August 11, 2020

Now We Need Flexible Minds and Strong Will to Change

The products and services that consumers are looking for have been transformed by the behavior of avoiding contact with other people. Revenues in land and air transport are down by 70%, and accommodation, food service restaurants, gift stores, and other businesses which had benefited from inbound tourism (31.88 million foreign visitors to Japan in 2019) are in a desperate plight. On the other hand, people are spending more time in their own homes, and turning their attention to foods and games. In more detail, they are looking at functional foods and supplements that address immune resistance against the coronavirus.

The key point here is that companies which were already moving forward with digitalization, artificial intelligence (AI), use of robots, and working method reform, will step up the speed of those processes because of the coronavirus. That will accentuate the strength of companies that catch the waves of that structural transformation.

Tokyo Electron, the semiconductor manufacturing equipment company, recorded its best results ever. The medical information company M3 is making record profits as users increase on the sites it has developed around the world. Daifuku, strong in conveyor systems for warehouses and factories, also recorded good results.

Another aspect that has come into sharper relief is winners and losers within the same type of business. Toyota managed to remain in the black while all its competitors dropped into the red, hit by the slowdown in new car sales. Sony leads in electrical equipment. Constant effort to hone product strength, and earnest cost control, make a more obvious difference in hard times.

It’s a mistake to shrink back when faced with a crisis. Companies need to ride out the crisis first, and then read the times and take the initiative for forward-looking investments. Those which do not can only retreat. Management able to create new value has never been needed more than it is now.