Magazine

Adult adoptions: Keeping Japan's family firms alive

  • 19 September 2012
  • From the section Magazine

In Japan, an ancient practice has provided a solution for the age-old conundrum - how do family businesses survive when there are no sons to take over?

The tale began in AD717, when the god of Mount Haku visited Buddhist monk Taicho Daishi in a dream and told him to find a hot spring in nearby village Awazu - today's Ishikawa prefecture.

Daishi discovered the spot and ordered his pupil Garyo Hoshi to build a guest house.

Garyo Hoshi, in turn, preached Buddhism to his visitors and adopted a son as his successor who took his childhood name Zengoro.

That is how the world's oldest family business - according to the Guinness World Records - is believed to have started.

Since then, for nearly 1,300 years, the hotel and the name - Zengoro Hoshi - have been passed down the family for 46 generations.

An idyllic view from the Hoshi hotel, in Ishikawa Prefecture

But in a country where a son usually inherits a family name, how have they always managed to have a boy?

Well, there is a slight catch.

"When there were only girls, we adopted a daughter's husband," says the latest Zengoro Hoshi.

"In fact, my father married into the Hoshi family and was adopted."

It is a uniquely Japanese-style adoption known as Mukoyoshi.

Japan has the world's second highest adoption rate of more than 80,000 a year but most are adult men in their 20s and 30s.

"Historically, it's been far more common with families in the western part of Japan where merchant families tried to choose the most capable successor," says Mariko Fujiwara, a sociologist at Hakuhodo Institute of Life and Living.

If you did not have a capable son to succeed, you would try to find a more capable man to marry one of your daughters, she says.

"It was a very pragmatic decision for that family business to survive," she adds.

Even today, the vast majority of Japanese companies are considered family businesses. They include household names such as car-makers Toyota and Suzuki, camera-maker Canon and soy sauce firm Kikkoman.

Osamu Suzuki is the fourth adopted son to run Suzuki car manufacturers

Suzuki is famously known to have been led by adopted sons. The current chairman and CEO Osamu Suzuki is the fourth adopted son in a row to run the company.

"Family businesses that are run by sons-in-law are much better in many cases than family businesses run by their own sons," says Yasuaki Kinoshita who invests in Japanese companies at Nissay Asset Management.

"When I make a decision to invest in a listed company which is still owned by a family, the big negatives are corporate governance and succession."

At Matsui Securities, its fourth president Michio Matsui was adopted into the family, but this meant ditching his own name.

"I was my parent's oldest son so I was a bit hesitant to be adopted by another family," he recalls.

"But my biological parents said maybe it was my fate."

Historically, however, changing names wasn't a big deal because many simply didn't have one.

"Only 150 years ago, people didn't have family names unless you came from a significant social class of Samurai," sociologist Mariko Fujiwara explains.

"And when you changed your name, it was usually because you were given a new name as an honour or as an award for something that you'd accomplished." It became aspirational, she adds.

It is common to pass down names through adoption in Kabuki

Chieko Date has started a matchmaking website where women look for a husband who is willing to be adopted by his wife's family.

"There is definitely demand because the birth rate in Japan has been falling and many parents just have a daughter."

"And many men are looking for opportunities to use their business skills outside the corporate world because in this economy, climbing up the corporate ladder is much harder," Date adds.

Tsunemaru Tanaka signed up to Date's website in November.

He established a successful business but lost it to his ex-wife who was also his business partner.

Now, he wants to be adopted and take over a family business.

"I see no problem in changing my family name because I see it as a nickname given by the government for the family registry," he says.

"I am confident that my skills can be useful so if there is a chance for me to inherit a family business and make it successful, that would be good for everyone."

He has met six women through the website but hasn't so far found his ideal partner.

"I looked up some information about the companies that those women's families own," he says. "I am not marrying their companies but I still wanted to know."

If you marry into a family with a business, you know what is expected, says sociologist Mariko Fujiwara, who discovered in adulthood that her own grandfather was himself adopted.

"You're expected to be a good and loving husband and father and a good capable business person."

If these expectations are clear from the outset then, she says, like a mutually beneficial business deal, it may be easier to manage than a fiery romance.

Since the BBC visited Zengoro Hoshi, his son passed away. Zengoro Hoshi said he will now groom his grandson to become the 47th owner of the hotel and to inherit the name, Zengoro Hoshi.

Find out more on Assignment on the BBC World Service on Thursday, 20 September. You can listen again via the World Service website or World Service Documentaries download.