2024-03-13 21:00:00
He says that the progress in management reform at Japanese companies is due to the retirement of “old-school managers” like himself, who were raised on cost-cutting practices. He speaks with self-discipline, saying that in order to promote a virtuous cycle of wage increases and price pass-through, it is necessary to change the structure that has been dependent on suppliers. (Photo by Koichi Imai)
Read other articles in the special feature “The significance of stock prices rising for the first time in 34 years”
On March 4th, the closing price of the Nikkei Stock Average was 40,109 yen, marking the first time in its history to reach the 40,000 yen level. Has the Japanese economy truly escaped the “lost 30 years” or is this just another bubble?
We asked Toshiyuki Shiga, who has served as Nissan Motor’s chief operating officer and chairman of the Japan Automobile Manufacturers Association, and is currently chairman of INCJ (formerly known as Innovation Japan Corporation), an investment fund affiliated with the Ministry of Economy, Trade and Industry, for his thoughts.
*This article can be read for free until 6:00 on March 17th. After that, it will be available to paid members.
–The Nikkei Stock Average, which hit a new high during the bubble period, temporarily exceeded 40,000 yen. How do you see it?
This is the result of a combination of various factors. From a macro perspective, there has been a “surplus of money” phenomenon overseas, and that money has come to Japan as an investment destination. In particular, funds that were invested in China or within China are now coming to Japan. Middle Eastern sovereign wealth funds are also increasing their investments in Japan.
However, what I am paying more attention to than these external factors is the changes in Japanese corporate management over the past 10 years. For regarding 10 years, Japanese companies have been making serious efforts to improve ROE (return on equity) and comply with the Corporate Governance Code.
From the perspective of foreign investors, Japanese companies in the past had poor disclosure of financial data, leading to suspicions that they were hiding something. However, as governance has improved, Japanese companies have come to be seen as suitable investment targets.
Another major factor is that old managers like me are retiring and there is a generational change to new managers.
A manager who grew up on cost cutting retires
–How have management changed with the generational change?
I took a management position at Nissan Motor Co. in 1990, when the bubble burst. At the time, Nissan had a consolidated debt of approximately 3 trillion yen, and had a surplus of factories and workers. Therefore, it was important to figure out how to reduce fixed costs, and those who successfully cut costs and achieved results were promoted.
Recently, it has been said that it is important to invest in human resources, which increases labor and personnel costs, but at the time, there was no idea that personnel costs were an expense and an investment. We live in an era where base-up is frowned upon. Business owners who grew up in this way are starting to retire, and an increasing number of young business owners have turned to us as their mentors.
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