The Legend of Japan's Shinise: Family Stewardship, Craftsmanship, and the Secret of Centuries-Old Brands

Introduction

Japan is home to more century-old and even millennium-old enterprises than any other country in the world—businesses known as shinise (老舗). By some counts, more than 52,000 Japanese companies have histories exceeding a hundred years; of these, 1,938 have surpassed 500 years, and 21 have carried on for over a millennium. By comparison, the average lifespan of a company in the S&P 500 is less than 18 years.

These enterprises have weathered wars, disasters, and sweeping social change, and still stand—prompting curiosity about the secret of their longevity. How do they manage and operate so as to sustain long-term competitiveness? How do they hand down their culture and core values through changing times? What business strategies have they adopted to adapt to the market and maintain stability? Which internal and external factors, exactly, account for their long life? And which of their lessons are worth borrowing for Chinese companies, while which spring from a unique environment and culture that make them hard to replicate?

Management Model: Prudent, Long-Term Family Stewardship and a Stakeholder Orientation

Family Succession

A great many of Japan’s long-lived enterprises adopt a family-management model, passing control of the business from one generation to the next. Research shows that the concept of the family business known in Japan as ie (家) is deeply rooted. Many shinise are inherited by the eldest son of the founding family, who carries on the family’s reputation and the company’s mission. When there is no direct heir, Japanese businesses will even continue the family line by adopting an heir—the leadership of well-known companies such as Panasonic, Denso, and Toyota has at times been passed on by adopting a son-in-law, and Osamu Suzuki, current chairman of the automaker Suzuki, is a fourth-generation adopted successor.

This distinctive inheritance mechanism ensures continuity of corporate leadership and avoids the disruption of having no one to take over. By contrast, in China and other cultures, family businesses often falter midway because of poorly handled generational transitions. Researchers point out that China has traditionally practiced equal division of property among children, which leads to infighting within the family and the dispersal of business assets—unfavorable to the enterprise’s enduring survival. In Japan, family businesses are usually inherited solely by the eldest son; assets are not split up, and so the company can be run in a concentrated way and endure for the long term.

Stakeholder Orientation

The management model of long-lived enterprises generally emphasizes responsibility to stakeholders rather than the maximization of short-term shareholder interests. These companies practice a philosophy of prudent management grounded in a long-term perspective: in making decisions, they put the core values handed down through the generations first, rather than chasing short-term profit.

In the culture of the Japanese shinise, “protecting the good name of the enterprise” is regarded as the highest priority, so building and maintaining the trust of customers, the loyalty of employees, and the support of the community matters more than pursuing rapid growth. Many time-honored firms, for instance, take the initiative to balance their relationships with stakeholders: they consider the needs of customers while also valuing harmonious coexistence with competitors and the wider industry.

During World War II, with shortages of soybeans and other raw materials, many soy-sauce makers resorted to chemical additives to keep production going. But Kikkoman (キッコーマン), a soy-sauce company with 300 years of heritage, developed a new process to improve fermentation efficiency and preserve the traditional quality of its sauce. More admirable still, Kikkoman did not keep this formula to itself to corner the market; instead it shared it freely with competitors, in order to stabilize the quality and reputation of the entire soy-sauce industry and keep it from sliding into a vicious cycle in which “bad money drives out good.” This move reflects the far-sightedness of shinise management: thinking from the standpoint of the entire network of stakeholders, and willing to sacrifice momentary profit in order to safeguard the industry’s ecosystem and its long-term trust. This philosophy chimes with the ancient merchant ideal of sanpo-yoshi (三方良し, “good for the seller, good for the buyer, good for society”), which stresses a win for all parties to a transaction and for society as a whole, earning the enterprise lasting credibility and room to survive.

Prudent Operations and Risk Management

Japan’s long-lived enterprises generally practice prudent, conservative financial and operational strategies. They set great store by building ample reserves against sudden crises. Surveys find that roughly a quarter of Japan’s century-old companies hold enough cash on hand to endure more than two years without turning a profit. This conservative financial style springs from a concern for the enterprise’s enduring survival, enabling it to withstand shocks such as recessions, natural disasters, and even global pandemics. At the same time, time-honored firms attach great importance to crisis management and business-continuity planning.

