1 00:00:12,800 --> 00:00:15,640 Speaker 1: This is Wall Street Week. I'm David Weston bringing you 2 00:00:15,760 --> 00:00:20,239 Speaker 1: stories of capitalism. This time capitalism Japanese style. This is 3 00:00:20,280 --> 00:00:23,040 Speaker 1: an ancient land with the imperial dynasty stretching back over 4 00:00:23,079 --> 00:00:26,960 Speaker 1: one thousand years. Apollo Global Management invited us along as 5 00:00:27,000 --> 00:00:29,360 Speaker 1: it convened the meeting of its two hundred partners from 6 00:00:29,400 --> 00:00:32,760 Speaker 1: around the world to see firsthand the investment opportunities it 7 00:00:32,880 --> 00:00:36,160 Speaker 1: sees in Japan today, a world that has not traditionally 8 00:00:36,159 --> 00:00:39,600 Speaker 1: been associated with risk. We're going to talk with Mark Rowan, 9 00:00:39,640 --> 00:00:41,840 Speaker 1: the head of Apollo, as well as the leaders of Sony, 10 00:00:41,960 --> 00:00:45,800 Speaker 1: Panasonic Automotive, and the Tokyo Stock Exchange. But we start 11 00:00:45,880 --> 00:00:48,920 Speaker 1: with the story of choraku. That's a Japanese term meaning 12 00:00:48,960 --> 00:00:52,720 Speaker 1: falling behind. In nineteen eighties, Japanese industry was the envy 13 00:00:52,760 --> 00:00:56,720 Speaker 1: of the world in a variety of sectors such as automotive, electronics, 14 00:00:56,760 --> 00:01:00,000 Speaker 1: and steel. As a result, asset values went out, particularly 15 00:01:00,080 --> 00:01:02,920 Speaker 1: here in Tokyo, where real estate values went sky high, 16 00:01:02,960 --> 00:01:06,160 Speaker 1: supported by patient capital that did not demand a lot 17 00:01:06,200 --> 00:01:10,080 Speaker 1: of returns. The nineteen nineties, though, saw that asset bubble burst, 18 00:01:10,400 --> 00:01:12,840 Speaker 1: and when the Japanese government in Japanese banks did not 19 00:01:12,959 --> 00:01:16,280 Speaker 1: step in aggressively. They took what was a lost decade 20 00:01:16,400 --> 00:01:18,759 Speaker 1: and turned it into a lost three decades. 21 00:01:21,040 --> 00:01:24,839 Speaker 2: Most people's expectation of Japan or business mindset of Japan 22 00:01:25,360 --> 00:01:26,560 Speaker 2: is thirty years of stagnation. 23 00:01:26,880 --> 00:01:30,840 Speaker 3: I think, you know the we called the lost ages 24 00:01:31,319 --> 00:01:36,880 Speaker 3: during decads and we do not have substantial growth in Japan. 25 00:01:37,280 --> 00:01:40,160 Speaker 4: Japan faced the deferation for VADI eighty long. 26 00:01:40,000 --> 00:01:43,560 Speaker 5: Time Japan has been you know, suffering from deflation for 27 00:01:43,600 --> 00:01:44,759 Speaker 5: more than two decades. 28 00:01:46,000 --> 00:01:48,480 Speaker 1: In the late eighties, Japan's economy grew by as much 29 00:01:48,480 --> 00:01:51,800 Speaker 1: as six point seven percent a year, only to have 30 00:01:51,840 --> 00:01:54,800 Speaker 1: that growth plummet for most of the next thirty years, 31 00:01:55,120 --> 00:01:58,840 Speaker 1: hovering between zero and two percent and contracting during the 32 00:01:58,880 --> 00:02:02,720 Speaker 1: Great Financial Crisis and the COVID pandemic, relegating what had 33 00:02:02,720 --> 00:02:05,320 Speaker 1: been the third largest economy in the world to number four. 34 00:02:05,680 --> 00:02:09,800 Speaker 1: As Germany surged past the nick stock market went thirty 35 00:02:09,800 --> 00:02:13,720 Speaker 1: four years without setting new highs. Japanese government bond yields 36 00:02:13,760 --> 00:02:17,560 Speaker 1: turned negative and stayed there for years. But all that 37 00:02:17,639 --> 00:02:21,800 Speaker 1: could now be changing as Japan emerges from those lost decades. 38 00:02:22,080 --> 00:02:23,680 Speaker 2: What a lovely day in Tokyo. 39 00:02:23,960 --> 00:02:27,079 Speaker 1: Mark Rowan is CEO of Apollo Global Management. 40 00:02:27,320 --> 00:02:30,200 Speaker 2: This is a savings culture, and holding on to your 41 00:02:30,200 --> 00:02:33,079 Speaker 2: cash or leaving your money into jgb's for the past 42 00:02:33,120 --> 00:02:37,280 Speaker 2: thirty years has been fined because there's been no inflation. 43 00:02:37,360 --> 00:02:41,000 Speaker 2: In fact, there's been deflation. All of a sudden, you 44 00:02:41,120 --> 00:02:44,440 Speaker 2: have closer to three percent inflation. You have interest rates 45 00:02:44,520 --> 00:02:47,800 Speaker 2: up for the first time, and that savings is going 46 00:02:47,840 --> 00:02:51,440 Speaker 2: to be deployed productively, and now some of it has 47 00:02:51,480 --> 00:02:54,840 Speaker 2: to go toward retirement. They will want better solutions for retirement, 48 00:02:55,200 --> 00:02:56,760 Speaker 2: but some of it is just going to keep up 49 00:02:56,760 --> 00:03:00,280 Speaker 2: with purchase price and purchasing power. I think about what's 50 00:03:00,320 --> 00:03:05,280 Speaker 2: happening in Japan, and in Japan, they're going through generational change, 51 00:03:05,680 --> 00:03:09,440 Speaker 2: and it's generational change in corporate governance, it's in interest rates, 52 00:03:09,639 --> 00:03:12,440 Speaker 2: it's in government policy, and in many ways they are 53 00:03:12,520 --> 00:03:16,799 Speaker 2: the first of the Western democracies to face real aging, 54 00:03:17,600 --> 00:03:22,080 Speaker 2: retirement and high levels of government debt. And what's happening 55 00:03:22,080 --> 00:03:26,560 Speaker 2: here is totally different than people's expectation, because most people's 56 00:03:26,600 --> 00:03:30,519 Speaker 2: expectation of Japan or business mindset of Japan is thirty 57 00:03:30,600 --> 00:03:34,280 Speaker 2: years of stagnation, and that is so dynamic here today. 58 00:03:35,360 --> 00:03:37,880 Speaker 1: The thing that got things going again for Japan was 59 00:03:38,080 --> 00:03:42,120 Speaker 1: ironically adversity as supply change came under stress from the 60 00:03:42,160 --> 00:03:45,240 Speaker 1: COVID shutdown and a war in Ukraine put pressure on 61 00:03:45,400 --> 00:03:48,480 Speaker 1: energy prices, a big problem for a country dependent on 62 00:03:48,560 --> 00:03:49,760 Speaker 1: oil from abroad. 63 00:03:50,120 --> 00:03:55,200 Speaker 4: With the supply hand breakdown, corporate has executes to transfer 64 00:03:55,280 --> 00:03:59,960 Speaker 4: the price to the retail. So now the CPI started 65 00:04:00,080 --> 00:04:03,680 Speaker 4: to suddenly, which has been zero one negative for very 66 00:04:03,680 --> 00:04:06,840 Speaker 4: long time, suddenly went up to almost three percent. 67 00:04:07,040 --> 00:04:10,200 Speaker 5: If she can get to third, that's a. 68 00:04:10,280 --> 00:04:13,520 Speaker 1: Long a g Waida is head of Asia Pacific for. 69 00:04:13,560 --> 00:04:19,159 Speaker 4: Apollo, everybody has to think differently. So with the defrational environment, 70 00:04:19,480 --> 00:04:23,160 Speaker 4: cash has been the king. But with the inforation at 71 00:04:23,200 --> 00:04:26,440 Speaker 4: the close to three percent, cash is not the right 72 00:04:26,480 --> 00:04:29,720 Speaker 4: assets to own. It's actually the war's assets to own. 73 00:04:30,720 --> 00:04:33,200 Speaker 4: So that has to put the pressure out of a 74 00:04:33,200 --> 00:04:35,560 Speaker 4: lot of people to think about things differently. 75 00:04:37,000 --> 00:04:40,479 Speaker 1: Even before the return of inflation, those responsible for Japanese 76 00:04:40,480 --> 00:04:44,080 Speaker 1: markets were thinking differently, starting with Prime Minister Abbe's call 77 00:04:44,160 --> 00:04:46,440 Speaker 1: for market reform back in twenty fifteen. 78 00:04:46,720 --> 00:04:49,839 Speaker 6: And it's true that for maybe a good decade Japan 79 00:04:49,880 --> 00:04:53,520 Speaker 6: did struggle in finding its way out of that banking crisis. 80 00:04:53,680 --> 00:04:56,679 Speaker 1: Maria Soliz is Director of the Center for Asia Policy 81 00:04:56,760 --> 00:05:01,760 Speaker 1: Studies at the Brookings Institution and author of Japan's Quiet Leadership. 82 00:05:02,080 --> 00:05:05,400 Speaker 6: But the fact is that we have overused the image 83 00:05:05,440 --> 00:05:08,159 Speaker 6: of the last decades because this has not been a 84 00:05:08,200 --> 00:05:11,560 Speaker 6: period where Japan has stood still, and people referred to 85 00:05:11,600 --> 00:05:14,800 Speaker 6: this period as thirty years. And a lot has happened 86 00:05:14,839 --> 00:05:18,120 Speaker 6: in the economy, in the politics, in the international projection 87 00:05:18,200 --> 00:05:22,120 Speaker 6: of Japan that actually shows that undercurrents of change have 88 00:05:22,240 --> 00:05:25,640 Speaker 6: repositioned where Japan stands today. Some areas actually there was 89 00:05:25,680 --> 00:05:28,400 Speaker 6: a lot of progress. I think in the area of 90 00:05:28,440 --> 00:05:32,919 Speaker 6: corporate governance you do see important changes there. I also 91 00:05:33,000 --> 00:05:36,039 Speaker 6: believe that the notion of women omics, the idea that 92 00:05:36,160 --> 00:05:39,320 Speaker 6: Japan needed to create conditions for women not to have 93 00:05:39,440 --> 00:05:42,919 Speaker 6: to choose between a career and a family raising a family, 94 00:05:43,400 --> 00:05:46,840 Speaker 6: those also were very, very positive, so much so that 95 00:05:46,960 --> 00:05:51,160 Speaker 6: Japan actually has a very high level of female lever participation. 