Subject: [cwj 123] Reform starts with big business
From: Corporate Watch in Japanese <>
Date: Fri, 20 Oct 2000 18:56:56 -0700
Seq: 123

The Japan Times
Saturday, October 21, 2000

Reform starts with big business

Two of Japan's four largest business organizations, Keidanren
(Federation of Economic Organizations) and Nikkeiren
(Federation of Employers Associations), have decided to merge
by May 2002. A task force will be working out details by the
end of the year, including the proposed name and articles of
association of the combined organization.

The planned merger is of great significance to the future of
corporate activity in this country. The issue at stake is whether
a consolidation of major business lobbies, which are known
collectively as "zaikai," will help to streamline industry
associations, sever cozy ties with government and
bureaucracy, and encourage freer and more independent

Zaikai now consists of four major groups -- Keidanren,
Nikkeiren, Keizai Doyukai (Japanese Association of Corporate
Executives) and Nissho (Japan Chamber of Commerce and
Industry). Keidanren, the zaikai leader, is concerned mainly
with administrative, economic and fiscal issues as well as
questions involving the world economy. Nikkeiren, which
speaks for big-business employers, deals with employment
issues, such as those affecting wages and jobs. Doyukai is a
free-wheeling forum of corporate executives, including
small-business and foreign managers. Nissho works for small
businesses through regional chambers of commerce.

In recent years, zaikai members' status as corporate opinion
leaders has declined sharply. This is thought to be the major
reason for the planned merger between Keidanren and
Nikkeiren. The purpose of their marriage, therefore, should be
to address their common concerns, such as social security
(corporate pensions, medical costs), employment and the
environment. They will also streamline their activities by
avoiding duplication in research and advisory activities,
including those related to information technology and structural

Leaders of the two organizations say the merger is designed to
create a "powerful, integrated economic organization" and
thereby exert greater influence on government policymaking.
The integration, however, should lead to the establishment of a
more transparent government-business relationship and to the
bold reform of Japan's regulated economy. The merger will be
a failure if it creates only a more powerful interest group, a
mammoth lobby aimed at promoting business interests at the
expense of consumer interests.

It will be a success if it results in breaking the business
community's bad habits, such as the lockstep mentality, the
tendency toward collusion and the dependence on government
and bureaucracy. The Keidanren-Nikkeiren combination should
aim at demolishing the so-called iron triangle of government,
bureaucracy and business.

Deregulation is the key. To prevent official intervention in
corporate activity and minimize administrative guidance and
supervision it is essential to create a "small government." Zaikai
can help to create it by downsizing itself. Zaikai consolidation
should lead to the streamlining of industry associations and to
the development of self-reliant corporate groups that do not
look to the government for help in hard times.

Zaikai form the top of a vast pyramid of industry associations.
Therefore, the consolidation of these groups is an essential
condition for successful zaikai integration. The steel industry,
for instance, is represented by the Federation of Electric Power
Companies (Denjiren). Banks belong to the Federation of
Bankers Associations of Japan (Zenginren). Keidanren and
Nikkeiren embrace nearly 200 such industry groups.

Each of these groups is partly staffed by employees farmed out
by member companies. These employees, many of them in
charge of planning, return to their companies after several
years. Many of the groups also serve as havens for retired
bureaucrats, who deal with their former government offices as
"representatives" of the industries they work for.

Of course, times have changed. Few companies are now in a
position to send quality staff to their industry associations.
Government-business ties, meanwhile, have visibly weakened,
if not disappeared. Once banks had "point men" posted at the
Finance Ministry on a full-time basis, who almost routinely
wined and dined ministry officials to gather tips from them or
to bend ministry regulations. Now, however, banks -- and
other private companies generally -- have little to gain from
such intimate association with bureaucrats.

It is also true that collusive and lockstep tendencies in the
corporate sector have declined, but not disappeared; they could
even revive in better times. The coming merger between
Keidanren and Nikkeiren should provide a golden opportunity to
kick these bad habits once and for all.

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Transnational Resource and Action Center (TRAC)
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