In 2008, the global economy was hit by a "once-in-a-century" financial crisis. By sheer coincidence, the Brother Group commemorated the 100^th anniversary of its founding in 2008. Brother Industries, Ltd.'s President Toshikazu Koike invited Ms. Mari Christine, Goodwill Ambassador for UN-Habitat, to discuss the Brother Group's growth and CSR (Corporate Social Responsibility) into the next 100 years.

Representative Director & President Brother Industries, Ltd. Toshikazu "Terry" Koike		Cross-Cultural Communicator and Goodwill Ambassador for UN-Habitat Mari Christine

What counts is to always take up new challenges and keep on changing

Mari: In 2008, Brother Industries marked the 100^th anniversary in the midst of a tumultuous downturn in the global economy. Terry^*1, what do you have in mind for the next 100 years?

*1: "Terry" is Koike's nickname that was given to him when he worked in the US. Today, Koike is known by this nickname in the group as a token of his friendliness.

Koike: I think that the current economic downturn is a warning by God to mankind who has been absorbed in money games. In this context, manufacturers are expected to "work on developing new products and offer excellent values" in an effort to stimulate the economy. When you look at the global market, some companies are achieving continuous growth by flexibly meeting the changes of the times and transforming their businesses, while other companies are overwhelmed by the economic downturn and finding no way out as a consequence of their manufacturing the same old products. At the Brother Group, we want to always take up new challenges and keep on changing over the next 100 years.

When I joined Brother Industries in the 1970's, the main business was door-to-door selling of home-use sewing machines and other products. In 1982, I volunteered to be transferred to Brother International Corporation (U.S.A.), a sales facility in the US. There was growing momentum back then to strengthen the information and communications equipment business, including printers, in overseas markets. The launch of laser printers and other devices in the 1990's contributed to a significant increase in sales abroad, and has eventually led to a dramatic change in our business framework. Today, with many manufacturing and sales facilities in more than 40 countries and regions, the Brother Group is a global company whose overseas sales and employees account for more than 80%. If I might add, the sales of information and communications equipment including color laser printers have exceeded those of sewing machines, and now account for more than 70% of our total sales. Brother has been increasingly recognized around the globe as a company focused on "colors."

Mari: It occurs to me that the Japanese government has tried to contain development and production technologies within the country, but such efforts seem to have fettered Japanese companies to some extent. Against this backdrop, the Brother Group has taken up the challenge of setting up facilities all over the world and establishing its technologies as global standards. I find these efforts admirable.

Koike: Thank you. For some time, we will have to endure the situation and build a framework in which we can make profits on a group basis under the tough market conditions. Through this process, we will plant seeds for future dreams by taking up challenges and changing ourselves on an ongoing basis. In FY2008, we initiated changes in "new business fields." Specifically, we introduced a new technology called "Retinal Imaging Display" and a new e-paper-based product named "Brother Document Viewer." But, there is one thing that must not change. That is "At your side."— our corporate culture to "develop activities from the viewpoint of all stakeholders, with top priority given to customers."

"At your side." — In pursuit of customer satisfaction

Mari: There is a Brother fax machine in my house in the US. My father told me that the Brother operator was very polite in giving instructions when he contacted the call center.

Koike: Thank you. In the 1990's, sales volume grew rapidly in the US. In response, we drastically reformed our services, logistics system, and IT architecture. As a result, we were able to reduce the waiting time of customers who are trying get connected to the call center, and solve their problems with one call.

All the activities at the Brother Group are based on the "Brother Group Global Charter." The basic principles include the creation and quick delivery of excellent values with the "At your side." customers-first spirit in every aspect, and the establishment of long-term trust and loyalty with customers. To meet these goals, we have built a management system named Brother Value Chain Management in an effort to deliver excellent values to customers in every aspect of our activities, from development, design and manufacture to services. To achieve the ultimate goal of customer satisfaction, "No Calls, No Returns^*2," we are committed to improving product quality, while upgrading and enhancing support information so that customers can solve problems by themselves. At the Brother Group, these efforts are called "customer inconvenience rate^*3" reduction activities. We will continue to work on these activities to develop "Brother" into a brand trusted by all stakeholders including customers.

*2: No Calls, No Returns: To eliminate inquiries and products returned from customers

*3: Customer inconvenience rate: Number of products returned/number of products shipped in a month

Working with business partners

Koike: If you want to deliver excellent values to customers quickly, you have to work closely with business partners. I believe it is important not to simply sustain impartial and fair trade, which serves as the basis of the working relationship, but to build confidence and achieve mutual growth.

Mari: There has been a global trend to honor workers' human rights as well as work safety and health in developing and emerging countries. How do you request or support your business partners?

