How troubled Japanese firms, like Toshiba, manage to survive
By Karishma Vaswani
"What else are you hiding?" screamed journalists at Toshiba executives, according to this reporter's tweet from Tokyo.
From a cancelled earnings announcement, to a chairman resigning, to a shambolic shouting match between executives and reporters at a hastily organised press conference – it would be fair to say that Toshiba is facing a sorry state of affairs.
Toshiba has now confirmed that it will ask for another month before it releases its earnings - but it has issued a preliminary report warning of losses worth some US$ 3.4bn.
Many analysts are concerned that this is a sign of far worse things to come.
"It's really unheard of in Japan to miss your planned earnings announcement," Marc Einstein with Frost and Sullivan told me.
"Timing and being on time is sacred in Japanese business culture – so things must be considerably worse than anticipated."
So what's gone wrong at Toshiba – once a poster child for post-war industrial Japan, now a company that hasn't made a profit since 2013?
Tosh in trouble
Behind the well publicised problems at the firm is a "disastrous" management, says Amir Anvarzadeh of BGC Partners in Singapore.
Part of the problem is also the fact that these massive Japanese companies know they can rely on the government to bail them out.
"The government will almost certainly intervene to rescue the firm," adds Mr. Anvarzadeh. "They allowed TEPCO to survive, so they're going to allow this to survive. What they should do is let it die."
That's a scenario though that's probably hard for Japan's policy makers to stomach – especially given the number of people Toshiba employs - more than 180,000 people around the world.
It's not just Toshiba that's in this mess, as I've written about before, Sharp, Takata and Mitsubishi are just a few recent examples of shambolic goings ons at Japan Inc, and are all massive employers too.
But Toshiba is as good an example as any of what's wrong.
It's not making money and lied about that. It's made bad investments, and it's lied about how well those investments are doing.
It's consistently failed to provide solutions for what is in effect a failing business.
And yet it – and others like it – survive, partly because of government support and a reluctance to let big firms fail, and partly because of the fiscal environment in Japan.
"Debt in Japan is almost free," says Mr. Einstein, "So, it's not been difficult for Toshiba or for any company in Japan to keep the lights on. There are questions about whether that should change – but because it hasn't there's no incentive for Japanese companies to change their behaviour."
Killing me softly
Like most things in Japan then, it links back to the government and the three arrows of Abenomics – the third arrow being structural reforms of Japan INC.
Prime Minister Shinzo Abe has been criticised for not pushing Corporate Japan to change more – fearful of upsetting the tight nexus between politics and business that exists.
But there's a bigger problem: what Zombie companies do to the Japanese economy.
Imagine for a moment that you're a nimble young entrepreneur in Tokyo, hoping to strike it big. But what would be the point if everything you've been taught about business – making products that people buy, turning a profit, keeping your books in order - are completely ignored by the government and big industrial giants?
You're playing by the rules, but the big boys aren't – which means there's no level playing field for smaller players.
Consistently providing Japan's failing firms with avenues to capital and bailing them out won't achieve the stated goals of Mr. Abe's new vision for an entrepreneurial, innovative Japan.
It will only end up ensuring that the rot within Japan Inc remains entrenched in the country's business culture.
- China to provide 90 water bowsers worth Rs 1b 2307
- Wag the Dog 2302
- A brief look at FARC’s origins in Colombia 2249
- ‘Panama Papers’ bags Pulitzer 2272
- SAITM will cooperate with Govt 2288
- dead man was near fashion mall 2319
- Japanese MPs back Lanka’s development 2283
- CB Bond earnings whitewashed – JVP 2291
- Talks to extend Lanka’s Continental Shelf 2298
- Ex-DIG and son re-remanded 2292
- Government can be sent home 2828
- GMOA flogging SAITM for Mahinda– Rajitha 2299
- Ranil invites Japan to invest in S. Asia 2270
- Somali Pirates’ Captives Back Home 2284
- Customs in Rs 8 M bust 2281
- Redefining Rape 2455
- The march of folly Our mad Cabinet system 1928
- First adventures in Europe 2013
- Inspiration for writers 1985
- Sri Lanka’s sustainable development dream 2328
- Sinhala and Tamil New Year with Easter 2184
- Filipino Oconer wins overall title 1919
- Unsporty conduct by Joes 1966
- Bertie Wijesinghe, pre-Test era Sri Lankan cricketer, dies aged 96 1942
- CEAT revs up for 2017 1930
- Palace shock Arsenal 1904
- Argentina fire coach Bauza 1928
- BCCI postpones SGM to 18 April 1899
- Murray returns from injury 1916
- New mum Azarenka to return to WTA 1877
- Galle win by 188 runs 1888
- Keeping Cool 1914
- Do the right thing and do it now! 1926
- Ravi Jayewardene Pious son of a political giant 2515
- In the heart of the old country 2340
- Sarath Weerasekera’s Geneva adventure 2167
- No moral right to play with public funds 2101
- No need for fine if route permits are issued in fair, just manner 2016
- UDA incurs Rs 330M Loss 1942
- DOUSING A MEGA SHIP FIRE 1757
- Health authorities in denial? 2247
- Minorities’ frustration a powder keg – VIDURA 2263
- Administrative powers a must for the Plantation Tamils –Radhakrishnan 1518
- Rajapaksa sought advice from McGuinness– Indika Perera 2670
- I will lead SLFP to victory in future elections – President 2045
- Hang the ‘traitors’– RTD. REAR ADMIRAL WEERASEKARA 2458
- We oppose Nationalism and Federalism – Samarasinghe 3123
- SilkAir launches direct flights to Colombo 1978
- Rupee falls on thin volumes 1952
- SriLankan, Japan Airlines add new routes 1941
- Colombo Port box volume up 5.6-pct in Jan 1933
- Private sector to transform into main domestic growth engine 1945
- Oil eases from 5-week top, rising US production weighs 1902
- Tight fiscal and monetary policies constrain SL’s growth 1932
- Shell admits dealing with money launderer 1912
- Toshiba may sell chip business to Foxconn for $27bn 1921
- Asian shares pressured by geopolitical risks; Nikkei down 0.25% 1907
- SLIM launches Certificate in Digital Marketing 1912
- Microsoft Hosts Second ‘Device Day’ in Sri Lanka 1912
- Emirates named Best Airline in the World 1892
- Turkish Airlines and social media assist Somalia 1913
- Brain cell therapy ‘promising’ for Parkinson’s disease 1909
- Trump pushed into bombing Syria 1967
- Thailand discovers Power of Women Travellers 1934
- Economics of gambling 1840
- Trans National Aural Identity 3503
- Queen Anula The Shadow of Cleopatra 3561
- Poetry and its possibilities Part 2 3561
- The Enigma of Labyrinths 3651
- From Couture to Kutir 3546
- Hybrid Sources 4936
- Offering Riddles & Enigmas 5001
- Poetry and its possibilities 5053
- With a festive bang! 1159
- Easter Fun 1153
- Arrogance and crowing is the way of the doomed 1199
- Avurudu on the streets 1207
- Tick control 1184
- Sunny Sunday on the beach 1165
- It’s time to save the world 1214
- From viewer to YouTuber! 1235
- Expert skincare and makeup 1255
- Avurudu at Induruwa 1221
- Exo 1252
- Remembering our fallen heroes 2336