By Ichiro Suzuki The Nikkei, Japan’e business daily, reports that a steadily growing number of Japanese scholars (presumably scientists) are leaving the country to land a university post in China. The Ministry of Foreign Affairs estimates that approximately 8,000 researchers were working on a full time basis at Chinese universities as of October 2017 (a bit old statistics). According to the Ministry of Education and Science, 18,460 Japanese, including part-timers, were working at Chinese universities in 2018 (probably including those in humanities fields). Japan ranks second after the United States, and a notch above the neighboring South Korea, in the number of scholars working in China. While the U.S. and South Korea are witnessing decreasing numbers of scholars in China in the last several years, the number continues to rise for Japanese. In recent years, the People’s Republic is stressing uplifting the country’s level of science and universities, pouring financial resources into academic research. Such a move represents China’s strategy beyond ‘Made in China 2025’ whose goal is upgrading China from labor-intensive workshops to technology-driven manufacturing powerhouse. So far, chemist Tu Youyou is the only Chinese to have won a Nobel Prize in science (and there is Liu Xiaobo whose anti-Communist Party activity won him a peace prize that Beijing didn’t appreciate.) A few decades later from now, this could be considerably different. The Chinese government's emphasis on basic research in science might result in a wave of Chinese Nobel laureates. For this grand objective, the Chinese government is spending almost freely. China’s science budget in 2018 was estimated at $270 billion, dwarfing Japan’s $37 billion. It has been said that Chinese universities offer vey competitive compensation packages and research budgets to capable scholars. Such offers obviously look very appealing to young men and women at Japanese universities that are notoriously known not only for low pay but also a lack of advancement opportunities. Chinese universities that have been moving up in global rankings look very attractive to many scholars. In contrast, Japanese universities are under-appreciating talents due to budget constraints and the country’s employment practices, but academia is not the only one that treats talent poorly. Japanese corporations are equally notorious with low pay and slow promotion for their skilled and capable employees. It is easy to understand that bright, young and aggressive people choose American corporations to build their career and prove themselves. On the other hand, it is also true that middle-aged engineers with a few decades of experiences find a job with Asian manufacturers that are or were trying to catch up with Japan. These Asian companIes find experiences and knowledges of veteran Japanese engineers extremely valuable. In the 1980s some Japanese engineers reportedly took regular weekend short trips to Seoul to help Samsung build its semiconductor business, at a time when the Korean manufacturer was trying to leap from what they were known as a maker of cheap electric appliances. Such trips were lucrative part time jobs that supplemented Japanese engineers’ meager salary from their well established employers. It is obviously questionable and unethical to transfer their knowledge for money to assist foreign firms while Japanese companies back then arrogantly looked down South Korean companies that were up and coming. At the very least, such a conduct probably was not banned outright by their companies’ code of conduct at that time. It was not in the mind of management back then, since it was totally beyond anyone’s imagination. Beginning in the 1990s, when the Japanese economy sunk into an economic malaise with a series of recessions and Japanese manufacturers struggled to keep up with the advent of the digital age brought by the Internet, they began to downsize the company, consolidating balance sheets. Once almost unheard-of, layoffs became rather common in Japan. A number of veteran engineers were let go along with staff function people. To an early retirement offer, those who put their hand up was the ones who were capable of finding the next job. Engineers found it relatively easy to land a new jobs if they agree to relocate to outside the country. Korean, Taiwanese and more recently Chinese manufactures were thrilled to have them, and they got a raise from what they were paid by penny-pinching Japanese companies. Talent flowed out of Japan, and this is how the once mighty Japanese manufacturing industry lost its competitiveness. It looks Japan’s academia is repeating the mistake made by Corporate Japan. Rigid structure in its own world is disillusioning gifted and skilled people, pushing them to leave the country to pursue their career. In already the third decade of the 21st century, Japan continues to think how best talents can be compensated. Doing it would cause excessive disruptions in the organization that are supposedly run on a harmony among those who are in there. On the other hand, Japanese corporations have not yet found how to motivate foreign nationals who have different values and aspirations from their Japanese colleagues. In addition, Japanese universities face an even harder problem than keeping talents from leaving. That is soliciting talents from outside. They have to invite foreign scholars with their limited financial resources. On top of limited budget, Japan for years has been going down the rankings of per capita income. Once the wealthiest country among those whose population larger than 10 million, Japan is getting close to the bottom quartile of OECD countries rankings after three decades of economic stagnation. This makes pay in Japan unappealing to foreigners, be they highly skilled professionals or construction workers. First rate scholars would choose not to come to Japanese universities, if the school’s compensation table is strictly applied to gifted foreigners. Maybe they apply a different package to foreigners, a sort of expatriates package. This was how Japan invited foreign, mostly European, engineers to build industries, when the country opened itself to the outside world to modernize it 150 years ago and the country was far poorer than those in Europe. The tradition of offering different packages to capable foreigners remains intact well into the 21st century in the world of professional baseball, soccer etc. This may be it though it is unhealthy to holding onto a double standard system. That said, this does not solve the problem of satisfying Japanese talents and keep them from leaving for China. Rigidity has a tremendous price. About the author: Mr. Suzuki is a retired banking executive based in Tokyo, Japan.