Lawson CEO Takeshi Niinami Inc. plans to open about 10,000 stores in China in 2020, selling drinks, food and magazines. To remove it, the Tokyo-based executive is packing its bags from Shanghai.
As the second largest Japanese convenience store operator plans to boost sales outlets in more than 30 times, Niinami, 51 from China, will spend a month in the country since May and in less than a year, said a press conference in Tokyo on 20 December. Lawson is also training to recruits of China in Japan to work as managers of the stores in their country of origin, where the company lags behind rival Seven & I Holdings Co. and FamilyMart Co.
"To get an idea of daily life in China and to take risks, I have to live there a couple of months," said Niinami. "Standing all time in Japan, which tend to focus only on downside risks."
Niinami plans highlight how Japanese companies have China may overtake Japan as second largest economy in the world this year as a shrinking and aging of the population is obscured growth prospects in the country. It is also an example of how executives of the nation are trying to overcome the lack of international experience as they expand abroad.
"Move Lawson shows how Japanese companies are trying to globalize," said Tsuyoshi Komori, president of the Tokyo-based consultant for Mercer Japan Ltd. "Spending time and energy that flows demonstrate China's commitment Niinami."
Lawson rose 0.7 percent to 4.035 yen at the end of three hours of negotiations in Tokyo. The shares have fallen 1.6 percent this year, compared with a 1.9 percent drop in the Nikkei 225 Stock Average.
Household expenditure
Lawson operated 318 stores in mainland China since November, according to the website of the company. The nation is Lawson's single market outside Japan, where he had 9,935 points of sale.
The momentum in China is driven in part by a decline in Japanese consumer spending, which fell in 2008 and 2009, according to figures released by the Cabinet Office.
Japan's population is declining from a peak of 127.8 million in 2004 and may hit bottom in less than 90 million in 2055, according to the National Institute of Population and Social Security Research.
In contrast, the number of middle income and wealthy consumers in China, the world's most populous country with more than 1.3 million people, you can almost triple to 415 million dollars in 10 years, Boston Consulting Group Inc. said November.
7-Eleven, FamilyMart
Lawson competitors have surpassed the use of growth in China. Seven & I Holdings, the world's leading convenience retailer operated 708 7-Eleven outlets in mainland China since November, said Minoru Matsumoto, a spokesman for the company. FamilyMart had 492 stores in the country, according to its website.
Lawson opened its first China store in Shanghai in 1996, according to its website. The three companies are based in Tokyo.
"To reach a goal of 10,000 stores in 2020, no single example of leadership of the CEO, but also the logistics and human resources will be needed," says Naozumi Nishimura, TIW Inc. analyst in Tokyo with a recommendation "neutral" rating on the shares of Lawson. "I'll be paying attention to the rapidly expanding and how fast to turn a profit from it."
Lawson's growth in China has been delayed by lack of human resources, Niinami said in an interview in April. An initial effort to send their Chinese employees to Japan for training proved to be too long, he said. Changing its strategy, the company began hiring and training of Chinese graduates of Japanese universities.
"The new system started three or four years, and now I think we have the resources to accelerate our business abroad," said Niinami in April.
International Experience
cross-border training and experience is also a challenge level management in Japanese companies. Japan ranked 49th among 58 countries this year on international experience for senior managers, according to the World Competitiveness Yearbook 2010 published by the IMD business school in Switzerland International.
The number of Japanese living in China almost tripled in one decade to 127,282 in October 2009, according to Japanese Foreign Ministry. Shanghai is home to 48,255, according to the ministry.
Niinami international experience includes business start trading Chinese sugar Mitsubishi Corp., a trading company based in Tokyo, said in an interview with LA 21, a monthly magazine in 2008. He is also a graduate of Harvard Business School.
He began his career with Mitsubishi, the largest shareholder in Lawson, in 1981 and became president of convenience store operator in 2002. In 2005 he was appointed CEO of Lawson.
China Gains
Under Niinami, Lawson's operating profit has increased in the last seven consecutive fiscal years. The company expects net income in the 12 months ending in February could rise to 22 billion yen (266 million) 12,600,000,000 yen last fiscal year, while revenues may fall to 430 million yen 467 200 000 000 JPY.
In China, operating profit was at a level of balance last fiscal year, according to the website of the company.
Niinami plans to send a team of officials, including company directors, in China ahead of his own arrival, said Dec. 20.
The director general is also improving speaking skills of China, said Song Wenzhou, founder of the Tokyo-based Softbrain Co. and a strategic advisor to Lawson in China.
"These days, when Mr. Niinami called me, speaking Chinese with pronunciation as well be confused with China", the song, a native of China, said in an interview Dec. 17.
After working in China may be increasingly seen as a qualification for senior executive positions in Japanese companies, as well as having served in the U.S. was a prerequisite for some, said Song.
Niinami, speaking at the conference of December 20, made the same suggestion.
"I will send the best people in our company" China said. "If they succeed, they may be in line for my job."
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