So we see every day why Japan has so much trouble getting out of it's long slump. There was an article recently talking about how the lost decade in Japan is actually a myth, and that the reality is that Japan has done better than we all think since the bubble popped in 1990. Yes, Japan has low unemployment, earnings are up and the economy avoided a depression, but that was done pretty much by government debt spending.
I wouldn't be too proud of that.
Anyway, recent headlines further highlight the disfunction of corporate Japan. We painfully realized how incompetent the government was in handling the earthquake and nuclear crisis last year and corporate Japan continues to shock us observers with truly bizarre developments.
Olympus sued current and former executives and directors for failing to deal with the fraud but strangely kept them on board. Apparently, there is no support in Japan from shareholders to fire the board or replace the senior management. How can this be? It doesn't make any sense at all. Woodford just gave up completely. I don't know if he is the right guy or not, but the fact that there was no support for him in Japan and full support for current board and management is mind-boggling.
Nomura today also lost Jasjit Bhattal, the head of Nomura's global business apparently because Tokyo resisted Bhattal's call for deeper cuts in global operations (shutting unprofitable businesses, getting out of unprofitable countries etc...). This is really bizarre too because I would think that more often, a head of a business would want to expand more than headquarters feels comfortable with and they leave. Most bosses are empire-builders; they want to expand their empires, cost and risk be damned. And Bhattal wanted to *shrink* and Tokyo said no, lol. Only in a Japanese company can this happen (?).
I have no idea if Bhattal is any good or not, but I get the sense that this is typical Japanese corporate mentality to resist change and resist firing people. Also, Japanese are notoriously bad at cutting losses and admitting defeat (look at Olympus!). They are also more concerned with market share and status than profitability (statements to the contrary notwithstanding). You can be sure there are turf war issues too; intense lobbying by heads of unprofitable businesses to keep them going.
I don't know if this means that the Lehman purchase was a complete failure, but I bet that deep cuts would have been interpreted as such which probably scare the heck out of senior management in Tokyo.
Anyway, this is not a good development, I don't think.
Nomura's legacy of failing internationally seems to be continuing and this might just be the latest iteration of it.
I still think for Nomura to realize value, they should focus on the domestic business and then eventually team up with a strong international bank. Of course, this will never happen for the reasons I stated before.
Similar to this was the Sony comments that they will never exit the TV business because the engineers are very proud of their work.
I truly wish Japanese companies would really stop thinking this way and focus on profitability, returns on capital and things like that. As Jack Welch says, firing people might be unpleasant and short term bad for the fired, but over the long haul it is good for everyone; the company (as they can cut cost and reduce the odds of bankruptcy which would be bad for everybody and reallocate resources to productive areas) , the fired employee (that can go out and find something that they can do productively instead of becoming corporate zombie employees like so many salarymen in Japan) and even the economy (as the newly unemployed find productive things to do including starting ventures. Also more frequent firings would by necessity increase labor mobility).
Japan has a long, long way to go...
Post a Comment