96 00:05:53,000 --> 00:05:55,279 Speaker 1: As much as Prime Minister Abbe may have laid the 97 00:05:55,279 --> 00:05:58,040 Speaker 1: groundwork for reform, the state of the economy did not 98 00:05:58,200 --> 00:06:02,120 Speaker 1: demand the changes he wanted. For that they needed three 99 00:06:02,160 --> 00:06:03,840 Speaker 1: percent inflation to kick in. 100 00:06:04,040 --> 00:06:07,520 Speaker 6: Well, it has changed everything. It has changed the politics, 101 00:06:07,600 --> 00:06:11,799 Speaker 6: it has changed the main economic challenges that the country faces, 102 00:06:11,839 --> 00:06:15,159 Speaker 6: and I think in many ways it has redirected areas 103 00:06:15,240 --> 00:06:18,120 Speaker 6: where reform is necessary. 104 00:06:19,400 --> 00:06:22,560 Speaker 1: Now inflation has returned, and there's a new prime minister 105 00:06:22,640 --> 00:06:26,000 Speaker 1: in town, one who's just won a landslide victory and 106 00:06:26,040 --> 00:06:28,640 Speaker 1: seeks to take Abyamk's reform to a new level. 107 00:06:28,800 --> 00:06:33,200 Speaker 5: So many similistic changes them in the Japanese not only 108 00:06:33,200 --> 00:06:36,240 Speaker 5: the Japanese market, but also Japanese society. 109 00:06:36,320 --> 00:06:40,040 Speaker 1: Hiromi Yamaji is Group CEO of the Japan Exchange Group, 110 00:06:40,320 --> 00:06:44,280 Speaker 1: which oversees the Tokyo and Osaka stock exchanges. What was 111 00:06:44,320 --> 00:06:47,960 Speaker 1: the role of government, the Japanese government in the reforms. 112 00:06:47,520 --> 00:06:52,240 Speaker 5: I think it all since the prime ministave supported our 113 00:06:52,400 --> 00:06:56,480 Speaker 5: governor's deform back in twenty fifteen. I think all the 114 00:06:56,520 --> 00:07:02,159 Speaker 5: successes of Mista Abe Suga, the Kishida Shiba, and the 115 00:07:02,200 --> 00:07:06,360 Speaker 5: current Miss Takaichi, all of them are quite big supporter 116 00:07:06,600 --> 00:07:10,480 Speaker 5: of a governance deform because all of them are convinced 117 00:07:10,600 --> 00:07:15,040 Speaker 5: that growth of the private sector is essential for the 118 00:07:15,080 --> 00:07:17,360 Speaker 5: growth of entire Japanese economy. 119 00:07:18,400 --> 00:07:22,200 Speaker 1: Since taking over the TSE in twenty twenty one, Yamaji 120 00:07:22,280 --> 00:07:25,800 Speaker 1: has implemented a series of reforms to encourage Japanese companies 121 00:07:25,880 --> 00:07:29,360 Speaker 1: to become more profitable and more accountable. Your reforms of 122 00:07:29,440 --> 00:07:33,120 Speaker 1: the markets has various aspects to including price to book 123 00:07:33,240 --> 00:07:37,920 Speaker 1: ratio and interlacking ownership of equity and independent directors. What 124 00:07:37,960 --> 00:07:39,040 Speaker 1: are the most important ones? 125 00:07:39,480 --> 00:07:44,080 Speaker 5: I think to transform the mindset of the management of 126 00:07:44,160 --> 00:07:47,960 Speaker 5: the companies. That's very important and also probably the most 127 00:07:48,600 --> 00:07:53,080 Speaker 5: challenging thing. And PBR is just kind of a you know, 128 00:07:53,200 --> 00:07:59,640 Speaker 5: financial indicator to just gauge how much you progressed. But 129 00:07:59,720 --> 00:08:03,600 Speaker 5: I think, I think fundamental challenge is to transform the 130 00:08:03,680 --> 00:08:05,120 Speaker 5: mindset of the management. 131 00:08:05,680 --> 00:08:09,200 Speaker 1: Not all minds are willing to be transformed. Have you 132 00:08:09,280 --> 00:08:12,640 Speaker 1: had some management changes in order to respond to it? 133 00:08:12,800 --> 00:08:12,960 Speaker 7: Well? 134 00:08:13,040 --> 00:08:17,400 Speaker 5: I think, you know, at least once a year we've 135 00:08:17,480 --> 00:08:21,440 Speaker 5: analyzed the current situation of the Japanese market or Japanese companies, 136 00:08:21,960 --> 00:08:24,840 Speaker 5: and we are not the entity to assess the progress. 137 00:08:25,560 --> 00:08:29,320 Speaker 5: The Grover Investors is the you know, the people who 138 00:08:29,400 --> 00:08:33,840 Speaker 5: assess how much progress we've made. And you know, last 139 00:08:33,920 --> 00:08:38,000 Speaker 5: year we've the most recent one. We did a analysis 140 00:08:38,040 --> 00:08:41,520 Speaker 5: of a current situation December last year based upon the 141 00:08:41,559 --> 00:08:45,360 Speaker 5: four hundred Grover investors domestic and overseas. 142 00:08:45,640 --> 00:08:49,040 Speaker 1: If the markets are any judge, Yamaji's efforts are bearing fruit. 143 00:08:49,160 --> 00:08:51,120 Speaker 5: Last yea was the record or high modern We have 144 00:08:51,320 --> 00:08:55,680 Speaker 5: five thousand, one hundred mondays and the total amount was 145 00:08:55,920 --> 00:08:59,200 Speaker 5: thirty five two years. Yeah, both of them are recorded high. 146 00:08:59,520 --> 00:09:02,319 Speaker 5: And that means is that the buyer side seeking for 147 00:09:02,440 --> 00:09:07,240 Speaker 5: other say more growth or algier needs for growth, and 148 00:09:07,280 --> 00:09:13,000 Speaker 5: the set out side is trying to reorganize their business portfolio. 149 00:09:12,600 --> 00:09:17,560 Speaker 4: Of Tokyo Stock Exchange, pushing the corporate to create more 150 00:09:17,600 --> 00:09:22,480 Speaker 4: efficiency in the capital usage for corporates and ROE has 151 00:09:22,520 --> 00:09:26,400 Speaker 4: been very, very low, and more than fifty percent of 152 00:09:26,440 --> 00:09:29,280 Speaker 4: the company listed in Japan has been trading below the 153 00:09:29,280 --> 00:09:36,040 Speaker 4: book valio. So they are pushing for capital efficiency and 154 00:09:36,679 --> 00:09:40,400 Speaker 4: they need to explain the reason why they're trading below 155 00:09:40,400 --> 00:09:40,760 Speaker 4: the book. 156 00:09:41,240 --> 00:09:44,480 Speaker 1: The Japanese push for higher returns and response to reflation 157 00:09:44,880 --> 00:09:47,560 Speaker 1: comes against the backdrop of a long term challenge that's 158 00:09:47,640 --> 00:09:53,200 Speaker 1: increasingly common in major economies around the world. A rapidly aging. 159 00:09:53,000 --> 00:09:58,640 Speaker 4: Workforce population between age fourteen to sixty five hit the 160 00:09:58,679 --> 00:10:04,840 Speaker 4: peak in nineteen nine and since then, because society started aging, 161 00:10:05,559 --> 00:10:09,880 Speaker 4: people spend less, so always demands showing faster than supply, 162 00:10:10,840 --> 00:10:15,160 Speaker 4: so the country faces long term defration and low growth. 163 00:10:15,440 --> 00:10:17,520 Speaker 2: Well, I think we're looking at things that are structural 164 00:10:17,559 --> 00:10:19,360 Speaker 2: that are going to take place over the next five 165 00:10:19,400 --> 00:10:24,040 Speaker 2: to ten years, the need for Japan to provide for 166 00:10:24,120 --> 00:10:26,559 Speaker 2: its aging population and to deal with its aging population, 167 00:10:27,040 --> 00:10:30,000 Speaker 2: the need for Japan to finance what it needs to finance, 168 00:10:30,640 --> 00:10:33,120 Speaker 2: and the opportunity that Japan has. 169 00:10:33,320 --> 00:10:36,319 Speaker 1: Japan responded to the challenges of its aging workforce by 170 00:10:36,360 --> 00:10:39,320 Speaker 1: adding workers from groups that had been on the sidelines. 171 00:10:39,559 --> 00:10:42,520 Speaker 6: Well, this is clearly one of the most serious challenges 172 00:10:42,600 --> 00:10:45,160 Speaker 6: because they share a drop in the level of a 173 00:10:45,200 --> 00:10:48,880 Speaker 6: population absolute numbers, but also the graining of the population. 174 00:10:49,160 --> 00:10:51,400 Speaker 6: The other one who's of course to bring in women 175 00:10:51,559 --> 00:10:55,040 Speaker 6: into the workforce, to bring in the elderly, who in 176 00:10:55,120 --> 00:10:58,200 Speaker 6: Japan tend to be still very active, and to make 177 00:10:58,240 --> 00:11:03,239 Speaker 6: sure that you can as much as possible maximize labor participation. 178 00:11:03,600 --> 00:11:06,160 Speaker 1: But there is a limit to how many women, elderly 179 00:11:06,320 --> 00:11:09,800 Speaker 1: and foreign workers Japan can bring into the workforce. What 180 00:11:09,920 --> 00:11:13,520 Speaker 1: does reform of capital markets do to help that problem? 181 00:11:13,800 --> 00:11:17,439 Speaker 5: I think, you know, the corporate governance reform sets that 182 00:11:17,480 --> 00:11:22,120 Speaker 5: we'd like to see more active female workers in the 183 00:11:22,160 --> 00:11:27,080 Speaker 5: in the workforce, and also a more senior persons are working. 