Saving the Sun: How Wall Street Mavericks Shook Up Japan’s Financial World and Made Billions
by Gillian Tett
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Publisher: Collins
Salesrank: 442642
Released: 2004-09-07
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Best book on Japanese business practices I’ve seen yet (2007-01-20)
In the 1980’s, Japanese business could seem to do no wrong. From business publications such as The Wall Street Journal and Forbes, to the mainstream press (Newsweek, The New York Times and CNN), the press wrote glowingly about Japanese business. For over a decade we read that our western practices were too short sighted and antiquated- we clearly needed to take a more “Japanese approach” to doing business, and in so doing, could be successful as they have been.
But a short time later Japanese companies were in big trouble in the US and back in Japan. Their stock market crashed, the real estate boom crashed, and the entire Japanese economy seemed to be not just in serious trouble, but in a meltdown of catastrophic proportions. What went wrong?
This book does an extremely credible job of explaining both how and why, and in simple layman’s terms that anyone can easily understand. Using many specific examples, Gillian Tett shows how American and Japanese thought and business practices are polar opposites. These differences are not just a matter of the differences in culture between east and west–they go considerably deeper. But by the end of the book, the results were able to speak for themselves. By bringing in a new international management team made up of Japanese, American, Indian and Australian management, an insolvent bank that had been bought out for the first time in history by a group of western investors (!!) became a success story.
I’m an investment banker myself that has (in previous lives) worked for two different Japanese multinationals over a 7-year period in the 80’s and 90’s. My own experiences with Japan are mixed. I made some great friends, and have developed a high level of respect for their work ethic and their dedication to their employers, and usually, to each other. But in my opinion, the extreme xenophobia that permeates Japanese culture will not be lessened anytime soon. The term “gaijin” when politely translated means “foreigner.” But to many (but not all) Japanese the term is not polite at all.
Get this one. I don’t give out many “five star” ratings, but I so for this book without quibbling. I look forward to future works from Ms. Tett.One well chosen case to illustrate a systemic problem (2006-09-27)
Saving the Sun is about the corporate culture of Japan’s financial industry and how it is changing. Gillian Tett focuses on one institution, The Long Term Credit Bank, to illustrate what happened and how the financial environment in Japan is changing.
The LTCB was a key player in Japan’s post war miracle. It lent money to fund business operations and new ventures, working in close cooperation with the elite bureaucrats of Japan’s Ministry of Finance and Ministry of International Trade and Industry. Then in the 1980s, drunk on its spectacular success, Japan Inc. excessively invested in thoughtless projects, all funded by the LTCB and the rest of the financial industry, with no thought at all given to making money. Prestige was everything.
As a result, the Japanese financial system almost collapsed; what survived had to change. Banks began failing despite attempts by the Ministry of Finance to organize rescues. Some failed banks were nationalized, among them the LTCB; these institutions were then put up for sale but no one in Japan wanted them.
There were tragedies. Katsunobu Onogi, a fatherly and admirably responsible gentleman of the old school, was arrested and charged, spending a month in custody before being found guilty and sentenced to three years in jail, suspended. A colleague, Takashi Uehara, committed suicide, which in Japan is a gesture of atonement, not an escape. At another bank, the president parachuted in from the Bank of Japan, Tadayo Honma, also killed himself again to atone for the system’s failure.
Then Tim Collins’s Ripplewood, an American fund, arrived and offered to rescue the LTCB. This was politically difficult. The Japanese don’t like foreign ways, and the thought of a pillar of Japanese finance being bought out by foreigners provoked public outrage. In the end MoF had no choice and the deal went through.
The bank was renamed Shinsei, meaning “Rebirth” in Japanese. A remarkable man, Masamoto Yashiro, was hauled out from a second retirement after a full career at Esso Sekiyu (Exxon’s Japan operation) and the creation of Citibank’s Japanese retail business, to oversee the reconstruction. Clash was inevitable. The conservative rank and file employees had no idea how to work with the hyperactive can-do go-go-go managers now running the show. A new Indian head of IT, Jay Dvivedi, junked the old mainframes and installed, in mere months, a new state-of-the-art system featuring PCs on every desk and instant access to whatever reports management wanted. The corporate planning department, which decided new products, disappeared: henceforth Shinsei would listen to its customers to determine their needs.
The financial revolution isn’t over. Shinsei’s success wasn’t total. Major clients were allowed to fail, Sogo department store went bankrupt. Politicians blamed Shinsei for not being kinder to its debtors.
I’ve worked for the IT departments of foreign banks in Japan since 1995 so this book strikes particularly close to home for me. I can even see the Shinsei headquarters from my desk. Interesting and informative. Recommended.
