TT-480 -- Yohan Goes Bankrupt, ebiz news from Japan

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General Edition Sunday, August 03, 2008 Issue No. 480


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On Thursday, July 31st, Japan's largest independent
distributor of foreign books and magazines, Yohan Inc.,
went bankrupt. Rather than a simple protection from
shareholders or reorganization, the company has shutdown
completely, firing all of its staff, closing the office,
and taking down its website the same day. Jiji reports that
Yohan, established in 1953, has left behind JPY6.5billion in

Related companies Aoyama Book Center and Ryusui Shobo,
under the control of Yohan Book Service Inc., are
apparently planning to stay in business and have applied
for corporation reorganization under the Japanese Civil
Rehabilitation laws. Apparently they have combined debts of
JPY5.4bn. Rumor has it that there is a corporate sponsor in
the works to take over these two companies, who will be
announced in the near future.

Yohan has been teetering on the verge of financial disaster
for some years and our take is that the firm, which at one
time controlled the distribution of many of the leading
English-language publications in Japan, has been mismanaged
or at very best managed by misguided investors, by at least
three separate entities over the last 10 years.

Firstly, the original owners could not keep up with the
times and failed to properly computerize their
organization as margins fell and the 90's recession bit.
Because their computerization was so primitive, data entry,
shipping, inventory management, costing, returns, and
pretty much everything else got done manually -- requiring
more than 120 people for an operation that should have
required just two thirds of of that number. These high labor
costs coupled with falling book and magazine margins and
rising transport costs were a sure recipe for eventual
business failure.

We would posit that pride by senior management was another
factor -- causing any rescue attempt to be late.

[Continued below...]

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[...Article continues]

Secondly, the MBO that led to InterCultural Group Inc (ICG)
buying the business out in 2003, was based on the premise
that Yohan simply needed to become a platform for a bigger
and more efficient set of businesses. This had the senior
management embark on a disastrous expansion program,
belatedly fixing internal systems and going out and buying
up other lines of business that the company didn't really
have experience in, and which were all themselves in
trouble. Once of these was Aoyama Book Center in 2004.

Thirdly, by the time Mizuho's Polaris Principal Finance
fund bought 60% of the company out in Q2, 2007, the costs
of ICG's various acquisitions were starting to mount, and
one wonders why Polaris decided to jump in at all.
According to the Nikkei, they injected JPY1bn into Yohan,
which then went on to report a loss of JPY1.065bn in
November last year. Talk about a zero-sum game. This has
been a hard and possibly lasting lesson for Polaris that
there is very little money to be made in distributing paper
books and magazines these days. It's a tough business.

So why should you care if one old fashioned and terminally
sick distributor goes bust? The bankruptcy has not been
picked up by any of the English-language press, is it a
case of the failure being too close to home... or that
smaller bankruptcies have become boring?

To be honest, there may be nothing to care about. Although
the Yohan bust will hurt a lot of smaller independent
publishers who are owed money (our sister company
included), the company apparently controlled about 60% of
the foreign publications distributed into Japan, the fact
is that the Japan Association of International Publications
(JAIP) has 69 surviving members, and a number of these
companies could pick up the baton. Maruzen and Tohan
would be two likely candidates. However, in the interim
between Thursday's bankruptcy and the negotiation of
distribution rights between the successor and Yohan's
overseas and local publishers, we imagine that quite a few
foreign magazines will be in short supply in Tokyo over the
next 3-6 months. Stock up on your summer holiday trip!

Of course for Japan Inc. magazine you can order direct
from us:

As a closing comment, it is fair to say that the economy is
certainly taking a downturn in Japan and bankruptcies such
as Yohan are gathering steam. According to Teikoku
Databank, June bankruptcies rose 8.1% to 1,065 cases, the
fifth monthly year-on-year rise this year. Now, while the
government has a lot to answer for in its sudden crackdown
on the construction sector, but in fact, only around 30% of
the bankruptcies are due to construction firm failures --
meaning that the current downturn is much broader and
deeper in impact.

The volume of debt due to bankruptcies is also rising
substantially, being up 40.3% from last year, to hit
JPY471.9bn (US$4.41bn). That is a lot of money owed to
others being sucked out of the economy and spells potential
trouble for banks funding both the bankrupted companies and
their (barely) surviving vendors. Indeed, editorial from
the Nikkei over the last week speculates that Japanese
banks may be hit by another wave of bad debt reminiscent of
the late 1990's.


Responses are coming in for the Japan Inc. Business Awards
(JIBA), but we need more. Remember the deadline for
nominations is September 1st, 2008. Nominations do not
require significant documentation and are easy to do. Go to to make yours now.

...The information janitors/


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+++ NEWS

- NTT Data to buy out German IT company
- TSE to sue Chinese CEO
- Foreign i-banks rake in the profits
- Returnees push up Japan's population
- Far fewer Indonesian nurses than expected

-> NTT Data to buy out German IT company

In what seems to be a good move for the very cautious NTT
Data Corporation, the Nikkei has said that NTT Data will
buy Cirquent GmbH of Germany, the IT subsidiary of
car-maker BMW AG, for an undisclosed price (but which the
Nikkei speculates will be around JPY30bn-35bn). The deal
is expected to close in September, and will give NTT Data
both BMW and insurance giant Allianz SE in Germany as
customers. Cirquent operates in 10 countries, has sales of
JPY286m Euros, and has 1,800 employees. (Source: TT
commentary from, Aug 2, 2008)

