Chanpon

Merle Okawara is a rare presence in the upper echelons of the Japanese business world. To begin with, she founded and heads a major Japanese public corporation, JC Foods, and has led numerous other companies, including eBay Japan, and Tokyo Delica. She is also in a leadership position in a mind-boggling number of business organizations and government advisory boards. Just a few of her current positions are former Chair of the Japan Pizza Association, former Vice-president of the American Chamber of Commerce in Japan, Trustee of the Japan Association of Corporate Executives, member of Japan Fulbright Commission and former Councilor of the Tokyo Chamber of Commerce and Industry. As if being a woman is not enough to raise some eyebrows given Merle's position in the business world, she is also an American national, born and raised in Hawaii, and with the exception of one year at ASIJ, educated entirely in the US and Europe. Fresh out of college in the mid-sixties, Merle broke all rules and precedents by starting her own business as a young foreign woman, struggling to learn Japanese, and with almost no assets to begin with. Hers is truly a chanpon success story, about using a razor thin edge of ingenuity and unconventional thinking to become a major force in international business. It is no wonder she has been recognized as the Business Woman of the Year by the Nikkan Kogyo Newspaper, Keizaikai Magazine and Veuve Clicquot , Woman Entrepreneur of the Year by the New Business Conference, Business Stateswoman of the Year by the Harvard Business School Club of Japan, and Woman of the Year by Business Nikkei Woman Magazine. Merle took some time out from her busy schedule to talk to Joi and Mimi Ito for chanpon.org and to share some of her stories of how she got where she is. She tells us the story of setting up her first 18-tsubo pizza factory, the persistence and out of the box thinking that landed her first financing from a Japanese bank. I sat with a loan officer for about one hour. He wanted to get rid of me after five minutes. I refused to go. And he would say jaa, and I just sat there. She laughs. And you know one of the advantages of not being Japanese is I can just ignore these Japanese gestures, right? So he couldn't get rid of me. Despite being shut out of the old boys network and having little access to domestic information networks, Merle was able to take her company public and turn it into one of the most successful businesses in the sector. She credits family dinner talk about her father's adventures in international business, a mother that insisted on giving her the same opportunities as her brothers, as well as a chanpon background that gave her a unique perspective on business.

Is it unusual? she wonders, as we marvel at her ability to penetrate the trust network of Japanese business. And then she reflects, I think probably, in my generation, I am the only one. I've never thought of it. Maybe it is unusual. I've always thought that in order to be effective, I certainly had to be in the center of things. Despite the immaculate business suit and the polished demeanor of a world-class business executive, Merle radiates with an unpretentious confidence that would suit a family dinner in Hawaii as much as the corporate board room.

The Basics:

Q: Can you tell us one story about when your chanpon background helped you?

A: I think that I have been able to leverage my American and European based education to my advantage in dealing with Japanese in business. As you know, a rather rigid and uniform education has led most Japanese people to think in the same manner. I think that my ability to think out of the box has given me a competitive edge in business dealings and also in coming up with solutions that my colleagues would not have thought about.

Q: Can you tell us one story about when your chanpon background hurt you?

A: I am very pleased with my chanpon background in this ever increasing borderless world. I think that we are the front-runners and are truly international citizens of the world. We are able to understand the arguments on both sides of the table and be objective, thereby coming up with the most efficient solutions. I don't consider it to be a hindrance.

Q: What do you miss most about Japan when you are away?

A: Japanese love to form clubs and are fairly clannish. Is this based on a sense of insecurity? I don't really know, but it gives one a feeling of belonging, and the mutual camaraderie and pleasures derived from belonging to certain groups is something I enjoy in Japan. On the other hand one could say that Americans are more independent and are free from the trappings of small clubs and groups which in a way influence one's ideas and attitudes. I don't mean the tennis clubs and golf clubs and school clubs that abound in every country. What I find particularly Japanese is the fact that four or five people get together and decide to call themselves by some name and have dinner several times a year, making them feel intimately related and enjoying a special relationship apart from others. I belong to about ten of these types of clubs, each one ranging from four people to maybe twenty.

