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Jan. 06, 2014
Kuniharu Nakamura
President and CEO, Sumitomo Corporation

The President’s New Year Message for 2014

Happy New Year to all of you. I extend New Year’s greetings from our headquarters in Tokyo to all the members of the Sumitomo Corporation Group around the world.
 
We had a nine-day New Year’s break here in Japan, and so I imagine many of you took overseas or domestic trips to refresh yourselves in body and spirit. I started the new year in the snow country to the north. On the morning of January 1, the sky was blue, without a single cloud, and the air was bracingly cold; I felt a combination of tension and confidence and sensed that 2014 would be a year full of hope.
 
Last year, 2013, we saw some signs of brightness in the Japanese economy, which had long been suffering from stagnation, thanks to factors like the economic effects of Abenomics and Tokyo’s successful bid to host the Olympics and Paralympics , and we were able to feel some liveliness in the economy for the first time in quite a while. In the global economy, the year brought a sense of closure to the phase of rising resource prices that arose from the quantitative easing following the Lehman shock of 2008. In the middle of the year, expectations that the United States would start tapering its third round of quantitative easing led to slowdowns in emerging economies. But private-sector demand propped up the economies of advanced countries, and overall the global economy has kept growing at a modest pace.

How about this year? Sumitomo Shoji Research Institute expects 2014 to be a year of “economic clarity but political opacity.” On the economic front, expansions led by solid private-sector demand in the advanced countries, including Japan with its Abenomics, are expected to continue powering overall global growth in 2014. On the political front, in the United States, with midterm congressional elections approaching this November, the confrontation between Democrats and Republicans can be expected to grow even more intense, leading to a further weakening of President Barack Obama’s ability to govern.
 
In China, the government will continue to face the difficult task of maintaining its domestic hold through foreign policy and reform initiatives while seeking to resolve the many issues the country faces and to achieve economic growth. A number of major Asian countries will be holding national elections, while in the Middle East geopolitical realignment will be taking place. In all these places the outlook is unpredictable.
 
We believe that this situation in which there is no single great power like the United States leading the world—an unstable state that can be described as “nonpolar” and “multipolar”—will continue this year and for some time to come. In such a world, political instability and disorder can have unexpectedly great effects on the economy. We can no longer focus on the moves of a single country, as we could in the days of a unipolar setup; in a multipolar world, we must keep our eye on multiple poles at the same time. Among these, I think we will need to pay particular attention this year to developments following the Fed’s decision late last year to start the tapering process and the effects of the process on the emerging countries.
The emerging countries that are liable to be affected have a couple of features in common: They are behind in terms of establishing the foundations for economic growth, and they have national elections coming up this year. And as you know, some of them have already felt the impact of currency depreciation.
 
So this year I want all of us to raise our antennas higher for better sensitivity. It is important for us not just to get information from secondary sources like the media, think tanks, and financial institutions in countries around the world but also for us to gather as much as we possibly can directly from the people we deal with on an everyday basis. I would ask in particular those of you working in offices overseas to strive this year to extend the personal networks that you have already built, making our company-wide set of networks broader and deeper. And let’s strive to share information in a timely manner and respond to changes with flexibility on a company-wide basis. At the same time, however, I ask you to avoid making simplistic judgments about doing business in particular countries—especially emerging countries—based only on short-term developments like capital flight and currency depreciation. For this purpose, it is important that we constantly keep our eyes on the big picture of trends in politics, the economy, and society as a whole and consider each country’s development from a medium- to long-term perspective. When changes happen in front of our eyes, we should carefully judge whether they are just passing phenomena or structural issues, taking a longer-term view of the situation. I think it is important for each of us to think carefully about the impact of such changes on our own businesses. Looking at this from a different angle, I would say it is crucial for us to formulate our own medium- to long-term strategies in advance and maintain them as our basic stance. Provided we have this sort of firm axis, even if dramatic changes suddenly occur, we will be able to examine the trends calmly and respond flexibly. And I think we will also be able to look at the changes with a positive attitude and turn them into chances for the creation of new value.

