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JTI

Home / Posts Tagged "JTI"

Tag: JTI

Will Japan’s NTT put its global base in the UK despite – or because of – Brexit?

While Panasonic and Sony have announced they are shifting their European headquarters out of the UK because of Brexit (and Japanese tax haven laws), NTT are likely to place not just their European but their global (ie excluding Japan/domestic) headquarters in London. Is this despite Brexit, or even because of?  As previously blogged, NTT Data have been hiring by the hundreds in the UK, and staying positive about Brexit with one eye on public sector contracts for Brexit related IT systems such as border security and customs.

The President of NTT until 2018, Hiroo Unoura, had said in an interview five years’ ago that the US would be a global pivot for NTT, but I suspect, rather as my former employer Fujitsu has found, that it is very hard to take on the big US IT/telecoms giants in their home territory.  Some of the acquisitions that NTT and NTT Data have made over the past decade have been US companies such as Keane and Virtela, but some of the biggest acquisitions were in the EMEA region – Everis (Spain), Dimension Data (South Africa) and Value Team (Italy).

Cleaning up an organisational mess

As I said in a previous post, the result was an organisational mess.  NTT Data was kept separate from NTT as a brand and tried to unify across all its global acquisitions whereas Dimension Data, in some ways a competitor, was directly owned by NTT.  NTT also had a separate organisation NTT Communications, to manage its global businesses.

From this summer, NTT is setting up a global holding company, and putting 5 subsidiaries including NTT Communications, NTT Security, NTT Data and Dimension Data under its umbrella. The organisation of the 4 companies excluding NTT Data will be split between domestic Japanese and global, and the global businesses will be unified.

The last time NTT changed its structure this drastically was 20 years’ ago. They have faced two challenges since then, first with the attempted global expansion of NTT DoCoMo, particularly into the US, which led to large losses, after the dotcom bubble burst. For 10 years, no further investments were made outside of Japan.

The challenge of global profitability

The second challenge is profitability. The reason they structured themselves in such a complex way in 1999 was to open up NTT (which originated as a partially privatised former ministry of telecommunications organisation) to competition domestically. So merging the company back into a holding company is likely to be regarded with suspicion by its competitors in Japan. However, NTT has reached a limit of how much it can cut costs domestically, and although overseas turnover has risen thanks to all the acquisitions, profitability is not on target. So it was felt more radical steps were needed.

One model for this might be Japan Tobacco, says Kazuyuki Okudaira in the Nikkei. JT was also part privatised and acquired RJR Nabisco’s non-US tobacco business in 1999 and also Gallaher in the UK in 2006. Japan Tobacco’s global headquarters is in Switzerland, and 60% of its sales are now overseas.  “Whether NTT can repeat JT’s success remains to be seen” says Okudaira.

Is not being the US or China enough?

NTT has said it won’t confirm the decision about where it will base its global HQ until July, but has already moved into a swanky new office in the City of London. Dimension Data has 2,500 employees, over 10% of its global workforce, in the UK and its global hub and executives are in London.  In the short term at least, London remains the global financial capital in need of the kind of data centres and infrastructure NTT provides, and has a multinational, multilingual IT workforce. It’s also not the USA, and Japan is not China (see Huawei controversy).  In the longer run, however, if Japan Tobacco is meant to be the model, it’s worth remembering JT shut down the Gallaher factory in Northern Ireland in 2017, with the loss of 1,000 jobs. Even though it has a 41% share of the UK market, the factories and the bulk of the jobs are elsewhere in Europe, Middle East and Africa.

As we found at Fujitsu, even if you try to base your global marketing out of Europe, you still have to compete with US rivals – not only with IBM but Google and Amazon – in IT B2B services. NTT has a big brand recognition challenge on its hands which may mean that global profitability is elusive for a while yet.

 

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Japanese automotive companies represent 1/3 of top 30 Japanese employers in the UK

Fujitsu continues to be the largest Japanese employer in the UK despite recent restructuring.  We’ve added Sumitomo Rubber to the list, following its recent acquisition of UK tyre wholesaler and retailer Micheldever.  Along with Kwik Fit, another UK tyre dealer and car servicing company is owned by Itochu at #3, this means that over a third of the companies in the list are automotive or have a substantial automotive component to their business.

We’ve also revised upwards our estimate of the total number of Mitsubishi Corporation employees, having confirmed from various sources that its main subsidiary in the UK, Princes, the foods company, has around 3000 of its 8000 employees in its UK operations.

The top 30 now cover around 80,000 of the 140,000 employees that Japanese companies in the UK employ.  Individual profiles of each company, including trends in employment, regional headquarters, European organisation and CSR and diversity analyses are available – please contact pernilledotrudlinatrudlinconsultingdotcom

Rank Company UK employees 2016
1 Fujitsu 9,905
2 Nissan 7,657
3 Itochu 6,697
4 Honda 4,565
5 Ricoh 3,702
6 Mitsubishi Corp 3,482
7 Hitachi 3,317
8 Toyota 3,233
9 Sony 2,937
10 Canon 2,744
11 Dentsu 2,571
12 Nomura 2,468
13 NSG 2,167
14 Mitsubishi UFJ Financial Goup 2,100
15 Denso 1,925
16 NYK Group 1,919
17 Mitsui Sumitomo & Aioi Nissay Dowa 1,867
18 Yazaki 1,846
19 Calsonic Kansei 1,729
20 SoftBank 1,700
21 Sumitomo Rubber 1,574
22 JT Group 1,473
23 Sumitomo Corporation 1,366
24 Fujifilm Holdings 1,292
25 Brother Industries 1,174
26 Olympus 1,157
27 Fast Retailing 1,100
28 Unipres 1,095
29 Konica Minolta 1,055
30 NSK 866
TOTAL 80,683

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。

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Last updated by Pernille Rudlin at 2019-04-28.

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