The professional services provided by Nichii Gakkan Co., Ltd. have the health industry covered, from healthcare, childcare and long-term elderly care to medical support, housekeeping and vocational education development. Chairman, President and CEO Akihiko Terada explains how the company can help healthcare professionals focus on their key tasks and deliver better services and the importance of understanding the needs of local communities, as well as some of the challenges facing service industries expanding into new territories, using the company’s venture into China as a prime example of the need to be adaptable, well prepared and well trained.
How important is the development of education to the success of Abenomics?
I can say that the world is rapidly globalizing, and the barriers between economies are rapidly being taken down. The most important thing for Japanese people is to produce global-minded human resources.
Another point I want to emphasize is the need for workers in the labor force, especially in the sector of long-term elderly care. In 2017 we will still be lacking 120,000 people working in this sector, while in 2025 we are going to need 380,000 people engaged in this sector. The increase in low birth rates and the aging of society is continuing. Research shows 2.26 people have to support one elderly person. In 2025, it is going to be almost a 1-to-1 ratio.
One of the major issues that Abenomics is facing is the decline of the labor force. Prime Minister Abe has been encouraging women to work and take part in society more, and also capitalizing on creating opportunities for the elderly. I believe that these two points must be promoted efficiently. In order to tackle these points, we need policies to implement them.
In terms of women’s advancement, most single women, as well as women who have finished raising their children, are already in the workforce. What we need to work on is how to provide jobs for married women prior to pregnancy or who have recently given birth. I have heard that in the US, women go back to work as early as two to three months after giving birth, which would rarely happen in Japan. We need to come up with solutions like providing babysitters or nurseries. Currently Nichii Gakkan Co., Ltd. is putting a lot of effort into these areas as well. The local municipalities depend on us for providing nurseries. Since last October, we have taken on operating new nurseries from various municipalities and the numbers are increasing. Recently, I think that on average, we take on five to six new locations a month.
For the regional municipalities in particular, it is very important for them to vitalize the economy by having these post-birth mothers return to the workforce. In order to do so, the government needs to provide childcare. Our company is praised for operating and providing these facilities.
The other point is about making use of the older generation. Seventy percent of those over 65 are considered healthy. We need to think about how to provide workplaces for these people. Our company provides aged care facilities nationwide. In the communities around these facilities, there are healthy, elderly people who are willing to work. We would like to employ them and support them in the long term. These people are often seniors who are over 65, and since they themselves are seniors, they likely know what the people in need of care are looking for.
Going back to the first point, there are mothers who want to return to work after giving birth. These mothers would look for a workplace closer to their homes because they also need to take care of their children. We need to consider this demand. It is said that there are more mothers who are looking for work near their home than returning to their previous workplace. If you take our company as an example, we have a plan to increase care facilities, which have childcare facilities and aged care facilities embedded in each community. We would like to employ these post-birth mothers in these facilities.
To achieve that, we need to provide vocational education for these mothers and seniors in order for them to work again. After the vocational education, we would have them work in either long-term care facilities or childcare facilities. This is something that we are planning at the moment and continuing to advance.
For a long time, we have believed in the possibility of integrating aged care facilities and childcare facilities. We have been making preparations for this. We believe that people with grandchildren are capable of raising children. Then the mothers of these small children can work in the aged care facilities. It would be most ideal if that could take place in one area. We are still working on this project to implement it as soon as possible.
Also in the field of childcare, we are engaged in the medical support business. We have found that in hospitals, there are a declining number of nurses. That is because the nurses are having trouble after giving birth and finding a place to entrust their children while they are working. We are now helping to create nurseries within hospitals so that the nurses can bring their children to work and leave them at the nursery in their hospital.
One of the biggest threats to Japan’s economy is its aging society. What responsibility do leading healthcare companies such as Nichii Gakkan have in lessening the economic burden of Japan’s aging society, and also what opportunities does it present for Nichii Gakkan?
Particularly for regional communities, the importance of creating jobs cannot be overstated, because the population is concentrated in the urban areas, and there is a lack of human resources outside metropolitan areas. By creating new workplaces, we can provide many jobs. I believe this is very important for revitalizing rural areas. With this background, that is why the regional municipalities are working to create more nurseries, so that mothers can work inside the community and provide new jobs, which will lead to economic prosperity. We have been helping them do that, which is why these municipalities are very happy to accept our proposals and applications.
