Going Global: English Proficiency and Business Competitiveness in Japan

Photo Courtesy: Kimie Takahashi[1]

By Marina Kurokawa

Last May, the Liberal Democratic Party (LDP), the majority party in the National Diet of Japan, announced as part of their agenda, a provision to make the Test of English as a Foreign Language (TOEFL) mandatory for all the test takers of the university entrance examination, a counterpart to the ACT/SAT in the United States. The LDP argues that making TOEFL mandatory will improve English proficiency for all Japanese students and will make them competitive in today’s global economy.[2]

More and more Japanese companies are requiring their employees to be proficient in English, either by making English their official language, or setting a score requirement on proficiency tests. Nissan, Sharp, Rakuten, and Fast Retailing are examples of Japanese companies that have adopted English as their official language.[3] They view this change as necessary to allow them to compete in the global market. For example, since 2012, employees at Rakuten have to communicate in English even between native Japanese speakers, and all company documents are written in English, including the cafeteria menu. After implementing the policy, Rakuten announced that it had experienced a decrease in the cost of translation and faster communication between branches. Additionally, since everyone was communicating in the same language, information was shared more quickly.[4] However, only half of the Rakuten’s employees are in favor of the policy.[5]

Yukari Kuramoto, a strategic management consultant who got an MBA from MIT Sloan, is of the opinion that these companies are on the right track. She feels that “English as a company’s official language equips employees to adopt a new business model, rather than improving their proficiency. [Usually] employees in Japanese companies do not have an incentive to study English unlike those in multinational companies who want to talk to English speakers occupying higher positions and get promoted.”[6] In other words, Japanese companies need a radical solution to change their employees’ mindset in order to compete in the global market. Currently, Rakuten competes against companies such as Google and Apple,[7] whereas Fast Retailing competes against INDITEX (Zara), Hennes & Mauritz and Gap.[8]

Toshiyuki Takahashi, the CEO of Miraizu, points out three things that Japanese companies should consider when deciding whether to institute English as their official language: 1) Is there a need for the company to be global? 2) Is there a need to switch from using Japanese as the official company language? 3) What is the cost of implementing such a policy? Takahashi believes that “The business model Japanese companies have used, having headquarters in Japan and branches overseas, will no longer work. Employees will be spread around the world, and they’ll have to do video conferences. How effective will it be to keep having such conferences in Japanese? Companies want and need to hire exceptional workers from the global market, but just like English is a wall for Japanese people, the Japanese language is a hurdle for all the other language speakers.”[9]

Critics against the LDP’s policy contend that it does not improve the overall proficiency in English. Statistics from the EF Education First show that the peak age of English proficiency for Japanese people is between 18-25 years, and declines over time once they get out of college, simply because there is no need to use English on a daily basis.[10] “Therefore, even if people in these age groups become more proficient, it does not necessarily mean there will be more global leaders,” says Hiroshi Yamaguchi, a professor of Global Media Studies at Komazawa University. He further argues that if the LDP wants education reform, there are more effective ways of doing it, such as providing scholarships for students to study abroad, or improving the quality of school teachers, many of whom have never been outside the country. Yamaguchi argues the issue should not be about trying to improve the average proficiency of all Japanese people, rather it must be directed at the few who are involved in international business and politics. He suggests that it would be more effective to make it mandatory for politicians running for the election.[11]

Shinobu Naito, an entrepreneur and another MBA graduate from MIT Sloan, points out another potential downside of the language proficiency policy. He feels that it may make Japanese companies biased against non-English speaking workers. Naito divides Japanese workers into four categories based on their level of performance and proficiency: 1) Skilled and proficient 2) Unskilled but proficient 3) Skilled but not proficient 4) Unskilled and not proficient. He concludes that “there are many people who are unskilled but proficient, or skilled but not proficient. It is possible that the competitiveness of otherwise skilled Japanese employees will be diminished in the company.”[12]

Therefore, how useful or effective is such a policy for enhancing Japanese competitiveness if companies start hiring people because of their English proficiency regardless of their business skills? An article in Shukan Gendai (Modern Weekly) highlighted cases of such “proficient but unskilled” employees: “One time we were having a business dinner in New York City, and our client asked our new employee’s opinion on the Prime Minister’s visit to Yasukuni Shrine. He was fluent in English, but was not familiar with the topic and remained silent.” Another one read, “We hired a new employee because he got a high score on Test of English for International Communication (TOEIC) and we thought he was proficient in English. However, when we took him to meet our clients, he did not speak at all. I was surprised.”[13]

In conclusion, the LDP and Japanese multinational companies have tough choices to make in the years ahead. While introducing English proficiency seems to be a logical move to improve global competitiveness of the Japanese labor force, this must be done without exhibiting prejudice against employees who might otherwise be highly competent and skilled but are not fluent in English.


