THE OBLIQUE ART OF REPORTING IN JAPAN

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Japan is an odd place to be a business reporter, writes a correspondent for The Economist, as being interested in making money is considered dishonourable. News does not break here; it creeps, slinks, whispers ...

ISSUES & IDEAS Places
OH THE SHAME OF IT ALL | October 19th 2008

From ECONOMIST.COM

Japan is an odd nut for a journalist. News does not "break"; it creeps, slinks and whispers. Political changes large and small are telegraphed to the media in advance. Major business developments appear in the pages of Nikkei, Japan's financial daily, long before they are publicly announced. Recent days may have bucked the norm: Yasuo Fukuda, a former prime minister, abruptly resigned in September and Japanese banks scrambled to buy bits of distressed American investment banks. But all of this happened as sedately as ever.

Many of The Economist's diaries relate some dashing adventure; reporting from Tokyo, by contrast, features long stretches in which nothing discernable actually happens. Scratch the placid surface, however, and the typical workweek teems with fascinating people and events. Part of what makes reporting for this newspaper special is that our coverage is driven as much by ideas as by news: we would rather find a new way to think about an issue than reveal a scoop that will probably be forgotten the next day. In a way, it turns journalism on its head.

This means that, in my work as business correspondent for Japan, most of what qualifies as "reporting" takes place over lunches and coffees, usually off-the-record (which I have followed in this diary). It seems to be the right approach for the circumstances: Japan is a great, wonderful mystery. Like life, trying to comprehend it is not the point; rather, it is the journey, not the destination, that matters.

On this particular morning, I dash off to meet the head of the Japan office of a large American private-equity fund. The conversation is an informal, off-the-record chat about trends in the market. From the firm's posh meeting room overlooking the Imperial Palace, I compliment the building, one of my favourites in Tokyo. It is a prewar four-storey building of European design, but with a modern glass office-tower elegantly built on top of it. At ground level, one has a taste of Meiji-era Japan; within modernity reigns. The melding of new and old is tastefully achieved.



In Japan, as in most of Asia, older buildings are generally demolished without a second thought, so newer, taller ones can take their space. Hong Kong is the most criminal in this regard, having demolished charming structures like the old Foreign Correspondent's Club. Singapore and Malaysia are also sinfully derelict in this crime. My Japanese host and I agree that this building's architectural coexistence is wonderful.

But I pose the question: "Why do the Japanese seem to erase the physical structures of the past rather than preserve them? Do the Japanese have a sense of nostalgia?" The West is a sentimental culture, in which one society uses previous ones as a point of reference. The West's notion of progress inherently presumes that society is always building upon the past, like layers of sedimentary rock. So the Romans looked to ancient Greece, the Renaissance states looked to ancient Rome, and so on. The pantheon and Parthenon remain potent and well-preserved symbols of their civilizations. But the Japanese, rather than pamper their patrimony, have the habit of tearing down temples, shrines or massive gates that are hundreds of years old, only to immediately construct replicas.

"The ideal form of beauty for the Japanese is the cherry blossom," says the Japanese fund manger, in perfect American-accented English. "It is temporary, impermanent. It is beautiful, but quickly disappears." I accept his polite reply, but know that there must be more to it.

The conversation eventually turns to mergers and acquisitions in Japan. The firm hopes to find successful mid-sized companies that need global scale to succeed, in order to combine them with other firms from abroad. An obstacle, I point out, are Japanese managers themselves, who are often reluctant to merge because it disrupts the corporate culture and it may be seen as a blemish on their abilities--an admission that they cannot succeed on their own. Moreover, Japanese executives do not profit from M&A transactions as do their counterparts in the West, so they lack a strong incentive to do deals.

"Are Japanese businessmen motivated by money?," I flatly ask.

"No!," my host booms, followed by a hearty laugh. "But this is changing," he says.

Japanese managers know that a company has to be profitable, but generally, being interested in earning money is considered dishonourable, he says. We agree that there is a healthy inconsistency, judging from the popularity of shops selling fancy handbags for as much as $10,000, but the general sentiment holds.

"In the past in Japan, there was a strict hierarchy of classes," he recounts. "Samurai, farmers, manufacturers and last, merchants." (In the taxonomy, he leaves out burakumin, or "untouchables," the very bottom class--so sensitive a topic that most Japanese avoid even referring to them.) "For samurai, making money was disgraceful. Even today there is a sense of shame."

I add that this explains why corporate mission statements appeal to serving society. And perhaps it helps explain why Japanese businesses earn a return-on-equity that is around half what American and European firms make. The Yomiuri Shimbun, Japan's biggest newspaper, in January hosted a forum on whether the pursuit of profits by companies had gotten out of control. The idea of such a topic being seriously discussed in America is unfathomable.

The conversation turns to individualism, and whether such a Western notion can really take hold in Japan, where social relationships are paramount. The matter is imperative, I parry, because individualism is the cornerstone of freedom and capitalism. It is individualism that overcomes the feudal notion that who one can become depends on who is one's father. It is what enables society to grow and commercial exchanges to flourish.

The view that pursuing one's self interest could lead to a social gain--bequeathed by Adam Smith--finds little favour in Japan. Instead, the self is something that must be sacrificed for the sanctity of wider society.

Picture credit: gruntzooki/flickr

(This is an instalment of a correspondent's diary about reporting in Tokyo, published on Economist.com.)