The 7 Key Challenges Foreign Executives Face When Leading a Japanese Company

From intrusive regulators to language barriers to lacking board member skills

My latest LinkedIn post about foreign CEOs in Japanese companies clearly struck a chord. Inspired by recent appointments at Nissan and Seven & i, I explored why Japan is still continuing to underutilize international leadership talent.

Within hours, dozens of comments poured in and I received several direct messages from current and former board members across the U.S., India, and Europe. Many pointed out non-Japanese CEOs I had missed, suggesting that the figures I cited could actually be slightly higher.

However, the overall numbers are still low — yet change is on the horizon.

What challenges do non-Japanese CEOs face?

What’s actually more interesting than the numbers themselves, are the challenges that non-Japanese executives face during their tenure.

One of the most eye-opening conversations I had was with an American executive who led a turnaround at a listed Japanese company during the pandemic.

He shared key insights into the unique hurdles foreign leaders face in Japan.

I expected challenges around communication and decision-making, but I was surprised to hear what this US executive had to say about his biggest challenge:

Challenge #1: Regulatory Hurdles

He revealed that navigating the Tokyo Stock Exchange (TSE) and Japan's financial regulators was one of his most unexpected struggles. He found the process overly complex, burdensome, and, to some extent, unfair. Beyond the CEO’s direct involvement, the company had to assign a dedicated individual solely to handle inquiries from the regulator.

Challenge #2: Board Meetings

Preparing for board meetings was another challenge. He made sure to prepare all written documents well in advance and give everyone enough time to digest the information and form an opinion.

Challenge #3: Language Barriers

A big reason for the cumbersome preparation, were lacking language skills. While English was defined as the board language, lacking language skills were a significant obstacle during meetings, complicating internal communication and alignment.

Challenge #4: Board Members Lacking Skill Sets

On a broader note, he lamented that many board members in Japan lack a diverse set of management skills or formal training for executive roles. This is a common concern raised by other non-Japanese executives, who point out that board members are often appointed based on loyalty to a former boss rather than expertise—what is often referred to as the "Yes man" syndrome.

Challenge #5: Ad-Hoc Decisions:

These had to be made due to the pandemic crisis, but were difficult due to language issues and a lack of skills or understanding in broader management and financial areas.

Challenge #6: Buy-in for Business Strategy

Reflecting some of the above, one of the biggest challenges this foreign executives faced in Japan was securing buy-in for changes in the company’s business strategy. This was often complicated by a lack of understanding of the broader picture, as local teams were more focused on immediate, day-to-day concerns. However, despite this, the executive successfully made a major pivot, cutting one of its loss-making units and put the company back on a growth trajectory.

Challenge #7: Hybrid Meetings and COVID-19 Struggles

With board members spread across various locations, hybrid meetings became the norm — introducing logistical and cultural difficulties. The pandemic exacerbated these challenges, making coordination with overseas board members even more complex.

These points highlight just how challenging it is for foreign executives in Japan. The corporate culture, regulatory landscape, and business expectations create a tough environment to navigate—even for the most experienced international leaders. Who would want to take on such a role?

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For now, wishing you a great start to the weekend – with the first cherry blossoms just about to bloom across western Japan.

Pascal

P.S.: I'll be back on the weekend with our weekly news roundup and a story on Japan’s “Hierarchy Paradox.”