Execs abandon Japan for greener business pastures

June 26, 2013

By YASUYUKI NISHII/ Senior Staff Writer

SINGAPORE--Hiroshi Suzuki is one of a handful of Japanese executives who have given up on Japan as a base to conduct global business operations and opted for a more cosmopolitan setting.

Suzuki is president of optical lens and eyeglass maker Hoya Corp., which is listed on the Tokyo Stock Exchange’s First Section and headquartered in the capital’s Shinjuku Ward.

Yet, he moved a major part of his business to Singapore, figuring that access to on-the-ground information and other opportunities would enable him to better steer the company.

For the past year and a half, Suzuki has spent more than half of any month in Singapore.

“What a president should do is develop a strategy on how to allocate funds and personnel to businesses with higher growth potential,” he said. “I have better access to information required for such responsibility outside Japan.”

Suzuki, 54, has a long-term contract on a residential floor of an exclusive resort hotel on Sentosa Island and commutes to his office in the business district in central Singapore.

Suzuki returns to Japan mainly for Hoya’s 10 board meetings a year. He consults with representatives of company divisions once a month, either at a meeting outside Japan or through a teleconference.

“From our factories and workers to our customers and rivals, everyone is based outside Japan,” Suzuki said. “I considered relocating our headquarters abroad, but I decided that I would go out first.”

Five of Hoya’s seven board members are from outside the company. The remaining two, Suzuki and Kenji Ema, chief financial officer, are both based overseas.

Ema, 65, set up the company’s financial headquarters in the Netherlands in 2003 and works out of the country.

In late April, Suzuki and Ema met at Hoya’s headquarters in Tokyo and discussed dividends and other issues for an hour. They soon left Japan for their respective bases.

“If we have something to discuss, we can communicate via e-mail and other means,” Suzuki said. “We do not have to get together.”

Sunstar Co., whose main business is health care products, operates its global headquarters in Switzerland.

The company chose Switzerland to change the way its employees view the global business environment.

“How will the world look like if we see it from Switzerland, not from Japan?” a Sunstar official asked.

Sunstar Group Chairman Yoshihiro Kaneda recently moved his base for business to Singapore to expand the company’s Asian operations. He rarely returns to Japan.

The company has no plans to place Japan, whose market is shrinking, at the center of the group’s operations.

A growing number of Japanese companies are relocating some of their headquarters functions or their business divisions abroad.

There are 60 such companies in Singapore alone, including Panasonic Corp., trading house Mitsubishi Corp., shipping company Nippon Yusen KK and chemicals producers Mitsubishi Chemical Holdings Corp. and Mitsui Chemicals Inc.

Mitsui Chemicals moved a division in charge of sophisticated resins two years ago. It has a production base in Jurong Island, which hosts a number of petrochemical complexes.

Atsushi Komoriya, president of Mitsui Elastomers Singapore Pte., a local subsidiary, said: “Everyone is here, from U.S. chemicals giants with which we compete for market shares to automotive manufacturers to which we supply our products. The basic rule is to do business close to where there is business. It will take too long if we stay in Japan.”

At Hoya, Suzuki and Ema have discussed where each business operation, such as production, sales and research and development, can be conducted most efficiently.

The company moved its eyeglass division to Thailand in 2009 and later relocated its hard disk division to Vietnam and its intraocular lens division to Singapore.

“When it came to whether we can choose Japan as the best place to do business, our conclusion was that we have to choose elsewhere for most operations, such as finance and strategy planning,” Ema said.

A key goal for Hoya’s Dutch-based financial headquarters is to minimize tax payments, drawing on different taxation systems around the world.

In the year ended March, Hoya’s group-wide effective corporate tax rate had fallen to 20.3 percent, compared with 35 percent in Japan.

Hoya concentrates earnings at regional headquarters in countries with low corporate tax rates or at manufacturing companies in Asia and elsewhere where tax burdens are relatively low.

Ema said U.S. and European shareholders consider taxes as business costs and do not invest in a company unless it reduces tax payments at least to levels of Western companies.

“Companies have no choice but to adapt themselves to the environment,” he said. “We are in an era when companies can choose a country where they make products, employ workers and pay taxes.”

SINGAPORE FACES PROBLEMS

As part of its strategy to bolster economic growth and increase tax revenue, Singapore has sought to attract foreign companies, top-level engineers and wealthy people from around the world by offering them an environment in which they can operate freely.

Its corporate tax rate of 17 percent is among the lowest in Asia. An even lower rate applies to regional headquarters and financial centers set up by foreign companies.

Entrepreneurs and wealthy individuals who transfer a certain level of assets to Singapore are granted permanent resident status and exempted from inheritance tax.

However, the influx of foreign companies has caused office rents in central Singapore to double compared with a few years ago. Real estate prices have soared beyond the reach of residents.

Prices of automobiles and other products have risen more than wages. Real income has fallen, hitting low-income earners particularly hard and widening the wealth gap.

Singapore, saddled with an aging population, is trying to maintain growth by making up for a labor shortage with foreign workers.

The population is expected to hit as high as 6.9 million in 2030, with the ratio of foreigners reaching 45 percent, up from the current 38 percent.

In February, 4,000 people filled the Hong Lim Park to protest the government policy, many carrying hand-made placards.

Demonstrators said Singapore was facing a national crisis and would disintegrate if foreigners accounted for nearly half of its population.

The government, reacting to popular sentiment, felt compelled to announce plans to curb the inflow of companies and foreigners and to raise wages.

By YASUYUKI NISHII/ Senior Staff Writer
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The office of Hoya Corp. President Hiroshi Suzuki is on the 59th floor of a building, far right, in Singapore’s financial district. (Yasuyuki Nishii)

The office of Hoya Corp. President Hiroshi Suzuki is on the 59th floor of a building, far right, in Singapore’s financial district. (Yasuyuki Nishii)

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  • The office of Hoya Corp. President Hiroshi Suzuki is on the 59th floor of a building, far right, in Singapore’s financial district. (Yasuyuki Nishii)
  • Hiroshi Suzuki has a long-term contract on a residential floor of a resort hotel in Singapore. (Yasuyuki Nishii)

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