184 00:11:27,200 --> 00:11:30,800 Speaker 5: Really in Japan now, the labor force increased in Japan 185 00:11:31,160 --> 00:11:35,679 Speaker 5: but obviously a female job participation as well as a 186 00:11:35,800 --> 00:11:39,760 Speaker 5: senior members job part spationition. There's a seedting. I think, 187 00:11:39,840 --> 00:11:43,480 Speaker 5: you know, we don't expect too much from those new 188 00:11:43,800 --> 00:11:48,080 Speaker 5: forces coming in. So I think Japanan's companies has been 189 00:11:48,559 --> 00:11:53,880 Speaker 5: making a huge investment into automation or digitalization AI usage. 190 00:11:54,080 --> 00:11:57,520 Speaker 5: I think those are very important to enhance productivity, even 191 00:11:57,600 --> 00:12:02,120 Speaker 5: though appropriation has been shrinking, and also he's going to 192 00:12:02,120 --> 00:12:03,280 Speaker 5: shink in the future. 193 00:12:03,520 --> 00:12:07,520 Speaker 1: What are the large long term capital means that companies say, 194 00:12:07,559 --> 00:12:09,280 Speaker 1: I need to have this for a long period of time. 195 00:12:09,559 --> 00:12:13,960 Speaker 2: This is manufacturing, This is energy, This is AI and data, 196 00:12:14,440 --> 00:12:18,240 Speaker 2: this is infrastructure. These are the big buckets that we're 197 00:12:18,280 --> 00:12:22,360 Speaker 2: looking at. And the scale just of the infrastructure market, 198 00:12:22,480 --> 00:12:24,640 Speaker 2: or as I say, just of the AI, data energy 199 00:12:24,640 --> 00:12:28,000 Speaker 2: market as one package, is beyond anything we can comprehend. 200 00:12:28,320 --> 00:12:30,800 Speaker 2: This is measured in trillions. Sometimes I joke and I say, 201 00:12:30,800 --> 00:12:33,319 Speaker 2: we're about to spend every dollar since the invention of fire, 202 00:12:34,080 --> 00:12:37,000 Speaker 2: and that's what we're doing. We are as a world 203 00:12:37,880 --> 00:12:41,240 Speaker 2: going to issue more debt, access more capital in twenty 204 00:12:41,280 --> 00:12:44,080 Speaker 2: twenty six than ever before. I think this is ultimately 205 00:12:44,080 --> 00:12:48,240 Speaker 2: about growing the pie. I think the Japanese were very 206 00:12:48,240 --> 00:12:50,840 Speaker 2: defensive for a long period of time, with good reason 207 00:12:51,160 --> 00:12:54,120 Speaker 2: given what was happening in the hall market. I think 208 00:12:54,120 --> 00:12:55,480 Speaker 2: there's a new swagger. 209 00:12:57,000 --> 00:13:01,319 Speaker 1: Coming up, matchmaking between abundant capital and abundant capital needs 210 00:13:01,480 --> 00:13:18,719 Speaker 1: the opportunities that presents for companies like Apollo. This is 211 00:13:18,760 --> 00:13:23,120 Speaker 1: a story about henkaku. That's a Japanese term meaning fundamental reform. 212 00:13:23,520 --> 00:13:25,680 Speaker 1: We've come to Japan to see how and why it 213 00:13:25,760 --> 00:13:28,200 Speaker 1: is changing the way it does business, changing what it 214 00:13:28,200 --> 00:13:31,440 Speaker 1: expects from its corporations, and changing what it expects in 215 00:13:31,480 --> 00:13:34,280 Speaker 1: its investments, not just for the sake of change, but 216 00:13:34,320 --> 00:13:37,200 Speaker 1: in order to raise the capital needed to invest in productivity. 217 00:13:39,559 --> 00:13:42,760 Speaker 1: Over the last three decades, Japan fell from second to 218 00:13:42,880 --> 00:13:46,000 Speaker 1: fourth in the ranking of world economies. As it struggles 219 00:13:46,000 --> 00:13:49,319 Speaker 1: to climb back up the leaderboard, it is focused on investment. 220 00:13:49,720 --> 00:13:52,360 Speaker 1: In this case, trillions of dollars. 221 00:13:52,000 --> 00:13:55,560 Speaker 4: Worth fifty five percent over the asset sits in cash, 222 00:13:55,600 --> 00:13:59,400 Speaker 4: historic gardy, and the corporate has been accummulated a lot 223 00:13:59,520 --> 00:14:02,720 Speaker 4: of cash balance sheet because they want to be safe 224 00:14:02,880 --> 00:14:06,880 Speaker 4: and they want to be sustainable, and cash is the 225 00:14:06,920 --> 00:14:11,160 Speaker 4: safest assets for them to own. So even though the 226 00:14:11,280 --> 00:14:15,160 Speaker 4: raidars of the being lowest in the world. The ratio 227 00:14:15,160 --> 00:14:17,080 Speaker 4: of the cash on balance sheet among the old the 228 00:14:17,080 --> 00:14:18,680 Speaker 4: culprits was the highest in the world. 229 00:14:18,760 --> 00:14:20,040 Speaker 1: That must be a lot of cash. 230 00:14:20,440 --> 00:14:24,840 Speaker 4: It is retail asset is two thousand treating en, so 231 00:14:25,360 --> 00:14:26,560 Speaker 4: that's a lot of cash. 232 00:14:26,840 --> 00:14:27,080 Speaker 8: Well. 233 00:14:27,160 --> 00:14:30,800 Speaker 1: Almost fifty five percent of household financial assets in Japan 234 00:14:30,880 --> 00:14:33,680 Speaker 1: set in cash and deposits in twenty twenty two, a 235 00:14:33,720 --> 00:14:36,680 Speaker 1: figure far higher than the US or Europe. By twenty 236 00:14:36,760 --> 00:14:40,360 Speaker 1: twenty four, that number had inched lower to around fifty percent, 237 00:14:40,800 --> 00:14:43,400 Speaker 1: and the percentage of assets in equity markets had crept 238 00:14:43,480 --> 00:14:46,560 Speaker 1: up to fourteen percent. The head of the Tokyo and 239 00:14:46,560 --> 00:14:51,120 Speaker 1: Osaka Stock Exchanges, Hero Mediyamaji, says that many Japanese companies 240 00:14:51,160 --> 00:14:53,680 Speaker 1: are starting to use that cash to change the way 241 00:14:53,720 --> 00:14:54,400 Speaker 1: they do business. 242 00:14:54,680 --> 00:15:01,200 Speaker 5: Japanese companies are quite receptive for new de mental technologies 243 00:15:01,320 --> 00:15:06,520 Speaker 5: like AI. I think Japanese companies are are the adopters 244 00:15:06,920 --> 00:15:10,200 Speaker 5: of a new technologies. But at the same time, how 245 00:15:10,240 --> 00:15:13,440 Speaker 5: do we take advantage of those new technologies that you know, 246 00:15:13,840 --> 00:15:18,120 Speaker 5: you have to be quite serious how to utilize in 247 00:15:18,240 --> 00:15:21,360 Speaker 5: what kind of areas. So now we are still in 248 00:15:21,440 --> 00:15:24,520 Speaker 5: the very early stage, but I think Japanese company is 249 00:15:24,560 --> 00:15:28,200 Speaker 5: quite a receptive to those new ideas. 250 00:15:28,440 --> 00:15:32,720 Speaker 4: Japan is I think well positioned for the industrial renaissance, 251 00:15:33,400 --> 00:15:38,160 Speaker 4: the energy shift, supply chain breakdown, and they need to 252 00:15:38,240 --> 00:15:42,280 Speaker 4: rebuild it AI changes. There are a lot of big 253 00:15:42,320 --> 00:15:46,560 Speaker 4: themes going on where companies need a lot of capets, 254 00:15:47,160 --> 00:15:51,920 Speaker 4: and the size of the new finance finance needs is 255 00:15:52,000 --> 00:15:57,800 Speaker 4: growing so fast that big demand for the capex will 256 00:15:57,840 --> 00:16:01,720 Speaker 4: create a lot of demand for our news, which the 257 00:16:02,200 --> 00:16:04,200 Speaker 4: note of a capital camp shift. 258 00:16:03,920 --> 00:16:07,840 Speaker 1: To Japan may have a big need for investment, it 259 00:16:07,880 --> 00:16:10,720 Speaker 1: may have the capital that's needed, but our ex financial 260 00:16:10,760 --> 00:16:13,760 Speaker 1: institutions in a position to direct the capital to where 261 00:16:13,800 --> 00:16:16,040 Speaker 1: it is needed and at scale. 262 00:16:16,360 --> 00:16:19,040 Speaker 2: Japan is like I would say, like many economies. If 263 00:16:19,080 --> 00:16:21,840 Speaker 2: you think about the structure of the Japanese market, it 264 00:16:21,920 --> 00:16:26,240 Speaker 2: is primarily two financial products bank debt and equity. 265 00:16:26,600 --> 00:16:29,720 Speaker 1: Apollo CEO Mark Rowan sees his company is providing a 266 00:16:29,800 --> 00:16:34,000 Speaker 1: much needed third way to finance the capital investment Japan needs. 