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MUFG

Home / Posts Tagged "MUFG"

Tag: MUFG

Chipping away at the three treasures of Japanese HR

Several Japanese blue chip companies have announced some quite radical changes to their HR systems, just in time for the new Reiwa era. The so called three treasures of lifetime employment, seniority based pay and a company union have been looking a little tarnished for some years now. They seem a legacy not even of the Heisei era but of the post war Showa era of a booming economy and a need to retain a young workforce.

Hitachi had shown the way four years ago (as described in our blog post at the time), abolishing seniority based pay for its managers and replacing it with pay based on job roles. They have made further waves recently with the announcement of the first ever Hitachi subsidiary President to be in their forties.  The newly formed Hitachi Global Life Solutions will be led by Jun Taniguchi, born in 1972.

Hitachi claim that this new system is needed for the company to be truly global and able to appoint and transfer managers around the world, regardless of where they were recruited. Beer and soft drink manufacturer Asahi Group Holdings has also been shifting to global standards. Around half their employees are non-Japanese, as a result of their acquisitions of European brands such as Peroni, Grolsch and Fullers. They have said their Presidents and CEOs will be evaluated on return on equity from now on, and given the boot if it is not maintained above 13%.

Japanese megabank MUFG says it will reduce new hires in Japan by 45% to 530 next spring, and will cut the 6000 employees in its Tokyo headquarters by half. Not all Japanese HR traditions are being thrown out of the window, however, as the surplus 3000 will not be made redundant, but rather redeployed to sales functions or sent overseas to areas where MUFG is expanding like the USA and Asia (but not it seems, Europe).  MUFG  is automating the functions that these staff performed, as well as cutting many of its retail branches in Japan. It will instead be beefing up its overseas compliance and digital payment systems divisions.

Some Japanese politicians and commentators have said that the “rei” of Reiwa sounds rather cold, as it can sometimes mean “order” or “command”.  It also, when combined with the radical for water, becomes a character meaning chilly or freezing.  It certainly feels like some icy winds will be blasting through Japanese cosy HR traditions in the new era.

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Mitsubishi Corporation – a microcosm of the challenges facing Japanese business

The death of the Japanese trading company and the “keiretsu” (company grouping) model has been repeatedly announced over the nearly thirty years since I started working for leading trading company Mitsubishi Corporation and researching their history. But when the Nikkei newspaper runs a three part series on whether Mitsubishi Corporation’s business model is bust, (as they do regularly) it’s worth a look, as Mitsubishi Corporation’s doings are closely watched by the rest of Japanese business.

Digital speed

Part one of the Nikkei series deals with the digital revolution and how it might disintermediate middlemen like Mitsubishi Corp. It notes that Mitsubishi Corp is likely to announce a record profit for 2018/9, but calls Mitsubishi Corp’s legacy a “heavy burden” in trying to find a new digital way to do business.

It looks at how young Mitsubishi employees are scouring Shanghai and Guangzhou for new technologies in convenience stores that they can bring back to Japan.  Mitsubishi Corporation turned Lawson, a convenience store chain in Japan, into a fully owned subsidiary in 2017, partly in response to the losses made on its traditional commodities trading business. But convenience stores themselves are now being threatened by Amazon and China’s Alibaba.

In the mid term plan announced last autumn, Mitsubishi Corp set up a special cross-company structure to look at communications and data [pretty sure we had something like that when I worked there 25 years’ ago, but anyway] and appointed an executive from the energy division (one of the traditional powerful factions at Mitsubishi Corp) as Chief Digital Officer.  “Other trading companies are not our competitors any more” says a senior Mitsubishi Corp executive.  Instead they are looking at SoftBank, who have double the profit and double the share price of Mitsubishi Corporation – a reverse of 10 years’ ago.

The concern, as with so many older Japanese companies, is the speed of change. President Kakiuchi syas he wants to decide within 3 years how to participate in the digital economy – but is that fast enough, the Nikkei asks.

The Three Diamond brand

“Mitsubishi Heavy Industries can fix it by themselves” said a senior executive at Mitsubishi Corporation in September 2018. A subsidiary of Mitsubishi Heavy, Mitsubishi Aircraft Corporation was facing delays in developing its Mitsubishi Regional Jet and needed further investment. The main branches of the Mitsubishi Three Diamonds, the core of the Friday Meeting are Mitsubishi Corporation, Mitsubishi Heavy Industries and MUFG Bank.  It was usual in the past for Mitsubishi Corporation to come to Mitsubishi Heavy Industries’ rescue [often grudgingly I would say] but this time they did not step in.

President Kakiuchi says Mitsubishi Corporation’s relations with other Mitsubishi companies are “no different from with normal independent companies” and has been reducing cross shareholdings.

The Mitsubishi Motors factory which started production in Indonesia in February 2019 of the Nissan Livina also illustrates how ties are weakening.  The factory is a joint venture between Mitsubishi Motors and Mitsubishi Corporation. Mitsubishi Motors was originally an offshoot of Mitsubishi Heavy Industries, and Mitsubishi Corporation has been a frequent partner either in dealerships or production, but Mitsubishi Motors turned to Nissan for investment when it was hit by a fuel emissions scandal in 2016 and is now in a triple alliance with Nissan and Renault.  Up until then, the Mitsubishi group had always bailed it out, but repeated scandals meant they felt their fingers had been burned too often.  “To be frank, we have no role to play in this” said a Mitsubishi Corporation executive on the arrest of Ghosn, even though Mitsubishi Corporation had increased its investment in Mitsubishi Motors from 10% to 20% in 2018.  Mitsubishi Motors was selling around 1.2m vehicles a year, and the view was it had to enter an alliance, manufacturing 100 million a year to survive.

