Nihon Keizai Shimbun, Inc.

9-5, Otemachi 1-Chome
Chiyoda-ku, Tokyo 100-66
Japan
(03) 3270-0251
Fax: (03) 3246-1817

Private Company
Incorporated: 1911 as Chugai Shogyo Shimposha
Employees: 4,263
Sales: ¥217.53 billion (US$1.60 billion)

The dynamic Nihon Keizai Shimbun, Inc. (Nikkei), Japan’s leading financial-newspaper publishing company, produces five business and financial papers, the oldest and best known of which, The Nihon Keizai Shimbun (The Japan Economic Journal), is the largest business newspaper in the world. The Nihon Keizai Shimbun has a total morning and evening circulation of 3.7 million, and even to the uninitiated the Nikkei 225 stock average, or Japanese stock market average, is a familiar term. The Nikkei average tracks the general performance of the Tokyo Stock Exchange. Each of the 225 Japanese companies included in the Nikkei is assigned a weight, and the average is reached through a computation of the performance of the weighted companies’ stocks. The Nikkei is very much like the Dow Jones Averages in this sense, but, unlike the Dow Jones Averages, the Nikkei is also traded as a futures index-that is investors can speculate on the performance of the Japanese stock market by buying and selling Nikkei 225 Stock Average indices.

Because Japanese newspapers are considered public trusts, and therefore forbidden to go public, Nikkei remains a private and not very profitable company, owned by its employees. With its patriarchal management, Nikkei has the world’s most advanced newspaper technology. The first of the world’s newspaper publishers to install computerized newspaper-production equipment in 1972, to which a computerized automatic translation system would be added, Nikkei in 1989 was also the first newspaper company in history to introduce robots into its work force, as well as super-high-speed printing machines. The result is that the production of its newspapers is totally automated, from final page proof to printing. Indeed, the presses begin to print the morning edition of The Nihon Keizai Shimbun at 1:50 a.m. Tokyo time, and trucks pick up the finished papers for delivery ten minutes later.

Nikkei has more than 50 affiliates—including companies as well as research groups—collectively known as the Nikkei Group. In 1990, the Nikkei Group published hundreds of books on business and finance and scores of periodicals. One of the largest subsidiaries, Nikkei Business Publications, Inc., is already Japan’s ninth-largest publishing company, although it was established in 1969.

The fastest growing business area of both Nikkei and its affiliates is neither newspapers nor magazines, however, but computerized electronic data bases. Nikkei searches for new ways to advance its capacity for information. Its goal is to become the world’s leading provider of financial and economic news, thereby competing with Western companies such as Dow Jones and Reuters.

So prestigious are Nikkei’s five financial newspapers that they do not have to employ the often-brutal competitive stratagems to which other Japanese newspaper companies resort. The spectacular success of Nikkei has not come without a price, nor has its ascent to the top of the world’s financial press been a painless one. In the mid-19th century, when movable type had existed in the West for 400 years and newspapers had been in existence almost as long, printing in Japan was still being carried out by the clumsy, time-consuming Chinese method of block printing. Yet in 1869, only a year after the end of Japan’s official isolation under the shoguns, a creative Japanese man improved upon the movable-type printing press brought to Japan by Western missionaries, paving the way for modern Japanese printing, which in only 50 years would be on a par with the West. In this same period, illiteracy in Japan virtually vanished, creating a huge market for publishing companies and newspapers.

In 1870 the first daily newspaper was published in Japan. With the introduction from Europe in 1874 of the steam-powered printing press, Japanese newspapers suddenly proliferated. In 1875, more than 100 newspapers existed in Japan. However, the vast majority of these were extremely crude affairs that printed vicious attacks against the government and provided explicit details of the latest sex scandals. It did not take the government long to clamp down on the increasingly influential press through censorship laws, which were often only loosely enforced. Into this milieu of overheated reportage and cut-throat competition for subscriptions came the forerunner of Nikkei.

A 28-year-old Japanese, Takashi Masuda, founded a financial paper in 1876 unglamorously entitled Chugai Bukka Shimpo (Foreign and Domestic Commodity Price Newspaper). Masuda was president of the recently founded Mitsui & Company, the trading arm of the huge Mitsui zaibatsu (conglomerate), and Chugai Bukka Shimpo was an outgrowth of Mitsui’s in-house market-quotation bulletin. Masuda, a descendant of a samurai family, had dutifully followed the time-honored tradition of grooming himself to serve in the shogun’s armed forces, which had come to an abrupt end with the restoration of the Meiji emperor in the 1860s. In his early teens Masuda and his father had traveled to Paris as part of a diplomatic mission. Upon their return to Japan, Masuda had briefly led the life of a samurai in the shogun’s army from the mid-1860s until the fall of the shogun and the restoration of the emperor in 1868. Masuda then abandoned military life to take up a career as a civil servant in the Ministry of Finance. This transition from warrior to civil servant was not unusual, but for a samurai to become a despised businessman, as Masuda noted in a biographical note 30 years later, was a daring step. Indeed, traditional Japanese values were turned upside down, and the lowly businessman was becoming the arbiter of Japan’s future.

