ACADEMIA Letters

Asian Students’ Brain Circulation and Japanese

Companies: An empirical study to explore the relationship
Yuriko Sato, Tokyo Institute of Technology

This paper aims to explore the relationship between the brain circulation of Asian graduates
of Japanese universities and the overseas business expansion of Japanese companies.
As the result of the analysis of statistics, questionnaires, and interviews, it was found out
that expansion of overseas business by Japanese companies has promoted Asian students’ em-
ployment in Japan. However, slow promotion and delayed assignment to overseas subsidiaries
have made it difficult for Japanese companies to retain them, leading to their brain circulation
(return of talents to their home countries).
Japanese companies need to provide better salaries and higher positions to able local staff
in overseas subsidiaries to recruit and retain the returned graduates and to realize the brain
circulation which is beneficial for both of them.

1. Background, purpose, and method

The return of the international graduates to their home countries has been called brain circula-
tion in contrast to brain drain/gain, the traditional one-way mobility from developing countries
to developed countries (Saxenian, 2005). Brain circulation is said to bring benefits to both
countries of origin and study destinations (Tung, 2008). So far, international graduates’ con-
tributions to their home countries by starting a business (Saxenian, 2005; Khadria, 2008) or
by upgrading doctoral training and research (Yonezawa et al., 2016) have been reported as
benefits of brain circulation. However, the role and benefit of study destination companies in
relation to students’ brain circulation have not been studied enough. To fill this research gap,
this paper aims to explore the relationship between the brain circulation of Asian students who

Academia Letters, September 2021 ©2021 by the author — Open Access — Distributed under CC BY 4.0

Corresponding Author: Yuriko Sato, yusato@tse.ens.titech.ac.jp

Citation: Sato, Y. (2021). Asian Students’ Brain Circulation and Japanese Companies: An empirical study to
explore the relationship. Academia Letters, Article 3560. https://doi.org/10.20935/AL3560.

1
studied at Japanese universities and the overseas business expansion of Japanese companies.
The number of Japan-affiliated companies overseas has increased by 42% from 2008 to 2017,
according to the survey of the Ministry of Economy, Trade and Industry.
The research target is international students from China, Thailand, Indonesia, and Viet-
nam, which are among the top countries to send students to Japan and to host Japan-affiliated
companies.
This research adopts a mixed method, combining analysis of statistics, questionnaire and
interview surveys: after confirming the employment situation of the international students
from the four-countries based on statistics and public survey data, 283 questionnaire responses
and 23 interviews of the four country graduates working for Japanese companies are analyzed,
coupled with the interviews of 16 human resources (HR) managers and executives of the
Japanese companies that employ international graduates.

2. Findings
According to the statistics of the Immigration Bureau of the Ministry of Justice, the number
of international students who found employment in Japan grew by 2.7 times from 8,272 in
2006 to 22,419 in 2017, encouraged by the Japanese government’s “Plan to Accept 300,000
International Students” which promotes their employment in Japan. “Revitalization Strategy
2016,” the Japanese government’s top policy to revitalize its economy, set a goal of raising
the international student employment rate in Japan from 30% to 50% as a part of measures to
acquire highly skilled workers.
Through the data analysis of the survey of privately funded international students con-
ducted by the Japan Student Support Organization in 2017, it was found out that more than
two-thirds of them hope to find employment in Japan, though the actual percentage varies
according to their country of origin: the ratio of Vietnamese students who hope to find em-
ployment in Japan is 71.2%, followed by 65.9% of Indonesian students, 63.3% of Chinese
students and 49.4% of Thai students.
Regarding their plans after being employed in Japan, those who hope to work in Japan for
a long time is 35.5% on average while the percentage of those who hope to return to their home
countries after working in Japan is 50.0% for Thai students, 49.9% for Vietnamese students,
37.3% for Indonesian students and 36.8% for Chinese students.
According to the EYJ’s survey entrusted by the Ministry of Economy, Trade and Industry
in 2015, 45.3% of international graduates working for Japanese companies in Japan answered
that they chose to work there because of the possibility of assignment to their overseas sub-
sidiaries. The result also shows that nearly 40% of them plan to leave the workplace within

Academia Letters, September 2021 ©2021 by the author — Open Access — Distributed under CC BY 4.0

Corresponding Author: Yuriko Sato, yusato@tse.ens.titech.ac.jp

Citation: Sato, Y. (2021). Asian Students’ Brain Circulation and Japanese Companies: An empirical study to
explore the relationship. Academia Letters, Article 3560. https://doi.org/10.20935/AL3560.

