Tokyo should put its mouth where its money is

Japan spares little expense boosting its economy. It has amassed the largest public debt, lowered interest rates to zero and bailed out banks and companies. Now, it’s time for Japan to put its mouth where its money is.

Tokyo wants to be a global financial center. It’s busily upgrading infrastructure and considering a similar zoning approach as London’s Canary Wharf to attract hedge funds, banks and other institutions. While that’s all well and good, a key ingredient is missing: English.

Call it the “Economics of Engrish,” as did C.H. Kwan, senior fellow at Japan’s Research Institute of Economy, Trade and Industry, in a May 2002 article. The idea was that Japan needs to improve its English proficiency to stay at the forefront of business in an increasingly globalized world.

Fast-forward six years and Japan is still tripping over what many observers call its “English-language deficit.” Considering its economic success and the frequency with which Japanese travel abroad, the country’s English-fluency rate is surprisingly low.

I feel a bit uncomfortable tackling this issue. Arguing Japanese need to learn English might strike some as an attempt to advance America’s cultural hegemony. My own challenge learning Japanese after six years in Tokyo also makes me skittish about judging others’ language abilities. We Americans aren’t known for our passion for learning other tongues.

Yet, English, for better or worse, has become the lingua franca of finance, business, science and the Internet. The longer any nation resists the need to improve its English skills, the more it limits its potential.

‘Working language’

This argument would be valid if the global business language were French, German, Mandarin—or Japanese. Even world leaders known for acrimony toward the West, such as former Malaysian Prime Minister Mahathir Mohamad, grudgingly acknowledge as much.

“A genuine global financial center needs to bring together players of every nationality, and from a variety of disciplines: accountants, lawyers, IT specialists, traders, due-diligence guys, etc.,” says Louis Turner, London-based chief executive of the Asia-Pacific Technology Network. “There has to be one working language to bring all these people together and, like it or not, that language has to be English.”

In Asia, Turner says, Mandarin may eventually establish itself as a working second language for business and science. For now, though, the focus is on English.

Native Japanese speakers taking the paper-based Test of English as a Foreign Language, or TOEFL, scored lower than students from China, India, Indonesia, Malaysia, Myanmar, Nepal, South Korea and Vietnam in 2007. Even North Koreans scored higher.

Bold action needed

Japan is moving in the right direction. The education ministry introduced measures in recent years to improve its language program and encouraged public-school teachers to undergo fresh training. Students will begin learning English in the fifth grade starting in 2011, instead of the seventh grade.

Bolder action is needed, and there’s not a moment to waste. In late 2006, Bunmei Ibuki, then-minister of education, shifted the focus back to teaching traditional values and patriotism to young Japanese. It was an untimely distraction in tackling what was arguably a curriculum problem. The emphasis has long been on passing written English exams, not verbal communication.

The English issue is becoming a serious liability. It was moot in the 1980s, when foreigners lined up to do business with a Japan very much on the ascendancy. Today, Japanese companies compete more with international executives, often boasting better communication skills, than with domestic rivals.

Heavy costs

“It’s striking how irrelevant Japan is, not only in many international and Western forums, but also in much of Asia in policy and academic circles,” says Jean-Pierre Lehmann, a professor of international political economy at IMD, a business school in Lausanne, Switzerland. “The inability to speak English is not the only cause, but it’s an important one.”

All this can lead to heavy costs for corporations. Teaching English to employees is an expensive, productivity-killing process. It also can lead to faulty decisions. Hiring someone primarily for their language skills may mean missing out on a far more skilled candidate.

The language debate has met with some resistance in Japan. It’s at the core of concerns about globalization watering down culture and tradition. Japanese is an incredibly complex language with thousands of characters, layers of honorifics to master and a proud literary history. Many worry a greater emphasis on English will devalue Japanese skills in future generations.

Happy medium

A happy medium must be struck here. Embracing English need not come at the expense of tradition or culture. The stark reality is that the rise of China and India is making this debate moot. It’s leaving Japan with a choice: either improve English proficiency or get left behind by fast-growing economic upstarts.

English isn’t everything; it’s not a magic wand that will suddenly rid Japan of its long-term problems. Observers such as Philippa Malmgren, president of Canonbury Group in London, are more focused on Japan’s tax regime, which she says hurts Japan’s attractiveness as a financial center.

Yet, English is an increasingly important ingredient to making Tokyo more competitive in the digital age. “The language issue is a barrier,” Malmgren says, “but it can be overcome.”

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