THE OBLIQUE ART OF REPORTING IN JAPAN

OH THE SHAME OF IT ALL | October 19th 2008

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 ...

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.)