Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Last year, a recent graduate from one of Japan's top
Speaker 2: universities was weighing job offers from a few international banks.
Speaker 2: One offer was from a Wall Street firm, which he
Speaker 2: decided to pass on.
Speaker 1: He had turned down the offer on the phone, but
Speaker 1: then they called him and asked him to come in
Speaker 1: for a meeting. So he showed up and was greeted
Speaker 1: in a room by three managing directors.
Speaker 2: Bloomberg's Lisa du covers finance and Investing out of Tokyo.
Speaker 2: She says the young man's story caught her eye in
Speaker 2: part because of what happened next. The managing directors kept
Speaker 2: him inside the room and gave their young candidate the
Speaker 2: hard sell.
Speaker 1: They basically spent two hours trying to convince him to
Speaker 1: change his mind and take that offer, and at one point,
Speaker 1: you know, telling him, don't take this company lightly, just
Speaker 1: don't mess with us. You should take this offer, and
Speaker 1: just like really given a lot of pressure, wow, to
Speaker 1: take this job.
Speaker 2: The man told Lisa that when the directors finally let
Speaker 2: him go, he was exhausted and a little traumatized, and
Speaker 2: even more confident that he'd made the right choice by
Speaker 2: not taking the job. It sounds like a crazy story,
Speaker 2: but Lisa says these hardball recruitment tactics aren't unusual in
Speaker 2: Japan right now.
Speaker 1: We did hear several instances where young candidates were either
Speaker 1: forced to stay in a room for hours or were
Speaker 1: just heavily courted by being taken to really fancy restaurants
Speaker 1: in private rooms.
Speaker 2: That's because right now Japan has one of the world's
Speaker 2: tightest labor markets. In many ways, it's the opposite of
Speaker 2: what's happening in the rest of the financial world. Bankers
Speaker 2: from Hong Kong to London have been hit by pay
Speaker 2: cuts and layoff as the global economy contracts, But in
Speaker 2: Japan there's a hiring boom.
Speaker 1: So I think several factors are coming together at the
Speaker 1: same time to create this perfect storm. The Japanese market
Speaker 1: is interesting again because inflation is back, money is very
Speaker 1: easy to borrow. There's a week end leading now to
Speaker 1: a surge in trading for Japanese growing bonds, Japanese stocks,
Speaker 1: and also a burst in foreign investment. And this is
Speaker 1: coming after years of you know, Japan kind of playing
Speaker 1: second fiddle in Asia to China, and so these banks
Speaker 1: haven't really looked at Japan for many years and are
Speaker 1: now realizing the need to build up the business. So
Speaker 1: now international banks, while Street banks included, are all kind
Speaker 1: of racing in Japan to take advantage of the market
Speaker 1: renaissance that's happening.
Speaker 2: This is the Big Take Asia from Bloomberg News. I'm Wanha.
Speaker 2: Every week we take you inside some of the world's
Speaker 2: biggest and most powerful economies and the markets, tycoons and
Speaker 2: businesses that drive this ever shifting region. Today, in the
Speaker 2: show Wall Street's talent War in Japan and why a
Speaker 2: pivot there could be a bumpy road ahead, Bloomberg's Lisa
Speaker 2: du started taking note of the intense competition for finance
Speaker 2: talent in Japan last year. There are a couple of drivers. Inflation,
Speaker 2: corporate reforms and low borrowing costs have made Japan a
Speaker 2: more lucrative environment for investors. Then there's a slew of
Speaker 2: mega deals also putting Japan in the spotlight.
Speaker 1: Right now, Toyota Industries is about to be taken private
Speaker 1: for about thirty three billion dollars. The operator of seven
Speaker 1: to eleven seven and I Holdings is facing a bid
Speaker 1: from a Canadian firm to Buya for about fifty to
Speaker 1: two billion dollars and from Bloomberg data that we crunched. Actually,
Speaker 1: I think the value of announced deals in the past
Speaker 1: twelve months is up about seventy percent in Japan.
Speaker 2: Even before this renewed interest in Japan, its labor market
Speaker 2: was already challenging for employers.
Speaker 1: There's been a chronic and acute labor shortage in Japan
Speaker 1: for many, many years, and this is due to the
Speaker 1: aging demographics. And at the same time, they have this
Speaker 1: younger workforce that's more mobile, more vibrant, has different ideas
Speaker 1: about what they want from their jobs, and may not
Speaker 1: be as attracted to a job in finance as they
Speaker 1: were in the past.
