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backASIAtalk January, 2010

Industry Review Japan: Consolidate or Lose!

In a new study, Hisaji Yoneda and Martin Tonko analyze the need for, and future of, consolidation in Japan2009 marks a year of change in Japan. The effects of the ongoing economic crisis and the landslide election of a new government have vividly shown that pressing economic issues have to be addressed with more economic rationale than before. The need for change is apparent.Declining competitivenessPopulation decline, ongoing globalization and increasing competitiveness of other Asian countries like China and Korea, place a heavy burden on Japan's industry.In fact, apart from large Japanese tier I corporations like Toyota, the competitiveness of other Japanese enterprises has largely fallen back. Decades of organic growth and corporate "live and let live" mentality have left whole industry sectors overcrowded with unprofitable companies.Consolidation is overdueIn their new "Industry Review Japan: Consolidate or Lose!", Partner Hisaji Yoneda and Principal Martin Tonko examine the triggers, but also the success and failure cases in Japan to show in which sectors consolidation should or will happen and what should be done systematically at a corporate level to prevail over the difficulties of the integration.As much as consolidation is overdue, it is also a very challenging endeavor – particularly in Japan where M&A is perceived as hi-jacking (jap. "nottori"), and where post-merger integration is largely understood as a pure combination exercise of balance sheets.

In their postscript to the study, the authors cite Charles Darwin to point out the task at hand for Japanese enterprises: "It is not the strongest of the species that survives, nor the most intelligent. It is the one that is the most adaptable to change". In their view, this is definitely true for Japan's business landscape today.

To order the study, please click here.

Source: Roland Berger - GAI

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