267 00:16:34,360 --> 00:16:36,480 Speaker 2: The equity market in the context of the world is 268 00:16:36,520 --> 00:16:39,080 Speaker 2: actually quite small though it is the second largest equity 269 00:16:39,120 --> 00:16:40,800 Speaker 2: market in the world, but it is roughly the size 270 00:16:40,800 --> 00:16:44,320 Speaker 2: of Nvidia. Just to put things in perspective, there's not 271 00:16:44,480 --> 00:16:47,400 Speaker 2: the well developed you know kind of corporate bond market 272 00:16:47,880 --> 00:16:51,000 Speaker 2: that exists throughout the US, and so I think what 273 00:16:51,000 --> 00:16:53,840 Speaker 2: we're watching not just in Japan but around the world 274 00:16:54,040 --> 00:16:57,800 Speaker 2: is corporate CFOs. Corporate treasurers now understand that there are 275 00:16:57,800 --> 00:17:00,920 Speaker 2: three types of finance, things that are really highly rated 276 00:17:00,920 --> 00:17:02,720 Speaker 2: and short. You want to be with your banks. There's 277 00:17:02,720 --> 00:17:08,119 Speaker 2: no better provider equity, very very expensive public markets for 278 00:17:08,240 --> 00:17:13,199 Speaker 2: plain vanilla, very very good execution. Everything else comes to 279 00:17:13,200 --> 00:17:15,760 Speaker 2: the private market. The largest part of the private market 280 00:17:15,840 --> 00:17:18,960 Speaker 2: today is investment grade. It is these large companies who 281 00:17:19,000 --> 00:17:24,439 Speaker 2: have these transformational opportunities who want to match long dated investments, 282 00:17:24,720 --> 00:17:27,040 Speaker 2: and most of what we're doing is long dated with 283 00:17:27,160 --> 00:17:29,679 Speaker 2: long dated capital, and that is not what the banking 284 00:17:29,720 --> 00:17:32,040 Speaker 2: system does well. That is not what the public markets 285 00:17:32,040 --> 00:17:35,520 Speaker 2: do well. And so you're seeing this extraordinary growth in 286 00:17:35,600 --> 00:17:38,160 Speaker 2: the US. We've seen it in lots of ways. You've 287 00:17:38,240 --> 00:17:41,959 Speaker 2: met as financing last year at some thirty billion. In Europe, 288 00:17:42,040 --> 00:17:45,320 Speaker 2: we've seen the Europeans, who also have structural issues via 289 00:17:45,440 --> 00:17:51,040 Speaker 2: v capital availability, really embrace private finance. In Japan, we're 290 00:17:51,040 --> 00:17:54,080 Speaker 2: seeing the beginnings of that. The work we've done with Sony, 291 00:17:54,119 --> 00:17:56,720 Speaker 2: the work we've done with SMBC, the work we've done 292 00:17:57,040 --> 00:18:01,560 Speaker 2: in financing buy now, pay later Japanese companies is beginning 293 00:18:01,600 --> 00:18:04,000 Speaker 2: to open up in the minds of CFOs and treasures 294 00:18:04,280 --> 00:18:05,800 Speaker 2: that there's just another alternative. 295 00:18:06,320 --> 00:18:08,560 Speaker 1: It's not the private credit firms like a policy to 296 00:18:08,640 --> 00:18:12,000 Speaker 1: replace Japanese banks. A POLOS team says that it can 297 00:18:12,040 --> 00:18:13,560 Speaker 1: supplement what the banks do. 298 00:18:13,920 --> 00:18:18,920 Speaker 4: The public credit market is very very small. I think 299 00:18:19,000 --> 00:18:22,320 Speaker 4: there's the only sixty trity again outstanding on the corporate 300 00:18:22,359 --> 00:18:27,120 Speaker 4: bond market. Compared to the size of the finance, it's 301 00:18:27,160 --> 00:18:31,479 Speaker 4: being quite small. So a lot of finance has been 302 00:18:31,560 --> 00:18:35,639 Speaker 4: done by banks, who is basically private credit. So I 303 00:18:35,680 --> 00:18:40,719 Speaker 4: think there's a demand for longer dated capital and also 304 00:18:40,840 --> 00:18:46,720 Speaker 4: compress capital because the bank can provide cheaper and short 305 00:18:46,800 --> 00:18:50,920 Speaker 4: term finance, and with the huge capex needs, they need 306 00:18:51,000 --> 00:18:56,080 Speaker 4: longer term, more complex finance structure where the private capital 307 00:18:56,119 --> 00:18:58,840 Speaker 4: markets can solve the problem for it. 308 00:18:59,040 --> 00:19:03,520 Speaker 2: We will start to establish private as just another alternative 309 00:19:03,720 --> 00:19:06,320 Speaker 2: for every CFO and every treasure and by the way, 310 00:19:06,720 --> 00:19:10,000 Speaker 2: in partnership with the Japanese banking system, because at the 311 00:19:10,080 --> 00:19:12,040 Speaker 2: end of the day, we don't do what the banks do. 312 00:19:12,520 --> 00:19:15,359 Speaker 2: We don't provide advice, we don't provide hedging, derivatives, m 313 00:19:15,400 --> 00:19:18,879 Speaker 2: and a any other service that's the purview of the 314 00:19:18,920 --> 00:19:21,879 Speaker 2: banking system. We provide a piece of capital that is 315 00:19:21,880 --> 00:19:26,639 Speaker 2: in very short supply in Japan, investment grade long dated 316 00:19:27,200 --> 00:19:28,400 Speaker 2: to finance what they need. 317 00:19:28,720 --> 00:19:33,000 Speaker 5: It's growing gradually, and I think it's a good alternative 318 00:19:33,119 --> 00:19:37,720 Speaker 5: investment alternative funding BIKU from the viewpoint of the companies, 319 00:19:37,760 --> 00:19:41,480 Speaker 5: as you said, used to be banks are the main credits. 320 00:19:41,880 --> 00:19:45,199 Speaker 5: But in these days because of the banking industry has 321 00:19:45,200 --> 00:19:49,480 Speaker 5: so many restrictions, capital restrictions and kinds of things, and 322 00:19:49,840 --> 00:19:54,720 Speaker 5: so their capability to provide lending to apply the sector 323 00:19:54,960 --> 00:19:58,080 Speaker 5: is getting to a limited the amount. So I think 324 00:19:58,200 --> 00:20:02,680 Speaker 5: private credit can play a big role in Japan as well. 325 00:20:02,920 --> 00:20:06,320 Speaker 1: Firms like Apollo Global Advisors may see an important opportunity 326 00:20:06,440 --> 00:20:10,080 Speaker 1: in the newly evolving Japanese markets. But our Japanese investors 327 00:20:10,119 --> 00:20:13,920 Speaker 1: and companies receptive to adding private market alternatives to their 328 00:20:14,000 --> 00:20:18,040 Speaker 1: means of financing. As you go out into the Japanese market, 329 00:20:19,160 --> 00:20:22,800 Speaker 1: what resistance do you get to these new forms of 330 00:20:22,800 --> 00:20:23,720 Speaker 1: investment vehicles. 331 00:20:23,920 --> 00:20:26,119 Speaker 2: I don't think it's resistance. I think again, just like 332 00:20:26,160 --> 00:20:29,600 Speaker 2: in the wealth market, this is about education. In many instances, 333 00:20:29,640 --> 00:20:32,960 Speaker 2: we are not going to Japanese corporates directly. We're going 334 00:20:33,000 --> 00:20:37,920 Speaker 2: with their longtime banker. In some instances, particularly when Japanese 335 00:20:37,960 --> 00:20:41,360 Speaker 2: companies are financing overseas, we'll deal with them directly. Our 336 00:20:41,400 --> 00:20:47,280 Speaker 2: team here is unbelievable. From our chairman Tanakasan to the 337 00:20:47,320 --> 00:20:51,480 Speaker 2: head of our Asian Business Aetasan, these are very well known, 338 00:20:51,600 --> 00:20:54,440 Speaker 2: very substantive individuals who have been at the cutting edge 339 00:20:54,480 --> 00:20:57,719 Speaker 2: of finance for a very long time. The weight we 340 00:20:57,760 --> 00:20:59,920 Speaker 2: have put here, at the intellectual capital we've put here 341 00:21:00,280 --> 00:21:02,240 Speaker 2: is second to none. I think we're at the beginning 342 00:21:02,240 --> 00:21:05,040 Speaker 2: of a trend, but I think this is going to 343 00:21:05,080 --> 00:21:07,640 Speaker 2: be just a fascinating market for any number of reasons. 344 00:21:08,200 --> 00:21:10,600 Speaker 1: I have never seen a business strategy or an investment 345 00:21:10,680 --> 00:21:13,520 Speaker 1: that doesn't have some downside risk. So what are the 346 00:21:13,560 --> 00:21:16,840 Speaker 1: possible downside risks to this bright new future that you see? 347 00:21:16,920 --> 00:21:19,280 Speaker 2: Well, look, the downside risks are the same risks that 348 00:21:19,560 --> 00:21:22,679 Speaker 2: exist around the world. So for me, the way I 349 00:21:22,760 --> 00:21:25,800 Speaker 2: describe it is in my business career, most of the time, 350 00:21:25,880 --> 00:21:28,520 Speaker 2: where I'd say ninety five percent of the outcomes are 351 00:21:28,640 --> 00:21:32,240 Speaker 2: between two sidelines, and sometimes we like what's on the 352 00:21:32,240 --> 00:21:34,840 Speaker 2: playing field, and sometimes we don't. Sometimes the economy is 353 00:21:34,840 --> 00:21:37,200 Speaker 2: better or worse. Sometimes the capital markets are better worse, 354 00:21:37,240 --> 00:21:39,920 Speaker 2: valuations better or worse, but we know how to navigate 355 00:21:39,960 --> 00:21:43,240 Speaker 2: those things, and the chance of an outside the sidelines 356 00:21:43,280 --> 00:21:50,520 Speaker 2: outcome was small and unpredictable. That's my normal setup today. 357 00:21:50,800 --> 00:21:53,280 Speaker 2: I only think seventy seventy five percent of the outcomes 358 00:21:53,320 --> 00:21:56,440 Speaker 2: are between the two sidelines. And what's between the two 359 00:21:56,520 --> 00:22:02,800 Speaker 2: sidelines is amazing capital cycle grow both employment, inflation coming 360 00:22:02,840 --> 00:22:07,000 Speaker 2: down on a worldwide basis, lots of opportunity, but we 361 00:22:07,040 --> 00:22:11,560 Speaker 2: can ignore that there is an increased risk of an 362 00:22:11,560 --> 00:22:15,240 Speaker 2: out of the box, out of expected outcome, and it's 363 00:22:15,280 --> 00:22:18,639 Speaker 2: of a magnitude that investors people like us, need to 364 00:22:18,640 --> 00:22:22,359 Speaker 2: pay attention to that. And yes, there's always the credit cycle. 365 00:22:22,920 --> 00:22:24,479 Speaker 2: I don't think that's what we're talking about. I think 366 00:22:24,480 --> 00:22:27,680 Speaker 2: we're talking about geopolitics. I think we're talking about government deficits. 367 00:22:27,840 --> 00:22:30,560 Speaker 2: I think we're talking about rates up and rates down. 368 00:22:31,480 --> 00:22:33,560 Speaker 2: And so for the first time in a very long time, 369 00:22:34,040 --> 00:22:37,800 Speaker 2: we are trying to address outcomes that perhaps could occur 370 00:22:37,920 --> 00:22:40,760 Speaker 2: outside of what we normally see in front of us. 371 00:22:40,880 --> 00:22:44,840 Speaker 1: But absent one of those outside the sidelines events. Rowan 372 00:22:44,920 --> 00:22:48,040 Speaker 1: sees his firm as well positioned for a bright future 373 00:22:48,240 --> 00:22:48,800 Speaker 1: in Japan. 