They aren’t mere businesses. They’re dynasties, fiefdoms passed on from one monarchical mogul to the next in an archaic lineage that is growing obsolete in the modern market-place.
By Kyle Mullin
As strange as it may seem in this time of overnight tech success stories, this kind of marketplace longevity is not only possible, but also quite common in Japan. A recent article in The Atlantic article has focused on the surprising endurance, and recent downfall, of some of Japan’s most renowned thousand-year-old companies—in particular, Kongo Gumi, which constructed Buddhist temples for 1429 years before being absorbed by another firm in 2007.
A 10-foot-long, 17th century scroll lists the Kongo Gumi owners from one generation to the next, and also indirectly reveal a curious business practice that Washington University economics professor Mike Smitka describes as crucial to helping these companies carry on over the centuries: “The continuity component is surely helped by the custom of adopting (adult) sons to carry on the business, displacing ‘natural’ sons when direct progeny are not viewed as suitable.”
While these age-old practices have endured centuries, they now finally appear to be outdated. Aside from Kongo Gumi, other recently ill-fated ancient Japanese businesses include a 465-year-old seafood company named Minoya Kichibee that filed for bankruptcy in January and a five-century-old confectioner named Surugaya that contended with similar issues in late 2014. Upon its closure, The Wall Street Journal noted that the “squid gut delicacy” purveyor had been helmed by 22 managers since opening in the 16th century, and had racked up ¥3 billion ($25 million) in liabilities when it filed for bankruptcy. Meanwhile, The Japan Times highlighted a criminal investigation into an allegedly shady loan from Aozora Bank to Surugaya in November, saying “Police suspect the confectionery company faked the capital increase to ensure its continued listing on the second section of the Tokyo Stock Exchange.”
Surugaya’s issues may point to one of the biggest new hurdles for Japan’s archaic corporations: bank reform. UC San Diego Japanese Business Professor Ulrike Schaede told The Atlantic that struggling Japanese firms endured from 1955 to 1990 because “ …the banks were supposed to bail them out.” But that all changed in 2000 and 2004, when Japan passed new bankruptcy and corporate liquidation laws. Now, Schaede says, “Non-performing companies no longer receive help from lenders unless they have a solid plan for change.”
But Japan’s oldest companies may be far more worried by another change heralded by indifferent youngsters. The aforementioned Japan Times article noted that before Surugaya fell under suspicion for crooked financial practices, its business had been “falling in recent years as consumers gradually move[d] away from Japanese-style confectioneries.” New Jersey Institute of Technology business professor William Rapp elaborated on this point in The Atlantic, saying, “Japanese millennials are not that interested in really traditional Japanese culture as compared to their grandparents or parents … As the old population dies off, there is just not enough demand that is able to sustain such firms.”
This generational shift in values and norms has been a huge hurdle for companies like Kongo Gumi which, according to Bloomberg, depended on its conventionally steady religious demographic because “few industries could be less flighty than Buddhist temple construction.”
Of course, these recent changes by no means spell a definitive end to the era of longevous firms. The Atlantic readily notes that Japan has over 50,000 businesses that are more than 100 years old, 3,886 of which are older than 200 years. Some of the eldest in that geriatric tier include Nisiyama Onsen Keiunkan and Hoshi Ryokan, a pair of hot spring hotels that are 1310 and 1297 years old, respectively (according to Slate) and Sudo Honke, an 874-year-old sake brewer. Hopefully these-still standing businesses are a testament to the staying power of Japanese tradition, and an indication that companies who not only stay true to their roots throughout the centuries, but also avoid shady loans and obsolete banking practices, will have what it takes to last another thousand years to come.