-> TSE to sue Chinese CEO

In an unusual situation, and one that must be really
embarrassing for the Tokyo Stock Exchange (TSE), the TSE
has asked the Chinese authorities to apprehend and charge
the CEO of the very first Chinese firm to debut on the
Mothers stock exchange. The company is Asia Media, and its
ex-CEO, Cui Jianping, is accused of embezzling JPY1.6bn
(US$14.95m) for personal use. Asia Media now faces
de-listing because of the situation. ***Ed: The TSE has
spent considerable time and effort marketing its several
bourses to Chinese and other North Asian firms looking to
go public. The problem is that it is still too early for
many Chinese firms, and for technology and media companies
in particular. Many of these companies are not terribly
mature in terms of management capability and corporate
governance. Of course, neither are many Japanese start-ups,
so perhaps the TSE thinks this debacle is just par for the
course.** (Source: TT commentary from, Aug 1,

-> Foreign i-banks rake in the profits

Thanks to fees earned from M&A advisory and brokerage
services, foreign investment banks are doing excellent
business in Japan. According to FSA filings, Goldman Sachs'
Japan income was JPY256.5bn (US$2.4bn) for FY2007, ending
March 31, 2008. Next was Morgan Stanley with JPY213.9bn,
Deutsche Bank with JPY191bn, UBS AG with JPY134.1bn,
Merrill Lynch with JPY129.8bn, Lehman Brothers with
JPY122bn (up a massive 300% over last year), Credit Suisse
with JPY100.9bn, and JPMorgan with JPY85.5bn. ***Ed: M&A
by Japanese firms of foreign ones increased substantially
in 2007 and even more so this year. According to the
Nikkei, Japan-related mergers for the period January
through July 31st are already at JPY8.7trn (US$81.5bn),
around JPY1.6trn ahead of all last year.** (Source: TT
commentary from, Aug 1, 2008)

-> Returnees push up Japan's population

Surprisingly, Japan's population grew slightly in the last
12 months, for the first time in three years. The Internal
Affairs and Communications Ministry said that the
population increased by 12,707 people from a year earlier,
due to a rise in the number of Japanese expats returning
home after office closures overseas. In addition, the
Ministry said that Tokyo's population increased by 100,460,
marking an acceleration of the transfer of the population
from rural areas to the big smoke. (Source: TT commentary
from, Aug 1, 2008)

-> Far fewer Indonesian nurses than expected

As the first anniversary of the Japan-Indonesia Economic
Partnership Agreement (EPA) comes up, the Yomiuri reports
that the partners have fallen behind in their target for
Indonesian nurses and care workers to come to Japan.
Originally it was envisaged that 500 nurses would have been
dispatched to Japan by now, however, both a shortage of
suitable applicants and Japan's basic refusal to take male
nurses means that only 208 nurses will be dispatched by the
end of this year. The nurses will attend a 6-month Japanese
course shortly after arriving, then work for 3 years at
hospitals around Japan while at the same time studying to
pass the national examination of nurses. If they don't
pass, they have to return to Indonesia. If they do, they
can stay indefinitely. ***Ed: Hmmm, so if they can stay,
does that mean the plan is for them to get married to
Japanese men and have babies? The rest of the article
goes on to talk about how Japan is discriminating against
male nurse applicants. Do we see a government agenda
here?** (Source: TT commentary from,
Aug 1, 2008)

NOTE: Broken links
Many online news sources remove their articles after just a
few days of posting them, thus breaking our links -- we
apologize for the inconvenience.

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Japan requires a bilingual, native-English speaking
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commence training by early September 2008.

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organizational and people skills and fluent Japanese.
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environment where initiative and multi-tasking are
essential. An excellent opportunity for someone looking to
develop their professional career.

Key attributes of the Operations Manager:

- Organizational skills
- Presentation / interpersonal skills
- Computer knowledge and ability
- Japanese ability equivalent to Level 2 (Japanese Language
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or via email to
No telephone inquiries. Applications close COB Monday 4th
August 2008. Early applications are encouraged.


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In this section we run comments and corrections submitted
by readers. We encourage you to spot our mistakes and
amplify our points, by email, to

TT: In response to our TT477 issue about Oji Homes and
their disdain for caution with asbestos and other

Reader: I read your article about Oji Homes with interest.
I live and work in Fujinomiya, Shizuoka, and in nearby
Fuji City it is well known that the factories of many
companies, such as Oji and others, observe the pollution
regulations during the day, but at night fire up their
plants to full capacity -- significantly breaching the
emissions regulations. A principal at a school in Yoshiwara
(Fuji City area), told me it's a 'public secret.' I guess
people feel that they have to be employed and what they
can't see won't hurt them. Anyway, Fuji City is not a city
that smells very nice, especially at night. Luckily, here
in Fujinomiya, a little to the north beside Mount Fuji, the
air and water are much cleaner. Unfortunately the economy
sucks, because there are few jobs here.


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Your Yohan comments were sent on to me by a reader in Sendai. Appreciated the info as it added to my own knowledge of the events. But, I think you could have been more helpful.

The bookstores rely on magazines (women) to draw regular customers. National Azabu Super's book department would probably become unprofitable if it relied only on sales of books. Its the magazines that draw regular traffic, and it seems to be the magazines that are going to be permanently damaged. Nobody I know could or would want to take over nationwide distribution of American copy-sale magazines. Maruzen ... noway. Tohan? Nippan? They have the network but why mess with the small business of English mags?

If you know who will pick up task, let me know!!

Cheers, Warren

PS - Three cheers to you for at least noticing Yohan's very ugly death.