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2012年12月 4日 (火)

三菱重と日立 攻めの統合で世界3強目指せ

The Yomiuri Shimbun (Dec. 4, 2012)
MHI-Hitachi integration good model to emulate
三菱重と日立 攻めの統合で世界3強目指せ(12月3日付・読売社説)

The business integration between Mitsubishi Heavy Industries, Ltd. and Hitachi, Ltd. is aimed at making inroads in emerging economies, particularly in the growing Asian market. This could be a model for Japanese high-technology companies to follow if they want to survive in the face of global competition.

The two firms have reached a basic agreement to integrate their businesses in the field of thermal power generation, including turbines. They will establish a joint venture company in around January 2014.

The two companies also plan to consolidate their business operations in the fields of geothermal power and fuel cells. It is significant that a mega-sized electric power infrastructure firm will be created, with sales totaling more than 1 trillion yen.

MHI President Hideaki Omiya said at a press conference, "We will compete in overseas markets, rather than waging a war of attrition among Japanese companies." Hitachi President Hiroaki Nakanishi emphasized that the integration signified "the strongest combination [of technology and human resources]."

The two companies were probably prompted to make such a bold decision by their sense of crisis over the harsh business environment.


Nuclear plant business suffering

Since the crisis erupted at Tokyo Electric Power Co.'s Fukushima No. 1 nuclear power plant, construction or enlargement of nuclear power plants have ceased for the time being in Japan, sending a cold wind through both companies as the nuclear power business is their main field of operations.

As business operations of electric power firms, which are important customers for MHI and Hitachi, have deteriorated, it is inevitable that the power generation market, including thermal power, will contract in this country.

On the other hand, newly emerging countries, such as those in Southeast Asia, are seeing their electric power infrastructure market expanding in line with their economic growth. As a result, the competition between Japanese companies and their foreign rivals, such as firms in South Korea, China, Europe and United States, is becoming fierce.

It was against this backdrop that MHI, which is strong in the field of large-scale thermal power generation systems, and Hitachi, which prevails in the field of small and medium-scale power generation systems, integrated in the hope of generating synergies and making inroads in foreign markets. Their decision is fitting.


Compete with Big 2

In the field of power generation infrastructure, Siemens AG of Germany and General Electric Co. of the United States are the two most powerful companies. The two Japanese firms will lag far behind in terms of management strength even after integration. They will face the challenge of coming up with business strategies to compete with Siemens and GE.

Despite their latest move, the two Japanese firms must decide sooner or later to expand their business integration, such as in the field of nuclear power generation.

The integration decision by MHI and Hitachi has set alarm bells ringing among other business sectors.

Electrical appliance makers, which face fierce rivalry from firms in South Korea and other countries, have been burdened by massive deficits, making it extremely important for them to rebuild their managements.

Japan also has so many automakers that they are continuously fighting a war of attrition with foreign rivals at home and abroad, such as in the European and U.S. markets, as well as China and other emerging markets.

Advanced technologies are essential. However, they alone will not be sufficient for Japanese firms to prevail in the global market. It is important for Japanese firms to ascertain their growth fields and make a strenuous effort to pinpoint and focus on business fields to capture emerging markets.

This concept should be applied not only to other manufacturing sectors, but also to nonmanufacturing companies, such as firms in the services sector.

While rethinking their strategies, they should also consider drastically reorganizing business sectors or integrating across industrial business sectors.

We hope Japanese businesses wield their power more competitively in the world's growing markets and help revitalize the Japanese economy.

(From The Yomiuri Shimbun, Dec. 3, 2012)
(2012年12月3日01時30分  読売新聞)


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