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Mr. Fujio Mitarai, president of Canon Inc., has been picked to succeed Mr. Hiroshi Okuda as head of Nippon Keidanren (the Japan Business Federation). He will start leading the organization dubbed as the “commanding headquarters” of Japan’s business community in May 2006.

Mr. Mitarai’s selection symbolizes Japan’s economic transformation. He has formidable international business experience and is from a company that specializes in high-technology products such as digital cameras, copying machines and computer peripherals.

His background contrasts with that of most of his predecessors at Keidanren (the Japan Federation of Economic Organizations) and Nippon Keidanren, who were from such traditional mainstay industries as chemical, steel, heavy machinery, automotive and electric power. Mr. Okuda is chairman of Toyota Motor Corp.

Nippon Keidanren was born in 2002 through a merger of Keidanren, then the nation’s most influential business organization, and Nikkeiren (the Japan Federation of Employers’ Associations). Mr. Okuda became the first chairman of Nippon Keidanren and will finish his second term in May 2006.

Mr. Mitarai’s performance as an entrepreneur is impressive. Despite the deflation-driven economic slump, he has turned Canon into a top-notch company. It is expected to register record profits for six straight years in December 2005. It is hoped that as Nippon Keidanren leader Mr. Mitarai will present both the business community and the general public with insights that grasp future business and social trends.

Mr. Mitarai, 70, joined Canon in 1961. He worked for Canon USA for 23 years from 1966 through 1989, including a stint as president of Canon’s U.S. subsidiary. He is familiar with the American style of corporate management and is a proponent of the merit system. But he also supports Japan’s traditional lifetime-employment system, believing that employees serve as a foundation for a company’s growth. He also thinks that a company should be a good member of society.

Mr. Mitarai’s philosophy that an ideal enterprise is one in which employees can lead a happy life until their retirement should serve as a guiding principle at a time when non-regular employees account for 30 percent of the nation’s labor force, and the economic gap between such workers and regular workers is widening.

After he became president of Canon in 1995, he adopted a rationalist approach to strengthen his company’s finances. He decided to withdraw from fields not making profits, such as personal-computer manufacturing, and concentrated his company’s resources in profit-making fields, including digital cameras. Eliminating assembly-line conveyor belts from Canon’s factories, he introduced the cell-manufacturing system in which an individual worker accomplishes a number of production steps.

Mr. Mitarai’s achievement has attracted attention from foreign investors, who now own slightly more than half of Canon’s shares. Ironically, under a Japanese law, this has prevented the company from making political donations. In 1993, Keidanren stopped coordinating such donations. Under Mr. Okuda’s leadership, Nippon Keidanren resumed the role.

The fact that Canon is not making political donations will be helpful if Mr. Mitarai endeavors to make relations between Nippon Keidanren and the government transparent. Transparency is necessary because Nippon Keidaren is in a position to influence the government. Given that Japan faces a large financial deficit and a decrease in population, hopefully Nippon Keidanren under Mr. Mitarai’s leadership will present constructive policy proposals on social-welfare reform and tax issues.

Mr. Mitarai’s experience in America will also be an asset in helping to strengthen economic relations between Japan and the U.S. He is familiar with U.S. business leaders and American industry. A lack of mutual understanding was partially responsible for past frictions in Japan-U.S. economic relations. Given his thorough knowledge of Japanese and U.S. industry, Mr. Mitarai will be able to serve as a bridge between the two countries’ business communities.

There have been times when Nippon Keidanren appeared to be swayed by the interests of domestic industries, as seen in its lack of enthusiasm for revising the Antimonopoly Law to increase penalties for violators. As Japan’s top business leader, it is hoped that Mr. Mitarai will place the welfare of society as a whole above that of individual companies.

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