President, Itochu Corporation
Education: Nagoya University, law degree, 1962.
Career: Itochu Corporation, 1966–1998, various positions; 1998–, president; 2004–, chairman.
Address: 5-1, Kyutaromachi 4-chome, Chuo-ku, Osaka 541-8577 Japan; http://www.itochu.co.jp/.
■ Uichiro Niwa was a man with a radical vision for the Itochu Corporation, a company that was one of the largest in the world and intended to remain so. After Niwa became president of a company that was faltering in 1998, he reevaluated Japanese executive culture and decided that certain attitudes and practices had to change if his company were to be profitable once again. He cut executive salaries, took away such perquisites as reserved elevators, and even went without his own salary for a period of time. Although his approach was radical for Japan, it worked. Itochu was able to improve its bottom line by 2004, mainly because of Niwa's drastic changes.
Niwa graduated from Nagoya University in 1962 with a law degree. Instead of practicing law, however, he became an expert in trading foodstuffs and joined the Itochu Company in 1966. At that time Itochu was an internationally integrated company whose operations covered a broad range of businesses with offices in over 80 countries. Itochu's yearly profits positioned it among the world's largest companies of any type. The company had seven business groups: aerospace, electronics, and multimedia; chemicals, forest products, and general merchandise; energy, metals, and minerals; finance, realty, insurance, and logistics services; food; plant, automobile, and industrial machinery; and textiles.
Niwa worked his way up through the company, starting in the food group and then learning about the rest of the company's businesses. He became president of Itochu in 1998. At that point the company was doing rather poorly, with many of its subsidiaries having run deficits for years. Niwa's first action was to cut executive salaries by 30 to 50 percent. He completely disagreed with the prevailing assumption of Japanese business culture that executives should be paid exorbitant salaries and treated like royalty. For example, certain elevators in Itochu's buildings were set aside for the exclusive use of higher-ranking personnel. Niwa did away with this privilege, allowing all employees to use any elevator because he wished them to be able to return to their offices as quickly as possible. His next action was a declaration that any Itochu subsidiary remaining in the red for three years in a row would either be liquidated or have its entire executive group replaced.
In 1999 Niwa accelerated his plans to reduce the company's interest-bearing debts. He cut the number of Itochu board members and focused on a select few of Itochu's core businesses, including information services, clothing, retail financing, oil and gas, engineering, and food resource development. He was preparing the company, he told the Financial Times , to become a holding company by April 2001 (January 5, 1999). Niwa also made plans to cut the number of directors from 45 to between 10 and 15 by 2000.
In addition to cutting back on executive frills, Niwa set an example for his company by giving up his own salary. By 2001 he had gone without pay for 18 months, vowing that he would not accept any money from Itochu until its financial situation had improved. In January 2001, however, the company finally turned a profit and Niwa once again drew his salary. "As the leader of the Itochu group with some 1000 companies, I wanted to show that corporate executives should always be first to put their own performance under the microscope and discipline themselves," Niwa said in The Australian (January 3, 2001). Forgoing his pay was a radical act, but it showed a dedication to the company that few executives would have been willing to imitate.
In the early 2000s Japanese companies had come to fear China as an unbeatable competitor in production and exports. Such companies as Sony, however, began moving into China and developing their products there, having decided to benefit from the country's lower costs rather than avoiding competition with Chinese industries. Itochu itself worked with Japan's Ito-Yokado Company in 2001 to open a department store in Beijing at the Asian Games Village, which had already been constructed in preparation for the 2008 Olympics. Niwa also stated that the company planned to open two more stores in Beijing, including one near the zoo in the downtown area and one near Lizeqiao. He said that Itochu had considered opening between 10 and 15 more stores in Beijing before expanding outside the capital. In addition, Itochu planned to open three thousand FamilyMart convenience stores, with expectations of increasing the number to 10,000 over the next several years. Niwa maintained that the sheer size of the Chinese population meant that Itochu could eventually open almost four hundred thousand convenience stores. "I'm not thinking China is the enemy to Japanese companies anymore," Niwa told a reporter from Forbes (December 23, 2002). "It is quite a good thing for us that China might be developing its economy very rapidly in the future."
