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CENTURY TOKYO LEASING CORPORATION

CTLC to tap enormous potential for synergies between Japanese and American firms

Interview - October 1, 2015

For the Century Tokyo Leasing Corporation (CTLC), trusted partnerships have always been key. Now as the company focuses on expanding its international operations to become a comprehensive financial services enterprise with even greater reach, President and CEO Shunichi Asada explains how win-win ventures with local partners will be key to succeeding.

 

SHUNICHI ASADA, PRESIDENT AND CEO OF CENTURY TOKYO LEASING CORPORATION
SHUNICHI ASADA | PRESIDENT AND CEO OF CENTURY TOKYO LEASING CORPORATION

CTLC aspires to become a “comprehensive financial services enterprise.” As CEO, what are your top priorities to achieve this and how important is the continued internationalization of CTLC to this goal?

Six years ago, we focused on the domestic front. We are not acting as a globalized industry. So it has been in the last six years that we have made this large shift from domestic to international arena. And for Japanese companies, there are a lot of obstacles they have to overcome in order to get to that level of globalization. 

And the thing that I am most aware of is that you have to make changes. So, if you are going to take on a new challenge, you have got to get it together with the risks. 

In the manufacturing or trading field, for example, many fine Japanese companies are known around the world. They have a high level of recognition. And have spent a long time struggling, and that struggle is inherent in the process of going global. They gained their experience at a global stage and then dealt with what came up. So I think that is the approach we need to take.

CTLC has aggressively expanded overseas in the past with M&As, BPI in the Philippines, TATA Capital in India, CIT in the US and Ireland, to name a few. Why is it important to have a local partner when TCL enters new markets?

Actually, that is one of the characteristics of our firm – to work with our partners, even in Japan, not just overseas. In Japan, we have many partners (such as Kyocera) and we feel that working with partners has advantages for both sides.

And when it comes to overseas in particular, we are not terribly knowledgeable about local credits, so having an overseas partner gives us a chance to get the information that we need. So they work on the credit aspect with us and help us expand the business overseas. And to work closely with customers in that country, we feel it is crucial to have a partner.

We are professionals in the field of finance. And so we can provide support in areas relating to finance. It works both ways, we gain and we give. As for overseas markets, other companies overseas need Japan’s business expertise. We have expertise about Japanese business so we can share this. It is a win-win situation. 

TCL just boosted their US portfolio and aircraft leasing operations by partnering with CIT Group, which has the sixth highest number of aircraft to lease in the world. Why the US aviation sector and what are your expectations for this venture?

We see the aviation industry as a huge growth industry, and the US is the largest market in that industry. So I think that if you want to be a prominent player in aircraft financing, you need to be in the US.

Back in the 1990s, for a period of 12 years, our shareholder Mizuho Bank (then the Dai-Ichi Kangyo Bank) held a majority stake in CIT, and therefore there is a strong affiliation between the two companies.

With respect to the aviation market, we feel that there is going to be huge growth globally, especially in Asia. We feel that we can combine the know-how that we have cultivated through our network with the expertise of CIT to grow in Asia, and also reap the benefits from the growing aviation market, globally.

The imminent signing of the Trans-Pacific Partnership (TPP), which is comprised of 12 countries, 40% of the world’s GDP and 1/3 of its trade, will be the largest trade deal in history. Do you believe there will be opportunities under the TPP to expand your operations in the US?

I think that TPP is going to have a huge impact, not just on Japan, but on other countries. It is going to affect everybody. And, of course, we have to take a cautious approach because each of those countries has had its own interest involved. And I think that the TPP could lead to bigger chances for everybody.

For us, right now, our three big markets are East Asia, the Asian market and the US. And I think that we are going to see significant growth in all of those three areas, and of course, the US is number one when it comes to growth potential. And also, the US is extremely rational in finding their approach to growth.

CTLC has substantial operations in financing and facilitating both Japanese companies to go abroad as well as foreign companies who are interesting in setting up operations here in Japan. Why should U.S. companies partner with you when they are considering doing business in Japan?

We have been involved in the leasing business for many years as you know, and we have over 25,000 customers who are active customers. So we have a very strong customer base that we can offer an incoming company. We also have a history of a close affiliation with banks.

As you know, banks are regulatory institutions. They are very limited in the operations that they can engage in, to mainly savings and loans. On the other hand we can offer a wide range of services. We have the advantage of our affiliations with banks for our customer base, but we can provide many more services than banks. So in many senses, we can be a very attractive and unique partner.

In the last three years, CTLC has grown its revenue by an astounding 25% from 716 billion JPY to 882 billion JPY. To what do you attribute this impressive growth?