On the more materialistic side, I miss the security of the country, being able to walk down the street without looking over my shoulder at midnight, and the great food, be it Japanese, Chinese, Italian or French. I miss the general courtesy of the Japanese people. We don't have to worry about being yelled at or frowned upon by waiters or cab drivers. In other words, our already turbulent lives don't have to be further complicated by unnecessary outside hassles.

Q: What do miss most about the US when you are in Japan?

A: I think that I miss the frank discussions that I am able to have with my American friends without worrying about tatemae. I miss the freedom of a society where people really aren't concerned about what you look like, how you dress, where you go and with whom etc.

Q: What makes you feel Japanese?

A: I feel very Japanese when I visit a temple or a garden and can enjoy the calm and feel proud that we are products of an ancient civilization. I feel Japanese when I hear Americans criticizing Japanese people, their customs, their manners.

Q: What makes you feel you aren't Japanese?

A: I feel very American when I am walking down the streets of New York and can feel the excitement of the city, the excitement of a new business deal to be made, the opportunities. I feel very American when I hear Japanese criticizing Americans for being crass, for their lack of manners and tradition.

MI: Mimi Ito
MO: Merle Okawara
JI:  Joi Ito

MI:  Could you start by telling us about your background and your relationship to Japan?

MO: I was born and raised in Hawaii.  When I was fifteen, I came to Japan to attend the American School in Japan for a year before going back to the States and Europe for university.  When I came back, being fortunate to have both backgrounds, it was easier for me than for someone purely of American heritage to slip into society and try to do something.  Although of course we looked Japanese but we were not.  In those days, it was often quite strange for people and they could not accept it. 

When I returned to Japan as an adult in the mid-sixties, I was a complete outsider as a woman, an entrepreneur and a foreigner, and also being young.  The environment is changing, but we are still outsiders of society.  So it was very difficult.  On the other hand, it�s interesting.  I think one of the things about being a chanponite is that we can take good sides of both societies.  One of the good things about American society is that people are taught to think independently and creatively.  I always tried to have out of the box thinking whereas my Japanese competitors were always thinking in the same way.  So this is one advantage that I had in the business. Of course the disadvantages are great. Being an outsider means not having access to enough financing.  This is still a big problem in Japan where banks insist on collateral in the form of land or securities.  Anyone starting out never has enough collateral.

So in the beginning my father was my main bank, until we got to a certain point where I had to go out and deal with the banks in the real world.  It was very difficult because I had to try to convince them I had to go about my business on the little collateral that I had.  And being in manufacturing�I was manufacturing frozen pizzas at the time�we were constantly in need of investment for the plant and for equipment.  And since everyone was working on the tegata system, we were in turn financing our customers. So it was always very difficult.  Even though business was slowly becoming profitable, we were always cash poor.  I had to convince the banks that we really did have a viable business plan.  If you are able to do that, they actually try to think of ways to loan money because that is in their interest.  So although they did require collateral, they made it easier.  The only collateral I was able to offer was my mom�s land in Karuizawa.  In those days, resort land had no value.  A money-centered bank wasn�t going to lend money on land in Karuizawa, but they needed something.  So they said, �We�ll take a look at it.�Elt;span style="mso-spacerun: yes">  They went all the way and looked at it, and they gave it a higher value than necessary.  But in order to convince them to do this, it was really like pulling teeth.  I sat with a loan officer for about one hour.  He wanted to get rid of me after five minutes.  I refused to go.  And he would say �Elt;i style="mso-bidi-font-style:normal">jaa�Elt;/i>, and I just sat there.  [laugh]  And you know one of the advantages of not being Japanese is I can just ignore these Japanese gestures, right? He would give cues such as �Elt;i style="mso-bidi-font-style:normal">sore de wa,�Eor �Elt;i style="mso-bidi-font-style: normal">aaa�Elt;/i>, but I would just sit and continue and continue.  He couldn�t get rid of me.  I kept saying, �I must pay my bills. I have payroll coming up.�EI just sat there and thought of various things to get him to look at my point of view and to think a little bit more creatively about how we could get around some of the rules.

