

– What’s New — Dealing with a Rogue Employee in Japan
– News — Tweaking China’s nose in Philippines?
– Upcoming Events
– Corrections/Feedback
– Travel Picks — Traditional houses in Kyoto, traditional restaurant in
– News Credits

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Dealing with a Rogue Employee in Japan

It’s tough being a foreign businessperson in Japan. Unlike our Japanese
colleagues, we don’t have a support network that stretches back to High
School or University, and thus when confronted with new or difficult
challenges we’re often left in a lonely and uninformed position. Turning
to your local staff for advice is one possible source of know how, but
what do you do if it’s a staff member who is the cause of the problem?
Then things become doubly awkward…

It’s for this reason that I offer to act as a sounding board for other
foreign business people in Japan. I don’t charge for doing so, unless
the interaction is becoming time-consuming, and instead consider it a
chance to “pay it forward”. With 34 years of employing staff in Japan
and having hired well over 1,000 people, I’ve had the opportunity to see
a wide range of employee mis-adventure: deaths, accidents, severe
illness, run-ins with ex-wives (and husbands), jailings, theft, sexual
harassment, power harassment, and business sabotage.

In case you’re wondering about this list of mis-adventures, I actually
have a very nice group of employees to work with. I would say that less
than 1% of the staff I’ve ever hired have had deep personal problems.
Unfortunately, foreign companies, with their less intrusive management
style do seem to attract more people who have trouble fitting into a
regular Japanese firm, and some of those people can be a bit extreme.
That said, at 1%, we are still only talking about one rogue person every
few years for a typical SME with 10-20 staff.

So this brings us to the situation a friend is having at the moment. The
short background is that he was employing an independent contractor (in
itself an awkward employment arrangement, though not illegal if
documented and handled correctly) and this person was posted to a
multinational corporation to be part of a global support contract. The
reporting manager in the client corporation is new and not really
competent and my friend’s contractor guy managed make himself invaluable
to this new manager – helping to hide the incompetence.

As you could imagine, this allowed the contractor to embed himself at
the client’s workplace to such an extent that it triggered an ambition
by him to move into that company directly, even though his contract
forbids it. Yes, this is allowed by Japanese labor law (freedom to seek
employment), but it is also a gross breach of trust. Worse still, the
way he is doing it is to try to get my friend’s company kicked out –
which he appears to have achieved through a series of clever
manipulations. It’s really a nightmare scenario for my friend – as he
faces the prospect of not only losing the contract but also having his
business reputation blackened.

This is a particularly nasty case, and my guess is that things have
already gone too far to retrieve the situation. However, when I look at
how he got into this predicament, I see some familiar patterns that I
would have warned him about before, because years ago I was in a similar
situation myself.

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[…Article continues]

1. Confusing friendliness with friendship. In business, it’s great to be
friendly with your staff. I certainly don’t want sad sacks around my
office and I make an effort to keep a good positive environment there –
mostly by hiring positive people. However, being friendly and being
close friends should not be confused in a business relationship.
Unfortunately my friend had a soft spot for his new contractor, and made
a big effort to help the other fellow out – arranging a visa (yes, the
contractor is non-Japanese) at short notice, personally providing him a
place to stay at the beginning, lending him money, and generally helping
him get on his feet. In doing this, my friend felt positive enough that
he decided not to bother with a formal contract, and instead just paid
the contractor on a monthly basis. This is a huge “no-no” since it
didn’t set responsibilities in the relationship, and furthermore helped
to create an entitlement mindset in the contractor.

Labor contracts are not really binding in Japanese labor law, especially
those clauses that contravene certain rights, but they do help focus the
employee, and they should carefully spell out what is acceptable
behavior and what is not. When it’s in writing, it takes a much more
determined individual to willfully breach it.

2. Not managing the client relationship. It is tempting when you
dispatch someone to a client, to forget about them and the client, and
to get on with the next piece of business. But as I’ve found out in my
own outsourcing businesses, if you don’t spend time actively managing
both your onsite staff and clients, you will eventually have a nasty
surprise waiting. It’s human nature to not want the involvement of a
middleman, and despite any value you may be bringing to the table, if
you are not visible to either party you become that unwanted middleman
that everyone wants to cut out.

