SURPRISE AT HAKUHODO: ADMAN TO PRESIDENT

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TOKYO-Japan's No. 2 agency broke with tradition last week when Hakuhodo named its first president in almost 20 years with an advertising background, and separately relinquished 49% equity in the successful joint venture McCann-Erickson Hakuhodo.

Neither move is expected to change the operations or direc-tions of the agencies, though McCann-Erickson Hakuhodo will be renamed McCann-Erickson Inc. But both moves reflect a different kind of business environment in the Land of the Rising Sun.

Following formal confirmation at a general meeting Feb. 25, Exec VP Takashi Shoji, 61, will become Hakuhodo president, succeeding Ritsuo Isobe, 72, who becomes chairman. Michitaka Kondo, 74, retires as chairman but remains on the board as a representative director.

The first advertising professional to head Hakuhodo since 1975, Mr. Shoji joins a small group of professional admen in top posts at Japanese agencies, which are often headed by executives from the industrial and trading companies or major daily newspapers associated with the agencies.

The past two presidents joined Hakuhodo after retiring from the Ministry of Finance. Retiring public servants so often take top jobs at agencies that the practice has acquired a name, amakudari, or "descending from heaven."

Hakuhodo's sale of its interest in McCann-Erickson Hakuhodo to partner McCann for an estimated $25 million comes as recession-troubled Japanese agencies are pressed for money.

Both Hakuhodo and McCann said the joint venture agency had achieved the maturity to operate without a Japanese partner, but one executive close to both shops acknowledged money was a factor for Hakuhodo in the sale.

Formed in 1960, the joint venture was considered the most successful collaboration between U.S. and Japanese agencies. The shop ranks No. 6 with $112.8 million in gross income on billings of $752.3 million in 1992.

Executives at rival agencies agree that McCann-Erickson Hakuhodo is capable of holding its own. Although the move came as a surprise to Leo Burnett-Kyodo President Bill Smith, he said McCann is very well-established and has developed important media buying relation ships.

Going without a Japanese partner is still not the norm since broadcasters and publishers limit the number of agencies they do business with to as few as 12. Consequently, other agencies must buy through a shop authorized by the media company, usually a local shop. The commission is split, generally 50-50, but some buyers demand as much as 80%.

One agency that successfully entered on its own was J. Walter Thompson Co., which pays media when invoiced instead of the customary 30 to 60 days later. That practice means JWT can negotiate bigger discounts to pass along to clients and guarantees the shop authorization to deal with the media company directly. JWT and McCann are believed to be the only foreign agencies with such status.

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