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Different inroads into Japan:
Finnish forest knowhow vs French corporate genius

Finland continue to make inroads to Japan. After "official" Finland's policy triumph with Circular Economy Forum and wide publicity for Moomin Park opening, it's been back to grassroots business. Last weekend, several specialized machinery companies from Finland promoted their knowhow and technology at Forestry Machinery exhibition in West Tokyo. This week more companies are attending the annual Home and Building Show at Big Site exhibition hall in Odaiba.

As an old "forest man" - even if always out in the world far away from the roots – I continue to be impressed by the Finnish forestry, how advanced it is in every respect. Same time I've been always concerned how poorly managed and undeveloped forestry is in Japan even if it has equal vast amount of "green gold". Despite its image of high rises and congestion in metropolitan Tokyo, Japan is equally much covered by forests as Finland, yet you don't have to be an expert to see how badly managed they are as soon as you drive out of Tokyo.

Those in the business know the reasons just too well: the forests are left alone to rotten as ownership is seldom private or clearly defined to spur business interest and the mountainous terrain makes it expensive to harvest it raising the cost price uncompetitive against imports. Thanks to this – and combined with big home building industry's high demand for quality timber – Japan has been for years the No.1 export market for Finnish and Swedish saw mills. Maybe China has passed us in volume recently, but Japan continues to prevail in sellers' focus with its long term business relations, steady demand and price level.

Yet, for every true Finn it feels bad to see the degradation of Japanese forests and despite our own good sales we would like to see Japanese forestry do better, become again healthy and sustainable as it was in the past. So what could be better than our own highly developed Finnish machines to improve the efficiency of harvesting and handling in Japan?

The Forestry Machinery exhibition was much bigger than I expected: big number of participating companies had laid out their wares on two big fields. They were mainly domestic and specialists in their own fields, but also many well-known big construction machinery groups like Hitachi, Sumitomo and Komatsu displayed products from their own forestry machine divisions. From Finland, four companies attended, all forestry machine specialists from small places in Finnish countryside. I was impressed to learn that one of them, Kone-Ketonen from Kristinestad, had been selling its products here already for 30 years. Its "owner shacho" Mr. Ketonen, an unassuming veteran in wind jacket and baseball cap, was present himself, of course.

The most impressive Finnish stand, however, belonged to Ponsse, a family company from a small village in the heart of Savo countryside, who has become a world leader in the industry. They displayed a giant yellow combined harvester which was bigger than anything else at the site even if the Ponsse boys said it was actually the smallest in their range. A test run sitting in its cockpit with its happy owner from Kagoshima showing how it worked was highly impressive: not only it lifted huge cedar logs with complete ease – his light touch on control sticks looked like playing PlayStation - but sound isolation was so perfect it totally blocked out roar from the big diesel engine. Add to that a seat that looked better than in luxury cars and air conditioning, an essential comfort in Japan's hot, sticky summer, and you can easily see how such machine, if widely available, would be the right solution not only for efficient harvesting, but to get young people including females to join the industry and patch up the dwindling number of aging professional foresters here.

I was amazed to learn that Ponsse has developed this technology on its own and manufactures 90% of each machine by itself employing 600 people plus indirectly another 250 at the contract suppliers next door in a Savo village with total population of 4000 people. We wish best business success in Japan to such company and all other similar from Finland.


The Big Business News this week is, of course, the arrest of Carlos Ghosn, the big boss of world's biggest car maker Nissan-Renault-Mitsubishi alliance for gross tax cheat and petty thieving from his company despite his huge salary. Japanese public is shocked how such great man, a celebrated legend around the world and highly respected here for turning around Japan's No.2 car maker from edge of bankruptcy 20 years ago into new heights, could stoop that low? The TV channels and popular press have had hay day digging up his personal excesses with company money, while some bitter foreigners have come forward with their usual claims it's all Japanese envy and discrimination against successful gaijins.

