Fujio Mitarai: The holy Canon of business

Beijing, China – Entrepreneurs and visionary business leaders can lead Asia out of economic crisis, not politicians and bureaucrats. This reality has been so eloquently manifested by the phenomenal success of Canon and optimism in recession-hit and pessimistic Japan. The Philippine Star was recently invited to witness the recent "Canon Expo 2002" held in this booming former imperial capital city of Beijing and had the rare privilege to personally meet the world-famous Canon chief executive officer Fujio Mitarai at the China World Exhibition Hall and also at the 1,007-room Great Wall Sheraton Hotel. The 67-year-old business leader is more fascinating and far more important than even the emperor or prime minister of Japan, and acclaimed by international media such as Forbes, Fortune, Business Week and others as the popular new management icon of Asia.

The Sept. 30, 2002 issue of Fortune magazine reported: "Mitarai has forged a hybrid management style that embraces the hardheaded American pursuit of profit with traditional Japanese business values.

Canon’s strength is all the more remarkable because so many other icons of Japanese high-tech are floundering. Hitachi, Matsushita, Toshiba, NEC, and Fujitsu all posted losses in the fiscal year that ended in March. Canon earned $1.4 billion on revenues of $23.9 billion in 2001. And that was at a time when all of the world’s economies were soft."

Entrepreneur Hero Better Than Politicians & Bureaucrats

Unlike the politicians and bureaucrats who seemed to have failed Japan, the entrepreneurial and aggressive Fujio Mitarai is being hailed as his country’s new folk hero. Vig-orously defying Japan’s 11-year economic recession and prevailing pessimism, Fujio Mitarai has never lost faith in the future of the Asian economic miracle and of his country’s economic viability. His management ideas and reforms are so much widely admired, there’s a new business book on his career, and executives worldwide are starting to emulate the "Mitarai Way."

Mitarai led Canon to triple net profits to $1.4 billion. Canon market capitalization grew fast from $11 billion to $34 billion, despite the record-low prices in the Japanese stock exchange due to the depressed economy. Canon holds a total of 74,000 USA patents due to Mitarai’s emphasis on technological innovations, creativity, research & development. Canon is second only to IBM in the number of US patents. Business Week magazine of the US in its Sept. 16, 2002 issue cited Mitarai: "He put the flash back in Canon. His East-West management style revived the company. The rest of Japan, Inc. would do well to listen to his pieces of advice carefully."

The workaholic Japanese taipan holds daily meetings with managers on strategies, he cuts costs, he does not hesitate to close unprofitable businesses, he emphasizes merit-based pay, focuses a lot on profitability, promotes Oriental-style consensus and job security. Mitarai does not like the American corporate style of stockholders demanding short-term profits, which pressures American firms to tend to doctor financial results. He believes in focusing on shareholder value, making corporate matters more transparent and he personally attends investor relations meetings. In a Japan now full of debt-ridden corporations, Mitarai has led Canon to become a profitable firm with $7 billion in cash.

Mitarai has single-handedly transformed Canon into a multinational giant in printers, copiers, cameras, semiconductor manufacturing equipments and even in consumer electronics. Other Asian taipans of comparable prestige are Taiwan’s "god of management" Y. C. Wang of Formosa Plastics, the late Singaporean "Rubber King" and Xiamen University founder Tan Kah Kee, the late Japanese industrialist Konosuke Matsushita, the late Korean taipan Chung Ju Yung of Hyundai and Hong Kong billionaire Li Ka Shing.

Fujio Mitarai said: "I wanted to change the thinking in the company. When certain businesses were losing money, I thought it was just common sense to cut them proactively even though our over-all earnings were healthy. Canon is basically a very aggressive company. Our company works on competitive principles. It does not treat people equally – but it does treat them fairly."

How did he overhaul Canon and make it more efficient during the Asian financial crisis which caused so many business bankruptcies throughout the region?