Throughout its history Japan has been repeatedly tested by earthquakes, fires, and wars, yet many shinise prepared in advance and responded swiftly, and so were able to recover quickly after disaster. Those that break past the average lifespan to endure beyond a century tend to hold, in their management philosophy, to the principle of fueki-ryūkō (不易流行)—“keep to the unchanging essentials while adapting to the changing currents.” On the one hand these enterprises adhere to their founding purpose and spiritual pillars (ancestral precepts, company mottoes, business missions, and the like); on the other they do not cling stubbornly to the old ways, but continually adjust their business and bring forth the new in response to customer needs and the changing times. It is precisely this coexistence of the conservative and the flexible that keeps shinise enterprises invincible amid competition.

Cultural Inheritance: Holding Fast to Core Values and Passing Them Between Generations

Core Ideals Handed Down Through the Generations

There is not one long-lived enterprise without deep roots of corporate culture. They typically have an explicit family precept or company motto that serves as a spiritual pillar handed down through the generations.

The famous 300-year-old Kyoto incense house Shoyeido (松栄堂), for example, has always carried on its founding family’s motto: “A thin stream flows far; the farther the fragrance travels, the purer it grows”—signifying that the enterprise should do its work meticulously and for the long haul, neither swaying nor straying, spreading like fragrance, unbroken, to the far corners of the world. Guided by this ideal, Shoyeido has kept to prudence in its operations rather than blindly chasing trends: even seeing the vast market of China, it resolutely decided not to rush in, focusing instead on Europe, the United States, and other regions with steady demand for traditional incense. This devoted adherence to the family’s purpose is precisely why Shoyeido still stands after 300 years.

Many time-honored firms weave a similar ideal of “never forgetting the original aspiration” into their decisions. The company motto of the Edo-era kimono house Echigoya—“win the hearts of your buyers and you win the world”—or the corporate spirit that Konosuke Matsushita set down when he founded Matsushita Electric, are invoked and followed again and again in the workings of later generations.

Employees and the Craftsman’s Spirit

Long-lived enterprises take care to pass their culture on to each generation of employees, cultivating a sense of belonging in which “the company is like a family.” This shows in the respect and cultivation extended to employees. Some time-honored firms even hold an annual Buddhist memorial service for deceased employees, as a sign that the enterprise will not forget their contributions.

The venerable sake company Gekkeikan (月桂冠), founded in 1637, holds annual Buddhist rites for all its departed employees, expressing respect for them “in life and after death.”

At the same time, many century-old companies use an apprenticeship system to train newcomers; new employees often start from the ground up and undergo long seasoning to inherit the craft and the spirit. The trading company Okaya & Co. and the renowned construction firm Takenaka Corporation, for instance, both require new recruits to live in a shared dormitory as apprentices, to foster team spirit and communication. Gekkeikan, too, insists that employees who join in the digital age learn the ancient methods of sake brewing, while Yamato Kogyo, a long-established foundry in Nagano Prefecture, even stipulates that every new employee, whatever their educational background, must first work on the factory floor for five years—after which, it is said, each of them has come to “love the smell of cast iron”! Through this careful immersion, employees gain a first-hand understanding of the enterprise’s traditions and the essence of its products, cultivating a dedicated “craftsman’s spirit.”

The employees of long-lived enterprises tend to regard carrying on the reputation and craft of the enterprise as their own charge, forming powerful cohesion and loyalty, and in hard times they are willing to share the company’s tribulations. As a veteran employee of Ikuta Sanki Kogyo, a century-old machinery firm, put it, the reason he swore to follow the new president to the death even in the company’s crisis was to “repay the kindness of the previous two presidents”—a cross-generational emotional bond born of long immersion in the corporate culture, binding employee and enterprise tightly together.

The Customer First, and Reputation

Putting the customer at the center is one of the values that Japanese shinise universally uphold. The saying okyakusama daiichi (お客様第一, “the customer comes first”) is deeply ingrained. However the times may change, satisfying customer needs and winning customer trust is always the starting point and the destination of these enterprises’ work. Many time-honored firms strive relentlessly for excellence and maintain high quality in their products and services, to protect a signboard that has stood for a century.

The venerable Kyoto tea house Ippodo, founded in 1743, insists on selling only tea and no sweets, out of concern that a distracting sideline would compromise the utmost care it gives to preparing tea; it would rather forgo the extra profit than risk losing the trust of its long-standing patrons.

