I’ve been to China countless times, but I had never been to Hangzhou until my last trip. Hangzhou is a historic city, one of the six ancient capitals of China, whose origin can be traced back to the Qin Dynasty (221 – 206 BC). Hangzhou prospered particularly as the capital of Wuyue Kingdom (907 – 978) and the Southern Song Dynasty (1127 – 1279). Various locations in Hangzhou hint at its history, but the most prominent one, which is also the heart of the City, is Xi Hu or West Lake.

The eastern sky started to brighten just before 6 a.m. From my hotel room on the seventh floor, with a commanding view of West Lake, I admired the lake as it appeared in the morning. As the morning mist that had covered the surface of the lake quietly drifted and disappeared, small islands in the lake and old towers and arbors that dotted its shores became faintly and gradually visible. That was an unforgettable sight.

I changed quickly and went downstairs and outdoors, to make the most of the limited time I had there. Despite the early hour, there were already tourists about, speaking loudly to each other. They were probably unable to contain their emotions at the beauty of West Lake. In the park, I saw people doing t’ai chi, enjoying silent walks, breakfasting on benches. For an early Friday morning, there was a lively atmosphere around the lake.

I crossed Bai Di (Bai Causeway), constructed when the poet Bai Juyi was stationed as Governor in Hangzhou during the Tang Dynasty Zhenyuan Period (785 – 805). Bai Di was lined on both sides with peach and willow trees. In spring, the colorfully scenic site must please people’s eyes, as described in one of Bai Juyi’s poems. I also quickly crossed Su Di (Su Dike), which the poet Su Dongpo built, as did Bai Juyi, when he became Hangzhou’s Governor during the Northern Song Dynasty (960 – 1127). Both Di’s add scenic beauty to West Lake. Willow, plum, peach, fragrant olive trees and other such typically Chinese plants are found there. The lakeside promenade was clean and seemed to comfort visitors.

I suppose the beauty of West Lake is a result of many years’ fusion of Nature and Chinese wisdom. Oh, yes, I shouldn’t forget that West Lake (Xi Hu) is said to be named after Xi Shi, one of the Four Beauties of ancient China, originally from the ancient State of Yue (Zhejiang Province) of the Spring and Autumn Period (722 – 481 BC).

Now, let me close today's entry with my poor poem (quatrain with seven Chinese characters in each line).

As already announced in Sumitomo Electric’s press release, Sumitomo Electric and Futong Group Co., Ltd., headquartered in Hangzhou City, Zhejiang Province, China, have reached an agreement to jointly run optical fiber and optical cable businesses at three bases in China: Hangzhou, Chengdu and Shenzhen (Hong Kong). The two companies held a signing ceremony on October 16, with the highest-ranking provincial and municipal leaders and many others in attendance.

A splendid dinner followed the signing ceremony; attendants were heard cheerfully proposing toasts here and there. The two companies were able to reach their agreement thanks to the dedicated efforts of the working groups involved in consulting and negotiating for over a year. I would like to express my heartfelt thanks and respect for them.

The information industry was seriously damaged at the time of the bursting of the IT bubble. The industry has recovered gradually; outside Japan-in Chinese, US and European markets, demand for optical fibers has been surpassing supply. Today, China is the world’s largest optical fiber market, so it is highly significant for us to commence joint ventures at this time with a reliable partner.

In the extremely severe current business situation, with the unprecedented subprime crisis-triggered and financial turmoil seriously affecting the real economy, I attended the signing ceremony with my strong belief in the growth potential of China’s information industry and my sincere hope that the Sumitomo Electric strength that we have built up thus far will develop into great success in China.

Business projects always have ups and downs. Aware of this, the two companies mutually pledged that we would work together always in good spirits, maintain constructive tension, thoughtfulness and mutual trust, and develop joint ventures as strong and viable businesses.

On the following day I went by car to visit Fuyang, about one hour southwest of Hangzhou, to visit the Futong Group’s head office and the plant site under construction. To make the most of this two-day, one-night trip to China, on the second day I woke up early in Hangzhou to enjoy a brisk walk around the famous West Lake for about an hour. More on West Lake in my next entry with my improvisatory poem.

I would like to repost my message for new recruits from last year's blog entry.

“Message for new recruits”

When I look back on my corporate life of many years, memories of pleasant times, as well as hardships, come to my mind. I have always worked at Sumitomo Electric, but I have undergone quite a few changes – different posts within the company and about ten relocations, including two overseas posts. So I have been constantly discovering new environments and different domains.

