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Monday, September 5, 2011

Japan and the Oldest Companies in the World

Money!  Image courtesy of Wikipedia.

The Tokyo Shoko Research, a Japanese survey firm, searched their database of 1,975,620 companies to see which ones have lasted for a century.  They found 21,666 companies that have.  To be on the list, a company's name or brand must remain, at least in part, since its beginning.  Any changes to their name must be verifiable.

"Onigawara" a depiction of evil by potter Seishichio Sumikawa, circa 1775.
It serves as a guardian protecting guests in the Hoshi Ryokan - one of the oldest.

A similar survey conducted by the Bank of Korea found 3,146 companies that are over 200 years old in Japan, 837 in Germany, 222 in the Netherlands, and 196 in France.  The oldest companies go back almost 1,300 years, and 89.4% of all the companies older than a century employ 300 people or less.  There's a lesson here on sustainability for big businesses.  Only one in five businesses started today will last five years.

Traditional breakfast at a ryokan.  Three of the oldest companies in the
world are ryokans.  Image courtesy of Wikipedia.

Kongō Gumi Company Limited, a Japanese firm specializing in building temples, was the world's oldest continually operating family business until it was purchased by Takamatsu Corporation in 2006.  At the time of the takeover, it had over 100 employees, but due to heavy investments in real estate, the subsequent bubble economy bursting, and the fact that fewer temples are being built, its debt was insurmountable.

Kongō Gumi in 1930.  Image courtesy of Wikipedia.

Still, it had an amazingly long run, starting in 578 CE, when an engineer hired by Prince Shōtoku to build a Buddhist temple decided to start his own business.  The firm had a hand in building many famous buildings, including Osaka Castle. There is a ten-foot 17th century scroll that traces 40 generations from the company's beginnings.  Its last president was Masakazu Kongo, the 40th member of the family to lead the firm.  One of the things contributing to its long success, according to him, was not strictly following the principle of primogeniture.  Rather than the oldest son inheriting the business, the best person was selected.  In at least one case, the 38th president, the best person was a woman, Masakazu's grandmother.

Osaka Castle.  Image courtesy of Wikipedia.

Out of the current top ten oldest companies in the world, six are in Japan.  Three of those are hotels.  In particular they are ryokan - traditional inns that served travelers on the nation's highways.  They are seldom found in cities, and became popular in the Edo period (1603-1868).  They are usually found in scenic areas and tend to be a bit pricey.  The Kyoto-based Ikenobo Kadokai is sometimes listed as the second oldest company, but it is an association promoting ikebana, Japanese flower arranging, with chapters all over the world, rather than a company.  It did begin in 587 CE, however with classes.

Exhibition of ikebana in a Kyoto subway station.  Image courtesy of Wikipedia.

Of the three ryokans, one began in the year 705 CE, and the other two in 717 CE. Nissiyama Onsen Keiunkan, founded in 705, is in the Guinness Book of World Records as the oldest hotel in the world.  Located in Hayakawa, Yamanashi Prefecture, after the Guinness achievement was awarded in February it was expected that Keiunkan would have a huge increase in guests.  Unfortunately, the great Japanese earthquake of March 11th resulted in cancellations.

Nishiyama Onsen Keiunkan - the world's oldest hotel and company.

Keiunkan is said to have been founded by Fujiwara Mahito, son of Fujiwara Kamatari, an aide to Emperor Tenji in the late 600s.  Some parts of the complex remain unchanged since the hotel was first built.  There is a hot spring there that was dug in 2005, almost a mile underground. It provides 430.5 gallons of 125.6 degrees F water every minute.  Keiunkan executives hope to pick up another Guinness world record for the hot spring with the largest volume of water.

Keiunkan's hot spring.

Hoshi Ryokan, in the Awazu Onsen area of Komatsu, Ishikawa Prefecture, was founded in 717 CE.  It was the previous record holder in Guinness for oldest hotel. Founded by a Buddhist disciple whose master dreamed of the spring's location, it has been run by the same family for 46 generations.  The legend is that Taicho Daishi, the great Buddhist teacher, hiked up to the top of sacred Mount Hakusan. While he was asleep the mountain deity appeared to him and told him of an underground hot spring with restorative powers.  The deity urged him to unearth the hot springs for the people of the nearby village.

Hoshi at night, courtesy of their website.

He went to the village of Awazu, uncovered the hot spring, and some of the locals who were unwell were immediately cured when they used it.  He instructed his disciple, Garyo Hōshi, to build a spa business there.  Some 1300 years later, and Hōshi's family is still running it.  As people with illnesses visited the spa, they made donations.  These funds were used for expansion, which grew as the number of visitors increased.  The ryokan now has 100 guest rooms, two indoor hot springs, and two outdoor ones.

One of the spas at Hoshi, also courtesy of their website.

Sennen-no Yu Koman is another ryokan that began in 717 CE.  It is in Toyooka, Hongo Prefecture.  It is in the center of a well-known onsen (hot springs) area. There are two types of hot springs.  There is also a private one, and one of the guest rooms has an open-air hot spring.

Sennen-no Yu Koman.  Image courtesy of www.japanhotel.net.

One of the lessons from these ongoing, very long-term businesses is first of all to pick a stable industry.  Construction is always a needed enterprise.  Inns and hotels have been necessary for travelers and therefore an indispensable business endeavor as well.  Japanese companies also tend to put their employees and their well-being first, ahead of concern for any shareholders.  Team spirit is legendary, and companies function as a social organization, similar to a family.  Of course, if it was easy, there would be many more businesses with such long histories.


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