For decades, Japan has been struggling with the economic need to attract more foreign residents to the country and the general social reluctance to do so.

Over the years there have been some well-publicized failures and a few quiet successes, and Japan retains her image as a generally closed nation.

But reality changes much faster than perception in Japan. Things are already changing and that change is about to accelerate.

Today I’d like you to meet Nao Sugihara founder of MTIC, who is going to explain these trends in detail. Nao runs a recruiting platform called GaijinBank that deals exclusively with blue-collar, foreign labor, and he’ll show you not only that Japan’s has opened up far more than most people acknowledge, but that this trend will likely accelerate over the next 20 years.

It’s a great conversation, and I think you’ll enjoy it.

Show Notes

  • Which companies hire foreigners for blue-collar work n Japan
  • The biggest misunderstandings between Japanese companies and foreign staff
  • The overtime gap with foreign workers
  • The real reasons foreign workers object to overtime
  • Japan’s new guest visa program
  • How to integrate more foreigners into Japanese society
  • Lessons learned from the Latin American guest-worker program
  • Why the foreign nurses programs never seem to work out well

Links from the Founder

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I love working with startups. I love talking with startup founders and I know that you do too. That is why you listen to the podcast and I thank you for that.

When the traditional media focuses on startups, they tend to look at the crazy founders making outrageous claims or the newly minted billionaires, CEOs, and investors. That is all good fun, of course, but when we look a little deeper, startups tell us something else.

Looking at what startups get started and what startups get funded, and what startups get traction, that tells us a lot about the kinds of problems that we, as a country, thin  are worth solving. What problems are important enough to attract time and money, and customers changes a lot from country to country, and it reveals a lot about the social priorities of the cultures that these startups operated, and it’s not always a pleasant revelation.

Japan has always had a complex relationship with her foreign residents. Even today, there is a widespread intellectual acknowledgment that Japan needs to increase and encourage immigration but transforming that goal into actual policy enter real social acceptance, well, that is harder.

Today, we sit down with Nao Sugihara of MTIC and were going to dive deep into this. Nao runs a recruiting platform called GaijinBank and while there are lots of job sites catering to foreign engineers and creative’s, socket deals exclusively with the blue-collar labor.

Foreigners are working blue-collar jobs in Japan is actually an incredible aspect of the Japanese economy and one that is largely ignored, not only by the Japanese press, but even by the foreigners living in Japan, and you know, I have to admit, the things are different and, in some ways, much more encouraging than I expected.

But you know, Nao tells that story much better than I can. So, let’s get right to the interview.


Tim: So, I’m sitting here with Nao Sugihara of MTIC which is Make Tokyo an International City.

Nao: Yes!

Tim: So, thanks for sitting down with me.

Nao: Thank you. Thank you for the opportunity like this. I’m happy to talk today.

Tim: Wow, I’m glad to have you on, and I usually don’t interview founders of companies for like, recruiting companies, but what you are doing is really different.

Nao: Thank you.

Tim: You know, there is – I don’t know how many hundreds of different job sites for engineers and designers in Japan, but you’ve got a unique focus.

Nao: Yeah. Our service name is GaijinBank and we are especially for blue-collar type of work. We focus on the foreigner in Japan.

Tim: The job market for foreigners in blue-collar jobs is something that a lot of people don’t know outside Japan. So, tell me a little bit about your customers on the employer side. What kind of blue-collar jobs are being filled by foreigners in Japan?

Nao: For example, hotel, front desk, and craning, or manufacturing and construction, and logistics, and caregiver.

Tim: That seems quite a range of responsibilities, so something like factory work would not require a great deal of Japanese skills but someone working at the front desk of a hotel or being a caregiver, I imagine that would require some pretty high level of Japanese ability.

Nao: Yes.

Tim: So, where are these jobs? Are they in Tokyo or are they in the countryside? Are they all over Japan?

Nao: Of course, like many demand came from around Tokyo, and we do like Tokyo, Chiba, Kanagawa mainly, but actually, the countryside has more demand. So, we do sometimes in Fukushima in Tohoku and Ehime in Shikoku and can be like also Nagoya.

