2006 President's Message

Charles D. Lake II
2006 ACCJ President

Dear current and prospective ACCJ Members:

Like all organizations, sound corporate governance is essential to the success of the American Chamber of Commerce in Japan (ACCJ). The ACCJ strives to apply rigorous corporate governance standards to its own activities through established internal rules and practices, and through an internal structure that consists of the Board of Governors, advisory councils, and committee leaders that collectively ensure accountability, and that the organization is governed in a responsible manner.

The ACCJ's Annual Report is one important tool for ensuring transparency and accountability at the Chamber. This document aims to provide current and prospective ACCJ members with a comprehensive overview of the ACCJ, from programs and membership to advocacy and financials. I hope that all of you take the time to read this important governance document and avail yourselves of every opportunity to be involved in helping to lead the ACCJ forward in 2007 and beyond.

相利共生 (Sori Kyosei) — "Working Together, Winning Together"

At our 2006 Shinnenkai, the ACCJ introduced a new slogan: "相利共生," or "Working Together, Winning Together." In January, the ACCJ Board of Governors came together for a long strategic planning session and agreed, under the 相利共生 slogan, to focus on — in addition to ongoing activities — two major areas in 2006: Corporate Social Responsibility (CSR) and the ACCJ's role as a 改革応援団(Kaikaku Oendan), or "Supporter of Reforms." Thanks to the tremendous efforts of ACCJ leaders, members and staff, the Chamber achieved real results in 2006, and not just upon these two pillars.

In this introductory message, I will review the ACCJ's 2006 activities in three important areas: 1) leadership and management; 2) advocacy; and 3) programs.

Leadership and Management

The core of the ACCJ is composed of its committee structure and its volunteer leaders; the stronger they are as leaders, the more successful the Chamber will be. In 2006, the ACCJ's leaders continued to engage in a number of leadership capacity building activities. These included a complete updating of the leadership guide and leadership training sessions. The Leadership Forum also continued to be a place where the Board and committee leaders gathered to exchange information and ideas and improve their leadership skills.

Last year, the Board of Governors worked very closely with Don Westmore and Sam Kidder to ensure that the Executive Director transition was executed smoothly. Thanks to Don and Sam working well together, and with great help from Deputy Executive Director Aron Kremer and other staff, the ACCJ's day-to-day operations completed this transition in an outstanding fashion. I would like to include a special thanks to Don Westmore for his eight outstanding years of leadership at the ACCJ. Don, the Chamber owes you a debt of gratitude.

Membership

In the area of membership, 2006 data suggest that we are on the rebound. We added more than 30 new commercial memberships last year, with our year-end total coming in at slightly above 3,000 dues-paying members.

In the summer of last year, thanks to efforts by former Vice President Marc Fuoti as then-Chair of the Membership Advisory Council, a Membership Expansion Subcommittee (MESC) was formed. The new subcommittee, under the excellent leadership of Chair Mike Makino, successfully recruited 13 new memberships in the short time between its formation and the end of the year.

Led by Vice President Michel Weenick, the Chubu Chapter worked hard in 2006 to maintain its existing members while looking for ways to increase its membership roster. Although Chubu wrapped up 2006 with five fewer members, ending several years of growth, the Chubu Chapter's membership is still significantly higher than it was several years ago.

Under the leadership of Vice President Mike Bobrove and bolstered by an extremely successful 2006 Walk-a-Thon, the Kansai Chapter also made strong efforts to maintain its membership. In 2006, Kansai had a net loss of just four members, much improved from 2005.

Overall, membership is recovering from the downward trend that began in 2004. Kanto, and the two chapters, Kansai and Chubu, will continue to work on improving internal recruiting and member retention through various measures, including following up with guests who attend ACCJ events, continuing Fee Waiver Campaigns, and enhancing the ACCJ's New Member Orientations.

Finances

In the area of finances, thanks to the tremendous efforts of ACCJ Treasurer Mark Baldwin and Vice President Mark Schwab and others on the Business and Financial Affairs Advisory Council as well as the ACCJ staff, the Chamber is in good financial health. Although there are more details in the financials section of this report, I would like to give a brief overview.

The Chamber ended the year with 157 million yen in net assets, which exceeded our original budget expectation by over 34 million yen and represented a significant cushion over the 100 million yen safety reserve level adopted by the Board of Governors a few years ago. Kanto, Kansai and Chubu, all ran in the black again last year.

This result was achieved through containing expenses; favorable advertising sales; revenues generated by Employment Central, the ACCJ's job and resume posting website; and a slight improvement in membership numbers since the beginning of the year. Thank you especially to Executive Director Sam Kidder and Deputy Executive Director Aron Kremer for their hard work in controlling expenses.

Advocacy

In the area of advocacy, the Chamber accomplished much in 2006.

