Ill Keidanren head resigns amid reform

TOKYO - Sumitomo Chemical Co. Chairman Masakazu Tokura will succeed Hiroaki Nakanishi as the chairman of the Japan Business Federation, or Keidanren, after the sudden announcement that Nakanishi would be resigning due to illness.

Keidanren has been restoring its influence under the leadership of Nakanishi, who is also the chairman of Hitachi Ltd. The baton is now being passed on to Tokura, who has supported Nakanishi as vice chair, among other positions.

Nakanishi expressed his willingness to fully restart activities during a press conference connecting his hospital room and the Keidanren building online on April 5. "I've just finished the final round of anti-cancer drug treatment and I am supposed to leave the hospital under normal circumstances. Considering the current situation of the coronavirus pandemic, however, my body is susceptible to infectious diseases as I've undergone many rounds of treatment. My doctor has told me that I should be closely monitored," Nakanishi said.

Keidanren Director General Masakazu Kubota, who participated in the press conference, said Nakanishi told him on April 13 that a recurrence of lymphoma was detected and that he would like to resign at the next regular general meeting on June 1 due to health problems. Nakanishi nominated Tokura as the next chairman.

Kubota said he had not spoken with Nakanishi since that day. A teary-eyed Kubota said at a press conference, "Considering the feelings of Nakanishi, I don't know what to say."

Tokura was nominated as the next chairman partly because he is familiar with issues that Nakanishi focused on as the chairman of Keidanren, such as digital transformation and climate change issues. Another possible reason is that Hiromasa Yonekura, former president and chairman of Sumitomo Chemical, had served as the chairman of Keidanren from 2010 to 2014.

Nakanishi had served as the vice chair of Keidanren for four years since 2014 before he assumed his current position, while Tokura had been in the same position for four years since 2015. "Since Nakanishi and Tokura have known each other for many years, they know each other's character and way of thinking very well," said a senior Hitachi official.

Nakanishi has led Keidanren while taking advantage of his name recognition as being from Hitachi, one of Japan's leading manufacturers.

As well as scrapping rules on new-graduate recruitment methods created by Keidanren and widely applied by many companies, Nakanishi played a central role in promoting reforms including teleworking amid the coronavirus pandemic. When it comes to promoting digital transformation, Nakanishi sounded more convincing as his company Hitachi has strength in businesses such as computer systems for companies.

He relaxed membership conditions for companies and encouraged information technology companies and startups to join Keidanren. He also tried to increase diversity in leadership positions and appointed Tomoko Namba, chairwoman of major IT company DeNA Co., as the first female vice chair of Keidanren.

However, many issues will be inherited by Tokura. With the end of the pandemic not yet in sight, deteriorating performance has hurt industries such as transport and tourism. Also, Japanese companies are far behind U.S. IT giants concerning digitization and data utilization.

The government aims to reduce greenhouse gas emissions to net zero by 2050, but in reality, the introduction of renewable energies is slow in Japan. Hasty moves toward decarbonization have prompted strong criticism among the business community.

At a press conference on April 10, Tokura said, "We will express political opinions as necessary and make various policy proposals." Tokura will need to show strong leadership to carry on policies promoted by Nakanishi, who will step down in the middle of his term.

Collaboration with the central government is essential for Keidanren to realize the policies it supports, but if it strays too close to politics, it may be seen as collusion. Previous Keidanren chairmen struggled to maintain an appropriate distance from the government.

In 1955, Keidanren started a system called the "Assen method," under which it specified the amount of political donations made by each member company, which supported the long-term rule of the Liberal Democratic Party. In the bubble economy period, the total amount of political donations by Keidanren member companies and business organizations exceeded 10 billion yen. They supported political activities through donations and politicians realized certain policies to support businesses. Keidanren also helped the country's high economic growth through Japanese-style management such as lifetime employment and the seniority wage system.

However, in 1993 when the government led by Prime Minister Morihiro Hosokawa was launched, the Assen method was abolished due to criticism against money-driven politics, and respective member companies started to decide the amount of political donations they would make on their own. As more and more companies suffered from declining business, the amount of political donations gradually decreased and in recent years, the amount has fallen to about one-fifth of the peak level.

As economic globalization progressed and companies increasingly expanded business overseas, Keidanren lost influence.

In 2012, when the second Cabinet of Prime Minister Shinzo Abe was inaugurated, then Keidanren Chairman Yonekura was not chosen as a private-sector member of the government's Council on Economic and Fiscal Policy, even though the position was said to be reserved for the chief of Keidanren. This was because Yonekura harshly criticized Abe's bold monetary-easing policy as being reckless and a strategy that should be prohibited.

Since then, Keidanren has improved its relationship with the government. Under the leadership of Sadayuki Sakakibara, who succeeded Yonekura in 2014, Keidanren cooperated with the government-led shunto wage negotiations, in which the government played a leading role in calling for pay hikes. Nakanishi, who took office in 2018, has maintained a good relationship with the government, which has helped the business body restore its influence.