Tim: And are these permanent jobs? Are these temporary jobs?

Nao: We do both. Our temporary dispatching position and also sometimes, we introduce directly to employers permanently.

Tim: Now, in a minute, I want to dive deep into kind of this social impact that all this is happening, but looking at it from the employee side, who are taking these jobs?

Nao: We have many candidates, more than, I think nationality-wise, 100 countries, but mainly Asian countries people. Half of our candidates is a resident visa holder such as permanent, spouse visa, long-term visa. 30% students intend to 20% is like working visa, like international, humanity visa.

Tim: Okay, so my understanding was that for example, it’s almost impossible to get a permanent residency visa working at a factory. So, do they have permanent residency because of family members or for some other reason?

Nao: Yes, some of them like, get married with Japanese people or got married with permanent residence visa holder, then they become like a spouse, and then stay here maybe 5 to 10 years, they become a permanent resident.

Tim: So, when the employers contacted you, are they looking for foreign staff specifically or are they just looking for anyone to fill these positions and they can’t find Japanese or foreigners who are okay too?

Nao: Yes, they don’t care about the nationality. The most cases they cannot find Japanese workers, and then they kind of adjust.

Tim: What I imagined it for Japanese, particularly in these the blue-collar and very traditional industries, that’s a big adjustment. Do you guys help kind of bridge that communication gap?

Nao: In many cases, there was a miscommunication. For example, a contract or like some direction in the workplace. It’s kind of very difficult to communicate in Japanese or English, especially in Korea, cannot speak English in most cases. So, they call us, and then we communicate in English or their mother tongue.

Tim: Okay, so there are times you are actually providing an interpretation service so that they can give instructions to the employees?

Nao: Yes. We send it like a very bilingual staff in the work location, and then they directly bridge Japanese and English, or mother tongue.

Tim: So, I imagine a lot of cases, this is the employers first experience really working with a foreign staff. What are some of the differences between the expectation and reality? Just because the work culture in Japan is so different that it is in other places, so what kind of surprises or expectations are different?

Nao: The foreigner has, of course, like have a different culture. For example, some staff, after two weeks start working, like they ask us like, “Can I have a break, like one month? I have to go back to my country,” and wow, and then these don’t happen for Japanese employees, I think. So, we try to make sure, if you have a break plan, please let me know first.

Tim: That’s interesting.

Nao: And also like, work time, as you can imagine, Japanese people are accepting of overwork, but some foreign staff don’t like.

Tim: Oh, okay. Yeah, I can imagine that’s quite a surprise to a lot of foreign workers.

Nao: We have to educate both sides. Employees, sometimes, you have to accept overwork, and do we educate also employers. If you have, they ask now in advance, and we inform.

Tim: When the foreign workers are objecting to the over time, are the usually objecting because of pain mandatory because of time and they had other plans?

Nao: Both. Sometimes, they have planned, so they just want to go home. Regarding payment, actually in blue-collar, the money is very well. Normally, employer pay all of overwork.

Tim: Okay. So, it’s really more just a matter of scheduling and having control of your own time. That makes sense.

Looking at Japan as a whole and how society is changing this way, your business of placing blue-collar – or let’s just say non-technical foreign staff, it seems like a really growth industry in Japan. Just a few weeks ago, maybe a month ago, the government announced the new guest worker visa program for 2019, and they are targeting 40,000 foreign workers in Japan for next year, and they announced they are hoping for 250,000 by the fifth year. Do you think those numbers are reasonable? Do you think we’re going to see that many foreign workers coming into Japan?

Nao: Yes, that’s why I started this business. As you know, Japanese population shrink. In 2060, the population is going to be like, half. So, we need workers. Yeah, actually, some companies expect foreigner worker population, it’s going to be 12 million in 2055.

Tim: So, they are expecting it to make up 10 to 20% of the population? Yeah, over the last 20 years, the debate in Japan over foreign workers has been going back and forth between it’s a good thing and it’s a bad thing. A lot of Japanese are concerned about, well, the same thing people are concerned about immigration everywhere in the world, that the foreigners coming into Japan won’t be able to integrate into Japanese society. How do you think that can be overcome?

