Jan. 04, 2022
2022 President’s Message: New Year’s Greeting
The year 2021 was another year that saw the world greatly affected by COVID-19. Lockdowns and declarations of a state of emergency were announced in many countries and regions, and restrictions were placed on economic activities and our daily life. At the same time, with various restrictions and inspections in place, the Olympic and Paralympic Games in Tokyo were held after being postponed for a year through the cooperation of people all over the world. The omicron variant is raising the level of alert again, but overall, we are starting to see signs of recovery in the global economy. Behavioral patterns and the state of society under the new normal are also gaining foothold.
It is in such an environment that Sumitomo Corporation formulated our new Medium-Term Management Plan “SHIFT 2023” and embarked on a new start toward the return to a growth trajectory. As you know, our Group has been working as one to execute the strategies of each SBU, thoroughly go through the PDCA cycle to monitor progress, and aim to shift our business portfolio. I am very encouraged by the steady progress, and I wish to express my sincere appreciation to everyone for putting in your best.
Year 2022 External Environment
Next, let us look at the prospects of the new year 2022.
2022 will be the year of the mizunoe-tora or “water tiger,” of the Chinese zodiac, which has a 60-year cycle. It is based on the ancient theory of Yin-Yang and the Five Elements and has been deeply enrooted in the lives of Japanese people. Mizunoe has the meaning of “to be filled with joy of starting a new life” and tora—which means “tiger”—forms part of the Chinese character for “earthworm” and symbolizes the growing of plants and trees in spring through the work of earthworms. Therefore, the Year of the Water Tiger is expected to be the foundation of new growth, with new life sprouting after the harsh winter. When I looked it up, the following things happened in 1962, the previous Year of the Water Tiger.
〇 Tokyo became the world’s first city to reach a population of 10 million people (with New York in second place with 7.78 million people), and Japan’s economic growth was gaining momentum toward the 1964 Tokyo Olympics.
〇 At the global level, there was the Cuban Missile Crisis, when tensions between the two superpowers came close to a catastrophic nuclear war but was narrowly averted through dialogue between the leaders of the United States and the Soviet Union.
Now, what will the year 2022 be like? Sumitomo Corporation Global Research describes 2022 as a year of “A turbulent recovery and a new order created by inward-looking global powers.” Although the global economy is maintaining signs of recovery, there are also uncertainties as represented by the omicron variant, the prolongation of tensions between the United States and China, and rising resource and energy prices. It is expected that various new orders will be created under such circumstances. Specifically, on climate change, which is a social issue shared globally, we can expect an acceleration in the consideration of new mechanisms toward achieving carbon neutrality—such as carbon pricing and baseline of sustainability-related disclosure —as discussed at COP26 late last year. The business environment surrounding us and the ideal state of value creation required by society will also likely change. Companies that commit toward solving social issues and pursue the realization of a sustainable society from a medium- to long-term perspective will be the ones that gain more business opportunities. For us to survive and succeed in such an environment, we need to understand the essence of such social trends and strategically take on issues while managing the risks. However, that does not mean we are doing something different. Applying Sumitomo Corporation Group’s strengths to social issues and shifting management resources to businesses that deliver results is truly the strategic discussions that we are conducting now, and it is important to steadily implement them. If there is anything different from the past, it is the speed of change. There is nothing more critical than honing our awareness about the changes in the business environment surrounding each SBU, incorporating such changes into our strategies ahead of our competitors, and pursuing business opportunities.
New Year Resolutions
As we enter a new year, there are two points which I hope everyone will keep in mind and put into practice.
The first is “integrity and sound management.”
Ultimately, the basics of business is about building relationships of trust between people and working together while helping each other. When putting this into practice, I think there is nothing better than face-to-face communication. It is also the reason why the New Year’s greeting is being conducted face-to-face this year even though we had to limit the number of people. Going forward, I also hope to meet face-to-face with fellow employees and our clients and partners through business trips within and outside Japan while keeping an eye on the COVID-19 situation. Similarly, please also discuss and act on how to deepen relationships of trust to maximize organizational output in this with-COVID-19 era while taking into consideration the circumstances of your business sectors, customers, and counterparts.
Integrity and sound management is also at the root of our Group Management Policy.
The Sumitomo Corporation Group comprises approximately 400 group companies, and the respective SBUs communicate with these companies daily. Each company has a latent ability to grow, and I think there is ample room to apply this ability. If the SBUs deepen their interactions with these 400 group companies and further strengthen their relationships of trust through proactive conversation; if the group companies establish and implement resilient business management systems on their own and maximize the application of that strength through internal collaboration within our Group; and if the SBUs themselves also accomplish further growth. If we can achieve all these by building upon integrity and sound management, we will be able to significantly expand our Group’s overall corporate value. Centered on the leaders of each SBU, I hope each member, whether in Japan or overseas, will undertake this effort together.
The second is “Grand Design.”
An enterprising spirit was passed down to us by our predecessors, and one of the keys toward putting this spirit into practice is Grand Design. When planning the growth of existing businesses and development of new ones, besides goals regarding short-term profits and scale, we should think deeply and broadly from a long-term perspective and formulate a basic concept. What are we aiming for beyond the short-term goals? How will we change the industry? What value and transformation are we bringing to society, and how do we keep doing so? We expect the future to be even more uncertain and society to change even more drastically. It is in such times that we must not become distracted by the changes in front of us and use a long-term perspective with a view of the future to pursue the realization of a sustainable society to help the Sumitomo Corporation Group to grow further. This is not limited to the businesses of the SBUs. It is applicable to all organizations and every kind of work. At each organization, please discuss how to incorporate this Grand Design into your daily activities and take specific actions to grow and manage our Group’s assets.
Last year, our performance went better than the initial plan as we started to see the results of the structural reforms being undertaken by each organization as well as having a tailwind in the business environment. At the same time, 2022 will be the year when our true value is tested on the kind of results we can deliver when this tailwind tapers off. Structural reforms are tough as they come with short-term pain but accomplishing them will allow our Group as a whole to aim for an even higher growth trajectory. To solidify the business portfolio shift that we seek under SHIFT 2023, it is important to accomplish the things that each of us say we will do. This is the moment of truth. Let us unite as one Group and make this a year where everyone accomplishes the things that must be done.
Finally, I wish to express my sincere sympathies to those who have fallen ill to COVID-19 as well as their families. I pray that 2022 will be a wonderful year for the greater development of the Sumitomo Corporation Group and a happy one for you and your families.