Canon's President Mitarai Named Chair of Japan Business Lobby

Reviewed by Hitoshi URABE

Article:
Canon's President Mitarai Named Chair of Japan Business Lobby
Bloomberg
http://www.bloomberg.com/apps/news?pid=10000101&sid=aczqWvuihFsQ&refer=japan

Comments:

Mr Mitarai, chairman of Canon, has been designated to succeed Mr Okuda as the chairman of Keidanren (Japan Business Federation) next May. In arguably a closed business circle in Japan, it could be the beginning of a long awaited reform.

Nippon Keidanren, often dubbed simply as Keidanren, was born in May 2002 by amalgamation of Keidanren (Japan Federation of Economic Organizations) and Nikkeiren (Japan Federation of Employers' Associations). (The former) Keidanren - which itself was an acronym for Keizai Dantai Rengo-kai (Coalition of Business Associations) - was formed in 1946 to exchange views among the members as well as to convey concerted business views to the public and lawmakers. Nikkeiren, on the other hand, was originally formed, as its name implies, to function as a group of employers to cope with labor, when it was considered natural - even mandatory - for employers and employees to act hostile against each other.

Then over the years relationship between employers and employees became less confrontational, and ideological conflict between capitalism and communism subsided as the society overall became affluent. As both Keidanren and Nikkeiren share the basic business sentiment, and in fact, most of the members were overlapping, they decided to merge, to become Nippon Keidanren, an acronym representing the formal name of "Nihon Keizai Dantai Rengo-kai."

The chair of Keidanren is not chosen by open vote but through a consensus formed behind closed doors. The members of Keidanren encompass a large scope of Japan's business scene - as well as some foreign company members, that have, on one hand a common sentiment any business possesses while on the other they have diversely different views on how each business strategy, including public economic policy to back it, should be conducted. The chairman of Keidanren must constantly seek the common denominator to express the collective voice of business while being careful not to infringe upon conflicting issues among the members.

Accordingly, choosing a chairman is a very political - by definition - process. As such, while the chairmanship of Keidanren is acknowledged to be a very honorable position, it seems true that many executives consider it to be a burden they would prefer to avoid.

Among the recent six chairmen since 1908 leading to Mr Okuda, three were executives of Nippon Steel, two were from Toyota - including Mr Okuda, and one was from Tokyo Electric Power. Nippon Steel is a remnant, though it's still huge, of steel mills founded by the government more than a century ago when Japan were beginning to modernize its industry. They indeed played a large role in supporting Japan to grow and maintain independence through the years. Needless to say, steel has been the staple of industry since the industrial revolution. Tokyo Electric Power was established as a public utility company immediately after WWII through consolidation of existing suppliers to stabilize supply of electricity necessary for reconstruction of the country and the industry. As such, the company is heavily regulated, controlled - and guarded - by the government.

There were reports of power struggle when in 1998 Toyota's chairman at the time Mr Toyoda - a family member of the founder - was named as the chairman of Keidanren. Opponents criticized him - not personally but the company - as being a newcomer (compared to such companies as Nippon Steel or Tokyo Electric Power), not qualified to represent all business as being a manufacturer of certain line of products (instead of providing universal products such as steel or electricity), and has no close ties with political circles (as opposed to having public ancestry or close interactions with the government).

It is reported that this time, until they settled for Mr Mitarai, Mr Cho, currently Toyota's vice-chairman, was considered to succeed Mr Okuda. Apparently, Mr Okuda turned down the idea for the fear of portraying the image of Toyota doing everything in, and for, Japan.

It is, therefore, regarded as unprecedented for Mr Mitarai, who has been leading such a 'minor' company as Canon, which is a manufacturer of 'small' and specific line of products and without political clout in the government, to chair Keidanren,

Looking from another perspective, Japan's business circle has finally chosen the leader of an 'ordinary' company to lead their 'esteemed' organization, Keidanren, by opening its doors just a little more.

Mr Mitarai has worked in the U.S. for 20 years leading Canon's operations there. He is thus well versed in U.S. business customs and practices. He has restored Canon's business performance since he became chairman in 1995, and achieved recognition of being a fair and honest person among those who met him on business or private.

While many of Japan's individual companies have gone through reforms and restructures to become truly global, Japan's business circle often show signs of it being governed by outdated practices and in-house politics. Mr Mitarai is expected to breathe new life into Keidanren, which is necessary to reform and revive the Japan's business sector as a whole.

By the way, about half of Canon's shares are owned by foreign investors.