[Text/Observer Network Columnist Chen Gang]
Toshiba Co., Ltd., a 148-year-old company that has been listed on the Tokyo Stock Exchange for 74 years, announced on December 20, 2023 that it would be delisted.
At a time when the economy is booming and the depreciation of the yen exchange rate has made large international enterprises make a lot of money, and they have announced high-profile increases in business targets at the end of the year to further expand the domestic and international markets, the century-old Toshiba has been delisted, which is really embarrassing.
In order to prove that companies play a pivotal role in Japan, it is sufficient to provide data on the scale and profitability of the company, and simply say that "the president of our company has once served as the president of the Japan Keidanren (Keidanren)." The two presidents of Toshiba Corporation (Yasuzo Ishisaka and Toshio Toshio Tsuchimitsu) were elected as the presidents of Keidanren at a time when Japan's economy was most in need of economic revitalization and reform, and they made a big step forward for the Japanese economy as prime ministers.
Toshiba is not only able to launch a wide range of home appliances that consumers love, but is also a manufacturer of important industrial machinery, social infrastructure, and military industries in Japan. Toshiba's announcement of delisting not only shows the decline of Japan's comprehensive mechanical and electrical enterprises, but also is an inevitable result of Japanese companies annexing American companies in a snake swallowing elephant posture and eventually being countered by the United States.
There are two reasons why Toshiba had to fade out of the capital market temporarily by delisting:
The first was the acquisition of Westinghouse Electronics, an American nuclear power technology company, for $5.4 billion (637 billion yen at the time) in January 2006, which was extremely financially burdensome.
When Toshiba loses money and needs external funds, the second reason comes. Since 2017, external funds from the United States and other countries have been injected into Toshiba. Rapid access to benefits is the only purpose of capital injection by external funds, and instead of listening to Toshiba's future business plan, Toshiba will first get a piece of the pie, and finally let Toshiba completely collapse, leaving a painful lesson.
Toshiba's headquarters in Tokyo, Japan (data map/Xinhua News Agency)
The acquisition of Westinghouse in the United States has brought Toshiba to a slump
The reason for Toshiba's delisting was the acquisition of Westinghouse in 2006. Of course, the government (Ministry of Economy, Trade and Industry) listened to the opinions of the government (METI) and offered $5.4 billion higher than the actual price to make the merger a success, but this paved the way for Toshiba to finally "go on the market and scrape".
Toshiba, a century-old company, has a solid business that is obvious to all, but why did such a big change occur when Toshiba Atsutoshi (December 1943 ~ December 2017) became president (June 2005 ~ June 2009)?
What we should note is that since the year 2000, Japanese companies have suddenly lost their ability to innovate in technology and products, and after steel, home appliances, automobiles, and digital, they have begun to lack new products that can sweep the world market. Around 2000, Toshiba and other companies held semiconductor technology and products in their hands, and their technical level and market share in the world were very high, but the additional investment required for semiconductors was too large, and the speed of technology update was too fast, in other words, the risk was very high, and Toshiba needed to find a business pillar in addition to semiconductors. This requires an entrepreneurial spirit, and Toshiba needs a new type of head who dares to gamble.
Nishida is such a person who dares to gamble.
In the 70s of the last century, when he was studying for a doctorate in philosophy at the University of Tokyo, he fell in love with an Iranian girl, so he decided to marry this Iranian girl and moved to Iran. After arriving in Iran, he went to Toshiba, which had set up a company there, and joined Toshiba Iran as a local employee as an employee.
At a time when few could have imagined that a computer could be portable from the size of a few houses, Toshiba developed the laptop in 1986, but the price was too high for almost no one to buy. At this time, Nishida saw an opportunity, and he thought he could sell laptops in Europe. Through Nishida's efforts, by 1986, Toshiba laptops became the world's best-selling product. In 1993, Toshiba Computer was squeezed out of the world's No. 1 seat, but it was also through Nishida's efforts that Toshiba returned to the world's No. 1 position a year later in 1994, and this position was maintained until 2000.
Nishida's self-confidence comes from his courage in the computer business, and he believes that he can achieve new success in addition to computers.
Nishida Tsutoshi (data map/Japanese media)
In 2005, Nishida became president of Toshiba. The author has interviewed him several times individually. At this time, Toshiba is no longer the world's largest computer manufacturer, listening to Nishida's investment in semiconductors, especially the investment in NAND flash memory semiconductors, I feel that he is very different from the head of other comprehensive electromechanical manufacturers - he is pursuing high-tech, high-return new business, and firmly believes that semiconductor products have this ability. In addition, it can also be deeply felt that Westfield is still looking for a new way to support the company's operation for more than ten years and decades.
Just entering 2006, I heard the news of Toshiba's acquisition of Westinghouse. Around that time, I also went to meet several Japanese nuclear power companies and listened to their evaluations of Toshiba. There is a company that bluntly said that Westinghouse is worth 200 billion yen at most, and how can it not rush to 637 billion yen, and I feel very incomprehensible about Toshiba's acquisition of American companies.
