Autonomous and Decentralized Management: Practical Perspectives

Transforming the Japan Group in a mature market to seize future opportunities

The Japan Group has been driving structural reforms through unique and, at times, uncomfortable initiatives, setting it apart from peers in recent years. The Group is now poised for a bold transformation of its operational model. The partner company-centric model has served us well, with a strong focus on customers and industry segments. With the introduction of the CXO structure in January 2025, it is time to build upon this customer-centricity with a new focus on nurturing collaboration across organizational boundaries in Japan. The appointment of four CXOs — Chief Commercial Officer (CCO), Chief Supply Chain Officer (CSCO), Chief Technology Officer (CTO) and Chief Administrative Officer (CAO) — marked a symbolic and strategic shift. Under the “ONE NIPPE” banner, the five partner companies within the Japan Group now strive to operate as a unified entity, while preserving the strength of their customer-focused instincts. This transformation aims to shift the mindset from individual partner company primacy to collective, country-level optimization in Japan, thereby maximizing organizational synergies and contributing to sustainable EPS compounding.

The Japan Group is fortunate to be guided by an outstanding leadership team with deep experience. Mr. Kida and Mr. Shiotani, both former heads of partner companies, have assumed CXO roles to lead enterprise-wide optimization efforts. Ms. Inoue is already well situated to be CAO as she had been taking a Japan-level lens from her vantage point at Nippon Paint Corporate Solutions (NPCS). Dr. Hong as CTO continues determined execution of technology plans laid out three years ago. Meanwhile, Mr. Enomoto and Mr. Kagami, recognized for their impressive achievements in transforming the marine business, have been newly appointed as heads of partner companies, paving the way for cultivating the next generation of leadership. The Japan Group is committed to revitalizing its talent base and energizing the organization by creating an environment that accelerates the development of high-potential young employees and empowers them to quickly step into new roles. This approach is designed to foster group-wide synergy and strengthen organizational vitality.

At the Japan Group Management Meeting (J-GMM) held in Tokyo in September 2024, the Japan Group unveiled an ambitious theme: embracing management and people practices that go beyond — and often diverge from — the conventional behaviors of Japanese corporations. Adoption of this bold theme was made possible by the remarkable transformation of the marine business in recent years. Long considered unprofitable, the newbuild segment of Nippon Paint Marine Coatings (NPMC) achieved a profit breakthrough, overturning a 20-year belief that success was unattainable. This turnaround has proven to our Japanese workforce that shifts in employee mindset and behavior are necessary drivers of organizational growth. In the face of global competition, the marine business strengthened its responsiveness to international customer needs while streamlining its cost structure. As a result, it achieved the ambitious targets of its three-year medium-term plan in just the first year, prompting a welcome upward revision of its medium-term goals. This outstanding achievement underscores that, with strong leadership and a workplace that enriches employee motivation, the “magic of transformation” is well within reach for the Japan Group.

Four function-specific CXO/PC President structure

Forging a competitive edge in the global automotive market of tomorrow

Nippon Paint Group’s automotive coatings business is intensifying its efforts to meet global challenges and lead future-focused initiatives in an evolving market. Deviating from a singular emphasis on just the domestic front, we are driving transformation with a clear focus on enhancing global competitiveness to capture emerging opportunities in different parts of the world.

The automotive industry is undergoing a profound shift, as automakers accelerate the transition toward carbon-neutral and cost-effective solutions and move from traditional internal combustion-engine vehicles to electric and hydrogen-powered alternatives; and exploring the judicious mix of paint versus film. In response, our Group is advancing new solutions centered on the theme of weight reduction, a critical factor in next generation vehicle design, as well as advanced film and coatings options.

Amid this evolving landscape, our Group is committed to cultivating talents capable of thriving in this emerging paradigm. We are transitioning from a regionally independent approach to a globally integrated framework, aligning regional operations to function as a unified organization that responds to customer needs worldwide. Historically, we have supported Japanese automakers in their global expansion across Asia, the Americas, and Europe. Of late, Chinese automakers have been rapidly expanding overseas on the back of their success in the electric vehicle (EV) segment. In response, NIPSEA China is leveraging its locally cultivated expertise and technical strengths to enhance Nippon Paint Group Auto’s global competitiveness by implementing a business model that couples Nippon Paint China’s strengths with the Chinese auto OEMs in-country with the local support and delivery prowess of the local NPXs (Nippon Paint Group’s in-country business entities). Deepening collaboration between NIPSEA China and NPXs have successfully delivered agile, locally optimized solutions backed by a cost-effective operational structure that has started to gain market share with the globalizing Chinese auto OEMs.

Global key account managers are now supporting customers who have operations spanning the globe with dedicated and customized services and solutions; while the business and functional heads of the automotive entities in different parts of the world are reinforcing the processes that forge sharper competitiveness as an entire automotive business segment.

Through these customer-centric efforts, backed up by newly developed environmentally friendly solutions, as well as furnishing options in the new area of film, our Group continues to stay ahead of evolving automotive industry trends and proactively meet the diverse needs of global markets. We are committed to building long-term, sustainable competitiveness to seize future opportunities.

Establishing a future-focused growth platform in India post-reentry

Our businesses in India faced considerable growth and profitability challenges in 2021. Over three years, structural reforms and bold marketing initiatives eventually charted a path toward sustainable profit growth. As a result, we reintegrated the India-based businesses into the Nippon Paint Group in 2024. Taking the increasing competition in the Indian market in our stride, our market reentry reflected our commitment and confidence in capturing the substantial growth opportunities that India offers for the future.

In India’s rapidly evolving market landscape, the decorative paints segment is experiencing the most dynamic transformation. Historically dominated by five key players, the market in recent years has become increasingly competitive with the entry of new players from diverse industries. In this environment, it is essential that we remain vigilant, closely tracking competitor movements, monitoring the innovations of new market entrants, and formulating well-considered strategies to stay ahead. By concentrating on the southern states of Tamil Nadu and Karnataka, we have successfully built strong brand recognition, established resilient distribution networks, and secured a stable share of the market. Looking ahead, we intend to couple the indigenous competence of our Indian team with the diverse offerings from our overseas coatings entities to differentiate ourselves in a crowded market place.

India’s automotive market is rapidly growing and is poised to become the world’s third-largest automotive market. We aim to ride this momentum by strengthening partnerships with key customers to drive sustainable business growth. Together with our JV partner, we believe the ability to meet the expectations of both Indian and foreign car OEMs and auto parts manufacturers position us to benefit from the growth of market demand.

At the same time, the automotive refinish segment continues to show steady growth, and we are focused on bringing to market a wide portfolio of products and services backed by robust support systems that foster mutual success with our customers. This ability is further strengthened by the entities that we have acquired over the past three years.

In the industrial segment, our coil coatings business generates half of its revenue from exports, leveraging India as a high-quality, cost-efficient export base to serve overseas markets such as Central Asia and East Africa. This balanced reliance on domestic and export market demands provided resilience even as the in-country competition heats up.

Overview of the India businesses (NPI and BNPA)

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