Gerhard Fasol.

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  • Japan’s globalization paradox: is Japan global? or struggling to globalize?

    Japan’s globalization paradox: is Japan global? or struggling to globalize?

    Japan’s globalization puzzle: intriguing questions by one of my great European friends, a great European banking sector leader

    How do you explain Japan’s lack of internationalization with so many big Japanese holdings managing successfully businesses abroad (e.g. Toyota, Toshiba, Mitsubishi, etc.)

    Japan’s globalization paradox – a closer look

    Its not so simple: Japan is a huge country, third globally, and there are 3500 Japanese companies listed on the Stock Exchanges – they are all different. Some Japanese companies are very excellent and successful and global leaders or even No. 1 in their fields – e.g. you mention Toyota and there are many more.

    On the other hand, Japan is the only major country who’s economy has not grown for 20 years, and for example, Japan’s electronics sector dominated the world 20 years ago, but since then there is no growth and essentially no profits, see: http://www.eurotechnology.com/2015/06/18/japanese-electronics/

    There are two main factors limiting Japan’s growth

    • decreasing and aging population. few babies and no immigration.
    • structural reasons (slow growth by traditional established corporations, and too few new high-growth industries), corporate governance issues, addressed by Prime-Minister Abe’s “third arrow”, however most people agree that Prime Minister Abe’s “third arrow” reforms have been more words than action. Maybe the most or only successful “third arrow” reform are Japan’s corporate governance reforms

    I’ll give a talk on 6 October 2016 for the Swedish Chamber of Commerce in Japan, Stockholm School of Economics, at the Swedish Embassy in Tokyo:
    “Changing the way Japanese corporations are managed”

    Exhibit – Toshiba and its scandal

    You mention Toshiba – Toshiba is a famous global brand in many sectors, and Toshiba has developed many important technologies in many areas from medical technology (Toshiba’s medical sector has been sold to Canon as a result of Toshiba’s accounting scandal), semiconductors (especially flash memory), but Toshiba’s profits/income averaged over 20 years is close to zero, ant Toshiba did not grow for 20 years, and went through a series of accounting scandals etc. Now as a consequence of these scandals, Toshiba has to sell off several important growth divisions, e.g. their very valuable medical technology sector to Canon. Read comments on Toshiba here:
    http://www.eurotechnology.com/2015/07/21/toshiba-income-restatement/
    or read in Wall Street Journal about Toshiba here 2 days ago
    http://www.wsj.com/articles/toshibas-turnaround-needs-more-work-1471007429

    Toshiba’s accounting issues are the result of a combination of mainly two factors:

    • 20 years no growth and essentially no profits, compounded by financial problems in the nuclear industry segment as a consequence of the Fukushima Dai-Ichi nuclear disaster (Toshiba had acquired the nuclear manufacturer Westinghouse, and thus is a major nuclear industry manufacturer and contractor)
    • corporate governance

    Companies such as Toshiba, benefit from their globally famous brand, therefore I am quite optimistic that Toshiba and other Japanese companies in similar situations can recover, if the correct management decisions are taken, and if corporate governance is improved – and this is exactly the reason why the current Japanese government sees corporate governance reforms in Japan as a major priority.

    There is no doubt in my mind, that if corporate governance, management and other factors are improved, companies like Toshiba can be transformed into iconic companies, but these will be different companies than today.

    As an example, both SONY and HITACHI are quite successful in their revival efforts.

    Japan’s electronic sector

    Japan’s whole electrical sector is in huge trouble – again caused largely by corporate governance – read: http://www.eurotechnology.com/2015/06/18/japanese-electronics/

    Here are some of my interviews on CNBC, BBC etc about these issues, e.g. http://www.bbc.com/news/business-20335272
    and
    http://www.bbc.co.uk/search?q=gerhard+fasol
    http://www.bbc.com/news/world-asia-21992700

    Mitsubishi – there is no Mitsubishi Holding Company, but 1000s of companies with Mitsubishi in their name…

    As another example you mention is Mitsubishi. There is no single company with the name “Mitsubishi” in Japan. There are 1000s of companies with Mitsubishi in their name, and most are loosely grouped into the Mitsubishi Group – which is not a legal entity, and at their core is Mitsubishi Trading Company, and Tokyo Mitsubishi UFJ Bank etc. In some cases there are cross-shareholdings within the Mitsubishi Group, but these have been reduced much over the recent years. There is no “Mitsubishi Holding Company”. Most companies with Mitsubishi in their name are independent companies, many independently on the stock exchange.

