No, guys, I haven’t forgotten about you. Remember in March when I said that it was the end of the Japanese financial year and that things should start to get a little less hectic in April?
Right.
In truth, the busy-ness was only part of it. The ugliness of the debates over, say, immigration and the rape allegations at Duke has not exactly provided an incentive to get right in there and contribute. At least, it hasn’t provided any incentive to me. So despite the DPJ’s much-discussed win last week and the death of urban planning critic Jane Jacobs and other newsworthy stuff, I didn’t feel much like posting. I don’t think I even remembered to mention that I’d been blogging for exactly two years as of mid-April. (Did I?) Anyway, thanks to those who have kept checking back despite the silence.
The Nikkei lead editorial spot was devoted to a single piece today–no surprise, considering the topic:
On 1 May, the “Corporate Law,” with its nearly 1000 articles, goes into effect. It is the new fundamental law that has been set up to bundle Section 2 of the Commercial Law with the Limited Company Law, among others, which up to now stipulated how enterprises may be constituted.
A variety of options have been established to permit companies from start-ups to corporate giants to be created and operated in accordance with their respective statures. That means the large-scale deregulation of entrepreneurial activity. Enterprises will have to take decisive responsibility for themselves and set strategies with a new level of clarity.
A few notes here: Japanese has a good handful of words that can be translated “corporation,” depending not only on the kind of organization but also on which aspect of corporation-ness is being emphasized. The most literal equivalent to the Latinate sense of embodiedness in our English terms is 法人 (houjin: “law” + “person”). The strictest equivalent of limited, both in terms of meaning and in terms of use in company names, is 有限会社 (yuugen-gaisha: “limited company”), which is the word used in the name of the law referred to above.
In the era of numerous legal restrictions, they were like so-called “rails” that had been laid down. From here on, [enterprises] will have to decide for themselves which directions to travel. Without being kept in line by government supervision, they will get direct feedback on their business acumen in the results of applying it. Toshitaka Hagiwara, chair of the Nippon Keidanren’s Joint Committee on Economic Regulation and chairman of the board of Komatsu, sees the new law this way: “We won’t be able to exploit our increased number of options if we don’t adopt solid policies based on what will truly profit those with a stake in our organizations, starting with our shareholders.”
Making money for shareholders was, of course, approximately priority number 953 in the Japan Inc. era. Expansion was the goal, and with the book value of assets (especially property) increasing so rapidly during the Bubble, it was easy to justify.
Yes, I know that the Bubble burst a decade and a half ago. Unfortunately, the Japan Inc. mindset and ways of doing things still have a hold on too many organizations. Outside a handful of world-famous giants, most companies have only a hazy idea of what competing in global markets would actually require of them. That means that whether the nationwide corporate culture in Japan is really ready to make the most of the its new options is an open question. The new law abolishes minimum capitalizations on public companies and LLCs. It allows terms of up to ten years for directors and allows for the requirement that board members be shareholders. It also eases the dissolution of holding companies and the spinning off of subsidiaries.
It doesn’t address other factors, such as the financial sector’s continuing poor lending judgment. (Risk assessment and risk management are still underdeveloped here in just about every field. So, for that matter, is the financial sector itself.) And a quite extraordinary number of people–even around my age–still look on their companies as social entities to which they owe loyalty, rather than enterprises to which they contribute productivity. That’s not to say they don’t work hard. But most people, including those who go on to become CEOs, still don’t seem to think in terms of developing their own talents their own way and looking for the organizations (and niches within organizations) where they best fit. The relaxing of regulations on corporate structure is itself a sign of a cultural shift, naturally, but how much of one remains to be seen.