Japan has an exceptionally high number of family-owned businesses that have passed the third generation, with over 33,000 to 50,000 companies operating for more than 100 years. Collectively, companies more than 100 years old are called shinise constitute over 40% of the world’s total century-old companies.. Beyond its age-defying implications, the term carries important connotations around trust and wealth.
According to the Japan Times, 9 February 2026 the key statistics on multigenerational businesses in Japan are:
- 100+ Years (Approx. 3rd-4th Generation+): As of September 2024, there are 45,284 companies with an operating history of 100 years or more.
- 300+ Years (10th+ Generation+): Approximately 1,938 companies have been in business for more than 300 years.
- 500+ Years: Around 147 companies have existed for over 500 years.
- 1,000+ Years: There are at least 21 companies with over 1,000 years of operation.
Know in the context of business and economy, according to U.S. Bureau of Labor Statistics (BLS) data often cited in financial and professional analysis that:
- 1 Year: Roughly 20% to 23.2% of new businesses fail within the first year.
- 5 Years: Around 48% to 50% of new businesses have closed by the end of the fifth year.
- 10 Years: About 65% to 70% of businesses fail within a decade.
In our case, our business as a management consulting firm under Mien Universal Services commenced on 3 June 1999 some 27 years ago and growing stronger.
According to many cultures especially in the Chinese where succinctly capture in its proverb, “Wealth does not pass three generations” (富不过三代). First we need to understand the perception and where lies the heart matter of the systemic failure of generational businesses.
The cycle is, the first generation creates wealth through grit and fortuitous conditions, the second generation maintain as it is or scale up and by the third generation they lost the fortune. 20-year study by the Williams Group found 70% of families lose wealth by the second generation, increasing to 90% by the third. Common factors are due to asset dilution to family members, lack of business ethics, poor financial education, self-entitlement and most importantly, poor business succession planning.
Legacy Modelling
Our bespoke model was based on a programme that we introduced in Intel University back in 16th April 2010. There was no intention for the programme to be part of a wider model then as it falls under the examination of leadership, management and strategy in which I had intended for it to look into the rise of a never-has-failed footballing coach, José Mourinho who was very successful in what he did with the football club he had coached – Porto, Chelsea, Inter Milan and Real Madrid.
The objective of the program, Win-Lose Proposition in LIfe was to be incorporate into a future book together with two lecturers from a local university, was to predict José’s fall and what is more importantly how he is going to pick himself up and manage himself and the future clubs. Thereupon in distant future he fell acrimoniously with the Manchester United and Tottenham Hotspur as the Special One.
Although everyone can more or less predict where market goes – inflation, downturns, wars and tariffs, very few businesses pick on the impact of COVID-19 that wiped out a lot of businesses except to see the rise of use in digitalisation, internet use and phone applications to order online. It severely impacted productivity with new working culture – work from home, created restrictions, phobias and anxieties and forced organisations to shutter down, some permanently especially those in the retail line.
Since 2010, various programmes were cobbled together for our multitude of clients accumulated and became a compelling story of its own. A journey to look not just at three generations of businesses but also the inspirational journey why people would go at length to keep their family businesses and expand beyond the original intent. Business sustainability is the difficult circumstances for all family offices to maintain.
The Legacy Modelling is made of 2 trilogies that cover:
The 3 Essentials
A family business is often a compact organisation made up of close people – a clan of family members and include friends and other relatives such as the in-laws. It requires the first and foremost an understanding why go into the business.
“The Philosophical Stone”
The history of this stone is said to date back to biblical times where Adam received the knowledge of it from God. According to the legend it was passed down to biblical patriarchs through the years. This stone was also mentioned in connection to the Temple of Solomon (Psalm 118). The centre to all the beliefs and symbol.
For my family business, we believe in strong entrenched Eastern business models that we often generate ourselves for our case use and merge it with some fine thinking values from the Western. If the Japanese being an Asian country can have up to 40% businesses of more than 3 generations old in the world’s total century old companies, then their philosophies to sustain that long should have been given due attention.[1]
“Shinise” – was an adapted concept from a Chinese philosophy of Neo-Confucianism. It became the Japanese ie (家) system, which prioritises the continuity and stability of the family with the “business first approach” as a corporate entity over the individual, bloodline, or short-term profit.
