Old com­pa­nies still thrive in brand-loyal Ja­pan

The China Post - - WORLD BUSINESS - BY YURI KAGEYAMA

Suc­cess­ful busi­nesses shine for a few years, then nim­bler com­peti­tors out­wit them in a con­stant cy­cle that spans be­ing feted to forgotten in less than a gen­er­a­tion. But Ja­pan has some­thing dif­fer­ent: thou­sands of com­pa­nies that have pros­pered for cen­turies.

Ja­pan has more old com­pa­nies than any other de­vel­oped na­tion. A study of 41 coun­tries car­ried out by the Bank of Korea found that Ja­pan has more than half of the known pool of com­pa­nies older than 200 years.

The longevity of Ja­panese busi­nesses, from a 378-year-old sake maker to a four-cen­tury-old con­struc­tion com­pany that started in tem­ple car­pen­try, partly has roots in the coun­try’s her­metic his­tory. Limited con­tact with the out­side world nur­tured a dis­tinc­tive cul­ture valu­ing loy­alty and con­ti­nu­ity. Since the mid-19th cen­tury, when Amer­i­can pres­sure prized open Ja­pan to the West­ern world, those traits pro­vided an an­chor as com­mer­cial life was con­fronted with in­no­va­tions and pres­sures from abroad.

David E. We­in­stein, an ex­pert on the Ja­panese econ­omy and chair of the Depart­ment of Eco­nomics at Columbia Uni­ver­sity, said nowa­days busi­ness fail­ures are as com­mon­place in Ja­pan as any­where else, but love of tra­di­tion can be a life­line for com­pa­nies with his­tor­i­cal ca­chet.

Ja­panese fam­ily busi­nesses have also adopted heirs out­side the fam­ily, such as in-laws and tal­ented work­ers, to en­sure sur­vival, he said. “It’s the name that is con­tin­u­ing,” said We­in­stein. “Peo­ple get at­tached to the names.”

Sake-maker Gekkeikan, founded in 1637, was tiny for its first 250 years but grew to one of Ja­pan’s big­gest liquor mak­ers in the early part of the 20th Cen­tury by com­ing up with tech­nol­ogy to keep sake fresh with­out chem­i­cal preser­va­tives, ahead of its ri­vals.

The com­pany, based in the pic­turesque an­cient cap­i­tal of Ky­oto, is a bal­anc­ing act be­tween the old and the new, a defin­ing char­ac­ter­is­tic of Ja­pan’s old com­pa­nies.

Although Gekkeikan is de­vel­op­ing new prod­ucts con­stantly, such as sugar-free sake and non­al­co­holic sake, it’s ba­si­cally mak­ing sake the old-fash­ioned way, stir­ring the gi­ant cas­kets with lov­ing care.

When the cur­rent 14th gen­er­a­tion pres­i­dent Haruhiko Okura de­cided to de­fine Gekkeikan’s ageold cor­po­rate prin­ci­ples in 1997, he did it in English — “qual­ity,” “cre­ativ­ity” and “hu­man­ity.”

But em­ploy­ees are still be­ing or­dered to live sto­ically, shun­ning sports cars and other flam­boy­ant life­styles, in­stead sweep­ing neigh­bor­hood streets as vol­un­teers, an old com­mu­nity prac­tice.

“Mod­esty and fru­gal­ity are im­por­tant for a com­pany’s sur­vival,” said com­pany spokesman Hiroki Ishida. Old com­pa­nies abound in Ja­pan. Su­mit­omo Corp., a trad­ing com­pany tech­ni­cally founded in 1919, dates back to the 17th cen­tury, when its his­tory is traced to mer­chant Masatomo Su­mit­omo’s start­ing a book­store in Ky­oto.

In con­trast, West­ern com­pa­nies ap­pear to be less en­dur­ing. Of the orig­i­nal 1955 For­tune 500 com­pa­nies, only 71, or 14 per­cent, sur­vived on the list, ac­cord­ing to busi­ness con­sul­tant Jim Collins, who stud­ied it in 2008, although that doesn’t mean com­pa­nies who dis­ap­peared from the list died.

The Bank of Korea study car­ried out in 2008 found 5,586 com­pa­nies older than 200 years — with 3,146, or 56 per­cent, in Ja­pan. That was fol­lowed by 837, or 15 per­cent, in Ger­many; 222 in the Nether­lands and 196 in France.

