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How NEC turned a crisis into society-leading strategy
ESG Talk
HIROKO NAKATACONTRIBUTING WRITER

Facing crisis a decade ago, electronics giant
NEC Corp. sought once again to define thesocial significance of its business. Since Japanese firms’ top market shares in the fields ofcomputers and semiconductors were gradually being eroded in the 1990s and the 2000s
by their rivals in South Korea and Taiwan,
NEC was forced to restructure itself by slashing its workforce, pulling out of its personal
computer and smartphone business andmaking its chip sector a non-consolidatedunit.
“We eventually reached the conclusionthat the reason why our company exists isto transform our technologies to social values, not just to pursue technological evolution,” said NEC President and CEO Takayuki
Morita. “That’s where our values originate,
and we were convinced we could do thatafter looking back at what we had done.”Founded in 1899, NEC has seen the riseand fall of the Japanese electronics industry. The country’s postwar rapid economic
growth in the 1960s and the following economic and financial boom pushed NECand other Japanese electronics makers to
top global companies. In 1977, NEC’s thenChairman Koji Kobayashi expressed thenew concept of “C&C” (computers and communications) for the first time at a telecommunications conference in Atlanta. The twokinds of business had not yet been integrated

Morita was appointed to CEO in April 2021
HIROMICHI MATONO

in the world technology industry, as they
are today. Experts in the U.S. and elsewhere
highly evaluated NEC as a good example ofcorporate strategic management with “corecompetence.” In 1990, only NEC was ranked
within the global top five in sales in the threefields of communications, semiconductors
and mainframe computers.
But after achieving record sales of ¥5.4
trillion ($50 billion at that time) in the business year to March 2001, NEC found its
balance sheets hit by a series of negative factors, including the bursting of the internet
bubble in 2001 and the emergence of global
competitors in the computer chip industry. As computer technology evolved, NECand other Japanese electronics giants weredefeated in the global competition with theU.S., South Korea and Taiwan in the fields ofsemiconductors and home appliances. In thebusiness year to March 2013, NEC’s sales haddwindled by nearly half to about ¥3 trillion.
The turning point came in 2013, when
NEC declared it would transform itself into
a company creating social values. Ahead of
the proclamation, the management team,including Morita, defined the corporate purpose as “creating the social values of safety,
security, fairness and efficiency to promote a
more sustainable world where everyone has
the chance to reach their full potential.”
Morita, who was appointed to CEO in
April 2021, said he has confirmed the rightness of the corporate purpose, particularly
for the past year, when society experienced
increasing uncertainty caused by the pandemic, climate change and geopolitical risks
caused by the Ukraine-Russia war.
Morita said that since technology is coming to play a huge role in our daily lives, information technology companies with ample
expertise like NEC must point people in theright direction on how to make proper useof technology and how to protect privacy
rights by contributing to global rule-making.
Morita mentioned privacy rights because
NEC has a global competitive edge in biometric authentication — technologies based

NEC President and CEO Takayuki Morita HIROMICHI MATONO

on personal data such as facial or iris recognition, fingerprints and palm prints, voicerecognition and the new technology of ear
acoustic authentication based on the uniqueshape of each person’s ear canal.
“Technology doesn’t have colors. So how
to use it depends upon us — human beings
who have both goodwill and bad will,”
Morita said. When setting up rules on how
to handle private information, it is crucial
to introduce “opt-in” and “opt-out” policies
because individual users must be the ones
controlling their own private data, not thecompanies that provide platform services, hesaid. Big Tech companies and social-media
platform providers should need to get prior

Satoyama Jujo
Cooking shaped by Niigata mountains, history

approval for collecting users’ private data
and then return control of the data to users
afterward. “Technological advancement
will probably make it possible in the future.
Global rulemaking will be more and moreimportant on what kind of data we use,when we use them and whether individuals
approve them or not,” Morita said.
To take the initiative in the rulemaking,what is necessary is “thought leadership”
with expertise and insights in a certain field,
the CEO said. Corporate leaders are responsible for guiding people with such leadershipin the technology fields, where it often takes
about 50 years for one technology to evolve,change the educational and social infrastruc-

MAIKO MURAOKACONTRIBUTING WRITERTAEKO TERAOCONTRIBUTING WRITERThe Osawa district of Minami-uonuma in
Niigata Prefecture has long been known for
its outstanding rice. The hot spring resort
Satoyama Jujo overlooks Osawa’s rice paddies. The reception hall sits beside the resort’s
own paddies, and beginning each October,
guests are served the new crop of local rice,including some planted and harvested byresort staff.
“Our main dish is white rice steamedin clay pots,” chef Keiko Kuwakino saidproudly. The water used to wash and cook
the rice is Osawa spring water. It is a dishthat distills the bounty of this area. At dinner, guests are served a taste of the rice themoment it is removed from the heat, still aldente. It is then allowed to sit with the lid on,
softening, developing sweetness and forming
a fragrant crust on the bottom. In this way
the flavor and texture of the rice change overthe course of the meal.
In between, heritage vegetables andother local ingredients shine. The dishes
relied on the richly varied flavors that canbe extracted from local vegetables and fish.
This, too, is the bounty of the Minamiuonuma area.
Since she began working at Satoyama