Niwa also made an agreement in 2002 with the government of Shandong province that committed Itochu to helping the Chinese expand their trading and upgrade their economy. This agreement between a foreign business and a Chinese provincial government was the first arrangement of its kind. Niwa noted that Itochu had invested in businesses in the Shandong area since the 1970s. "The scope of the business opportunities will expand down the track because the province has abundant human and agricultural resources," Niwa told the Asian Economic News (May 13, 2002). Around the same time Niwa himself became an economic adviser to the central Chinese government in Beijing.
The Japanese economy was not doing very well at the beginning of 2003 in spite of reassuring statements from the Japanese government. Niwa was not entirely optimistic, however, and advised caution on the grounds that full economic recovery takes time. He urged Japanese companies to follow their customary pattern of seeking business partners as well as customers in foreign countries by expanding into Thailand. He was quoted as having said, "I would like Japanese companies to invest in Thailand as their second headquarters. I want Thailand to be the most ready in Asia to absorb the expansion of investments of Japanese companies outside Japan" (The America's Intelligence Wire, December 24, 2003). Itochu at that time announced a deficit and appeared to have other difficulties because of the epidemic of severe acute respiratory syndrome (SARS) that was raging all over Asia. Niwa questioned whether his company would be able to pay dividends in mid-2003, as the epidemic had affected Itochu by delaying business meetings and depressing sales.
In mid-2003 Niwa announced Itochu's plans to invest ¥100 billion in its advanced technology and consumer goods businesses as well as its operations in China. Niwa followed up this statement in 2004 by reporting that Itochu would pay $10 million to acquire a 50-percent equity stake in the Tingtong Holding Corporation, a Chinese distribution company. Niwa told the press that the agreement was important because "… the distribution network in China may make the country a core base for its delivery business in the future" (Asia Africa Intelligence Wire, March 29, 2004).
By 2004 Itochu had become one of several relatively untroubled Japanese companies that began to include such fixed assets as real estate and factories to improve their balance sheet under a new rule scheduled to take effect in 2005. The new rules force companies to claim their losses on fixed assets—such as buildings and equipment—that are losing value. By claiming things early the costs are disseminated over a number of years. Niwa told the Asia Africa Intelligence Wire, "We decided to introduce the new rules early in order to get rid of future burdens as soon as possible" (April 5, 2004).
In 2004 Niwa was asked to chair a subcommittee of the Japanese government's Commission on Policy Evaluation and Evaluation of Incorporated Administrative Agencies. It was then announced in March 2004 that Niwa would assume the position of chairman of Itochu with representative rights, which enabled him to make decisions he had as president. And for someone who had brought his company out of the red during a very difficult period, it was certain he would use them.
See also entry on ITOCHU Corporation in International Directory of Company Histories .
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Haisma-Kwok, Constance, and Tsukasa Furukawa, "Asia Watch: Dropping Lingerie … New Underwear … Boosting Output," Women's Wear Daily , March 16, 2004.
"Itochu Agrees to Aid China's Shangong in Trade, Development," Asian Economic News , May 13, 2002.
"Itochu Chief Lauds Thailand over China," The America's Intelligence Wire, December 24, 2003.
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Lunn, Stephen, "New Pay Dawns for the Boss Who Gave It All Up," The Australian (Sydney, Australia), January 3, 2001.
Meredith, Robyn, "If You Can't Beat 'Em," Forbes , December 23, 2002, p. 84.
Nakamoto, Michiyo, "Asia-Pacific: Itochu Steps Up Pace of Restructuring Programme," The Financial Times , January 5, 1999.
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Shimbun, Asahi, "Uichiro Niwa," Asia Africa Intelligence Wire, January 28, 2003.
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"Trading in Knowledge," Forbes.com , 2004, http://www.forbes.com/specialsections/japan/27_niwa.html .
—Catherine Victoria Donaldson