Since the 60s and 70s were really economic growth years for Japan, not only was money in short supply, but also people, any kind of people.  Nobody wanted to go to a small venture business when they had the choice of going to Mitsubishi shoji or Sumitomo bank.  Why should they take the risk with a company that they weren�t sure would exist a few years from now or not? So we were always trying to find people, especially to work in the factories.

I had rented an 18-tsubo broken-down room in Meguro as a factory.  You can imagine it was like omamagoto . We put in a small line to bake all the pizzas and freeze them.  The freezing equipment was just freezers that we tossed the pizzas into. [laugh] 

MI: This was your first business?

MO: My first business.  We still had ten people, but if they got better offers elsewhere, they went elsewhere.  There was always a constant struggle.  I spent most of my efforts on sales because without sales there was no business.  But the more the sales increased, the more production lagged behind.  Sometimes I had to jump into the factory and work at night baking pizzas.  I thought �If the business is going to depend on whether I can make enough pizzas or not, we are never going to get very far.�E So my people were trying to think of how we could get more people in the factory.  We put out chirashi and so on.  I thought how silly this was, because no matter what we do, we are not going to be competitive with the larger companies in getting people.  My ideas was, instead of trying to get more people to come to this location, I�m going to just move this plant, my 18-tsubo run-down factory. So I moved it to the middle of the rice paddies in Kyushu. I converted an agricultural warehouse.  While everyone was thinking of how we could get more people here, I tried instead to think differently. Is it possible to get more people?  If we pay them more we�re never going to make it financially.  Of course there were other problems, but when we moved to the middle of the rice paddies in a little village north of Fukuoka, one of the advantages was that they didn�t have anything around there. So all of the wives and daughters of farmers were very happy to have a place like this to earn some extra money.  Now they have Yamazaki Bakery and many large factories.  But when we moved there was nothing.  So we really had a choice labor pool, the best labor force.  We still have a plant near the original one in Kyushu.  It�s one of our better plants.

Being an entrepreneur and a start-up, not having enough of anything, one had to be creative.  That is one of the advantages of being brought up in the United States, and not being educated like everyone to have tatemae . This was really my only advantage.  The big disadvantage was, being a woman, I was always left out of talks and industry meetings. I started the business when I was 24.  I was always left out.  Nobody would talk to me.  In those days, we had no Internet.  So information was very very important for this type of manufacturing business.  We needed to find out if our customers were going bankrupt or not.  By the time we found out it was too late to do anything.  I remember once my sales people found out that one of our customers was going to go bankrupt.  In those days, laws were not as they are today.  Everybody rushed in and took whatever they could from the company going bankrupt because they couldn�t get their money back.  Everyone was working off tegata, off 60 days, 90 days credit which can add up.  So I said, �Go and see what you can get.�EThey rush off and came back with the Xerox machine.  We were so late.  Xerox calls us up and says �That�s our machine,�Ebecause they�re leased. right?  Of course that was the only thing that was left there. [laugh] I learned very early that information and networking was so important.  This is really where I had a disadvantage in that I couldn�t get into any of those networks.

If I couldn't get access to that type of information, I thought I would use our US and European network for a different type of information that would give us an advantage, so our customers would not feel that they were always being left out of the loop. That was very important because even the shousha did not have access to that type of information.  For example, cheese is a very important ingredient for us. My contacts in Europe would let me know whether there was a disaster or a forecast for a tightening of the cheese supply, or whatever information I could pass on to my consumers.  So there was some sort of advantage to working with us as far as information is concerned.  Being a chanponite has its disadvantages as well as its advantages, depending on how a person wants to make use of whatever they have.  I think the not being 100% Japanese was more of an advantage for me.  And I think it is even more and more so now.

MI:  What was that decision like for you to start up a business in Japan?