When I met Nishida again, I also asked about the huge investment in nuclear power and the recovery of that investment. Nishida was a very smoked entrepreneur, and the huge conference room was soon filled with smoke, and it seemed that his face could not be seen clearly, but his eyes could be seen that day. I remember that he said that the United States will soon start investing in nuclear power plants again, and many Chinese companies are talking to Toshiba about the construction of nuclear power plants.
"We can sign up for roughly 33 nuclear power plants, and if the construction cost of each nuclear power plant is 500 billion yen, 33 will be 16.5 trillion yen. We only invested 637 billion yen in the acquisition of Westinghouse, and there is no problem at all in terms of investment risk, return on investment and long-term profitability. Nishida said.
He was so confident. People know that he has succeeded in computers, he is leading Toshiba to success in semiconductor chips, and through his words, I believe that in the future, Toshiba will achieve new achievements in nuclear power plants.
After Nishida was promoted to chairman, Norio Sasaki, who has been engaged in the nuclear power business for many years, became president (June 2009 ~ June 2013). When I went to Toshiba for an interview, I heard that Toshiba could get orders for 37 nuclear power plants, which was much higher than the 33 predicted by the Nishida era. Reading Japanese media reports, some media began to talk about the construction of 130 nuclear power plants in the future. In addition, people in the Japanese business community have privately begun to talk about Nishida's appointment as Keidanren's chairman.
At a time when other general electrical companies were running deficits (Hitachi lost 780 billion yen in 2009, and Matsushita lost 700 billion yen in 2012 and 2013), Toshiba was largely unharmed.
One of the problems that has not been relieved is that since the Three Mile Island nuclear power plant accident in the United States in 1979, the construction of new nuclear power plants has basically been at a standstill, and it was not until Obama became president of the United States (January 2009 ~ January 2017) that nuclear power suddenly became a "green" energy source, and there was hope for construction in the United States.
But people are not as good as heaven. On March 11, 2011, the Tokyo Electric Power Company (TEPCO) Fukushima nuclear power plant accident occurred, which was rated as severe as the Chernobyl nuclear power plant accident in the Soviet Union, which was rated as the most severe level of 7. Toshiba and other Japanese nuclear power companies basically lost the opportunity to build new nuclear power plants in the next decade or so, except for their ability to contribute to solving nuclear power plant accidents, and the international community began to talk very cautiously about the construction of new nuclear power plants. When I went to Toshiba again, I could no longer hear about the number of power plants being built, and the nuclear power business stagnated within Toshiba.
With no commercial opportunities for nuclear power, Westinghouse has left Toshiba with a burden of at least 1 trillion yen, which is far greater than the losses of Hitachi and Panasonic. At this time, Toshiba needs financial fraud if it wants to maintain its semblance of brilliance. Toshiba's internal report of financial fraud has brought the scandal to light.
Screenshot of a 2015 report by The New York Times
The introduction of American funds has made Toshiba's situation even worse
In 2015, when Toshiba's financial fraud report letter was mailed to the Tokyo Stock Exchange, it was known that Toshiba had a deficit of 230 billion yen. Toshiba is a company that has been sprinting towards 10 trillion yen in marketing sales, and although 230 billion yen is not a small amount, it is not a gap that cannot be filled.
After the fraud was revealed, a careful examination of the accounts revealed that the loss had already reached 712.5 billion yen, which was 191.2 billion yen more than Toshiba's total capital at the end of 2016. Toshiba's problems are far more serious than those of Hitachi and Panasonic. From a financial point of view, Toshiba has long since become insolvent (effectively bankrupt). The banks that provided loans to Toshiba began to include the funds lent to Toshiba in the "bad loans" at this time, and it was impossible for any bank to lend to Toshiba again, and it was only a matter of time before they went bankrupt.
At this time, dozens of fund companies in the United States and Japan were still able to lend money to Toshiba.
A reporter from Japan's "Toyo Keizai" weekly collected the financing of Toshiba by relevant funds ("Toyo Keizai" reporter Yuto Uragaki: "Investing in Toshiba Makes a Lot of Money, Fund Companies Earn More Than 450 Billion Yen", October 4, 2023). According to the report, the total financing of Toshiba by various fund companies is about 600 billion yen, and the investment of fund companies is mainly short-term, and they have earned more than 450 billion yen in profits from Toshiba after recovering the cost of investment.
How can Toshiba, which is already stretched thin, be able to provide such huge profits for fund companies?
People have seen that before and after the fund injected money into Toshiba, Toshiba had some changes:
In March 2016, the company sold Toshiba Medical Systems to Canon for 665.5 billion yen.
On March 29, 2017, Westinghouse Technologies, Inc., which disclosed total liabilities of $9,811 million, filed for Section 11 of the Federal Bankruptcy Act. This part of the debt will eventually need to be paid by Toshiba.
