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Monday, June 7, 2004
Kanebo's rescue: cosmetic surgery or a new lease on 'beautiful life'?
By NORIKO HAMA
"Kanebo, for beautiful human life."
Remember? If you do, you must have lived for a very long time in Japan. Or you must be a seasoned collector of the more esoteric Japanglish phrases. Or both.
That phrase, coupled in television commercials with the characteristic bell-shaped logo the company went in for at the time, was apt to stir up a lot of impassioned debate in pre-bubble Japan. Linguistic purists obviously abhorred and were embarrassed by the creatively concocted phrase, yet the idea of human life as something beautiful did hold a certain appeal. There was a hint of ecological sophistication there that spoke to the worn-out economic animals of that time.
Nearly a quarter of a century later, Kanebo calls itself "The Life Style Company." While the phrase is much improved in its idiomatic precision, the company the language represents is in deep trouble.
Just last week, the ailing concern placed itself under the effective control of the Industrial Revitalization Corporation of Japan. Kanebo's highly lucrative cosmetics division, the one people most strongly identified with the "beautiful human life" image, had been spun off earlier this year, with the IRCJ holding a controlling share of 86 percent in the divested company.
What remains of the widely and wildly diversified conglomerate now faces vicious downsizing and stringent restructuring.
Having started out as a textile-trading business in the late 19th century, the company went on to manufacture simply all sorts of things: soft drinks, ice cream, "cup noodles," shampoos, bath salts, skin-care products, eye makeup, laxatives, Chinese herbal medicines . . . all those things, in fact, that surround us in our everyday lives, beautiful or otherwise. Kanebo, or what is left of it without cosmetics, now has to sort out what its core and noncore activities are to be, what is to be done with the noncore elements, and how to make the core parts workable again. Moreover, it has to go through all this with the government perpetually breathing down its neck.
There are people who seem to think that it is actually not a bad idea for the IRCJ to be involved in Kanebo's rescue package. The argument goes that, if left to their own devices, Kanebo and its main creditor banks would never have had either the courage or the determination to undertake the kind of painful overhaul required to turn the beleaguered company's fortunes around.
Indeed, say the supporters of IRCJ involvement, it was the company and the banks' stalling and papering-over-the-cracks tactics that got them where they are in the first place. It needed the involvement of an outsider to make radical change happen.
All this is perfectly sound reasoning. Outside scrutiny does indeed look like the very thing that was needed to make reality sink in. Yet, to go on from there and say that a government-sponsored body such as the IRCJ is the one best suited for the job is going a little too far for logical palatability. The Japanese government has not exactly been either the most transparent or the most accountable of bodies in this nation's postwar history. Delaying tactics and ignoring the obvious seem to come to it quite naturally.
Moreover, there is no getting away from the moral hazard aspect of the problem.
Reports have it that Kanebo staff members are heaving a sigh of relief at IRCJ involvement. Now that the authorities have stepped in, they reason, the survival of the company, one way or another, is virtually guaranteed. This is how public-sector intervention will always tend to reward the weakest.
Noriko Hama is an economist and a professor at Doshisha University School of Management.