2021 President’s Message: New Year’s Greeting

A happy new year to each member of the global Sumitomo Corporation Group. 
I would like to extend my New Year’s greeting to all of you from Tokyo. 

Let me start extending my new year message in three parts; First, I touch upon my thoughts and wishes that I would like to share with all of you for this new year; Second, I would like to remember what happened in the world last year and what it would look like this year to remind ourselves what we need to be prepared for what we would like to accomplish this year; and Third and the last but not the least, I offer you three important key phrases always to remember whenever we extend our efforts this year.  


<First> 
Needless to say, the year 2020 was a year when the world was significantly shaken by COVID-19. This pandemic spread throughout the world in the blink of an eye and is still raging in many countries and regions. Many people around the world are affected by its impact, including travel restrictions and limitations on economic activities as well as your workplace and family. Here, at Tokyo headquarters, we will start the new year, taking measures to avoid the three C’s such as self-restraint on holding events, work from home. It will take time before widespread use of vaccines. Let us continue taking proper measures against the pandemic to protect ourselves and others.  

And please remember many colleagues fighting under these difficult circumstances. I would like to express my deep respect toward them together with you and mutually resolve to support each other through our work. 


<Second> 
Last year, in order to prevent the spread of COVID-19, new behavioral patterns have taken root. They include telework, staggered working hours, and online meetings. The technologies of today have drastically changed our working style to deal with this crisis and even significantly changing our societies and lives. Probably, we should say that the technologies and or the pandemic accelerate the changes. We have to cope with and adapt into our business these changing times i.e., new life styles with and after COVID-19 and rapidly changing social needs, for which we will keep on taking counter-measures not only carefully but also boldly.

Looking at the global situation, I would like to remind ourselves of and draw our attention to several happenings and or important issues of the world;  

(1)Even as many countries still have their hands full trying to deal with COVID19, China and Vietnam took an early lead in overcoming this difficulty, and its various assistance programs also succeeded, resulting in their economic growth. This shows us that our efforts to fight COVID-19 will pay us back, too if and when we succeed in dealing with it properly. 

(2)Meantime, in November last year, the presidential election resulted in electing Biden as the new President of the United States. I think his administration will launch new policies different from the Trump administration, such as the return to international cooperation, the economic plans and policies including climate change issues. We would welcome this move but, as for China and US relationship, they remain pessimistic and say that we should be prepared for uncertainties and adverse effects resulting from possible competition continuing between two countries.  

(3)This year, elections will be held in Germany, Netherland and other countries in EU as well as Japan. Political trend in every major country needs to be monitored. 

(4)Even against the backdrop of hegemonic competition by major powers and the anti-globalization movement, there are some good news. Towards the end of last year, the Regional Comprehensive Economic Partnership (RCEP) —which seeks to establish a free trade area in the Asia-Pacific region— was signed by 15 countries such as Japan, China, Korea, and the ASEAN countries. The European Union and the United Kingdom concluded a free trade agreement as well. We need to pay attention to geo-economics. 

(5)Both public and private sectors of many countries seem to be taking the same stance against global environmental issues. Following the lead of Europe, many other countries—including Japan—have declared they will be carbon neutral in 2050. Even China, who is a major emitter of GHG, has made clear its vision of becoming carbon neutral in 2060. The United States is also expected to rejoin Paris Agreement and conciliate its stance with the rest of the world under the Biden administration. Going forward, we may see countries becoming more proactive in competing to take the lead in developing new rules and standards for achieving those goals. We will also transform and bolster our business models and aim to carbon-neutralize our business activities by 2050as we announced in June last year. 

Amid this changing global situation and business environment, Sumitomo Corporation announced an annual forecast of a loss of 150 billion yen for FY2020 in August. This forecast or plan was prepared considering two major factors,(1)those businesses that were already less performing would be heavily affected by COVID-19 and the economic downturn, and (2)we have resolved to dispose of unprofitable businesses for our structural reforms and budgeted the enough cost thereof. Based on this plan, we also positioned this fiscal year of 2020 as the year of crisis management and controlled our cash flow and secured liquidity on hand. 

Thanks to each member’s efforts not only for raising top lines but also for reducing costs, we have been successful so far to start showing recovery of the group consolidated basic income level other than one-off items. Let us stick to the basics and continue to strive under the crisis management mode towards recovery, also with your determination of accomplishing the first phase of our structural reforms. 