For context, here are some examples of the oldest and older family businesses:
Founded in 578 with the Shitennō-ji temple as its first project, Kongō Gumi is widely considered the oldest company in the world, operational for a staggering 1448 years and counting. It is now operating as a wholly owned subsidiary of the Takamatsu Construction Group as of late 2024. While it faced financial distress and was absorbed in 2006, the 1,400+ year-old firm continues its specialty in building and repairing Buddhist temples, maintaining its reputation for traditional, high-quality Japanese construction techniques.
Nishiyama Onsen Keiunkan is an onsen (hot spring) hotel that opened in the Yamanashi Prefecture outside Tokyo in 705. The oldest tea house in the world, Tsuen Tea, poured its first brew in Tokyo in 1160, and the oldest listed business on the Japanese stock exchange is Matsui Kensetsu, a construction firm that dates from 1586.
What does ie (家) system holds?
- It runs in the family. Family owned that often the first child in the family had been given life lessons about businesses whether the business is big or small. Ie literally means house or home and in keeping the family name alive, the core values are passed from generations to generations. In Europe, one would have used the term, “House of …”
- “Shinise” never lose sight of its stakeholders and its contributory role to society.
- It ensures money in reserve are enough to fund for emergency to fund for the next 2 years of operations.
- There are those that are already household names. Nintendo was founded 1889 in Kyoto to manufacture playing cards; Suntory dates from the opening of a standalone wine store in Osaka in 1899; and Kikkoman came into being in 1917 with the merging of eight family-owned soy sauce companies (although one of those companies had started brewing soy sauce as early as the 17th century).
- Survival through diversification even though not far from original concept. Nintendo although no longer produces playing cards, it is still in the game business.
- Adoption of heir. Steep in ceremonies, companies like Panasonic, Toyota and Suzuki, whose current Chairman, Osamu Suzuki, is the fourth adopted son to fill the role. These days, women can also made into leaders to take over the “Shinise”.
- Challenges, the aging society in Japan forces one to think about atotsugi [successors]. There was a fear of failure and now with the new generation of leaders, they are allowed to make their own mistakes.
Direction – Driving Forward the Initiatives
In any succession planning, it is highly recommended for continual improvements that involve the mentors, past leaders and existing head of family business. A good way like our Malaysian Royalty is to consider rotation with everyone holding an even stake. The other way is whoever came up with the best results should stay to help run the family enterprise.
My pet grouse is that whenever a new person is at helm or at a new role, there are no visible direction coming from the party. Everyone holds their breath waiting for further instruction and without them, no one move an inch or knowing what to do. This inaction can cause a good organisation to collapse under the weight of uncertainties.
I had attended to cases where when an heir took over from an untimely accident of the founder, situation became hopeless because there is no idea, no strategy and no direction provided to the stakeholders and timely use of resources. Over time this cause dwindling in fortune and ultimately the business was not even worth selling and had to be terminated.
I will have to reserve writing on direction in the next issue of this Family Business series as it will take time to shell out my thoughts and opinions. Same as on matters related to the leadership. These are wider and interesting topics to learn about should one enjoy reading and trying out new things. Alternatively, you can reach out to me at Gray@samarata.com.my for any advice and consulting.
[1] https://www.theceomagazine.com/business/management-leadership/japan-oldest-businesses/
Erasmus Koay
A former lecturer at 2 university-colleges (PTPL, Han Chiang) – he had taught
advanced taxation, economics and organisational behaviour.
He enjoy workings since 15 years old at a local supermarket. Registered his 1 st firm at
the company secretary belonging to his boss, YK Tan after 2 years of graduation
A strategic PC game player, played International and Chinese Chess, he has been a
top performing student, known to be honest and tries to be factual and accurate.
(He acknowledges that there are currently too many scams and fake social media to
follow through).
He had been in leadership roles for over 20 organisations. He loves
RPGs, is an amateur writer and avid historian. He was once retired before coming
back to the scene to help out with international and national businesses.
Together with the pro-tem Foundation Directors, National Treasurer and National
Secretary General of Pertubuhan Perpaduan Anak Malaysia (“Society of United
Malaysians), he hoped within these two years, they have the chance to float these
two invaluable organisations to serve societies.
Privately, Erasmus “Gray” Koay supports mentally challenged and elderly care
organisations.
The writer is part of Gray Group, a family office with management consultancy firm
and other agencies.