I would like to take this opportunity to sincerely convey my deepest condolences to all the victims of the March 2011 Great East Japan Earthquake and Tsunami as well as my sympathy to everyone who lost loved ones, their home, their job, and who have had to endure life in evacuation shelters. I would also like to thank all of the men and women dedicated to the rescue, relief, and recovery operations taking place under severe conditions in hard-hit areas, often times risking their own lives. I am also praying for everyone who has suffered from the February earthquake on the South Island of New Zealand, and I hope that their lives return to normal as soon as possible.
This latest disaster has taken many lives and resulted in sickness, water and food shortages, bankruptcies, unemployment, resettlement, and serious environmental contamination. Businesses are taking countermeasures and revising future plans to address hardships in the form of insufficient power supplies and delays in material and component shipments.
Under such grave circumstances, we re-examined our ability to provide uninterrupted communication services to our valued customers during relief and recovery efforts, to better understand and minimize the effect on our multilevel supply chain, and to determine whether our Business Continuity Plan was effectively implemented. We are striving to improve these measures as quickly as possible based on our findings as I have presented in, What We Have Learned From Our Responses to the Great East Japan Earthquake.
Corporate ESG (Environmental, Social and Corporate Governance) efforts are expanding not only in developed countries, but also in China and other Asian emerging markets. I recognize that such efforts should be considered within the context of a value chain that includes our own procurement, production, and sales, as well as user support and eventual recycling and resources reconversion.
At Fuji Xerox, we view one of our key missions as contributing to “ build an environment for the creation and effective utilization of knowledge.” We will realize this mission by recognizing our responsibility to provide ever-improving document services and communication means and assist our customers in contributing to and meeting their societal responsibilities, while continuing to streamline their value-creating activities.
To this end, we seek to gain a deeper understanding of any changes in “ our customers' links to society” in light of their current management issues, and constantly consider the entire value chain to look at how we can create new value for society, not only through the provision of products and services, but also through initiatives such as our CSR Procurement and Environmental Management.
During fiscal 2010, we formulated a strategy that focuses on: (1) developing new markets and expanding sales with an emphasis on CSR in new emerging countries; (2) providing services that work to alleviate the environmental impact of domestic companies and contribute to a better work-life balance; and, (3) strengthening our insight into and mobility for business activities on a global scale, all based on our principle of “Go to Customers.”
With regard to (1), we are witnessing the rapid integration of business and CSR activities with growth aimed at exceeding targets centered on environmentally friendly products in the Chinese and Asia-Pacific markets. Conversely, our shift to becoming a service provider mentioned in (2) and collaborative efforts with domestic and overseas functions for development, procurement, production and sales to realize (3) have not yet attained the level that I had hoped we would achieve, all of which remain crucial management issues today. All of these strategies are absolutely essential responses to the market. We must further strengthen the culture of our actions to ensure that all employees are able to independently deal with these issues as a matter of course.
Presently, we are examining these issues from multiple perspectives. We also plan to promote effective ESG and the disclosure of information referring to a framework such as ISO 26000, which was issued in November 2010.
With regard to CSR key performance indicators, here I would like to describe the relevant circumstances and issues from our management's perspective. When exploring the following concerns, I would like all employees to (1) recognize themselves as members of society in good conscience, (2) consider the actual place, actual thing and actual situation, as well as (3) foster passion for value creation. I believe such unceasing consideration and self-discipline will ultimately lead to responsible actions.
In the domestic market, we have been dynamically promoting the integration of product and solution service sales structures as well as the formulation of a customer interface communication environment since fiscal 2008. As a result, our customer satisfaction level has returned to the highest in the industry (according to a survey by J.D. Power Asia Pacific, Inc.). Even in the markets overseas, our tireless efforts to support the shift to color devices and a broader line-up of our high value-added solutions have resulted in stronger ties with many of our valued customers. The actual customer satisfaction score is not in itself the final objective, rather, it is a means for each of us to continually understand the customers' point of view. We will view this score as an important indicator for our thorough customer-based actions in the years to come.
In the last two decades, the proportion of officers and employees of affiliates grew from 42% to 75%, while that of non-Japanese managers and employees swelled from 7% to 42%. Although our employee composition continues to diversify, there are still many barriers to overcome for management to create synergies from this pool of talent.
In addition, recruiting and training professionals who can lead our service business and globalization as well as creating a system that allows employees to flexibly choose their preferred work style (mobile work, telecommute, dual employment) have not yet been fully mapped out as a management issue.