374 00:22:49,080 --> 00:22:52,320 Speaker 2: When I look at our toolkit, our toolkit starts with 375 00:22:52,359 --> 00:22:55,679 Speaker 2: retirement services. We have been here any number of years. 376 00:22:56,160 --> 00:22:59,359 Speaker 2: We are a very large reinsurance player to the Japanese market, 377 00:22:59,640 --> 00:23:04,080 Speaker 2: and we are creating products for Japanese retirees. Second, we're 378 00:23:04,080 --> 00:23:08,440 Speaker 2: a provider of capital to industry, whether it's Sony or 379 00:23:08,880 --> 00:23:12,320 Speaker 2: SMBC or others. Third, we are in the buyout business here. 380 00:23:12,359 --> 00:23:14,720 Speaker 2: This is one of the best buyout businesses here. You've 381 00:23:14,720 --> 00:23:17,520 Speaker 2: met with some of our portfolio companies or companies we've 382 00:23:17,520 --> 00:23:20,480 Speaker 2: had an investment in here. It is a very robust 383 00:23:20,520 --> 00:23:23,560 Speaker 2: market and a very interesting market. The capital coming off 384 00:23:23,560 --> 00:23:27,000 Speaker 2: the sidelines from households is looking for better rates of 385 00:23:27,040 --> 00:23:30,199 Speaker 2: return now that they are facing three percent inflation, and 386 00:23:30,280 --> 00:23:33,280 Speaker 2: I expect this to be a very promising wealth market 387 00:23:33,680 --> 00:23:38,440 Speaker 2: where people want safe, healed, they want defensive equity, They 388 00:23:38,480 --> 00:23:41,439 Speaker 2: want the kinds of things that have been available institutionally 389 00:23:41,920 --> 00:23:43,920 Speaker 2: around the world for a long time that are now 390 00:23:43,960 --> 00:23:45,280 Speaker 2: available as wealth products. 391 00:23:46,880 --> 00:23:51,399 Speaker 1: Coming up the challenges and opportunities of changing things, shaking 392 00:23:51,440 --> 00:24:07,879 Speaker 1: things up in the Japanese c suite. This is a 393 00:24:07,920 --> 00:24:11,639 Speaker 1: story about GSM that's a Japanese term meaning putting theory 394 00:24:11,880 --> 00:24:14,959 Speaker 1: into practice. Japan is changing the way it does business 395 00:24:15,000 --> 00:24:16,800 Speaker 1: so it can have the money it needs to invest 396 00:24:16,840 --> 00:24:20,320 Speaker 1: in productivity. What does that mean for Japanese corporations the 397 00:24:20,359 --> 00:24:23,480 Speaker 1: way they are structured and the way they finance those investments. 398 00:24:26,560 --> 00:24:29,639 Speaker 2: There is a real corporate revolution going on. The notion 399 00:24:29,960 --> 00:24:32,440 Speaker 2: of every company needing a plan to get above one 400 00:24:32,480 --> 00:24:37,040 Speaker 2: times book and essentially using shame as a tool for 401 00:24:37,200 --> 00:24:39,160 Speaker 2: reform has been very very effective. 402 00:24:40,040 --> 00:24:44,520 Speaker 5: Management has the a best position to fulminate a plan 403 00:24:44,720 --> 00:24:49,000 Speaker 5: how to improve it improve the current situation. Company itself 404 00:24:49,240 --> 00:24:53,440 Speaker 5: has to drive how to transform the company. 405 00:24:53,600 --> 00:24:56,520 Speaker 1: The combination of a reflating economy and market reforms in 406 00:24:56,600 --> 00:25:01,080 Speaker 1: Japan are reverberating through corporate boardrooms and sees suit causing 407 00:25:01,160 --> 00:25:04,520 Speaker 1: CEOs to rethink everything from how they finance their businesses 408 00:25:04,840 --> 00:25:07,960 Speaker 1: to what businesses they want to have in their portfolio. 409 00:25:08,280 --> 00:25:12,439 Speaker 1: Are we seeing yet the effects of the reforms? Are 410 00:25:12,520 --> 00:25:14,720 Speaker 1: CEOs acting differently more actively? 411 00:25:15,119 --> 00:25:18,040 Speaker 6: Well? I do think we're seeing changes. I think that 412 00:25:18,080 --> 00:25:21,440 Speaker 6: we begin to see more diverse borts and we begin 413 00:25:21,560 --> 00:25:25,920 Speaker 6: to see perhaps the taking more of opportunities. 414 00:25:25,320 --> 00:25:28,680 Speaker 1: Moreo Solis is a japan expert at the Brookings Institution. 415 00:25:29,400 --> 00:25:31,639 Speaker 6: I believe that this could be a good moment I 416 00:25:31,680 --> 00:25:35,280 Speaker 6: think to think about new wave of investments. I think 417 00:25:35,560 --> 00:25:40,120 Speaker 6: one of the challenges source of frustration is that corporate 418 00:25:40,200 --> 00:25:44,159 Speaker 6: Japan has been very risk covers. This might be a 419 00:25:44,200 --> 00:25:48,600 Speaker 6: way in which begin to see an appetite for taking 420 00:25:48,640 --> 00:25:49,760 Speaker 6: on more investment. 421 00:25:50,000 --> 00:25:53,160 Speaker 1: Japanese company's willingness to rethink how they do business may 422 00:25:53,200 --> 00:25:55,960 Speaker 1: extend even to whether they want to be listed on 423 00:25:56,040 --> 00:25:57,440 Speaker 1: the Tokyo Stock Exchange. 424 00:25:57,640 --> 00:26:02,360 Speaker 5: The number of delisting used to be only fifty company delisted. 425 00:26:03,080 --> 00:26:05,600 Speaker 5: Now you know last year was one hundred and twenty 426 00:26:05,640 --> 00:26:09,520 Speaker 5: five company ditisted and now this year twenty twenty six 427 00:26:09,600 --> 00:26:14,720 Speaker 5: already sixteen announced to a dealist. So I think in 428 00:26:14,800 --> 00:26:20,960 Speaker 5: a number of companies scrutinizing whether the keep listing is 429 00:26:20,960 --> 00:26:23,880 Speaker 5: the best way for them to ursu growth. 430 00:26:24,240 --> 00:26:26,960 Speaker 1: As the head of the company overseeing both the Tokyo 431 00:26:27,080 --> 00:26:31,000 Speaker 1: and Osaka stock Exchanges, himI Yamaji leaves it up to 432 00:26:31,080 --> 00:26:34,520 Speaker 1: individual companies to decide their best path for growth, but 433 00:26:34,640 --> 00:26:38,160 Speaker 1: since taking over, he has also implemented reforms that required 434 00:26:38,160 --> 00:26:42,440 Speaker 1: disclosure and explanation of firm strategies to become more profitable. 435 00:26:43,280 --> 00:26:46,920 Speaker 5: Used to be Japanese companies didn't spin off any operations 436 00:26:47,200 --> 00:26:50,119 Speaker 5: last year. Only the half six months last year we 437 00:26:50,200 --> 00:26:54,320 Speaker 5: had a two hundred and eighty coveouts spin offs, So 438 00:26:54,440 --> 00:26:56,679 Speaker 5: you know that means that they are quite serious. To 439 00:26:57,040 --> 00:27:01,840 Speaker 5: the ASCETA side, is quite serious to reorganize their business portfolio. 440 00:27:01,840 --> 00:27:06,439 Speaker 5: But at the same time, they are realistic enough that 441 00:27:06,520 --> 00:27:09,520 Speaker 5: they recognize that they are not a good owner. I 442 00:27:09,560 --> 00:27:11,080 Speaker 5: think that's a good sign. 443 00:27:11,600 --> 00:27:14,000 Speaker 1: One of those carve outs came in twenty twenty four 444 00:27:14,400 --> 00:27:18,520 Speaker 1: when Panasonic Holdings sold a majority interest in Panasonic Automotive 445 00:27:18,560 --> 00:27:22,840 Speaker 1: Systems to Apollo Global Management. Shares of Panasonic Holdings have 446 00:27:22,880 --> 00:27:25,720 Speaker 1: been on a tear ever since, up more than seventy 447 00:27:25,760 --> 00:27:30,640 Speaker 1: percent since the deal was completed. It's amazing. Masashi Nakayasu 448 00:27:30,920 --> 00:27:34,800 Speaker 1: is CEO of Panasonic Automotive, now focused on the transition 449 00:27:34,840 --> 00:27:39,439 Speaker 1: from automobiles as driving experience to a mobility experience, something 450 00:27:39,440 --> 00:27:41,320 Speaker 1: he calls joy in motion. 451 00:27:42,320 --> 00:27:47,679 Speaker 7: The value of the car a shifting from driving performance 452 00:27:47,760 --> 00:27:53,399 Speaker 7: into the mobility experience which the people are having in 453 00:27:53,440 --> 00:28:00,520 Speaker 7: the cas space, but individual person having a different sense 454 00:28:00,560 --> 00:28:05,920 Speaker 7: of comfort like temperature as well. So we use our 455 00:28:05,960 --> 00:28:12,000 Speaker 7: technologies and also AI enhanced technologies to fit to a 456 00:28:12,040 --> 00:28:17,600 Speaker 7: personalization and make individual person making more comfortable in the car. 457 00:28:18,119 --> 00:28:22,280 Speaker 1: Nagayasu says, carve outs like Panasonic Automotives can bring with 458 00:28:22,359 --> 00:28:25,320 Speaker 1: them a new focus on a more specific business. 