For 20+ years, Japan's largest companies have been riddled with corruption and fraud

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My long term AirBnB’er is an engineer from Japan. He as much told me the same thing that’s in this piece. He got out after repeated BS with homeland companies, got an excellent job here in under a month.


Sounds like late stage capitalism has begun to rear its ugly head in Japan.


The mantra of profits above all else is something that’s deeply problematic and i don’t understand why virtually all industries operate under this goal. Of course a company needs to make money, but to put that in front of everything and disregard innovation, or customer and employee satisfaction, or quality seems like it would inevitably cause a collapse. I would have imagined that Japanese companies would be more interested in focusing on long-term goals and growth over short term profits for investors but i guess i am quite wrong.


I think its been a little longer than that. Closer to 50-60 years not counting the pre-war Zaibatsus who were as corrupt as they come (profiting handsomely off of a generation of conquest and slave labor).


As a lowly vendor-san, engineering in Japan is always a bit odd. Every project is managed in an excel spreadsheet (every cell of which is text, so the grid is basically just free tabbing), that acts as a bizarre database of everything that’s ever happened, one worksheet per problem. There’s a summary worksheet where your goal is to get all “OK”, “not so bad”, or the mythical (never actually seen “:blush:”, and a minimal number of “NG” and “:frowning:️”. “?” should be treated as “NG”. Failure to do so may mean you’re not an acceptable vendor, or it might mean that you have to shave a corresponding amount off the price. In this way, pretty much all cost-down and feature innovation seems to be foisted on vendors.

Every engineer has a narrow task and a document to work from on how to do it. The author of the document is not available, presumably having ascended to Heaven or at least upper middle management years ago. The document is written to be used in conjunction with the finest technology 1987 had to offer – either because it’s cheap on eBay, or because that’s all they want to pay for when they ship it to the China factory for end-of-line testing. No one is ever fired for following the document exactly, especially when it makes no sense.

The engineer works for a functional group, which is also highly specialized. No one in any functional group cares if the product group successfully builds anything. If everything fails the QA group’s tests, that’s not their problem. If something was laid out properly according to incorrect instructions, that’s not the layout group’s problem. In general, it’s not clear how to get the pieces to work together long enough to build a working product (unless they can foist it on vendor).

Every test must pass tests by a factor of 2 (reasonable in engineering land). Then they’ll tell you that they need a factor of 10 margin instead because some units – they know not why – fail even when everything else passes by a factor of 2.

Product engineers may need to check out/schedule equipment from the library (or more likely, a bench of equipment in the lab) for a limited time to do their pre-test work. Managers may need to check out/schedule engineers from the library to do the pre-test work.

It’s not hard to understand. It’ s high power-distance country that’s generally considered expensive by those who live there, that’s still in recession. Goal number one for everyone is, “don’t get fired.” The way large companies are segmented, that usually means “do exactly what the form your superior’s superior wrote 15 years ago, because no one was ever fired for following the form exactly.” Since “the form” is generally over-engineered, you get quality as a felicitous byproduct. But otherwise, there are cracks wide enough to drive a bus through.


I’m going toss that in a song I’m writing, if it’s ok with you…


They’re the ones where the light gets in, I guess.


I’m really surprised the story that Kobe Steel had been shipping inferior aluminium and copper with falsified quality assurances hasn’t made more waves. This metal could be anywhere by now - Kobe’s customers include Boeing, Hitachi, Mitsubishi, Ford, Nissan, Honda, Toyota…


Marx and Darwin.

It is entirely possible for a species to evolve to extinction, where every step leads to greater immediate outcomes while the road as a whole leads to death. A good example is cancer, which grows and reproduces rapidly until the host dies, and the cancer dies with it.

The company that pursues only growth grows the fastest, at least for a while. And that “a while” is long enough that competitors that prioritized other values sometimes die out, and their innovations and assets may become available for cheap… at which point you get the benefits of their virtue anyway. Or you may grow enough to buy them some other way. Extrapolate over time across a population of companies, and the largest companies will almost always be profit maximizers, even if each individual profit maximizer sooner or later comes to a bad end. It’s Moloch logic: you might not be willing to feed your baby into the flames for power, but someone is, and they end up with the power, sucks for everyone.


Jack Welch. Back when he was CEO of GE he gave a speech about shareholder value theory where he said the ultimate measure of a company’s success is the extent to which it enriches shareholders. Since then Mr Welch has referred to it as “the dumbest idea in the world”. Yet we still teach it in business school.


Some people are really determined to make the 1980s cyberpunk future Japan that never was happen.


My layman take on it is that valuing profits over everything else creates high value for stockholders/investors but causes a highly unstable environment. Valuing quality, good service, whathave you but still bringing in profit seems like it would cause a more stable environment with a much more loyal customer and employee base.

It must make sense to not put profits first, but whatever. I’m not rich so i likely don’t know what i’m talking about.

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That’s a fair assessment. Even the guy who came up with the profits first idea said it was stupid.


It is definitely unrealistic for every company to grow rapidly all the time. Decelerating profits usually result in a change in executive leadership, but are the natural result of growth. That’s why you often see the executives during the innovation phase of a company get replaced when the company “scales,” then those executives get replaced when growth stagnates, the next set of executives take the cash and create “growth” through acquisition until they run out of cash or run out of acquisition targets, wash, rinse, repeat.

One of the anomalies of the big Silicon Valley companies that could be part of their remarkable long-term growth is that the founders from the innovation stage have either stayed in power or returned after some period of time. Apple, Microsoft, Google, Salesforce, Oracle, etc. all have had their founders involved in the company for decades, and they have all managed to maintain organic growth through innovation for longer than the typical large company.

Frankly, most companies, once they’ve reached the point where they’ve exhausted the rapid growth phase (and thus tapped out most of the high-rate shareholder return), made some smart acquisitions (and avoided dumb ones) should revert from public to private. That way, there isn’t the insane and counter-productive drive to grow at any cost. The company can be successful doing what they do best, serving their customers and treating their employees well.


In the long run, I expect the collapse will come from the lack of customers due to the decrease in disposable income. Companies routinely cut costs by employing fewer people and paying workers less. Instead of reflecting that in the price of their products by keeping them the same or lowering them, the prices are increased. That looks great in the annual reports, so shareholders and executives consider that a successful model to follow every year - until sales drop. At some point, very few people will be able to afford the products these companies produce.

investor class’s patience is wearing thin

O rly?


Placeholder to reply in detail after Shabbat

Cant get to the FT article, can’t find the commentary on Naked Capitalism, don’t want to bother with Cory’s commentary.

I got nothin. Sorry folks.

no one ive met in the states even knows what ng stands for. while in japan smart cards readers have lights for ok and ng. ( cause nothing can be just simply bad or wrong? im not sure. )

my personal take is, like you say, as long you follow the request or documentation everything is fine. no one, absolutely no one, wants you to challenge the premise of the documentation even if they themselves know it’s a bad match for the current situation.

this is entirely different than my experience in the states where it doesn’t matter if you actually get anything done, so long as you’re being disruptive ( or at least “inventive” )

neither extreme seems particularly good. somewhere in the middle maybe.

the way capitalism meshes with actual humans is a mystery.

Remember in the 80s how all of us in the US wanted our companies to act like the Japanese, so we went nuts with kaizen and other copied ideas? Apparently they were envious of us too, and did the same thing.

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