It’s interesting that a bit of the incredible international saga that is Carlos Ghosn has popped up in the San Fernando Valley. As you can read in the article on the front page of this issue, a local car dealership group has alleged that the-then Ghosn-led Nissan strong-armed them into selling cheaply to a crony of Ghosn.
That’ll all play out in court, presumably. But I’m also interested in something different, and it’s not that Ghosn improbably spirited himself out of Japan by hiding in a big box a month ago. It’s that he made the bizarrely conspiratorial claim that Japanese prosecutors, presumably in league with the government and some high-level moles at Nissan, coordinated the effort to charge him with made-up crimes. He fled the country because, he said, he could never get a fair trial in Japan. It’s all outlandish, preposterous and, in my opinion, probably all true.
At first glance, Japanese business and governmental systems look and feel Western. But they operate quite differently. Businesses don’t prize competitiveness but cooperation; they form sprawling interlocking conglomerations, called keiretsu, and they work in sync with government, including its regulatory agencies. Japanese news outlets are quietly compliant.
The keiretsu and government agencies are clubby and exceedingly protective of Japanese businesses. It has long been notoriously difficult for foreign companies to crack the Japanese market. You might recall one well-known example of how Japanese regulators once moved to ban foreign-made skis because Japanese snow is “different.”
Along came Carlos Ghosn to head up Nissan, one of Japan’s prized companies. Ghosn, who was born in Brazil, raised in Lebanon and educated in France, is not Japanese. He set about upending the way a Japanese company is “supposed” to behave. He linked up Nissan with Renault in France and reportedly was close to bringing Fiat Chrysler into the fold to create a true globe-spanning automobile alliance. With Nissan on the verge of losing even more of its Japanese-ness under Ghosn, he suddenly was arrested and charged with self-dealing and financial improprieties.
What he is alleged to have done is intricate and nuanced. I have no idea if he wrongly paid himself, as prosecutors claim, or if he acted properly and with knowledge and approval of the company, as Ghosn claims. (But I do wonder why a pay dispute, which normally is solved in the boardroom, is supposedly a crime in Ghosn’s case.)
What I do know is that the keiretsu-government power bloc in Japan would never sit quietly while Ghosn transformed Nissan into a non-Japanese company. It’s believable to me that Japan’s regulators would work with prosecutors and high-level insiders at Nissan to stop him. Oh, and since Japanese prosecutors reportedly have a 99 percent conviction rate, Ghosn is justified in saying he likely could not get a fair trial in Japan. (Hey, Japanese prosecutors: If you try just a teensy bit harder, I’ll bet you could achieve a 100 percent conviction rate and be just like North Korea!)
What’s interesting and mystifying is why Ghosn – educated, intelligent, urbane, extremely successful – did not see this coming.
He sees it now. In a recent interview with CNBC, he was quoted as advising foreign business managers in Japan to “get out.” He said if foreign executives have any kind of problem with a colleague or partner in Japan, “you can be set up. And if you’re set up, nobody is gonna save you.”
So it’s interesting that finally someone is blowing the whistle on just how Japan Inc. operates – in clubby, protective and seemingly unfair ways against non-Japanese. It’s unfortunate that Ghosn may be so flawed a character that his message is ignored by the rest of the world.
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It’s reassuring that the San Fernando Valley’s economy continues to outperform just about any other region, as you can read in the Valley Economic Forecast section that begins on Page 13 of this issue.
However, house prices remain impossibly high in the Valley. And, according to Matthew Fienup, the executive director of California Lutheran University’s Center for Economic Research and Forecasting, those high prices carry a terrible social cost. In fact, they could explain why – improbably – Los Angeles County had a net loss in population last year. That is not reassuring at all.
As Fienup put it: “The housing shortage is now a crisis which threatens economic prosperity.”