459 00:28:25,640 --> 00:28:29,840 Speaker 7: Panasonia is congrammarated company and they have these diversified business 460 00:28:29,840 --> 00:28:36,879 Speaker 7: models and they have decided that automotive sector is not 461 00:28:37,080 --> 00:28:42,160 Speaker 7: the focus. So on the other hand, partnering with Aporo, 462 00:28:42,560 --> 00:28:46,480 Speaker 7: we can really one hundred percent commit to our automotive 463 00:28:46,480 --> 00:28:50,000 Speaker 7: sectors field. So this is rather you know, positive for 464 00:28:50,080 --> 00:28:52,600 Speaker 7: us to really stick to that, you know. 465 00:28:52,920 --> 00:28:55,920 Speaker 5: Sadly, the purpose of the spin off is that probably 466 00:28:56,360 --> 00:29:02,120 Speaker 5: that particular the now all now that of operations believes 467 00:29:02,120 --> 00:29:05,440 Speaker 5: that they are not the best choice from the billpoint 468 00:29:05,480 --> 00:29:09,080 Speaker 5: of the business itself. In other words, there might be 469 00:29:09,080 --> 00:29:13,280 Speaker 5: better partner for them, and so that you know, they believe, 470 00:29:13,360 --> 00:29:16,160 Speaker 5: you know, there are maybe a pe Funds which owns 471 00:29:16,840 --> 00:29:21,040 Speaker 5: other operations related to this particular business. I think, you know, 472 00:29:21,120 --> 00:29:25,479 Speaker 5: those are many different kinds of ways thinking, but I 473 00:29:25,480 --> 00:29:28,520 Speaker 5: think it's important for from the billpoint of the company 474 00:29:28,560 --> 00:29:31,440 Speaker 5: that they believe they are not a good owner of 475 00:29:31,480 --> 00:29:35,800 Speaker 5: that particular company and also they are not the best 476 00:29:35,840 --> 00:29:41,240 Speaker 5: owner to stimulate the growth of this particular business. I 477 00:29:41,280 --> 00:29:45,200 Speaker 5: think you know a Japanese companies started thinking many different 478 00:29:45,280 --> 00:29:48,360 Speaker 5: kinds of ways, and that's good for the for the 479 00:29:48,560 --> 00:29:49,360 Speaker 5: entire economy. 480 00:29:50,280 --> 00:29:53,360 Speaker 1: In addition to focus, Nagayasu says, a firm like Apollo 481 00:29:53,440 --> 00:29:57,760 Speaker 1: can also bring its particular expertise and working closely with management. 482 00:29:58,200 --> 00:30:03,719 Speaker 7: So the way of of the style Aporo is asking 483 00:30:03,800 --> 00:30:08,240 Speaker 7: us discipline. I take it this very positive way with 484 00:30:08,440 --> 00:30:13,280 Speaker 7: few Panasonic group constraints. So I don't want to say 485 00:30:13,280 --> 00:30:16,959 Speaker 7: the freedom, but we really can focus on what we 486 00:30:17,000 --> 00:30:17,480 Speaker 7: need to do. 487 00:30:18,640 --> 00:30:21,600 Speaker 1: What sorts of profit goals or targets do you have 488 00:30:22,240 --> 00:30:23,960 Speaker 1: for Panasonic a motive. 489 00:30:24,320 --> 00:30:27,720 Speaker 7: We are not disclosing much of numbers. However, you know 490 00:30:27,920 --> 00:30:32,960 Speaker 7: our most important KPI right now is E minus c 491 00:30:33,800 --> 00:30:40,120 Speaker 7: ebitda minus capex. We are aiming to triple that. This 492 00:30:40,280 --> 00:30:44,240 Speaker 7: emails in number from in twenty seven compared to twenty 493 00:30:44,320 --> 00:30:50,000 Speaker 7: twenty four. And so far since you know partnership started 494 00:30:50,040 --> 00:30:55,320 Speaker 7: with Aporo, partnership has been started, then the number is 495 00:30:55,360 --> 00:31:01,960 Speaker 7: showing a positive way. And also look ahead the midum 496 00:31:02,640 --> 00:31:06,120 Speaker 7: a short medium goal. We are quite advanced in this 497 00:31:06,840 --> 00:31:07,960 Speaker 7: situation right now. 498 00:31:09,720 --> 00:31:12,320 Speaker 1: The carve outs may help bring more discipline to companies 499 00:31:12,360 --> 00:31:16,400 Speaker 1: like Panasonic Automotive. But there are other transformations in Japanese 500 00:31:16,480 --> 00:31:20,680 Speaker 1: business that require injection of patient capital into existing companies, 501 00:31:21,160 --> 00:31:25,720 Speaker 1: transformations like the one ongoing at Sony under CEO Hierarchy Totoki, 502 00:31:26,440 --> 00:31:29,520 Speaker 1: moving from manufacturing the electronics on which the world consumes 503 00:31:29,640 --> 00:31:32,600 Speaker 1: entertainment to producing the entertainment itself. 504 00:31:33,400 --> 00:31:37,600 Speaker 3: Sony has had a lydical to great reputation in the 505 00:31:37,720 --> 00:31:41,640 Speaker 3: area of consumer ecmpanis and but you know the at 506 00:31:41,720 --> 00:31:47,800 Speaker 3: the same time, digitalization has happened and things move from 507 00:31:47,920 --> 00:31:51,800 Speaker 3: the analog to digital in terms of the technology, and 508 00:31:52,120 --> 00:31:57,320 Speaker 3: in this area generally it's particularly different from the difficult 509 00:31:57,400 --> 00:32:01,160 Speaker 3: to differentiate the you know, the pulla from the others 510 00:32:01,680 --> 00:32:05,520 Speaker 3: in the area of the consumer electronics, and then it's 511 00:32:05,880 --> 00:32:10,160 Speaker 3: very difficult to you know, the compete with the other players. 512 00:32:10,840 --> 00:32:15,880 Speaker 3: And that environment invite new entrant to the industry, first 513 00:32:15,960 --> 00:32:20,520 Speaker 3: from Korea and followed by China and particularly China as 514 00:32:20,640 --> 00:32:24,480 Speaker 3: you and son you know, they have enormous domestic market. 515 00:32:25,040 --> 00:32:28,560 Speaker 3: Backed by that market, they try to export their products. 516 00:32:29,160 --> 00:32:35,640 Speaker 3: The consumer efferentciata now need a massive scale and the 517 00:32:36,120 --> 00:32:41,720 Speaker 3: compassion field comes to a volume and price and unfortunately 518 00:32:41,960 --> 00:32:46,360 Speaker 3: it's very hard to maintain that volume in a Sony group. 519 00:32:47,080 --> 00:32:50,760 Speaker 1: How does the Sony transformation fit together with the broader transformation? 520 00:32:50,840 --> 00:32:53,920 Speaker 1: Does it affect how you're transferring Sony that the entire 521 00:32:54,320 --> 00:32:55,440 Speaker 1: industry is changing. 522 00:32:55,840 --> 00:32:59,280 Speaker 3: We forced to change because you know the when I 523 00:32:59,440 --> 00:33:03,720 Speaker 3: came back from a subsidiary to headquarter, and that was 524 00:33:04,080 --> 00:33:08,160 Speaker 3: twenty thirteen, that was a very severe time and the 525 00:33:08,240 --> 00:33:12,920 Speaker 3: financial performance is very back and many good people who 526 00:33:12,960 --> 00:33:14,320 Speaker 3: are left company. 527 00:33:18,120 --> 00:33:20,400 Speaker 1: It's been a big change for Sony to branch out 528 00:33:20,480 --> 00:33:24,040 Speaker 1: from its traditional position in consumer electronics, but it's already 529 00:33:24,120 --> 00:33:27,840 Speaker 1: well into that transition. Around a decade ago, entertainment made 530 00:33:27,920 --> 00:33:31,200 Speaker 1: up only thirty percent of its revenue. By twenty twenty four, 531 00:33:31,320 --> 00:33:34,520 Speaker 1: it had grown to sixty percent of the company. Let's 532 00:33:34,520 --> 00:33:37,120 Speaker 1: talk about the creative side. As I understand it, it's 533 00:33:37,200 --> 00:33:39,760 Speaker 1: more than half of the business for Sony at this point. 534 00:33:40,280 --> 00:33:42,520 Speaker 1: What are the component parts of that that you rely on? 535 00:33:42,880 --> 00:33:48,160 Speaker 3: That's including game and the music and motion pictures and 536 00:33:48,800 --> 00:33:53,360 Speaker 3: three these are entertainment business and the more than sixty 537 00:33:53,480 --> 00:33:54,719 Speaker 3: percent of revenue now. 538 00:33:55,480 --> 00:33:58,560 Speaker 1: And of those three, which is the largest one is 539 00:33:58,600 --> 00:33:58,920 Speaker 1: it gaming? 540 00:33:59,080 --> 00:33:59,360 Speaker 4: Gaming? 541 00:34:00,480 --> 00:34:02,560 Speaker 1: So tell me about the gaming business. 542 00:34:03,120 --> 00:34:06,160 Speaker 3: We are always talking about the play session should be 543 00:34:06,280 --> 00:34:11,000 Speaker 3: a best place to play from users perspective and at 544 00:34:11,040 --> 00:34:14,239 Speaker 3: the same time best to play to publish because we 545 00:34:14,440 --> 00:34:17,480 Speaker 3: have a great relationship is a bunch of third party 546 00:34:17,680 --> 00:34:20,719 Speaker 3: you know, game publishers, and of course we have great 547 00:34:20,840 --> 00:34:22,640 Speaker 3: studios as a first party. 548 00:34:22,960 --> 00:34:26,600 Speaker 1: Sony's major games include international blockbusters like God of War, 549 00:34:27,080 --> 00:34:30,719 Speaker 1: Ghost of Sushima, and Hell Divers. But as successful as 550 00:34:30,760 --> 00:34:34,600 Speaker 1: they've been, Totki San prefers to supervise rather than be 551 00:34:34,680 --> 00:34:35,600 Speaker 1: a gamer himself. 552 00:34:36,239 --> 00:34:39,680 Speaker 3: I'm good at, you know, the thinking about a business 553 00:34:39,760 --> 00:34:45,920 Speaker 3: model and including a financial and also the you know, 554 00:34:46,040 --> 00:34:51,560 Speaker 3: think about the top down approach, which industry is suitable, 555 00:34:51,920 --> 00:34:56,520 Speaker 3: which we have in Sony, which field we can capable 556 00:34:56,920 --> 00:35:00,960 Speaker 3: to compete with the other companies. That kind of you know, 557 00:35:01,080 --> 00:35:04,920 Speaker 3: the way of thinking is very helpful to develop my career. 