Ghosn’s scandal and Nissan-Renault Alliance

中湖 康太

Inappropriate move

Carlos Ghosn, Nissan’s chairman, was arrested for alleged false descriptions about his compensation on financial reporting. It was reported that Nissan was antagonizing Renault because of Ghosn’s scandal. If it is true, it’s very inappropriate move,

Renault rescued Nissan by injecting capital and sending Carlos Ghosn to rebuild Nissan

Nissan was near bankrupt in late 90’s with JPY2 trillion (US$17.7bn) interest-bearing debt, but recovered with personnel and financial supports from Renault in early 2000s. Carlos Ghosn from Renault displayed his uncommon shrewdness. Under his leadership, Nissan repaid the debt in 2003. To repeat, Nissan escaped business failure with the Renault’s capital injection and business participation.

Weird expression – “Nissan is deprived of its profits by Renault”

Deepening business participation after rebuilding business with capital injection is quite natural in capitalistic economy. Renault is the largest shareholder with 43% ownership of Nissan. If Renault deprives Nissan of its profits and weakens its financial health and its competitiveness, it is Renault that is damaged most by it, most likely by declines in Nissan’s share price. Renault gains nothing by impairing Nissan’s competitiveness.

Ghosn’s scandal and the alliance with Renault should be separated

Nissan should talk to Renault well about the capital and business alliance. It is quite inappropriate that Ghosn scandal should immediately lead to breaking up the alliance with Renault. Renault is the benefactor of Nissan who rescued it from financial ruin. The incident this time may perhaps reveal the peculiarity of Japanese perception about “company”. But to return evil for good is most disgraceful act in Japan’s culture.

For Nissan, Renault can be appropriate partner for its global expansion including Europe and China, to say nothing of its largest shareholder.

Undermining Japan’s international credibility

We have yet to make clear Carlos Ghosn’s reported scandal. It is important that Nissan should not antagonize and exclude Renault simply because of the incident. It could lead to undermining credibility of Japan’s business culture not only in global economy but global community. We must avoid it.

Kota Nakako

2018/11/25

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