A love affair at work turns sour

The setting was so Japanese it made one blink and look again. Inside, silence, pin-newness, the low hum of efficient air-conditioning; outside, pylons, factories, raw blocks of flats, railway lines, the sort of unforgiving industrial scenery you find in the Tokyo hinterland. But this was Stratford, east London, and at an industrial tribunal a Japanese financial information company called Quick was defending itself against charges of racial discrimination brought by three former employees, made redundant two years ago.

The three men, two British and one Asian, maintained that in comparison with Japanese staff they were underpaid, underpromoted and, eventually, unfairly discharged. One of the three, Cliff Wakeman, formerly deputy general manager of the firm's London office, arrested the tribunal's attention when he demonstrated how his former boss at Quick, Noriaki Nakajima, allegedly grabbed both his cheeks and commented, "You have a strange skin colour" - then made as if to punt a ball into the air, adding, "Your face looks like a rock or a football."

The Anglo-Japanese honeymoon, it seems, is well and truly over. Earlier in the year, a City dealer, Helen Bamber, was awarded pounds 100,000 damages for sex discrimination by Fuji International, one of the world's biggest banks. The case against Quick has now been adjourned until the autumn, but next week another case of alleged racial discrimination, this one involving Japan's Sakura Bank, comes to court.

For years, reports have extolled the merits of working for Japanese firms and the superiority of Japanese industrial culture. But as the number of foreign firms with British operations continues to climb, the evidence of cultural problems continues to mount. Eleven Japanese manufacturers set up shop in the UK last year, while Korea's Lucky Gold Star, manufacturer of semiconductors and consumer electronics, is only the most recent of firms from South-east Asia's tiger economies to decide to build British plants in Britain.

Cliff Wakeman's fundamental complaint was that Quick Corporation unfairly thwarted his ambition by failing to promote him to general manager of the office. "It was never possible for an English manager to reign over a Japanese manager," he said. He claimed he was the victim of what he called a "conspiracy" to prevent him rising further.

Ashok Solanki, Mr Wakeman's former colleague in the company, echoed his complaint. He was repeatedly passed over for promotion, he said, while a Japanese national with less experience was given a general management job. "I feel cheated and betrayed because I felt I had proved myself," he told the tribunal. "It was clear that this was a master plan to evade providing general management positions to non-Japanese staff." Quick denies racial discrimination, but has already admitted that the three men were unfairly dismissed.

This is the way that dreams die. Through the Eighties, Japan established a mythic reputation as the home of lifetime employment, where nobody was sacked or made redundant, where managers wore the same work uniform as the man on the shop floor and lunched in the same canteen.

It is a myth that has been in suspended animation since the turn of the Nineties, with the bursting of the bubble of the Japanese property market and the resulting stagnation that has beset the Japanese economy. Gradually, China, Korea and the other tiger economies have supplanted Japan as the object of the West's admiration and fear. Talk of the Japanese work ethic and of learning from Japan has stealthily been replaced by chatter about the yet more amorphous and conveniently hard to pin down "Asian values". If Quick and two or three other Japanese firms lose actions like these, Japan will be back down among the fallible mortals again. Japanese firms will be perceived as no better than any other employers - and, if racial discrimination is proved, worse than most.

What a short, strange trip it has been. Twenty years ago, Japanese firms were practically unknown in Britain. Three had made a beachhead in the Sixties, most prominently the zipper company YKK, and another 14 arrived during the Seventies, often in the teeth of prejudice and suspicion. After all, little good had happened to Anglo-Japanese relations since the building of the Burmese railway. Emperor Hirohito's state visit to Britain in 1971 prompted one of Private Eye's most vituperative covers (cover line: "A nasty nip in the air - piss off, bandy legs!"). In the absence of information to the contrary, most Brits were content to regard the Japanese as the most dastardly enemy they had ever encountered. The destruction of the British motorcycle industry by Honda and the rest only helped to reinforce the prejudice.

People who went to work for Japanese firms in the early days were regarded as a bit mad. James Shaff started selling YKK zips in the late Sixties, but it was an uphill task: potential customers accused him of selling out to the enemy. And it was taken as read that no Brit in a Japanese firm could expect serious promotion, because the Japanese would always reserve the top positions for their own.

