Japan's Oldest Businesses Have Survived for More Than 1,000 Years | Hacker News Reader

Japan's Oldest Businesses Have Survived for More Than 1,000 Years

theatlantic.com

100 pointsThevet51 comments

Interesting: "The country is currently home to more than 50,000 businesses that are over 100 years old. Of those, 3,886 have been around for more than 200 years. As a point of comparison, only one in every four U.S. companies founded in 1994 was still operating in 2004, according to the Bureau of Labor Statistics."

The "point of comparison" is nothing of the kind. There's no indication of what ratio of new businesses in Japan survive their first 20 years. Look up survivor bias.

Even more so, they try comparing absolute numbers with ratio.

reminds me of this http://i.imgur.com/gNefvUG.png

It should have been written as: "a point of comparison is that all US businesses aren't older than 239 years." And then something about what US businesses are older than 100.

They weren't really comparing anything.

Wikipedia lists 18 businesses in the US that have been operating since before 1776.

http://en.wikipedia.org/wiki/List_of_oldest_companies_in_the...

Technically the businesses can be older, but they can't be "US businesses" for longer than the US existed. That doesn't take away from the spirit of your point, though.

I'm now very curious which companies have managed to survive major ownership changes in their nation-of-business, and whether there was continuity of management/shareholdership in those cases or not. Hong Kong would probably be pretty easy to study for that.

The Hudson's Bay Company used to be the owner of its nation-of-business (Rupert's Land, now western Canada). Today it's a department store chain in Canada and the parent company of two chains (Lord & Taylor and Saks Fifth Avenue) in the US.

The handover caused very little, if any, disruption to business in Hong Kong. The city still runs itself for all intents and purposes as an independent country, just with a new flag on the mast.

The most recent handover was minimal, yes. I'm more curious as to whether any single organization in Hong Kong existed prior to 1842 that still exists today, thus having survived two sovereignty changes.

Macau would probably be a better subject if that's your aim. There was almost nothing in Hong Kong before the opium wars -- a couple of thousand people in fishing villages -- but the Portuguese were in Macau for ~400 years. Unfortunately, I'm not very well versed on the latter.

I imagine that it would be even easier to look at European companies, as there has been lots of border changes there.

According to a quick search into Finnish companies, the currently oldest one (Fiskars, founded in 1649) has survived the transitions from Swedish rule to Russian rule (1809) and to independence (1917). The owners have changed several times. The oldest one that remained in the same family seems to be Frenckells printshop, which survived from 1642 to 2008.

For North America, this is one of the oldest (if not the oldest) http://en.wikipedia.org/wiki/Hudson%27s_Bay_Company

The history of Zildjian is interesting: http://en.wikipedia.org/wiki/Avedis_Zildjian_Company

This is exactly what I came here to say. Now I don't have to. It's hard for me to continue reading an article after reading such an obvious logical error.

It's a ridiculous article. I bet the author took one fact, that in Japan businesses occasionally are bequeathed to adult-adopted sons, took that and fleshed out an article around that and dressed it as a "change in banking attitudes leads to old companies going bankrupt".

Re/ "family business.."

"Unlike in the U.S., where most adoptees are children, 98 percent of Japan’s adoptees are 25-to-30-year-old men."

Why? "In Japan, a 2011 study found, businesses run by adopted heirs consistently outperformed those run by blood heirs."

What does it mean in Japanese culture to adopt someone who in their 20s?

TL;DR: Upper-class family has no sons, so after extensive vetting they adopt somebody -- almost always a daughter's husband, aka son-in-law -- to become the son and continue the bloodline/business.

This is easily accomplished since the Japanese koseki family registry is primary-keyed by last name. Usually the wife takes her new husband's name and joins his koseki, but if they do the reverse, then the son is now part of the wife's family.

https://en.wikipedia.org/wiki/Japanese_adult_adoption

https://en.wikipedia.org/wiki/Koseki

fascinating!

The other comment is correct, but I thought I would just point out a few important differences in the concept of "family" in Japan than in... well probably almost everywhere else.