Jujo eight years ago, Kuwakino said, she haslearned much from her mentor, whose regular job is driving a taxi. She has learned when
and where to harvest wild mountain vegetables, how to prepare them, and how toobserve them from the time they sprout inspring until they wither back into the earth.
She has learned to distinguish the male andfemale varieties of certain plants, and knows
it is important to leave the males unpicked
for the sake of future harvests. This is wisdom that has been passed down for generations in a region traditionally isolated bydeep winter snows. This restaurant poses
anew the question of what it means to eat,
and what delicious food really is.

HIDEYO HANAZUMIGOVERNOR OF NIIGATA PREFECTURE

SHIGEO HAYASHIMAYOR OF MINAMIUONUMA

We are very pleased that
Satoyama Jujo has been
selected. Satoyama Jujo isa hot spring inn located at
Osawa Onsen in the Niigata
Prefecture city of Minamiuonuma that wasstarted by Jiyujin Co. Ltd., which publishes
the magazine Jiyujin (Free Spirit). Not only
can you enjoy new local dishes that rethink
traditional Niigata vegetables, but you canalso enjoy an agricultural experience growing Koshihikari rice from Uonuma.
We hope many people will be able toexperience the charms of Niigata food
through the cuisine at Satoyama Jujo.

I would like to extend myheartfelt congratulations tothe restaurant Satoyama
Jujo on being selected as oneof the Destination Restaurants 2022. Satoyama Jujo is a new-style innthat repurposed and utilized thick beams
and pillars from traditional folk houses
unique to the snow country. Covered in 3
meters of snow in winter, our region has
developed a unique food culture. We hopethat you can come and enjoy our cuisine,
while spending a fulfilling time in satoyama
where you can experience the nature of thefour seasons.

HIROMICHI MATONO

advantage of fresh ideas that contribute toinnovative products and services. “Japanesecompanies tend to think M&A as somethingspecial. But in global business, M&A is one ofthe options that companies always have toconsider,” Morita said. In December last year,
he told media outlets that it was possible forhis company to invest ¥500 billion throughMarch 2026, and this total includes M&A.
“While we have to align with our partners
in terms of a sense of values ... the reason
why we buy out these companies is not justto increase our resources or technologies
but to make the best use of their fresh ideas
in diverse perspectives,” Morita continued.
“Without that, it’s not worth making an alliance.” The policy on diversity also affects top
management and recruitment. For the past
several years, NEC has hired top executives
from foreign firms. It also aims for 20% of its
board members to be female or non-Japanese. Unlike traditional Japanese companies
that recruit a large number of college graduates every year, Morita said the company
already has started doing midcareer hires
as well in a similar way,and starting from 2024
will make half of its hires
among new graduatesfemale.
The ESG Talk series are interviews with business leaders
who are active proponents ofESG investing and practices
in Japan.

Premium Tottori Wagyu beef
links up with contest Bocuse d’Or
ESG/SDGs

Address
Satoyama Jujo
1209-6 Osawa, Minamiuonuma-shi, Niigata.
https://www.satoyamajujo.com

ture, and have the maximum effect on thesociety. “We need to support the movement
and help to accelerate it,” Morita said.
The role of technology in our society haswidened in the decades since the adventof the internet. Telecommunications technology has advanced to next-generation
5G wireless and will reach 6G in the future.
Home appliances can now be connected tothe internet, creating new services throughthe Internet of Things. Moreover, the internet
enables us to make virtual copies of physicalsystems or products, called “digital twins.”
In such a technology-driven society,
Morita believes, it is important to have
all kinds of stakeholders understand theshared vision about the future that NEC
has outlined. He called such understanding“shared vision about the future.” In a worldof increasing uncertainty, what makes NEC
different is people’s appreciation that it is
a company working for a better future forsociety based on goodwill, not one ignoring
human rights to maximize its profits. “It will
eventually lead to a difference in consumers’ support and the outcome of business,”
Morita said. Sharing its vision of the future
is important when NEC makes a long-term
alliance with a business partner. Morita said
his company’s commitment to investment,
research and development in the information technology field, as well as its stancenot to harm society and human rights, was
one of the keys to its tie-up with the world’s
largest global airline alliance, Star Alliance. In
November 2020, they kicked off biometricself-service touch points at the airports in
Frankfurt and Munich.
NEC also has made efforts to transform
itself by integrating businesses and workers
with diverse backgrounds. Since 2018, NEC
has acquired three companies — British IT
service provider Northgate Public Services
Ltd., Danish IT firm KMD A/S and Swissfinancial software company Avaloq GroupAG — to further develop digital transformations for governments and financial services.
Mergers and acquisitions also aim to take

