Mitsubishi Corporation (MC) and NTT Corporation (NTT) have agreed to form a business partnership in order to promote digitalization and structural transformation across industries. This partnership is intended to generate changes to existing value chains and encourage new value creation through digital transformation (DX)*1.
This marks the first time that MC has partnered with an ICT company that has the potential to impact all of its businesses as well as for NTT to form a wide-ranging alliance with a global trading company in the field of B2B2X*2 business.
■Background and Goal
As announced in the Midterm Corporate Strategy 2021, MC has appointed a Chief Digital Officer (CDO) this year who, together with MC’s ten business groups, has been examining the potential for developing new business models that can respond to the rapid DX that is taking place. In order to balance its business portfolio, MC has set its focus on DX in specific areas, which are service industries (communications, data assets, logistics, leasing, e-commerce, internet services, etc.) and downstream businesses in living, mobility and infrastructure, and energy and power generation sectors.
NTT, as announced in its medium-term business strategy “Your Value Partner 2025”, aims to contribute to the realization of “Smart World” and as a way to achieve this, the company has identified the B2B2X business model as one of its main strategic pillars. By supporting service providers in integrating DX into their business models, and therefore, creating new corporate values, NTT has been changing the lifestyles of its end-users and supporting the resolution of many social issues.
MC’s and NTT’s common vision to pursue DX and to transform business models has led the two companies to create this partnership.
By utilizing the complementary strengths of MC and NTT – industry knowledge and ICT capabilities, respectively – the two will establish an “Industrial DX Platform,” a one-stop solution that can be used to promote DX across a wide range of industries, and aim to promote industrial digitalization and address important social issues. MC’s know-how around business management obtained through its ten business groups and around 1,500 subsidiaries and affiliate companies integrated with NTT’s capabilities developed around more than 900 group companies has the power, especially through open collaboration with numerous other organizations including startups, to accelerate major structural reforms.
■Overview of the Initiative
MC and NTT will launch this initiative by applying it first to supply chains for food and industrial materials, both of which are areas where MC has a long history and extensive expertise. There are many business processes in the food industry that can benefit from DX, and the total annual cost is estimated to be worth approximately four trillion yen.
By working with various industry players (e.g. food retailers, manufacturers, wholesalers) to integrate their information and business processes, the goal will be to eliminate unnecessary and redundant tasks in the food value chain and achieve efficient and optimal food distribution system.
The two companies plan to gradually expand the program into other areas, and look forward to growing this business to one day become worth several hundred billion yen.
■Investment in HERE Technologies (HERE International B.V.)
MC and NTT have made the decision to co-invest in HERE Technologies, a global service provider in location information services (location intelligence)*3 based in the Netherlands. To this end, MC and NTT will establish a new holding company (joint-ownership on a 50:50 basis) in the Netherlands and, through this company, acquire 30% of HERE Technologies. All necessary procedures will be carried out, and the transaction is expected to complete following relevant regulatory approvals.
MC and NTT will explore the possibilities of our business alliance in various areas.
HERE Technologies is a global provider of location services and HD maps used in car navigation systems and automated vehicles. In recent years, HERE Technologies has been making a shift towards non-automotive sectors by leveraging its high-precision map and location data to provide service-oriented solutions such as logistics and route planning that incorporate traffic information and more. HERE Technologies’ solutions will be one of the core technologies within the “Industrial DX Platform” and the company will strive to expand its presence in Japan as well as in the Asia-Pacific.
MC and NTT’s understandings of businesses/industries, customers, and technologies will help accelerate HERE Technologies’ future growth of product offerings and innovation, and will work together to deliver valuable solutions for all clients.
*1 A company’s action to respond to the rapidly changing business environment and establish business advantage over competitors by utilizing data and digital technologies, understanding customer and social needs, and changing business models, products, services, business operations/processes, organizational structures, as well as corporate culture. (as defined by the Ministry of Economy, Trade and Industry of Japan)
*2 Operations to support and promote businesses for clients of other companies. “B” refers to a company, and “X” refers to a client, whether an individual, a corporation, an employee, a government agency or other entity. In this business model, the “B” in the center receives ICT solutions and DX support from the “B” on the left, and through this partnership, generate values for “X” that continuously evolve over time.
*3 Solutions and services that go beyond the traditional automotive applications (e.g. car navigation systems) to integrate mapping/location data into advanced digital devices or IoT sensors and perform advanced analysis using technologies such as artificial intelligence (AI).