    Together the Mitsubishi ‘Group’ is a big part of Japan’s economy – maybe 10-15%, but the ‘Mitsubishi Group’ is not a corporate group in the Western sense. Some of these companies are very successful and very strong – some are very good, but some have difficulties – which can also be overcome. An example is Mitsubishi Motors, an automobile maker, which was acquired around 2001 and then divested again in 2004-2005 by Daimler (then Daimler-Chrysler), and is currently being reformed by Nissan under the guidance of Nissan/Renault CEO Carlos Ghosn.

    Read this analysis in Wall Street Journal a few days ago – this is exactly what I will talk about in my talk at the Swedish Embassy
    http://www.wsj.com/articles/mitsubishi-motors-probe-finds-weak-governance-at-root-of-scandal-1470141587

    The whole picture is quite detailed and differentiated.

    “Toyota, Mitsubishi, Toshiba are great companies” … Yes and no. The devil is in the detail. More reading here:

    e.g. my talk at the American Chamber of Commerce in Japan: Japan’s Galapagos Effect

    My interviews on CNBC, BBC etc about these issues, e.g.:
    http://www.bbc.com/news/business-20335272

    Read also Masamoto Yashiro talk “Japanese management – why is it not global? asks Masamoto Yashiro at a Tokyo University brainstorming”

    (Masamoto Yashiro is my great friend and a legend in Japan’s banking and energy industry. He built Shinsei Bank from the ashes of the bankrupt Long Term Credit Bank of Japan, and served in leadership positions (Chairman, CEO, Board Member) in Esso, Exxon, Citibank, Shinsei Bank, and the China Construction Bank)

    Masamoto Yashiro also regularly attends the Ludwig Boltzmann Forum which I am developing into a global leadership platform, which I am organizing, you can see him in the photos here:
    8th Ludwig Boltzmann Forum 2016
    and here
    7th Ludwig Boltzmann Forum Tokyo 2015

    Japan’s economy overall and Abenomics

    My friend Takeo Hoshi, Professor of Finance at Stanford Graduate School of Business: “Abenomics success probability is 12%, 88% probability of failure”

    Download Gerhard Fasol’s Stanford University lecture “New opportunities vs old mistakes – foreign companies in Japan’s high-tech markets”

    Stanford University Japan Technology Center lecture on change and new opportunities in Japan

    Copyright (c) 2016-2019 Eurotechnology Japan KK All Rights Reserved

  • Ludwig Boltzmann Forum on Women’s development and leadership 2016

    Ludwig Boltzmann Forum on Women’s development and leadership 2016

    Women’s development and leadership

    Tokyo, Monday 16 May 2016, 9:00-11:00am

    Gerhard Fasol, Chair

    Program

    Ludwig Boltzmann Forum on Women’s development and leadership 2016
    Ludwig Boltzmann Forum on Women’s development and leadership 2016
    Ludwig Boltzmann Forum on women’s development and leadership in the medical sector
  • 8th Ludwig Boltzmann Forum Tokyo 2016

    8th Ludwig Boltzmann Forum Tokyo 2016

    Energy. Entropy. Leadership.

    8th Ludwig Boltzmann Forum – Thursday 18 February 2016, Embassy of Austria in Tokyo

    Dr Bernhard Zimburg (Ambassador of Austria to Japan), Her Imperial Highness, The Princess Takamado, Gerhard Fasol (from left to right)
    Dr Bernhard Zimburg (Ambassador of Austria to Japan), Her Imperial Highness, The Princess Takamado, Gerhard Fasol (from left to right)

    Program

    8th Ludwig Boltzmann Forum Tokyo 2016
  • Wiener Staatsoper – who is the owner?