Or take the millennium-old Kyoto shop Ichiwa (Ichimonjiya Wasuke, 一文字屋和輔, commonly known as “Ichiwa”), which to this day focuses solely on a single charcoal-grilled rice-cake sweet, aburi-mochi, its flavor unchanged over the centuries, serving pilgrims and travelers alike. Even after introducing modern methods such as machine-pounded rice cakes and uniform pricing following World War II, this shop, handed down through 25 generations, still insists on grilling the rice cakes fresh over traditional charcoal in the old way, to ensure that the taste customers savor is no different from that of a century ago.

It is precisely this unremitting devotion to the customer experience and to product quality that has won the shinise the trust of customers over generations—even dozens of generations. For the local community, to shop and spend at a shinise bearing a signboard handed down from one’s forebears is itself a form of identity, and the goods of a time-honored firm are even seen as a “status symbol” or the highest guarantee of quality. These enterprises have thus built up deep reputational capital among their customer base, giving them the most solid foundation for enduring operation.

Business Strategy: Seeking Balance Between Tradition and Innovation

Focus on the Core Business, with Prudent Diversification

Japan’s long-lived enterprises display, in their business strategy, the wisdom of “holding fast to some things and refraining from others.” They typically cultivate their core business deeply and do not lightly stray from its track, while innovating and diversifying in moderation according to the needs of the times—but such diversification always remains connected to the original business. The Japanese scholar Toshio Goto notes that successful diversification should “extend around the existing business” rather than rashly entering an entirely new field in which one has no experience.

Nintendo, for example, began by making playing cards when it was founded in 1889, and over more than a century transformed into a video-game giant—yet strictly speaking it still falls within the broad category of “entertainment and games,” never departing from its core positioning around “games.” Likewise the brewing giants Kirin and Suntory each gradually expanded their product lines within their respective core beverage fields (whisky, soft drinks, and so on), without rashly venturing into industries unrelated to food and drink.

This prudent diversification allows an enterprise both to adapt to market change and open new avenues of growth, and to avoid the risk of “not acclimatizing” that comes from blind expansion. Conversely, companies that chase the hot trend and lose sight of their core business rarely last long. Kongō Gumi stood unshaken for fourteen centuries, yet in the twentieth century it once fell into difficulty after over-borrowing to invest in property during the real-estate bubble, and had to be acquired and restructured by a large construction firm in 2006 to escape bankruptcy. After the restructuring, however, Kongō Gumi returned its business to its traditional strength—the construction and repair of temples—and found its way back to a path of sustained development. This too, from the opposite direction, confirms the importance of focusing on the core business and diversifying with caution.

Continuous Innovation, Keeping Pace with the Times

Though long-lived enterprises are known for their tradition, they do not cling stubbornly to the old; on the contrary, they display astonishing innovative resilience. Many can boldly transform or adopt new technologies at a critical moment, to meet the tides of the age.

The 300-year-old Kyoto incense maker Shoyeido, while maintaining its traditional incense-making craft, has repeatedly brought forth the new in packaging and marketing: when raw-material supplies were cut off after World War II, it swiftly opened up overseas sources to stabilize production; in modern times it changed its old paulownia-wood boxes to plastic ones, then upgraded again to eco-friendly recycled-paper boxes, to keep up with the modern trend toward environmental protection.

Consider, too, the case of the machinery maker Ikuta Sanki Kogyo: when its second-generation president died suddenly and the enterprise was mired in debt, the third-generation successor pushed through reforms with determination, introducing new technology and expanding into global markets, and led the enterprise out of the mire. Although it was beset for a time by troubles within and without because employees did not trust the new plan, with the efforts of the third-generation leader and the support of the veteran staff, the company was ultimately reborn through technological innovation and overseas expansion. The reversal amid crisis owed much to the reputation for quality laid down by the previous generation: when the new president happened upon an old machine—sold to a Chinese factory by the previous generation—still running well, the Chinese side at once regarded this century-old Japanese enterprise with respect, and an export contract followed. The new-generation leader reflected: “This is the ‘kindness’ my predecessor left me by making high-quality machines, and I mean to pass this kindness on to the next generation.” It was precisely the reputation for quality handed down through the generations that won the enterprise its chance to innovate and transform.

These stories show that Japan’s long-lived enterprises are adept at finding opportunity amid upheaval: taking the safeguarding of quality and reputation as their premise, they dare to use new technology and new thinking to solve problems and renew their business. “Tradition,” one might say, is the root, and “innovation” the wings; the two complement each other, propelling the enterprise across the fault lines of the age. As the Japanese ideal of fueki-ryūkō holds: what is unchanging is the original aspiration and the quality; what changes are the means and the forms.