558 00:35:05,640 --> 00:35:09,560 Speaker 1: Do you personally consume Sony created a product on whether 559 00:35:09,600 --> 00:35:11,680 Speaker 1: it's games or films or music. 560 00:35:11,800 --> 00:35:15,480 Speaker 3: I mean, I love music and TV dramas and music, 561 00:35:15,880 --> 00:35:19,319 Speaker 3: but I cannot play game. To be videos, I can't 562 00:35:19,360 --> 00:35:22,920 Speaker 3: play but very you know, the primitive level, and. 563 00:35:23,080 --> 00:35:25,720 Speaker 1: Sony is a major producer of the music and film 564 00:35:25,920 --> 00:35:27,200 Speaker 1: that to Toki San loves. 565 00:35:27,760 --> 00:35:30,320 Speaker 3: We are doing good business in the film and of 566 00:35:30,480 --> 00:35:34,440 Speaker 3: course you know some films are vlatile, but you know 567 00:35:34,600 --> 00:35:40,760 Speaker 3: they try to avoid such PARTI TI and we developed 568 00:35:40,800 --> 00:35:46,520 Speaker 3: the portfolio for to make a film and sometimes we 569 00:35:46,760 --> 00:35:51,480 Speaker 3: do a deal with a big distributors such as a Netflix. 570 00:35:52,440 --> 00:35:56,000 Speaker 1: Anime is something many of us identify with Japan. Yeah, 571 00:35:56,160 --> 00:35:58,800 Speaker 1: as almost uniquely Japan has it gone global. 572 00:35:59,480 --> 00:36:04,240 Speaker 3: Yes, now defentually thanks to the streaming big streaming platform. 573 00:36:04,880 --> 00:36:10,000 Speaker 3: Now anime is simultaneously distribute you know, the the at 574 00:36:10,040 --> 00:36:14,000 Speaker 3: the same time worldwid basis that helps you know, the 575 00:36:14,680 --> 00:36:18,840 Speaker 3: animal glogle hits as a law and the you know, 576 00:36:19,080 --> 00:36:24,040 Speaker 3: the that enable to mitigate the piracy risk control. 577 00:36:24,520 --> 00:36:27,279 Speaker 1: As part of its push toward content, Sony has made 578 00:36:27,440 --> 00:36:31,640 Speaker 1: major investments in music catalogs, building on traditional strength and 579 00:36:31,800 --> 00:36:33,000 Speaker 1: that's where Apollo came in. 580 00:36:33,440 --> 00:36:37,240 Speaker 3: It's quite important because you know, the the each capital 581 00:36:37,360 --> 00:36:41,120 Speaker 3: resources have a different disc capitite as well as a 582 00:36:41,200 --> 00:36:46,080 Speaker 3: different time horizon. And as we diversify our business and 583 00:36:46,280 --> 00:36:51,120 Speaker 3: we need to acquire many asset classes and it's a 584 00:36:51,239 --> 00:36:53,080 Speaker 3: you know, the we can find out the best fit 585 00:36:53,440 --> 00:36:56,600 Speaker 3: of the you know, the capital, investment and asset class. 586 00:36:57,560 --> 00:37:00,120 Speaker 1: Is that why you edited a relationship with Apollo for 587 00:37:00,400 --> 00:37:03,200 Speaker 1: music catalog because you needed a long term time. 588 00:37:03,040 --> 00:37:08,399 Speaker 3: Horizon exactly, and the music capital is a relatively low 589 00:37:08,440 --> 00:37:11,720 Speaker 3: risk and lord E Town, you know the asset class, 590 00:37:12,320 --> 00:37:15,880 Speaker 3: and that really fit to the you know the like 591 00:37:16,680 --> 00:37:22,040 Speaker 3: private credit and you know, need a long time for 592 00:37:22,160 --> 00:37:26,920 Speaker 3: item as a capital and outside that's a great example. 593 00:37:27,440 --> 00:37:29,839 Speaker 1: It turns out that Totky Sun has a long time 594 00:37:29,920 --> 00:37:33,600 Speaker 1: horizon in his music tastes as well. His favorite artist 595 00:37:33,760 --> 00:37:36,480 Speaker 1: is a British rock band from the nineties, one that's 596 00:37:36,560 --> 00:37:39,000 Speaker 1: recently gotten back together and one of that over the 597 00:37:39,120 --> 00:37:42,160 Speaker 1: years has worked with Sony in distributing some of their records. 598 00:37:42,560 --> 00:37:43,680 Speaker 1: Do you have a favorite artist? 599 00:37:43,880 --> 00:37:50,000 Speaker 3: I actually joined the concert of the Oasis and in 600 00:37:50,160 --> 00:37:53,960 Speaker 3: Tokyo and they have a dome concert two days and 601 00:37:54,280 --> 00:37:59,359 Speaker 3: I didly enjoyed. And it's after twenty years. They had 602 00:37:59,400 --> 00:38:04,960 Speaker 3: a concert in Japan and outofang are there and of 603 00:38:05,120 --> 00:38:10,319 Speaker 3: course I heard old days music. Aushle is a really good, 604 00:38:10,360 --> 00:38:11,080 Speaker 3: GrITT fun. 605 00:38:12,680 --> 00:38:17,000 Speaker 1: From Automotive Atonomy. Japanese corporate leaders are changing the way 606 00:38:17,040 --> 00:38:20,080 Speaker 1: they do business and finding new ways to capitalize those 607 00:38:20,200 --> 00:38:25,840 Speaker 1: changes with the help of firms like Apollo coming up. 608 00:38:26,160 --> 00:38:29,200 Speaker 1: Is Japan truly different? We take a fresh look at 609 00:38:29,239 --> 00:38:46,759 Speaker 1: what we thought we knew about Japanese culture. This is 610 00:38:46,840 --> 00:38:50,360 Speaker 1: a story about bunka. It's a Japanese term for culture. 611 00:38:50,880 --> 00:38:54,560 Speaker 1: The Japanese have developed their unique culture over one thousand years. 612 00:38:54,640 --> 00:38:58,359 Speaker 1: It's a culture that has informed the way Japan does business. Now, 613 00:38:58,480 --> 00:39:02,680 Speaker 1: Japan is pursuing a new economic strategy. Peter Drucker famously 614 00:39:02,800 --> 00:39:06,480 Speaker 1: said that culture eats strategy for breakfast. So what will 615 00:39:06,600 --> 00:39:10,759 Speaker 1: happen as Japan's new economic strategy comes up against its 616 00:39:10,840 --> 00:39:11,640 Speaker 1: ancient culture. 617 00:39:14,200 --> 00:39:17,279 Speaker 8: The economic growth of Japan has been the most spectacular 618 00:39:17,360 --> 00:39:20,560 Speaker 8: in recent history, a fine example of what a system 619 00:39:20,600 --> 00:39:24,920 Speaker 8: of pre economy can accomplish with wise planning, determination and 620 00:39:25,239 --> 00:39:25,880 Speaker 8: hard work. 621 00:39:30,000 --> 00:39:32,000 Speaker 1: Many of us have an image in our minds of 622 00:39:32,080 --> 00:39:36,040 Speaker 1: Japanese business traditions, like the groups of interrelated companies known 623 00:39:36,120 --> 00:39:39,640 Speaker 1: as Caretsu's and the lifestyles of the salary employees who 624 00:39:39,719 --> 00:39:40,239 Speaker 1: worked at them. 625 00:39:40,920 --> 00:39:44,680 Speaker 6: Under currents of change have repositioned where Japan stands today. 626 00:39:45,480 --> 00:39:48,520 Speaker 1: Maria Solis of the Brookings Institution says, the image of 627 00:39:48,600 --> 00:39:51,120 Speaker 1: the salary man was always a bit overdone. 628 00:39:51,960 --> 00:39:55,880 Speaker 6: The traditional image we have of the Japanese employee, the 629 00:39:56,000 --> 00:40:01,480 Speaker 6: salary man is applied really to just segment of the 630 00:40:01,840 --> 00:40:05,800 Speaker 6: working population. The idea that people would stay in the 631 00:40:05,880 --> 00:40:08,440 Speaker 6: same job all their careers, and that there was this 632 00:40:08,560 --> 00:40:12,279 Speaker 6: steady progression, and that they would be extremely loyal to 633 00:40:12,360 --> 00:40:16,640 Speaker 6: their company, they would not be seeking for opportunities. But 634 00:40:16,840 --> 00:40:20,600 Speaker 6: many other workers in Japan who operated, who were employed 635 00:40:20,640 --> 00:40:26,040 Speaker 6: by smaller companies, never had that level of predictability. We 636 00:40:26,200 --> 00:40:28,880 Speaker 6: believe that something like thirty eight to forty percent of 637 00:40:29,000 --> 00:40:32,680 Speaker 6: all employees in Japan are in this category of non 638 00:40:32,760 --> 00:40:37,560 Speaker 6: regular workers. The corporations and the government have also tried 639 00:40:37,640 --> 00:40:42,239 Speaker 6: to bring more flexibility to employment practices, and we begin 640 00:40:42,400 --> 00:40:45,680 Speaker 6: to see that many employees now are doing these lateral 641 00:40:45,840 --> 00:40:48,680 Speaker 6: changes and they do not expect to stay in the 642 00:40:48,800 --> 00:40:52,120 Speaker 6: same corporation all of their careers. So I think that 643 00:40:52,360 --> 00:40:56,840 Speaker 6: that's adding again more dynamism to the Japanese labor market. 644 00:40:57,520 --> 00:40:59,520 Speaker 5: The culture is changing here. 645 00:40:59,560 --> 00:41:03,360 Speaker 1: On me of the Tokyo Stock Exchange politely suggests that 646 00:41:03,480 --> 00:41:06,439 Speaker 1: the idea of the salaryman is at the very least 647 00:41:06,800 --> 00:41:09,799 Speaker 1: out of date. There was the salaryman that we all 648 00:41:09,960 --> 00:41:13,520 Speaker 1: talked about when you had a long term job, fairly quiet, 649 00:41:13,680 --> 00:41:15,359 Speaker 1: not a lot of races, but it was a lot 650 00:41:15,400 --> 00:41:17,319 Speaker 1: of stability. This is a different world. 