I would like to go back six years ago, when we merged with Century Leasing System. At that time, I had only been in Tokyo Leasing for one year when we merged. But we realized there was going to be a necessity for merging.

And so we talked to our affiliates and we decided to go ahead with this merger. At that time, the Lehman Brothers’ collapse had not yet occurred and nobody knew it was going to. It was really surprising. By merging before that, we had already enlarged our infrastructure base. So I think that the decisions that we made six years ago were what put us in a good place. 

A lot of our emphasis is on the financial services aspect. We are in a lot of growth fields, in a lot of specialty financing and international businesses where we see a lot of growth. So we focus mainly on these kinds of businesses.

And, to tell you the truth, during the first two years, we spent most of the time just forming up our foundation. So, it has really been in the last four years that we have seen growth. 

I believe it is not all about profit though at CTLC, you are also heavily involved in CSR campaigns such as your environmental performance report. Why are such virtues not only important to your corporate culture, but also good for your bottom line?

We are constantly keeping Eiichi Shibusawa in our minds because he was a founder of the Dai-Ichi Kangyo Bank (now Mizuho Bank) and Japan’s capitalism in the Meiji era. His thinking, in which the business and corporate ethics must always come together, has formed the basis of our corporation. We have felt such a combination is very important.

What would you say has been the impact of Abenomics on the private sector and on Century Tokyo Leasing Corporation? 

I think there are three different ways in which Abenomics’ impact is felt. The first centers on the positive effects to the economy, which are finally coming to light. Another is that Japan’s political situation has been finally settling down with the current administration.

Political stability means positive effects on the economy. Also, Japan under Abe has a good relationship with the US, and there are certain factors like the jobs and the oil price have had a positive effect on Japan’s businesses.

So, I think that Abenomics is affecting us in quite a number of ways. What is good for the overall economy is also good for our company.

At its core, Abenomics aspires to make Japan’s economy more international and in many respects CTLC is a case study of success for a Japanese company that is truly international with operations all over Asia, America and Europe. What role though do you think the private sector plays in building this country’s new global perception or image?


Before Mr. Abe’s administration came into office, everything was a mess, and we realized that it was not working. The economy had to be back on track, and we had to do whatever it took to do that. Of course, we and the rest of the private sector were thinking on the same line.

Because we had this parallel thinking, we believed that we had a lot to contribute. We are working towards the same goal as they are. 

Politically, it might be a tough thing to achieve, but I would like to see the administration working towards reforms in areas like agricultural problems and regulations for medical care, for example.

And I think that we need to put more energy into these things to create a better situation for the global perception. 

Japan is a very good country to be in, but there is one thing we really do need to think about, and that is in the US and Europe I see a great momentum to change things and to implement reforms. But in Japan, that momentum is still pretty weak, and we need to have the discretionary power to make the changes that need to be made.

In this globalized world, the importance of countries to brand themselves and communicate their strengths to the international community cannot be overstated. Considering Japan is coming to an end of two decades of poor economic performance and taking this opportunity to reach out with America’s leading media, Newsweek, how then would you like our Americans to perceive Japan?

There is a lot of emphasis in Japan right now and the problem of Mr. Abe’s historical awareness with respect to neighboring countries and the historical situation in terms of war seems a bit exaggerated, although his thinking is not necessarily the primary kind of thinking in his party.

There tends to be a culture in Japan that once somebody dies, all is forgiven. Or, for example, we have a similar mentality in the business world. However, I think that we are going to see a transition in history as the generations progress, we will see people who are less willing to just let everything go, and they will start to take stronger sense of responsibility and develop empathy for global base understandings.

Before and after the war, the US was an extremely important country too, as it is now. We have built a strong foundation between us. We do know that we are indispensable for each other. For a truly great relationship that goes long in the future, frankness and acceptance are the keys for a powerful relationship. This is applicable not only for the US but also other countries.

What would you say to businessmen who may be worried about investing in Japan or doing business with a Japanese firm?

In Japan’s position within Asia, the infrastructure is in place. Organizations are well managed, our society is relatively stable, and our system is in place. So I think when people look at Japan, our standard is number one in terms of the political situation. And it is absolutely crucial to conduct business in the country.

We do have the fundamentals in place, but what pulls us back is that we are an island country; we do not have a lot of experience in interacting with other countries, and we do not have strong communication skills. So, this is going to take some time.

I think for people of our generation, it will take time to establish our communication skills. People 10 or 20 years from now will probably have much better communication skills and be able to conduct business in English. And I think that is going to generate changes. 

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