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No. 26 — July 9, 1999

 

Feature Article

LEADING TRADING COMPANY ENTERS A NEW AGE

Interview With Minoru Makihara, Chairman, Mitsubishi Corp.

Summary

Minoru Makihara, chairman of Mitsubishi Corp., which vies with Mitsui & Co., Ltd. for the title of Japan's biggest trading company, is especially qualified to discuss the future of corporate Japan in a deregulating, globalizing environment. Educated in Japan and the United States and having had extensive international business experience in trade, production and finance, Mr. Makihara's views represent a blend of Japanese and Western business practices. His vision for Mitsubishi incorporates a conservative approach that would preserve the strengths of Japanese business traditions — for example, continuation of the best aspects of long-term employment — with such changes as increased management mobility across companies and careers.

In a recent interview with JEI President Arthur J. Alexander, Mr. Makihara analyzed the problems that Japanese businesses face and discussed possible future directions for corporate restructuring. The insight provided by his position as the former chief executive officer of Mitsubishi — one of the world's great industrial groups — gives his views the credibility of a thoughtful, experienced and involved executive.

Minoru Makihara, chairman of Mitsubishi Corp., which vies with Mitsui & Co., Ltd. for the title of Japan's biggest trading company, is especially qualified to discuss the future of corporate Japan in a deregulating, globalizing environment. Educated in Japan and the United States and having had extensive international business experience in trade, production and finance, Mr. Makihara's views represent a blend of Japanese and Western business practices. His vision for Mitsubishi incorporates a conservative approach that would preserve the strengths of Japanese business traditions — for example, continuation of the best aspects of long-term employment — with such changes as increased management mobility across companies and careers.

In a recent interview with JEI President Arthur J. Alexander, Mr. Makihara analyzed the problems that Japanese businesses face and discussed possible future directions for corporate restructuring. The insight provided by his position as the former chief executive officer of Mitsubishi — one of the world's great industrial groups — gives his views the credibility of a thoughtful, experienced and involved executive.

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Weekly Review

RECENT INDICATORS SUGGEST END OF JAPANESE ECONOMY'S DECLINE by Arthur J. Alexander

Corporate Japan is more optimistic about business conditions in coming months — or at least not quite so downbeat as last year. That is the bottom line of the latest tankan, the Bank of Japan's quarterly review of short-term economic prospects. The survey, conducted in June and released July 5, included data from more than 9,000 companies that showed a slight upturn in business sentiment. The thinking of six groups of companies is tracked by the tankan: big, midsized and small businesses in the manufacturing and nonmanufacturing sectors. Four of these groups signaled increased confidence in an improving economic climate in March and again in June. The other two — small and midsized nonmanufacturers — have become progressively more hopeful in each of the last three surveys since expressing considerable unease about the future last fall.

 

JAPAN'S FOREIGN DIRECT INVESTMENT DATA REFLECT ECONOMIC SITUATION by Jon Choy

Evidence of the ongoing restructuring of Japan's economy appears in its latest foreign direct investment figures. According to the Ministry of Finance, the number of reported transactions as well as the value of outbound direct investment fell sharply in FY 1998 — a likely reflection of corporate Japan's efforts to reorganize. At the same time, the data revealed a solid increase in the number and the value of the inward flow of direct investment in the year ended March 31, 1999, as foreign companies took advantage of both the problems of their Japanese counterparts and the new opportunities opened by ongoing deregulation. Although Japan's surplus of savings over domestic investment should pump up outward investment flows over the long run, the restructuring of the economy likely will mean for the short term that direct investment abroad will be below what has come to be considered the norm.

 

SOUTH KOREA ENDS BAN ON JAPANESE IMPORTS by Marc Castellano

South Korea's 21-year-old ban on Japanese-made products was lifted completely July 1, when the last 16 items were removed from a list that numbered nearly 350 just 10 years ago. In 1978, Seoul placed restrictions on a wide range of imports from Japan, initiating its so-called import source diversification system to reduce a persistent bilateral trade deficit and to protect strategic industries then in their infancy. As South Korea's economy developed, the controls gradually were eased. In early 1998, Seoul promised to accelerate the process in return for Tokyo's help late the previous year in securing a record-breaking package of financial assistance from the International Monetary Fund. The government needed this money to quell the financial and economic crisis at home ignited by the Thai baht's devaluation in July 1997 (see JEI Report No. 46B, December 12, 1997).

 

TOKYO SHIES AWAY FROM U.N. REQUEST FOR KOSOVO POLICE SUPPORT by Barbara Wanner

After underscoring its desire to play a leading role in the reconstruction of war-torn Kosovo at the recent summit of the Group of Seven industrial nations plus Russia in Cologne, Germany, Tokyo stepped back from the plate. Or, so it seemed at the first United Nations-sponsored meeting on rebuilding the Yugoslav province, held June 30 and July 1 at U.N. headquarters in New York City. U.N. Secretary General Kofi Annan called on the countries represented by the 18 foreign ministers and other senior diplomats attending the talks to contribute 3,100 civilian law enforcement officers to establish an international police force. Such an entity is desperately needed, he said, to prevent the looting and revenge killings that have occurred in Kosovo with the withdrawal of Serbian military forces and the return of Albanian refugees. Once it is fully operational, the civilian police force will assume responsibility for local security work from KFOR, as the North Atlantic Treaty Organization's Kosovo Force is known.

 

NOTES

The millennium came six months early for Nippon Telegraph and Telephone Corp. The biggest telecommunications business in the world by most measures was split July 1 into a pair of regional local telephone services providers — Nippon Telegraph and Telephone East Corp. and Nippon Telegraph and Telephone West Corp. — and a long-distance/ international carrier, NTT Communications Corp., under a holding company. The umbrella of this firm, which will retain the Nippon Telegraph and Telephone Corp. name, also will extend over NTT Mobile Communications Network, Inc., the country's top cellular services operator, NTT Data Corp., a fast-expanding data communications and systems integration firm, and a host of other subsidiaries of the former NTT (see JEI Report No. 6B, February 12, 1999).

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