Moreover, I believe the utilization of diverse human resources will become crucial for Japan. The government needs to implement policies that would make it easier for foreign companies to enter Japan. Prime Minister Abe has designated 10 special economic regions in Japan. I believe this needs to happen all over Japan. I imagine that is also the wish of Prime Minister Abe. This is just his way of starting the process by experimenting in these cities first. If we can implement this successfully, I believe Japan will be revitalized quite a bit. In order for this to happen, the corporate tax must not be reduced by such a small amount, but it should really make a dramatic change.
To face an evolving market, you also had to adapt to globalization, and Nichii Group invested in education aiming to provide a language barrier-free environment and help individuals adapt to this new globalized world with, for example, your language schools Coco Juku and Gaba. Can you outline your growth strategies and ambitions in the education sector both domestically and abroad?
As I mentioned, we need to create global-minded human resources. The essential condition to make that happen is to have facilities using the English language, which is the common language of the world. This is the first thing we are working on. Up to now, Japanese people have focused on improving their English. I believe that is not enough. We would like to educate people to be able to use English as a communication tool in order to become proactive participants in economic activity.
“Actions speak louder than words” has been a Japanese virtue. We have valued executing actions over speaking our thoughts. Today in the global society, these kinds of virtues are no longer valid. We now need people who can assert themselves and exchange opinions with others. The former Minister of Education Hakubun Shimomura has also expressed similar opinions and emphasized the need to assert oneself, understand who one is, and exert one’s unique characteristics.
Also, creative thinking and the basic matter of valuing humanity are important. At Coco Juku, we have started our Coco Juku Junior program where we can interact with the younger generation and train them to present their own opinions and their dreams. We encourage our students to express their dreams. We ask our students to express their happiness through drawings. Then we choose the winners and compile them into a calendar. Small children do not know the feeling of embarrassment, so they are very assertive. We would like them to retain that and be assertive so that they can become independent and assertive adults. This is something into which we are putting a lot of effort. We would like to create individuality.
Also, in order to create global human resources, it is important to learn the English language from a young age and to have contact with native English speakers. We ask Coco Juku teachers to visit nurseries and interact with children once a week. This has been very effective. By spreading these efforts further, I believe it will bring out an assertive personality, which is an essential element for global human resources.
By being a strong and powerful educational hub, Nichii Gakkan is also contributing to the future of Japan by helping to educate and train young minds with an edge in the world of entrepreneurship. How important is this responsibility for you?
We are looking to proactively spread this all over Japan. I plan to develop a system for Nichii nurseries in regional municipalities to adopt the same system of having native English speakers visit them once a week. Also, we would like to be proactive in making efforts for children to interact with these native speakers by using online resources. With that in mind, at Coco Juku Junior, we are going to implement an all-English conversation system. Not only in our medical support business, but also in the aged care business and in childcare business, we would like to be the best at what we do and what we already are. Unless you are a linguist, language is simply a communication tool that you need to use in order to assert yourself. This is the attitude that we are trying to instill in young people in various ways.
Lately, China has been a very strong market for the company. You have set up subsidiaries in Beijing, Shanghai, Guangzhou, and Hong Kong, and continued with the acquisition of housekeeping companies in other areas of China. There is also a strong potential with the baby boom that might occur from the loosening of the one-child policy. Can you outline how important China is to your growth strategies, and the other markets that you may be considering for the near future?
Our company is aiming to secure and strengthen our position in the global market. That is our global strategy. Our vision in expanding into the global market is shown in the long preparations we have made in order to thoroughly build what we call “the Nichii business model.” Using this model, we would like to expand into China, the US, and Southeast Asia, for example.
In order to expand business, language is not the only thing that is required. In addition to language lessons, we need to provide vocational education rooted in the community of each area. We are already implementing this in China.
The most important point in overseas operations is the development of human resources. In order to create human resources, you need to properly combine language lessons with vocational training in an integrated fashion. The other important point is that we need to make sure that we can properly take advantage of the people that we have trained. We carry this out through our service operation systems. We need capable human resources as well as a standardized operation system process. Furthermore, we also need an organization that can back this up. These three elements constitute the Nichii business model.
There are many Japanese companies operating abroad, but most of them are manufacturers. So far there has not been a company that has succeeded abroad in the human service sector. The human service sector is very difficult to develop. The difference between the service industry and the manufacturing industry is that production and consuming in the service industry are done at once, in one place. It happens simultaneously. The person provides the service, and the person receives the service at the same time. This makes the service sector so much more difficult than the manufacturing sector. In the manufacturing sector, you can create the specifications with the first model. Then you can just leave it up to the factory line to mass-produce them. With manufacturing, you can create a plant to produce the products and then collect the products, which can be stocked to be sold later.
