Fuji Xerox is undergoing the biggest change in the company’s history. After its half-century-old technology agreement with Xerox Corporation ends next year, the Tokyo-based firm plans to embark on a dynamic growth strategy and expand to new markets under the Fujifilm brand.
Fuji Xerox reached record profits in fiscal year 2018 and says it expects to post strong results in fiscal 2019. “Our employees have worked incredibly hard. I would like to share the fruit of those results with our customers,” says Kouichi Tamai, who has been President of Fuji Xerox since June 2018. Over the past two years, he has addressed management issues and established a corporate structure to generate profits through various initiatives.
Going Global With Fujifilm Brand
Fuji Xerox was established in 1962 in Tokyo as a joint venture between Rank Xerox and Fuji Photo Film, now Xerox and Fujifilm, respectively, to bring to Japan and to the Asia-Pacific the technology that revolutionized business communications—xerography, which is widely used in photocopying and printing. From the start, Fuji Xerox had the technology agreement with Xerox that provided for technology/brand licensing and sales-territory coverage. That agreement is set to expire at the end of March 2021. Pursuant to its expiry, Fuji Xerox will change its name to “Fujifilm Business Innovation,” the company announced in January.
“The first thing I want to say is that we will continue providing the same services to our customers. By improving the speed and the level of technology and product development within Fuji Xerox, we are innovating products with our own original technology. I would like all of our valued customers to be assured that there will be no change in the products and services we already offer,” Tamai says.
Ending the technology agreement with Xerox will bring three major changes for Fuji Xerox. The biggest is the expansion of its sales territories worldwide. The firm’s sales coverage is currently limited to Asia-Pacific and Oceania. But after April 2021, the restrictions will be lifted, paving the way for Fuji Xerox to pursue global expansion under a new brand.
Next, the company will be in position to move quickly to invest in new businesses as well as seek mergers and acquisitions in line with strategic goals. Fuji Xerox will also be able to provide customers with innovative new products and solutions by strengthening collaboration within the Fujifilm group. Fuji Xerox will have exclusive use of technology patents that it retains after the expiration of its agreement with Xerox.
Finally, Fuji Xerox will no longer have to pay approximately ¥10 billion (US$95.3 million) annually to Xerox for use of the Xerox brand. The money instead will be reinvested in new businesses.
Innovating Constantly
The decision to disclose the changes in January was also significant. “Sure, it will be more than a year before the company name will actually change. However, Xerox is a brand that employees have affection for and customers are extremely familiar with. So we opted to make the announcement early to take plenty of time to explain the background of our decision,” Tamai says.
The company plans to accelerate its synergies with Fujifilm group companies to further promote innovative solutions and services using technologies such as the cloud, AI and the Internet of Things.
“For example, in the area of AI, there is synergy with Fujifilm’s medical field. Combining Fujifilm’s image-processing technology with our language-processing technology will expand the possibilities of new IT solutions. We must continue to focus on building an effective and efficient development system that leverages the strengths of both companies by fusing the technologies of Fuji Xerox and Fujifilm,” Tamai says.
Expanding to Europe and America
To break into new overseas markets, including Europe and the U.S., “we will first look into manufacturing products for other brands. In other words, we’ll start as an OEM [original equipment manufacturer] supplier,” Tamai says.
He received requests from both domestic and foreign manufacturers seeking OEM supplies from Fuji Xerox after the company became a wholly owned subsidiary of FUJIFILM Holdings in 2019. “When asked why they wanted to partner with us, clients responded unanimously that in side-by-side comparisons of the world’s major multifunction printers, the best products were made by Fuji Xerox. Even in challenging environments, there hardly were paper jams or malfunctions. In the case of cyberattacks, data remains safe,” Tamai says. “Careful consideration should be given on whether to invest in fixed costs, so in highly competitive European and American markets, we will keep a close eye on the OEM situation while considering whether to launch our own brand there.”
In Asia-Pacific countries where Fuji Xerox’s sales channels already exist, the company will pursue M&As that will increase market share or accelerate the development of solutions and services. In February, Fuji Xerox acquired Australian office IT services company CSG to leverage CSG’s relationships with small and midsize businesses in Australia and New Zealand. Fuji Xerox, whose main customers are large corporations, aims to capture a broader client base through the mutually complementary business structures of the two companies.
Tamai, who holds a doctorate degree in engineering, takes a precise approach to strategy development, much like a mechanical engineer designing sophisticated machinery. His goal is to raise the company’s sales to ¥1.3 trillion (US$12.4 billion) from approximately ¥1 trillion (US$9.5 billion) by fiscal 2024. The company is also working on developing new game-changing models that will contribute to the company’s growth. Fuji Xerox is set to become a key force in driving innovation in global business.
Tamai has been growing roses as a hobby for the past 10 years—precisely, he says, because they are “difficult to grow.”
“Just like with work, you have to put a lot of effort into it, but it gives me so much pleasure to see others enjoy their beautiful blossoms,” he explains.