Mr. Kan replaces Mr. Hatoyama as Prime Minister and effectively Mr Ozawa at the head of the Japan Liberal party. Mr. Hatoyamaa and Mr. Ozawa were ousted for financial irregularities. Mr. Kan was also forced to resign a few years ago for a few missed social security payments in his student days. He then embarked on a pilgrimage around the temples of Shikoku island and has clearly atoned for his misdoings. Perhaps the LDP politicians who engineered the review of his contributions and the bureaucrats who aided and abetted them should also go on a pilgrimage...
Hopefully, Mr. Kan can compensate for the embarrassing Hatoyama effect and allow the experiment with a non-LDP government to continue. The alternative is too horrible to contemplate.
As the owner of a Japanese business, I am praying that the Liberals will last long enough to push through the planned reduction in corporation tax. At 5% it's not world shattering, but sends a very positive message.
Friday, 11 June 2010
Saturday, 30 January 2010
Negotiating in Japan
The end of 2009 was very busy for AKI Japan. We supported strategic negotiations for two clients and negotiated agreements with suppliers from Europe and Asia.
One interesting point arising from these various activities was the range of negotiating styles and targeted outcomes. These divided along national lines and again within national borders according to company culture. Hardly groundbreaking discoveries, I hear you say, and, of course, you're right. But I found the experience and the outcomes interesting, not least because it all happened in a short time-period. I will write about this in more detail in future.
Going into 2010 we see a lot of cross-border activity: VW-Suzuki, Peugeot-MMC, Geely-Volvo, Autoliv-Delphi Asia and possibly Nissan involvement in the proposed Daimler-Renault technical tie-up.
All these activities will involve intensive negotiations and integration activity and experience shows that the outcomes will vary widely according to the quality of the integration. plan and the skills of the integration teams. These are both elements which can be optimised as long as the cross-border element is handled correctly. This is particularly true in Japan. The words of Stuart Chambers, former CEO of NSG Pilkington during a presentation at the FCCJ last year sum this up nicely: "For two years I said that Japan was just another culture, now, in my third year, I am beginning to think Japan is more different than other cultures".
Those who take the trouble to listen to managers experienced in bridging cultures positively and who assemble and educate the right teams will succeed.
One interesting point arising from these various activities was the range of negotiating styles and targeted outcomes. These divided along national lines and again within national borders according to company culture. Hardly groundbreaking discoveries, I hear you say, and, of course, you're right. But I found the experience and the outcomes interesting, not least because it all happened in a short time-period. I will write about this in more detail in future.
Going into 2010 we see a lot of cross-border activity: VW-Suzuki, Peugeot-MMC, Geely-Volvo, Autoliv-Delphi Asia and possibly Nissan involvement in the proposed Daimler-Renault technical tie-up.
All these activities will involve intensive negotiations and integration activity and experience shows that the outcomes will vary widely according to the quality of the integration. plan and the skills of the integration teams. These are both elements which can be optimised as long as the cross-border element is handled correctly. This is particularly true in Japan. The words of Stuart Chambers, former CEO of NSG Pilkington during a presentation at the FCCJ last year sum this up nicely: "For two years I said that Japan was just another culture, now, in my third year, I am beginning to think Japan is more different than other cultures".
Those who take the trouble to listen to managers experienced in bridging cultures positively and who assemble and educate the right teams will succeed.
Friday, 14 August 2009
Auto Supplier Consolidation
From the steamy heat of mid-August Osaka, o-hisashiburi (it's been a while).
Continuing on the consolidation theme, it's interesting that there don't appear to be any large Japanese funds buying up companies to drive consolidation. This is happening in the USA and Europe either driven by companies pursuing consolidation as a strategy or by funds assembled for the purpose.
Is this because Japanese management shrewdly recognise the extreme difficulty in achieving real value from M&A activity, because they are simply too risk averse or because they recognise that they lack the breadth of management talent to make cross-border, post-merger integration work?
Probably all of the above.