    Wiener Staatsoper – who is the owner?

    One of my friends asked me who the owner of the Vienna State Opera House is

    Wiener Staatsoper organization and ownership, as for Austria’s top 5 Theater Houses, is determined by the “Bundestheaterorganisationsgesetz” (BThOG)

    One of my friends asked me the question “Who owns the Wiener Staatsoper these days by the way?”. This is easy to answer. Hold tight and read:

    The major Austrian Theater Houses (Wiener Staatsoper, die Wiener Volksoper, das Burg- und das Akademietheater) are considered by law as the representative “Bühnen” (=stages) of the Republic of Austria, and are governed by the “Bundestheaterorganisationsgesetz” (BThOG) <- one word! you know German has long words…

    According to this law, the Staatsoper belongs to the company “Bundestheater-Holding Gesellschaft mit beschränkter Haftung”, which belongs 100% to the Federation of Austria (Bund).

    To understand the ownership and Governance, you need to read § 3 of the Austrian Federal Law, the Bundestheaterorganisationsgesetz. Essentially it says that the four major Austrian Theater Houses (Bühnen) above including the Wiener Staatsoper belong to a company called: “Bundestheater-Holding Gesellschaft mit beschränkter Haftung” which is founded by the Federal Chancellor, and which belongs 100% to the “Bund”, the Austrian Federation = the Federal Government of the Republic of Austria.

    Read the “Bundestheaterorganisationsgesetz” (BThOG) here

    You can read the “Bundestheaterorganisationsgesetz” (BThOG) here – by the way, its just being revised: Bundesrecht konsolidiert: Gesamte Rechtsvorschrift für Bundestheaterorganisationsgesetz, Fassung vom 13.07.2015

    Copyright notice

    According to Wikipedia, the photograph above of the Wiener Staatsoper is public domain, see: https://commons.wikimedia.org/wiki/File:Staatsoper_(ca.1898).jpg

    Description
    English: State opera in Vienna
    Deutsch: Wiener Staatsoper, fotografiert vor 1898
    Date circa 1898
    Source Julius Laurenčič (Hrsg.): Unsere Monarchie – Die österreichischen Kronländer zur Zeit des fünfzigjährigen Regierungs-Jubiläums seiner k.u.k. apostol. Majestät Franz Joseph I., Georg Szelinski k.k. Universitäs-Buchhandlung, Wien 1898
    Author
    Josef Löwy (1834–1902) Link back to Creator infobox template wikidata:Q1705180
    Permission
    (Reusing this file)
    Public domain
    This work is in the public domain in its country of origin and other countries and areas where the copyright term is the author’s life plus 100 years or less.
    This work is in the public domain in the United States because it was published (or registered with the U.S. Copyright Office) before January 1, 1923.
    This file has been identified as being free of known restrictions under copyright law, including all related and neighboring rights.

    Copyright (c) 2015 Eurotechnology Japan KK All Rights Reserved

  • 7th Ludwig Boltzmann Forum Tokyo 2015

    7th Ludwig Boltzmann Forum Tokyo 2015

    7th Ludwig Boltzmann Forum: 20 February 2015 at the Embassy of Austria in Tokyo

    Gerhard Fasol, Chair

    One highlight of this year’s 7th Ludwig Boltzmann Forum was when Nobel Prize Winner Shuji Nakamura who’s invention of GaN LEDs eliminates the need to build thirty 1GW class nuclear power stations in the USA alone by 2030, asked the world’s most experienced nuclear power station operators and regulators, Chuck Casto, which source of energy he thought was best for Japan. Read Chuck Casto’s answer here.

    Keynote speakers

    Program

    7th Ludwig Boltzmann Forum Tokyo 2015
  • Best wishes for 2015 from Tokyo!

    Best wishes for 2015 from Tokyo!

