Learning From the International Community's Challenges

Fuji Xerox's Overseas Business: The Current Situation and Development Challenges

Yamamoto:

Fuji Xerox's overseas operations have gone through three phases to date. The first phase was from the establishment of the company in 1962 to the first half of the 1990s. During that phase, Japanese business accounted for 80 percent of our total operations. We remodeled the products we had developed for the Japanese market and provided them to our sales companies overseas. Later, we needed to develop new markets in Asia. At the same time, we also needed to think about the cost competitiveness of our production operations with the sudden appreciation of the yen. From the middle of the 1990s, we entered the Chinese market looking to develop a new market as well as to acquire a more cost competitive labor force and cheaper raw materials. That was the second phase.

Ogata:

Therefore, both your new market and your new production bases were in China?

Yamamoto:

That's right. To manufacture internationally competitive products, we launched education and training for young factory workers from the Chinese countryside, improved working conditions and health and safety standards, and implemented quality control and environmental measures. We asked our local suppliers to do the same. As a result, today we maintain quality levels in China that surpasses those in Japan.

Ogata:

I understand that you were in charge of the transfer of Fuji Xerox's production operations to China. I would imagine you have many stories to tell about your experiences.

Yamamoto:

Yes, indeed! We made the decision to transfer our production bases to China for business reasons, and I worked frantically to maintain our international competitiveness. Doing business in a developing country, I keenly felt that sometimes things would not move forward unless companies put forth efforts even in relation to matters that you would normally expect the country's government to do. I have noticed that we have entered a third phase since around last year. It looks like it might be rather thorny. In this phase, the question is how Fuji Xerox's corporate executives should view ties with China and our other Asian neighbors as these countries will become more and more important in the future.

The Role of JICA in International Cooperation

Ogata:

I am in my sixth year with JICA now, and I think our situations are very similar in the sense of going through phases. In its first phase, JICA invited Southeast Asian engineers to Japan for education and training. These trainees then returned to their university labs in their home countries, and institutes of higher education in science and technology were developed throughout Southeast Asia through these key people. Then Japanese corporations entered the markets in those countries and further elevated the level of technology there.

Yamamoto:

As human re source s and educational institutes developed, privatesector corporations promoted them further.

Ogata:

That's right. When I joined JICA, a certain amount of infrastructure for growth was in place in China and Asia, but there were also areas, such as Africa, where there were virtually no Japanese companies. Recently there has been increasing momentum in Japan for our nation to cooperate in African economic growth as well. As a result, Japan's Ministry of Foreign Affairs has spearheaded the launch of the Tokyo International Conference on African Development, or TICAD.

Arima:

As you know, the Base of the Economic Pyramid, or BOP, is a socio-demographic designation describing both the development needs and the market potential of nearly 4 billion people worldwide who live in nearpoverty or poverty conditions. Tapping the potential of the BOP markets of Africa and other developing economies while addressing their needs is being discussed frequently these days as a business model for CSR.

Ogata:

It was not until recently that science and technology were added to the conversation about growth in Africa and the Middle and Near East nations. There are more concerted calls today for cooperation in science and technology development even in the stages where roads and other infrastructure have not been built yet.

Yamamoto:

The assistance-based approach to growth taken in Southeast Asia is being repeated here, I see.

Ogata:

That's right. Rwanda, for example, realizes it cannot achieve growth on the export of coffee beans alone, so it has been advocating a policy to build the nation through information and communication technology (ICT) from early on. The shift from farming and mining to the ICT industry will continue to move forward in the future, I believe.

Arima:

What are JICA's plans for the future?

Ogata:

We are entering a new phase now where we must think about how best to conduct relations with China and other Asian countries that have grown economically. China, for example, has foreign exchange reserves in excess of US$2 trillion, which puts it among the world's largest. European countries are also concerned that sophisticated Chinese corporations will enter world markets and constitute tough rivals for those of developed nations. As you tell me about Fuji Xerox, I sense that the question of what kind of partnerships to develop with newly developed nations will also define JICA's third phase.

The Impact of Globalization and the Information Society

Yamamoto:

People in developing nations are very interested in improving their standard of living and respond immediately to information they obtain from television or the Internet.

Ogata:

That's very true. Information about the situation in other countries gets around quickly! Around the time that the Cold War ended, the Italian government contacted the Office of the United Nations High Commissioner for Refugees and requested its support in handling the flood of emigrants that swept in from their poor neighbor of Albania after Italian television showed pictures of a cat eating its food from a silver bowl. The collapse of the Berlin Wall also occurred because information traveled across borders in a flash. With the increased use of ICT, though, people are insecure about their own identity. They are not sure where they belong, so nationalism-based conflicts have arisen as a result. This causes instability in society. In developing and developed nations alike, the faster the speed of globalization, the more pronounced the inequalities are that arise. Since Fuji Xerox handles information and communication, I imagine that you are thinking about your CSR from this perspective.

Yamamoto:

You're right. Communication is Fuji Xerox's business focus, so this is an area where we must be keenly aware of our responsibility to society.

Human Resources Development Through International Cooperation

Yamamoto:

A total of 10 Fuj i Xe rox employees participated in JICA's Japan Overseas Cooperation Volunteers and Senior Volunteers programs from 1992 through 2007. Unfortunately, four of the 10 quit the company after returning to Japan. There are two things I regret in this regard. First, the company has not actively encouraged employees to take advantage of such opportunities, but instead left it up to the individuals' desire to volunteer. Second, when the volunteers returned, we did not consider deeply how to utilize the skills and experiences they had gained while abroad.