Nao: Firstly, Japanese society already understand, we need foreigners, especially service and manufacturing.

Tim: I think so, I mean, I think that people know it intellectually. They know it in their head, but they have not accepted with their hearts, and that’s much harder.

Nao: Yes, like Japanese people, it’s difficult to accept foreigner in the past. However, like from 2011, like we have many foreign travelers. We saw many foreigners, like naturally, and then we step-by-step getting used to being visa foreigner. Then, I think recently, they are much better to accept foreigner.

Tim: I think so. The change from when I first came here in 1988 to wow, that was almost 30 years ago, holy cow. So, the change over those 30 years is absolutely amazing. 30 years ago, foreigners, even in Tokyo, were sort of exotic creatures.

Nao: Yes, they may be, yeah, looking at you.

Tim: Yeah, so it is not like that anymore, so I think Japan has gone through this phase where they become more accepting of kind of like the idea of foreigners in Japan, and I think you are right. Over the last 5 to 10 years, Japan has become very accepting of the idea of foreign tourists coming to Japan, but tourism is easy. Tourism is people come, they leave their money, they go home. It seems like Japan is still having a really serious debate about foreigners living in Japan, especially 10 to 20% of the population being foreigners in Japan. Even in the best case, it’s not like a smooth simple process, right?

Nao: Actually, in Japan, around Nagoya, like 20 years ago, we accept the many foreigner from Latin America – Brazil, Peru, or like, Japanese second-generation, and what happened is we accept many foreigner, but many foreigner around Nagoya, they don’t have any good education for Japanese, and then there is a gap, like Japanese foreigner community, and also, wage was not so high. So, some foreigners became like gang. So, now, like we and also, I think Japanese government think Japanese language assistance is needed. Recently, many foreigner go to Japanese language school, but it’s very expensive. If they go like five days a week, they have to pay like, ¥80,000, so we need more cheap, more convenient, maybe e-learning.

Tim: Are either the national government or the local governments, are they investing in those kinds of programs?

Nao: Yes, Japanese government has a budget for next year, especially I think e-learning.

Tim: Okay, well, that is encouraging because Japanese is a hard language. I’ve been here over 25 years and I’m still studying.

So, what is the situation now in Nagoya, like say 20 years ago was when they started this program and they ran into a problem with foreigners kind of isolating themselves into their own communities and not integrating, how has Nagoya tried to fix that?

Nao: I think time passed, and then they had funding, and then they are more stable. Nowadays, Nagoya is one of the highest wage location, so like Toyota or other car company pays a lot for salary, so yeah, I think they have like a better life.

Tim: Okay, this is encouraging because I remember 10 years ago or so, the Japanese descent Brazilians who came to Japan and settled in Nagoya and the crime rates and the problems were a big deal in the press, and people were pointing to that saying look, we can’t bring in a lot of foreigners, but today, is dispute is kind of a success?

Nao: Yes, yes. The last five years, I don’t think many press did not announce about crime rate is high. Yeah, so far, Japan has success to accept foreign workers.

Tim: Huh. So, how many workers came in on that program?

Nao: About jyu-yon-man or something?

Tim: About 140,00 people?

Nao: I think so.

Tim: Okay, so it’s a similar number of people. So hopefully, they can use that as a model to make things go more smoothly.

So, for the different guest worker programs over the past 20 years where Japan has been trying to bring in like, non-technical workers, it’s been split into two types of visas. Some are the very short term, 1 to 3 year-visas, and then it’s expected the worker would go home, and most Japanese people are very supportive of that, and then there is the other which are much longer visas with the idea that the worker could stay in Japan and settle here, and that has been much more hotly debated in Japan. So, this new program, is it focused more on the short-term visa or the long term?

Nao: Long-term. So far, we accept many trainees. They can stay, at max, they can stay here for five years, but actually, industry demand to government, we need to more longer because we educate staff, but they go home after three years or five years, and then this new visa happened. At max, they can stay here like, 10 years, and then with higher scale, and then they can be permanent residency.

