From Third World to First The Singapore Story pdfdrive com

32. Lessons from Japan
After World War II, a few men at the top of Japanese society were determined to
rebuild Japan and its industrial sinews. This elite had not been disbanded by
General MacArthur’s occupying forces. When communist China intervened in
the Korean War, the Americans switched their policy to one of rebuilding Japan.
Japanese leaders realised this was their chance and kept a low, humble posture
while they caught up with Americans in textiles, steel, ships, motorcars and
petrochemicals, then electrical and electronic goods and cameras, and finally
computers. They had an elitist system. Like the French with their Grand Ecoles,
their former imperial universities as well as the top private ones selected the best
and honed their talent. That talent found its way to the top of the bureaucracy
and their corporations. Their elite, both administrators and corporate leaders, are
equal to any in the world. However, the Japanese miracle was not the work of
just a few at the top. The Japanese people as a whole shared a determination to
prove that they were able to make the grade. At every level they strove to excel.
I saw an unforgettable example of how they took pride in their work during a
visit in the late 1970s to Takamatsu, a city on the island of Shikoku. The
Japanese ambassador gave me dinner at their best but three-star hotel. The food
was excellent. For fruit and dessert, a chef in his 30s appeared in immaculate
white to demonstrate his skill with a sharp knife, peeling persimmons and
crunchy pears. It was a virtuoso performance. I asked about his training. He had
started as a kitchen helper, cleaning plates, peeling potatoes and chopping
vegetables. Five years later he graduated as a junior cook; ten years later he
became a chief chef in this hotel and was proud of it. Pride in their job and the
desire to excel in their given roles, whether as cook, waiter or chambermaid,
makes for high productivity, and in manufacturing, near-zero defect products.
No nation in Asia can match them, not the Chinese, Koreans, Vietnamese or
Southeast Asians. They consider themselves a special people. You are either
born a Japanese and therefore in that magic circle, or you are not. This myth of
being special makes them a formidable force as a nation, a corporation or a team

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in any workplace.
Indeed, the Japanese have admirable qualities. Theirs is a unique culture,
where they fit into each other snugly like Lego bricks. One-to-one, many
Chinese can match the Japanese, whether it is at Chinese chess or the game of
Go
. But in a group, especially a production team in a factory, they are difficult to
beat. When I presented an award to Nobuo Hizaki, the managing director of
Nichison company in the 1980s, I asked how the Singapore worker compared to
his counterpart in Japan because both worked identical machines. He assessed
the Singaporean’s productivity at 70 per cent. The reasons: Japanese workers
were more skilled and were multi-skilled, more flexible and adaptable, had less
job-hopping and absenteeism. They accepted the need for life-long learning and
training. All workers considered themselves grey-collar workers, not white-or
blue-collar. Technicians, group leaders and supervisors were willing to soil their
hands. How long would it take for Singapore workers to catch up? He thought in
10–15 years. When pressed, Hizaki said Singapore workers would never catch
up 100 per cent. He gave two reasons. First, the Japanese worker would cover
for his work-mate who had to attend to other urgent business; the Singapore
worker looked only after his own job. Second, there was a clear division in
Singapore between the rank and file and the officer cadre, which was the British
system, where a polytechnic or university graduate came straight into the officer
grade. This was not so in Japan.
When I was in Japan in 1967, I visited the Yokohama shipyards of
shipbuilders IHI (Ishikawajima-Harima Industries), our joint venture partner in
Jurong Shipyards Ltd in Singapore. The vice-president, Dr Shinto, was a stout,
energetic, able man and an outstanding engineer. Like the other workers, he
wore his company’s uniform. He wore rubber boots and a hard hat and provided
me with the same before we toured the dockyard. He knew every inch of it and
gave a running commentary in English. The Japanese workers were disciplined,
hardworking, united and efficient.
Back in his office, over a working lunch, he explained the difference
between British and Japanese managements. Japanese executives and engineers
start work on the factory floor. They had to understand the low-level workers to
lead them effectively before they could rise from the ranks. The British dockyard
executive sat in his carpeted office and did not visit the men on the shop floor or
in the dockyards. That was bad for morale and productivity.
Later that year, I visited Swan & Hunter’s shipyards on the Tyneside. Sir
John Hunter took me through his dockyard. The contrast was stark. Sir John