Speaker 2: Banks and money managers looking to hire face an even
Speaker 2: smaller talent pool. Japan's unemployment rate sits at just two
Speaker 2: point five percent, roughly half of the US level, and
Speaker 2: by the numbers, that means for every applicant there are
Speaker 2: often multiple jobs available. Lisa says it's not uncommon for
Speaker 2: rising stars to receive five or six offers. Lisa, how
Speaker 2: many jobs are waiting to be filled now in Japan's
Speaker 2: banking sector? I mean, how big of a problem are
Speaker 2: we talking about.
Speaker 1: It's hard to get exact data on this, but most
Speaker 1: banks and financial executives that we're speaking to, you know,
Speaker 1: have always mentioned they need to add headcount, that this
Speaker 1: is something that's on top of their mind all time.
Speaker 1: So City Group had told us that they were expanding
Speaker 1: their investment banking team by about fifteen percent. JP Morgan
Speaker 1: Chase was saying they needed to add to their capital
Speaker 1: raising and financing teams. Carlisle Group, the big private equity firm.
Speaker 1: They've just raised a giant Japan buyout fund and they
Speaker 1: said they need to hire ten more investment professionals to
Speaker 1: deploy that money.
Speaker 2: So even if the scale isn't like thousands and thousands
Speaker 2: of jobs, it sounds like these are pretty critical jobs
Speaker 2: for these international firms.
Speaker 1: Yes, and I think timing is very key. Is they
Speaker 1: really want these job candidates now to take advantage of
Speaker 1: this moment because there is this demand, And what are these.
Speaker 2: Banks doing to attract talent?
Speaker 1: I mean, this is you know banks. While she were
Speaker 1: talking about so of course money, Yeah, one investment banking
Speaker 1: partner we had spoken to said they had raised the
Speaker 1: offers they made for investment banking by about ten percent
Speaker 1: every year in the last three years. You know, we
Speaker 1: had heard that younger associate analyst level bankers in Japan
Speaker 1: would make about one hundred and forty thousand US dollars
Speaker 1: per year, and that will compare to New York, where
Speaker 1: these associo bankers will make about two hundred thousand US
Speaker 1: dollars a year. Japan historically has had slightly lower pay
Speaker 1: in the financial sector than most other places in the world,
Speaker 1: so these are quite big pay bumps for these young
Speaker 1: bankers in Japan.
Speaker 2: Besides showering candidates with cash, banks are adopting other more
Speaker 2: creative ways to woo talent.
Speaker 1: One thing we heard they were doing was holding these
Speaker 1: parties where they invite people that left the firm to
Speaker 1: kind of common network again to try to get them
Speaker 1: to come back. Some are being more serious about setting
Speaker 1: up an alumni network so that they then have basically
Speaker 1: a contact list of people they can reach out to
Speaker 1: if they want to hire them back, and they're whining
Speaker 1: and dining them as well and try to get them on.
Speaker 2: And it's not just young graduates that banks are finding
Speaker 2: difficult to recruit. Lisa says the shortage for finance staff
Speaker 2: is across the board.
Speaker 1: There is also a great need for mid level to
Speaker 1: senior bankers. One interesting phenomenon we've also been tracking is
Speaker 1: obviously the Japanese government bond market has come back to
Speaker 1: life because Japan has exit negative rates, and so some
Speaker 1: brokerages are trying to leer back. Workers have retired because
Speaker 1: these guys know what a world with interest rates was. Like,
Speaker 1: traders who were in their twenties and thirties have never
Speaker 1: experienced a market with interest rates, and so some ways,
Speaker 1: like being an old timer is now kind of a benefit.
Speaker 2: After the break. Why is it so hard to hire
Speaker 2: bankers in Japan? Besides having a limited talent pool, Japan
Speaker 2: presents unique challenges for global firms looking to expand. The
Speaker 2: language barrier is at the top of the list. Unlike
Speaker 2: in Hong Kong or Shanghai, traders and bankers can't get
Speaker 2: by with just English. Lisa, how important is it to
Speaker 2: be able to speak Japanese in these jobs?
Speaker 1: I think it's very important and quite job specific, you know,
Speaker 1: like Japanese government bond traders, that's a very domestic job
Speaker 1: that requires like specialization. I think that one you really
Speaker 1: would need Japanese Ideally, I think what I mes in
Speaker 1: banking jobs or investment firms like private equity would like
Speaker 1: is someone who is just bilingual and able to seamlessly
Speaker 1: move between kind of Japanese culture and more of international
Speaker 1: Western culture, so that then they can work across teams globally.