Business White Paper

One of our key projects last year was the Business White Paper Initiative, which culminated in the launch of the ACCJ's first Business White Paper in five years at a press conference in November. The Business White Paper Initiative began at the start of 2006 with several meetings of the External Affairs Advisory Council (EAAC) and Board members to discuss and decide upon the key components of the Business White Paper. Once the notional table of contents was drafted and agreed upon, nine industry/sector specific Working Groups headed by CEO level members were established.

Each Working Group was responsible for the research and drafting of their specific chapter of the Business White Paper. With the help of Working Group members, ACCJ staff, and a professional editor, the Chamber spent the bulk of the summer and early fall producing the various chapters of the Business White Paper, which were reviewed and approved by the Board and EAAC. Each chapter was translated into Japanese and once again put through a review process to check the translations and finalize both the English and Japanese versions.

As many of you know, the aim of the White Paper was in line with both the ACCJ's mission and its 2006 role as a Kaikaku Oendan, which was to provide an overview of the business environment in Japan and identify measures that are important for the U.S. and Japan in partnering for success in a globalizing economy.

I would like to again thank the working group leaders: Ravi Chaturvedi, Robert Grondine, Darren Huston, Nobuhiko Ito, Curtis Mewborn, Skipp Orr, Kirk Patterson, and Doug Peterson. I'd also like to thank Don Westmore, who served as the Project Coordinator and Editor-in-Chief for this enormous undertaking.

There are countless others to thank, many of whom are acknowledged inside the White Paper itself.

Diet Doorknock

Because the 2005 10th Annual Diet Doorknock was postponed due to the Lower House's general election and cabinet reshuffling, we held two Diet Doorknocks last year. The mini- Diet Doorknock was held in February, and over 40 ACCJ members met with senior Japanese policymakers to discuss the ACCJ's high-level policy priorities in 2006. In meetings with Diet members and others, the ACCJ presented the Chamber's new slogan and shared specific policy documents.

The 11th Annual Diet Doorknock was held in November, and more than 65 ACCJ members met with nearly 85 senior Japanese policymakers (including 6 Ministers and 15 Senior Vice Ministers), a record number since the inception of the Doorknock. In their meetings with Diet members and others, ACCJ representatives presented the newly released Business White Paper and the CSR publication, the culmination of the two primary pillars of the ACCJ's 2006 activities. In all, approximately 400 Japanese policymakers received copies of the Business White Paper. The Business White Paper was well-timed, providing the ACCJ an excellent opportunity to communicate important policy messages to the Abe Administration early on as it formulated its core policies and programs.

Committee advocacy activities

In other areas of advocacy, the Chamber really turned things up a notch in 2006, releasing 19 viewpoints, 16 public comments, and more than 10 advocacy-related press releases.

Although I cannot possibly detail all of the issues presented, I would like to mention the committees and task forces who were the key drivers behind these strong 2006 advocacy efforts: the Financial Services Committee; the Healthcare Committee; the Legal Services Committee; the Transportation and Logistics Committee; the Toiletries, Cosmetics, and Fragrances Committee; the Labor Mobility Task Force; and the Privatization Task Force.

Thank you to the members and leaders of these and other committees and task forces.

Thank you also to Vice President Allan Smith, Governor John Kakinuki and other members of the External Affairs Advisory Council for reviewing all the policy documents.

Government briefings

During the year, the Chamber held 40 U.S. Government briefings, including meetings with Secretary of Transportation Norman Mineta, Secretary of Homeland Security Michael Chertoff, Secretary of Energy Samuel Bodman, Senators Lisa Mukowski and Richard Shelby, Deputy USTR Karan Bhatia, Federal Trade Commission Chairman Deborah Majoras, and Federal Communications Commission Chairman Kevin Martin.

As always, these briefings served as excellent opportunities for sharing the ACCJ's views with the U.S. Government. In April, 2006, we also completed a successful Washington D.C. Doorknock, effectively presenting the Chamber's views on numerous public policy issues, including our call for the negotiation of a U.S.-Japan Economic Integration Agreement.

Programs

2006 was another great year for programs.

CSR Initiative / Charity Ball

Among the most notable of all of the ACCJ's activities this year was our CSR Initiative, which included a CSR publication, "Conscientious Commerce," a symposium to launch the publication, and two other CSR-related events.

The publication and series of events was a tremendous success thanks to the efforts of CSR Task Force Chair and ACCJ Vice President Kumi Sato, Chamber Chairman Debbie Howard, Task Force Vice Chair Patricia Bader-Johnston, and many other volunteer task force members.

The CSR publication enhanced the positive impact that ACCJ members are making in Japan by highlighting the broad range of their CSR activities and by further emphasizing the long-established record of ACCJ company members as good corporate citizens meaningfully contributing to Japan's continued economic growth and prosperity.

The symposium that launched Conscientious Commerce marked a milestone for the CSR Initiative. At that event, over 140 ACCJ members and their guests heard from a panel featuring Keizai Doyukai Chairman Kakutaro Kitashiro, European Business Council Chairman Richard Collasse, and myself on behalf of the ACCJ.

