News2012
2012 New Year Message from the CEO2012/01/05
Good morning everyone and a happy new year.
Last year was a particularly difficult one due to a number of negative influences, notably the Great East Japan Earthquake and the massive flooding in Thailand. While today we are here to bring in the New Year, in 2012 the harsh business and economic climate is forecast to continue due to factors such as the continuing high yen value, political unrest and global uncertainty arising from the European financial crisis which in turn is expected to slow economic growth in developing countries. However despite being in challenging times, I believe that facing and overcoming these challenges will make us stronger, provided that we tackle them with a sense of positive forward thinking. This way of thinking is so fundamental to KWE's philosophy that it can be described as KWE's DNA.
This year marks the final financial year of the current medium-term management plan (March 31, 2011 – March 31, 2013). As the next medium-term management plan will be drafted this Autumn, it is of the utmost importance to achieve the goals and targets set forth for this year to ensure a smooth transition into our next medium-term management plan. To both achieve the targets stated in the medium-term management plan and ensure future growth, I believe that in 2012 we must all focus on the 5 concrete strategies outlined below.
1. Improving Our Profit Ratio
When we drafted the present medium-term management plan, an operating profit ratio of 5% was set. However this has subsequently been revised down to 4.7%. While it is generally accepted that within the distribution industry the operating profit ratio is low, I believe that through the concerted efforts of the entire KWE group that we can improve on this percentage. I am talking not just of reaching 5% but possibly 7 or 8% and in the future actually achieving a double-digit profit ratio. While of course an increase in the operating profit ratio also gives rise to a corresponding decrease in the cost ratio, I believe that given the present situation we should review our cost reduction strategies from all possible angles, placing a focus on other ways of reducing it through measures such as eliminating waste and improving operating and business efficiency. In particular as the profit ratio for KWEJ is lower than that of our overseas regional groups, improvement in this area is one of our major issues.
2. Creating a Strong Asia. Particularly Strengthening South East Asia
One of the major strategies stated in our medium-term management plan was to “Create a Strong Asia”. This has been reflected in both the first and second year of our medium-term plan by the establishment of a bonded distribution company and an inland based jointly owned company in China as well as the establishment of a number of specialized logistics companies in South East Asia (Thailand, Indonesia). To date KWE has pursued a concurrent expansion strategy devoting equal time and resources to our two Asian regional operation hubs, being East Asia/Oceania and South East Asia. KWE considers that in order to achieve our policy of “Creating a “Strong Asia” the success of both these regional hubs, being two wheels on the same axis, is vital. These two regional hubs with an equal focus have meshed smoothly to take the initial steps towards a “Strong Asia”. However KWE recognizes that it has for the time being a sufficient industry presence in East Asia, while there are some countries within South East Asia where KWE’s presence is notably lagging behind our competitors. Accordingly we cannot be said to have sufficient strength in this region. Therefore in the short term from this year onwards, we will to the greatest extent possible be focusing on strengthening our network of locally registered companies in South East Asia.
3. Strengthened Sales through Handled Product Expansion
10 years ago approximately 70% of our clients were involved in electronics related industries. While since that time through the cultivation of clients involved in other industries we have been able to gradually reduce this percentage we still have not achieved sufficient client base diversification. Building on our past efforts we must step up our client cultivation efforts in respect of companies involved in the automotive, healthcare, retail, apparel, oil and gas and other industries. While of course air freight will greatly benefit, I am confident that this expansion will also support an expansion in our sea freight and logistics operations.
4. Expansion into New Markets
KWE, aiming to be a truly global distribution company, will this year as in the past continue to develop its business. I believe that in addition to expanding the operations of our existing companies in countries such as China, we must continue to actively invest in those promising new markets that have recently becomes a focus of global attention with the aim of bringing us up to par with our competitor companies.
5. Fostering our Global Human Resources
It is said that a “Corporation is its People”. This is particularly true of companies involved in the service industry such as KWE where human resources are truly their most valuable asset. For our company to further expand its business in the future, fostering our global human resources is one of our most important issues and one which we cannot afford to overlook. Since its commencement last year we have been continuing our “Business Leader Global Seminar” for those employees selected from our HR with Japan and abroad. While it is easy to talk about fostering global human resources its actual realization is not so easy to achieve. However it is vital that we steadfastly commit to continuing these activities one step at a time. Further we are also committed to implementing a range of other such measures that are linked to improving the motivation level of all our employees.
While I believe that the harsh business environment will continue this year, I would like to urge you all to bring together your collective powers and abilities to make this a year in which we achieve the goals necessary to smoothly transition into our next medium-term management plan.