Marina Kurokawa is studying International Affairs and Communication Arts and Sciences at The Pennsylvania State University. Marina was born and raised in Japan, and has been living in the United States for more than three years. Her research interests include nuclear disarmament and US-Japan relations.

[1] http://www.languageonthemove.com/recent-posts/english-at-work-in-japan.

[2] Kyouikusaiseijikkoukaigi(Education Rebuilding Action Committee). “University Education and Global Human Resource Development for the future (Third Proposal).” 28 5 2013. Prime Minister of Japan and His Cabinet. 3 12 2013.


[3] best_teacher. “楽天とユニクロ以外に「社内英語公用語」を発表している企業様まとめ (a list of companies with English as their official language besides Rakuten and Uniqlo).” 18 4 2013. Naver まとめ. 3 12 2013. http://matome.naver.jp/odai/2134322029985508201.

[4] Otsubo, Ryo. “凄絶!楽天の「英語公用語化」(Extreme! Rakuten’s “English Officialization”).” 週刊ダイヤモンド(Weekly Diamond) (2012). http://diamond.jp/articles/-/16303?page=2.

[5] best_teacher. “楽天とユニクロ以外に「社内英語公用語」を発表している企業様まとめ (a list of companies with English as their official language besides Rakuten and Uniqlo).” 18 4 2013. Naver まとめ. 3 12 2013. http://matome.naver.jp/odai/2134322029985508201.

[6] Kuramoto, Yukari. “日本企業は「社内公用語=英語」しないともう世界で生き残れない(Japanese companies can no longer survive in the world without “the official language of the company=English”).” 19 6 2010. My Life After MIT Sloan. 3 12 2013. http://blog.goo.ne.jp/mit_sloan/e/12e944b3494ce767ea7f03b7b7d051d9.

[7] Otsubo, Ryo. “凄絶!楽天の「英語公用語化」(Extreme! Rakuten’s “English Officialization”).” 週刊ダイヤモンド(Weekly Diamond) (2012). http://diamond.jp/articles/-/16303?page=2.

[8] Fast Retailing. “Industry Ranking.” 5 11 2013. Fast Retailing. 3 12 2013.


[9] Takahashi, Toshiyuki. “英語公用語化はチャンスかピンチか?(Is the officialization of English an opportunity or a crisis?).” 23 7 2010. Nikkei Biz Academy BizCollege. 3 12 2013.


[10] EF Education First. “Press Release 日本の英語能力指数(EF EPI)は54カ国中第22位(Japan’s EF English Proficiency Index (EF EPI) ranked 22nd among 54 nations).” 21 2 2013. Education First . 3 12 2013.


[11] Yamaguchi, Hiroshi. “なぜTOEFL義務付けなどという発想が出てくるのか (Why the LDP came up with the provision of mandating TOEFL).” Huffington Post 9 5 2013.


[12] Naito, Shinobu. “楽天とユニクロ-社内英語化はグローバルな成功をもたらすか?(Rakuten and Uniqlo: Will English as their official language bring global success?).” 25 5 2011. Shinoby’s World. 3 12 2013. http://www.shinoby.net/2011/05/post-2415.html.

[13] Shukan Gendai. “大研究 なぜ日本の企業はこんな採用をしているのか ユニクロ・楽天・グーグルほか 急増中!「英語ができて、仕事ができない」若手社員たち(Research: Why are Japanese companies hiring workers this way? Uniqlo, Rakuten, Google, etc. An increasing number of young, proficient but unskilled workers).” Shukan Gendai (Modern Weekly) (2013). http://gendai.ismedia.jp/articles/-/35580.

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