At the beginning of each new assignment, I sometimes felt slightly disoriented. To quickly grasp what I had to do in my new position, I carefully read documents of transfer of duties left by my predecessor, talked with my superiors, and designed my career path, setting goals to achieve for every 3 days, 3 weeks, 3 months and 3 years. In setting specific goals by imagining myself in a position one grade above mine, I managed to draw up plans from a somewhat broad perspective. In addition, in working on each program I came to be convinced of the vital importance of careful preparation, passion and a determination to achieve.

As I rose within the organization, I had to work in a way that had a broader sphere of influence, so I adopted increasingly sophisticated approaches. Still, the basic rule has always been the same: showing myself and others my determination to carry through with the program, thereby motivating others around me and winning their sympathy, can get the desired results. Things may not work like this all the time, under all circumstances. Nevertheless, it is important to constantly do your best, because others seeing you working with an attitude of sincerity and fairness will give you what is probably the greatest treasure in your professional life: their trust and confidence in you. If a project does not work out well, you will have another chance. From my personal experience, I can say that others trust and confidence in you always bring about the desired results. Whenever I draw up a plan, I always make sure to avoid an approach made up entirely of how-to’s and what-to-do’s, with no underlying why-to’s. Such planning is in fact rather difficult to do, but it can be a very good intellectual exercise from a mid- to long-term perspective, and even if your why-to’s do not unfortunately win others’ approval, you can win their respect for having substance.

Having gotten into details, to conclude this message I would like to share with you now something more general, which I consider my personal principles for life: I believe it extremely important to always remain your natural self and have a tranquil mind. In other words, unexpected things happen in life, and how you react on such occasions must be consistent with who you are and what you believe in, and must never be superficial. You cannot learn to do this overnight; you must undergo daily exercise in self-discipline. I hope you keep this in a small corner of your mind. I would be pleased if my message were of some use at the outset of this new chapter in your life. I hope you will look after your physical health as well, and advance in your life with dignity.

From the afternoon to the evening of October 1, we held a reception for college and university students who are informally engaged to join the Company next April.

A total of 161 students are expected to start work on the professional track. Employee diversification and globalization are slowly progressing: women still constitute a small percentage, but they are growing in number each year, foreign nationalities as well.

At the reception, I was able to meet the students personally and sense their differently attractive personalities. I sincerely hope that these young people are the quality human resources who will lead the Sumitomo Electric Group in the future.

All the Directors attended the ceremony and had pleasant talks with the students, hearing them express their ideas and expectations in regard to starting work, and frankly talking about our views on working in the Company.

At the beginning of the reception, I spoke about our corporate culture, in which open communication is the norm, as well as the present general economic situation, the company’s policy for this year, and its progression. I particularly emphasized my expectation that the students would obtain all the credits required and graduate without problems, so I would be able to meet all of them at the entrance ceremony next spring. I didn’t mean that they simply had to graduate no matter what; rather, I asked them to spend the last months of their student life in a meaningful way, studying and building on their abilities. I believe that my message was correctly understood.

The other day, a reader of the English-language version of my blog left a comment, saying that many of today’s young Japanese lack “zeal, fortitude, and hard work” and that we should adopt a result-oriented system to hire more foreigners. This is a very thought-provoking opinion, although it is easier said than done. With regard to hiring foreigners, I replied: “Sumitomo Electric has already grown into a global company and we think about human resource development from a global perspective. We don’t have much concern over this matter.”

Those young people who are expected to join us in April will be actively working on a worldwide scale. I sincerely hope that they will acquire a firm understanding of the backbone of the Sumitomo Electric Group-Sumitomo Business Spirit, the Sumitomo Electric Group Corporate Principles, and the Sumitomo Electric Group Charter of Corporate Behavior-and will work with us while making good use of their individual personalities.

I wrote in one of my recent entries that the general upward and expansive tendency that dominated the last business year has been completely replaced by a major “tsunami,” announcing the approach of a worldwide recession. The American financial turmoil triggered by the subprime loan crisis is now seriously impacting the real economy. It is of course not possible that we should be the only business not affected. Our business in the second half of the current year is therefore expected to be extremely difficult. Yet, I hope that all of the Sumitomo Electric Group will work together to overcome this hardship.

Under such circumstances, on October 1 we held a ceremony and reception to welcome new Sumitomo Electric employees who joined the Company on that day and during the first six months of this current business year, as well as a reception for those informally engaged to start work at Sumitomo Electric in April 2009.

The ceremony and reception for new employees was held in a somewhat bracing atmosphere. This is probably because many of them, including 6 who joined the Company in the autumn and 64 hired mid-career, were already working with us and acutely aware of the situation confronting us.

