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No.53
No.53, Economy  Sept. 20, 2019

The Centenarian Companies that are Saving Japan―Tsumura, Konoike Transport and Seiren. Why did these companies survive?

Japanese companies continue to face tough battles in the face of waves of globalization and digitalization. In particular, Japan is said to trail the pack in AI-related technology. When Japanese companies are compared to others around the world, a miserable situation is often recorded. Turning our attention to within Japan however, today there are actually 34,394 “historic companies” that were founded 100 or more years ago (according to a 2017 study by Tokyo Shoko Research). Some researchers put the number at over ten thousand — notably more than in other countries around the world. In 2019, famous examples were Nintendo (over 130 years old), Morinaga (over 120 years), Olympus and NGK Insulators (both over 100 years). The oldest company in the world is an Osaka shrine and temple construction firm called Kongo Gumi. It was founded in 578 during the Asuka period. The oldest ... ... [Read more]

No.53
No.53, Economy  Sept. 19, 2019

Challenges Facing the Abe Administration after the Upper House Election: Social Security Reforms Should Be a Multi-Partisan Discussion

Key points Economic policy should return to an orthodox type from an emergency type The government should aim to increase worker productivity The opposition parties should also make responsible proposals regarding the consumption tax and pension   The Upper House election is over. The result of the election does not directly place the Abe administration under pressure to make revisions to its economic policy. On this occasion, however, I would like to point out three basic directions required for the economic policy in the years to come based on challenges taken on before the election and discussions held by the political parties during the election. The first direction is to return the experimental and venturous economic policy, enacted in an emergency, to an orthodox policy for normal times. For about thirty years following the burst of the bubble, the Japanese economy faced uncharted challenges ... ... [Read more]

No.53
No.53, Economy  Aug. 4, 2019

An assessment in the seventh year of Abenomics: Labor reforms should be implemented immediately, ahead of monetary and fiscal measures

  Key Points Set a permissible range of 1% over or under the 2% inflation rate target Take measures for banks when deepening the degree of negative interest rates It is necessary to improve labor mobility and raise wages for young workers Six and a half years have now passed since the second Abe administration was established in December 2012. Continued economic expansion has led to a remarkable improvement in the employment situation. Although people reportedly do not have feel that their income has increased, the overall growth rate is above 1% despite the decreasing working-age population and the aging society. The effect of the radical quantitative and qualitative easing has kept the average inflation rate positive, at slightly under 1%. Some are critical, however. To put it plainly, Abenomics, which entered its seventh year with continued strong market conditions, has led to a ... ... [Read more]

No.52
No.52, Economy  Jul. 18, 2019

Shibusawa Eiichi and the Principles of Modern Banking

As institutions prepare for the release of new banknotes in 2024, the principles and ideas of Shibusawa Eiichi, the pioneer of modern banking in Japan some 150 years before, ring as true as ever. When the Bank of Japan reissues its banknotes in 2024, the 10,000-yen note will feature a portrait of Shibusawa Eiichi (1840–1931), “the father of modern Japanese capitalism.” In locations with deep associations to Shibusawa, such as his birthplace of Fukaya City in Saitama Prefecture, everyone is delighted. The Shibusawa Memorial Museum meanwhile is receiving many visitors. According to Inoue Jun, director of the Museum, many inquiries have also been received from media and other organizations. “It is a very good opportunity for people to find out who Shibusawa is,” Inoue says. “People will learn that he is very much alive in this paradigm shifting era.” (The Shibusawa Memorial Museum will ... ... [Read more]

No.52
No.52, Economy  Jul. 18, 2019

Uniting the Minds of Merchants: Shibusawa Eiichi and the Tokyo Chamber of Commerce

Today, the Tokyo Chamber of Commerce and Industry (TCCI) undertakes a variety of activities as a private sector economic organization. Its forerunner, the Tokyo Chamber of Commerce (Tokyo Shoho Kaigisho), is closely linked to Shibusawa Eiichi, who was the first chairman and a central figure within the organization. Eiichi also chaired successive forms of the Tokyo Chamber of Commerce, namely the Tokyo Shokokai and the Tokyo Shogyo Kaigisho, and through his work was instrumental in “uniting the minds of merchants.”  Establishment of the Tokyo Chamber of Commerce Chambers of commerce are economic and capitalist organizations established by merchants and industrialists in a given locale to express their intentions and protect their interests. The first such organization is said to have been founded in Marseille, France, in the sixteenth century. Since then, chambers have been established throughout Europe and around the world. The first in ... ... [Read more]