MO: My family was living in Japan.  I graduated from the University of Geneva when I was 22. I did not really feel that I should go to the States.  I had studied law and wanted to become a lawyer, and there was no possibility of my becoming a lawyer here because of the language difficulties and because I was an American citizen.  There are still many restrictions on foreigner lawyers�Eability to work even today.  In those days it was even worse. But I wasn�t fond enough of law as to go to the US and take the bar exam, etc.  So I just stayed here.  I had no choice.  Who is going to hire a young foreigner who had very little skills, and especially little Japanese language skills?  I had legal training, but what could I do?  So the only skills I did have was my ability to translate and interpret from English to French, since I did my studies in French.  I also did a bit of writing for the Japan Times. But I thought that I would like to do something more creative.  This was not me.  When you�re translating, it�s very interesting, but it�s not your thoughts.  You just translate some else�s thoughts.  And the type of writing I did was a social column.  So it was not really writing.  It was just writing about what other people did. I wanted to do something creative.  All of my friends thought I was nuts. Women get married when they were 23 or 24.  Nobody aspired to a career.  If they did work, it was while waiting to get married.  I did do what they all did.  I took flower arrangement lessons and all those things you are supposed to do.  But I think that my mom, who never really worked a day of her life and could not possibly be a role model in that sense, was a role model for life.  She was very encouraging.  She always thought I should have the same opportunities as my brothers.  She was very unusual coming from where she was where women didn�t work.  She thought I should go to college.  She thought I should have the same education and the same opportunities as men did.   And she told me to never depend on anyone else.  Even if you get married, you just never know.  You just have to depend yourself.  It was great advice because I�ve always been very independent because of her support.  So in that way, I never felt I was inferior to my brothers. [laugh].  Which is again an advantage of a Western upbringing.

JI: You have become quite Japanese, though, since you have come here.  When I watch you networking with the old economy folks like keizai douyukai, you seem very popular and comfortable.

MO: I think one has to adapt to the situation.  If I feel that it is going to be more advantageous for me to be Japanese, then it is an option for us, isn�t it?  Any of us can be very Japanese or very Western depending on the situation.  

JI: One of the interesting things is that you came to Japan rather late, but you were you were able to penetrate the trust network in Japan quite a bit, although there were hardships in the beginning,.  I think people always tell us the reverse, that you can�t come in part way through and get in.  You may not be all in the inner circles, but you are in quite a few of the inner circles.

MO: Is it unusual?

MI: That was another question I had for you.  Do you keep in touch with other chanpon people?  Do you see other people with similar backgrounds where you are professionally?

MO: I think probably, in my generation, I am the only one.  I�ve never thought of it. Maybe it is unusual.  I�ve always thought that in order to be effective, I certainly had to be in the center of things.  One has to make an effort.  It�s not easy, but it becomes easier as the time goes on, once you�re there.  But Joi is in the center of everything!

JI: But not nearly as much.

MI:  I think it has become easier now, for people in our generation.

MO: I think that I�ve always been very optimistic.  The second thing is that I�m always trying to take a negative situation and make it into a positive.  This is basically getting back to what I said about being able to think out of the box.  It�s even an advantage today because Japanese are trained to think in the same way.  You know what they are going to say.  So you just have to think a little bit differently.  I know what my competitors are going to do in a certain situation, so I think then what my next step should be.  It�s very simple.  In the beginning, we had a lot of competitors in the frozen pizza industry.  And some of them are larger than we were.  But I tried to take things step by step and take each problem and really think about it.  I think most people in business then did not do as much strategic planning, and they were just worried about today or tomorrow.  I try to think a little bit about the long-term effects of action taken now.  This is all simple stuff that people do now, but in those days, perhaps they didn�t.  I think we were very fortunate.  Eventually most competitors fell by the wayside, and those that exist now are still very much involved in day to day details where we sort of evolved along the way.