Take the Long View, Prefer Slow to Hasty

Long-lived enterprises tend to set their strategy with an eye to long-term impact rather than immediate gains and losses. These companies are generally willing to sacrifice rapid short-term growth in exchange for steady long-term returns. Some century-old tea houses, for instance, would rather not take on a lucrative sideline in sweets, lest it disturb the quality of their core tea business and the experience of their loyal customers. And many time-honored firms did not follow the crowd into over-expansion during the economic bubble, and so, when the bubble burst, they instead preserved their strength and had the last laugh.

This “content with modest prosperity” mentality stands in stark contrast to the high growth and high valuations that modern enterprises so often pursue. Yet it is precisely because they do not blindly chase profit that these enterprises can survive through market downturns.

Research notes that many shinise companies can accept years of thin operating profit or even zero growth—so long as the enterprise itself can survive in good health, that counts as success. This prudent strategy gives enterprises stronger resilience against risk in the face of economic cycles and industry upheavals.

Moreover, time-honored firms understand their own place in the long river of society and history, and often set themselves a “hundred-year plan” rather than an annual one. Many family-business managers are taught from a young age by their elders to make safeguarding the ancestral enterprise their mission, to imagine what the enterprise will look like ten or twenty years hence, and then to work toward that vision with their feet on the ground. Under this guidance of long-term thinking, enterprises are in no hurry for quick success, but build up technology, cultivate talent, and expand markets step by steady step. “Haste makes waste” is fully borne out in these enterprises: slow but steady growth instead earns the compounding effect of time, making the enterprise’s foundations ever deeper.

Rooted in the Local Community

The development strategy of many long-lived enterprises is bound up, bone and blood, with the local community; “living in symbiosis with the locality” is their way of survival. A great many shinise were originally born to serve local living needs, and after a century still remain rooted at their original site—the Yamamotoyama tea shop in Nihonbashi, Tokyo, for example, has operated at the same spot for over 330 years. These enterprises attach great importance to local ties, and even as they reach national and overseas markets, they still regard the local community as “home.”

Gekkeikan, for instance, holds deep gratitude toward the Fushimi district where it was born; over the generations its presidents have concurrently held more than 80 public posts in local industry, taking the initiative to fund the building of fire stations and hospitals and to set up scholarships in return to their hometown. It is precisely because it has given back to the community over the long term that the enterprise has formed a relationship of mutual dependence with the locality, in which when one side is in trouble the other lends its full support. Indeed, many century-old shops were able to pull through hard times thanks to the continued patronage and support of local residents—a sense of community identity that became a moat protecting them against outside shocks.

At the same time, some time-honored firms in traditional industries also benefit from government industrial policy or industry structure: because of legal and regulatory limits, for instance, few new entrants join Japan’s sake-brewing industry, and about 80 percent of the breweries in existence are enterprises more than a century old. This means that so long as these breweries make no great mistakes, their market position is relatively secure, and their corporate lifespan is naturally longer. Or take traditional-craft industries such as Kyoto kimono and Nishijin brocade, where the long-established merchants, relying on their exclusive skills and geographic reputation, have formed industry barriers. These external factors (community support, regulatory protection, industry barriers, and the like), combined with the enterprises’ own efforts, have together made the legend of Japan’s long-lived enterprises.

Key Factors: The Internal and External Causes of Longevity

Drawing the above analysis together, the enduring prosperity of Japan’s century-old enterprises is inseparable from the combined action of internal and external factors.

Internal Factors (the enterprise’s own secrets)

First is a firm sense of mission and core values. A corporate culture handed down through the generations (family creeds, the customer first, honest dealing) provides the enterprise with a stable spiritual lodestar.

Second, outstanding product and service quality builds a cross-generational reputation and wins lasting customer loyalty and trust—the greatest asset for withstanding competition.

Third, a focus on cultivating talent and on organizational succession ensures that experience and skill are not lost through personnel turnover, while good employee relations strengthen the enterprise’s cohesion.

Fourth, a prudent and pragmatic management approach—not expanding recklessly, not over-leveraging—keeps finances healthy and maintains reserves against risk.