My personal rule with clients is to visit them regularly, at least every
3 months, and to reach up as high in the company as I can get – so that
I have access to a senior manager at short notice if things don’t go
well. For contract employees, I work on managing their career, seeking
to connect them with the mother ship (us) as much as possible – through
informal parties, training, employee awards, etc. I also used to move
contractors I’d like to keep, around every 2 years, so as to be
compliant with part-timer/contractor laws. If for some reason I can’t
move the person, then I learned to expect that I may lose either them
or the client in due course. In my friend’s case, after the contractor
had declared war his options were extremely limited because he was
unable to talk to anyone higher up the food chain at the client, and
thus he was unable to rebut the widely distributed accusations and
vitriol directed at him by the two plotters (the contractor and the
incompetent manager).

3. Not acting quickly enough. When someone you trust betrays you in an
aggressive and blatant way, it takes you by surprise and most normal
people need time to process what just happened and decide what to do. In
particular, most people want to avoid confrontation and so try to
negotiate with the employee, hoping to resolve things before they get
out of hand. The problem is that if you are dealing with a cold-blooded
planner, or, worse, someone who has built up a heated grudge against
you, there may be no negotiation. Some people only identify with winning
and making the other person “pay” for real or imagined transgressions.
When I first heard my friend’s story and some of the accusations, lies,
and actions being perpetrated, I recommended him to let the guy go
immediately. However, my friend really wanted to believe that he could
work things out and that things would normalize. Unfortunately they didn’t.

4. Not understanding naked ambition. When someone is going for a home
run and is willing to hurt another person, especially if they have
fueled their ambitions with a grievance, then they have probably already
crossed the line between whether lying is OK or not. This happened to me
years ago, when someone who was sales manager of a company I’d bought
stayed back late one night and downloaded the customer database, right
before they gave notice and secretly started a competing company! Her
motivating grievance was that our transition manager was too pushy
towards her (they’d been working together for several months – since the
due diligence phase), and so she claimed she was being “forced” out of
the company by him. This despite the fact that she was the top
salesperson by far, and we had no intention of firing anyone who was
performing at that level. Anyway, for her, that justified taking the

5. Not documenting the situation. For the contractor’s audacious plan to
work he had to turn the client company against my friend. So far, he has
done so with stunning effectiveness and my friend is simply bewildered
at how this could possibly be happening. However, as with any properly
managed relationship, if one party wants to build up a grievance and the
other party is doing their part correctly, that means the only path to
successfully turning a client is to lie about the party you want to cut
out. Lie about their terrible management, their alleged non-payments,
their bullying, whatever other mud you can come up with. Well written
lies can get great traction, and really the only way you can undo the
damage is carefully documenting the timeline, the conversations, and
refuting the lies with proof.

The problem is that my friend was so upset by what was going on that he
decided to remove all emails relating to the contractor from his
account, so that he wouldn’t have to be reminded on a daily basis about
the situation. While this sounds illogical, but I can assure you that
the psychic pain of being attacked and falsely accused can indeed make
you wish the person out of your life, and taking them out of your email
box doesn’t seem like such a bad idea.

So what can my friend do about this rogue contractor? He could try
taking the guy to court, but without meticulous documentation proving
his machinations, it’s unlikely that any lawyer would take on the job.
And even if he did find a lawyer, he would still have to pay the court a
50% bond (50% of the damages being sought) for the duration of the case
– which could take anywhere from 12 to 60 months!

Instead, if he wants justice and wants to be heard, a more expedient
measure could be to withhold the contractor’s last salary and the
severance pay, and see what happens. The contractor will either consider
that he is well enough ahead with his new full-time position and won’t
feel the need to pursue a court case, or, he will pursue it, or he will
go to the Labor Standards Office. Either way, my friend will then have
an authoritative audience to show his evidence to, and those bodies have
the power to reduce or remove the final payments. Usually, they will
split the disputed amount mid-way, since they love to find a compromise.
But thorough documentation is the key here.