Such com­pa­nies thrived over the years be­cause they cre­ated new de­mand while stick­ing to a cor­po­rate cul­ture that pro­moted crafts­man­ship with at­ten­tion to de­tail, the re­port said.

And in­stead of go­ing af­ter West­ern-style short-term re­sults, they pur­sued long­stand­ing trust with cus­tomers and part­ners, the study said. They also pur­sued growth within their means, rarely bor­row­ing to ex­pand.

Osaka-based con­trac­tor Takenaka Corp., which to­day con­structs sta­di­ums and shop­ping malls, had its be­gin­nings in 1610, with Takenaka Tobei Masa­taka, a tem­ple car­pen­ter. That’s 288 years be­fore War­ren A. Bech­tel started build­ing with a rented steam shovel to found Bech­tel Corp., one of the old­est Amer­i­can com­pa­nies.

Nin­tendo Co., the game maker be­hind Su­per Mario, is 126 years old, and be­gan in 1889 by sell­ing decks of tra­di­tional play­ing cards. Yag­i­sawa Shoten Co., a soy-sauce maker founded in 1807, sur­vived the March 2011 gi­ant tsunami of north­east­ern Ja­pan, turn­ing to mod­ern-day crowd-fund­ing to build a new plant from scratch.

The com­pa­nies, dat­ing back to the samu­rai era, are so nu­mer­ous there’s a spe­cial term for them — “shinise,” which com­bines the char­ac­ters for “old” and “store.”

The term con­notes the pin­na­cle of taste, such as sup­ply­ing the Em­peror, a brag­ging right res­onat­ing with the Ja­panese con­sumer, even to­day. Gekkeikan, the sake-maker, notes proudly it re­ceived its first im­pe­rial or­der in 1907.

The love for shinise high­lights Ja­pan’s con­form­ity mind-set, a be­lief that own­ing a shinise item protects you from so­cial ridicule, said Chuo Uni­ver­sity Pro­fes­sor Toshi­hiko Miura.

“Ja­pan has its love for lux­u­ry­brand shoes and bags, which ex­ists in the West as well, but in Ja­pan it extends to food — a de­sire to eat fa­mous things. As a re­sult, there are lots more com­pa­nies con­sid­ered shinise in Ja­pan,” he said. In­tense brand loy­alty means some shinise do fine with­out over­seas mar­kets.

Mi­noya Kichibee Store is among the old­est of shinise, founded about 450 years ago, when a samu­rai, Azai Kichibee, be­came a mer­chant. The ex­act year is un­known.

The man­u­fac­turer still has only 100 em­ploy­ees, and its star prod­uct, su­per-salty squid in a bot­tle, is un­likely to go over with non-Ja­panese but is a peren­nial fa­vorite here, es­pe­cially with sakedrinkers.

The ho­tel busi­ness is an­other shinise forte, of­fer­ing a unique fam­ily-like ex­pe­ri­ence for trav­el­ers.

Guin­ness World Records has cer­ti­fied Nisiyama On­sen Keiunkan, a hot-springs inn op­er­at­ing since 705 in Ja­pan, as the world’s old­est ho­tel.

Hi­iragiya inn is not as old, founded in 1818, but it also boasts an el­e­gant tra­di­tion.

The bath tubs in each room are fra­grant wood and lac­quer. The small buck­ets are hand­crafted by a mas­ter des­ig­nated a Na­tional Trea­sure. The food served for din­ner looks like art­work, served in tiny dec­o­ra­tive por­tions in ex­pen­sive ce­ramic. The screen win­dows peer out to a gar­den of rocks and fo­liage. A sumi-brush paint­ing hangs in the al­cove. The light­ing is soft and muted. Work­ers shuf­fle about in ki­mono.

AP

1. In this photo taken March 25, a cou­ple walk by Gekkeikan sake bar­rels dis­played at the exit of Gekkeikan Okura Sake Mu­seum in Ky­oto, west­ern Ja­pan. 2. In this photo taken March 25, an em­ployee stirs un­re­fined sake at Gekkeikan Okura sake Mu­seum in Ky­oto. 3.In this photo taken March 25, tourists walk out­side the Gekkeikan Okura sake Mu­seum in Ky­oto.

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