Monday, 18 February 2013: Japan, an Ambassador's and Hitachi Group Chairman's view
Sir Stephen Gomersall, KCMG, Director and Group Chairman for Europe, Hitachi Ltd.
Hosted by the University of Glasgow Principal, Professor Muscatelli
On the 18th February 2013, we welcomed Sir Stephen Gomersall, KCMG, Director and Group Chairman for Europe, Hitachi Ltd., who talked about Japan and the challenge of globalisation.
Hitachi is a major engineering and information technology conglomerate specialising in social infrastructure, with a global annual turnover circa $100 billion. In Europe they have interests in power generation, rail transport, construction, automotive systems, data storage and IT solutions, medical equipment and consumer products. The Group Chairman for Europe is also the senior representative for the Middle East and Africa.
Sir Stephen’s first foreign assignment was to Japan (1972-77). He served there again from 1986-90 and as Ambassador from 1999-2004. He took up the post of Hitachi’s CEO for Europe in October 2004 before being appointed Group Chairman Europe in April 2011. In June 2011 he became a member of the Board of Directors of Hitachi.
‘Japan and the Challenge of Globalisation’
To hear the presentation undertaken by Sir Gomersall, please visit:-
Viewed from Japan, Europe is positive, but not immediate. Like the UK, Japan is allied with the United States and though that relationship is paramount, Japan also has to live within Asia, as the UK does within Europe.
Japan is now facing two major challenges: the rise of China and the domestic challenge of declining and ageing population and not-growing domestic demand. As for the former, especially following the recent territorial dispute and associated anti-Japan demonstration and riots, some Japanese companies are trying to diversify their operations away from China towards Southeast Asia counties, but in his view, there is a limit to this. Hitachi has a factory in northeast China, but its Chinese employees protected Japanese staff against a possible riot.
As for the demographic challenge, an obvious solution would be encouraging immigration to Japan, but the government of Japan is not taking this option. Nevertheless, he cites an anecdote when he attended a welcome party held in Akita, a rice-growing area in northeast Japan. A bamboo dance was performed by a Filipino woman married to a Japanese farmer. There are pockets of immigrants in rural Japan, although homogeneity of Japanese society is a cliché.
Hitachi, as a typical heavy industry company with 400,000 employees world-wide, has stated its intent to improve operating income ratio from the current 5.3%, which is good compared with other Japanese companies, towards the western standard of 8 to 10% within the next three years. Without growing domestic demand, Hitachi is shifting factories overseas, but the shift would be associated with a tension among Japan-centric organisation and employees. He is a board member of Hitachi, Ltd, which leads about 900 companies under the Hitachi group, but Hitachi is one of a very few Japanese companies that have a non-Japanese as a board member.
Hitachi has recently been on news in the UK. It purchased Horizon Nuclear Power from a German company and is going to build nuclear power stations in the UK, with funds to be raised from the market. Asked about whether it would be appropriate for Hitachi, a Japanese company, to export its nuclear technology overseas following the Fukushima accident, he answers that Japan has excellent nuclear technology and that the guarantee of safety for the British people is in the independent role of the British nuclear regulator.
Hitachi has recently signed a contract with the UK government to introduce high-speed trains (225 km per hour) from Paddington to the Southwest and on the East Coast main line to Edinburgh and beyond. It will build an assembly plant in the Northeast England, not only for this and other UK orders, but as a hub for exports from Britain to other countries in Europe. In this context, UK’s relations with the EU would have an impact on Hitachi’s European train business.
Asked a piece of advice for a company considering entering Japanese market, he recommended seeking advice from the British Embassy in Tokyo and British Chamber of Commerce in Japan.