ON APRIL 1, 2017, TOSHIBA SPUN OFF ITS SEMICONDUCTOR BUSINESS AND ESTABLISHED TOSHIBA SEMICONDUCTOR MEMORY CORPORATION, THE PREDECESSOR OF KIOXIA CORPORATION. Kioxia was finally sold for 2 trillion yen on September 28.
On December 5, 2017, it opened its doors to overseas investors and raised 600 billion yen, which was mainly used to cover the shortfall in the U.S. nuclear power industry.
On February 28, 2018, Toshiba sold a 95% stake in Imaging Solutions Inc. to Hisense Group.
On October 1, 2018, the company sold 80.1% of its shares in Toshiba Computer Corporation to Sharp Corporation. On August 4, 2020, the remaining shares were also sold to Sharp.
The purpose of short-term investment by fund companies is to get wool from Toshiba, and the investment is because they see that Toshiba has a large number of good assets and are shy in their pockets for a while, and they can obtain profits by selling the assets. The reporter of "Toyo Keizai" documented the benefits of the main funds from Toshiba:
Japan's Effissimo Capital Management, set up in Singapore, made a profit of 131.6 billion yen;
Farallon Capital Management (L.L.C) of the United States made a profit of 67.2 billion yen;
美国King Street Capital Management - LinkedIn获利548亿日元。
In a very short period of time, after forcing Toshiba to sell assets, recoup its investment and make huge profits, the fund company continued to force Toshiba to sell other assets. Since the entry of external funds into Toshiba, Toshiba's board of directors since 2017 has only discussed how to continue to sell assets, and the company's proposed business plans have almost always been rejected by the fund's shareholders. After the fund company entered Toshiba, the company's situation deteriorated, and it just waited to sit and eat nothing, and brought about its own destruction.
It was the Japanese state that came to Toshiba's rescue.
Toshiba suffered losses due to the acquisition of Westinghouse, but Toshiba is still the most important nuclear energy company in Japan, and a full set of key nuclear technologies are in the hands of Toshiba. In addition, Toshiba has strong technical reserves in social infrastructure such as high-speed rail, is an important manufacturer of power semiconductor chips and flash memory components, and also maintains a large number of patents in quantum cipher and artificial intelligence, which cannot be disposed of by external funds at will.
On March 23, 2023, the Japan Industrial Partnership Fund, which has a Japanese national background, began a public acquisition of Toshiba shares, and announced on November 22 that Toshiba would delist itself after becoming Toshiba's largest shareholder.
On December 20, Toshiba was officially delisted.
As has been repeatedly said in this article, most of the fund companies' investments in Toshiba are short-term investments, which are quickly recovered and withdrawn after investment, and individual funds that have kept Toshiba shares for a long time now have no right to speak in Toshiba's management.
Toshiba's acquisition of American companies, the misplacement of nuclear power plants, the hasty introduction of funds, and finally the respite of several years through delisting by the state have left Japanese companies with extremely painful lessons.
Toshiba was followed by Nippon Steel
Toshiba's decline and delisting are basically sorted out here, but when it is necessary to sum up the lessons of Toshiba's mergers and acquisitions of American companies, Japan has a new big news of mergers and acquisitions of American companies:
On December 18, two days before Toshiba officially delisted on December 20, 2023, Nippon Steel, Japan's largest steel company, decided to acquire U.S. Steel for 2 trillion yen.
Hearing this news, the author came up with Toshiba in 2006. Toshiba once talked about the construction of nuclear power plants in the United States, and now Nippon Steel is talking about the glorious prospects of the American steel market: in 2022, the domestic production of the United States will only be 80.5 million tons, but the consumption will be 94.5 million tons, and the gap of 14 million tons proves that the United States has a large market;
The picture is taken from Nippon Steel's official website
Toshiba retains boiling water reactor technology, and the lack of pressurized water reactor technology makes for Toshiba's shortcomings. Nippon Steel now emphasizes that U.S. Steel retains electric furnace technology, and that Nippon Steel is able to produce non-directional electromagnetic steel plates for electric vehicles, and the two companies complement each other. Japanese automakers are not interested in electric vehicles, and Nippon Steel is looking for new markets in the United States to expand its steel business in the United States by acquiring American steel companies.
In the 90s of the last century, the author happened to be studying the topic of steel technology and economic development in Japan, and saw that Japanese iron and steel companies flocked to the United States to invest, and hundreds of billions of yen were spent during that time, but after 2000, none of the Japanese iron and steel companies were able to survive in the United States. Now that Nippon Steel is once again in the United States, what will be the result in a few years or more than a decade?
Nippon Steel was established through the merger of Nippon Steel and Sumitomo Metal Industries. Among them, three presidents of Nippon Steel have served as Keidanren's presidents, one more than Toshiba. Nippon Steel has a long reputation among Japanese companies, and its scale is about the same as that of Toshiba in 2006. The story of Toshiba's acquisition of an American company is now being retold in the steel industry in a different industry.
Hegel said: "The lesson that mankind has learned from history is that mankind never remembers the lessons of history." "Will Japanese steel companies be an exception this time?
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