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Ghosn: Learn from China


Unswerving cyclist
14 Mar 2002
Q&A: Carlos Ghosn: What Japan Needs Is a Vision
Carlos Ghosn, president and chief executive of Nissan Motor Co., has just announced record six-month earnings of $2.4 billion at the Japanese automaker. Better yet, after a long drought, Nissan is finally producing hit models like the redesigned Altima sedan, the Micra subcompact, and the back-from-the-dead 350Z sports car. Assistant Managing Editor Joyce Barnathan and Tokyo auto correspondent Chester Dawson spoke to Ghosn recently about Nissan's turnaround, its lessons for Japan, and the year ahead.

Q: Are other companies in Japan adopting Nissan-style restructuring?
I don't think today we can see any evidence in Japan that companies are following the whole process. But I see more examples of specific items [of my reform agenda] being analyzed. For example, in 1999 we sold a lot of noncore assets and equities. Today, cross-shareholdings [by Japanese companies] are being dismantled systematically. Certainly the fact that Nissan (NSANY) has done it in such a transparent way gives courage to a lot of people who would like to do it but have been hesitating.

Q: Is the pace of reform in Japan glacial, or does it just look that way?
It's slow, it's very pragmatic. One would expect a quicker kind of resolution. But I would say it's not a surprise. The Japanese people are usually very prudent, even when they are convinced change is necessary. They want to make sure that the appropriate steps have been taken--that [they're] not too much but enough to address the issue.

Q: Why can't Japan break out of its deflationary spiral?
When you don't have a clear vision of the future, there's not an incentive to consume or to invest. Until the public sees a clear--or clearer--vision for the future, I don't think what you're seeing today is going to drastically change, frankly.

Q: What kind of vision does this require?
Look at the last Congress of the Chinese Communist Party, which had a very simple vision: multiply by four the national income in 20 years. Period. They set the target. How are they going to do it? That's another story. But at least they are sharing with everybody in the country where they should be in 20 years. That's very motivating.

Q: What about the Japanese?
The Japanese have done this in the past. And they can more than do it. Why? Because you have this capacity that when people like the vision, they're going to do better. When it comes to executing a vision, they're second to none.

Q: But is the country willing to accept the pain of reform?
If you show the pain but don't show the vision, you're going to get what you get from anybody. In the case of Nissan 180 [Nissan's latest restructuring plan], the vision is 1 million more cars sold, top level of profitability in the industry, and no debt. When people see this, they say: `Yeah, I'm ready to fight for this.' If you eliminate the benefit, why will people want to work 14 hours a day?

Q: What's your outlook for the U.S. car market in 2003?
Our most probable scenario for next year is that the market will be down compared with 2002. In 2002, [the industry] sold around 17 million units. Our most probable scenario [for 2003] is between 16 million and 16.5 million. In part, the market this year has been inflated by the very aggressive level of incentives that, in my opinion, won't be sustainable.

Q: What if the U.S. faces deflation?
I don't see a heavy decline in the [auto] market because of stories about the U.S. and deflation. To face deflation, you have to have people accepting it and not reacting to it. I don't think the different actors in the economy of the U.S. are ready to accept deflation.

Q: How big of an opportunity is China?
Last year, we sold less than 40,000 cars [in China]. This year, our forecast for the moment is about 80,000. And we're positing a target in 2006 of 220,000 cars--without counting the buses, trucks, and light-duty trucks. And then in 2010: 450,000 cars.

Q: What do you make of the corporate governance crisis in the U.S.?
It's a kind of wake-up call for everybody about the necessity of transparency. If your question is: `Will the U.S. economy overcome this?' then there is no doubt about it. I don't think it's going to be a long-term concern. It will be dealt with--if not now, then in the next six months.

Q: What has been the toughest part of your job at Nissan?
In the beginning, the toughest part was raising motivation when you have very tough things to do. Now, it's to avoid complacency.


Yeah, Japan's economy isn't that great, and it doesn't help with a negative birthrate either...