Fifth, a capacity for continuous innovation, or what might be called “holding to the orthodox while producing the unexpected”—improving products and opening markets in step with the times, on the basis of the enterprise’s core strengths, so as to avoid being cast aside by the age.

Sixth, attention to succession and to wealth-transfer planning, ensuring that the enterprise passes smoothly between generations and does not decline through internal strife. Especially worthy of note is the trinity model of Japanese family businesses—enterprise management, family management, and asset management combined: strictly upholding operating principles while daring to innovate and respond to crises (enterprise management); continuing the family enterprise through family precepts and the cultivation of successors (family management); and properly handling the inheritance of wealth to avoid family disputes (asset management). Research shows that family businesses that do well in all three areas tend to have a longer lifespan. The internal factors above together shape an enterprise’s “longevity genes.”

External Factors (the help the environment provides)

Japan’s unique social and historical environment has provided fertile soil for its long-lived enterprises.

First, a relatively stable macro environment. From the Edo period to the present, although Japanese society has suffered the shocks of war, the damage to the continuity of private commerce has been relatively limited. After World War II, for instance, Japan quickly restored its market economy, and many time-honored firms, forced to suspend business during the war, rebuilt swiftly afterward. The kind of situation seen in China—where public-private mergers and changes of regime caused time-honored firms to vanish en masse—did not occur in Japan. This gave enterprises the chance to live through long cycles spanning several centuries.

Second, Japanese culture reveres the order of seniority and tradition, and consumers have a natural trust in and fondness for old shops, gladly supporting the “time-honored brand.” That a company has been in business for more than a century is itself regarded as a mark of credibility and quality (a symbol of “trust” and “wealth”), and public opinion is more tolerant of its conservative strategy.

Third, the legal and institutional environment is relatively favorable. Japan’s commercial law and tax system are fairly friendly to the inheritance of family businesses (low inheritance-tax rates, a good range of corporate forms to choose from), and its sound bankruptcy law allows a valuable old enterprise, when it runs into operating difficulty, to continue its life through restructuring and other means.

Fourth, the market structure and policy tilt of some industries make it easier for old enterprises to survive. In the brewing industry mentioned above, for example, because new entrants are restricted, the existing enterprises are mostly ones with long histories; and in fields such as temple construction and traditional crafts, long-accumulated brand reputation and secretly handed-down skills form barriers to entry that make it hard for new competitors to shake the position of the old enterprises.

Fifth, business networks and community bonds. Japanese enterprises tend to form long-term, stable networks of relationships with suppliers, customers, and their local community, with a high degree of mutual trust. Should an enterprise run into temporary difficulty, the parties concerned may, out of the goodwill of long-term cooperation, grant it tolerance and support (deferred payment, favorable orders, and so on) to help it through. This “symbiotic” ecosystem is precisely the external support on which the shinise rely to weather the storms. External conditions are not, of course, fixed; new challenges such as Japan’s aging society and market saturation are now testing the resilience of these long-lived enterprises. But on the whole, a favorable cultural and institutional environment provides support for corporate longevity as quietly as rain nourishing all things.

Transferability: Lessons for Chinese Enterprises

The experience of Japan’s long-lived enterprises offers Chinese enterprises much to learn from in strengthening their capacity for sustainable development. Although the business environments and cultures of the two countries differ, the following points are worth Chinese enterprises’ reflection and absorption.

Establish a Long-Term Vision, Hold Fast to Core Values

Chinese enterprises should shift from a focus on short-term performance to a concern for long-term survival. Like the Japanese shinise, they should set the enterprise a “hundred-year goal,” write core values such as customer trust, product quality, and honest dealing into the enterprise’s genes, and let these principles take priority over the impulse for momentary profit when decisions are made. Only by establishing enduring, consistent values can an enterprise keep its composure amid market ups and downs, and not lose its way when the environment changes.

Focus on the Core Business While Innovating Flexibly

Drawing on the ideal of fueki-ryūkō, Chinese enterprises should clarify their own core competitiveness and foundation, cultivate the core business with diligence and care, and at the same time watch closely for changes in the market and in technology, adjusting strategy in good time. In expanding into new business, they should ensure it is connected to the core business, extending from existing strengths. Some old manufacturing enterprises in China, for example, can upgrade their technology or expand their product lines in fields they are good at, rather than rashly crossing over into an entirely unfamiliar industry. At the same time, they should encourage internal innovation and cultivate the capacity to renew themselves in step with the times, so as to keep the enterprise vital and competitive.