In certainly looks like that inside Nissan early thankfulness for The Miracle Man and respect for his visionary guidance changed long time ago to bitter resentment against the arrogant dictator, who concentrated all decision making to himself and his hatchet man who was also arrested. Dealing with the company in my old business some 10 years ago, I could easily sense things were not right in the fancy big Head Office. People were clearly fearful and unhappy that their decisions even on such small matters as choice of print advertising material had to be run through "France head office" or its local acolytes in Yokohama. If on top of that CEO was impudently robbing the cash box for his personal gain while Renault benefitted disproportionately of Nissan's success, it's no wonder there would be a rebellion sooner or later. It seems this is it now: there was no single "whistleblower" as claimed, but general "coup d'etat" widely organized through the ranks. As the old saying goes "Hotoke no kao mo sando". The Miracle Man had over lived his "use-by-date". If only he would have given up in time instead of behaving even worse. Well, it was not the first time a great leader ends up an illustrious career in complete disgrace.

We will see in due course what waits for Ghosn and his lieutenant as investigations proceed on both corporate and legal side. Hiding USD 50 million personal income on top of his official USD 50 million during 5 years certainly is big numbers and the penal code entails penalty up to 10 years prison for that. That the maximum fine is as small as USD 100,000 – just pocket money for Ghosn - tells how far out of scale this is for "normal" in Japan. Yes, we have seen a row of similar financial scandals recently but seldom if ever they were for personal gain, but to make the company look better than it really was.

Beyond legal proceedings, we should focus on what will happen to the alliance. While the French government holds the control with its 45% ownership through Renault, it is clear Nissan side is deeply unhappy with the French dominated management as well as with Nissan's success and profits being used to artificially pump up a French government company. In order to avoid the coup turning into civil war inside the company – or even political feud between the two nations – the French side clearly must address this imbalance. In short term, a 45% ownership gives Renault practically free hands to do what it wants, but strategic long term thinking says forcing its will on the partner would surely ruin the relationship and kill the money cow. Some thought should be also given to the third wheel in the alliance, Mitsubishi Motor Co.

It would be really a pity if power struggle would ruin the huge cost benefits of the alliance sharing technology, platforms and R&D costs: they were estimated at USD 7 billion last year and expected to rise to USD 10 billion by 2020. Ruining that would be clearly against all shareholders' interest.

However horrible behavior, excess and even crime, Carlos Ghosn was a genius and built up a great industrial structure that lifted the multinational alliance to World No.1.

Timo Varhama  
Tokyo, November 21, 2018  

Previous Columns

7 November 2018
"Moomin, Muji, Movies and Mobile Phone Fees"

29 October 2018
"Towards better world? Circular economy, collaboration with China"

15 October 2018
"Circular economy, fish market and construction boom"

2 October 2018
"Abe's "third reich": challenges abound"

17 September 2018
"From Osaka typhoon to Osaka fever - dark side and bright side of Japan"

6 September 2018
"Emperor: love, peace and reverence"

23 August 2018
"Summer heat, new scandals and export worries - but Tokyo is best"

8 August 2018
"Petty politicians, bungling bureaucrats and profitable business"

30 July 2018
"While we were on holiday"

17 June 2018
"From Singapore to soccer - wrapp up for summer"

11 June 2018
"Showdown in Singapore, commotion in Canada and cover-ups in Tokyo"

28 May 2018
"Morals and responsibility, blind loyalty and power harassment"

17 May 2018
"Big Business in record results again, but consumer are not convinced - North Korea spectacle continues under Kim direction"

26 April 2018
"Political spectacle approaches grand finale
- people's trust sinking ever lower"

17 April 2018
"Cruise missiles and cronyism, business boom, old people and sumo"

6 April 2018
"Mystery train and other unpredictable moves in geopolitics around Japan"

26 March 2018
"Trump Unchained and Abelympics – Can PM Make the Party?"

16 March 2018
"Anniversaries, updates, fallacies and deception"

5 March 2018

26 February 2018
"Korean Olympics: sports shine, politics stink"

14 February 2018
"Korea: Murky Politics and Big Business Behind the Sport Spectacle"

4 February 2018
"It's "smile time" in politics, Olympics, economics and business"

23 January 2018
"Moomin crisis, panda frenzy and Olympics turned into political farce"

12 January 2018
"Heisei 30 looks good: share prices soar, PM rides high "

About the Columnist

The columnist is a Japan veteran among Finnish business, our Chamber ex-president and today Member of the Board of Trustees.
After running a major Finnish industry company's Japan business for over 20 years, he is now Senior Associate in a strategic consulting company.

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