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wore a beautifully tailored suit with highly polished shoes. We drove up together
in a Rolls Royce. When we walked through the greasy shop floor the muck stuck
to our shoes. I had not noticed such grease at the IHI dockyard in Yokohama. As
we were about to enter the Rolls, I hesitated. Sir John did not. He scraped the
soles of his shoes against the floor and went into the car where he wiped the
remaining grease on to the thick beige carpet. I was invited to do the same. I
must have looked surprised for he said, “They will shampoo it.” We were driven
off, not to an office working lunch but to the Gosforth Hotel, where we had an
excellent meal before playing 18 holes of golf. The British executive lived in
style.
May 1975 was my first visit to Japan after the oil crisis of October 1973. I
had read of the comprehensive steps the Japanese had taken to save energy and
their success in reducing oil consumption per unit of industrial output. I found all
offices and public buildings including their top hotels had reduced power use.
That summer, the temperature in my air-conditioned hotel room could not be
brought below a minimum 25°C which was warm; there was a polite notice
asking guests to be forbearing. The chambermaids assiduously switched off all
lights and air-conditioners every time we left our rooms.
I asked our Public Utilities Board officials to study how the Japanese had
been so successful in conserving energy. Their report showed how seriously
they, unlike the Americans, had tackled the problem. Factories consuming more
than a certain amount of electricity had appointed energy managers to rationalise
energy use and report their progress to the ministry of international trade and
industry (MITI) yearly. The construction industry took conservation measures to
prevent heat loss through external walls and windows. Manufacturers improved
the efficiency of domestic appliances such as air-conditioners, lighting and water
heaters and so lowered electricity consumption. They did the same for industrial
machines and were required to display the power efficiency of each.
The government gave tax incentives for installing energy-saving equipment,
while banks financed the purchase and installation of heat insulation and other
such equipment at special low rates of interest. They created an Energy
Conservation Centre in 1978 to spread information on conservation technology
through exhibitions, factory energy audits and research. No wonder Japan
achieved the lowest electricity consumed per unit of industrial production.
I asked our ministries to adopt similar measures wherever practical. We

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managed to cut down our use of electricity but nowhere as effectively as the
Japanese.
By the late 1970s Japan was greatly admired for its recovery from the oil
crisis. It enjoyed high rates of growth while Western Europe and America
slowed down. Numerous articles and bestselling books extolled its virtues. But
they could not erase the widely held stereotype that the Japanese worked like
ants, lived in rabbit hutches, closed their markets and exported an endless flow
of steel, cars and zero-defect television sets and electronic products.
I learnt from the Japanese the importance of increasing productivity through
worker-manager cooperation, the real meaning of human resource development.
We had formed a National Productivity Board (NPB) in 1972. We made
progress, especially after Wong Kwei Cheong, a PAP MP and the managing
director of a joint venture Japanese electronics company, educated me on the
virtues of Japanese-style management. He helped us form a National
Productivity Council with members drawn from the private sector to advise the
NPB. I approached the Japan Productivity Centre to help us set up a centre and
saw the chairman, Kohei Goshi, a dry old man of very few words in his mid-70s.
He was an ascetic who exuded sincerity and earnestness. He described
productivity as a marathon with no finishing line. With his help over the next 10
years, we built up an effective productivity organisation that gradually got the
unions and management working together on improving productivity.
Japanese managers are totally dedicated to their job. In the 1970s a Japanese
engineer at Jurong Shipyard failed to secure an important oil storage tank project
because of an error he had made in calculating costs. He felt deeply responsible
for the drop in his company’s profits that year and killed himself. We were
shocked. We could not imagine any Singaporean feeling such a heavy sense of
personal responsibility.
In every major city I visited in China and Vietnam, the major Japanese
trading companies had stationed representatives to study what could be
purchased and sold to other parts of the world, and what goods these places
needed which Japan could bring in from elsewhere. They beavered away
assiduously and kept Japanese companies well-informed. Singapore companies,
on the other hand, have trouble getting young executives to man hardship
postings in developing countries like China and Vietnam.
Because they demand so much of themselves, Japanese companies seldom