Prudent Finances and Risk Management

The lesson from Japanese enterprises is that aggressive expansion often comes at the price of prudence. Chinese enterprises should control their leverage ratios and the impulse toward risky investment, build risk-buffer funds, and prepare crisis contingency plans. Family businesses in particular should reserve responses to unforeseeable events (the sudden death of a founder, an abrupt shift in the market). They can learn from the business-continuity-planning (BCP) practices of Japanese enterprises, institutionalizing and front-loading risk-resistance measures to raise the odds of survival.

Build an Excellent Corporate Culture and Team

Emphasize people-centered management, treating employees as long-term partners of the enterprise rather than resources to be used up. Pass on skill and culture through training, apprenticeship, and the like, strengthening employees’ sense of identification with and loyalty to the enterprise. At the same time, refine mechanisms for incentive and care, retain key talent, and share the fruits of the enterprise’s long-term development. A cohesive team is the key to helping an enterprise hold firm in adversity.

Value Succession and the Cultivation of Successors

Many private enterprises in China are now facing the problem of a founding generation gradually aging and a second generation taking over. The Japanese experience shows that planning for succession in advance and cultivating successors is of the utmost importance. Founders should impart the enterprise’s “secret weapon” and cultural ideals to the next generation early, and gradually delegate power at the appropriate time to let them take on responsibility. Where appropriate, it is worth considering professional-manager or non-family “quasi-successor” arrangements, and even drawing on the Japanese idea of adoptive inheritance—bringing in outstanding outside talent to take a stake and take over when there is no successor within the family, so that the enterprise’s bloodline may continue. The greatest taboo is to avoid speaking of the succession problem, or to let disputes arise within the family over unclear inheritance rights, sapping the enterprise’s vitality. To avoid such situations, a family can use legal and institutional means (setting up a family trust, clarifying the allocation of equity and voting rights) to safeguard the stable transfer of control over the enterprise.

Take On Social Responsibility, Cultivate a Symbiotic Ecosystem

The way Japanese time-honored firms deeply engage in building up their community and industry is also worth Chinese enterprises’ emulation. Within their means, they should actively give back to society and be good corporate citizens—taking part in local public welfare, supporting partners along the supply chain, upholding industry norms, and so on. In this way, when the enterprise runs into difficulty, it will more easily gain support from all sides and pull through. At the same time, the business ideal of “a win for all three parties” can be spread: concern not only for the interests of the company and its customers, but also for the impact on the environment and society, thereby winning broader trust and support. This in fact chimes with the modern concept of ESG (environmental, social, and governance). As one study shows, senior managers who hold the “good for all three parties” value are more inclined to incorporate it into their decisions, which helps the enterprise achieve outstanding ESG performance. In pursuing commercial success, Chinese enterprises should likewise attend to stakeholders and social value, achieving both an enduring foundation and shared prosperity with society.

In sum, Chinese enterprises can strengthen their own capacity for sustainable development and their resilience against risk through strategies such as long-term thinking, holding fast while reforming, putting people first, and prudent management. These principles are not unique to Japanese enterprises, but they are embodied to the fullest in Japan’s long-lived enterprises, and are well worth Chinese enterprises’ serious study. It must be stressed that any transplanting of experience must take account of differences in environment—playing to strengths, avoiding weaknesses, and adapting the application to local conditions.

Uniqueness: Factors in Japan’s Long-Lived Enterprises That Are Hard to Replicate

Although the success of Japan’s long-lived enterprises contains much universal wisdom, some factors also bear a uniquely Japanese stamp, which other countries—Chinese enterprises especially—need to treat with caution when attempting to replicate them.

Social and Cultural Differences

The deep familialism and feudal notions of inheritance behind the longevity of Japanese enterprises are not entirely the same as the contemporary Chinese cultural context. Japanese society broadly shares the value of “the family enterprise carrying on”; an enduring enterprise is regarded as an honor, and the public more readily respects the image of a merchant who preserves what has been built over one who takes risks. Chinese business culture, by contrast, went through rupture and reshaping in modern times, and since the reform and opening-up has esteemed the pioneering spirit of the entrepreneur and the drive to grow big and strong, perhaps affording no equivalent social-psychological advantage to conservatism and prudence. The adult-adoption inheritance model that Japanese enterprises customarily use also lacks a basis in the Chinese cultural and legal environment, where people lean more toward blood-line inheritance, or else toward simply selling the enterprise or taking it public to resolve the succession problem. The Japanese model of “running a business as a family unit for a century” is thus not entirely replicable.

