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Microwave king loses Zojirushi board fight but keeps heat on

Galanz calls Japanese appliance group's China strategy 'pointless'

OSAKA -- Shareholders of Japanese appliance maker Zojirushi rejected a director appointment Wednesday proposed by China's Galanz Group, a big investor pressing for change as earnings slump at the family-owned company. 

"I want to keep working to improve Zojirushi's management," said Liang Huiqiang, deputy chairman of Galanz.

Galanz, based in Guangdong Province, claims to hold a 30% share of the global microwave market. It has amassed a 13.5% stake in Zojirushi, with some held through investment funds.

The episode is part of a renewed burst of investor activism in Japan spanning industrial groups like Toshiba Machine to companies with such well-known brands as brewer Kirin Holdings.

Galanz has blamed "lax" management for three straight years of falling revenue and profits at Zojirushi, a household name in Japan for rice cookers, electric teapots and vacuum flasks. Galanz said that Zojirushi President Norio Ichikawa holds too much sway for other directors to make independent judgments.

Ichikawa, part of the Zojirushi founding family, which owns about 30% of the the company's stock, has held his post for 19 years.

Galanz proposed appointing Satoshi Nagano, formerly of the Bank of Japan, as an independent board member. Zojirushi opposed the proposal while nominating beverage group Suntory Holdings Vice Chairman Shingo Torii as an outside director in its slate of candidates.

Liang Huiqiang, pictured here in a Nikkei interview in January, said Zojirushi needs to spend more on innovation and pay raises for workers. (Photo by Yusuke Hinata)

Zojirushi's slate passed, though Galanz found some sympathy for its arguments among other shareholders at Wednesday's meeting.

Both Zojirushi and Galanz agree on the need to expand abroad, given the Japanese market's poor growth prospects -- but they differ on how.

Ichikawa looks to sell more products online to Chinese consumers, and the company is creating a specialized team in Shanghai to this end.

Liang, part of Galanz's founding family, views this strategy as "pointless," saying the Osaka-based manufacturer has failed to develop products that cater to local tastes and needs.

The two disagree on financial strategy as well. The company paid an annual dividend of 26 yen per share for the fiscal year ended in November, up 4 yen from three years ago. Galanz called increasing shareholder payouts amid an earnings slump "irresponsible."

The Chinese company wants Zojirushi to spend more money on innovation and boosting employee pay, pointing to a dearth of growth investments and a cash hoard that has grown 30% over the past three years to 30.4 billion yen ($277 million).

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