651 00:41:17,520 --> 00:41:23,720 Speaker 5: Well, yes, that's the kind of stereotype, kind of image 652 00:41:23,760 --> 00:41:29,040 Speaker 5: of the Japanese workers. But it's amazingly since twenty fifteen 653 00:41:29,160 --> 00:41:34,000 Speaker 5: or sixteen, about one out of three new a freshmen 654 00:41:34,160 --> 00:41:37,560 Speaker 5: to the companies are thinking to leave the company to 655 00:41:37,760 --> 00:41:41,280 Speaker 5: join their startups. Is a one of the most popular 656 00:41:42,120 --> 00:41:46,920 Speaker 5: jobs the university students to choose. Used to be like 657 00:41:47,000 --> 00:41:51,359 Speaker 5: a bureaucrats or consultants or investment banks, those kinds of things, 658 00:41:51,440 --> 00:41:55,560 Speaker 5: but now there's a number of students or you know, 659 00:41:55,760 --> 00:41:59,800 Speaker 5: the freshmen it's trying to leave the current company and 660 00:42:00,160 --> 00:42:02,520 Speaker 5: join the new start ups. 661 00:42:03,320 --> 00:42:06,640 Speaker 1: And large Japanese companies are relying more on those startups 662 00:42:06,760 --> 00:42:12,879 Speaker 1: attracting new college grads. Companies like Masashi Nagayasu's Panasonic Automotive. 663 00:42:12,960 --> 00:42:17,160 Speaker 7: Our business model or profit model need to be also changed, 664 00:42:17,520 --> 00:42:22,800 Speaker 7: so we need to have more capability to partnery with 665 00:42:23,440 --> 00:42:30,200 Speaker 7: many kind of industrial or automotive industry sectors, including startup companies. 666 00:42:31,080 --> 00:42:34,040 Speaker 1: Even as Panasonic Automotive changes the way it does business 667 00:42:34,280 --> 00:42:37,040 Speaker 1: and with whom it works to preserve the best of 668 00:42:37,120 --> 00:42:40,760 Speaker 1: the larger Panasonic culture, a culture established by the founder 669 00:42:40,800 --> 00:42:45,040 Speaker 1: of its predecessor company, Konosuki Matsushita at. 670 00:42:44,920 --> 00:42:48,840 Speaker 7: The same time. Okay, Matsusa is our own company is 671 00:42:48,920 --> 00:42:53,440 Speaker 7: found This is no change forever. And the parasonit is 672 00:42:53,480 --> 00:42:57,600 Speaker 7: almost one hundred ten years history, but Parasonian Automotive has 673 00:42:58,120 --> 00:42:59,440 Speaker 7: eighty years history. 674 00:43:00,400 --> 00:43:05,040 Speaker 5: So we're still put importals on our founders. 675 00:43:05,600 --> 00:43:10,520 Speaker 7: You know, philosophy in our mind and this is our backbone. 676 00:43:11,160 --> 00:43:15,919 Speaker 7: This won't change, but otherwise we can change. 677 00:43:17,280 --> 00:43:19,680 Speaker 1: One of the things you're changing is the name of 678 00:43:19,719 --> 00:43:24,880 Speaker 1: the company. Yess how do you employees a Panasonic Automotive 679 00:43:24,960 --> 00:43:27,720 Speaker 1: respond to changing these Panasonic is and iconic? 680 00:43:28,000 --> 00:43:28,160 Speaker 7: Yeah? 681 00:43:28,239 --> 00:43:29,160 Speaker 8: Yeah, you know. 682 00:43:30,440 --> 00:43:32,680 Speaker 7: You know I've been working for a parattery for forty 683 00:43:32,719 --> 00:43:37,239 Speaker 7: two years. Yeah you know, yeah, yes exactly. Some people 684 00:43:38,440 --> 00:43:45,279 Speaker 7: ah expressing, how to say it, kind of nostarigic, you know, 685 00:43:45,400 --> 00:43:52,000 Speaker 7: feelings right, and first response from them are not very 686 00:43:52,080 --> 00:43:58,279 Speaker 7: positive frankly some of them. But however, to speed up 687 00:43:58,320 --> 00:44:03,800 Speaker 7: the process of transforming a company and of course profitabilities 688 00:44:04,480 --> 00:44:08,239 Speaker 7: growth strategy, we need to show the evidence to the employees. 689 00:44:08,680 --> 00:44:11,320 Speaker 7: I do believe they would change the mindset to a 690 00:44:11,400 --> 00:44:14,759 Speaker 7: polictive way, So that's why I have to show the 691 00:44:14,840 --> 00:44:20,720 Speaker 7: result to the employee to make it everyone be positive. 692 00:44:20,760 --> 00:44:26,000 Speaker 7: Way we will speed up the process of the transform 693 00:44:26,040 --> 00:44:29,480 Speaker 7: of ourselves to fit to the market at a global basis, 694 00:44:30,120 --> 00:44:33,440 Speaker 7: so customers a response are quite positive. 695 00:44:34,440 --> 00:44:38,359 Speaker 1: Over At Sony, CEO Hiroki Totoki has a similar goal 696 00:44:38,480 --> 00:44:42,360 Speaker 1: of communication with employees as he continues his company's transformation. 697 00:44:43,040 --> 00:44:45,680 Speaker 1: What you're describing is a very different Sony from what 698 00:44:45,800 --> 00:44:48,880 Speaker 1: it was twenty years ago. How do you bring along 699 00:44:49,239 --> 00:44:50,879 Speaker 1: Sony employees to this new world? 700 00:44:51,600 --> 00:44:54,600 Speaker 3: That's a great question, and that you know, even the 701 00:44:54,880 --> 00:44:58,359 Speaker 3: Portofolio shift is a right thing from an investors point 702 00:44:58,400 --> 00:45:02,160 Speaker 3: of view, and the the business has been done by 703 00:45:02,239 --> 00:45:06,040 Speaker 3: the people and if you you know, the look down 704 00:45:06,160 --> 00:45:09,280 Speaker 3: to the ground, people are very commit to the current 705 00:45:09,360 --> 00:45:13,239 Speaker 3: business and the current job and to shift that job 706 00:45:13,440 --> 00:45:17,480 Speaker 3: and that business domain is not really important. But as 707 00:45:17,520 --> 00:45:23,600 Speaker 3: a CEO, most important thing is how to pathway with rationale. 708 00:45:24,280 --> 00:45:26,719 Speaker 3: This is the right thing we have to do. That 709 00:45:27,400 --> 00:45:31,680 Speaker 3: kind of communication is quite important to the employee. We 710 00:45:31,920 --> 00:45:35,480 Speaker 3: have to transform the entire Sony otherwise we can survive. 711 00:45:36,360 --> 00:45:40,360 Speaker 3: And you know, sometimes that transformation is very severe, but 712 00:45:40,640 --> 00:45:41,400 Speaker 3: we have to do that. 713 00:45:42,320 --> 00:45:45,880 Speaker 1: Over and above the experiences of individual Japanese company leaders 714 00:45:46,320 --> 00:45:49,680 Speaker 1: and the experiences of Japanese workers, there's a larger cultural 715 00:45:49,800 --> 00:45:53,520 Speaker 1: question whether the conservatism we've seen in Japanese markets and 716 00:45:53,600 --> 00:45:56,840 Speaker 1: investors is imprinted or whether it has been the result 717 00:45:56,880 --> 00:46:01,520 Speaker 1: of macroeconomic forces which have changed A Uita of Apollo 718 00:46:01,719 --> 00:46:05,000 Speaker 1: observed the back and forth between economics and culture during 719 00:46:05,120 --> 00:46:09,560 Speaker 1: his years at Goldman Sachs and National Pension Fund GPIF. 720 00:46:10,560 --> 00:46:14,279 Speaker 1: For thirty years or so, Japan has been perceived as 721 00:46:14,320 --> 00:46:17,759 Speaker 1: sort of low risk, low return. Yes, as you say, 722 00:46:17,880 --> 00:46:21,200 Speaker 1: cash is king yeap, and it's been thought maybe that's 723 00:46:21,200 --> 00:46:23,759 Speaker 1: part of the Japanese culture. Is that not right, that 724 00:46:23,920 --> 00:46:26,560 Speaker 1: Japanese are not inherently conservative. 725 00:46:26,880 --> 00:46:32,040 Speaker 4: I don't think so, because when I started in my career, 726 00:46:33,239 --> 00:46:36,560 Speaker 4: DDP was growing, you know, a high single digit and 727 00:46:36,800 --> 00:46:41,799 Speaker 4: the tenure yield was of six percent. So I don't 728 00:46:41,840 --> 00:46:45,080 Speaker 4: think this is the cultural things. People based gott to 729 00:46:45,120 --> 00:46:49,320 Speaker 4: make a rational decisions with the macro environment because the 730 00:46:49,600 --> 00:46:52,840 Speaker 4: cash is the best assets to own compared to the others, 731 00:46:53,560 --> 00:46:57,400 Speaker 4: and now things are different. So I think if people 732 00:46:57,520 --> 00:47:02,279 Speaker 4: make a rational decision, we go to rational decisions. I 733 00:47:02,400 --> 00:47:06,359 Speaker 4: think people are open for various ideas on the new 734 00:47:06,440 --> 00:47:07,800 Speaker 4: finance space. 735 00:47:09,200 --> 00:47:12,520 Speaker 2: There's nothing like three percent inflation to get people to 736 00:47:12,560 --> 00:47:15,600 Speaker 2: think differently, and we have our work cut out for us, 737 00:47:15,680 --> 00:47:18,640 Speaker 2: as do some of the other large providers of private 738 00:47:18,719 --> 00:47:22,600 Speaker 2: market investment opportunities. But this is about education. This is 739 00:47:22,680 --> 00:47:25,439 Speaker 2: not about whether they will move. They are going to move. 740 00:47:25,760 --> 00:47:29,239 Speaker 2: The Japanese institutions are moving, and so it's just a 741 00:47:29,400 --> 00:47:31,360 Speaker 2: rate of change, and we're now we're seeing an inflection 742 00:47:31,440 --> 00:47:34,720 Speaker 2: point in that rate of change, spurred on by higher inflation. 743 00:47:37,360 --> 00:47:39,160 Speaker 1: That does it for us here on Wall Street. We're 744 00:47:39,280 --> 00:47:42,239 Speaker 1: coming to you from Tokyo. I'm David West, and see 745 00:47:42,280 --> 00:47:44,719 Speaker 1: you next week for more stories of capitalism.