About ten years ago I had a Japanese contract employee who while drunk
punched out a taxi driver. He was arrested and thrown in jail for two
weeks until he paid redress to the driver. During this time the police
seized as evidence his keys to our client’s server facility, and we
couldn’t get these keys back during that time, even though they are
supposed to be returned to the facility every 24 hours. As a result, we
almost lost the contract and that prompted me to fire him while he was
still in jail. I offered a month’s salary as severance.

Unfortunately for me, the contractor decided that it was unfair to be
fired, and took me to court. After getting a lecture from the judge
about public behavior, the contractor hit on a brilliant
counter-strategy of claiming that he was actually a full-time employee
instead of an independent worker (despite invoicing me from his personal
company on a monthly basis for at least 4 years before that), and
therefore he should not have been fired for the incident. The judge
unexpectedly changed his mind on hearing this and started sided with the

It was at this time that I learned that Japanese courts work in strange

Nonetheless, I did have meticulous documentation, and I was able to
insist that the contractor’s employee claims were spurious and
sidestepped the real problem, which was that he was violent and had
caused real harm to our company. I was in fact REALLY insistent about
this, and at one point even asked if it was legal if I could blog about
the case. The judge then decided to kick the case “upstairs” to the High
Court. The contractor’s lawyer, seeing that a High Court case might take
another 5 years (conservative estimate) to resolve, and seeing how well
prepared we were, advised his client to take what I had offered and cut
his losses.

The point of my story is that having detailed documentation gave me the
moral authority to try to regain control of the courtroom narrative,
which in the end resulted in a fair and reasonable settlement.

…The information janitors/


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+++ NEWS

– Tweaking China’s nose in Philippines?
– Where are the stock markets going?
– New manga drawing app
– Major banks looking at major cost-cutting
– Current Account surplus surges partly thanks to tourists

=> Tweaking China’s nose in Philippines?

Japan has agreed to build four coast guard radar stations for the
Philippines, between that country and Indonesia. Although nominally
intended to cover the Sulu and Celebes Seas, the radar stations are also
well positioned for Over the Horizon (OTH) scanning of the Spratly
Islands – the location of China’s recent island reclamation activities.
The two parties don’t say whether the four stations will be OTH or not,
but given that both seas extend more than 200km from the intended radar
station locations, it would make sense that the units will be
sophisticated enough to cover the entire region. ***Ed: This is the
first part of a longer-term effort to improve Japanese influence in the
Philippines. Maybe we can expect a relaxation of visas and tourism to
Japan again in the near future as well?** (Source: TT commentary from, Nov 11, 2017)

=> Where are the stock markets going?

Stock markets both in Japan and Europe turned jittery on Friday, after
the Nikkei share average fell 0.8% on Friday. This still left a 0.6%
gain for the whole week, and was still close to the 26-year high of
23,382.15. Stocks losing the most value were Toshiba at -5.1%,
Bridgestone at -7.7%, and Kumagai Gumi -13.7%. Most of the losers had
operational problems that impacted their core businesses, such as
Toshiba’s nuclear exposure and Bridgestone’s increased raw materials
costs. ***Ed: Europe had a much steeper fall later on Friday, which
reinforces the nervous stance of the global markets. Events like this
are also one big reason why Japanese companies have so much cash piled
up.** (Source: TT commentary from, Nov 11, 2017)

=> New manga drawing app

Publisher Shueisha has just released a manga drawing app call Jump
Paint, which is themed around the popular Shukan Shonen Jump manga.
Users get insider tips from famous manga authors, such as “One Piece”
author Eiichiro Oda. As a free app to start with, Jump Paint is already
a hit and has already been downloaded 500,000 times. ***Ed: Shueisha is
using a freemium strategy similar to popular games, and providing
additional painting tools for an in-app subscription fee.** (Source: TT
commentary from, Nov 11, 2017)

