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Fumio Kishida draws “new capitalism” for corporate Japan

Last thursday when I was with a colleague Interview with the Japanese Prime Minister And he might just have swung his watch because he asked him to identify some of the clear strengths of some of the world’s third-largest economies.

Seiko Astron is expensive and sophisticated, and is perfect for anyone who needs a watch bling on their wrist.But it is also the form worn by Fumio Kishida, a modern descendant of the world. First commercial quartz watch.. Seiko’s 1969 landmark of miniaturization and workmanship was pioneered by Japanese companies just as the economy began to become synonymous with the brilliance of industry.

But instead of taking advantage of this accessory or choosing from a long list of other possible gems, Kishida meandered uncommitted about the vitality and innovative scientific development of the private sector.That was someone’s answer General election to win At the end of the month.

In the meantime, you may hear more about fair “neoliberalism”, “heartwarming” reform pledges, and the general refusal of neoliberalism that is hazy in precise detail. In other words, things were calculated to play well with modest voters.

However, none of these comfort generalities should be distracted from some potentially very important details that may have been brewed in the background, especially with respect to the following issues: Corporate governance reform Whether it needs to be applied to two-track systems for large companies and small and medium-sized companies in the future.so Book of 2020Kishida argued that it should, and repeated that feeling in the Financial Times last week.

“It’s not feasible to apply the same rules. Corporate governance is important for SMEs, but it can’t be done in the same way as large companies,” he said.

Critically, he has entwined many SMEs with local associations and other businesses. He suggested that such companies needed greater freedom to govern themselves in ways that may not have the harsh economic implications demanded by governance-focused investors. .. It is the position of a man who wants to make his name as a friend of the small business sector, which has been hit by a huge Japanese pandemic.

Still, every move to adjust the flagship Abenomics reform Corporate governance is important.After the first few weeks of Fumio Kishida’s power Win leadership elections The takeover from the ruling Liberal Democratic Party and Yoshihide Suga last month was mainly expected to be stable.

He was a friendly, decent communicator and a solid foreign minister for five years when Prime Minister Abe was in command. In many respects, he looks like a political equivalent of a corporate “salaryman CEO” living in Japan. These leaders are climbing the hierarchy of the company by avoiding risk. They lead reluctantly to undertake something too transformative, even when the situation demands to speak a good game about change.

But in 2015 Japan Its first introduction The world of corporate governance code, CEO of office workers has fallen into turmoil. The introduction of the code (and subsequent revisions) has made it possible for shareholders to make more effective claims. While dragging and ticking boxes, businesses are under pressure to increase transparency. They are required to translate more material into English, have a more diverse board of directors with more independent directors, and place more emphasis on shareholder-friendly indicators such as return on equity.

Stock buying is on the rise. Investors have won a crucial victory over management. Companies that have justified relative shareholder unkindness by citing widespread concerns about stakeholders (customers, communities, employees, etc.) for decades feel no longer able to do so. I am. Kishida’s “new capitalist” rhetoric may rewind some of it.

Large publicly traded companies have primarily led and rewarded improving Japan’s governance. Their medium and small counterparts often suffer from compliance burdens and often remain a solid governance blackspot. Kishida’s instinct is that this second group should be treated more generously, and a significant portion of Japan’s listed companies are theoretically not vulnerable to the cruelty of “old capitalism”, his version. It seems that they are leaving to prosper more freely.

Attention would be wise. The Corporate Governance Code may still have restrictions and inequality. However, attempts to free parts of the market from that limitation have unraveled one of the few parts of the “third arrow” of Abenomics of structural reform that actually worked, even in good faith. There is a possibility of becoming.

leo.lewis@ft.com

Fumio Kishida draws “new capitalism” for corporate Japan

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