Toshiba Headquarters, Tokyo, April 7, 2021.

Losses and profits. On March 26, 2021, an extraordinary event happened in Japan: the cherry trees were suddenly covered with flowers, two weeks before the usual date. Such precocity had never been observed in the thousand-year-old history of Kyoto gardens. Climate change is part of the country’s most popular rites. Another historical upheaval is underway, that of Japanese capitalism.

On April 7, the Luxembourg investment fund Cinven, associated with its American counterpart KKR, unveiled a formal takeover offer for the entire Toshiba electronics and energy group for $ 20 billion. The next day, the American fund Bain Capital confirmed its intention to acquire Hitachi Metals, the metallurgical subsidiary of one of the country’s largest conglomerates.

Accounting scandals

These two news are not totally a surprise. Toshiba is struggling to recover from accounting scandals which almost made it disappear and Hitachi had announced its intention to withdraw from its mechanical activity to reinvest in electronics and IT.

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But the identity of the buyers, Anglo-Saxon investment funds, is indicative of a major development in Japanese capitalism over the past ten years. Just as the blossoming of the cherry trees inexorably advances in the calendar, the rise in power of the external shareholders is made more and more significant in the governance of the companies of the country.

To restore dynamism to a sclerotic private sector, Prime Minister Shinzo Abe, between 2012 and 2020, forced companies to open up so that they are urged by shareholders to improve their performance

To the point of seeing the landing of predators that we know well in the United States and Europe. They are called KKR, Carlyle, Blackstone, Apollo, Cinven, CVC. A famous book from 1989 called them barbarians (Barbarians at the Gate, HarperBusiness). These specialists in debt redemption, the LBO, scoured the United States in the 1990s, then swooped down on Europe during the 2000s. Japan is now their priority.

Since the post-war period, Japanese capitalism had remained permeated with a very particular mixture of Confucianist morality and market logic, the sanpo yoshi. The company had to aim for harmony between the seller, the buyer and the company. A form of social responsibility, as we discover it in the West, but imbued with feudalism. The company provided lifelong protection to employees against absolute loyalty, and suppliers were integrated into the family through cross-shareholdings. Outside shareholders and the stock market didn’t count. The 1990 crisis and the economic stagnation that followed destroyed this age-old consensus. To restore dynamism to a sclerotic private sector, preferring accumulation to investment, Prime Minister Shinzo Abe, between 2012 and 2020, forced companies to open up so that they are encouraged by shareholders to improve their performance.

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Financial funds, including Japanese, are now attacking management and administrators. The barbarians intend to accelerate the flowering of Japanese capitalism to their benefit. The sanpo yoshi, now so fashionable in Europe, risks a serious cold snap, like the cherry trees of Kyoto.

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