Chiyoda Corporation, a spin off from Mitsubishi Oil, asked Mitsubishi Corporation for financial support last year on a loss made on a US LNG plant construction joint venture. The President of Chiyoda Corporation, Masaji Santo, is a former Mitsubishi Corporation employee.  Mitsubishi Corporation was not only the lead shareholder in the LNG plant but was going to be a customer of the LNG plant, so insisted on a low construction cost, which was resulting in Chiyoda making a loss.  President Kakiuchi has said “we will do what we can to support” but is still considering the pros and cons.

Retaining young employees

“I didn’t want to feel regret” said a young employee in his twenties, who left Mitsubishi Corporation after a few years, to join an IT company, citing the difference in the speed of decision making between the two companies.  Mitsubishi Corporation has always been one of the favourites for the elite graduates of Japan, but recently it has dropped in the popularity rankings for Tokyo and Kyoto University graduates, losing out to foreign consultancies like McKinsey.

Graduates who want to make a difference quickly are avoiding trading companies, experts say. One reason is the continuing seniority based promotion system. It took around 20 years to become a general manager until recently, but now Mitsubishi Corporation has reformed its personnel system for the first time in 20 years, to allow capable employees to take on responsibility regardless of age.  Performance based systems and evaluations have been introduced at certain management grades, setting compensation on complexity of the job role and results. Young employees are polishing their management skills with overseas postings.

The Nikkei cites the example of a 33 year old employee posted to the Cote D’Ivoire, who started a solar panel energy project. A Tsukumo Fund has also been set up, to invest up to Y500m in any ideas that employees have which pass certain criteria, even if they don’t have their boss’s approval.

This last point is key to me – it was always possible to have a lot of autonomy, become a manager overseas at a young age and start new projects at Mitsubishi Corporation if you were capable enough, but you needed your manager and the rest of the hierachy’s support – and that took a lot of time.

As the Nikkei says, Mitsubishi Corporation is a microcosm of the Japanese business world. The lifetime employment, seniority based promotion system worked well in the post war era, but now with an ageing, shrinking workforce, companies have to become more flexible to attract young people and encourage innovation.

 

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Japan’s megabanks lose popularity with Japanese graduate hires

It’s not surprising that Mizuho, one of Japan’s megabanks, has fallen in popularity from the top spot for 2018 new recruits to #17 for those graduates aiming to join in 2019, according to recruitment agency Disco.  As previously blogged, Mizuho’s former president, now chairman, Yasuhiro Sato has been very clear that the bank should lose around 30% of its workforce globally, through greater use of information technology, and yes, AI.  His successor Tatsufumi Sakai shows no signs of reversing this.

The other megabanks have fallen less dramatically out of favour, from #2 to #4 in the case of MUFG (dropping the Tokyo from Bank of Tokyo-Mitsubishi UFJ as of April 1) and from #5 to #14 in the case of Sumitomo Mitsui Banking Corporation.

Japan’s airlines JAL and ANA have stayed in the top 5, at #1 and #3 respectively. Perennial favourites, the trading companies Itochu and Mitsubishi Corp have also gained popularity, up from #7 to #2 and #9 to #6 respectively.

Manufacturers such as Toyota (#5 from #12), Sony (#11 from #31) and Denso (#19 from #33) have become more attractive, as graduates realise that the Internet of Things means traditional companies are now moving into more innovative IT related areas.

Japanese graduates who have studied at foreign universities favour foreign companies operating in Japan such as Procter & Gamble, Google and Amazon, or management consultancies, whereas no foreign owned company is in the top 10 for domestically educated Japanese graduates.

 

 

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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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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Why Japanese companies are behind in using IT and what they need to do about it

shutterstock_105693488For as long as I’ve been working in or for Japanese companies (25 years…) I’ve been surprised by how behind they are in using IT, considering how much Japanese people love the latest technology, much of it developed by Japanese companies themselves.  Like so many paradoxes of Japanese corporate culture, the roots may lie in the post war system of life time employment, generalist track careers and seniority based promotion.

The Nikkei Business magazine cites one example of how, as it puts it, Japanese companies are not just one but three steps behind their Western counterparts.  Most Western banks (Barclays, HSBC, RBS, Deutsche Bank, Commerzbank, Societe Generale in Europe) are adopting the highly cost effective blockchain system for settling payments. MUFG is the only Japanese bank to use the system.

The Nikkei recommends 4 countermeasures Japanese companies need to take:

1. Keep replacing top executives

According to an IDC Japan survey, only 15.7% of Japanese presidents and other CXOs think investment in IT is “very important” compared to 75.3% of US executives.  Alternatively, as the Nikkei says, if you don’t understand IT, make sure you appoint executives who do.

2. Bring in an external CIO

According to a Japanese Ministry of Economy, Trade and Industry survey, whereas in the US over 70% of IT specialists can be found working in-house in US companies, in Japan, 75% of IT specialists are working at IT vendors.

3. Make your IT systems department a key function

Staff in Japan’s IT departments are ageing.  56.9% of companies in a 2015 survey said the majority of staff in their IT departments were over 40.

4. Use people from outside Japan

Japan’s Recruit Holdings has just started to recruit non-Japanese data scientists by starting up competitions on Kaggle, a data scientist network of over 350,00 people from over 100 countries, in order to make the Recruit brand name better known.

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 2021-10-13.

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