What is the advantage of shinise companies in Japan, the “shinise superpower”?

We tend to associate “shinise” with long-standing companies that have been passed on for many generations. However, what is more important than the long history is the trust from customers and high reputation in the area that are generated over time.

Japan is said to be the world’s “shinise superpower.” According to the 2019 Teikoku Databank survey, there are about 33,000 companies in Japan that had a history of more than 100 years, and among them there are about 4,000 companies with a history of more than 200 years. In terms of the number of companies, Japanese companies account for about 40% in the world.

In their long history, shinise companies have encountered various difficulties. Even during the last 100 years, they have had to overcome challenges such as war (World War II), financial and economic crisis (the collapse of the bubble economy and the 2008 financial crisis), natural disasters (the Great Hanshin-Awaji Earthquake and the Great East Japan Earthquake), and a global epidemic (the COVID-19 pandemic). In other words, shinise companies have many characteristics that we should learn from because they have avoided collapse during the change of times and environment and survived as organizations for a long time.

Moreover, we cannot overlook their characteristics of having the mindset to value long-term survival and sustainability rather than short-term profit, even if they are profit-making companies, and to focus on harmony and coexistence with the local community and social values.

In recent years, factors such as social and economic sustainability, response to SDGs, CSV and ESG are attracting attention as something that corporate management needs to take into consideration. However, in Japan, we have already had these thoughts and culture, including sanpo-yoshi (all parties doing well), which is the secret of Omi merchants. The thoughts that are cherished by shinise companies, which focus on not only corporate values but also social values, can be said to be something that has been deeply rooted in Japanese culture.

On the other hand, shinise companies are often family businesses. That also leads to a management stance that values modest investment and long-term sustainability. However, the demographic situation in Japanese society is casting a large shadow on the sustainability of family businesses.

The biggest issue is the absence of successors due to the declining birthrate and aging population. Many owners of shinise companies are aging, and they cannot find their successors. Therefore, sometimes they are forced to close their business. Moreover, there are cases in which, as a result of a buyout by an emerging company, they lose the beauty of shinise. Such a situation is perhaps the biggest challenge for current shinise companies in Japan.

How to maintain shinise companies when the population is declining? Or, even if a shinise company could not continue as a family business, isn’t it possible to pass on its social, cultural, and economic value in our Japanese society?

From such a perspective, I would like to discover something that contributes to the sustainability of shinise brands by integrating European and the U.S. brand theory and Japanese noren (goodwill) and shinise management theory.

Five points for managing a shinise brand

In the first place, what is the brand power that shinise companies have? Brand is a concept which came from Europe and the U.S. It seems similar to but different from words like “noren,” “yago” (trade name), or “meigara” (brand), which shinise companies have.

Firstly, “shinise” is a concept implying not only longevity but also the formalities which were acquired through its tradition and the trust that is felt by its customers. Compared with these factors of recognition and trust, not much of the implications of the brand, such as identifiability, distinguishability, attachment and self-expression by consumers, are included.

Noren and meigara function as proof of eminence and trust, just like shinise. However, unlike “brand,” which does not distinguish a company from the products, noren indicates company and meigara indicates products, and their scope of usage is limited.

I combine shinise and brand and call it “shinise brand.” Here I would not argue that “shinise” is the same as “brand.” Instead, I separately recognize the historical background and characteristics of shinise and the current concept of “brand” that was introduced from Europe and the U.S. Then I would like to focus on the intangible asset management that shinise companies possess. Here I think there are five key points.

The first is unearthing and compiling the history. Shinise in the first place, by being old in itself, expresses its legitimacy and its ancient and honorable origins. This will be the strength of a brand. Therefore, the key is whether its history can be unearthed and a story can be built up from its foundation to the current time.

For example, even only with the foundation year, the impression that it will give to customers will change depending on whether this is clearly and effectively expressed. The judgement is divided among people concerning whether it should be displayed together with yago or not. However, the method to display it on the official company website, leaflets, notes accompanying products or service guides, was used in most shinise companies that I surveyed.

Furthermore, instead of stating a business history comprehensively and in detail, when it is described as a story, for example, about the struggles of the founder, the existence of the restorer, or the response to a crisis, it will be read more, and is also effective. For that it is necessary to secure physical evidence such as obituaries and official documents, which guarantee the validity of oral stories.