In the service sector, you cannot store your products. This concept of simultaneously producing and consuming makes the service industry very difficult. At least in Japan, perhaps it is a little easier. If you go to China, there is a language and culture barrier that makes it incredibly difficult. We need to train each local service provider who meets the needs of its regional areas. In doing that, the idea of making cost performance work is of utmost importance, because if you have human resources stocked away, that is going to be very costly and not viable as a business.
The idea of cost balance is very important. If you are in a manufacturing sector, say you have a plant in Tokyo and say you have received orders from Hokkaido or from Kyushu, there is no problem because you can just ship your stocked products to them at the time required. However, with service, if you have demands from Hokkaido and Kyushu, you would actually have to create business centers in Hokkaido and Kyushu. In line with expansion, you have to actually create business centers locally.
I already experienced this characteristic of simultaneousness almost 50 years ago when I entered the medical support service. I began operations in Tokyo, but soon after, I received demands asking for our services from Hokkaido, Kyushu, Osaka and Hiroshima. That was not possible in any way, because if we had to go from Tokyo to Sapporo to provide a service, just the cost of transport would be too much. In order to answer their needs, I learned that we needed to create offices in Sapporo, Fukuoka, Osaka, Hiroshima, and other places, and train the people there to create a solid business system in order to provide our service.
While Nichii Gakkan enjoys a strong brand in Japan, how are you working to grow and communicate this brand internationally? What would you like your brand to signal to your clients and partners in the US?
This is another point that differs significantly from the manufacturing industry. With a product that is tangible, it can be seen, it can be touched, and the customers can decide for themselves that it is high quality. In service, it does not have shape. Therefore, the only way that is left for us is this very traditional method of having people experience our services and evaluate the quality of our service. All you can say is, “This is a very good service. We are better than others,” but there is nothing we can show the customers.
Once someone uses our service, he or she starts recommending it to other people, which is one of the most effective ways to develop a business. The method of Nichii is to have people experience our service and to appreciate and judge the quality. Then by word of mouth, they spread our good reputation, which will lead to branding. This is our method. As our reputation expands, we also need to have sound planning in order to create service centers close to the people.
Unless you have real-life experience of overcoming difficult challenges, I do not think you would be prepared to venture abroad and take on even more difficult challenges because it would be too risky. As long as you build a sound operation system throughout the process, it will lead inevitably to success. In order for us to provide good service, we need to train good service staff. Then we need to back up this staff that provides services through our organization in order for them to provide quality.
The Nichii business model that I mentioned earlier has already been completed. We are taking that to China. In the near future, we are hoping to go to the US as well. We are now embarking on the first stage in China, as you can see. These are the sectors in which we are engaged in China today: aged care, maternity care, childcare, housekeeping, and sanitary product sales. Soon, I believe there will also be a demand for medical support services, which we are hoping to provide. This is a whole process for which we use the know-how we have gained in Japan. The reason we selected China to do our first stage is that we wanted to try the most difficult region in order to be more flexible and capable in the future. Out of all the areas I could think of, China was the most difficult country. At the same time, it is also the largest market in the world.
What would you say to the international community who may still be hesitant to invest in Japan or do business with a Japanese company?
As a Japanese company venturing abroad, we would like to become a company that is loved wherever we go and welcomed and appreciated. We would like to work in harmony with the local culture and their practices and make the best use of local human resources in order to provide services and contribute to creating a strong healthcare market for those countries.
We would like to operate in China to create long-term nursing care markets and be able to provide quality services that are welcomed by the Chinese people. As you know, in China, there is a shift from the manufacturing sector to the service sector. As the service sector shifts, Nichii Gakkan will be able to contribute to create job opportunities, which will drive internal consumer demand, which is what China is striving for at the moment. This can also apply to the US and anywhere else that we operate.
For the world leaders participating in the G7 Summit, I would like to put our efforts in order to have these leaders say, “Nichii Gakkan, please be the first to come to our country.” We would like these countries to understand that Nichii Gakkan will be able to provide high quality services that would be appreciated by the citizens of their countries. We are striving with a vision of providing and contributing to countries around the world.
I would like to give the message of Nichii Gakkan’s brand slogan to the international community: “We want kindness to be our strength.” Business cannot be executed without toughness because mental toughness is required in developing business overseas. At the same time, we believe that we have a no right to provide human care services without kindness.