The strength is one-stop service with Japanese-style business model, even abroad

The first overseas expansion was in Europe, wasn't it?

Mr. Nakamura: Yes, at present we are doing business overseas in three main regions. The first region is Europe. We first acquired a company that was in the business of port-based cold storage in Rotterdam, the Netherlands. Since then, we have expanded into Germany, Poland, France, and the UK, acquiring companies in related businesses such as warehousing, transport and freight forwarding. Next, we develop our business in Asia, including China. We have set up a joint venture in China. We're also expanding into Southeast Asia, such as Thailand and Malaysia. In Thailand, as in China, we established a joint venture company, and in Malaysia we entered the market in 2018 by investing in a cold chain logistics company. And now, with the aim of further expanding our business in Malaysia, we have invested in Litt Tatt, which is also involved in the cold chain logistics business.

Are there any other Japanese companies in the same industry operating in the same areas as Nichirei Logistics?

Mr. Nakamura: In Southeast Asia and elsewhere, many Japanese companies are only in the warehousing business. Our concept for overseas business is to develop the same business model as in Japan directly overseas. We offer a 'one-stop service', where we don't just store clients' packages but also deliver them with a necessary value-added service. There are very few companies that offer this kind of one-stop service, and I think that is our strength.

Why did you decide to invest in Litt Tatt?

Mr. Nakamura: Litt Tatt has six warehouses and distribution centers in Malaysia and owns many of its own vehicles, so it excels in flexible and meticulous delivery. On the other hand, the other company in Malaysia in which we have already invested has abundant storage capacity, so there is a high degree of business affinity, and we can expect synergies by utilizing each other's strengths, such as joint deliveries and joint use of warehouses. I believe that partnering with a leading transport company has given us a great advantage in further expanding our business in the future.

[M&A Schedule]
TOP meeting: 21 April 2021
Signing of basic agreement: 30 June 2021
Last contract date: 12 April 2022

We must create markets abroad in difficult times with a declining Japanese population

You have worked with many overseas companies, what are the key points in deciding which companies to work with?

Mr. Nakamura: The most important point is whether it matches our strategy. Of course, the personality of the owner is important too. In addition, we also check the financial soundness of the company, as double or triple book-keeping is the norm in some countries.

What were some of the challenges in negotiating with Litt Tatt?

Mr. Nakamura: It was that we were hardly able to visit to the site due to the travel restrictions imposed by the Covid-19 pandemic. This made it difficult to evaluate this negotiation as we were unable to see their vehicles in reality or to meet the owners in person. However, I think we were able to have exhaustive discussion through several online meetings. It wasn't as inconvenient as I thought it would be and we found it useful, besides we wouldn't travel abroad very often even if there were no travel restrictions.

WThis time, you carried out the transaction with a minority investment. Do you feel that this is different from previous cases?

Mr. Nakamura: In Thailand and China, we set up joint ventures from scratch, but this time, we only invested in companies that were already operating. This is a big advantage because we ourselves do not have to go into the start-up and take the lead in the business.

How are you tackling PMI?

Mr. Nakamura: What we always do is share our vision. Almost all of the partner companies have been established and grown by their owners, so sharing the vision of the company itself was sometimes the first experience for the employees. It is also important to consider the strategy to generate enough synergies in the group. We expect the synergy to come from shifting the transport business to Litt Tatt, which will allow us to continue to grow our warehousing business. We would like to work closely with them, especially when considering investments in the future.

Lastly, what advice would you give to companies considering cross border M&A?

Mr. Nakamura: Japan has a declining birthrate and an ageing population. This means that market growth in Japan is limited in the long term. We therefore need to create markets abroad. With this in mind, we have been expanding our overseas operations. We must be aware that times are tough if we plan to do business only in Japan.