Commentary: Nissan saga makes Japan Inc look ever more of a myth

TOKYO: Over the new year holidays, beaming Japanese Prime Minister Shinzo Abe let himself be photographed playing a round of golf with two former chairmen of the Keidanren business federation and the retired president of Japan’s largest oil company.

The well-crafted message was clear. Japan Inc — that much-cited, symbiotic entwinement of government and big business — has never been preened to look so hale. Far too hale perhaps, for investors glued to the unfolding Carlos Ghosn/Nissan crisis.

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OLD FEARS AND ILLUSIONS

The temptation to see Japan Inc machinations in everything that preceded and followed Mr Ghosn’s November arrest at Tokyo’s Haneda airport, is strong.

Carlos Ghosn faces three separate sets of allegations involving financial wrongdoing during his tenure as Nissan chief (Photo: AFP/Toshifumi KITAMURA)

Foreign, and to some extent domestic, investors have spent the past four years kicking the tyres on the idea that Japan itself has devised and deployed the carrots and sticks (corporate governance code, “shame” indices etc) required to disrupt some of the cosiness, opacity and intransigence that has long defined the corporate scene.

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These attractive new tyres may not have been the fastest-moving, many concluded, but at least they held air.

But the Nissan saga, notes WisdomTree Japan head Jesper Koll, ushers back old fears to puncture that narrative, starting with the weapons-grade collision between the company and the authorities implied by the surprise arrest of one of the world’s most famous businessmen under the gaze of pre-briefed local media.

The now audible sighs are familiar: Progress has been an illusion, Japan is the same old same old. Mr Ghosn, whether felled by a corporate coup or some other design, has fallen victim to an insiders’ club he could never have hoped to join.

These are the rules of Japan Inc: Love them or leave them.

But while Nissan may be leading foreign Japan-watchers back to traditional wells of despair, there is an argument that it is quietly causing even more pain to the domestic audience.

Strip away all the drama, and Mr Ghosn’s downfall is playing out as an embarrassing reminder that Japan Inc has largely ceased functioning the way everyone likes to imagine it does.

RESOLVING A RIFT

The innocence or guilt of Mr Ghosn, his lawyers indicated on Tuesday, could take a very long time for the courts to establish. Less debatable and more immediate is the need to resolve a rift in the Nissan-Renault alliance — a rift that, in all likelihood, created the pressures that led to Mr Ghosn’s downfall.

Members of former Nissan chairman Carlos Ghosn’s legal team including chief lawyer Motonari Otsuru (L), Go Kondo (C) and Masato Oshikubo sit in a courtroom ahead of a court hearing on Ghosn’s case at the Tokyo District Court in Tokyo on Jan 8, 2019. (Photo: KIYOSHI OTA / POOL / AFP)

The intensified focus on the alliance, meanwhile, is a legacy of a double Japan Inc failure to survive and to save. In 1999, Renault rescued Nissan from collapse, stepping in with funding, crucially, where Japan Inc had opted to pass.

Where was the cosiness? Where, 20 years ago, was Japan Inc’s famed, government-sanctioned propensity to huddle together and hammer-out a fix to protect its own?

FAILURES

Wherever the reason was, this absence was not a one-off. There have been moments (such as the state-led creation of Renesas from various struggling chipmakers) where the Japan Inc instincts have kicked in, but Nissan’s rescue by French money and Mr Ghosn’s management now feels like an early taste of things to come.

The presumption of an all-Japan solution to any problem is fading as the great cardinal of the Japan Inc credo, the Ministry of Economy Trade and Industry (METI) has become a gradually less effective and influential eminence grise and the banks, beset by their own problems, are less inclined to support the kind of wagon-circling efforts they might have in the past.

The 2016 sale of a thoroughly battle-scarred Sharp to Taiwan’s Foxconn felt like a major watershed of Japan Inc failure until, a year later, Toshiba was plunged into financial crisis and the company’s future into doubt.

There were, absolutely, attempts by METI (urged personally by Mr Abe) to come up with a homegrown solution, particularly when it seemed the only option was to sell Toshiba’s crown-jewel memory business. Even in extremis, a consortium of Japanese buyers could not be assembled.

Media members wait near the Tokyo Detention Centre, where Nissan’s arrested chairman Carlos Ghosn is being held, in Tokyo, Japan January 8, 2019. (Photo: REUTERS/Issei Kato)

REQUIEM FOR A JAPAN INC

Which must certainly have been swirling in Mr Abe’s mind last week as he swung and putted against the Japan Inc titans, Fujio Mitarai and Sadayuki Sakakibara.

The latter was chairman of Keidanren at the time of the Toshiba crisis and his efforts to rally a Japan Inc rescue squad might have inspired more support if his own company, Toray, had been involved.

The decision by Mr Mitarai, his Keidanren predecessor and chairman of Canon, to also decline the opportunity to save Toshiba, was a big reason the project fizzled.

Amid the cosiness of the golf round, Mr Abe will almost certainly have repeated his wish that big business raise salaries by a decent margin. Japan Inc, if it ever really existed, may not be listening.

© 2019 The Financial Times Ltd.


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