M&A

Top 30 Japanese companies in EMEA – not much growth in 2023

We have finalised the Top 30 rankings for the largest Japanese employers in the Europe, Middle East and Africa region (download available below). As before,  the extent to which Japanese companies take the UN Sustainable Development Goals pretty seriously has had a noticeably positive effect on disclosure of data and transparency. But there are still some laggards in terms of the metric we focus on, which is the number and location of employees outside of Japan.

Overall, the year from 2021/2 to 2022/3 has been one of very little growth for Japanese companies in Europe.

83% of companies have the majority of their staff overseas

More often than not, the detail on human resources in terms of diversity and inclusion in the various sustainability reports published by Japan headquarters is all about employees in Japan. And yet, 83% of the companies in our rankings have more than 50% of their employees overseas.  Those with less than 50% of employees overseas are the ICT companies – NTT, Fujitsu and NEC, along with Toyota and Asahi Glass. In some cases no clear figures were given for Japan and overseas employees, so we estimated  them based on employee numbers give for consolidated (Japan and overseas) and non-consolidated (which we took to be the Japan parent company).

The non-disclosers

NTT does not disclose the number and location of its staff, which is perhaps excusable as the huge consolidation and reorganisation of its group companies and overseas acquisitions is still working its way through.

The two recruitment giants, Outsourcing and Recruit are notably lacking in transparency on employee numbers. The excuse may be that is difficult to calculate numbers on a consistent basis, given that in some countries, temporary workers on their books will count as employees. Outsourcing has had to delist from the Tokyo Stock Exchange and may be bought out by Bain, following investigation for fraud and inflating revenues and expenses. We estimate Outsourcing is now the second largest Japanese corporate employer in Europe, after Sumitomo Electric Industries, pushing Yazaki to third place.

The other companies  who do not disclose regional data on employees are Sony, Toyota Tsusho, Japan Tobacco, Dentsu, Toyota Industries, Kyocera, Mitsubishi Electric  and Mitsubishi Corporation.  Japan Tobacco does  not even disclose how many employees are outside Japan at all. Some estimate can be made by looking at the employee numbers given for each location, on their website however.

No growth?

The lack of data from Outsourcing makes it very difficult to estimate the trend for the whole Top 30. We think their acquisitions in Europe over 2018 to 2021 may have grown the European workforce to 48,000. If we assume that this held level in 2022/3, then there are around 629,000 employees working for the biggest Japanese companies across the region and growth was only around 1%.

The only companies who grew significantly in the region from FY 2021/2 to FY 2022/3 were Daikin (10%) and Dentsu (6%). Shrinkage was noticeable in the automotive sector – Nissan (-22%) . Toyota Motor (-5%) and Toyota Industries (-6%). Honda has dropped out of the Top 30 since the closure of manufacturing in the UK, but has shrunk further by 3%. NSG, which supplies automotive glass, has shrunk by 5% over the year.

The influence of Europe through acquisitions

The total employed in EMEA as a proportion of all employees in the Top 30 companies is 16%. Those companies with significantly above that proportion of employees in EMEA are NSG, Outsourcing, Japan Tobacco, Toyota Tsusho and the Asahi Group. The Asahi Group acquired many beer and alcohol brands in Europe around eight years ago, which was also when Toyota Tsusho acquired CFAO, a France headquartered company with substantial operations in Africa. NSG acquired Pilkington in 2006 and Japan Tobacco acquired Gallaher in 2007.

The lack of any large scale acquisitions since 2021 is undoubtedly one of the factors behind the lack of growth of Japanese companies in the region.

Click the link below for  a pdf (£3 + VAT) of the Top 30 Japanese employers in the EMEA region, showing ranking in 2022 and 2023, total global employees, % of employees overseas and number employed in EMEA:

DOWNLOAD OF TOP 30 JAPANESE COMPANIES IN EUROPE, MIDDLE EAST & AFRICA

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Selling off the tiger cubs

Something that we’ve been noticing for a while is that Japanese trading companies (sogo shosha) have been divesting long held assets, particularly in Japan and in the UK. These assets are known as toranoko or tiger cubs, meaning a treasure in Japanese. It seems the sogo shosha are no longer afraid to sell assets if they do not meet their desired investment efficiency or if the proceeds from the sale exceed medium- to long-term profit expectations.

In the case of Mitsubishi Corporation (who have recently declared they no longer want to be referred to as a trading company), this has included selling off 50% of Lawsons, the convenience store chain, in Japan and in the UK, Princes Foods has been up for sale since 2022.

These divestments are partly to do with the current President, Nakanishi Katsuya, coming from the typically hard headed and unsentimental Heavy Machinery group, making a big break from his predecessor Kakiuichi Takeo’s strategy.  Kakiuchi came from the Foods Group and was President of Mitsubishi Corp from 2016 to 2022. Mitsubishi Corp increased its stake in Lawson in 2017, having become the main shareholder in 2001, taking over from Daiei. You might think from the name that Lawson is an American company – and it was, originally, eventually becoming CircleK. More here on Wikipedia.

