The land of the setting sum

FIRST there was the sheer size of them, but we learned later that size doesn't matter.

Then it was the bottomless wallet, but we now know that money doesn't buy everything. Finally, it was the inscrutable intelligence; the absolute genius that was meant to overwhelm us. Now, after a decade, we know that they are not only very human, but like an alcoholic with a can of Special Brew at 9 o'clock in the morning, seemingly programmed towards self-destruction.

It is 10 years since the Japanese stormed the citadel of the Square Mile.

They appeared to have every advantage in the world and the money to buy the City as well as Wall Street lock, stock and barrel.

For many bankers it was the time to get in on the ground floor of the mammoth City banks of Japan and the mighty Big Four security firms.

The money was excellent, the job prospects promising and it seemed as if every upwardly-mobile banker in the City was learning Japanese at evening classes. At that moment, the Japanese had the opportunity to dominate the world of international finance, but they blew it for the simple reason that they were Japanese.

Ivan Hall has explored this dilemma in his newly-published book, Cartels of the Mind, an insider's study of Japan's professional barriers, both institutional and psychological. The book looks at the repeated failures of American and European corporations, frustrated by cultural and legal hurdles, to break into the Japanese market.

Japan's financial services companies have no boardroom seats for foreigner bankers. The Japanese were never willing to relinquish real power to their British or American employees. As a result, these firms were dead in the water before they even started to compete in the City.

Caught in a culture gap, they were run as dictatorships by an all- male clique of parochial and astoundingly incompetent managers. Now these Japanese businesses are in retreat virtually worldwide. Not only are many almost bankrupt, but they have almost nothing to show for 10-to-15 years in the City and the millions they invested.

The truth is that any truly global financial institution has to forget its roots. It is irrelevant that HSBC was started by a band of Scottish expatriates in Hong Kong, or that a great American financier founded JP Morgan, or that Bankers Trust was once a New York High Street bank. A potpourri of nationalities now runs these institutions. In Morgan's European offices more than two-thirds of employees speak two or more languages. It is not really an American bank but a global one.

At Bankers Trust more than 52 nationalities make up the 4000 staff who work in the City. The former head of the bank in Europe, Yves de Bal-mann, is a Frenchman.

The Japanese are not the only ones who have made costly errors, or find it difficult to allow a free exchange of ideas to override cultural and ethnic barriers. What makes their story unique is that they once had the wealth and capability to dominate the financial markets.

The first irony is that if they had simply stopped being obsessed with being Japanese and learned to assimilate into a foreign culture, or at least pretend to, we would all be kow-towing to Japan by now. The second irony is that they probably don't get the first one.

Copyright 1998
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