The Sumitomo Corporation Group has a Corporate Vision declaring, “We aim to be a global organization that constantly stays a step ahead in dealing with change, creates new value, and contributes broadly to society.” I believe that tackling challenges with the backing of our principles based on this Corporate Vision is the proper way for us to act in a manner befitting the distinctive identity of our Group. And I hope that we will contribute to economic growth in countries around the world, while winning favorable appraisals for meeting and exceeding the high expectations directed toward us, by following through to the end in the face of each one of these challenges. Last year we set up our vision of what we aim to be in 2019, our centennial year: Be the Best, Be the One.
 
In my New Year’s message last year, I compared our course over the coming seven years to driving a car with seven gears, and I said that 2013 would be the year for us to get into first gear and make a new start. To get underway, we formulated medium- to long-term strategies for our vision of what we aim to be within each organizational unit. And in April we launched our new medium-term management plan, Be the Best, Be the One 2014(BBBO 2014), heading toward realization of this vision. We also set clear priorities for our new investments under BBBO 2014, which are to be of the largest scale in our history, decided on plans for implementation, established a system for speedy review, and moved on to the execution stage. At the same time, we moved to achieve even greater leverage of our integrated corporate strength by consolidating our overseas operations into four greater regional organizations and our headquarters operations into five business units. With these moves, we established the management setups and systems required to achieve an even higher level of growth.
 
Today we will shift up to the second of the seven gears—starting a year when we will accelerate to a higher speed than last year. I want to make this year the beginning of a new stage in which we will break out of our previous range and aim for record high profits to put us on the way toward achieving our vision for 2019. In that sense, I see this year as an extremely important turning point, testing whether we are able to reach our budget targets for fiscal 2013, which is nearing its end, achieve results matching our goals in fiscal 2014 as well, and move ahead to a new stage. If we can reach our targets, we will be considerably closer to realization of our vision for 2019. So let’s all work in tandem throughout the company to raise ourselves to the next higher stage.
 
As we start this new year and aim to make it a year for transitioning to the next stage, I would like to reconfirm two points that I made at our General Managers’ Meeting last November.
 
The first point is to “walk the talk”—matching our deeds to our words.
This means striving with all our might and following through to the end to accomplish what we said, what we decided, and what we planned. As I mentioned earlier, it is possible that political developments in quite a few countries could lead suddenly to situations in which our conventional wisdom will no longer apply. Even if that happens, we should respond by adapting to the changed circumstances with cool heads. And we should strive valiantly to implement the plans we have adopted without giving up. Let’s act with this sort of resolve.

The second point is to “Be enthusiastic, Be hungry, and Be persistent!”
I want you never to forget the enthusiasm that makes us want to tackle new challenges, the hunger that pushes us to make our businesses grow bigger, and the persistence that makes us not give up until we have realized our objectives and dreams. We should make this our norm. This enthusiasm, hunger, and persistence are in our corporate genes. This is the DNA that we have inherited from our predecessors, who started our activities as a trading company from scratch after World War II and, under the motto “The enthusiastic amateur beats the professional,” built the business foundation we have now. Let’s bring back that DNA and pass it on to our juniors and the generations to come.
 
These two points—the determination to “walk the talk” and the DNA of enthusiasm, hunger, and persistence—have a feature in common: They begin with the sentiments of each individual. In order to turn our sentiments into actions and results, this year let’s start by expressing them more frankly and openly. If we succeed in a business competition, let’s rejoice, and if key players in the competition are at hand, let’s give them solid praise. Conversely, if we fail, let’s show our chagrin, and let’s give solid encouragement to subordinates and colleagues who experience defeat. Let’s build a team full of vitality whose members can all join together and share in each other’s joy and chagrin. I myself also want to share the joy with all of you, when we reach a major goal in this year. Let’s all work in tandem to break through to a new, higher stage
 
In closing, since this is a New Year’s message, I would like to touch on the fact that 2014 is kinoe uma in the traditional oriental 60-year cycle. kinoe is said to stand for plants sending forth their new sprouts breaking through the surface of the ground as winter ends and spring begins. And uma means “horse”—an animal speeding like the wind. This year brings together these two signs. Let’s take advantage of this confluence to make it a year for galloping toward our goal and for sending forth new sprouts reaching toward the sky, so as to break through to a new stage.
 
To conclude my New Year’s greeting, I wish for you and your families all to be healthy and successful throughout the year to come.

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