No.52
No.52, Economy  Jul. 18, 2019

Shibusawa Eiichi’s Starting Point

Shibusawa Eiichi was born in 1840 in Chiaraijima-mura, Hanzawa-gum, Musashi-no-kuni (now Chiaraijima in the city of Fukaya, Saitama Prefecture). While tax was usually paid in rice during the Edo period (1603–1867), a system to pay in cash was already adopted in Chiaraijima. The money economy was disseminated early in this typical farming village because farmland yielding stable crops was scarce in the area, and people were unable to make a living without taking part in commerce in addition to farming. Many in the area were engaged in business that involved purchasing indigo leaves, processing them into a raw material for dye called aidama (indigo balls) and selling them in Shinshu (now Nagano Prefecture), Joshu (now Gunma Prefecture) and other regions. Eiichi’s father started the business in full scale, which brought them tremendous wealth, developing into one of the richest farming families in the village. ... ... [Read more]

No.52
No.52, Economy  Jul. 11, 2019

Shibusawa Eiichi’s principle of “The Analects and the Abacus” will save the Japanese economy ― Hopefully, the will of the “father of Japanese capitalism” will be passed on in the new era

The new era of Reiwa has begun. The ideal path that the country should take and a hope for national peace were always put into the names of previous Japanese eras. I feel that Reiwa also has meanings suitable for all Japanese people to welcome the new era with one heart in the reign of a new emperor. What struck me particularly strongly was the interpretation of “beautiful harmony,” which is defined as the official English translation of Reiwa by the Ministry of Foreign Affairs. This is because the phrase “beautiful harmony” has some associations with the teachings of Shibusawa Eiichi (1840–1931), the first Chairman of the Tokyo Chamber of Commerce and Industry. Shibusawa was reported to have been selected for the portrait on the obverse of the new 10,000-yen note that will be issued by 2024. Shibusawa, born in the closing days of ... ... [Read more]

No.52
No.52, Economy  Jul. 5, 2019

Corporate IT giants and competition policy: Speeding up the regulation of the digital market

Prof. Ohashi Hiroshi

  Key points Customer Enclosure is a possibility for a platform operator to take advantage of asymmetric information Current enforcement structure of the Antimonopoly Act remains effective Break down silos, and create sectoral units inside the competition authority Platform functionality that gathers massive amounts of data in one place in a user-friendly format is extremely useful. For example, an online retail platform allows us to easily find the product we want at the lowest price without having to physically go around different stores. On the other hand, stores can significantly shorten the distance between themselves and the consumer. This is a particularly great advantage for Small and Medium Enterprises (SMEs) with limited capital and regional companies located away from the consuming area, since it enables them to promote their products to consumers themselves without incurring advertising expenses. Platforms unconstrained by geographical space that match ... ... [Read more]

No.51
No.51, Economy  Mar. 2, 2019

The End of the Heisei Period: Striving to Become a Country that Takes Pride in Female Empowerment

Key points Rate of women leaving the workforce after birth of first child continuing at a high level Importance of male participation and social support in the raising of children Despite progress in female empowerment, Japan lags behind other countries The Act on Securing of Equal Opportunity and Treatment between Men and Women in Employment (the Gender Equality Act) was enacted in 1985, near the end of the Showa period. Today, more than thirty years later, female empowerment has again become the government’s most pressing issue, together with “work-style reforms.” In this article, I would like to talk not only about how this is in itself an issue of crucial importance to society, but also how it plays a vital role in the context of dealing with Japan’s most serious social issue, that of the declining birthrate and aging population, as well as creating ... ... [Read more]

No.51
No.51, Economy  Feb. 25, 2019

China’s Forty years of Reform and Opening: Industrial Advancement will be Inevitable for Growth

Key points China is standing at the crossroads of the middle-income trap The reform of state-owned companies will proceed with difficulty because there are multiple vested interests New startups are rising and will drive industrial advancement Forty years ago, in 1978, China embarked on reform and opening up. It achieved rapid economic growth, surpassed Japan in terms of GDP in 2010 and grew to be the world’s second largest economy. After its transition to reform and opening up, China carried out painful domestic reforms of negative heritage, such as state-owned companies saddled with chronic deficits and financial institutions engulfed by nonperforming loans to reconstruct the devastated economy under a centrally planned economy. Externally, by opening up China not only introduced technologies, capital and business management from overseas, expanded exports and increased foreign reserves, but also increased employment and tax revenue. There is no doubt ... ... [Read more]