PART 2
United States
My first decade as a manager had been incredibly rewarding in both corporate and personal spheres. The Stacy Ames launch—along with a host of smaller projects tied to the Bobbie Brooks fashion house—not only changed how Takihyo did business but also revolutionized women’s fashion in Japan. Never before had a large company taken such a leap of faith into an unknown territory with such positive results. There’s a saying in Japan: “The nail that sticks up gets hammered down.” In other words, it’s better to stay with what’s been done in the past, and don’t try anything new. However, our experience with the Stacy Ames brand disputed this axiom; the brand’s newness stuck out and in the process brought legitimacy to manufacturing and wholesaling Western-style women’s wear in Japan.
Of course, fashion had been changing all over Japan. The climate had been ripe for such a transformation, but no one, including me, foresaw the strength of demand for Western-style women’s wear. Takihyo’s initiatives led to dresses flying off the racks in weeks.
In addition to offering Western-style clothing in Japan, completing the Marunouchi Building—Nagoya’s first high-rise—under budget and ahead of schedule with the Takenaka Construction Company was a major accomplishment. There were high-rises in Japan, of course, but none in Nagoya. The other construction companies building high-rises in Japan were based out of the three major cities—Osaka, Tokyo, and Kyoto. I viewed the Marunouchi Building as an investment for both Takihyo and for the city: I was betting on Nagoya’s imminent vertical climb in the decades to come.
The ventures furnishing the building were also quite successful—particularly Takihyo’s joint venture with the US company Steelcase to manufacture the building’s modular office furniture in the Far East. Being able to transform a rigid office space into one that can be anything from a showroom to a conference room with little physical effort redefined what office space meant for our company. If we needed a runway at the last minute, we could have one without too much of a fuss. This change dramatically boosted sales, thus increasing our exposure and making it much easier to market our products. The flexibility of our space increased productivity and the salability of our goods.
The newly established Chu-Bu Distribution Center added to the excitement. Our offices became our own. We no longer shared space with inventory, which increased productivity in the office: administrators, directors, and managers could focus on their allotted tasks rather than shipping and receiving. Housing the inventory in a new place also proved more economical per square meter and increased the ease of tracking parcels thanks to our enhanced shipping and receiving organization. I came up with this idea from some of my travels to the United States when I noticed how American offices functioned. I preferred this environment to the traditional Japanese methods to which I was accustomed. The distribution center helped channel our inventory from the manufacturing plants to the end consumer faster and more effectively. Aside from the new distribution process, which I discussed in an earlier chapter, Takihyo was also forging new relationships with mom-and-pop clothing stores.
Although most of Takihyo’s goods were distributed to our Jusco and Uny chain stores, our business also focused on wholesaling garment products and textiles. I wanted Takihyo to diversify and expand its distribution channels beyond the big chain stores to smaller stores. Under my guidance, Takihyo invested in a few small companies to grow existing distribution channels. Tokyo Style was one company with which I helped establish a working relationship. We negotiated terms of credit with Tokyo Style in exchange for information about what fabrics and items moved in the market. This credit line allowed Tokyo Style to expand its market share but also gave us the information we needed at the consumer level. For instance, if there were 100 orders for a particular garment in a certain month, but Tokyo Style did not have capital for materials, Takihyo would offer credit to fulfill the order. Takihyo advanced textiles and garments to satisfy the end consumer’s needs through manufacturers with which we had established good relationships. With little risk on our part, Takihyo helped Tokyo Style grow into the large company it is today. By the late 1960s, Takihyo was in the best shape it had been in since its inception.
The revolutions, discoveries, and innovations responsible for birthing cultures and countercultures across the globe marked the feel of the 1960s. From the new styles in popular music to the foundations of modern civil rights, the decade became synonymous with change. Although my life represents only a point in this mass movement to difference, the growth of my family’s company and school ushered in a new era of protocols and conventions for Japanese fashion. There could not have been a more exciting historical period to be a Japanese businessman in the textile and garment industries.