Sumitomo Corporation Global Research uses “Fleeting Recovery, Passing Stability” to describe 2021. Although there are concerns such as the current resurgence of the pandemic and mutation of the coronavirus, the pandemic will be curbed by the widespread use of vaccines and we can expect the global economy to move toward the robust recovery in the second half of the year. However, governments around the world have already expended enormous funds in various forms toward prevention of the pandemic and for economic plunge prevention and recovery, and there are many countries who are walking a tightrope in their fiscal positions. The trade friction between the United States and China—which casts a shadow on the global economy—also does not seem likely to improve, and we remain unable to be optimistic about the future business environment. 

Having said so, as I mentioned at the outset, it goes without saying that we will strive to maintain and enhance the measures for COVID-19.And it would also remain unchanged that we will continue what we have been doing i.e., we will keep and accomplish our own commitments to the cash control under the crisis management and the structural reforms. Then, in April, we will start the new medium-term management plan in which we will gear up the structural reforms to embark on its second phase. While the details will be announced in time to come, we intend to invest management resources in businesses which can grow significantly through leveraging our strengths. Therefore, we will thoroughly discuss, retune and enhance the business strategies of all SBUs, set KPIs and KAIs, go through the PDCA cycle, and develop new systems and measures therefor. We will also restructure the organization as required for its effective implementation. In 2021, let each of us stride forth firmly to get back on the growth trajectory. 

In year 2020, we made steady progress of several new initiatives in order to enhance our corporate base. In June, as part of enhancing our sustainability management, we launched our new policy of the sustainability, by identifying six key social issues and setting out our long-term targets therefor including our new commitment toward climate change issues. Going forward, we will bolster our business portfolio by strategically allocating management resources in line with this sustainability policy, which will surely take us to our sustainable growth in harmony with society. 

In addition, in August we were selected as one of the Digital Transformation Stocks by the Ministry of Economy, Trade and Industry and the Tokyo Stock Exchange in recognition of our efforts in promoting digital transformation ahead of our competitors and having worked on new growth and strengthening of competitiveness such as taking on the challenge of business model transformation. 

Enhancing sustainability management and promoting digital transformation are indispensable to the sustainable growth of our group. Let’s stay ahead, embed them into the SBU strategies and advance them. 

 
<Third and the Last> 
I again hope to share with everyone three key phrases for the new year. 

The first key phrase is “back to basics.” I mentioned the same in my New Year’s greetings two years ago. Let us relook at this concept again toward the start of the next medium-term management plan in April this year. Amid a global situation and business environment which are changing at a bewildering pace, Sumitomo Corporation Group will accomplish structural reforms and aim for an early recovery to a growth trajectory. We must, however, not lose sight of “Benefit for self and others, private and public interests are one and the same” and the other principles of Sumitomo’s business philosophy —which has been passed down from generation to generation in Sumitomo Group—as well as the Sumitomo Corporation Group’s Corporate Mission Statement. Anyone of us has to make various decisions and actions in a variety of circumstances, and I hope every one of us will always recognize and fall back on these values and standards set forth by our basics and business principles. I also want to add compliance as one of the important elements. 

Next is “challenge.” As mentioned, the world is changing, or rather, evolving rapidly. Let us see the trend of this new normal as an opportunity and take on fresh challenges in new value creation as well as the operational improvement. People tend to think about the risk of failure when taking on challenges, but today, not taking on challenges itself is a risk. Do not use the lack of experience as an excuse. If we remain where we are, nothing can be created. Nothing will change. In aiming for our vision, it is all about understanding what we lack, finding ways to get them, and putting them into practice. In addition to taking on your individual challenges, be sure to support the challenges of the other members around you. 

Lastly, “place emphasis on earning.” Sumitomo Corporation Group can recover our earning power and get back on a growth trajectory by implementing structural reforms as well as the systems and measures of the next medium-term management plan. If we create and provide new value to our customers and the society, we will receive profits as returns. In response to the world and society’s needs that keeps on changing and evolving, let us stay focused on earning and value creation and seek them out unabashedly while we transform the business portfolio. At each respective SBU, please thoroughly discuss and refine your business strategies. Then, aim high, act on our principles and execute them. We must do our best and also learn from one another. This is not only for the business units. This is an all-out effort that includes the Corporate Group that supports these activities as well as our regional organizations around the world. 

I hope to start 2021 with these three key phrases always in mind—back to basics, challenge, and place emphasis on earning—that I just mentioned. In addition, let us keep the phrase “Enriching lives and the world” close to heart as we gather the total strength of Sumitomo Corporation Group and make this a year where we stride forth firmly toward new growth. 

In ending this New Year’s greeting, I would like to send my regards to everyone who has been affected by COVID-19 as well as their families. At the same time, I wish that 2021 will be a wonderful year for everyone and Sumitomo Corporation through everyone taking proper measures against the pandemic. 

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