John, You may have seen this article, but I believe it illustrates the Japanese mind and the inherent controls placed on the structural elements of their culture.
The systemic problems within their free market economy may not be repaired by the present generation of politicians...?
It could take decades..!
BUSINESS WEEK ONLINE
April 18, 2000
EYE ON JAPAN By Brian Bremner
Nasdaq Japan's Chief Has Big Game in His Sights
Tatsuyuki Saeki, who's getting set to launch the exchange, is focused on dealing a death blow to Japan's old financial system
If you want to make a Japanese investor wince these days, just utter one dreaded word: Nasdaq. After all, the collapse of the U.S.-based, tech-laden exchange in recent weeks has generated plenty of collateral damage to dot-com shares all over Asia, especially in Tokyo. On Apr. 17, Japan's Nikkei 225 average fell 7%, it biggest one-day decline since 1987.
You'd think the broad sell-off in Japanese Internet shares over the past seven weeks would give Tatsuyuki Saeki pause. He's the president and chief executive officer of Nasdaq Japan, which is rushing to launch its exchange come June. But Saeki isn't the sort to get rattled by market lurches. He has his eye on a bigger prize: to deliver a death blow to Tokyo's backward financial system and free up capital to seed startups that will ultimately build the new Japan.
Saeki isn't your typical self-effacing Japanese executive. When I caught up with him last week, he launched into an unsolicited soliloquy of his career triumphs during a three-decade-plus stint at IBM. One highlight: He doubled the consumer market share of IBM personal computers to 10% in the Asia Pacific region. He had a secure, high-level job at Big Blue and figured he would ride out his career there.
"VERY STICKY." Then, Softbank Corp. founder and fabled Internet investor Masayoshi Son rang and offered him the job of Nasdaq Japan chief last year. Softbank, Nasdaq, and a group of other backers aimed to make a go of it in Japan and made their plans public last June. "He told me he wanted to change Japan and that we should work together," recalls Saeki. His superiors at IBM, however, told him, "'Don't throw a 35-year career into a ditch,'" he says with a laugh.
Truth is, Saeki had grave doubts about jumping ship. He had first gotten to know Son years earlier, when Son was a budding entrepreneur running a mix of businesses such as computer trade books, the Comdex trade shows, and a software-distribution business in Japan. Son used to call Saeki at IBM Japan all the time, pitching ideas and joint ventures and just brainstorming. "He was very sticky," he says of Son.
But there was something about Son he admired. In a big, established company like IBM, things tend to move glacially. Son is a relentless dealmaker. He met Nasdaq chief Frank Zarb at a U.S. Embassy cocktail party in early 1999. Zarb had spent months flying into Tokyo and sounding out established brokers like Nomura about launching a Japanese version of Nasdaq but had gotten nowhere. When Son heard that, his dealmaking synapses started firing and the outlines of a Nasdaq Japan fell together in a matter of months.
CONNECT THE DOTS. Saeki also admires Son's approach to staying on top of the ever-mutating world of digital technology. Instead of making a few big billion-dollar acquisitions, Softbank has spent some $3.8 billion since the mid-1990s taking minority equity stakes in 300-plus Internet companies in the U.S. and Asia. He has then partnered up with the strong players like Yahoo! and helped them move overseas. "This might be the only way to connect the dots," he says.
Even so, Saeki will have his work cut out for him. Before that, Saeki will need to prove that Nasdaq Japan won't turn out to be just a high-tech piggybank for Son. The worry is that, in return for Son's financial backing, Softbank's 300-odd equity partners in Japan and the U.S. will get preferential treatment should they try to list with Nasdaq in Japan. No way, says Saeki. Doing that would be suicide for the new venture, he says.
Also, once news of Nasdaq Japan appeared in the press, the Tokyo Stock Exchange rushed out a startup exchange called Mothers. Though Nasdaq Japan will start in June, for the first year or so it will rely on the Osaka Securities Exchange for trading and settlement. It won't have its own network in place until June of 2001. To get to that point, it will have to attract a critical mass of members: initial public offerings, listings for the Japanese subsidiaries of Nasdaq-listed U.S. companies, and dual listings of companies already on the Tokyo Stock Exchange.
DECODER RING. On top of that, Son and Zarb probably don't have the backing of Tokyo officialdom. "Son pissed them off. The Ministry of Finance didn't like the way we announced our exchange without their approval," Saeki says. Still, Saeki isn't concerned. He thinks that ultimately, Nasdaq Japan will be a platform for 24-hour trading that will connect Japan's most promising players to the global capital markets.
In the past, making that connection hasn't been easy. Though foreign mutual funds are big players in Japan's equity market, the participation of global investors would be far higher if it didn't take a secret decoder ring to properly value Japanese companies. Things like quarterly financial reports, disclosure of important risk factors, and a detailed management discussion about the company's prospects are a rarity in Japan. Saeki believes Nasdaq Japan will change that by requiring its companies to improve their disclosure and accounting standards so that global investors can make better calls on their Japanese investments.
In sum, Saeki believes Nasdaq Japan can help pull Japanese companies out of the financial Dark Ages. If he's right, he will have a lot more to brag about than successfully flogging personal computers in the Pacific Rim for IBM.
Bremner, Tokyo bureau chief for Business Week, offers his views every week for BW Online |