Altogether, I am confident that the CSR Initiative contributed ideas and strategies to the ongoing discussion on CSR in Japan and helped to raise the level of dialogue among the foreign business community, the Japanese government, and ACCJ member companies.

Conscientious Commerce also underlined the CSR activities of the Chamber, including, of course, the Charity Crystal Ball, which raised nearly 17 million yen in 2006 for distribution to deserving local non-profit organizations.

Thank you to Barry Bergmann and all the members of the Charity Ball Committee for their hard work in organizing a successful event. Thank you also to Governor Tom Jordan, Tom Whitson, Tad Johnson, Vice President Mark Schwab, and others for their work with the ACCJ Community Service Fund (now the Community Service Advisory Council).

Other Programs

Overall, we held 500 programs in 2006, up more than 14% from 2005. Attendance was also up, with over 17,500 attendees from January to September, a 10% increase over 2005. At ¥19.77 million, total revenue from programs was consistent with 2005, showing a slight increase of less than 1%. This is a positive trend that hopefully represents stabilization from a 4-year decline.

We saw some impressive and innovative programs in 2006, starting with the Human Resources Committee's successful quarterly workshops called the "Learning and Development Workshop Series." All three workshops quickly sold out, with more than 140 people in total taking advantage of this series.

The Financial Services Committee, meanwhile, hosted a very successful "Symposium on Women in Financial Services." More than 300 people attended this half-day event, which featured three panels of women who have broken the glass ceiling, to share their advice for other women and for companies looking to create a better working environment for women.

The Membership Relations Committee had another good year for programs. Its three "Nomunication" events drew a total of nearly 500 people and its two "Meet and Greets" brought in more than 300. These fantastic networking opportunities are a major reason why many join the Chamber and why they stay as members year after year. Networking is a vital part of the Chamber's value proposition, and I would like to thank Membership Relations Committee co-Chairs Andrew Silberman and Jim Weisser and the members of the committee for doing such a great job in getting our members together.

We also hosted some high-profile speakers in 2006, including Bobby Valentine, Jesper Koll, Tokyo Stock Exchange President and CEO Taizo Nishimuro, and U.S. Secretary of Commerce Carlos M. Gutierrez.

And we played some more great golf, beating the Europeans for the third year in a row to retain the DaimlerChrysler Cup. The Chamber owes a debt of gratitude to Living in Japan Committee Co-Chairs Joe Lestage and Robert Bernal and team captain Bob Grondine, who together with Deputy Executive Director Aron Kremer comprise the organizing task force for the North American team.

Tokyo was not the only place for exciting events in 2006, as the Chubu Chapter held its fifteenth Walk-A-Thon, which has become the largest annual international event in Nagoya. The Walk-A-Thon brought together nearly 1600 members of international and Japanese communities. In 2006, the Walk-A-Thon raised ¥6.5 million to support the vital work being conducted by local NPOs and charitable organizations. Congratulations to Vice President Michael Weenick and Governor Harry Hill for another outstanding job.

Last year, the Kansai Chapter held the first-ever Kansai Chapter Walk-A-Thon. Over 50 businesses, 12 governmental and NGO agencies, 3 international schools and approximately 800 individual participants came together to participate in a 4 km walk around a scenic portion of Kobe's beautifully rebuilt shoreline. Despite being the first Walk-A-Thon put on by the Kansai Chapter, nearly ¥7 million was raised for charities around the theme of supporting women in the workplace. Working with key Kansai Chapter committee leaders, Vice President Michael Bobrove and Governor Ravi Chaturvedi showed strong leadership in planning and executing this successful event.

I would also like to mention the great success of our Online Member Feedback Survey, launched in January 2006 by Programs Development Chair Dominic Carter and Chamber Chairman Debbie Howard, which aims to ensure that the Chamber is effectively monitoring member opinions about our programs. The online survey is a post-event survey system where ACCJ members are given an opportunity to give feedback on an ACCJ event they just attended. The results are automatically provided to Committee Chairs, who are able to use the information to help them with improving their future programs.

The event survey has been extremely useful in identifying areas of opportunity and showing areas of strengths. Results for 2006 show that ACCJ members are generally satisfied with ACCJ programs:

Overall Quality: 70% Excellent/Very good
Value for Money: 59% Excellent/Very good
Recommend ACCJ events: 69% Extremely likely/ Very likely to
Speaker Professionalism: 77% Excellent/Very good
Speaker Quality: 71% Excellent/Very good

Closing

In closing, I would like to say that it was an honor serving as President of the ACCJ in 2006. I was truly impressed with the spirit of volunteerism, dedication, and professionalism of all of our members and the ACCJ staff. As a volunteer organization, the ACCJ would not be as robust and influential as it is without the tireless efforts of the leaders and members — from the Board of Governors to the committee and subcommittee chairs and vice-chairs as well as many other active members — and the ACCJ staff, led by Executive Director Sam Kidder. The success we had in 2006 would not have been possible without all of your dedicated efforts. Thank you.

Sincerely,

Charles D. Lake II

2006 ACCJ President