Privatized Japan Post gets new business model

Introducing Toyota Motor Corp.’s business methods to Japan Post Corporation, which will be privatized on Oct. 1, is the next challenge for Norio Kitamura, a former Toyota Motor Italia president who will be the chairman and chief executive officer of Japan Post Service Co., one of four operating firms in charge of postal services.

Japan Post will be divided into a holding company and four operating firms handling postal delivery, customer service, postal savings and postal insurance.

Kitamura was the president of the Italian subsidiary of Toyota. for 10 years until June 2006, when he was urged to take the Japan Post position by Toyota’s former chairman, Hiroshi Okuda, then a member of the Council on Economic and Fiscal Policy.

He was chosen because of his remarkable achievements at the Italian subsidiary, but his experience at Toyota, which is famous for kaizen (operational improvements), is also expected to contribute to better postal services.

Although the postal services are different from the automobile industry, “the basics of business are the same,” Kitamura said.

In the fiscal year that ended in March 31, the total operating income of Japan Post was 19.6 trillion yen. Income from postal delivery was 1.9 trillion yen, an increase of 3.3 billion yen from the previous fiscal year due to increased shipments of small packages and international mail. However, the total quantity of domestic and international mail and packages has decreased over the past five years.

Increasing value of small packages and international mail, which only account for about 10 percent of the total quantity of postal material, is also a key for the postal delivery business.

However, the normal domestic post is not profitable because of the universal service that requires Japan Post to provide pickup and delivery service equally across the nation.

Japan Post established a joint venture with All Nippon Airways Co. in February 2006 as the first stage of the international distribution business. ANA & JP Express Co., in which Japan Post took a 33.3 percent stake while ANA took 51.7 percent, began operations in August the same year, mainly handling freight between Japan and China.

As a government-run firm with little emphasis on sales, Japan Post had not done enough to promote its international postal service, according to Kitamura.

USD = 115.090 JPY