One of the main reasons why I took the company public nine or ten years ago was the fact that we thought that this was one thing that would make us an insider.  There were many reasons why I was an outsider.  But I thought the way to get accepted by the old establishment was to become a member of the establishment.  Very early on, that had been one of our goals.  In order to become a public corporation now, it�s very easy with MOTHERS and NASDAC Japan, etc.  In those days, the average time between startup and IPO was thirty years.  It was incredible.  There were so many barriers that you became very old and tired by the time you did the IPO.  Just having a certain goal really drove me and made me think of the many things between here and where I wanted to go. While I was able to gain their respect, many of the old economy managers were just thinking all that time, �When she is going to drop out?  When is she going to fail?�Elt;span style="mso-spacerun: yes">  So that was the one important thing that I had to do. That opened the doors.  We were finally welcomed into the old boys�Enetwork. They realized it was not omatsuri and an omatsuri game.

I look at Joi who is so young and who has done so much.  It took me much longer to get there. I didn�t even have time to do the outside stuff.  I was concentrating on one thing.  I never joined any government panels.  Well, they didn�t ask me to join any government panels until I passed certain stages.  I was never interested in joining other organizations or going to seminars.  That was good in some ways, but in other ways I was really in too narrow an environment.  Now things are so different, and there are so many things going on, and everyone is getting into the loop more and more.

MI:  Is your professional community primarily Japanese or international?

MO: Both. My business is completely domestic.  I�m in manufacturing so I have to deal with all the retailers.  We sell to supermarkets, department stores, convenience stores, and food service.  So that means I have all these connections.   We also have to purchase ingredients from the shousha or from other manufacturers.  The food industry is extremely old and extremely large.

By the way, we have this joint venture with Mitsubishi. I have this joint venture with because we were buying cheese from them, and cheese is our most important ingredient.  Being in manufacturing, we�re always doing senkou toushi and we are always extending credit for 60 days or so to our customers.  So we always had cash flow problems.  Consequently, we used to give tegata to our suppliers too and we kept increasing it and lengthening it out.  We were buying cheese from Mitsubishi Corporation on 60 day credit.  As the company started growing, I extended it to 90 days and finally 120 days.  It�s incredible.  And finally the kansa and people at Mitsubishi Corporation called me in and said �Your company is not stable, and we are loaning okus and okus to you in cheese.  So either you put up tanpo or we have to cut back.�Elt;span style="mso-spacerun: yes">  I was really worried and scared because that would cut our growth, and I had no more tanpo to give to Mitsubishi Shoji.  Of course there were other suppliers, but if they knew that Mitsubishi was squeezing us, they would request the same thing.  So I thought about it for a few days and again, thinking out of the box, I came up with the idea of forming a joint venture with Mitsubishi.  This company would buy the cheese from Mitsubishi and process and shred it and we would buy it from this company and sell it to our customers.  Because Mitsubishi Shoji would own 45%, it was their kogaisha, and they couldn�t take tanpo from their kogaisha.  Because we owned 55% we were oyagaisha of this joint venture so they couldn�t request tanpo from us.  So that got us out of the problem.  Also, the sales people in Mitsubishi wanted to sell more.  It was the auditing department that didn�t want them to take the risk.  So the sales people were happy to have a constant purchaser for their cheese.  We formed the joint venture around fifteen years ago.   It�s been profitable and contributing dividends to both oyagaisha and we never had to give any tanpo to Mitsubishi. I like to look at a problem and turn it around to see how it could be solved.  That�s very thrilling.

But getting back to your question, my business network is in Japan, but I do a lot of speaking at women�s conferences in the US so I have a wonderful women�s network there.  It is nice to keep up with both. Most of the conferences I attend abroad are concerned with women�s issues.

JI: Your father was entrepreneur?

MO: My father was an entrepreneur. 

JI: I think there are a lot more entrepreneurs than there used to be in Japan, though not nearly enough.  After postwar Japan, some people were building companies and a lot of them became successful. I read about Nick Zapetti.  You hear about these people who really weren�t trained in being entrepreneurs, but there was so much opportunity around. I was wondering how much your education and also how much your family contributed to your of drive to become an entrepreneur.