Koike: The Brother Group requests and supports business partners on a broad spectrum of issues, ranging from green procurement (from the viewpoint of eco-consciousness), human rights, labor, health and safety, fair trade to business ethics, information security, consumer protection, and social contributions. In FY2008, we hosted seminars and workshops in China, Malaysia, and Vietnam to promote understanding about these issues.

Respecting diversity of employees

Mari: You must have encountered local employees with different ideas as you transferred business infrastructures and technologies to developing countries in various forms. What have you kept in mind from a management viewpoint?

Koike: In product manufacturing, cost competitiveness is a key factor. When we build plants in developing countries, we need to develop technical skills of local employees so that they can be a part of our global "Brother" team. In particular, many of our employees in other Asian countries show their excellence, and are more enthusiastic about their jobs than their Japanese counterparts. That is why they learn and absorb new things so quickly. In this way, it is important to put in place a global manufacturing framework where local characteristics can be unleashed. Here is another issue you need to think about: how local employees can assume a greater role as a part of the Brother Group. Simply applying the Japanese management style to local facilities does not work. Rather, it is important to set up a mechanism where local employees can be effectively involved in management while obtaining fair assessments and growing if they work hard at Brother.

Mari: More than 80% of Brother Group's employees are non-Japanese. Tell me about the difficulties, if any, when you work with employees of diverse cultural backgrounds.

Koike: Customs and ways of thinking are different in respective countries and regions. For example, employees relate themselves with management in different ways. I visit overseas facilities once or twice a month, and talk with local employees. At a plant in China, one employee asked me a straightforward question with much enthusiasm: "How come you climbed all the way up to the top while so young? Please tell me the secret."

Mari: I suppose that kind of communication is encouraging. What about the relationship with employees in Europe and the Americas where many of your sales facilities are located?

Koike: We launched into these markets early on — more than 50 years ago. Many Japanese employees are transferred to these facilities on a temporary basis, and friendly communications with local employees have led to the creation of an atmosphere where candid opinions can be exchanged. Family-like relationships have been maintained. In this way, respective facilities have different cultures around the globe.
The development of customer-oriented business on a global scale requires proactive information-sharing and mutual cooperation within the group. In this context, I believe that each and every employee should respect each other's differences, and share a "customer comes first" spirit.

Mari: What about the development of human resources?

Koike: We encourage Japanese employees to gain experience at overseas group companies so that they can become globally acceptable human resources. Meanwhile, we offer training to local staff in other Asian countries, including China, to upgrade management skills so that the local facilities can be managed by local staff.

Mari: Terry, you are also putting a great deal of effort in communications through a blog.

Koike: When I came back from the US, most of young employees in Japan did not know about me. I wanted to share "my ideas" about business and personal affairs with the employees, but it was impossible to directly contact all of them. In Japan alone, the Brother Group employees add up to about 5,000. So, I decided launch a blog, updating it twice a week, writing what I think, feel, or experience with photos attached. Eventually, I disclose almost everything about my life, from business episodes, hobbies, weekend activities, to relationships with my family and friends. At first, I was a little anxious about readers' reactions, but I found my blog was well accepted beyond expectations. I cannot stop blogging any more. In fact, I have updated it nearly 300 times in the past three and a half years.

Contributing to the global environment and local communities

Mari: I visited Brother's exhibition zone at the 2005 World Exposition, Aichi, Japan, and learned that Brother is committed to various activities for environmental conservation.

Koike: We work proactively to protect the global environment in every aspect of our corporate activities in order to build a society where sustainable development can be achieved. We are committed to developing products of excellent environmental performance, and to curbing CO2 emissions from production activities by, for example, introducing photovoltaic power generation systems at our factories. We also work on waste reduction based on the concept of the "5Rs" — the 3Rs (reduce, reuse, recycle) plus "refuse^*4" and "reform^*5." In FY2008, we launched the "Ink Cartridge Home Coming Project" in collaboration with printing device manufacturers and dealers. This project is designed to enable users to return used ink cartridges of their printers via post offices. We will set mid-term targets for CO2 emissions reduction, and upgrade our activities to achieve these goals.

*4: Refuse: Avoid purchase of environmentally burdensome materials whenever possible

*5: Reform: Reuse for different purposes in different forms

We also invest resources into activities to make social contributions through environmental activities. For example, we count points every time an employee takes an environmentally conscious action. The collected points are used for afforestation activities, for example. We are also engaged in activities to meet the needs of local communities around the globe. For instance, we have donated sewing machines to a vocational school in China to support women in rural areas.

Mari: I have been appointed Honorary Director of the "Aichi Kaisho Forest Center" on the former site of the 2005 World Exposition, Aichi, Japan, and Public Relations Advisor for the 10^th Conference of the Parties to the Convention on Biological Diversity (COP10). In my capacity, I will continue to work on disseminating "Nature's Wisdom," which is the theme of the exposition, by preserving forests for our children.

Koike: I hope we could work together to build a sustainable global community for future generations.

March 2009