"As Expected of the Land of Artisans"... Family-Oriented Japan Faces Succession Crisis for '1,000-Year-Old Longevity Companies' [Nichiyobi Nichibunka]

11 Companies Over 1,000 Years Old... 40% of the World's Centennial Firms Are in Japan
Geographical Features and Family-Oriented Culture Play a Role
Succession Becomes a New Challenge Amid Low Birthrate and Aging Population

One aspect of Japanese culture that many Koreans find fascinating is the tradition of passing down family businesses for generations. In fact, about 40% of all centennial companies worldwide are located in Japan. Japanese media often describe the country as a "rare nation of long-lived companies." There are quite a few businesses that have lasted not just 100 years, but even over 1,000 years. Today, let's explore why Japan has such a high number of longstanding shops and companies.

45,000 Centennial Companies... Even 11 Companies Over 1,000 Years Old

First, let's look at how many long-standing companies exist in Japan. According to market research firm Teikoku Databank, as of September last year, there were 45,284 companies in Japan with a history of more than 100 years.

In fact, a 100-year history is considered relatively short. There are 1,813 companies with a history of over 200 years, 889 companies over 300 years, and 47 companies over 500 years. There are 3,474 companies founded during the Edo period (early 17th century), and even 178 companies that were established before the start of the Edo shogunate in 1603 and are still in business today. Notably, there are 11 companies that have been in operation for over 1,000 years. The oldest among them is "Kongo Gumi," which has maintained its legacy for 1,444 years. This company is also recognized as the oldest company in the world and specializes in wooden temple construction.

Official website introducing the history of Kongo Gumi. It states that it started in 578. Kongo Gumi.

Kongo Gumi also has ties to Korea. In 578, Prince Shotoku invited three craftsmen from Baekje to Japan to build a temple. At the time, Japan did not have the technology to construct large temples, so they brought in skilled workers from Baekje, where Buddhist culture was flourishing. Among the three, a craftsman named "Kongo" remained and continued the business, which became the origin of Kongo Gumi. Even today, the company organizes a "Guild of Artisans" to pass down traditional wooden construction techniques.

 

Another example is "Geiunkan," recognized by Guinness World Records as the oldest ryokan in the world, which has been in operation since 705. Located at Nishiyama Onsen in Yamanashi Prefecture, this ryokan has long been frequented by artists and other notable figures.

Other millennium-old companies include "Shumiya Shinbutsugu," founded in 1024, which sells Buddhist ritual implements.

The world's oldest ryokan, "Geiunkan," has been in operation since 705. Geiunkan.

Where are most of these long-standing companies located? Teikoku Databank calculated the ratio of companies over 100 years old in each region, calling it the "long-lived company emergence rate." By region, most of these companies are concentrated in Kyoto Prefecture (5.35%). Since Kyoto served as Japan's capital before Tokyo, it makes sense that many are located there.

Although Tokyo has the largest number of companies overall, its proportion of long-standing companies is only 2.24%, ranking 38th nationwide. Interestingly, many long-standing companies are found in coastal regions such as Yamagata (5.34%), Niigata (5.02%), and Fukui (4.62%) Prefectures. These areas share a history of flourishing through trade during the mid-Edo period.

On the other hand, the rate of long-standing companies is relatively low in Kyushu and major metropolitan areas. The lowest is Okinawa Prefecture (0.17%), where the few centennial companies and shops that do exist are all Awamori distilleries, makers of Okinawa's traditional liquor. Distilleries in general are known for their long histories; in fact, 80.5% of Japanese distilleries are long-standing companies. Other traditional manufacturing sectors, such as sugar and vinegar production, have also maintained their businesses for centuries.

Another interesting point is that many long-standing companies eventually shift to the real estate rental business after making money in their original fields. They often build office buildings or other rental properties on the land where their factories once stood, and as rental income surpasses their original business profits, some companies have completely transitioned to real estate. The saying that "the best thing is to own property" seems to hold true in Japan as well.

Introduction to Sakimoto Brewery, an Okinawa traditional liquor Awamori distillery. It promotes that it adheres to the traditional method of fermenting yeast. Sakimoto Brewery.

How Did They Become Long-Standing Companies? Geographic Environment and Family-Oriented Traditions

Experts have analyzed the reasons behind the abundance of long-standing companies in Japan from various perspectives. Several convincing arguments are presented in the Teikoku Databank report. The first is Japan's geographic environment. As an island nation, Japan has historically relied on self-sufficiency, which fostered a culture of preserving skills for extended periods. Additionally, except for World War II, Japan has never experienced a war that devastated the entire country, allowing businesses to survive for long periods without major disruptions.

Japan's unique family system has also played a role. Rather than prioritizing direct bloodlines, Japanese culture has emphasized the continuity of the family itself. As a result, bringing in sons-in-law or adopting heirs to continue the family business has been widely accepted. In fact, most centennial companies have continued their business through sons-in-law or adopted heirs. While these are still considered family businesses, management is not limited to blood relatives, and outside talent is often brought in, making the system relatively open.

No Heir to Inherit... Long-Standing Companies Shaken by Succession Issues

However, not all is smooth sailing for these long-standing companies today. Many business owners are aging, and fewer young people are willing to inherit the family business. According to a survey, 31.8% of centennial company CEOs are in their 60s. This is a higher proportion of older CEOs compared to the 27.2% among CEOs of general companies.

The problem is that when asked about succession, only 47.4% of long-standing companies said they had an heir, while 51.0% said they did not. More than half have not designated a successor. As a result, mergers and acquisitions (M&A) between companies unable to find successors have become increasingly common in Japan. Although these companies have survived for centuries thanks to Japan's geographic and cultural foundations, the challenges of low birth rates and an aging population are now threatening their continuity. In an era where tradition alone cannot guarantee sustainability, these long-standing companies are facing ever-deepening concerns.