The vaccination dilemma facing Japan’s CEOs

This time a year ago, Yuji Kuroiwa, the governor of Japan’s Kanagawa prefecture, attempted some light wordplay in the face of a terrifying new disease, economic spasm and life-changing strictures. 

The normally joyous early-May “golden week” of national holidays, he suggested, should be rebranded “gaman week” for 2020 — a reference to Japan’s cherished quality of stolid, uncomplaining perseverance. A year later, with golden week 2021 about to start, infections rising, the country in a renewed state of emergency and fewer than 3 per cent of Japan’s population receiving the first vaccine dose, Kuroiwa rolled the same gag out for a second time.

After 12 months of relying on the public to keep Covid-19 at bay with self-restraint, the repeated demand for more unflinching endurance — of gaman without visible endgame — feels a much heavier imposition. It would perhaps feel less so, say Japanese friends, if the authorities were not simultaneously touting their determination to allow many thousands of athletes and their teams to enter the country for the Olympics, while offering no firm target for vaccinating the general population. 

This strained atmosphere is creating a moral dilemma for those leaders of Japan’s more globalised companies who are desperate to get back on the road (or the private jet). The capacity for gaman counts among the country’s deepest natural resources: both public and private sectors lean on it constantly. But debates on Japanese social media reveal an indignation that the store has been overdrawn, rather than treated as precious and finite. Given this tension, say the CEOs of several of Japan’s largest companies, business leaders are torn over whether they should get vaccinated outside the country and sneak into a gaman-exempt elite. 

The motivation to do so is serious. For the past few years, many Japanese companies have decided that the best growth options lie outside the country. The calculation is based on Japan’s shrinking population, but companies have also perceived an exceptional window for overseas dealmaking in which investors are actively pushing them to raise returns on equity and Chinese competitors are (for now) less globally acquisitive.

The result has been a boom in overseas acquisitions that was, pre-pandemic, generating an average of about $23bn of deals per quarter. In a relatively short space of time, that has left a number of Japanese companies — from insurers to brewers — with extensive global business empires and a pressing need to patrol them in person.

The problem with all this acquisition is that it was undertaken with what were once reasonable assumptions about how the new assets would be integrated. Not only would substantial numbers of Japanese executives visit the acquired operations and report back, but there would normally be multiple trips by the CEO and his senior leadership team in the months following the deal.

Japanese buyers often aim to keep the management of a target under close observation post acquisition — a scrutiny that depends on pre-pandemic mobility and which executives deem impossible via Zoom. The surprise visit to far-flung corners of their empires, several CEOs have grumbled in recent weeks, is a sorely-missed management weapon. 

Business leaders confronting this now fall into two camps. One (particularly those with acquisitions in the US) is actively pursuing schemes to get vaccinated abroad (or to spirit vaccines back home for personal use) and allow immediate travel.

At the start of the year, when Japan’s vaccination programme seemed even more remote, domestic media reported in scandalised tones that the heads of “some of Japan’s most famous companies” had managed to secure vaccines from China.

One CEO of one of Japan’s largest household names was not part of that scheme, but finds it easy to justify: thousands of employees rely on him to run the empire to the best of his ability, and receiving a vaccine sooner is necessary to that end.

But several CEOs in the second camp, also running businesses with recent overseas acquisitions, said the idea was unthinkable. Whatever the short-term advantages of grasping months of head start on a sluggish vaccine programme, the hit to reputation — as a leader unable to gaman — would be irreparable. 

The heads of Japanese business, one tells me, exist in a realm where, for all their revered elevation, must affect to share the quiet endurance of their staff — especially when a gaman resource that once seemed in such abundant national supply is being called upon to carry everyone through a second, dismal golden week.

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