Speaker 1: And that is the ideal, the perfect Canada, someone who
Speaker 1: can just really do both.
Speaker 2: So you're saying, for the bankers listening in New York London,
Speaker 2: there's no need for them to hop on a plane
Speaker 2: and try to land one of these jobs.
Speaker 1: I think that might be hard. I think they would
Speaker 1: prefer that you, you know, have some understanding of Japanese
Speaker 1: and Japanese culture and Japanese business practices.
Speaker 2: At the beginning of the story, you mentioned how this
Speaker 2: one young graduate turned down a Wall Street firm after
Speaker 2: they tried to pressure him to join them, And I
Speaker 2: wonder for these young candidates, do big Wall Street names
Speaker 2: half cachet does working for Goldman Sachs or an international
Speaker 2: firm carry a lot of weight with him.
Speaker 1: Well, he turned down a Wall Street firm for another
Speaker 1: international one that was European, So I think, you know,
Speaker 1: these big ones do have cachet, but it probably isn't
Speaker 1: worth as much as they are in the US, it
Speaker 1: would be just as good to work for a trading
Speaker 1: house like mets be Shi or Sumitomo here to working
Speaker 1: at Goldman Sachs. Japan is home to some of the
Speaker 1: biggest banks in the world, the megabanks, and large brokerages
Speaker 1: like Nomura and Daiwa which have international operations. So you know,
Speaker 1: if you are a young grad in Japan, it would
Speaker 1: be equally attractive to go work for these firms and
Speaker 1: also make a lot of good money and have a
Speaker 1: very international experience.
Speaker 2: On top of that, Wall Street firms are also up
Speaker 2: against a culture that prizes loyalty. Workers in Japan often
Speaker 2: stay at the same company for their entire career, and
Speaker 2: poaching employees from rival firms is frowned upon.
Speaker 1: One aspect is Japanese workers historically tend to be very
Speaker 1: loyal to where they're working, and back in the days,
Speaker 1: like your parents, who probably stayed the same company for life,
Speaker 1: that was very common. Your company took care of you,
Speaker 1: and when we retire, they also took care of you.
Speaker 1: And some of that mindset is still there, but it's
Speaker 1: slowly changing.
Speaker 2: Lisa says. What's changing is how young people think about
Speaker 2: work and their careers in general, and that means working
Speaker 2: for big finance corporations might not be as attractive as
Speaker 2: it once was.
Speaker 1: Which saw this really in the mindsets of younger workers
Speaker 1: we spoke to. They want better work life balance, They
Speaker 1: want to do work that they think is more meaningful
Speaker 1: and more impactful, and sometimes the salary doesn't even sway them. Actually,
Speaker 1: one former investment banker I spoke to who opted to
Speaker 1: go into venture capital said he didn't need that much money.
Speaker 1: He found being able to help build up businesses way
Speaker 1: more rewarding.
Speaker 2: Lisa, what do you think this story tells us about Japan.
Speaker 1: I think what's interesting about the story is that I
Speaker 1: think it captures a moment in time, and we're telling
Speaker 1: it through financial firms, but it could probably apply to
Speaker 1: other industries as well. Where Japan is having a kind
Speaker 1: of financial renaissance. It's become very interesting again global investors
Speaker 1: for global banks, and as they rush back in to
Speaker 1: try to take advantage of this, they're running up against
Speaker 1: a problem that has always been there and is actually
Speaker 1: getting much worse. I'm not sure we can make any
Speaker 1: big hypothesis about the future from this tale, but I
Speaker 1: think kind of painting this picture of what it's like
Speaker 1: in Japan right now is quite interesting.
Speaker 2: And how long do you think this intense competition for
Speaker 2: talent will last.
Speaker 1: I think that will go on for as long as
Speaker 1: the Japanese markets are sexy. I think it all ties
Speaker 1: back to attractiveness of the Japanese market. And this is
Speaker 1: a question that investors' financiers all ask all the time.
Speaker 1: Is this moment for real? Is Japan like really back
Speaker 1: for the long run? And all the factors I described
Speaker 1: before about easy borrowing, week yen driving all this activity.
Speaker 1: As long as that continues, this will also go on.
Speaker 2: This is The Big Take Asia from Bloomberg News. I'm wanha.
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