In the past, this was not a problem. Hanging on to the coat tails of Toyota, Nissan, Honda et al was as good a strategy as any. These days, the rallying cry across Japanese industry is "Globalise or Die". Easier said than done (the former, that is).
Some deals have taken place (Takata - Petri, NSG - Pilkington), but many more have failed (purchase of FAG, purchase of Karmann, purchase of SKF....) and many have not even got as far as identification of a potential partner/target.
M&A managers in the big Japanese financial institutions complain constantly of the difficulty of getting even as far as due diligence.
Interest remains high despite the problems, but is mainly focused on individual deals.
So should Japan Inc focus on getting more two party deals successfully through to closure or start thinking big and looking at industry consolidation on a global scale?
Let me know what you think.
Continuing on the consolidation theme, it's interesting that there don't appear to be any large Japanese funds buying up companies to drive consolidation. This is happening in the USA and Europe either driven by companies pursuing consolidation as a strategy or by funds assembled for the purpose.
Is this because Japanese management shrewdly recognise the extreme difficulty in achieving real value from M&A activity, because they are simply too risk averse or because they recognise that they lack the breadth of management talent to make cross-border, post-merger integration work?
Probably all of the above.
In the past, this was not a problem. Hanging on to the coat tails of Toyota, Nissan, Honda et al was as good a strategy as any. These days, the rallying cry across Japanese industry is "Globalise or Die". Easier said than done (the former, that is).
Some deals have taken place (Takata - Petri, NSG - Pilkington), but many more have failed (purchase of FAG, purchase of Karmann, purchase of SKF....) and many have not even got as far as identification of a potential partner/target.
M&A managers in the big Japanese financial institutions complain constantly of the difficulty of getting even as far as due diligence.
Interest remains high despite the problems, but is mainly focused on individual deals.
So should Japan Inc focus on getting more two party deals successfully through to closure or start thinking big and looking at industry consolidation on a global scale?
Let me know what you think.
Sunday, 17 May 2009
Reactions to reactions to reactions to the flu
The sequence of events has been interesting.
First, people fall ill and die in Mexico. The government closes down significant parts of Mexico City. The WHO issues a level 4 pandemic threat alert.
Japanese newspapers report the threat.
The WHO raises the pandemic threat alert to level 5.
Japanese media report the increased threat alert level and run articles on the reactions to the threat around the world.
Japanese media are vilified by the Japanese government and public for over-reacting and exaggerating the threat level.
Following mass travel to infected areas by the Japanese public during the Golden Week holidays, permitted by the Japanese government, the disease starts to spread in Japan and local governments react by closing schools in Kobe and Osaka.
One wonders how the media is expected to report this...
Thursday, 9 April 2009
Automotive Consolidation - Asian Influence
Ashvin Chotai of Intelligence Automotive Asia and I have just given a seminar at Chatham House in London on the outlook for automotive M&A activity in Asia and outbound from Asia.
Although activity has dropped (90 deals in 2007, 30 in 2008), companies are still picking up some of the opportunities thrown up by the global turbulence. In the first quarter we saw purchases by Motherson Sumi - Visiocorp of Europe, Geely -DSI of Australia and BeijingWest - Delphi Brakes and Suspension business. Geely is now rumoured to be looking at SAAB. We expect to see more activity from Chinese and Indian companies although they face serious challenges in managing the assets purchased.
The prevailing view in Japan is that companies have to expand overseas or die, due to the unfavourable demographics in their home market. The currently strong yen should help, once the effect of the drop in production volumes has passed.
Japanese companies face problems in completing purchases, however. The prospect of an NSG - Pilkington situation, where NSG concluded that they lacked the management resources to run the combined global business and handed over the management to Pilkington executives, is seen as a serious obstacle. Nevertheless, many companies are trying to implement a strategy of overseas expansion by acquisition. One recent non-automotive example is the purchase of myonic, a small German specialist bearing producer, by Minebea.