On the other hand, the changes of the 1970s in Japan revolved around international diplomacy and subsequent transformations in economic and political policies. Japan is geographically a very small country. Although the country’s population had been growing for quite some time before the 1970s, more goods were being manufactured than consumed—and most ended up in the export market. From 1944 until 1971, the Bretton Woods system was in place to guide financial and commercial relations across international lines. This system touted a gold exchange standard, to which all internationally trading countries adhered: gold acted as currency for international trade. After MacArthur’s occupation of Japan during the Korean and Vietnamese Wars, the United States used Japan not only as a base for military operations but also for the manufacturing of arms and vehicles. These operations gave Japan an economic jump on China and Korea, and they also further fortified Japan’s relations with the United States. Consequently, the Japanese people and government felt comfortable economically even though the nation was still politically and militarily subject to US power.
Within the last couple of years of his first term as US president, Richard Nixon shook the world twofold—the so-called Nixon shocks of 1971 and 1972. These shocks impacted the globe, but the potential consequences for Japan were particularly devastating. The first Nixon shock was the eradication of the Bretton Woods system. The United States had spent most of its gold during the Korean and Vietnamese Wars, not to mention the costs of the preceding First and Second World Wars. Nixon saw a potential shift in power and loss of economic prowess if he kept the Bretton Woods Accord in place. Although Japan (and many other exporting nations) had been piling up gold, the United States and its allies had nearly depleted their resources. Lyndon Johnson’s economic and political policies and Great Society programs decimated American finances; Nixon yearned to reinvigorate the American economy to guarantee future American economic strength.
In a way, the Nixon shocks solidified America’s relationship with Japan. After the Second World War, the American occupation effectively rewrote the Japanese constitution. In the ninth article, Japan is forbidden to have a standing army and to wage war against another nation. Under the Treaty of Mutual Cooperation and Security signed after the occupation in 1960, the United States became an ally to a state without a standing army. In short, after the occupation, the United States has been required to protect Japan, as attacking Japanese soil is equivalent to attacking the United States Consequently, keeping America wealthy, or at least balancing the budget, would serve to protect Japanese interests. On the other hand, the Japanese were upset because all of the gold collected was now being traded on a commodity market unrelated to the dollar—a move that potentially threatened Japan’s financial stability. Exporting countries like Japan were hurt and surprised by such a radical shift in economic policy—what were they supposed to do with stockpiles of gold with no monetary value?! The outcome, as we can see today, was not as grim as predicted at the time. However, the first Nixon shock set a tone for change that the Japanese people were not ready for.
Nixon’s second shock was to open a window for trade with China the following year. Not that this was really such a surprising political maneuver, although Nixon had kept all premeditation secret until after the talks. His clandestine politics conjured in the Japanese feelings of betrayal: they worried that the United States wanted to open trade with a former Japanese enemy without the new Japanese leadership finding out. At the end of the day, however, Nixon’s changes were brilliant. Everyone benefited, including the Japanese.
These two events led to questions about the value of the US dollar and the force that US politics wields to manipulate international economies. The United States pushed the Japanese to rethink terms and guidelines for cooperation and reconciliation with previous enemies, thereby planting the seeds to spur future growth.
After the Yom Kippur War, Egypt, Syria, and the Arab members of OPEC put an oil embargo temporarily on the United States for sending $2.2 billion in emergency aid to Israel. This embargo led to the oil crisis, or Oil Shock of 1973—which deeply impacted the Japanese economy. Since 1945, Japan had depended on American markets and demands. The Korean and Vietnamese Wars provided Japanese industry room for growth and steady state-sponsored business manufacturing tanks, cars, airplanes, helicopters—you name it—for the US military. The first Oil Shock brought Japanese consumer spending to a standstill. Much like what occurred during the 2008–2009 recession, the Japanese people no longer sought after luxury or high-end goods. In terms of fashion, men and women wore the same clothes year after year, rather than replenishing according to the season’s trends.
These events played a pivotal role in Takihyo’s history in the 1970s. We had become accustomed to increased consumer spending from the decade before, and so we did not foresee such a dramatic shift. This break from the past annihilated distribution channels and forced us to shut down a number of once-lucrative divisions, including the Steelcase joint venture and the carpet-manufacturing business. In the following chapter, I will discuss how these historical events had a detrimental effect on both my corporate and personal life.