Tim: And I mean, if there stayed for five years or 10 years, that’s plenty of time for them to develop high your skills and to improve their Japanese ability, and eventually bring their family over as well.

Nao: Yes, there are two types of peace. One is a beginner and second is more expert. For beginner visa, they can stay at max five years, and then if they complete five-year work or if they can pass the examination, they can be like a higher skill visa, and then with higher skill visa, they can bring their family from country to here, and then at max, they can stay 10 years which means they can be permanent resident holder.

Tim: Huh. Yeah, I mean, that sounds like a great plan both for Japanese industries and Japanese society if they can learn from past examples and make integration smoother, but in the past, Japan has tried similar programs and it’s had a really hard time with it. So, for example, there’s been several attempts in the past to solve the nursing shortage by bringing in foreign nurses, and that never seems to work.

Nao: Yes. Actually, there is examination is very difficult for foreigner, especially this is national examination and the only Japanese is available, so like Chinese or Taiwanese, and Korean can pass that examination but other than those countries, it’s very tough.

Tim: That makes sense. I mean, they are working in a Japanese hospital, so you need to be able to read everything in Japanese. So, it’s really just that particular job, the Japanese language requirements were too high?

Nao: Too high, but actually, Chinese or Taiwanese pass the examination a lot. For these countries, this program works.

Tim: Because at least, they can read the kanji and don’t have to study that part. You think this program will be more successful because the language requirements aren’t nearly as high?

Nao: Yes.

Tim: Okay. Most of the startup founders come on the show tend to be technology-focus, and from my point of view, it seems like a real success stories in bringing foreign workers into Japan have been in for an engineering talent. There has been a lot of successes there, and that is about – or maybe, or in startup founders, it’s a big enough community here, but I can’t think of too many other successes on an industrywide basis, but what I mean is for example, is there an industry saying, “Well, in logistics, now 20% of the staff are foreign,” or in –

Nao: I think caregiver.

Tim: Caregivers?

Nao: Yes. Caregiver industry is very hard. For example, we send many Filipina ladies to caregiver industry, but I think naturally, they are very kind and gentle. Actually, we have like, feedback, Filipino caregivers are sometimes better than Japanese caregivers.

Tim: That’s interesting because I would have figured that caregiving would have had some of the highest Japanese language requirements for all the jobs?

Nao: It depends.

Tim: So, it’s more of just kind of a personality warmth than communication?

Nao: Yes, and also, elderly people don’t speak a lot. So, actually, some parts, the job requires Japanese high level, but most of part, they don’t require high level of Japanese.

Tim: You know what, and I recently read that in Tokyo at all the convenience stores, 30% of the convenience stores have foreigners working on the night shift in Tokyo, and that is a huge amount of labor force.

Nao: Yes. They go for foreigner night shift. It’s a 25% increase wage, so actually, they want to work in night.

Tim: So, what is the future of this program? I mean, moving from a year one target of 40,000 workers to a year six target of 500,000 workers, that is a big, fast ramp up. Do you think that can happen?

Nao: That’s happens. Actually, it can be bigger than that.

Tim: Really?

Nao: Yes. We need people, and then population decrease, it’s getting faster.

Tim: That would be great if it can happen smoothly and is planned.

Well, listen, Nao, before we wrap up, I want to ask you what I call my “Magic Wand” question and that is if I gave you a magic wand and I told you that you could change one thing about Japan, anything at all – the legal system, the way people think about risk, the education system – anything at all to make things better for startups and innovation in Japan, what would you change?

Nao: Mentally being more acceptable.

Tim: So, more accepting of what?

Nao: Of, for example, foreigners and for example, for risk. I was thinking about why Japanese people don’t – I mean, recently, Japanese people startup more, but compared with maybe America or Israel, much less. I think if they do and then if they fail, they think they cannot come back to society as before. So, most of the people like, hesitate.