In 1875, having worked a mere year in the Ministry of Finance, Masuda went on to head his own business, a trading company, Senshu Kaisha. At the same time Masuda was working to start Senshu Kaisha, he also was working with the Mitsui zaibatsu on a separate project.

Masuda was exceptional in that he spoke fluent English-indeed, later in life he would write an English-Japanese dictionary. He threw himself into his business with such zeal that when it was taken over by Mitsui in 1876 and merged with another Mitsui company to form Mitsui & Company, the able Masuda, still a young man in his 20s, was asked to become president of the powerful, newly established Mitsui & Company. Once more, he devoted himself to his work, which he saw as including the reform of the woefully inadequate business education system in Japan; to that end, he decided that what Japan needed was a business and financial paper that would serve as a beacon for Japan’s emerging and influential financial community.

This paper, the Chugai Bukka Shimpo, was an expanded version of an in-house Mitsui publication. It rapidly came into its own. Nine years after its first appearance in 1876, the paper became a daily, and in 1889 it was renamed the Chugai Shogyo Shimpo (Foreign and Domestic Business Newspaper). At the same time it was spun off from Mitsui to form a private partnership, while the increasingly busy Masuda was replaced as president of the new newspaper company by the paper’s editor, Hirota Nozaki. In 1911, a wholly independent corporation, the Chugai Shogyo Shimposha, was established to run the newspaper, with the first stockholders’ meeting held the following year. At the end of World War I, in 1918, this forebear of today’s Nihon Keizai Shimbun was the 14th-largest newspaper in Japan in terms of circulation, and ranked foremost in reputation among Japan’s financial newspapers.

Untrammeled success for nearly 40 years was followed by a series of setbacks, however. During World War I, paper became scarce, and the cost of newsprint rose precipitously. Reluctantly, the Chugai Shogyo Shimpo raised its subscription price, which during the general wartime boom, did not affect its circulation. After the war, however, when worldwide recession brought economic hardship to Japan—a country totally dependent on importing raw materials in a world market increasingly averse to free trade—the newspaper’s circulation dropped steadily. Worse was to follow. In September 1923, the world’s worst earthquake struck Tokyo and nearby Yokohama, causing more than 100,000 deaths. Downtown Tokyo was decimated, along with half of the rest of the city. Most of the publishing houses were located there, and were consequently demolished. The central office of the Chugai Shogyo Shimposha was relatively undamaged by the earthquake, but could not escape the raging fire, which destroyed half of the building. Its branch office in Yokohama was obliterated. Sales now plummeted 50%, down to less than ¥75,000 from a pre-earthquake high of ¥150,000.

Hitherto, Chugai Shogyo Shimposha had been relatively unaffected by the numerous governmental restrictions on the press, especially the Peace Preservation Law of 1925, which allowed the government the right to close any newspaper without showing cause. The paper disdained to imitate the sensationalist newspapers of the day. Although a concession had been made in the 1890s to alleviate the dry contents somewhat by introducing serialized short stories, this had been discontinued. By the 1930s not even a financial paper could remain unaffected by the rampant militarism and chauvinism overtaking Japan. In 1936 it was obvious that even Chugai Shogyo Shimpo was a mere mouthpiece of the government, an entire issue being devoted, for instance, to the glorious economic prospects of Manchukuo, that part of Chinese Manchuria seized by the Japanese army in 1930. The government’s hold over the press would continue. By the late 1930s, control over the press became centralized under the Information Board, dominated by the military. One of the board’s conclusions was that there were too many newspapers in Japan, and many of them were forced to merge. In 1942, Chugai Shogyo Shimpo was the victim of an enforced merger with two other papers and a few trade journals. The newspaper that emerged was renamed the Nihon Sangyo Keizai Shimbun (Japan Business and Economic Newspaper). The company had been reorganized in 1936, and its board of directors was enlarged, the number of its overseas bureaus increased, and its assets amounted to over ¥2 million. Despite the forced merger and loss of identity, the financial paper continued to be published throughout World War II, notwithstanding an extreme scarcity of paper. The newspaper company’s headquarters in Tokyo survived the savage bombing raid on March 10, 1945. By the end of World War II, several months later, however, all publishing activity in Japan had ceased.

By the time Allied occupation forces arrived in Japan in December 1945, newspapers once again began to proliferate. Over 300 flourished at the start of the occupation, encouraged by greater freedom to publish and by the public’s insatiable appetite for knowledge of the recent past. For the first four years of the occupation, which lasted until 1952, government was carried out largely by decree. One such decree, the Press Code, removed all controls over the press, but at the same time instituted a censorship over all media to eradicate any militaristic and ultranationalistic sentiment. The goal of the occupation, or the Supreme Command of the Allied Powers (SCAP), under General Douglas Mac Arthur, was nothing less than to transform Japanese thinking. Removing prominent Japanese figures from their positions of authority was a means to this end. Hence the occupation authorities instigated three major purges of hundreds of nonmilitary Japanese figures, among whom were the publishers of the Nihon Sangyo Keizai Shimbun.

