Rakuten chief defends exit from Keidanren

by Kazuaki Nagata

Staff Writer

The Japan Business Federation (Keidanren) is too conservative and too reluctant to carry out drastic reforms that may threaten big-name firms but in the process boost the nation’s international competitiveness, and that’s why online retailer Rakuten Inc. plans to leave the group, according to company President Hiroshi Mikitani.

During a program streamed live by Nico Nico Douga on Thursday, Mikitani cited the so-called Galapagos syndrome, saying Japanese businesses are too comfortable focusing on the domestic market and should instead act boldly to develop overseas markets.

“It seems Keidanren is either trying to protect everything about ‘Galapagos’ or doesn’t have the courage to (adopt reforms),” said Mikitani, 46, known as an influential entrepreneur especially with the younger generation.

Rakuten became a member of the nation’s most powerful business group in 2004, but Mikitani announced with a Twitter tweet on May 27 that he was thinking of leaving Keidanren and submitted a notice of withdrawal on June 23.

“Keidanren’s original mission is to strengthen Japan’s competitiveness, and it was trying to promote it at least when we joined,” he said. “I don’t know since when, but the organization has become conservative.”

One example cited by Mikitani was Keidanren Chairman Hiromasa Yonekura’s unwillingness to separate power generation and distribution in the nation’s electricity utilities, which currently have monopolies in their regions.

With concern running high over power shortages triggered by the nuclear accident at the Fukushima No. 1 power plant, Mikitani said the industry should be reformed, such as by separating generation and distribution. This would encourage entry into the market by new players, in turn leading to lower electricity rates, he said.

Yonekura expressed skepticism such a move should be made at this time.

“It is not just about the power industry, but also its stance on hostile takeovers, corporate governance and accounting,” Mikitani said.

Japanese companies should have a stronger awareness of promoting their businesses globally rather than just looking at the domestic market, he said. Rakuten has been aggressively expanding overseas, including in China, Indonesia and Brazil.

Asked why Japanese firms are great at technology but can’t set global standards, Mikitani said there are few Japanese entrepreneurs who can project a strong message globally by using foreign languages, including English.

With this in mind, Rakuten announced last year it would make English its official language by the end of 2012. Mikitani said 95 percent of his meetings are now conducted in English.

“If Rakuten succeeds in this strategy, other companies will follow. And then English-language educators will realize the current learning system needs to change. As a result, Japanese society may start to see that Japan has to go global,” Mikitani said.

He also mentioned his concern that the government doesn’t seem to truly understand the potential of the Internet, compared with other countries.

In May he attended the Group of Eight summit to discuss with the world’s most powerful political leaders how the Internet can energize the entire planet, but Prime Minister Naoto Kan didn’t speak during the discussion, according to Mikitani.

French President Nicolas Sarkozy and U.S. President Barack Obama “had a firm conviction that the Internet changes the world, whether they like it or not,” he said.

However, “Japanese politicians and business leaders don’t have that kind of mind-set.”