Legally, "family" means that you are listed on the koseki. As far as I know, every Japanese citizen must be listed in a koseki. Your family name is dependent upon the koseki. When I got married to my Japanese wife, she decided to use my name and since I am a foreigner we had to create a new koseki for our family. I could just have easily have changed my name to her family name and joined her family's koseki. I didn't read the linked article, but I suspect that is what they are referring to as "adoption".

I suppose it is adoption in a way since the person is joining the family, but when you get married one person or the other has to move to the other koseki. Usually the woman moves, but there are many reasons why a man might be invited to join the woman's family instead. The obvious one is that the family has no male children and therefore nobody to continue the family (if all the female children get married and join other koseki). Other reasons can include things like the man being an orphan and wanting to join the other family (this is the case of a friend of mine).

Note that gay and lesbian couples have hacked the koseki to have a form of marriage. One of them simply "adopts" the other. Then they are in the same koseki and legally in the same family. I don't know the details, but I don't think this affords all the benefits of marriage, but I think it gets you quite close.

The koseki is quite strange when you first get exposed to it, but it is really a simple legal instrument. There are definite problems, but for the vast majority of Japanese people it works quite well. The main problems are related to non-citizens. For example, in my case if I were to divorce from my wife, I would revert to a state where I was not on any koseki. This would essentially remove a whole raft of rights that I have when I am on a koseki. You basically aren't a legal person unless you are on a koseki. If I had children, for instance, if I got divorced my wife would automatically get custody because I would not legally be able to take custody, not being a person. There are apparently some reforms coming down the pipe to handle these corner cases, but like I said the system works quite well for the vast majority of Japanese citizens.

> if I got divorced my wife would automatically get custody because I would not legally be able to take custody, not being a person.

This isn't true. You're still considered a person but you're not considered a citizen. Big difference. Koseki does not (nor should it) grant you the same rights as a naturalized citizen of Japan. Becoming a naturalized citizen (through citizinship) is a step which you (or anyone else who qualifies) can take if you want, but it takes a bit of time (same length as becoming a citizen in the U.S, ~10 years).

In your comment, you don't differentiate being a naturalized citizen of Japan and a koseki. But there's a huge difference. A koseki is something different and apart from becoming a naturalized citizen. It shouldn't grant you the same rights if you're a foreigner, it wasn't meant too.

You are correct :-) I was careless in the way I wrote. I did not mean to imply that being on the koseki imparted citizenship. It does not, and you are correct to point out that there is a big difference. What I meant is than in many areas of the law, you are literally not a legal person if you are not on the koseki. They just have no way of dealing with you. Family law is the most obvious place where this occurs, but there are some others a well. Basically, if the law is written to look at the juuminhyou (essentially your registered address), then as a foreigner you are good to go. If it is writen to look at the koseki, unless you are married, you are going to hit a brick wall. Unless, the law has changed very recently (and I know that they were planning to change it), the example I gave (custody in divorce) is a classic example. There is no way that a Japanese judge can grant custody of children to someone who is not on a koseki somewhere because it is legally impossible to do so. Where I was wrong was to say that this is a right. It is not a right (and as a foreigner living in any country you have to get used to the fact that you have a lot less rights than a citizen). It is a consequence of the way the law is written. Still, I can tell you that the difference between when I was living in Japan before I had my name on that piece of paper and after is quite large. Even better is to start a corporation as you then have an entity that you control that is recognized as a legal person (houjin). But that is way off topic...

My understanding is that every Japanese adult has their own Koseki Touhon. So I don't think you join the Koseki, but my understanding maybe incorrect. Children are registered on their parents Koseki. Marriages are also registered. When a name change occurs, this is also registered on the Koseki, but adult individuals retain their own Koseki's.

Foreigners can only be "noted" in a Koseki, they can't have their own, or be registered in, a Koseki.

This is my understanding, but I find the whole thing a bit confusing and am hoping someone will set me right where I'm incorrect.

An adult can still be in his/her parent's koseki until they marry. Most Japaneses do so.