The arrival of Nissan in 1983 marked a change in perceptions. Not only was the giant Japanese car company taking root in an area from which nearly all other heavy industry had fled, it was also bringing in a culture of labour relations that posed a radical challenge to the bad old class-based British way of doing things. Once Nissan had established itself, with a British personnel manager and even, in Ian Gibson, a British chief executive, the objections and scorn fell away. For an extraordinary moment in the late Eighties, large sections of the British media were brimming with humility and readiness to learn.

Under the headline "Britain rises under the Japanese sun", for example, the Independent on Sunday reported in February 1990 that "Britain's manufacturing industry is being regenerated not only by money and jobs from Japan, but also by the importing of its production ideas into home-grown enterprises". It went on to say that Nissan's operation in the North-east was "widely admired as a good mix of Japanese rigour and Western individualism". The personnel director, Peter Wickes, was quoted as saying: "I was on the same wavelength as the Japanese. I believed in the same basic things, such as treating the workforce with respect, having common terms with everyone, and flexibility."

The propaganda offensive was more than just brilliant public relations: it was an outward expression of industry's recognition of Japanese dominance, and its frequently sincere attempt to match Japanese achievements. The result has been, to take the most conspicuous example, the transformation of the British motor industry: all the defining characteristics of Nissan's corporate style - a unitary canteen, an obsession with tidiness and cleanliness, painstaking quality control, a standard company uniform worn by all grades - were adopted by Rover, and many of them by Ford and Vauxhall, too. Japanese influence has transformed swathes of British industry beyond recognition.

But there is - and always has been - another side to the coin. While both British and Japanese economies were churning through the Eighties boom years, it could be overlooked. Even now, the honeymoon continues in firms that have established their British operations recently and are still expanding rapidly: firms such as Toyota, 25 per cent of whose British employees have been promoted since its first British factory started up two years ago. But with recession and stagnation, the fact that most Japanese firms routinely treat their Japanese and non-Japanese staff differently has again become plain.

"The Japanese employment system expects people to join when they are young and stay till they retire," says Professor Ronald Dore, an authority on industrial practices in Britain and Japan. "Like the Civil Service and the police here, people are paid according to seniority, not in relation to the job they happen to be doing. By and large they do not expect to incorporate foreign employees into the system, because foreign employees move, and expect to move, from company to company. Therefore there is no joy for Japanese in employing British workers on the same terms. Foreigners are not really employed as members of the Japanese community - they are treated much as British employees are treated in British firms."

One of the bitter complaints of Mr Wakeman and the other plaintiffs is that their Japanese ex-colleagues, even those in junior positions, were paid two to three times as much as themselves. According to Stephen Wood, reader in industrial relations at the London School of Economics, some differential is to be expected. "The Japanese staff are paid an allowance for being abroad - even the accountants in the office would probably not know the salary of Japanese employees because they are not on the British books, not part of the UK firm." Mr Wood's view echoes the argument of witnesses for Quick, who claimed that the Japanese in the office were in London "on secondment", not as part of the local staff.

But the key complaint of Mr Wakeman and the others is that it was impossible for them to achieve serious promotion, to the point where they would be bossing other Japanese as well as other British employees. If this truly is the sticking point, it might well be accepted that Japanese practice truly is racist - analogous to British practice in the days of Empire.

Yet the picture in some prominent Japanese firms suggests that this need not always be the case. Ian Gibson became chief executive of Nissan in the UK; Toyota's plant in Derbyshire has a Japanese managing director but two British deputy md's, and two other British directors.

Bonnie Williams, managing director of Waterbridge International, a consultancy specialising in international management issues, says: "Yes, it's harder to develop relationships with Japanese companies. It takes a long time to build up trust to the point that they will hand over the company to you. But it happens: there's the 31-year-old British woman working for the huge Japanese firm Hitachi Zosan, who has 11 people working under her, including some Japanese men older than herself. There's a Japanese company near Birmingham with a British managing director. But these are people who have taken the time and care to develop an affinity and understanding with the company and built relationships. It is difficult for a local person to rise quickly through the ranks. But those who really take the time to build trust find they are considered nakama, 'intimate friends', for good, and great allowances are made for them."

British understanding of the realities of working for Japanese firms has been blighted by preconceptions - at first negative ones, then ones that were unsustainably positive. If the current spate of litigation brings greater realism, it will be welcome. Because working for foreign firms, with all the cultural hazards it involves, is the shape of the future for more and more members of the British workforce.