    The photograph shows the Gobelsburg Castle in Austria, you can see the location here on Google maps. A castle of this name is mentioned in 1178, and wine is grown in the region for about the last 1000 years.

    www.fasol.com
    www.fasol.com

    Thoughts and analysis for 2015

    Abenomics?!

    The trick of course is the third arrow, the reforms. Read what Professor Takeo Hoshi has to say about Abenomics, Japanese economist, who has worked his way up US Universities, and has now reached the position of Professor of Economics at Stanford University. By the way, here is my talk at Stanford University – some years ago, but much of it still applies today.

    Japan’s energy

    Japanese people’s views on nuclear power are polarized, and its unclear and unpredictable when nuclear power stations will be switched on again in Japan. Read what the Governor of Niigata Prefecture has to say, who hosts the world’s largest nuclear power plant with 7 reactors and 8 GigaWatt capacity.

    According to the Japanese Energy Fundamental Law, the Government has to publish an official Energy Basic Plan at regular intervals. You can read the 4th Energy Basic Plan published on April 11, 2014, and listen to a commentary on it for The Economist here on YouTube. The 4th Energy Basic Plan starts with the assumption that Japan is poor in natural energy resources, which of course is only true if we restrict “natural energy resources” to fossil resources. Japan is actually potentially very very rich in renewable energy sources, as the scenario plans developed by Japan’s Industry and Economy Ministry (METI) and Japan’s Environmental Ministry show.

    Solid state lighting saves energy

    GaN LEDs were invented and commercialized in Japan, and Shuji Nakamura, Isamu Akasaki and Hiroshi Amano won the 2014 Nobel Prize in Physics for this work. Read the summary of Shuji Nakamura’s keynote at the 5th Ludwig Boltzmann Forum.

    Post-Galapagos and globalization of Japan’s technology groups

    To overcome Japan’s Galapagos issues and to acquire technologies and market access, Japanese companies are acquiring overseas: read a list of Japanese acquisitions in Europe here.

    Foreign companies in Japan, and Japanese companies overseas face a dilemma: expensive expatriates with limited local know-how, or local management? Japanese companies seem to have finally reached the conclusion that Japanese managers eg sent to Germany are in most cases not the best choice to lead a German-based multinational company – here are some great recent examples:

    • Docomo acquires a majority stake in net mobile AG, however net mobile AG remains a publicly listed company. Read details here.
    • NTT DATA acquires SAP solution provider itelligence AG, however itelligence AG remains an independently managed company under the founder’s management, and grows aggressively via acquisitions all over the globe. Read details here.
    • NTT Communications acquires a majority of Integralis, Integralis is renamed NTT Com Security AG, however NTT Com Security AG remains traded on the m:access market of the Munich Stock Exchange. Read details here.

    Carlos Ghosn is very well aware of such multi-cultural management issues and how to solve them, however too many EU companies in Japan are not. If they were, EU investments in Japan could be at least 50% higher – as you can read here.

    Best wishes, and much success in 2015!

    Copyright (c) 2015 Eurotechnology Japan KK All Rights Reserved

  • Keep fit and save electricity: climb the stairs the geeky way

    Keep fit and save electricity: climb the stairs the geeky way

    Keep fit and save electricity

    Geeky way to persuade people climb the stairs – see in in Tokyo/Shibuya

    Its not easy to persuade people to climb the stairs instead of taking the elevator.

    Tokyu Hands store in Shibuya found a geeky way to persuade people to Keep fit and save electricity at the same time:

    Show the calories your body burns walking up the stairs, which should help you loose weight – and save on the store’s electricity bill at the same time.

    After the Fukushima nuclear disaster and the closure of all of Japan’s nuclear power stations, saving electricity has become a top priority. In Tokyo’s subway and trains fluorescent lighting has been replaced by LED lighting, some fluorescent tubes have been removed, and some elevators were at least temporarily shut down to save electricity – in Japanese: 節電. The Tokyu Hands Store in Shibuya found a geeky way to encourage customers to keep fit, burn calories, climb the stairs, and save electricity all at the same time.