When you marry, if either you or your spouse already have his/her own koseki, the other will be registered to it. If both are under their respective parents' koseki, then always a new koseki will be created for the couple.

I wish I could edit my comment. Thank you for the answers everyone. This is fascinating.

The kalzumeus article about business in japan, that was on HN recently, really was eye opening. I imagine maybe some of this is an extension of the parental nature of management structures in japan? Or is it just cynical "traditionally it's passed on to family, we'll just make you family".. If my boss asked to adopt me, that conversation would not go well.

http://www.kalzumeus.com/2014/11/07/doing-business-in-japan/

But you get to marry his daughter and make a useless heir who will be replaced by a random employee who you like more than your son!

Freakonomics covered this in a podcast in 2011. They looked at how businesses all over the world in which the founder passed the helm on to a child tended to perform worse EXCEPT in the case of Japan. The reason is because Japanese firms often search for a strong performer to become the next CEO and then the current CEO formally adopts that person into the family.

Audio podcast: http://freakonomics.com/2011/08/03/new-freakonomics-radio-po...

Transcript of the podcast: http://freakonomics.com/2011/06/03/the-church-of-scionology-...

One of the papers cited by Freakonomics is here: http://www.insead.edu/facultyresearch/areas/finance/activiti...

That paper's title is Adoptive Expectations: Rising Sons in Japanese Family Firms, and the transcript is as follows:

A unique Japanese practice of adopting adults, even if one has biological children, makes Japanese family firms unusually economically competitive. Using a large panel that very nearly comprises the population of postwar listed nonfinancial firms; we find inherited family firms more important in postwar Japan than generally realized, and also performing well – an unusual finding for a developed economy. Adopted heirs’ firms outperform blood heirs’ firms, and match or nearly match founderrun listed firms. Both adopted and blood heirs’ firms outperform nonfamily firms (excluding founders’ firms). With blood heir gender and educational records as instruments, we find family succession events “causing” elevated performance. These findings are consistent with adult adoptees displacing blood heirs in the left tail of the talent distribution, with the “adopted son” job motivating star managers, and with the threat of displacement inducing blood heirs to invest in human capital, mitigating the socalled “Carnegie conjecture” that inherited wealth deadens talent.

As others have pointed out, comparing a ratio of companies closing over a period in the US with absolute numbers of companies older than N years in Japan is not very useful. There is a listing of oldest companies in the United States on Wikipedia [1] that shows companies still operating since 1819 (83 by this count). Well over two orders of magnitude difference for the 100 year mark, and for the 200 year mark.

I do not believe that longevity ceteris paribus is an unalloyed desirable trait. Rather, it increasingly becomes a necessary tool as the scope of our technology and modeling power increases, and the ability to build and consistently, successfully sustain multi-generational business focus to address increasingly complex market demands in the future becomes the hallmark of a significant sector of growth in that future (for certain values of "growth").

[1] http://en.wikipedia.org/wiki/List_of_oldest_companies_in_the...

It's a good old ax. Three new heads and two new handles, but it's a good old ax.

My favourite 1,146 years old Japanese story: http://articles.latimes.com/print/2012/mar/11/opinion/la-oe-...

Several issues with the article:

- The first comparison between US and Japan businesses, as mentioned by other folks, does not make sense.

- I would not call "businesses" a enterprise that remains small for like 500 years (i.e. just a couple of folks). None of the businesses they refer to actually made it to becoming large corporations. This is more related to craftsmanship than anything else, and what made it possible for the line to continue is partly because of the adoption solution as mentioned in the article. I'd rather call that a "surviving tradition" than an actual business.

- Building buddhist temples back in 500's was not a sure way to earn a living. This was not the main religion in Japan then, and it was still the early beginnings of its introduction in a largely Shintoist country. Again, this is survivor bias from whoever wrote the article.

If the new trend (towards old companies collapsing) is described correctly, it is pretty sad. I think that a large part of why people open businesses as opposed to just doing 9-to-5 is the desire to make a long-term impact. Something that lasted 500 years seems like a much better candidate for this than a hyper-successful company that collapses after 5.