Mitarai said: "The past five years have been spent implementing the company’s first five-year management plan, which has included, among other issues, retrenchment, rationalization and the achievement of a vastly improved cash flow. We have basically fulfilled all the goals we set, and we can look to the future with a great deal of optimism."

What are the keys to the future of Canon and other Asian enterprises in this era of the World Trade Organization (WTO) and other rapid changes? Mitarai said: "Diversification and globalization are the keys to the future. In order to ensure the best global results, we are now aiming at enhancing group performance on a consolidated basis. During the next five years, we will diversify our operations by establishing independent headquarters in the US and Europe. Along with the current headquarters in Japan, this tri-polar system means that each office will be totally responsible for R&D, manufacturing and sales of its own area. This move will help our group grow even more. We are no longer a simple hardware manufacturer. Digitalization and networking mean that we now can offer complete office and home solutions. The world is facing a new networked, digital lifestyle, and we will ensure that Canon remains ahead of the game."

World’s No. 1 Copier Giant, No. 3 In Digital Cameras

Under Mitarai’s reformist leadership, Canon has emerged as the world’s No. 1 biggest copier giant, with 30 percent of the world market. Canon has even surpassed America’s Xerox, which used to have a monopoly in this market which it pioneered. Ever since Canon started its laser printer partnership with US giant Hewlett-Packard over 18 years ago, it has since captured over 70 percent of its market in a level of dominance equalled only by the likes of Microsoft and Intel. Once known as a manufacturer of cheap cameras, Canon is today the world’s No. 3 biggest maker of modern digital cameras and Mitarai’s aim is for Canon to be No. 1 soon, with its sales doubling every year. In digital photography, Mitarai reportedly hopes to challenge Kodak, Fuji Film and Sony like he did to Xerox in copiers according to Forbes magazine.

An accountant by training, Mitarai’s uncle, the medical doctor Takeshi Mitarai, founded Canon in the1930s with the goal of hoping to match the technological prowess of Germany’s Leica camera company. Fujio Mitarai had served for 23 years as Canon’s executive in America.

In August 1995 when his cousin, Canon president Hajimo Mitarai, suddenly died of pneumonia, Mitarai passed over six other senior company executives and was elected as the new chief executive officer. In the past seven years, Fujio Mitarai introduced revolutionary reforms which cut costs, strengthened research and development investments, made the conglomerate a truly multinational business and relentlessly increased efficiency.

Part of Mitarai’s long-term strategy to gain world leadership in its different product lines is Canon’s fast-growing investments in China, which today already total $700 million, seven factories and have over 30,000 employees. Apart from opening more factories in different parts of China, Canon plans to expand from seven to 17 sales and service offices, open 40 service depots by 2005 and to triple sales, and increase its exports. Canon will start three more factories in Suzhou City. In Beijing, Mitarai announced the transfer of Canon’s Asia Marketing Group headquarters from Singapore to Beijing, reflecting its goal to be world leader by investing more in booming China.

What about the Philippines? Canon already has business in the software industry in the Philippines. Canon officials led by Canon Southeast Asia Group manager Motoyasu Ishii, Canon Philippines president Satoshi Yahata, EVP and chief operating officer Ramon Artefecio said Canon is planning to increase business collaboration with software companies in the Philippines, India and China. In Vietnam, a new factory producing printers was recently established.

Despite the increased investments in China, Canon officials reaffirmed optimism in the long-term economic growth prospects of Southeast Asia and the Philippines, with Singapore remaining as an important regional headquarters. They pointed out that despite slight growth worldwide, Asian business growth has been stronger than ever.

To manifest its optimism about the world economic future, the executives told Philippine STAR that Canon has invested $1.7 billion in new research and development, and additional $77 million went into research for the exciting field of digital imaging. Some executives are even anticipating a new world of digital cameras, and portable photo processing machines without need of going to the traditional photo shops. However, they assured that traditional analog cameras and traditional photo shops will still continue to exist and play important roles in this fast-changing technological environment which Canon is aggressively pioneering.

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