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find Singapore managers as good as their own. In Jurong Shipyards Ltd, after 20
years of a joint venture operation started in the 1960s, the CEO, chief financial
officer and chief engineer were all Japanese. Nearly all American MNCs had
appointed local CEOs within ten years of starting operations. Singapore
executives and engineers know that promotions and acceptance are most difficult
in Japanese MNCs.
High Japanese standards of responsibility, reliability and professionalism and
competence in the Japanese language made for hurdles difficult to cross. This is
changing, but slowly. In the 1990s one major Japanese MNC, NEC (Nippon
Electric Company), appointed a Singaporean as its CEO. By then, more than 80
per cent of the American companies and 50 per cent of European companies had
done so. Their different culture has created problems for Japanese companies
overseas. They do not absorb non-Japanese easily into their corporate system. In
a global economy the Japanese will be at a disadvantage unless they can change
and become more like the Americans and Europeans and absorb foreigners into
their corporate cultures.
After living in Japan for decades, Chinese Singaporean bankers and
businessmen rarely develop deep friendships with their Japanese associates, in
spite of speaking fluent Japanese and conforming to Japanese social norms. They
meet over dinner and social gatherings at public places, almost never in their
homes.
The Japanese do not give business to foreign banks. Singapore banks in
Japan depend entirely on Singaporeans and other foreigners. When big Japanese
firms invest in Singapore they bring their supporting companies to cater to their
needs, including Japanese supermarkets, restaurants and other suppliers of their
way of life.
Because they were cut off from Western technology and had a difficult time
reaching the top, depending much on reverse engineering, the Japanese are
miserly in passing on their technology, as Taiwanese, Koreans and Southeast
Asians have found. Having earned their newly found wealth the hard way, they
are loath to part with it to spendthrift Third World regimes, to benefit, not the
people, but a few leaders. It is a minor miracle that under American suasion,
they have become the world’s largest aid donor. Singaporeans have also come
up the hard way, so I understand Japanese sentiments. We have always preferred
to give aid in the form of training and technical assistance, not in grants which
could be misused.

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In 1980 officials from our ministry for trade and industry visited their
counterparts in Japan’s formidable ministry for international trade and industry
(MITI) which had charted the course for Japan’s post-war industrial progress.
Their report was illuminating. The Japanese were focused on the future. They
were not harking back to an idyllic Japan of sailing ships and samurais. Their
agenda was energy conservation, alternatives to oil and a strategy to overcome
protectionism in steel, cars and electronic products by moving to creative
knowledge industries. So far their progress had been a catching-up process. Now
they had to move forward on their own by creating new technology and new
products. MITI’s vision for the 1980s was of a technology-based Japan that
embarked on the continuous acquisition and exploitation of new knowledge to
serve the needs of men and societies.
MITI’s advice to our officials in 1980 was, given Singapore’s geographic
position and environment, to prepare for a possible role as a centre for
knowledge and information, to complement Tokyo. The Japanese believed that
for such a centre to succeed, the people had to be reliable and trustworthy. We
took their advice to heart. After a careful study of what it took to be such a
knowledge and information centre, we redoubled our emphasis on the teaching
of the sciences, mathematics and computers in all our schools. We computerised
the whole government administration to set the pace for the private sector. We
gave income tax incentives by allowing rapid depreciation for computers. That
decision has given us a lead over our neighbours. It seeded our plans for an
“intelligent island”, completely linked up with fibreoptics and directly connected
with all the main centres of knowledge and information – in Tokyo, New York,
London, Paris and Frankfurt – and also our neighbours, Kuala Lumpur, Jakarta,
Bangkok and Manila.
At my meetings with the Japanese Chamber of Commerce in Singapore, I
learnt how they continuously rejuvenate their enterprises with fresh investments.
In order to compete worldwide, they set out to acquire the most advanced
technology for their industries. What impressed me most was their emphasis on
investing in the people who work these machines and manage the company. To
make the best use of state-of-the-art machines, they have continual training and
retraining of their staff. This philosophy ensured that they would always be out
in the forefront.
MITI officials explained to me that the fundamental strength of any
enterprise lay in its people. Hence they invested in their workers who had life-
long employment. We Singaporeans were immigrants. Our workers were

