January 31, 2015 1:00 pm JST
Japanese real estate
Unbound by custom, Sony breathes new life into land sector
TOKYO -- Sony ventured into the real estate business despite its lackluster business performance, including no dividend payment in fiscal 2014 for the first time since its listing. The idea of foraying into the sector caused plenty of turmoil and confusion inside and outside the company but Sony Real Estate President Kazuo Nishiyama, 39, pulled it off with passion and a long-term perspective. "The situation in Japan will become better if the real estate industry changes," he said in a recent interview with The Nikkei.
Q: The first company you joined as a graduate in 1998 was Matsushita Electric Industrial (now Panasonic), Sony's former archrival, wasn't it?
A: I joined Panasonic to become the president of the company. When the human resources department explained the company's retirement system to new employees, I put up my hand and asked "What happens to those who become the president?" An HR official did not take my question seriously and said, "New employees don't need to think about that." I remember thinking what a sad thing that was to say. I have always wanted to become a person who has a major influence on and contributes to society.
Q: Since joining Sony, you have made your mark as an adviser, haven't you?
A: Starting with magnetic recording media, the success rate of business plans I worked on with operations managers was very high. But I also had a bitter experience. When I was 32, I had about 30-40 subordinates but I thought I was so good at my job that I overloaded myself with work. However, I was unable to produce satisfactory results and ended up being hospitalized due to overwork. Since that experience, I have started learning to let others do the work while I concentrate on management.
Q: A remark by Sony President Kazuo Hirai led to the founding of Sony Real Estate. How did that happen?
A: As a member of the advisory board to Hirai, I was involved in personnel system reforms. Around the spring of 2013, Hirai said, "Even those who devise business plans and strategies like you have to become the initiator of delivering joy and excitement directly." Hiroki Totoki (now president of Sony Mobile Communications), who founded Sony Bank in his 30s, also encouraged me.
When I presented a real estate business plan to Hirai, the first thing he said was "Why real estate?" There had been opposition within the company when the ideas of founding Sony Life Insurance and Sony Bank came up but they have become major sources of earnings for Sony. I said I was sure that in five or 10 years we would be glad we founded Sony Real Estate. He agreed with my idea, saying that way of thinking was "exactly the DNA of Sony."
Q: You were acutely aware of problems in the real estate industry long before you founded Sony Real Estate, weren't you?
A: My grandfather ran a property leasing business, and I helped my mother manage and sell the inherited property. I also have been making real estate investments and am the owner of a condominium building. When I had property transactions in my 20s for the first time, I asked the broker to discount the commission, which was 3% of the price stated in the sales contract plus 60,000 yen ($505). The broker brushed off my request and said it was the standard procedure. Later I found that the commission was the maximum amount and discounts were possible. I did not understand why the system was so unclear. Sony Real Estate has adopted a system to decide commissions based on actual costs incurred.
It is also a problem that brokers find sellers and buyers, have them conclude contracts and obtain commissions from both. If other brokers are used to find sellers and buyers, it helps widen the search and the transaction of property can be done at an appropriate price. But there is a risk of brokers keeping transactions to themselves to obtain commissions from buyers and sellers. Some states in the U.S. regulate such practices and leading brokers voluntarily refrain from it. Sony Real Estate prohibits itself from receiving commissions from both buyers and sellers in principle. We want to provide services through Sony's fair, rational approach. For example, for the property put on sale that was priced in the range of 29 million yen to 33 million yen by other brokers, we closed the deal with the price of 36.7 million yen. The percentage of customers who came to us for consultation and signed a contract is three times higher than the average of major real estate companies.
Some people in the real estate industry might be alarmed by Sony's entry into the market, but I believe if transactions of used property are revitalized, it will be good for everyone. If the price of property is evaluated fairly, the number of assets to be kept will also increase. Changing the real estate industry will help improve people's lives.
Interviewed by Nikkei staff writer Naori Honda
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