Thursday, May 27, 2010

Japan Watch: An Important Emergent Trend

There is a most troubling trend afoot in Japan. No, it is not the further perplexing descent of JGB yields, the failure of a newly appointed Finance Ministers to survive longer than the time it takes to slow-roast a nice Gigot, the SFP Value Realization Fund's attempt to block Matsuya's takeover defense provisions despite their inexorable slide into the sunset, or the lack of a third-handle on the Yen. Rather, I refer to the peculiar practice of merged companies failing to find an appropriate moniker, resulting in tortured names for time-honoroured companies that resemble legal partnerships, or, even worse, the adoption of mneumonic abbreviations that could be mistaken for the chemical designation of food colouring, or a UN NGO.

I cannot say when it started, but bank mergers were perhaps first. Recall the 1990 merger of Mitsui and Taiyo Kobe Bank into, yes, Mitsui-Taiyo Kobe Bank which morphed, briefly into "Sakura"before  melting into Sumitomo. And of course Sanwa, Tokai and Toyo married to become UFJ, and like the Monty Python knight with "only a flesh wound", survived phagocytosis by Mitsubishi to yield "Mitsubishi-UFJ". The venerable Takugin, early banking casualty of the Bubble, partly dismembered and disemboweled lives as Sapporo-Hokuyo.  Chuo-Mitsui (Trust Banking), Sumitomo-Osaka (Cement), Hokuetsu-Kishu (Paper), GS-Yuasa (Batteries), Isetan-Mitsukoshi (Retail), Konica-Minolta (Precision), Kyowa-Kirin (Pharma), Sumitomo-Mitsui (Insurance), Maruha-Nichiro (Marine Prods), Daiichi-Sankyo, Dainippon-Sumitomo (both Pharma) are further examples of corporate diplomacy insuring that the preservation of tradition, organizational honor and management face trumped any meaningfully rational attempt at branding.

Some have rebranded when the "Wa" has been disturbed and reputations irreparably tarnished. Daiwa Bank, which not blew through its capital (and then some!) but was the residence of Toshihide Iguchi, one of the first to hide mammoth-amounts of [losing] trade tickets in desk, became "Resona" when the government merged it with Nara, Asahi, and Kinki-Osaka Banks. Ditto the merged near-bankrupts Nissho Iwai and Nichimen who agreed upon Sojitz, (meaning "Double" or "Twin") presumably to demonstrate it was a merger of financially pathetic equals.  However, the most notorious was the creation of Aozora (literally "Blue Sky")and Shinsei (meaning "New born") out of the rotting putrid carcasses of LTCB and NCB.

Cellular giant KDDI - the merger between the KDD and DDI - could be forgiven since both firms were themselves acronyms to begin with, and the merger resulted ostensibly in major savings by eliminating 2 upper-case "D's" (presumably one "D" from each for the sake of equality). Seven & I, the merger of retailing affiliates Ito Yokado and Seven-Eleven were ill-advised by their branding consultants (if they had one), for the result is an alphabetic number with an ampersand and a dangling consonant. Ummm, yeah.

J-Front raised my eyebrows, choosing unusually to ditch their legacy parents of Daimaru and Matsuzakaya (the joke of the price-weighted Nikkei 225 in 1990). The attempt was valiant, but there is something unsettling about the result, at least in English, for "Front" while possibly meaning store front, or two battle fronts, commonly has more nefarious connotations as in a fake or dupe. Clearly they didn't go out to any English focus groups on this one. Kawasaki & NKK Steel's merger into JFE was more successful in jettisoning the baggage of legacy for the future - whatever may be implied by JFE (Japan Ferrous Enterprise?). But somehow the acronym seems to fit the technical nature of the steel industry.

JX Holdings is entirely more mysterious, even sinister, with the association popping into my head being the evil Baron Silas von Greenback, the toad playing foil to Danger Mouse and Penfold. It was the result of Nippon Oil and Japan Energy which itself arose from Nippon Mining's earlier acquisitions. I suppose it IS economical in this age of the slimmed-down new normal. Heck, only two letters! Imagine the savings on stationary, business cards, and more importantly, signage.
 
But the coup d'grace goes to the insurance sector, where imagination and vision has always been in short supply. Where there were thirteen there are now four. Mitsui F&M and Sumitomo F&M, became yes Mitsui-Sumitomo, whereafter they joined with Aoi (itself the result of a merger between Dai-Tokyo & Chiyoda) and Nippon Life affiliate Nissay Dowa, to become, yes, you guessed it:  "MS & AD Holdings".  And since it is important not to rock the boat, "Nippon F&M who only a few years ago bedded Koa F&M, the progeny imaginatively known as "Nippon Koa", decided to merge with Yasuda ("Sompo" after gobbling minnows Taisei and Nissan F&M) to become none other than "NKSJ Holding".  

8 comments:

Namazu said...

I take it you're OK with "Mizuho." Disclosure: married to one, sadly not a banking heiress.

RCJ said...

I worked for Bank of Tokyo in the early 90's and was always amazed at the internal Kremlinology within the bank - parsing of whether it was Bank of Tokyo Trust, Bank of Tokyo NY Branch or BOT Financial Services usually took up half of any meeting - while customers sat, either confused or bemused - I was amazed until I moved to GE -
then a decade of ice cream headaches followed...

who, me? said...

i remember the days of D&C-Sakura here in Malaysia in the 1990s as well. if Ito Yokado and Seven-Eleven became I-Seven, would Steve Jobs have had an issue with it? :)

Chris (i-cjw.com) said...

“J” represents a Japanese and world leading “integrated energy, resources and materials group,” and “X” represents challenges to the unknown, growth and development for the future, and creativity and innovation, among others.

It's so obvious once you know..

(http://www.eneos.co.jp/english/press/e71_enpr_091225.html)

"Cassandra" said...

Thanks gents!

Chris - Obtuse indeed! But the Nippon Koa Sompo merger is the one that bothers me. It is ominously reminiscent of the dreaded NKVD - precursor as it was to the KGB. I really don't see how that one slipped them by...unless, of course it didn't!!

akikana said...

How about the naming of the recent JV between BOTMUFJ and Morgan Stanley:

"Mitsubishi UFJ Morgan Stanley Securities Co. (MUMSS) and Morgan Stanley MUFG Securities Co. (MSMS)...MUMSS provides retail services as well as M&A consultations and other investment banking services. MSMS handles stock and bond underwriting plus services for institutional investors."

So that's all nice and clear then. I hope they went the way of SumitomoMitsui Banking Corporation and reverse their naming convention in the Japanese langauge.

Finally, always interesting who is really ruling in these name changes with the SWIFT code that remains. Shinsei were 're-birthed' enough to retain their LTCB SWIFT code.

Gwailo said...

And Tokio Marine and Fire begat Millea, and Millea begat Tokio Marine Holdings, and so it is forever and ever, world without end, amen.

'Gwailo

hugh said...

just returned from 2 weeks in Tokyo this morning and the naming mumbo-jumbo is indeed hysterical...
I'm waiting for it to present itself in the political arena as the minshus and shamins fumble around to form coalitions as futenma further fragments the Diet...