There was nothing new in the message I gave to the new recruits as my way of expressing my expectations and encouragement. This year, as every year, I asked them to:
1. Master the basics of their work and do their work conscientiously,
2. Strive to improve and develop themselves constantly, and
3. Take great care in their communication with others.

Regarding the third request about communication, I impressed on them the growing importance of face-to-face communication, in this age of instant communication and global information networks.

I sincerely hope that our new recruits will quickly get used to their new environment and lifestyle, take good care of their health and safety, and fully develop and demonstrate their abilities, so as to realize a full working life.

Yesterday (October 7), two newspaper extras were issued, announcing at noon that the Nikkei stock average had fallen below the 10,000 yen line, and in the afternoon the awarding of the Nobel Prize in Physics to two Japanese physicists Drs. Makoto Kobayashi and Toshihide Maskawa and a Japanese-born American physicist, Dr. Yoichiro Nambu.

I felt like crying out my joy at the latter news, because the three were the first Japanese and Japanese-born Nobel laureates in six years, following Dr. Masatoshi Koshiba (Physics, 2002) and Mr. Koichi Tanaka (Chemistry, 2002). The three scientists’ achievements that were recognized by the Nobel Prize Committee are in the field of particle physics, which can be considered, in a way, a Japanese specialty. I’d like to express my deep respect for their great work, which has further extended the glorious line of Japanese Nobel laureates that started with Drs. Hideki Yukawa and Shinichiro Tomonaga.

Information obtained from newspaper articles is not sufficient to accurately grasp the magnitude of Dr. Nambu’s discovery of the mechanism of spontaneous broken symmetry in subatomic physics, but I understand that this discovery is important because it can lead to a theoretical explanation of the origin of matter. Dr. Nambu, who made his discovery several decades ago, has since remained at the frontline of research in the United States.

As for Drs. Kobayashi and Maskawa, the original authors of the Kobayashi-Maskawa matrix, they have predicted the presence of six types of quarks, thereby greatly contributing to the establishment of the “Standard Model,” which explains three fundamental forces of nature in today’s particle physics.
Quarks are basic particles that constitute matter. Until the two scientists presented their theory, four types of quarks had been predicted, with another yet to be identified. Then the Japanese physicists predicted six of them all at one time. Reading such fascinating background information, I was deeply impressed by the mental flexibility that they must have, to have worked this out.

I also read that beyond quarks, string-like objects proposed as original building blocks in Dr. Nambu’s string theory, and the superstring theory based on the string theory, are being adopted today to contemplate themes such as the very origin of the universe and the unification of the four fundamental forces of nature. They are all very difficult subjects for a lay person to understand. In any case, I look forward to further achievements by Japanese scientists.

Compared to this very inspiring piece of news, I found the subject of the other newspaper extra annoying. As a problem I’ve repeatedly called your attention to in this blog, the U.S. financial turmoil triggered by the subprime loan crisis is now having enormous negative impact on the real global economy.

As regards Japan, under normal circumstances the Japanese financial sector would not be much influenced by such a crisis, because we’ve learned our lessons from the property bubble and our mild but long-term tendency toward growth has been continuing. Most businesses have gained the leeway to deal with changes. However, unrelated to this actual state of affairs, overseas selling hedges put enormous pressure on the market, causing stock prices to plummet across the board. As a result, the Nikkei stock average yesterday fell below the 10,000 line, a level recorded five years ago, at the time of the bursting of the IT bubble, which affected Japanese corporate performance.

I was in those days, and I still am, a member of the Board, and on both occasions I felt the arrival of an extremely grave situation. History repeats itself … indeed.

Our company’s stock price has also dropped, an embarrassing situation for me as leader. Yet, there is no use getting panicked when all investors seem to be selling in panic. So I have told all the Sumitomo Electric Group members not to panic and instead concentrate on improving our corporate value via the royal road, that is, reinforcing our corporate constitution and making tangible positive results.

In Japan, we have the notion of building the nation through technological prowess. The news of the Nobel Prize has convinced me that there is still a lot of technological creativity in Japan. At Sumitomo Electric, we are also determined to improve our performance quickly, on the solid foundation of our technology.

As for quality, in QR-1 Campaign Phase III, which started this year with defect recurrence prevention as a priority goal, I have asked you to focus your efforts on activities aimed at thoroughly eliminating “total loss” and reducing serious customer complaints.

Toward the elimination of total loss, improvements are being realized in terms of absolute monetary amount and percentage of sales, with regard to the priority items you designated at the beginning of the current year. Still, there is much to be done.