The forced merger of the reputable Chugai Shogyo Shimpo with several other papers was evidently none too popular; almost immediately after the end of the war, one of the papers which had been forced to merge with the Chugai Shogyo Shimpo opted to become independent. Then, in 1946, the present-day name Nihon Keizai Shimbun was adopted by the company, since 1942 known as Nihon Sangyo Keizai Shimbun. The “new” company of Nihon Keizai Shimbun, from which the newspaper took its name, or Nikkei, was not new enough for the occupation authorities, since the same wartime publishers were still running the newspaper. In the third and final purge in late 1947, in which 170 publishers and editors nationwide were ousted from their positions, the axe fell on Nikkei: its wartime president, Kohei Murakami, and others were purged and a president more acceptable to the authorities, Sadakichi Odajama, was installed, remaining president of Nikkei until the mid-1950s. The end of the third purge was followed two years later by the end of U.S.-imposed censorship, although the 1947 postwar constitution of Japan guaranteed freedom of the press and forbade any form of censorship.

With the Japanese economy fully recovered by the 1960s and embarking on a phase of spectacular growth, Nikkei, too, grew uninterruptedly. Cautiously, the company expanded overseas. In 1968, Japan’s first English-language economic newspaper, the weekly Japan Economic Journal, was published in the United States. In 1969, Nikkei entered into a joint venture with McGraw-Hill in New York to form Nikkei-McGraw Hill, a Japanese company which at the onset published only one Japanese magazine, Nikkei Business. By 1988, when McGraw Hill sold its share to Nikkei and the company renamed itself Nikkei Business Publications, Inc., the new Nikkei subsidiary was publishing 42 periodicals with such diverse titles in Japanese as Nikkei Entertainment, Nikkei Restaurants, Nikkei Woman, and Nikkei Art. By the 1980s Nikkei was publishing not only five newspapers, but with its subsidiaries, the Nikkei Group of more than 50 companies and research organizations was one of the largest newspaper companies in Japan, with 33 offices abroad, more than any other Japanese newspaper company. Besides expanding into additional businesses and financial magazines and books, Nikkei has focused on expanding its range of computerized electronic data bases. Taking advantage of satellite communications, Nikkei TELECOM was launched in 1986, offering personal computer owners in the United States and Europe up-to-the-minute news on Japanese commodities and securities, money, and banking. Nikkei TELECOM was quickly followed by numerous online services, such as NEEDS, one of the world’s largest data bases; QUICK; and others.

By the late 20th century, Nihon Keizai Shimbun had become the financial daily with the largest circulation in the world, and is close to realizing its goal of becoming the world’s chief source of business and financial data.

For all Nikkei’s success, the company is less profitable than either Reuters and Dow Jones, because of its large structure. Japanese newspapers are allowed only limited profitability, and therefore tend to plow earnings back into their business. Thus, while The Wall Street Journal spends 21% of its revenue on labor costs, Nikkei spends 30%. Nikkei’s editorial staff, consisting of about 1,300 reporters and editors, is twice as large as The Wall Street Journal’s, although Japan has only half the population of the United States. Growth is far more important to the company than profit. In that respect, it has succeeded beyond its founder Takashi Masuda’s wildest imagination. Nevertheless, western observers continue to be annoyed by Japanese success. There was barely concealed mirth over Nikkei president Ko Morita’s resignation in 1988—he was replaced by current president Akira Arai—because of his involvement in an insider trading scandal. Rumor circulated that some Japanese resented Nikkei’s close association with big business and referred to Nihon Keizai Shimbun as the, Nihon Kabushiki Kaisha Shimbun (Japan Company Daily). Sensitive as most Japanese companies are to western criticism, Nikkei in 1987 enabled instantaneous two-way news transmission to take place between Japan and the United States, in the hope that U.S. trade friction would be eased. Nikkei’s tenet is that trade friction will decrease as communication increases.

Nikkei’s head start in the competitive field of telecommunications and Japan’s position as the world’s leading creditor nation may allow Nikkei to realize its goal of becoming the world’s chief source of financial information. Despite its ultramodern computer services and state-of-the-art technology, it continues to be run along traditional patriarchal lines, with men still occupying all leadership positions. No single person, however, is in complete control of the company, while its stock is in the hands of 80% of its employees.

Principal Subsidiaries

Nikkei Business Publications, Inc.; Nikkei Science, Inc.; Television Tokyo Channel 12 Ltd.; QUICK Corp.; Nikkei Research Inc.; The Japan Bond Research Institute; Oversea Courier Service Co., Ltd.; Nikkei Seibu Newspaper Marketing Inc.; Nihon Keizaisha Advertising Ltd.; Nikkei Printing Co., Ltd.; Nihon Keizai Shimbun America, Inc. (U.S.A.); Nihon Keizai Shimbun Europe Ltd. (U.K.); Japan Center for Economic Research; Nikkei Advertising Research Institute.