MO: Because my father was a businessman, we always heard about business, the interesting parts.  He never brought his problems home.  In the old days, everyone sat around the dinner table at six o�clock.  Now the lifestyles have changed and families aren�t sitting together at dinner.  Every night at the dinner table my dad would talk about interesting people he�d met and the things he did.  He traveled a lot, and he would tell us about all the fabulous countries he�d been to, and he would always bring us presents from those countries.  We were brought up with international business and it was very interesting.  Although my mom wanted my brothers to become professionals, a doctor, an architect, a lawyer, or whatever, we all turned out to be business people, much to her distress, much to my father�s pleasure.  [laugh]   

MI: You mentioned how your company had creative solutions that distinguished it from Japanese competitors.  Is there something about the corporate culture, or your company�s management that distinguishes it from a Japanese company?

MO: Unfortunately, it�s not as different as I would like it to be.  I thought it was very important to be as Japanese as possible in order to be accepted, to get people to work for us, and so they wouldn�t feel so strange.  I worked very hard to make it a Japanese company.  I regret not able to break away from that.

MI: So your staff and managers are almost all Japanese?

MO: Not almost all.  They are all Japanese.

MI:  Do you have plans to change that?

MO: I think it would be very difficult for someone not fluent in Japanese.  If our company were to hire foreigners or people with international backgrounds, I would have to hire a bunch of them at the same time, three or four.  Within a company like mine, which is very old and still hierarchical, it�s difficult to fit in. So I would need to go out and find at least three or four people. It is something that I am thinking about.  Just recently, I thought, oh heck with all, I�m not going to worry about doing emails in Japanese.  I still do prefer English.  I sent out emails to my people in English whether they can read it or not. I don�t know.  They try I guess.  I get answers in Japanese which is OK.  Of course at eBay, everyone writes in English, so it�s so easy to communicate for someone like me. Even for Japanese, it is troublesome to type in Japanese.   So I decided to make them all change for my benefit. [laugh]  But I wouldn�t do it unless I thought it was good for them.  I really believe that English deficiency is one of the things holding Japan back from becoming a world-class leader.  Japan is never able to take initiative in international conferences because of the need for interpreters, except for Kawaguchi Yoriko-san who is able to chair these conferences because her English is so good.  It is not because they are not capable, it�s just that their English capability is so low. I thought, you have to start somewhere.  So all my email is in English.  I�m sure they are quite nervous about it because Japanese are such perfectionists.  If they answer, they want to answer correctly. I get all the answers in Japanese.

JI: We have quite a bilingual group now. Unlike you, I don�t stick to one thing for a long time.  I pointed out to my group that if I tried to communicate in Japanese it took so much away from my time and my efficiency.  I figured if I I�m the CEO, I want to save my time, so I use English. [laugh]

MO: [laugh] Absolutely.  Your notes to iRevolution are all in English so It gave me the courage to write my notes in English. [laugh]

MI:  Are you two the only chanponites that appear in these circles?

JI: I found that  the foreign community, the expat community, stick pretty close to the American Chamber of Commerce and the American Club, and they don�t really drift into keizai douyu kai or keidanren or try to.   But I think there is a new generation like ValueCommerce.  They are trying to go public and their CEO, Brian Nelson, is American.  That will create a new generation.  Currently, I think Merle and I and Merle�s brother Ernie are probably the only people in these meetings who are more comfortable in English.  So when Merle and I are talking in English at a party, people get�Elt;o:p>

MO: They think we are kiza.  It makes them so uncomfortable. [laugh]

MI: So normally people are used to interacting with you in Japanese.

MO: Yes.  But it is a disadvantage for me.  I was at a shimon iinkai for keizai douyukai this morning.  Everyone is so eloquent.  Japanese have a way of saying nothing by using a lot of words. If I go on that long about one thing, my Japanese falls apart. [laugh]  I always feel very uncomfortable, so I make very short suggestions. In order to say the same thing, they take ten minutes.  I take about thirty seconds.  That is one thing I get very nervous about.  But, Joi, you speak very well in Japanese.  You have no problem in doing it the same way as the Japanese.

Posted by Mizuko Ito at 2001年12月16日 07:15