In the severe situation that I described in yesterday’s entry, fundamental constitutional improvement through complete elimination of total loss is vitally important for our Group. We should learn to free ourselves from conventional ways of thinking and dealing with technical issues, tackle problems from all angles and make vigorous problem-solving efforts.

As for the reduction of serious customer complaints, I have asked you to take action toward the goal of “zero complaints.” Unfortunately, this has not been achieved. Therefore, to prevent the future occurrence of serious complaints, I have instructed the leaders of all the divisions around the world to carry out emergency inspections. I attach top priority to thorough improvement for reducing serious customer complaints, because not only can such complaints erode customer confidence, they can also lead to the loss of future business opportunities. So I would like both leaders and members of all divisions to speed up their improvement efforts while maintaining a constructive sense of tension and adhering to the principle of ensuring quality work in the field, under the leadership of the Manufacturing Management & Engineering Unit, so that we can establish and sustain a level of quality that will win customer confidence.

Finally, the Switch Campaign: this campaign has been launched to encourage people to work in an efficient, concentrated manner when it is time to work, and when it is time to rest, to rest - by getting completely away from work - that is, switching on or off, thereby increasing work efficiency, reducing overtime working hours and eventually transforming our company into a world-class company whose people can realize great achievements at work while at the same time enjoying a full private life.

I have worked and lived in Chicago and London before. In those days I found that, compared to Japan, people in those cities attached far greater importance to maintaining a good balance between work and private life. I do not mean to say that either way is good or bad, but I believe that Sumitomo Electric Group still has a lot to do to adjust our way of working so as to realize both greater efficiency at work and more private time.

Since this campaign commenced in April, respective workplaces have set their own goals in consideration of their unique situations, and have been carrying out measures under the leadership of their managers. At the same time, we are also focusing further attention on efficient work methods with more specific actions on a company-wide basis, to realize more tangible changes and ensure positive results from this Campaign.

I expect all Sumitomo Electric Group members to do their very best, and to actively work on these corporate-wide campaigns for safety and quality, and on the Switch Campaign, in confidence that such efforts will enable us to realize “VISION 2012” and to develop into the envisaged “Glorious Excellent Company,” thereby bravely standing up to this difficult period.

The general upward and expansive tendency that dominated the last business year has been totally replaced by a major “tsunami,” auguring the approach of a worldwide recession. As I have repeatedly mentioned, the US subprime loan-triggered financial crisis is now having an enormous impact on the real global economy. Almost all companies have taken some protective measures, but they are still being forced to modify their activities or rewrite their projection figures. The U.S. economy, I believe, will eventually pick up, but when this will happen is unknown, and the business environment is expected to remain extremely severe and challenging for some time.

Since our second half-year period has started in such a situation, I earnestly expect you of the Sumitomo Electric Group to do your utmost to continue reinforcing our corporate constitution. For this, I have asked you to make further efforts in connection with safety, quality and the Switch Campaign, which started in April 2008.

First, about safety: please note that the first letter of “SEQCDD” stands for safety. So I have asked you to keep in mind the idea that “safety comes before all else.” At the company-wide safety convention held in May, the managers of respective divisions announced their safety commitments based on this idea, and I know that the divisions have been seriously working on these commitments.

During the first half of FY 2008, the number of injuries - both with and without lost work-days - has dropped by about 30% from last year. This is a result of your daily safety efforts, and I would like to thank you for this achievement.

At the same time, however, for the current year the Group-wide target upper limits of the numbers of injuries with and without lost work-days were already exceeded during the first six months. In fact, injuries occurred in succession in July and August. This is proof that the knowledge we have obtained from our experience of several years, that occupational hazards tend to concentrate during summer, has not been put to constructive use. I find this quite regrettable. Many of the incidents were due to inadequate managerial preparedness, such as the absence of rules that should have been in place, or unsafe conduct that neglected safety rules. As well, the number of accidents involving inexperienced workers has been on the rise, which suggests that training of unskilled workers has not been sufficiently reinforced and that the visualization of workplace rules has been incomplete.

Please remember that safety is for yourselves, your families and your workplaces. With that idea in mind, I ask you to make sure that rules are clearly stipulated, made known to all members of your respective workplaces and observed by all without fail, thereby creating an environment that does not tolerate a halfhearted attitude toward the rules.

In addition, I ask you to steadily promote measures for equipment safety - another pillar of our activities for this year - with firm determination to achieve the “zero accidents” goal. I strongly urge you to reaffirm your resolution to achieve an absolute zero accident record in the second half-year period.

(To be continued.)