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accustomed to the British system where workers moved to the employer who
paid best.
Also uniquely Japanese was their way of paying workers fringe benefits in
allowances, overtime, bonuses and company welfare. These amounted to more
than the basic wage, unlike the practice in Singapore. Because supplementary
benefits were high, a company faced with a recession could immediately trim
bonuses and allowances to save as much as 40–50 per cent of their wage bill,
and restore them later when company profits recovered.
This made life-long employment possible. Management and workers shared
the profits, and also shared the hardships in lean years when the company did not
make profits. Workers were conscious that the company’s long-term wellbeing
was crucial for their life-long employment. Their companies provided medical
and dental care, housing, including hostels for bachelors and housing loans at
highly subsidised rates, family recreational facilities, education for employees’
children, farewell and welcoming parties, long-service gifts, stock options and
congratulatory and condolence allowances. The ties that bound them to their
company were many and strong. Of course only the big companies and the
public sector could afford this life-long employment system. They were able to
pass on the burden of retrenchments in a downturn to their suppliers, the smaller
companies. I wanted to emulate them but gave up after discussions with
Singapore employers. We did not have their culture of strong worker loyalty to
their companies. Moreover, many of our big employers were American and
European MNCs with different company cultures.
I have tried to identify those Japanese strong points which we could adopt
because they were system-or method-based. In the 50 years since I first knew
them as military overlords, I have had many meetings with Japanese engineers,
CEOs, ministers and powerful bureaucrats. I have come to believe reports of
some Western psychologists that their average IQ, especially in mathematics, is
higher than that of Americans and Europeans.
In spite of my experiences during the Japanese occupation and the Japanese
traits I had learnt to fear, I now respect and admire them. Their group solidarity,
discipline, intelligence, industriousness and willingness to sacrifice for their
nation make them a formidable and productive force. Conscious of the poverty
of their resources, they will continue to make that extra effort to achieve the
unachievable.

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Because of their cultural values, they will be among the survivors after any
catastrophe. From time to time they are hit by the unpredictable forces of nature
– earthquakes, typhoons and tsunamis. They take their casualties, pick
themselves up, and rebuild. The behaviour of the people of Kobe after a massive
earthquake in 1995 was exemplary and impressive. Riots and looting followed in
Los Angeles in 1992 after a less devastating earthquake whereas the Japanese in
Kobe reacted stoically. There was no looting or rioting. Japanese companies
mounted their own rescue efforts to provide food, shelter and clothing; voluntary
organisations came forward to help without any prompting. Even the yakuza
(Japanese mafia) pitched in. The government’s rescue efforts were slow.
Railways and roads were unusable, and telephones, water and power were cut.
There was no wringing of hands, however terrible their losses in family and
property.
I was amazed at how life was returning to normal when I visited Kobe in
November 1996, one and a half years after the earthquake. They had taken this
catastrophe in their stride and settled to a new daily routine. They are indeed
different in culture. But they will have to change enough to fit into the world of
many peoples with many different cultures.
The Japanese paradigm of catching up with the West has run its course. It
climaxed in the late 1980s when the Tokyo stock market capitalisation was equal
to that of the New York Stock Exchange and land values in Tokyo exceeded
those in New York. However, when the Bank of Japan pricked the bubble in
1990, the economy went on a long slide downhill.
Meanwhile, in the 1990s, the American economy transformed itself through
downsizing, restructuring and exploiting the digital revolution, especially the
Internet. It has left both the Japanese and the European economies far behind.
The Japanese are working out a new paradigm. It has to embrace the digital
revolution; it must also emphasise rates of return on equity and concentrate on
shareholder value as American corporations do. As the economy globalised,
Japan has been forced to open up its domestic market. Many time-honoured
practices such as life-time employment will have to change. But I have seen the
strength of the Japanese people and the quality of their education. While they
may not have encouraged as many entrepreneurs in new start-ups as Americans
have done, their young men and women do not lack imagination, creativity and
innovative ideas. Within five to ten years, the Japanese will come fighting back.

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