Tim: I mean, it used to be very much true. If you started a company and you failed, I mean, it wasn’t like your life was over, but pretty close to it. You had to carry those debts and it was a really shameful thing, and now, I think that the economic reality is different. You can get investors and – so, if the economic reality has changed, why hasn’t the social reality changed too?

Nao: Look at my friends, still, I was banker. Only one or two people started up around me, so I think they still think about it’s a startup, it’s too risky. They are scared about risk.

Tim: So, what do you think they are risking? Are they worried about risking their reputation? Are they worried about risking money?

Nao: Money and also if they fail, they cannot come back to salaryman with like a same level of company, I think.

Tim: So, it’s very much a career risk?

Nao: Yes, and also sometimes, they have family already and the wife stop them.

Tim: I hear that a lot. That is –

Nao: We call it “wife stop”.

Tim: Yeah, that is one of the biggest challenges to starting a company in Japan.

Nao: Yeah, normally they don’t push.

Tim: Well, actually, you went to both Keio and Hitotsubashi, and both of those schools are known for traditionally generating a lot of entrepreneurs.

Nao: Oh, yes, yes, yes, especially Keio, yes.

Tim: Yeah. Do you think that’s true, even your friends from Keio are very risk averse?

Nao: Compared with other university, I think Keio University students are more entrepreneurial, but I still – regarding number, it’s still too small.

Tim: There are two concepts you talked about, risk aversion and accepting new things, and most people think those are very different, but actually, are you saying that they are actually related to each other?

Nao: Yes, because if, for example, a big company, if they accept the kind of people like some people like, have motivation to start up, and then they fail, and then they want to come back to like a big firm, in the company accepts the kind of people, actually very motivated, but nobody, they don’t accept with the same pace of career. So, if the big company attitudes change, I think the number of entrepreneurs will increase. That is why I think acceptance is very important.

Tim: Huh. We have been seeing a lot more startup founders in the last five or 10 years, and part of that, I think it’s just that the risk is going down, but do you think people are really becoming more accepting in Japan?

Nao: I hope so, I hope so. Yeah, if I have success, I would like to spread out the kind of idea, yes. Yeah, I hope so.

Tim: Well, listen, Nao, thank you so much for sitting down with me. I really appreciate it.

Nao: Thank you. Thank you, Tim, so much.


And we’re back.

You know, it’s funny. Largely due to Donald Trump, America’s immigration issues have become international news, but the immigration debate in Japan is every bit as complicated as what’s happening in the US, but of course, the debate is much more polite in Japan.

It’s clear Nao is optimistic about the future of foreign workers in Japan. I mean, he is betting his whole company on at, but students of Japanese history and longtime Japan residents are probably understandably skeptical.

We have been hearing about the importance of foreign workers in Japan for decades, but Japan has always been very fickle in this regard. For example, Sharp has been carefully negotiating and messaging its Japanese staff reduction for a few years. This last month, when they announced that 3000 foreign workers were being let go mid-contract, well, the attention barely lasted a single news cycle, but I don’t know, perhaps it’s my overly optimistic nature but I think, I really do think it is different this time, at least in a few important ways.

One of the most interesting things Nao pointed out was that the industry was lobbying the government to grant foreign workers long-term visas with rights to bring their families and a path to permanent residence. They are not looking for disposable low skill short-term employees. Japanese industry now wants skilled people that they can train for the long haul, and that is good, but more important, things are already changing.

The legal age of adulthood in Japan is 20 years old, and this year, 13% of all new adults in Tokyo were non-Japanese. In fact, in Shinjuku-ku, 46% of all new adults were non-Japanese. So, yeah, this is new, this is good. I think this is good, but in any event, it is different.

It is a change and as you, as a regular listener of Disrupting Japan, as you know, when Japan changes, Japan changes very quickly.

If you want to talk about working in Japan as a foreigner, Nao and I would love to hear from you. So, come by and let us know what you think, and if you get a chance, please check out our Facebook or even our LinkedIn group. If you ask a question there, I guarantee you I will reply.

But most of all, thanks for listening and thank you for letting people interested in Japanese startups know about the show.

I am Tim Romero and thanks for listening to Disrupting Japan.