In recent years, Japan’s major corporations, such as Dentsu, Hakuhodo, and SoftBank, have been consolidating, restructuring, or even closing some of their subsidiaries. At the same time, well-known companies like Shiseido have seen a surge in early retirement programs. These changes signal a quiet but profound transformation in Japan’s corporate landscape, challenging the long-held image of “stable and secure” large companies.
I believe there are two key forces driving this trend:
- The rising influence of foreign shareholders
- Pressure from the Tokyo Stock Exchange (TSE) to improve Price-to-Book Ratios (PBR)
The following is my view of what is happening and why.
1. Subsidiary Consolidation in Major Firms
Dentsu, Hakuhodo, and SoftBank have historically relied on large networks of subsidiaries to operate. Recently, however, some subsidiaries have been merged, reorganized, or closed.
- Dentsu: Streamlining global operations and reorganizing the group
- Hakuhodo: Consolidating affiliated companies and refocusing businesses
- SoftBank: Restructuring investment portfolios and concentrating on core areas
This is not just a routine efficiency measure. I believe it reflects a deeper shift in how Japanese corporations respond to global market expectations.
2. Early Retirement Programs: The Case of Shiseido
Shiseido has implemented large-scale early retirement programs, and similar initiatives are appearing across other major companies. The underlying reasons include:
- High personnel costs
- Changing skill requirements in the digital era
- Large mid- and senior-level workforce
- The need to reallocate talent to new growth areas
In short, companies are trying to “lighten their organizational structure” to remain competitive.
3. Foreign Shareholders Are Driving Change
The proportion of foreign shareholders in Japanese firms has increased significantly over the past two decades. Foreign investors generally prioritize:
- Cutting unprofitable subsidiaries and costs
- Improving capital efficiency (e.g., ROE, ROIC)
- Focusing on profitable or growth businesses
These priorities sometimes conflict with traditional Japanese management principles:
- Protecting employment
- Maintaining large corporate groups
- Preserving internal reserves
I believe the influence of foreign investors is pushing companies toward restructuring and streamlining.
4. Pressure from the Tokyo Stock Exchange (PBR Improvement)
Since 2023, the TSE has urged listed companies to improve their Price-to-Book Ratio (PBR) if it falls below 1.0.
A low PBR signals to the market that a company is not effectively using its assets, which can affect investor confidence. To respond, companies are often forced to:
- Restructure or close unprofitable subsidiaries
- Reduce non-core business operations
- Review labor and administrative costs
- Focus on profitable core businesses
I believe this regulatory pressure has accelerated the pace of corporate restructuring in Japan.
5. Japan’s Corporations Are in a Transitional Phase
Subsidiaries are disappearing. Early retirement programs are expanding. Organizations are shrinking.
I see these developments as part of a necessary transformation toward the next generation of Japanese corporate management.
Traditional Japanese corporate models—large organizations, lifetime employment, and diversification for risk reduction—are being rewritten. Companies must become lighter, faster, more capital-efficient, and globally competitive.
Conclusion: Hoping for a More Productive and Fair Future
I do not view this transitional period as purely negative.
I hope that, once these changes settle, Japanese companies will become more productive, transparent, and fair, and that employees will be evaluated based on their contributions and abilities.
In other words, I believe that this period of “quiet disruption” is a necessary step toward a future where talent is rewarded, organizations are more efficient, and Japan’s corporations can thrive globally.
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