As Japanese companies expand operations into the United States, a troubling trend has emerged: they continue to rely heavily on costly expatriate placements while neglecting investment in local, US-educated talent, particularly those requiring visa sponsorship.
This approach reflects not only a misallocation of resources but a deeper strategic blind spot in how globalization is practiced versus how it is professed.
Expatriate compensation packages are exorbitantly expensive, often exceeding $379,000 annually once housing allowances, relocation services, and cost-of-living adjustments are included.
Meanwhile, sponsoring a skilled foreign worker under the H‑1B visa program typically costs an employer a mere few thousands of dollars in combined legal and government fees.
Despite this dramatic cost gap, Japanese multinationals often balk at sponsoring visa-holding local hires, even when those individuals hold US accounting degrees and are fluent in both English and Japanese.
This contradiction points to more than financial conservatism. It signals a lingering “island-nation mindset” that continues to shape Japanese hiring practices abroad. This mindset, characterized by insularity and a preference for culturally homogeneous teams, has long been cited by scholars and business commentators as a barrier to effective globalization.
By excluding or underutilizing local talent, especially highly trained Japanese international students. At the same time, rigid, consensus-driven decision-making, often executed via the ringi system, can significantly delay US-focused initiatives. The formal circulation of proposals among multiple managers before approval frequently results in lengthy delays, which in an accounting context can lead to compliance delays or misstatements.
The bottom line is simple: global success demands more than international office addresses. It requires the local integration of human capital, especially in critical functions like accounting.
Until Japanese firms revise their approach, shifting from an expat-first mentality to one that values visa-holding local professionals, they risk not only inefficiency and legal exposure, but a credibility gap in their very claim to be “global companies.”
This strategic myopia is already triggering consequences. Japanese firms themselves acknowledge this growing difficulty: in JETRO’s FY2023 North America survey, 70% of Japanese-affiliated companies in the US reported facing human resource shortages. Those gaps are particularly acute in factory roles and specialized occupations such as legal, engineering and accounting.
Compounding the issue, Japanese expatriates frequently struggle with applying US-specific accounting standards and practices. A notable example is the PCAOB’s November 2023 disciplinary action against Japan’s KPMG AZSA for insufficient journal-entry testing under PCAOB audit standards. That penalty highlighted a broader pattern of non-US firms having difficulty aligning with US GAAP and audit requirements.
These structural inefficiencies have drawn scrutiny from regulators as well: the PCAOB has made clear that non‑US registered audit firms, including US subsidiaries of foreign companies, are subject to inspections just like domestic firms, with deficiencies in internal controls and audit practices regularly flagged and required to be remediated.
In this environment, continuing to sideline qualified, US-educated visa-holders is not just shortsighted but also undermines both operational resilience and long-term credibility. To overcome these structural challenges, Japanese multinationals must transition from rhetoric to action by embedding local, visa-holding professionals deeply within their US operations.
This isn’t just a theoretical fix; several leading firms are already paving the way. For instance, Toyota Boshoku has set a bold goal: by 2030, at least 80% of leadership positions in overseas plants will be held by local personnel, supported by a network of coordinators to bridge home–host communication.
Similarly, Toyota Tsusho emphasizes recruitment and development “without being constrained by past experiences or preconceptions,” focusing on equipping employees to “cooperate and lead” globally, evidenced by 74% of its staff gaining overseas experience within eight years of hiring.
Reflecting a broader strategic shift, Hitachi has made diversity and regional talent integration a cornerstone of its global human capital strategy. According to its 2023 Sustainability Report, the company has established regional DEI leaders and a Global DEI Council charged with implementing localized initiatives, including diagnostic recruiting assessments and equity-driven reforms. Hitachi’s DEI positions aimed to “attract and retain talent” and better “serve global customers” across North America and other regions.
By adopting this hybrid staffing model, melding expatriate oversight with empowered local teams, Japanese companies can both respect their cultural roots and meet the rigor of US regulatory, financial, and compliance standards.
The urgency to localize compliance expertise is intensifying. In March 2024, the US Securities and Exchange Commission (SEC) adopted sweeping climate-related disclosure rules, requiring large public companies to report Scope 1 and 2 greenhouse gas emissions and climate-related financial risks starting as early as 2026.
Simultaneously, updates to ASC 842 lease accounting standards have proven especially demanding for multinational companies operating under both US GAAP and IFRS, an added layer of complexity that foreign-based accounting teams often struggle to manage effectively.
According to a 2019 KPMG Global Lease Accounting Survey, “multinational companies that report under both accounting standards may need to consider use of a system that will support multiple sets of leasing rules in order to comply with statutory reporting.”
The SEC has also introduced enhanced cybersecurity disclosure rules, mandating faster and more detailed incident reporting, further raising the bar for internal controls and reporting precision.
In this environment, Japanese firms that continue relying on expatriate staff, many of whom lack direct exposure to these evolving US regulatory frameworks, face growing compliance risks and slower adaptation.
By contrast, visa-holding, US-educated professionals, particularly those with bilingual capabilities and formal training in US financial reporting, are well-equipped to navigate this complexity. They offer not only technical alignment but strategic foresight, positioning Japanese multinationals to respond nimbly to regulatory shifts while earning credibility with American stakeholders.
Beyond compliance, the ability to localize expertise is becoming a strategic imperative in a fast-changing global economy. Recent US industrial policy under the Biden administration, including the Inflation Reduction Act (IRA) and CHIPS & Science Act, has spurred over $350 billion in clean‑energy investments and created hundreds of thousands of domestic manufacturing jobs. Yet, 40% of these projects have already experienced delays, signaling that workforce readiness is a critical bottleneck.
At the same time, Japan joined the recently activated IPEF supply-chain pact in February 2024, which commits member countries to strengthening workforce development and supply-chain resilience.
Against this backdrop, Japanese firms that continue to lean on expatriate teams risk missing localization requirements tied to public contracts, tax incentives, and supply‑chain rebates, while also forfeiting the workforce readiness that visa‑holding US‑educated professionals can deliver.
Those firms that instead embed local, bilingual accounting and financial staff will not only align with industrial policy goals but also gain a clear edge in accessing government-backed opportunities and project timelines.
In today’s global marketplace, credibility hinges not just on presence, but on participation. Real, local and accountable. Japanese multinationals can no longer afford to treat their US subsidiaries as extensions of Tokyo headquarters.
As regulatory demands grow more complex and US industrial policy increasingly favors firms that demonstrate local investment, the failure to tap into visa-holding, US-educated talent is no longer just inefficient – it’s strategically self-defeating.
The solution is not abandoning Japan’s values but adapting them: combining the strength of disciplined oversight with the agility of locally embedded, culturally fluent professionals. Those firms that make this pivot will not only reduce compliance risk and unlock public-sector opportunities but will set the standard for what a truly global Japanese company looks like in the 21st century.
Sayaka Ohshima holds an MBA and a BS in accounting and works as a US-based accountant specializing in financial reporting and compliance. Her research explores the intersection of economic policy, trade strategy and global capital flows.
AloJapan.com