But seriously... The economic future is in China... with 1.5 billion potential customers, it's like HUGE sea of gasoline just waiting for a match... The market is going to explode in China, and with China's mass new development projects to be completed before the 2008 olympics, I think it will be the economic power of the future...

my 2 cents...
I couldn't agree with you more. China already has a huge burgeoning economy, behind only the U.S. and Japan. Once it starts to really go online, establish it's own line of domestic autombile manufacturers, etc. etc., China may very well be the next great marketbase assuming their government doesn't overstep it's boundaries. Will definitely be interesting to watch and see how it all unfolds over the next 10-20 years and I suspect they will be able to write their own ticket so to speak economically as a result. Hmm... I guess i'd better start learning Chinese... 8-p
china is a huge population indeed, but the percentage that is able to represent a financially standing market is still small, say a 5%. the rest is rural undevelopped area.
so multiply all your estimations by 5% and you'll get the true figures.
china citizens need a change of mindset which goes at a much slower pace as the economic milestones set by the government. we are talking about generations here.
it will take another decennia or two to see the full explosion, time enough to learn chinese, which is interesting anyway
China must learn a lesson from Japan economy crisis...
Nowaday, China economy has extremely heated, nearly expose.....
BEWARE!!! the coming collapsing of China economy~~~ Becareful
Jean-Francois said:
Without true democracy, a vision can be just another hallucination.
Yes, you are right!
Like Taiwan, great democracy, fantastic poll... caused 6 millions VS 6 millions, this is not a hallucination...WOW!!!
If China,60 millions VS 60 millions

Oh, my god........ :sorry:
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Hello Dragon:

I would like to tell you that Taiwanese people have been trying to set up a democratic government since the past decade. Who knows whether they will succeed or not?

But all my Taiwanese friends tell me that their government is very corrupted. They say it is a disease inherited from the previous KMT government. Taiwanese people try very hard to get rid of the corruptions but they fail. They say they are disappointed and feel ashamed of their government.

The essence of the story is:

(1) Taiwanese people acknowledge their mistake, and most important, they are trying to improve the situation.

(2) Taiwanese people have the right to protest in Taiwan. For more than a decade, Taiwanese media is allowed to criticize their government on a daily basis, as in most democratic countries. Some Taiwanese individuals even went on TV to slander their President. None of them has to go to jail or labour camp for that.

Anyway, since I am not Taiwanese, I don't want to spend any more of my time to talk about this.

Bye bye bye.

You can only be young once, but you can be immature forever. - by a fool
Thanks for your great explanation, Mr Maple.
Yes, probably I am a fool and immature youth, but I realized that western capitalism democratic system is very very difficult occurred in a great population, multiracial and poor nation.
Capitalism democratic system, yes, really maybe suitable in US, European, Japan etc because those are well-developed countries. But if this system set in a great imbalance of people income nation, it will be poor poorer, rich richer...Oh..... Riot, rebellion everywhere!!
Indeed, China has her unique democratic system, this is also truly democratic. Only some thought they are only the truth will ignore... Taiwan, a quite developed country also happened those miserable staff, this is hard to think if another coast also happened like this, world economy really.....???
A well democratic system must be supported by a strong economy.
Well, I am not a professional economist, I don't want to spend any more of my time to talk about this. :emoji_laughing:
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emperor said:
Indeed, China has her unique democratic system, this is also a true democratic.
Democracy (from M-W):
"1 a : government by the people; especially : rule of the majority
b : a government in which the supreme power is vested in the people and exercised by them directly or indirectly through a system of representation usually involving periodically held free elections"

Rule of the majority in the PRC? The CCP may be a party with a lot of members, but the majority? Far from it!
There may periodically held elections, but they're not free. You don't have a choice over there.
True democracy? How would you define that?

A well democratic system must supported by a strong economy.
Well, a strong economy definitely helps, but it's not a necessary requirement. Look at India: they have some problems but in general the democratic system there seems to work.
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