2
five years. DISCO’s survey of the employers of foreign nationals shows that the top reason
for foreign employees’ retirement is “to go back to their home countries”.
The analysis of questionnaire survey of Chinese, Thai, Indonesian and Vietnamese grad-
uates working for the Japanese companies in Japan or their home countries shows that the
prospect of career development is a top reason for choosing to work for Japanese companies.
Guidance of superiors and relationships with colleagues are the items of high satisfaction.
Satisfaction with promotion is rather low in almost all groups.
These results seem to reflect the tradition of HR management of Japanese companies,
which spend considerable cost, time and energy to train the staff and keep their motivation
by delaying the promotion (not showing the result of promotion race) based on the life-long
employment system. Breaden (2014) points out the paradox of Japanese companies, which
expect the adaptation of international graduates to local working culture while hiring them
because of their global attributes. Conrad and Meyer-Ohle (2017) contend that this is rooted
in the ethnocentric nature of Japanese companies. But we also need to see the positive aspect
of Japanese style HR management, which had functioned well in keeping the staff’s morale
high while assuring them long time employment.
Satisfaction with the working environment of those who work for Japanese companies in
their home countries tends to be higher than those working for Japanese companies in Japan.
Among international graduates working for Japanese companies in Japan, the percent-
ages of those who plan to work for the present company for a long time are 22.0% for Chinese
graduates, 42.9% for Thai graduates, 22.2% for Indonesian graduates, and 19.2% for Viet-
namese graduates, while the percentages of those who want to return to their home countries
are 26.8% for Chinese graduates, 14.3% for Thai graduates, 37.0% for Indonesian graduates
and 34.6% for Vietnamese graduates.
Regarding the reasons for their return home, care of their parent(s) is the strongest reason
for Chinese, Thai, and Indonesian graduates and the second strongest reason for Vietnamese
graduates. Vietnamese graduates raise the limited promotion opportunities in Japan as the
top reason to return home. Better career prospect in the home country is listed as the second
most important reason by Chinese and Indonesian graduates. For Thai graduates, the stress
in Japanese society is the second strongest reason to return to Thailand.
The interviews of HR managers of a few Japanese companies in Japan reveals that it is not
easy to assign a young foreign staff to the overseas subsidiaries since it sometimes causes a
conflict with the local staff who receive lower salaries than the staff sent from the head office.
The interviewed HR managers/executives of Japan-affiliated companies in the four coun-
tries pointed out the difficulty in retaining the trained local staff because of rampant job-
hopping. A vice president of a Japanese subsidiary testified that Japan-affiliated companies

Academia Letters, September 2021 ©2021 by the author — Open Access — Distributed under CC BY 4.0

Corresponding Author: Yuriko Sato, yusato@tse.ens.titech.ac.jp

Citation: Sato, Y. (2021). Asian Students’ Brain Circulation and Japanese Companies: An empirical study to
explore the relationship. Academia Letters, Article 3560. https://doi.org/10.20935/AL3560.

3
are called “Japan-affiliated colleges” because of their function of educating and “graduating”
local employees after a few years.

3. Discussion and conclusion

From the above analysis, we see that Japanese companies in Japan are not successful in retain-
ing the international graduates of Japanese universities, which leads to their brain circulation.
Satisfaction with the working environment in Japan-affiliated companies in their home coun-
tries tends to be higher than that in Japanese companies in Japan. Since there is not much
difference in actual salary considering price level, it is natural for the graduates to seek em-
ployment in their home countries where they can take care of their parent(s) and feel less work
stress.
Most of the subsidiaries of Japanese companies adopt semi-Japanese style HR manage-
ment, which can be counted as a major reason for their failure to retain the recruited talent,
including the returned graduates of Japanese universities, who are often head-hunted by the
rival companies of the other countries.
The above analysis indicates that Japanese companies which have expanded overseas busi-
nesses need to provide better salaries and higher positions to retain the international graduates
of Japanese universities. Since it is not easy to change the Japanese-style HR management
at the head offices, HR management of overseas subsidiaries should be reformed first to at-
tract and retain the returned graduates. It will also facilitate the earlier overseas assignment of
Japanese university graduates recruited at head offices in Japan by decreasing the possibility
of friction with the local staff at the overseas subsidiaries. By taking these measures, it would
be possible to realize brain circulation which is beneficial for both international graduates and
Japanese companies.

References
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Conrad, H. and Meyer-Ohle, H. (2017), “Overcoming the ethnocentric firm? – foreign fresh
university graduate employment in Japan as a new international human resource devel-
opment method”, The International Journal of Human Resource Management, pp.1-19.

Academia Letters, September 2021 ©2021 by the author — Open Access — Distributed under CC BY 4.0

Corresponding Author: Yuriko Sato, yusato@tse.ens.titech.ac.jp

Citation: Sato, Y. (2021). Asian Students’ Brain Circulation and Japanese Companies: An empirical study to
explore the relationship. Academia Letters, Article 3560. https://doi.org/10.20935/AL3560.

4
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Academia Letters, September 2021 ©2021 by the author — Open Access — Distributed under CC BY 4.0

Corresponding Author: Yuriko Sato, yusato@tse.ens.titech.ac.jp

Citation: Sato, Y. (2021). Asian Students’ Brain Circulation and Japanese Companies: An empirical study to
explore the relationship. Academia Letters, Article 3560. https://doi.org/10.20935/AL3560.