Historical Continuity

An important premise for Japan’s many time-honored firms being able to span several centuries is that Japan has, since the Meiji Restoration, broadly maintained protection for private property and business operation (with a brief wartime controlled economy, restored after the war), and has never had a period that utterly severed the development of private enterprise. China, by contrast, went through a long planned-economy era in the twentieth century, and the great majority of shops more than a century old vanished or were nationalized amid the historical upheavals. For contemporary Chinese enterprises to achieve the kind of century-long continuous operation of Japanese enterprises, therefore, will still require a considerable span of peaceful development in which to accumulate history. This “gulf” in historical continuity is hard to bridge in the short term.

Institutional and Policy Environment

Japan’s shinise benefit from certain special institutional conditions, such as a relatively lenient inheritance system and regulations that protect domestic industry (the licensing system in brewing, for instance). China’s institutional environment is different, and its market competition is now extremely intense and open, with new enterprises springing up in great numbers and old ones being eliminated in great numbers as a matter of course. At the policy level, Japanese society places more emphasis on maintaining employment and the stability of small and medium enterprises, while China places more emphasis on market efficiency and on growing to scale. Under different policy orientations, differences in average corporate lifespan are only to be expected. Some gaps in corporate lifespan that stem from institutional differences, therefore, cannot be changed by an enterprise’s own efforts alone.

Consumers and Market Structure

Japanese consumers have a relatively strong loyalty to and emotional identification with old brands, and many century-old shops have a customer base handed down through the generations. This phenomenon stems in part from the relative stability of Japanese society, its low population mobility, and consumers’ preference for tradition. In China, by contrast, the market is vast and consumer preferences shift more rapidly; the new generation of consumers does not necessarily have a special attachment to century-old shops, and is more easily drawn to new brands and new models. Even if Chinese enterprises imitate the operating methods of the Japanese shinise, therefore, they must face a more dynamic market competition, and can hardly enjoy the natural advantage of an “ancestral signboard.”

Industry and Technological Evolution

The large body of long-lived enterprises still existing in Japan is concentrated mostly in traditional industries (food, brewing, crafts, lodging, temple construction, and so on), where technological evolution is relatively slow, leaving room for enterprises to endure over the long term. By contrast, many of today’s hot industries (the internet, high-tech manufacturing) have short technology-iteration cycles and rapid replacement of the old by the new, making it hard for enterprises to be long-lived. The growth areas of China’s economy lie mostly in emerging industries, and for enterprises to endure a century may be more challenging still. This is a unique difficulty determined by the nature of the industry.

The Willingness “Not to Grow Big”

Interestingly, many Japanese shinise choose to keep family control and a small-to-medium scale, not necessarily aspiring to become an industry oligopoly. This self-restraint keeps them clear of the diseases of large enterprises and the risks of over-financialization, but it also means giving up the possibility of rapid expansion. In the Chinese environment, enterprises often face public-opinion and capital pressure to “grow big and strong,” and it is not easy to ask them to slow down and be content with modest prosperity. Moreover, Japanese enterprises are content to be “small and beautiful” partly because the domestic market is large enough to support their survival, whereas a Chinese enterprise confined to a small scale might find it harder to survive amid fierce competition. Whether this un-greedy mentality applies to China, therefore, calls for a dialectical view.

All in all, many of the practices and ideals of Japan’s long-lived enterprises are universal—integrity, quality, putting employees and customers first, continuous innovation, prudent management—and these hold inspiration for enterprises in any country. At the same time, quite a few of the factors behind their success are rooted in Japan’s unique history, culture, and market environment, and cannot be mechanically copied. In borrowing from them, Chinese enterprises need to discern which are the “Way” (universal principles) and which are the “technique” (practices under particular conditions). Only by taking the essence and adjusting its application to their own reality can they truly benefit.

The legend of Japan’s time-honored enterprises, spanning the centuries, tells us this: business is not a sprint but a marathon, and only by holding fast to the original aspiration, keeping pace with the times, and cultivating both the inner and the outer can one stand invincible in the long river of time. This holds equally true for Chinese and Japanese enterprises, and indeed for enterprises the world over.

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