comscore Japanese firms pin hopes on China | Honolulu Star-Advertiser
Business

Japanese firms pin hopes on China

  • BLOOMBERG NEWS
    The leader of Japan's second-largest convenience store chain, Lawson Inc., hopes to open 10,000 stores in China by 2020.
  • BLOOMBERG NEWS
    Lawson Inc., Japan's second-largest convenience store operator, is turning to mainland China to provide growth. Here, pedestrians walk past a Lawson store in Shanghai.
[ AD HAS BEEN REMOVED FROM THIS STORY ]

Lawson Inc. Chief Executive Officer Takeshi Niinami aims to open almost 10,000 stores in China by 2020, selling drinks, food and magazines. To pull it off, the Tokyo-based executive is packing his bags for Shanghai.

As Japan’s second-largest convenience store operator plans to boost outlets in China more than thirtyfold, Niinami, 51, will spend a month in the nation from May and another within less than a year, he said Dec. 20 at a media briefing in Tokyo. Lawson is also training Chinese recruits in Japan to work as store managers in their home country, where the company lags rivals Seven & I Holdings Co. and FamilyMart Co.

"To get a feel for daily life in China and to take risks, I’ve got to live there a couple of months," said Niinami. "Staying all the time in Japan, I tend to focus only on downside risks."

Niinami’s plans underscore how Japanese companies are counting on China, set to surpass Japan as the world’s second-largest economy this year, as Japan’s shrinking and aging population dims the outlook for growth at home. It is also an example of how executives in the nation are seeking to overcome a shortage of international experience as they expand abroad.

"Lawson’s move shows how Japanese companies are trying to globalize," said Tsuyoshi Komori, president of Tokyo-based consultant Mercer Japan Ltd. "Spending time and pouring energy into China will prove Niinami’s commitment."

Lawson operated 318 stores in mainland China as of November, according to the company’s website. The nation is Lawson’s sole market outside Japan, where it had 9,935 outlets.

The push in China is driven in part by a decline in Japanese consumer spending, which fell in 2008 and 2009, according to figures released by the Cabinet Office.

Japan’s population is decreasing from a peak of 127.8 million in 2004 and might bottom out at fewer than 90 million in 2055, according to the National Institute of Population and Social Security Research.

In contrast, the number of middle-income and affluent consumers in China, the world’s most populous nation with 1.33 billion people, might almost triple to 415 million in 10 years, Boston Consulting Group Inc. said in November.

Competitors have outpaced Lawson in tapping China’s growth. Seven & i Holdings, the world’s largest convenience retailer, operated 708 7-Eleven outlets in mainland China as of November, said Minoru Matsumoto, a company spokesman. FamilyMart had 492 stores in the nation, according to its website.

Lawson opened its first Chinese store in Shanghai in 1996, according to its website. All three companies are based in Tokyo.

"To reach a goal of 10,000 shops by the year 2020, not only the CEO’s leadership example, but also logistics and human resources are going to be needed," said Naozumi Nishimura, an analyst at TIW Inc. in Tokyo. "I’ll be paying attention to how fast they expand and how fast they turn a profit from it."

Lawson’s growth in China has been held back by a lack of human resources, Niinami said in April. An initial effort to send Chinese employees to Japan for training proved too time-consuming, he said. Changing its strategy, the company began hiring and training Chinese graduates from Japanese universities.

"The new system started three or four years ago, and now I think we have the resources to accelerate our foreign business," Niinami said in April.

Cross-border training and experience is also a management-level challenge at Japanese companies. Japan ranked 49th among 58 countries this year in international experience for senior managers, according to the World Competitiveness Yearbook 2010 published by Switzerland’s IMD international business school.

The number of Japanese citizens living in China almost tripled in a decade to 127,282 in October 2009, according to Japan’s Ministry of Foreign Affairs. Shanghai is home to 48,255, according to the ministry.

 

Comments have been disabled for this story...

Click here to see our full coverage of the coronavirus outbreak. Submit your coronavirus news tip.

Be the first to know
Get web push notifications from Star-Advertiser when the next breaking story happens — it's FREE! You just need a supported web browser.
Subscribe for this feature

Scroll Up