Saturday, March 26, 2011

No. 7: Profits come from the prosperous co-existence with customers (March 26, 2011)

Ohmi, which is currently Shiga Prefecture, was famous for Ohmi shonin (Ohmi merchants) back in the Edo Period (1603-1867). Even today, Ohmi merchants mean diligence and patience. They diligently expanded business and increased presence in the market. Such famous companies as Takeda Pharmaceutical and Takashimaya Department Store originate from Ohmi. Tonoyo is also an Ohmi-born company. Founded in 1700, it currently enjoys an established reputation as a trading company handling apparel products including Japanese kimono.
The family was originally a pack peddler selling linen cloth and silken threads. At the beginning of the 19th century, it opened a store in Kyoto and Osaka and grew to be one of the influential merchants in the market. Many Daimyos (Clans) suffered from financial crisis toward the end of Edo Period, and they borrowed money from affluent merchants. Lending money to clans was truly dangerous because merchants were forced to write off their loans in most cases. Most merchants, however, gave in to authority and reluctantly lent money to clans for fear of sanctions. One brave merchant existed, and he turned down the request from a clan for a loan twice.
It was the fifth generation of this family. He said to the clam without hesitation that he was mentally prepared for a sanction because he turned down the request for a loan twice, but strongly and proudly alleged that if he had been asked to discontinue business with the clan, all merchants would get fed up with business with the clan and ultimately would ruin the clan. The austerity epitomized by this story allows this company to prosper for more than 310 years.
This family has the precept that profits come from the prosperous co-existence with customers. That is, the business relations that ask one of the two parties to accept compulsion of the other will not last long. The request from the clan was exactly the one that the family had to turn down by any means. The two parties are usually joined by social contribution that means the efforts to do what is good for society. That is, the precept means that everything is fine if each of the two parties and society are fine, and this was the knowledge widely shared by Ohmi merchants.
The family was very innovative, too. It created several rulebooks to govern the family, its collateral families, and employees to prevent them from growing arrogant. In particular, it placed higher importance on the merit system than the seniority system. It asked all employees including managers to write a resignation every year to maintain an uncompromising stance in the relations between the family and employees.
Tonoyo currently has three plants in China and plans to build another one in China. As globalization develops, Japanese companies have to establish solid and longstanding business relations with foreign companies, and it is vital to locate reliable parties and collaborate with them. For this purpose, the family seems to place the highest importance on the precept that profits come from the prosperous co-existence with customers.

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