Other divestments in the food business are of shareholdings which pre-date Kakiuchi –  Mitsubishi is also looking to reduce its stake in KFC Japan, the majority of which it acquired in 2007. Princes Foods was acquired in 1989 and in turn has its roots in Mitsubishi’s involvement in canned food dating back to before WWII.*

The divestments are not just in food. Mitsubishi also sold its 20% stake in Fujifilm Diosynth to Fujifilm, in June 2023 and sold off various mining ventures that year too. Other sogo shosha are also divesting in the UK and elsewhere. Sumitomo Corp and its partner Osaka Gas pulled out of a UK water company and an American tyre retailer – the rumour persists they may want to sell off the UK’s Kwik-Fit and associated tyre wholesaling businesses as well. Itochu Corporation also sold its consumer finance business in Indonesia last year.

As to where the money made is then invested – the answer is mainly not Europe, and a focus on energy, minerals and digital. Mitsui is investing in Taiwanese off shore wind power, Mitsubishi in a US data center, Itochu is buying back Itochu Techno Solutions, Marubeni is investing in a Chilean copper mine and Sumitomo Corporation in an Australian LNG project.

*Update 28th May – Mitsubishi Corporation has just announced that it has agreed to sell Princes for £700m to Italian company Newlat.

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Japan’s Oji completes acquisition of Finnish film and packaging producer Walki

Japanese paper and packaging group Oji Holdings Corp completed the acquisition of Finnish film and packaging producer Walki Holding Oy in mid April 2024. Walki was owned by One Equity Partners since 2018. It has 17 production facilities in Finland, Germany, Belgium, Spain, France, Poland, the UK, and China and employs more than 1,700 people.

Oji owns two other European subsidiaries – Kanzan Spezialpapiere in Düren, Germany – with around 300 employees, and the Italian manufacturer of packaging and filling machines, IPI, which it acquired in 2023.

Oji Holdings Corporation was ranked as the sixth world’s largest paper & pulp company in 2022 and has nearly 38,000 employees, 156 subsidiaries worldwide, 86 manufacturing sites throughout Japan, forestry operations in Australia, Brazil, Canada, China, Germany, New Zealand and other countries around the world. Oji Holdings Corporation is listed at the Tokyo Stock Exchange with a market capitalization of approximately US$4bn.

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Largest Japanese companies in the UK – 2023

We’ve decided to stop trying to compile the Top 30 largest Japanese employers in the UK by corporate grouping. Partly this is because a substantial number of Japanese companies in the UK have become branches, so do not report their employee totals to Companies House. Another reason is that corporate groups have restructured substantially through divestment, so there are more subsidiaries which are equity affiliates rather than part of the consolidated company group, or are owned by KKR Japan (does this make them Japanese or not?). Finally, many of the largest Japan-owned companies were acquired through acquisition, but are not particularly “Japanese” in terms of their branding or executives.

Instead, we thought we’d look at the largest single Japan-owned companies – and it turns out that there are 31 who have over 1,000 employees. The full list can be downloaded  the link below.

The new entrant into this Top 31 in 2023 was Snowfox, a food processing company acquired by Zensho. Snowfox owns Taiko, who make sushi for Waitrose and Sainsburys and also owns the YO! Sushi restaurant chain, as well as chains in the USA and Canada.

In terms of growth, we already covered the fact that some of Dentsu UK’s and Dentsu International’s growth was due to the consolidation into Dentsu UK of its regional subsidiaries in Leeds, Edinburgh and Manchester, but there does also seem to be organic growth, and growth by acquisition too. The other companies showing double digit growth are mostly in the services sector – Yusen Logistics, Mitsubishi HC Capital and NTT Data. Only one manufacturer is showing double digit growth – Fujifilm Diosynth Biotechnologies – a contract development and manufacturing organisation in Teesside.

The automotive sector has shrunk further –  Nissan, Marelli (formerly Calsonic Kansei) and Honda Motor Europe had smaller workforces in 2023 than in 2022. Toyota has yet to file its accounts for 2023.

At risk of shrinkage or closure in the years to come look to be Hitachi Rail, whose contracts being built at its Newton Aycliffe plant come to an end in 2024 and Fujitsu, who has told staff that they will run down their Ireland operations, taking on no new contracts. This could be a pilot for what is to come in the UK.

Click here for download of the largest Japanese companies in the UK 2023

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Germany’s AEQUITA acquires German subsidiary of Japan’s Nifco

AEQUITA has added another Japanese company to its collection, following its acquisition of Nisshinbo’s TMD Friction last year.  It will acquire the German subsidiary of Nifco, which was itself a German company KTW, acquired by Nifco in 2014. Nifco Germany develops and produces injection-molded plastic components for the automotive industry, with around 766 employees in Germany, as well as operations in the USA and Serbia.

We assume this acquisition does not impact Nifco UK (which was Elta Plastics, acquired in 1990) or Nifco Poland, which we believe to be a greenfield investment. Nifco had already sold its Spanish subsidiary to Grupo Taurus in 2022.

For more content like this, subscribe to the free Rudlin Consulting Newsletter. 最新の在欧日系企業の状況については無料の月刊Rudlin Consulting ニューズレターにご登録ください。