Ogata:

When I visit the different field sites, I learn a lot myself. New perspectives and ideas are created in the field. I understand that many Fuji Xerox employees have been interested in CSR for a long time. As part of CSR, you could consider actively providing oppor tunities to the young generation by including work as a Japan Overseas Cooperation Volunteer, or JOCV, in career development at your company.

Arima:

It is frustrating that Japanese corporations have a low profile in the international community. I believe this is simply the result of not giving our young employees experience and training in global settings. Being a JOCV can also be an educational opportunity for Japan's young generation.

Ogata:

I understand that the aim of the JOCV program in the early days was not only to support developing nations, but to also educate young Japanese people. This remains important today as well. These days there are young people who cannot find work or are asked to leave the company due to the recession. With an eye to educating young people, we have increased the number of JOCVs by 200. This does not constitute an unemployment measure, but it is nonetheless significant.

Yamamoto:

As I listen to you talk about the importance of the field, I realize that community-based global management is exactly that: Ascertaining out what the local community needs, building projects that will help that community, and taking actions appropriate in the context of the local culture.

Ogata:

Viewed from a long-term, global perspective, this will produce corporate profits in the end. The situation of people in developing nations around the world may seem rather removed if you live in Japan, but I think you will agree that there are many merits in getting involved.

Social Partnerships to Combat Environmental and Energy Issues

Yamamoto:

We asked our local suppliers in China to address environmental issues and to improve work conditions as well as occupational health and safety through our ethical procurement activities. The Japanese partner companies that entered the Chinese market with us reported that it has been a great help that Fuji Xerox took the lead in providing local regulatory information. Our Japanese partners seemed very happy about this. The local Chinese suppliers initially seemed slightly puzzled by our actions, but once they understood that it would result in a competitive advantage for their business, they said that they wanted to use it in business with their other customers as well. Once such a movement develops this far, it is not practical to do it on an individual company basis; therefore, we thought about joining other companies and organizations that have already built up expertise in this area.

Ogata:

How to form social partnerships will be important in the future, not just in business tie-ups, but in various other areas as well. Our mistake in the past has been to try to address the issues individually without thinking about how to move forward together hand-in-hand in an equal fashion. For a developing nation to be involved in the paper industry, for example, roads and harbors must be created for the nation to process lumber into chips and export them. In projects where Japanese corporations enter a foreign market and promote industrialization in that nation, JICA and other organizations involved in official assistance are initiating support for road and harbor infrastructure projects in response to requests from that nation's government. Public/private partnerships are needed where the public and private sectors each play their own unique roles.

Yamamoto:

Private corporations cannot take on infrastructure development projects, so their only option is to ask organizations involved in official assistance to come in.

Ogata:

Water as well as electricity and other energy issues in particular are major aid areas in Africa and the Near and Middle East nations. Developing countries need electricity for future growth; therefore, a substantial amount of natural energy use, such as solar power generation, has been developed in these countries. In nations and regions that have been laid waste by war, it is hard for corporations to rebuild from scratch, so that's where Japanese government aid comes in. More and more people are realizing the merits of these kinds of public/private partnerships (PPP)-where the government and private sector join hands and implement projects based on a shared mid- to long-term design. Development projects of this type are being launched in Africa.

Ways Corporations and Communities Can Build Effective Partnerships

Yamamoto:

Our Philippine subsidiary participates in a project to build housing in slum areas and is now engaged in a program to provide the local people with educational opportunities using these facilities. That program would be even more special if an employee of a Fuji Xerox Group company were to assist with the program as a JOCV. Today, we are also making donations for the construction of schools in various areas. I am dissatisfied, however, with the fact that each project in Fuji Xerox's assistance work stands alone, and the links with other projects remain undeveloped. It is crucial that globalization results in a positive combined impact on local communities, one created by visiting the local community and determining its true needs.

Ogata:

That's exactly right. If globalization were pursued from that perspective, it would be very different. Corporations are showing great interest in public/private partnerships, which are promoted by the two sectors working hand-in-hand from the blueprint stages. In response, JICA has created the Office for Private Sector Partnership to handle corporate inquiries. They would be happy to work with you if you contact them.

Arima:

I see the same thing happening within the United Nations Global Compact or GC. The GC Local Networks of Japan, China, and Korea are joining hands to launch the China/Japan/Korea Global Compact Local Networks Roundtable, and the first meeting is scheduled to be held this year. I believe it will be increasingly important in the future that we efficiently share local information about each country.

Yamamoto:

After our conversation today, I have renewed my conviction that communitybased management is the search for ways to make real contributions through committed efforts in the local community. We have set up social contribution foundations at our five sales companies in Southeast Asia. We are aware that we have not been able to contribute adequately to the local community, and we are now looking for how best to use the foundations. We would like to consider community-based contributions. This might mean, for example, not just making donations to local schools, but dispatching employees as teachers or instructors through the JOCV program or contributing something that draws on Fuji Xerox's core business, such as providing support in creating learning materials.

Ogata:

Fuji Xerox would also gain a lot if, rather than giving a readymade solution, it went one step further and thought about what might most benefit the local community. I look forward to seeing what phase 3 will bring your company if you use that approach.