Korean companies face a number of obstacles in purchasing overseas assets, not least, a weak Won. They also lack experienced international managers to run the acquisitions. Nevertheless, the conventional wisdom seems to be that companies will have to expand abroad or lose out to Chinese competition. This perception should continue to drive M&A activity. The assembly of a war chest for overseas acquisitions by the KDB is a positive sign of this strategy.
More information: david_s@akilimited.com
Copyright to this blog: AKI Limited 2008 -2009
Although activity has dropped (90 deals in 2007, 30 in 2008), companies are still picking up some of the opportunities thrown up by the global turbulence. In the first quarter we saw purchases by Motherson Sumi - Visiocorp of Europe, Geely -DSI of Australia and BeijingWest - Delphi Brakes and Suspension business. Geely is now rumoured to be looking at SAAB. We expect to see more activity from Chinese and Indian companies although they face serious challenges in managing the assets purchased.
The prevailing view in Japan is that companies have to expand overseas or die, due to the unfavourable demographics in their home market. The currently strong yen should help, once the effect of the drop in production volumes has passed.
Japanese companies face problems in completing purchases, however. The prospect of an NSG - Pilkington situation, where NSG concluded that they lacked the management resources to run the combined global business and handed over the management to Pilkington executives, is seen as a serious obstacle. Nevertheless, many companies are trying to implement a strategy of overseas expansion by acquisition. One recent non-automotive example is the purchase of myonic, a small German specialist bearing producer, by Minebea.
Korean companies face a number of obstacles in purchasing overseas assets, not least, a weak Won. They also lack experienced international managers to run the acquisitions. Nevertheless, the conventional wisdom seems to be that companies will have to expand abroad or lose out to Chinese competition. This perception should continue to drive M&A activity. The assembly of a war chest for overseas acquisitions by the KDB is a positive sign of this strategy.
More information: david_s@akilimited.com
Copyright to this blog: AKI Limited 2008 -2009
Thursday, 4 December 2008
Recession in Japan
As with the last recession, it's hard to tell there's actually one on. The restaurants and izakaya are still full and the shoppers are as indefatigable as ever. Nevertheless, politicians are talking about extending the social safety net.
One reason for this is the move away from full employees to contract and part-time workers over the past two decades. This flexible workforce acts as a useful safety valve for companies as they can easily be fired in downturns, but exposes those people "downsized" to life without medical insurance or unemployment benefit.
People have now started questioning the morality of this arrangement. In a recent Sunday morning TV political debate a number of participants criticised the "lack of social responsibility" shown by companies which have shed large numbers of temporary staff recently.
Perhaps we will see the establishment of a European-style safety net on both sides of the Pacific simultaneously.
One reason for this is the move away from full employees to contract and part-time workers over the past two decades. This flexible workforce acts as a useful safety valve for companies as they can easily be fired in downturns, but exposes those people "downsized" to life without medical insurance or unemployment benefit.
People have now started questioning the morality of this arrangement. In a recent Sunday morning TV political debate a number of participants criticised the "lack of social responsibility" shown by companies which have shed large numbers of temporary staff recently.
Perhaps we will see the establishment of a European-style safety net on both sides of the Pacific simultaneously.
Saturday, 13 September 2008
Farewell Fukuda
Well, we saw his arrival as a return to grey nothingness so his departure is hardly grieved.
The "all-star" line-up on the LDP side presages a return to power for a non-LDP coalition - a rare event to be treasured, but, unfortunately not inspiring much hope. The chances of such a coalition ramming through sweeping reforms are not high.
The best hope would be for the LDP to stay out of power for a couple of terms forcing them to seek a Koizumi-style radical to win back power. This might put a serious shake-up of the political, bureaucratic and legal structures back on the table.
The "all-star" line-up on the LDP side presages a return to power for a non-LDP coalition - a rare event to be treasured, but, unfortunately not inspiring much hope. The chances of such a coalition ramming through sweeping reforms are not high.
The best hope would be for the LDP to stay out of power for a couple of terms forcing them to seek a Koizumi-style radical to win back power. This might put a serious shake-up of the political, bureaucratic and legal structures back on the table.
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