I believe it is the responsibility of management to provide all employees with an environment that encourages individual growth. To realize this, I would like to expand and enhance our human resource policies to be more flexible, replete with options and foster an organization where originality and ingenuity abound in tune with the local circumstances of each employee in every country.
Currently, we are implementing existing policies that include the Integrated Recycling System operation attaining the goals of the 2020 Greenhouse Gas Reduction Targets, and preparing new activities that push us to the next level. Specifically, we will mainly revise our environmental vision, policies and medium-term plan, formulate and implement our medium-term strategy for resources (including the reuse of components, water conservation, and waste reduction), and establish policies and guidelines for biodiversity as well as revise paper procurement standards and visualize environmental burden data. Reducing the environmental burden is an important managerial issue for our customers as well; therefore, through hands-on experience and trial and error, we will improve the solution services that we provide to our customers.
We are promoting ethical procurement for our logistic processes while enhancing the CSR procurement for our material purchasing processes. We believe that CSR procurement calls for improvements not through unilateral inspections, but rather by collaborative efforts aided by face-to-face communication. Among cooperating supplier companies, some have already started their own CSR procurement, using our methods and materials as a reference. It gives me great pleasure to know that we are contributing to the diffusion of CSR procurement.
During fiscal 2010, we gave donations to the victims of the Great East Japan Earthquake and Tsunami and the New Zealand earthquake, and cooperated with disaster relief NGOs. We are also promoting our ‘One Company, One Theme’ movement dealing with the environment and biodiversity at each of our affiliates both in Japan and overseas. For details, please see the activity examples of our affiliates in CSR Initiatives by Our Affiliates Around the World.
In fiscal 2010, consolidated sales revenue totaled 983.1 billion yen, a 4.2% increase over the previous fiscal year, thanks to higher sales in the Asia-Pacific region and exports to Xerox Corporation in the United States. In addition, as a result of pushing through cost-reduction measures and restructuring reforms, consolidated income before income taxes was 56.0 billion yen, up 177.6% year on year. I am pleased to report that there are no governance issues that require special attention at this time.
We predict that demand for our products and services will remain strong despite the lingering uncertainties in our domestic business caused by the recent disaster and power shortages. For our overseas business, we would like to see the sales ratio grow by more than 50% in the next few years. We expect emerging markets, Europe, and North America to continue to demonstrate robust growth, although concerns about soaring crude oil, resource prices and other issues abound.
In addition, we are seeing new regulations being established to combat climate change, preserve biodiversity and correct social inequalities in international politics. We predict that the problems occurring on the CSR side of corporate activities will become increasingly imminent in the future and that the attention to services that enhance corporate value of customers will increase.
In this environment, I believe that sustainable growth can be achieved by fully executing all that is necessary to meet the expectations of society.
In light of the current circumstances described above, we strive to realize the business policies established for fiscal 2011 outlined below. These policies are the foundation supporting our sustainability management.
We promote both globalization that aims to collaborate with and support each of our affiliates by promoting joint, worldwide marketing efforts as well as glocalization that consists of providing custom tailored solution services based on a deeper understanding of our customers' needs from both a global and local perspective.
In our sales territories, the management of local entities by international standards is expanding and, in particular, government procurement, which demands stringent ESG and disclosure, as well as CSR procurement are accelerating. Meanwhile, we will systematize our solution services based on our intimate knowledge of the sectors and operations of our valued customers and fortify personal relationships in domestic and overseas development, procurement, production, and sales functions with the aim of horizontally implementing the best practices of international standards throughout our sales territories for the benefit of our customers in their problem-solving efforts.
Office environments, the way documents are handled, and the work styles are largely changing as ICT (information and communication technologies) evolves. We will implement a new work style centered on the sharing and flattening of information with the standardization of documentation and information, management of integrated databases, and utilization of cloud computing services within our company first, and then provide an actual, effective, and realized system to our customers.
I firmly believe that CSR is not just risk management, but management itself, or in other words, a value creation that will affect the future of both our company and society at large. This fiscal 2011 will be my fifth year as president, and in February 2012 we will commemorate the 50th anniversary of our founding. I want to see all CSR arrangements and preparations effected to date be applied steadfastly to our CSR management. I would also like all employees to consider what they should be doing for the company and face this challenge courageously with 360° sustainability as the keywords.
Finally, I do not want the suffering of the victims in the recent disaster to be in vain. We must continue to consider ways to contribute to a society where our customers, employees, partners, and local residents can live with peace of mind.