Among all the wagyu brands in Japan, Tottori Wagyu Olein 55 is especially flavorful and light because of its high oleic acidcontent. Oleic acid, the main componentof olive oil, is said to enhance the meat’s
tenderness and smoothness on the palate.
To promote Tottori Wagyu brands, including Tottori Wagyu Olein 55, the prefecture
held a gala event on Oct. 25 at Argento,
a contemporary French restaurant inTokyo’s Ginza area, in collaboration withthe renowned international culinary competition Bocuse d’Or, Argento and Hiramatsu, the hospitality company that runs
Argento.
Tottori Gov. Shinji Hirai gave a welcome speech at the gala and introduced
the charms of the prefecture’s wagyu. Heexplained that it was Tottori that launchedregistration control of wagyu cattle abouta century ago to keep track of their bloodlines. Among many kinds of wagyu enteredin the registry, Tottori’s Kedaka cattle —which won the first national contest organized by the Wagyu Registry Association in1966 — became the origin of many of thewagyu brands that are currently produced
across the country.
Among the beef cattle categorized as Tottori Wagyu, only about 16% meet certain
standards and can be certified as Tottori
Wagyu Olein 55. Those standards include
oleic acid content of 55% or higher andbelonging to the Kedaka bloodline.
The five dishes served at the gala wereprepared by three award-winning chefs.

Tottori Wagyu Olein 55 TOTTORIPAGE: 7Two desserts using pears and persimmons produced in Tottori were the workof Argento. One of the chefs was Tomoyuki
Ishii, the sous-chef of Argento and the candidate representing Japan to next year’s
Bocuse d’Or international competitionin Lyon, France. He said in the opening
remarks of the gala that there are many
local delicacies in Tottori besides beef, andthat shiitake mushrooms named Tottori
115 contributed greatly to his victory in thepreliminary contest of the Bocuse d’Or.
Tottori supported this year’s Bocuse d’Or
Japan as a sponsor. Gov. Hirai said the significance of supporting the competition
lies in the interactions with the talented
chefs who have cooperated with in-depth
research on ingredients that Tottori provided. “Their perspectives are different
from those of the producers. They noticewhat we don’t, which is a great benefit,” hesaid. He also emphasized that communication between producers and chefs canprovide clues as to how more value can beadded to what the producers are growing.
The two other chefs, Hideki Takayama
and Noriyuki Hamada, also have in thepast been selected as Japanese representatives to Bocuse d’Or. The gala presented
the remarkable opportunity to experience a feast prepared by three of the 30
or so Japanese chefs who have ever won
the right to participate in the international
competition.
Both Takayama and Hamada have connections with Tottori. Takayama, theowner and chef of the recently opened
Kobe restaurant Entre Nous, said: “I served
my apprenticeship under a chef who wasfrom the Daisen area in Tottori Prefecture.
From this experience, I got to know many
producers in Tottori who are immensely
committed to what they grow.” Hamada,the executive chef of Hoshinoya Tokyo,
said he himself is from Sakaiminato, a port
city in Tottori.
Although all five dishes contained beef indifferent ways, there was no heaviness atall. The melting temperature of oleic acidis much lower than the other fatty acids in

Tottori governor Shinji Hirai with Argento chefs
at the gala event TOTTORI

beef, which is the reason behind the meltin-your-mouth texture and nongreasinessof Tottori Wagyu Olein 55. The beef andthe beef soup went very well with theother ingredients, even the seafood, mostof which were also produced in Tottori. Theguests also enjoyed a selection of wines andsake made in the prefecture.
At Argento, the Tottori Wagyu Fair will
be held until Nov. 20, serving Tottori Wagyu
Olein 55 in the main dishes for the lunch
and dinner courses presented by Argento’s
head chef, Kentaro Suzuki, who is committed to expressing the delights of Japanese
ingredients as well as the producers’ passion and the beauty of the places where
the foodstuffs come from. Other dishes in
the courses consist of various kinds of meatand seafood with flavorful autumn vegetables and fruits.
Dishes made with wagyu from Tottori
can also be enjoyed at seven restaurants
at The New Otani Tokyo hotel in Chiyoda
Ward during a special event featuring Tottori Wagyu as an original wagyu beef branduntil Dec. 16. Guests can enjoy the beef not
only as steaks but also in a wide varietyof Western, Japanese and Chinese dishes
such as minced meat cutlets, stew, spaghetti Bolognese, sukiyaki on rice, thinly
sliced Tottori Wagyu served on fried udon
noodles, and spicy Sichuan-style tofu andground beef.
Tottori is a member of the Sustainable Japan
Network, a group of companies that cooperate with this newspaper in spreading information about sustainability in Japan. You
can also be part of the network; scan the QR
code for more details.