    Keep fit and save electricity: geeky way to encourage people to climb stairs and save electricity, seen in Tokyo at Tokyu Hands Shibuya store
    Keep fit and save electricity: geeky way to encourage people to climb stairs and save electricity, seen in Tokyo at Tokyu Hands Shibuya store

    Copyright (c) 2014 Eurotechnology Japan KK All Rights Reserved

  • Corporate governance in Japan – views of an Independent Board Director of a listed Japanese Company

    Corporate governance in Japan – views of an Independent Board Director of a listed Japanese Company

    Prime Minister Abe urges reform of corporate governance

    Slow but steady change…

    Reuters reports that Japan’s Prime Minister Abe urges company boards to reform corporate governance to include independent directors. I added the following comment.

    Corporate governance in Japan: exercise of shareholder power and emergency situations

    The question of independent Board Directors is often framed in terms of exercising shareholder power over the company, as is the main message of the article above. Another focus of discussions on the role of outside independent directors, is during emergencies, and here the Olympus case is often cited.

    Corporate governance Japan: steady state contributions of independent directors

    However, in my experience in Japan, including my work as a non-Japanese independent Board Director of a public Japanese company, enlightened companies will welcome independent Board Directors for their know-how and contributions to the company – in the end the market decides.

    Docomo vs SoftBank

    As an example, lets compare NTT-Docomo and SoftBank. NTT-Docomo has a homogeneous pure Japanese Board, while SoftBank has independent Directors from many different countries and from many different walks of life. SoftBank recently overtook NTT-Docomo in terms of market cap, revenues, operating income and net income.

    In the end regulations have limitations, regulations influence behavior of course, but regulations do not produce business results or grow new business (with the exception of the compliance industry), and the realities of the market decide, as is the case of SoftBank.

    SoftBank and SPRINT

    As another example, SoftBank appointed Marcelo Claure, CEO of Brightstar Corporation and of Bolivian origin, to the Board. Masayoshi Son announced the appointment with the following words: “Marcelo’s experience as an entrepreneur and businessman who created and successfully grew a global telecommunications company will bring an invaluable perspective to Sprint’s board.” Note that Masayoshi Son clearly states that Marcelo Claure is appointed to bring invaluable know-how and experience to SPRINT, Masayoshi Son does not seem to be motivated by “increasing the power of the shareholders over Sprint”.

    The “power of shareholders” is usually a matter of last resort, when all other methods fail.

    Usually, when you have to show your power, its too late.

    Copyright (c) 2014 Eurotechnology Japan KK All Rights Reserved

  • Japan’s new energy policy – interview by The Economist

    Japan’s new energy policy – interview by The Economist

    Japan’s new energy policy: interview for The Economist on YouTube

    Japan’s new energy policy – Gerhard Fasol interview by The Economist
    Japan’s new energy policy – Gerhard Fasol interview by The Economist

    Japan’s new energy policy – interview outline:

    Japan’s new energy policy Question: Is the new energy policy of Japan’s Government an appropriate response to the situation or a missed opportunity

    Answer summery:The Government in its new strategy summarizes Japan’s energy situation and proposes a cocktail of different energy sources. Everyone knows that Prime Minister Abe is pro-nuclear energy, but that does not mean that he is against other energy sources, such as renewables. The new energy strategy paper though misses KPIs, Key Performance Indicators. There are no many numerical targets.

    Japan’s new energy policy Question: It is often repeated that Japan is poor in energy sources, is this true?

    Answer summery:It is often repeated that Japan is poor in energy sources. This is only true as long as we restrict our view to traditional carbon based primary energy sources such as oil, gas, or coal. But if we widen the view to renewables such as wind, water, solar, biomass, and geo-thermal energy sources, then Japan is actually very rich in primary energy sources, and could even aim for energy self-sufficiency. Off-shore wind alone would be sufficient to make Japan energy self-sufficient.
    Just by repeating the statement many times, that Japan is poor in energy sources, does not make this statement true.

    The new energy policy paper also starts out by saying the Japan is poor in primary energy sources. This is not true if we widen the view to renewable energy sources.

    Japan’s new energy policy Question: Re-engineering the electricity grid. Can you explain the concept?

