The New Year greeting delivered by Fumiya Kokubu, President & CEO at the Marubeni Tokyo Head Office on January 4 is posted below.

 

1. Introduction

Happy New Year.
I am happy to welcome everyone back to work, and hope we can all start 2017 with a renewed spirit for the new year.

I would like to start my New Year’s address by talking about three areas of change in global trends.

 

2. Changing Trends

The first is the change taking place in globalism.
I have looked back over the past 10 years before and talked about how the “currents of the world economy have changed.” Yet it seems that the events occurring now are fundamentally transforming the values and framework that have been built through globalism thus far. As major events like the withdrawal of Great Britain from the EU and the election of Donald Trump suggest, there seems to be a growing trend toward protectionism, higher priority on self-interest, and spreading intolerance in the world. This means we are approaching the end of the era of liberal globalism that became a major trend starting in the late 1980s, led by the U.S. This shift in sentiment will have wide-ranging effects on economic, trade and business activities.

For example, in a variety of fields, including the automotive and textile industries, there will be an unavoidable impact on supply chains built on the flow of goods and services based on the premise of regional free trade. The negative repercussions are likely to be especially hard on emerging economies like China that have benefited the most from globalization. Furthermore, there is a possibility that various nations will be forced to significantly revise their official policies, including energy policy, security policy and environmental policy, which have been established based on globalism. As we develop our business worldwide we must understand the big picture, meaning trends in the global economy as a whole, while also having a specific strategy for each country and region―local strategies within a global strategy―which is exactly what we aim to do.

The second change is in the financial climate.
At the end of last year, the U.S. raised interest rates for the first time in a year, and it is apparent that the surplus of capital and extremely low interest rate situation worldwide is gradually changing. In addition, as regulations on financial institutions are being strengthened (such as Basel III), the era of cheap capital available to almost anyone is coming to an end. As a company, it is important to recognize that a sound financial foundation is a major prerequisite in order to continue doing business.

Additionally, if the recent rate hike in the U.S. is the start of a sustained cycle, this coupled with the shift occurring in globalization creates the risk of an acceleration in the outflows of money from emerging economies and this money returning to the U.S. As a result, it seems that the likely scenario will be a further blow to emerging economies.

The turnabout in globalism and in the financial environment are negative factors that affect our business, and we must pay sufficient attention.

On the other hand, the third major trend is one that will create opportunities for Marubeni; this is technological innovation, specifically, breakthroughs in information technology.

In the industrial world, such information technology as IoT, artificial intelligence and Big Data, has evolved beyond expectations, and is starting to have an impact on the way business is conducted. This is truly the start of what will be a Game-Changer.

Even in our business the use of IoT, artificial intelligence, Big Data and other information technology is not unusual. It is necessary to be aware that the dramatic advancement of information technology is changing existing business, and this is a chance to create new business models.

 

3. The Era of “Competing Through Intelligence” (What we must do)

So far, I have talked about changing trends. In the midst of such change, I believe the keyword now is “Competing Through Intelligence.”

Up until now we have achieved growth by investing capital to acquire assets, and accumulating profits from these assets. It now seems to be time to evolve this concept further, and to develop strategies on what to do next using these assets, so that instead of 1 + 1 = 2, we find a way to get to 5, or even 6. We have reached an era in which the game is won or lost by how well we can focus and employ our knowledge and intelligence.

The evolution of business models is not limited to the area of information technology. In other words, it also involves the issue of how to utilize the assets of the Marubeni Group to increase value.

The Marubeni Group has excellent assets, including exceptional personnel, diverse business models, and extensive customer networks. This is an enormous business platform. It is up to us to figure out how to use it to create new business. Whether we are successful at driving the company to new heights depends on our effort and our intelligence.

To repeat, this is now the era of “Competing Through Intelligence.” This does not mean we should sit around the office just thinking; this will not lead to the emergence of any new knowledge or breakthroughs. It means that it is important to have the mindset to actively go out into the field and fully engage with customers, to hone sensitivity to customer needs, and to consider what is truly essential while always looking for ways to make things better.

 

4. Conclusion

The first year of GC2018 in 2016 was a difficult business environment. The progress made in implementing the various measures of this plan has been due to everyone’s hard work and effort. We are stepping up efforts to enhance our on-site presence and to become stronger outside Japan, which will certainly appear in future results. In this way, 2017 will be a “make or break year” as we move toward achieving GC2018.

As I mentioned earlier, I think that a few decades from now 2017 may be a year that will be called a Game-Changer (turning point). It is important to have the strength to think things through, as well as the toughness to carry out what must be done.

Last, but not least, I hope all of you will take good care of your health this year, and be able to pursue your activities with vigor and enthusiasm. To close my New Year’s address, I would like to extend my sincere wishes for health and success to all of you and your families. Thank you.