Japan's Ministry of International Trade and Industry Shifts Gears

Strategic Insights -

Japan's Ministry of International Trade and Industry (Miti) has been a key player in shaping the country's industrial policy, long regarded as a protector of Japanese industry. However, in the face of a severe post-war recession, Miti has undergone a significant transformation, embracing new methods to strengthen Japanese industry, including mergers and acquisitions and foreign investment. The ministry has expressed support for legislation encouraging such activities and has actively engaged with the ministry of finance to provide tax incentives and revise legislation to reduce the tax burden on companies involved in M&A activity. Furthermore, Miti has called for the restructuring and consolidation of the automotive industry to improve competitiveness against US and European rivals.

Key Takeaways:

  • Miti has shifted its strategy, embracing mergers and acquisitions and foreign investment as tools to strengthen Japanese industry.
  • The ministry has expressed support for legislation encouraging M&A activity, including tax breaks and low interest loans.
  • Miti has taken the initiative in convincing the ministry of finance to provide tax incentives and revise legislation to reduce the tax burden on companies involved in M&A activity.
  • The ministry has called for the restructuring and consolidation of the automotive industry to improve competitiveness against US and European rivals.
  • Nissan Motor has racked up a Y27.7bn net loss in the year ended in March, while Nissan Diesel recorded losses of Y14bn on sales of Y233.83bn last year.
  • Miti officials believe Japanese carmakers must form alliances with foreign companies to compete in the global market.
  • Nissan has signed a landmark alliance with Renault of France, triggering further speculation about tie-ups between Japanese and foreign automotive groups.
  • The oil sector has seen rapid consolidation, with Nippon Mitsubishi Oil agreeing a broad alliance with Cosmo Oil and purchasing a majority stake in Koa Oil.
  • Miti has played a key role in encouraging this consolidation, introducing deregulation in the oil industry to improve profitability and competitiveness.

Statistics:

  • Car sales fell 6.5 per cent to 5.87m units in 1998, the worst decline in 12 years.
  • Truck sales tumbled 30 per cent, falling to their lowest levels in 30 years.
  • Nissan Motor has recorded losses for six out of the past seven years.
  • Nissan Diesel recorded losses of Y14bn on sales of Y233.83bn last year.
  • Nippon Mitsubishi Oil has agreed a broad alliance with Cosmo Oil on refining, distribution, and lubricants.
  • Japan Energy has purchased a controlling stake in Kashima Oil.

Sources:

  • "Miti Backs Legistation To Encourage M&A Activity" by Alexandra Harney and Michiyo Nakamoto, Financial Times, 1999.
  • "Nissan's Y27.7bn Net Loss in Year Ended March" by Alexandra Harney and Michiyo Nakamoto, Financial Times, 1999.
  • "Miti Officials Call for Restructuring and Consolidation of Automotive Industry" by Alexandra Harney and Michiyo Nakamoto, Financial Times, 1999.
  • "Nissan Signs Landmark Alliance with Renault" by Alexandra Harney and Michiyo Nakamoto, Financial Times, 1999.