In a world that increasingly values youth, Japan is set apart for its reverence of age and experience. It famously has the oldest population in the world, but many people don’t know that it is also home to the highest number of enduring businesses in the world. 

In 2019, over 33,000 businesses in Japan were over a century old—according to research firm Teikoku Data Bank. These ancient businesses are called shinise (老舗), which literally translates “old shop”. This includes Nishiyama Onsen Keiunkanopen, the oldest hotel in the world, run by 52 generations of the same family, and hosting guests since 705 AD, and Ichimonjiya Wasuke, the Kyoto-based confectioner, that has sold sweets since 1000. Even well-known technology businesses like Ninetendo have a sprawling history, stretching back as early as the 1800s. In contrast, 76% of UK FTSE 100 companies have disappeared in the last 30 years – so what is Japan’s secret to business longevity?

Many of the unique features of Japanese business are actually encapsulated in another cultural emblem: the bonsai tree. A Japanese form of the traditional Chinese penjing, which replicates an entire natural landscape across small pots—the Japanese bonsai seeks instead to imitate one single tree. Over its life, the bonsai tree typically remains under four feet high, yet with diligent care from its owner, it can survive for up to 1,000 years. 

Tradition

Like the bonsai tree, Japanese business is rooted in long-standing customs and tradition. An example of this is noren—a type of short curtain patterned with dyed symbols or characters, that is hung outside shops and restaurants. Originating from the Jomon period (12,000 – 300 BC), these curtains were initially used to prevent dust and dirt from entering the premises, but as technology evolved, they became decorative. Noren became synonymous with a businesses’ brand and reputation. A slightly old or dirty Noren indicates the business has longevity and reliability, while a torn or stained Noren signifies its reputation has suffered. 

Innan Sasaki, an assistant professor at the University of Warwick, argues that Japan’s “general long-term orientation: the culture of respecting tradition and ancestors, combined with the fact that it has been an island country with relatively limited interaction with other countries”—is key to Japanese company longevity. 

Attentivity

A great deal of discipline and restraint is required to tend to the bonsai trees’ particular requirements and grow it in a specific shape, including pruning, trimming, clamping, and wiring. 

This high level of attentivity is at the heart of the Japanese business mentality. Omotenashi refers to their specific approach to hospitality, a high-level customer service that believes in anticipating what customers need before they ask for it. 

“Through holding genuine moments of appreciation between ‘guest and host’, or ‘customer and brand’, with sincere acts of care taken with immense pride, not only will your customers be loyal to you, but you to them,” writes Tsuyoshi Notani, Managing Director, JCB International (Europe) in Finance Digest. This results in a customer-centric brand with higher loyalty, which, “in turn, brings numerous benefits such as brand advocacy and resilience, as well as richer data, and forecastable revenue and profit.” 

Long-termism

With generations of careful maintenance and hard work, bonsai trees can outlive their owners and live for centuries. The oldest tree is located at the Crespi Bonsai Museum in Italy and has lived for over 1000 years. 

Like the bonsai tree, Japanese businesses are marked by their ability to withstand the force of time. In 2008, the Bank of Korea reported that the majority of the world’s companies aged 200 years and over were located in Japan (56%), overtaking Germany (15%) and the Netherlands (4%). 

Prioritising long-term value over short-term gain, Japanese businesses are uniquely positioned to support communities in times of crisis, enabling a faster recovery. A lot of this comes down to mindset, as Hirotaka Takeuchi, as Professor of Management Practice at Harvard Business School has found.

In the aftermath of the 2011 earthquake and tsunami, he interviewed four leaders of companies and found that community was prioritised over profit at all costs. 

“Many companies are stuck in short-termism, focusing on a strategic plan for five years,” says Makoto Kigawa, CEO of Yamato. “But a lot of Japanese companies think about 100 or 200 years from now and envision the kind of future they want to create.”

After the earthquake hit, Kigawa informed all 10,000 employees in the Tohoku region that: “If help is needed, then help. Don’t worry about profits.” They were able to resume deliveries ten days after the earthquake hit, delivering emergency relief supplies to evacuation centers in the region, for eight months after the crisis.

Likewise, CEO Takeshi Niinami, CEO of Lawson, a chain of convenience stores, told employees to “deliver food to disaster victims within seven days. And disregard cost”. In the two weeks before government relief kicked in, they delivered 200,000 prepared meals to victims.

“Not only does a company have to live in harmony with society, but to be accepted, it must contribute to society,” Tadashi Yanai, CEO of UNIQLO told Takeuchi. “The majority of companies that have failed did not maintain that balance. Everyone is, first, a member of society before one of the company. Thinking only about the company will undoubtedly result in failure.”

This means investing in future societies too. Japanese companies’ long-term mindset is reflected in the fact that only 1% of waste in Japan ends up in landfills, and in the global transition to renewables, Japan currently ranks at number five in the world. The long-term health of future stakeholders is paramount. Like the parent dutifully watering a bonsai tree to pass over to their child, companies are not just building for themselves, but tending, innovating, and investing in the next generation.

Can capitalism be done differently – and better?

The Purpose of Capitalism: Insights from Japan documentary takes an inside look at some of the largest and oldest Japanese companies to find the answer. It premieres on CNBC in October.

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