=> Major banks looking at major cost-cutting

Mizuho Financial Group has said that it will consider cutting up to one
third of its workforce, about 19,000 jobs, in an effort to reduce costs
and increase efficiency over the next 10 years. Although most of those
jobs will be lost through attrition, it also means that there will be
significantly less branches (about half of the current 800) and staff
manning them in the late 2020’s. *** Ed: Of the three major city banks,
Mizuho has had the biggest fall in profit, about 35%, and so the
restructuring is not unexpected. However, it seems that both Mitsubishi
UFJ and Sumitomo Mitsui also have plans to cut thousands of jobs over
the next 3-5 years.** (Source: TT commentary from, Nov 10,

=> Current Account surplus surges partly thanks to tourists

The Finance Ministry has released data for the Apr-Sep period,
indicating a surge in Japan’s current-account surplus, of about
JPY11.5trn, up 11.7% over the same time last year. This is in fact the
highest surplus for the last 10 years (since FY2007). Although most of
the amount was due to favorable trading conditions for Japan’s largest
manufacturers, the travel balance also made a substantial contribution,
with a 25% increase over last year, to JPY842.9bn. According to JNTO,
over the first 6 months of the fiscal year there were 14.66m tourists,
also a record for the country to date.*** Ed: Wonder if Japan’s
statisticians are taking into account the profit surges at JR and other
major firms, thanks to foreign tourists? Would be good to see an
up-to-date study on their influence on the greater economy.** (Source:
TT commentary from, Nov 9, 2017)

NOTE: Broken links
Some online news sources remove their articles after just a few days of
posting them, thus breaking our links — we apologize for the inconvenience.



——– Harvest Festival 2017 tour by JapanTravel ——–

Enjoy a full day of wine-filled recreation at Harvest Festival 2017!
Held on the rolling hills of Ashikaga in Tochigi prefecture, this event
is organized by Coco Farm and Winery, formerly started to raise money
for autistic individuals. Enjoy different types of locally-produced wine
paired with delicious Kanto cuisine while relaxing on the grass and
listening to a live lineup of well-known Japanese musicians!

Japan Travel is organizing a tour to the festival on Saturday, 18th
November – this includes round-trip bus transportation to the event, an
English-speaking tour guide, and an entry package consisting of festival
memorabilia and a bottle of locally-produced red or white wine! Join our
group as an individual or book together with friends and family!

Book the tour here:
Contact us: 03-4588-2679


None this week.



=> Nakano House Project, Kyoto
East meets west in this stunning Kyoto creation

It is not often that you can combine two cultures without losing the
essence of one. The Kiraku accommodation project does this effortlessly.
In a response to the gradual deterioration of Japan’s distinct
architectural heritage, Kiraku aims to provide traditional Japanese
lodging equipped with all the amenities of luxury western style
accommodation. Kiraku has recently developed two properties available to
guests who want a traditional Japanese experience without having to
forfeit the luxuries of home.

Wedged between the Kyoto Imperial Palace and the Nijo Castle in the
bustling heart of downtown Kyoto, the Nakano edition of the Kiraku
project sets new levels in terms of automation and privacy – guests are
issued with a code that will unlock the front door and from that point
onward this house becomes your home.

The primary floor of the house features a marvelous pebbled genkan, the
part of the Japanese home where guests remove their shoes before
proceeding to the next room. The genkan at Nakano house is significantly
larger than those found in traditional Japanese dwellings and provides
adequate cupboard space for those traveling with a significant amount of

=> Restaurant Washoku Yohira
Seasonal Nagasaki cuisine in a traditional setting

Shianbashi is Nagasaki’s entertainment district and it is filled with
restaurants, bars, and clubs. Washoku Yohira is hidden down a narrow
cobblestone alley that is off to the side of one of Shianbashi’s main
streets. Seeming a world away from the surrounding neighborhood, this
wonderful restaurant serves traditional Nagasaki cuisine based on
seasonal ingredients.

Upon passing through its gate, visitors walk through a quiet garden
before entering a lovely 140-year-old building. Inside are 17 different
rooms, some of which are used for general dining and others are for
private use. Some look out onto their own mini gardens. Although
elaborate and delicious, meals are extremely reasonable. The ‘Rindou’
lunch that I enjoyed cost around ¥2000. Dinner sets start around ¥5000.



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