Mitsui Hachirobei, 1622-1694: One Price Fits All

Americans and, I suppose, westerners in general, tend to have a somewhat vague mental image of Japan prior to the twentieth century.   Rickety wooden temples, paper houses, zen gardens, skilled artisans, rice paddies, fishing villages, mountainous wilderness with the occasional samurai warrior wandering about looking for an injustice to set right.

The notion that they had cities and a bustling economy just as the Europeans did may not filter through.  More’s the pity.  The time and the players make for some fascinating stuff.  Consider the Mitsui family.

The clan had been samurai for generation, but lost power and land in the Wars of Unification.  One goes with the flow.  Hachirobei’s father, having seen that the merchant class prospered mightily in times of peace, elected to lose status as well.  He sold off the swords and turned his hand to brewing saki and soy sauce.  This was no small gesture, but he really had little choice in the matter.  Sadly, he did not live long enough to see the final pay off.

Hachirobei was his youngest son and the one who figured out how to direct the ancestral energy and boldness into the new world of commerce.  He and his brother sold silk, generally to the gentry, generally on credit.  The lessons of Ginger and Pickles soon came home to him, and he came up with a new business model which he put on the front of their shop: CASH ONLY AND ONE PRICE ONLY.

What he lost in the high end trade he more than made up for in the rising middle class.  It worked. With a more predictable cash flow and no anxiety about non-payment, the store boomed and he was soon expanding into other cities and doing well wherever he went.  He pioneered marketing by giving away umbrellas with the company logo and paying playwrights to mention his stores in the dialogue.

By the end of the 17th century, he had a thousand branches across Japan.  And he was branching out, this time into banking.  Sticking to his guns, so to speak, he lent not to high society, who have never been a good risk, but to merchants, who had a care for their reputations.  This is not to say he was adverse to dealing with the high and mighty.  He arranged with the Shogun to care for his cash management, effectively becoming banker to the government.   Taxes paid in rice which was sold and silver and gold transported – all very labor intensive and dangerous.  Hachirobei contracted with the Shogun to arrange deposits of gold from Osaka to the treasury at Yedo on terms that effectively gave Mitsui six months use of cash at no cost, a float he put to good use in buying and selling yet more stock.

As an employer, he  was progressive.  His managers were enrolled in profit-sharing and his employees were provided shelter and health care benefits.

He died and ensured that his descendents would keep the enterprise together, in the family, and going strong, which is pretty much the case.  Shirt sleeves to shirt sleeves in three generations is the cliche, and in general it takes a stupendous fortune to beat it.  Mitsui has succeeded over three hundred years.

Not a lot of competition on that score.

*****

John G Roberts, Mitsui: Three Centuries of Japanese Business

Mark Weston,  The Mitsui Story. Three Centuries of Japanese Business.

Oland D. Russell, The House of Mitsui.

 

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