Partnerships in cultural turmoil

In Japan, strategic Western partnerships can prove complex as a result of cultural conflict. WPP’s MindShare Japan has established a blueprint for co-operation

Cultural conflicts can bedevil international marriages between agencies. Language, egos, chauvinism and different attitudes to business can all make the going rough. Problems can be particularly acute between a publicly quoted Western holding company, keenly focused on shareholder value, and Japanese partners who have different priorities.

About a year ago, WPP announced its largest investment in Asia, committing $208m (&£130m) in return for 20 per cent of Asatsu – now Asatsu-DK- Japan’s third largest agency. WPP Group chief executive Martin Sorrell described the Asatsu relationship as a strategic partnership, which would pursue joint projects. He also agreed not to become a predator and hunt down additional Asatsu equity.

Earlier in the same year, Omnicom had bought 20 per cent of I&S, Japan’s seventh largest agency, and merged it with BBDO Japan last summer. At the time, BBDO executives said the plan was to increase their stake in the agency from 20 per cent to 40 cent. This could then rise to 60 per cent by the summer of this year, and to 80 per cent thereafter, depending on the agency’s financial performance.

The Omnicom deal won applause. It was easier to understand than the deal struck by WPP because majority control looked a more productive goal than a strategic partnership.

Yet of the two, Omnicom has faced the greater problems. In early July, BBDO abruptly replaced the Japanese president, Yonezo Udagawa, it inherited from I&S. The problem, say insiders, was a cultural one. To meet the financial targets that will trigger Omnicom’s purchase of more equity, I&S must either win business at a rate not yet seen in Japan or drastically downsize. According to sources, at least 20 per cent of the agency’s 800-plus staff need to go. Japanese corporate culture traditionally shuns such action, and so Yonezawa was doing what any other Japanese president would have done, sacrificing financial performance to maintain employment.

Replacing Yonezawa was difficult. In the end, BBDO and I&S’s Japanese owners could only agree on persuading the agency’s founder, 73-year old Mahito Suzuki, to come out of retirement and act as caretaker while looking for someone to wield the axe.

Despite the turmoil, no business has been lost and, so far at least, BBDO is succeeding in upholding the standards its international clients require.

Meanwhile in June, and with Asatsu’s support, WPP launched MindShare in Japan. Although MindShare Japan is not the first media specialist in Japan, it is the first international media specialist company to start business there and the only one to be publicly endorsed by a major Japanese agency. Sorrell says: “WPP is exploring fresh opportunities involving Asatsu-DK. We have examined Asatsu’s network in the region, and our own, and are looking at how we can consolidate our offers in an effective way for both clients and our staff. There are tremendous opportunities in terms of revenue generation and cost saving with Asatsu-DK, and WPP’s emphasis in the coming months must be on exploring both these areas.”

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