Vincent Poirier, TokyoEnjoyable worthwhile read in Japanese economics (2005-06-14)
I don’t usually read books like these but I decided to purchase it anyway. How can something as dry as Japanese banking reform be interesting? Well Gillian Tett made it interesting enough. As with her style of writing, I note that the chapter headings fully telegraph what is about to take place in the narative, I thought, well whats the fun of reading on if you know what is going to happen? With that, Tett’s narative is replete with all the drama one can ever read in a good novel. There are deaths, gangsters, flamboyant characters, politics, society, culture clashes, and mix in with all of this, economics.
The Japanese are suppose to be the smart ones. They excel in many areas requiring technical knowledge. The media never misses an opportunity to point out how inferior Americans are when it comes to math and such knowledge. I was therefore amazed when I have read that the Japanese don’t have a grasp of the simple relationship between risk and return. I would have thought that they’d have overly complicated financial models using high level math. But it turns out that, from my perspective, the way the LTCB bankers did business was bizarre. Why would anybody be paternalistic when it comes to money?
I won’t spoil the ending but it seems obvious from the title of the book what will unfold, in fact, it is the heading of the final chapter. I belive but am not sure that the paperback has an epilogue, revisiting the many chracters as further back as 2004. There are classes offered at university focusing in Asian economics and also Japanese economics as well. Gillian Tett’s tract would be apposite as reading material if you are into that.Get an insight of Japanese Economy (2005-03-25)
This is the first book I read about Japanese banks and this has not only given me an insight about their banking system but about how the Japan’s Economic Policy is the face of Japan’s Banks. It is about the clash between Japanese Traditional way of life against the changing face of the world. This book is about Globalization, this book is about dreams, this book is about Japanese pride. Go read this book.Culture clashes and financial mismanagement on a large scale (2004-10-01)
In the 1980’s, Japan was considered an economic powerhouse and their sun was still rising. There was genuine fear in the United States of that power; the news broadcasts of the time were full of new Japanese purchases of properties in the U. S. and there was talk of restricting how much could be purchased. Much of this was based on real estate prices in Japan and some of the figures are incredible. At one time, the land area of the imperial palace, approximately 1.15 square kilometers, was estimated to be equal in value to the entire state of California or the entire country of Canada.
However, most of this value was nothing more than a speculative bubble, and very early into the nineties, it crashed. This left the Japanese banks with billions of dollars of uncollectible loans and looking for a way to survive. With deepest reluctance, some original thinkers in the Japanese banking community looked to American capital vendors to assist in their recovery. This is the story of those events, but it is just as much a story of the contrast and clash of two cultures.
In America, the flow of capital is largely freewheeling, the ideal is that it will always move to where it can most quickly be reproduced. However, in Japan, that is not the case. Lending is done based largely on personal and institutional relationships. Cooperation, even to the point of losing money, is the cultural imperative, reinforced by tradition and social pressures. It was considered very unacceptable for banks to call in unserviceable debt, with some banks referring to insolvent companies as “their children.” Therefore, when the bubble burst, most banks themselves were insolvent.
However, the leaders of the banks did not come clean, preferring to hide their problems with accounting tricks. One humorous incident is related where the true records were hidden in a closet when Japanese government inspectors were conducting an on-site audit. This behavior, considered criminal in the United States, was much more acceptable in Japan, which points out what are the real lessons to be learned from this book.
Although the economic might of Japan leads those in the western nations to believe that it is economically similar, in fact it is not. The differences are dramatic and the explanations of how those cultural differences make economic differences make this book very interesting. Without the cultural contrasts, this is just another story about a weak, bankrupt company being taken over by another. While interesting, there is no real intensity to the story.
I was amazed at reading how an American company that specializes in takeovers managed to purchase an interest in an insolvent Japanese bank and how all parties handled the event. There were political repercussions on both sides of the Pacific and it was necessary for some fundamental changes to be made in the Japanese financial systems. The events took place in the early 1990’s, well after the economies of Japan and the United States had two decades to get to know each other. And yet, there was still a lot of misunderstanding and some naiveté on both sides.
The Americans made the typical mistakes of thinking that the circumstances were no different than when they were on Wall Street. As soon as the company was saved and the price had gone up, they wanted to take their profits and run. This is anathema to the Japanese, and they should have known that. Their attempt to do so created a lot of unnecessary ill will that needed to be smoothed over. The Japanese also made the typical mistake of thinking that the Americans would act like Japanese after they purchased a Japanese company.
This is an excellent book on international finance and the recurring problems of the Japanese economy. For years, the Asian form of crony capitalism was considered the model for economic growth, and a force that could not be stopped. In this book, you learn the fundamental flaws of such a system and how difficult it is for two cultures to engage in an economic marriage of convenience, even when there is no choice in the matter.
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Publisher: Union Square Press
