Hiroaki Nakanishi has been forced to step down as chair of Japan’s Keidanren business lobby after a recurrence of cancer, removing a powerful reformist voice from the top of corporate Japan.
The loss of Nakanishi, who won fame for his transformation of Hitachi as chief executive and chair in the 2010s, will be regarded as a setback for the cause of modernisers in Japanese business.
Masakazu Tokura, the chair of Sumitomo Chemical, will succeed Nakanishi, following a tradition whereby the Keidanren chief comes from an industrial company. Tokura will take office at a general meeting next month.
“When you look at what Nakanishi did, you can see that Sumitomo Chemical is a more conservative company than Hitachi. Nakanishi was a proponent of aggressive corporate governance reform,” said Masatoshi Kikuchi, chief equity strategist at Mizuho Securities in Tokyo.
“But I have the impression that Sumitomo Chemical’s reform has been much slower. I have concerns that governance reform in Japan will slow under the new leadership of Keidanren,” Kikuchi said.
Nakanishi has been treated for lymphoma, a form of blood cancer, since 2019. In March, he said he was in remission but in April he suffered a recurrence of the disease and asked to step down a year before his term was due to end.
Keidanren is more influential than business federations in other countries. It plays a role in annual wage negotiating rounds between corporations and unions, while the chair usually sits on powerful government bodies, such as the Council on Economic and Fiscal Policy.
But it has also had to struggle to maintain its relevance, with many technology and internet companies refusing to join. In February, Nakanishi appointed Tomoko Namba, the founder of internet group DeNA, as Keidanren’s first female vice-chair.
Nakanishi’s selection as Keidanren chair in 2018 was welcomed by foreign and domestic investors who saw it as acknowledgment that even the conservative business lobby had recognised the pressure building behind corporate governance reform.
Nakanishi’s leadership of Hitachi, whose shares are trading at a 20-year high, was widely seen as providing a template for how the largest Japanese conglomerates might address the restructuring sought by many shareholders.
Among his more eye-catching measures was the process in which Hitachi steadily reduced the number of subsidiaries it had listed on the Tokyo Stock Exchange from more than 20 to two.
While at Keidanren, Nakanishi pushed for Japan to invest in digital technology, an agenda adopted wholeheartedly by Yoshihide Suga when he became prime minister last year.
Masakazu Kubota, director-general of the federation, said that Tokura had been chosen because of his experience as a past deputy chair of Keidanren and because of Sumitomo Chemical’s initiatives on digital transformation and climate change.
But his background also highlights the challenge for Keidanren as Suga pushes for Japan to accelerate its effort on climate change and achieve net zero carbon emissions by 2050. Many Keidanren members are involved in steelmaking, oil and other heavy industries.
“For now, the priority is for government and business to work together to minimise infections and achieve an economic recovery from Covid-19,” said Tokura at a press conference. He said he would pick up where Nakanishi left off and work to build “sustainable capitalism” in Japan.