Is the 500 year company a dream that keeps getting better and better or is it a dream that turns into a nightmare for the people who would otherwise disrupt it?

For the curious, here [1] is a non-authoritative list of some of the companies in the US that are 200+ years old.

1. http://en.wikipedia.org/wiki/List_of_oldest_companies_in_the...

This is probably an unpopular opinion, but I don't care about creating businesses that last 1000 years.

I have no idea what 100 years from now is going to look like, much less 1000 years.

That isn't to say that I am looking for 1 year, in and out, flip acquisition companies but optimizing for the "way way after I'm dead" timeline is equally ludicrous to me.

I care most about whats going to happen in my human lifetime. If I can create something that persists 1000 years, great, but that's not really important to me.

I don't think the point was to look ahead at your legacy but to look back and see what we can learn. Japan is interesting in this respect as it is a nation that has a long and generally stable history. I remember reading in the Guardian when the tsunami happened about a coastal town wit a shrine up a hill and a story the townspeople told about going not to the hill over there during the tsunami of 1000 years ago, but to the less obvious vantage point where the shrine was. Turns out this 1000 year old oral record saved a lot of lives, 2 tsunamis a millennium apart and an unchanging landscape.

Although what this tells us about how to run an inn for 1300 years I'm not sure.

“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,”

I have a Japanese friend that's part of a 400 year lineage of monks. He's expected to go back and be the head monk when he turns 50. Unfortunately he only has daughters. This little loophole could help him keep the lineage going.

While interesting, I think journalists should try to avoid doing comparisons that are meaningless.

I stumbled upon:

"...Of those, 3,886 have been around for more than 200 years. As a point of comparison, only one in every four U.S. companies founded in 1994 was still operating in 2004..."

What is the relevance there? To me it sounds as useful as saying "as a point of comparison, only two in every 6 companies founded in 1978 where still open in 1986". Why that range? how does a company opened up in 1994 and closed in 2004 have to do with the 200-year companies? Wouldn't it be more useful to say "as comparison, only 4 US companies are 200-year old or more"?

Did I miss something here?

It means they were too lazy to dig up better statistics for the US.

I agree, in fact to go even further the upper limit would also have to be specified. For example 3886 of the 1000000 companies founded in the past 1500 years in Japan have survived giving a 0.3886% survival rate. Since we have no idea how many companies were founded, the survival rate is completely unknown. It would be better to compare a country with a similar age such as China if they want to make an interesting comparison.

There's a short documentary on this Ryokan on Vimeo: https://vimeo.com/114879061

Some religious institutions have been owning and leasing out property for centuries.

Imagine if those companies had pursued a policy of innovation and technological progress from the start.

They probably would have suffered from creative destruction and not survived for hundreds of years. Maintaining innovation over multiple technology generations is a unicorn's unicorn.

In business, we need to accommodate to the changes and needs of the customers. By just sitting in the same comfort zone will eventually lead you to nowhere and risks of losing customers to other new and innovative businesses.

I have to say, I find it rather strange that this is worthy of mention. I'm sure all European countries have business entities that sort of age. I'm fact, I've had two clients in the last year that are over 900 years old.

It's right there in the second paragraph:

"While this longevity is not confined to East Asia—the Italian gun manufacturer Beretta has operated since at least 1526 and the cymbal maker Zildjian was founded in 1623 in Turkey—these Sequoia-like firms are relatively common in Japan."

The top 6 oldest companies in the world are all Japanese. A brash European upstart, namely an Austrian restaurant founded in 803, sneaks in at #7.

https://en.wikipedia.org/wiki/List_of_oldest_companies

Note that all lists of this kind have to be taken with a fistful of salt though, since usually the claims are along the lines of "this ancient document written in the year X mentions that there's an inn next to the hot spring; there is still an inn next to the hot spring; therefore this inn has been operating here since X".

I wonder how good that list is. The oldest danish company it lists is Munke Mølle from 1135 but it have actually only been a private company since 1881, before that it belonged to the state and earlier it belonged to the catholic church so I am wondering if the rest of the list is just as faulty.

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