Japan’s Newest Foreign CEO Asks: Where Are the Women Managers?
(Bloomberg) -- For new managers in foreign countries, many things can be surprising. For Jean-Marc Gilson, the newly-arrived head of a 90-year-old Japanese chemical giant, it was an absence that stood out.
“I’ve been to 25, 30, 40 meetings so far, and I have yet to see one woman from a management position in any of these meetings,” said Gilson, the Belgian who took over as chief executive officer of Mitsubishi Chemical Holdings Corp. this month. “I was amazed.”
Gilson, 57, is no newcomer to Japan, having spent five years in the country in the 2000s as an executive of what is now Dow Inc., where he managed a venture with Japan’s Toray Industries Inc. He was headhunted from France’s Roquette to lead the $11 billion member of the Nikkei 225 Stock Average that has interests in everything from petrochemicals to pharmaceuticals.
Gilson says in the absence of government intervention, he’ll push internally and actively promote women when faced with candidates of equal skill. Mitsubishi Chemical has women in 6.7% of management positions, and has two women on the board of directors.
“The quality is here. We owe it to our employees to give them the chance to go forward,” Gilson told Bloomberg News in an interview. “We can do better.”
The issue of gender equality remains a hot topic in the country after former prime minister Yoshiro Mori caused an international incident when as head of the organizing committee for the Tokyo Olympic games, he said women talk too much during meetings.
Women make up just 8.4% of board positions on listed companies in Japan, according to a March 2021 World Economic Forum report, less than a third of the ratio in the U.S. A government target to boost the number of women in leadership positions to 30% by 2020 was pushed back to a vaguer date of “as early as possible.”
The issue of gender equality is far from the only challenge facing Gilson. The more immediate mission will be to restore the materials company to profitability, with Mitsubishi Chemical forecasting a net loss of 48 billion yen ($441 million) for the fiscal year ended March. It reports results on May 12.
“We have to ask ourselves some tough questions,” Gilson said of the firm’s vast portfolio of businesses. “There will be no sacred cows.”
With Prime Minister Yoshihide Suga targeting a 46% cut in greenhouse gas emissions by 2030, it comes as no surprise that Gilson indicates he doesn’t see a strong future for the petrochemicals business in Japan. He said he’s taking a hard look at sectors that won’t contribute to future growth, and those that don’t fit into a carbon-neutral environment.
“If you look down the road, these are not the vectors for growth that we would be looking into,” Gilson said of the firm’s petrochemical business. “This is low-margin, and it’s a really hard business.”
Such businesses will probably be “leading candidates for reorganization,” SMBC Nikko analyst Go Miyamoto wrote in a March report, predicting that the lowest margins this year to be in petrochemicals, health care, and carbon products, though he added that the health-care business has steep upfront costs. Mitsubishi Chemical bought out its drugmaking unit Mitsubishi Tanabe Pharma for $4.5 billion in a deal completed just over a year ago.
Making decisions to sell or shut down historic but unprofitable operations has in the past been a reason for Japanese boards to turn to foreign executives, fearing local management might find such decisions tricky. Sony Group Corp. turned to Howard Stringer in the 2000s, hoping he could unite the firm’s disparate and often warring branches. While Stringer’s term was widely viewed as a failure, a more successful example might be that of Carlos Ghosn. The controversial executive-turned-fugitive was hailed as a hero for undertaking a difficult restructuring of Nissan Motor Co.’s businesses in the early 2000s, long before his arrest and escape.
The specter of Ghosn hangs over Gilson’s appointment as the Belgian is the first foreigner to be named head of a Nikkei 225-listed firm since Ghosn’s arrest in late 2018. Gilson shrugged off suggestions he was daunted by the challenge.
“I think I have a much more complete understanding than what other gaijin would have about Japanese companies,” Gilson said, using the Japanese word for foreigners.
Even before Ghosn, the record of foreign appointments is mixed. Craig Naylor quit as CEO of Nippon Sheet Glass Co. after less than two years in 2012, citing a clash with the board. In 2011, Michael Woodford was fired after just six months as president of Olympus Corp. after questioning the company’s accounting practices. Gilson’s case is also unusual with his coming from another firm, with major Japanese boards often reluctant to hire from outside, much less from abroad, when replacing top management.
Yet perceptions of foreign managers could also be changing. Owen Mahoney has led Nexon Co. into the Nikkei 225, along with a nearly 800% share price rise. U.S. hedge fund ValueAct Capital Management has been credited with shaking up Olympus and doubling profits after installing two of its members to the board. Corporate governance reforms encourage firms to add more foreign executives. Gilson says his role is to further this change and add more diversity for what is not an international company.
“If we were a truly international company, I’d be one of hundreds being here, of gaijin - I’m not,” he said. “You need different viewpoints.”
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