The second point is displaying the region and sending out information. The perspective is that by clarifying the origin of the company, concerning which region it was founded in, it can distinguish itself from other companies.

Many shinise companies have valued the relationship with neighboring areas from the outset. However, in order to keep growing, they need to start considering Japanese nationwide and worldwide market. The focus on online shopping/mail order is also increasing owing to the COVID-19 pandemic, etc. Thus, how to appropriately send out the information according to the advancing areas is an imminent challenge.

Even if the headquarters function and factories are relocated from the place of origin, it is possible to take advantage of the characteristics of the original area. For example, Shiseido is now a global brand. However, they have not removed the display of its origin, Tokyo Ginza Shiseido. When operating globally, it is important to embed the founding place into some of the stories.

The third point is responding to business transformation. Even if they are shinise, they need to keep innovating. Otherwise, they cannot survive. Moreover, concerning the business transformation according to the changing times, they need to maintain their basic values while being required to position themselves well in the market.

If we look at the actual data, many shinise companies have changed not only their products and services but also their main business in their long history. What is required here is brand repositioning according to the new use development, customer development, etc.

A famous successful example is Asahi Shuzo (Iwakuni City, Yamaguchi), which is known for the Japanese sake DASSAI. The company, which was founded in 1948, had standard sake called Asahifuji, which used subsidiary ingredients, as its main product for a long time. However, since they had a crisis in business selling this product in the area, in 1990 they came up with a junmai daiginjo sake called DASSAI, which used only Yamadanishiki as its rice ingredient. After that, the company fully expanded nationwide and now it has grown into a sake brand which is respected worldwide.

Continuation of shinise is an issue related to Japan’s sustainability

The fourth point is the management of a trade name and trademark. Even if a shinise company started as a family business having only a limited commercial area, now that the distribution network and advertising media have spread nationwide in our time, if it does not manage its trademark properly, problems and disputes concerning use rights may occur.

In response to the above-mentioned geographical relations or business transformations, how does one match the trade name to identify a company with the trademark system to identify products and services and try to redesign them? Should a company brand and a product brand be identical? Or, is it better to keep managing them separately? Otherwise, are there any other options? I think it is good to consider all these alternatives.

The cases in which a trade name that was originally the family name is integrated into its main trademark are often seen mainly in the major shinise companies which achieved nationwide distribution. For instance, in Mizkan (Handa City, Aichi), which was founded in 1804, as a family-run shinise company, successive owners have been assuming the name of the founder (NAKANO Matazaemon). However, over time, it changed the company name from Nakano Sumise to Mizkan.

While a brand policy to use main meigara also for the company name is efficient in terms of communication, it will be restricted to the category image of the main meigara. Thus, it is not suitable for multi-business development within the area. Therefore, they need to holistically evaluate the pros and cons before deciding whether to unify the trade name and the trademark.

And finally, the fifth point is inheritance of family business and intangible assets. How to overcome the absence of a successor? Or, the perspective is how to manage the brand in order to sustain and develop the value of shinise as an intangible asset.

Most of the advantages of the family business lie in intangible assets such as the management principle, organization culture, relationship with employees, capital policy, and crisis management. While maximizing such advantages, even if the family business could not continue and had to sell the business, it is important to maintain its high value. It is required to change the knowledge that was passed on by word of mouth or lore to an explicit knowledge, and enable it to pass on its social and cultural value to third parties.

Japan has unique culture such as food, crafts, art, life style, which cannot be found in other countries. And many shinise companies operate a business related to such unique Japanese culture. This kind of soft power can be the biggest weapon in the Japanese economy, where the population is declining and becoming difficult to compete in terms of quantity.

In that sense, it is not too much to say that the issue of sustaining shinise is, rather than that of just one company, related to the issue of the sustainability of Japanese society. As we live in a time when it is difficult to win against China or India in the so-called international competition of goods, it is necessary to move away from the “high-quality-but-low-price” idea which is deeply rooted in Japanese society. In order to differentiate products and services, and gain more added value, I think it is necessary to engage in brand management of shinise with the support of Japan in general.

* The information contained herein is current as of November 2023.
* The contents of articles on Meiji.net are based on the personal ideas and opinions of the author and do not indicate the official opinion of Meiji University.
* I work to achieve SDGs related to the educational and research themes that I am currently engaged in.

Information noted in the articles and videos, such as positions and affiliations, are current at the time of production.