What is this practice in Japan called?

Not helpful, but in English it is “sublimation.”

This is actually a strange activity at an Osaka plant of the giant Matsushita Electric Industrial Company. It is actually a form of therapy introduced by the Board Chairman Konosuke Matsushita to ease tension among workers. In his company there is a “self-control room,” where the employees can work off their frustration and anger. At the entrance of the room there are concave an convex mirrors so that the employees can have a hearty laugh seeing their distorted images. Then there is a gymnasium with punching bags and pedaling bikes to ease tension. The next room has two life sized padded dummies seated on a high platform. Bamboo staves are provided for the employees to beat the dummies to their hearts content, picturing in his mind his boss or any other person. When they come out of the room they can hear a recorded speech of Konosuke Matsushita urging harmony and meaningful relation among employer and employees. If still the employee does not get relief then there is a counselor waiting at the exit door.

Ask @ragingloli.