Japan’s Century-Old Companies

Verification notes (2026-10-28): 1. TSR (Tokyo Shoko Research): 2,649 companies reached their centenary in 2023; the total number of companies at least 100 years old in 2023 was 42,966. Sources: https://www.tsr-net.co.jp/data/detail/1197082_1527.html https://www.tsr-net.co.jp/data/detail/1197122_1527.html 2. A separate Teikoku Databank survey dated 2023-10-30 reported 43,631 companies. Its methodology and date differ, so its figures should not be mixed with TSR’s. Source: https://www.tdb.co.jp/report/economic/1o1nr445se1/ 3. SFI: a company’s typical lifespan is about ten years. Source: https://www.santafe.edu/news-center/news/sfi-scientists-find-predictive-rule-company-mortality 4. Japan’s corporate tax rules: the basic rate is 23.2%; for small and medium-sized corporations with capital of ¥100 million or less, a reduced rate of 15% applies to the portion of annual income up to ¥8 million. Size and tax burden are indeed related, but tax is calculated on income; capital is not the tax base. Sources: https://www.chusho.meti.go.jp/zaimu/zeisei/tokurei/houjin_keigen.html https://www.nta.go.jp/taxes/shiraberu/taxanswer/hojin/5759.htm 5. Kongo Gumi was founded in 578; Keiunkan was founded in 705 and is recognized by Guinness World Records as the oldest hotel. Its current operating company has capital of ¥10 million. Sources: https://www.kongogumi.co.jp/profile.html https://www.guinnessworldrecords.com/world-records/oldest-hotel https://compalyze.co.jp/company/4090001015027 6. Based on comparisons with these sources, statements for which no reliable source could be found have been removed, and some wording has been revised to a traceable version (six changes in total). ---- Japan’s Century-Old Companies Which country has the most century-old companies? The answer is Japan. Just how many does Japan have? According to Tokyo Shoko Research, Japan’s largest credit research firm, 2,649 Japanese companies will celebrate their hundredth birthdays in 2023. Including those already more than a century old, Japan will have 42,966 century-old companies by the end of 2023. The world’s oldest company is Japan’s Kongo Gumi, which specializes in building temples. Founded in 578 CE, during China’s Northern and Southern Dynasties period, it now has more than 1,400 years of history. The world’s oldest hotel is Japan’s Keiunkan, founded in 705 CE—the year Wu Zetian died. Japan has not only century-old companies, but millennium-old ones. Compare that with US data. The well-known complexity scientist Geoffrey West examined US listed companies and found a half-life of about ten years: roughly every ten years, half disappear through acquisition, merger, or liquidation. Why does Japan have so many century-old companies? Conventional explanations point to several reasons. The first is the particular importance Japanese businesses place on family succession. Boys learn about business from childhood. What if there is no son? The family takes in a son-in-law or adopts a son, and either must change his surname. If Taro Kimura marries into the Tanaka family, he becomes Taro Tanaka. The Kimura family’s affairs are no longer his concern; he must devote himself wholeheartedly to the Tanaka business. From the start, a family successor carries one responsibility: to pass the business smoothly to the next successor. The second reason is commitment to the core trade. If I sell sushi, I stick to sushi and never sell Western food. If I sell rice, I stick to rice and never sell noodles. People neither enter other industries nor dwell on expansion. After you have done something long enough, customers give you a title—something like the god of sushi, the god of tempura, or the rice sage. Do some old firms grow dissatisfied with their core trade? Yes. Kongo Gumi, the world’s oldest company mentioned earlier, originally built temples. It later tried constructing other buildings and lost so much that it went bankrupt. It survived only after another company acquired it in 2006. After that, it returned to building temples. Many of Japan’s so-called century-old companies are therefore very small—more like today’s workshops, little shops, or studios than large, continually expanding businesses. Kongo Gumi, for example, has more than 1,400 years of history, but its capital—its registered capital—is only ¥300 million. Keiunkan, the world’s oldest hotel, with more than 1,000 years of history, has registered capital of only ¥10 million. Why do Japanese companies not think about expansion? A company, as a commercial species, has the same instinct to reproduce and expand as a living organism. Why, then, do so many Japanese companies specifically avoid growing large? That brings us to two persistent misconceptions about Japan’s century-old companies. First, it is not that they do not want to grow large; they do not dare to. According to Xu Jingbo, a researcher of Japanese businesses, company size in Japan is linked to corporate tax. Many businesses therefore prefer not to grow: staying small and ensuring a profit is fine. But that raises a question. When choosing a business partner, I need some frame of reference—some indicator of reliability. If not financial strength, what should I look at? That brings us to a second characteristic of Japanese companies. Many Japanese companies assess potential partners not by registered capital but by their trading partners. If I want to do business with you, I first examine whom you have done business with. If your past partners are good companies, especially large ones, your credit standing is high. How do I know whom you have done business with? According to Xu Jingbo, Japanese companies use something called a “payment code” when working together. It is akin to a payment credential. A large company first gives you a payment code; you later present it to receive payment. Japanese companies, especially large ones, are extremely cautious about issuing these payment codes. Xu Jingbo, for example, once worked with Sony while doing business in Japan. The order was tiny: Sony purchased only ¥10,000 worth of magazines from him. Yet Sony’s legal department conducted a background check and specifically sent a stack of forms for his company to complete. Why so much trouble over ¥10,000? To assess the partner’s qualifications. Once you qualify, Sony gives you a payment code. With that code, you officially become a Sony trading partner. In future dealings, you have Sony’s endorsement of your creditworthiness. Notice how many Japanese business owners immediately bow and apologize publicly when a mistake makes the news. People used to attribute this to a strong sense of honor. But there is another reason: once an owner’s reputation is ruined, working with that company lowers other companies’ credit standing. Who would dare? The company faces a dead end. To build a century-old company, behind profits, revenue, and products lies another, less visible factor: can you make your company an asset in society’s network of trust? I am creditworthy, I work with creditworthy people, and working with me enhances your creditworthiness. Others will then want to include you in their assessment of trust. Not only your users but also your business partners need you. How could such a business fail to endure? Put simply, a product is a company’s hard capability, while creditworthiness is an indispensable soft skill. #得到頭條20230710 ----- Robin: “Japan has a truly distinctive cultural background. Returning to the point, as you make your way in the world, be sure to protect your reputation. Leave people with good things to hear when they ask about you, and you can keep going for the long term.”