    Answer summery:The electricity grid has evolved over many years, maybe 100-150 years. The traditional architecture of the electricity grid is a top-down one-way distribution network from large central power station such as large coal-, gas- or oil-fired power stations or nuclear power stations, to consumers. The traditional electricity grid is similar to the arteries in the human body, where there is the heart in the center, and the arteries distribute the blood to the extremities. This traditional top-down grid has served us very well for a long time, but the time as come now to evolve the grid to the next stage. There will be more distributed power generation, which feed in electricity in the opposite direction from the extremities, and there will be more intelligence in the grid.

    Japan’s new energy policy Question: How do you see Japan deal in the future with supply and demand manages, how do you see electricity prices evolve in Japan?

    Answer summery:With the liberalization there will be more flexibility in the pricing of electricity and supply and demand management. Prices will not necessarily go down, but will depend much more on the timing of demand, on demand/supply management, or on the value of electricity. For example, mission critical electricity consumers such as data centers or hospitals will need a different type of electricity supply, than washing machines in households. Demand/supply management and smart grid will manage the timing of less critical electricity usage.

    Economist briefing “Keeping the lights on – deregulation, new and renewables and Japan’s energy mix” handouts

    The interview is based on our reports:

    Japan energy markets (21st edition)
    Renewable energy Japan (9th edition)

    Copyright (c) 2014 Eurotechnology Japan KK All Rights Reserved

  • Professor Frank Kelly, Master of Christ’s College, Cambridge and Professor of the Mathematics of Systems

    Professor Frank Kelly, Master of Christ’s College, Cambridge and Professor of the Mathematics of Systems

    Professor Frank Kelly speaks about the future of Cambridge University and of Christ’s College

    Frank Kelly, Professor Francis Patrick Kelly FRS, Master of Christ’s College, Cambridge, and Professor of the Mathematics of Systems, gave us his view of Cambridge today at the Cambridge Oxford Society of Japan in Tokyo.

    Professor Frank Kelly spoke in Tokyo about Christ's College, Cambridge. In the past Cambridge competed only with Oxford, today competition is global
    Professor Frank Kelly spoke in Tokyo about Christ’s College, Cambridge. In the past Cambridge competed only with Oxford, today competition is global

    Professor Frank Kelly: In Cambridge the Colleges provide the personal connection, while the University provides the scale

    In the past Cambridge competed with Oxford, and Oxford’s saw Cambridge as the only competitor. Today this picture has changed dramatically, both Cambridge and Oxford compete globally, and especially more and more now with Asia, such as China, Korea and Japan. In order to keep ahead in this global competition, Cambridge needs more headroom for research.

    Professor Frank Kelly: The North West Cambridge Development

    One big venture is the North West Cambridge Development:

    • 150 Hektar
    • 5000 post-docs
    • 2000 graduate students
    • 600 million pounds
    • 11,000 cycling space reflecting Cambridge customs

    Professor Frank Kelly: Cambridge University’s first bond

    To the financing contributed a 350 million pound bond, which was awarded AAA rating (which according to Professor Frank Kelly is a better bond rating than the Government of the United Kingdom currently achieves).

    Professor Frank Kelly: the role of “benefactors”

    We have the annual Benefactors’ Dinners at Cambridge and Oxford Colleges. “Benefactors” used to be the people, who founded the Cambridge and Oxford Colleges 100s of years ago, and who we have as oil paintings on the walls. However, this picture has changed in the last 20-30 years. Today, our benefactors are also living people, our alumni, who are living benefactors, role models and inspirations in their professions for our undergraduates.

    Professor Frank Kelly: about alumni

    Colleges today have several stake holders: undergraduates, graduates, Fellows and alumni, and alumni are by far the largest group by numbers.

    We have a good business model, where the cost of each student to the College and the University is partly paid by fees, and part from elsewhere. However, this business model is difficult to scale to larger numbers. So our size in terms of student numbers is likely to remain as today.

    Copyright (c) 2014 Eurotechnology Japan KK All Rights Reserved