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Yakuza: "We Have To Evolve Our Business Model"
"We have to evolve our business model," said Masatoshi Kumagai, one of the bosses of the Inagawa-kai syndicate of the Japanese yakuza, in an interview with reporters of the French magazine L'Expansion. In the media, yakuza are portrayed as getting stronger and richer, but the opposite is actually true, he said. They're on decline, and if they don't change their business model, they might cease to exist.
Yakuza are an economic force in Japan with over 100,000 members in 22 syndicates, grouped into three families. An ambiguous relationship between them and the government contributed to their prosperity. After World War II, the government used the yakuza to fight Chinese and Korean gangs rampaging in the country. In the 60s, with the encouragement of the Liberal Democratic Party (LDP) that ran Japan essentially from 1955 to 2009, yakuza broke up massive strikes. As the relationship solidified, their influence spread: Rackets, pachinko, drug trafficking, consumer loans, prostitution—and they got rich. They showed up at parties of the jet-set and threw around money and had so much power that even the anti-gang law, passed in 1992 to control their influence and visibility, wasn't put into effect until six years later.
The slow and lacking response by the government to the horrible earthquake in Kobe in 1995 didn't help. Yakuza swooped in, even using a helicopter, and provided disaster relief while the authorities were dillydallying around. This was played up in the media and added to their aura of semi-legitimacy.
But when a yakuza assassinated the Mayor of Nagasaki, Iccho Ito, in 2007 outside his campaign office, everything changed. Considered an attack against democracy, the assassination caused the government to declare war on the yakuza. And crackdowns began. Then the financial crisis hit, and the LDP was losing its grip on power. In a desperate effort to prop up its popularity, it cracked down even harder.
As a consequence, said Masatoshi Kumagai, yakuza are weakened by repression and can no longer run their businesses as they see fit. The protection racket, for example. If caught by police, a shopkeeper can get in trouble for cooperation with a criminal enterprise. Same thing in construction, which used to be dominated by yakuza. Their influence is diminishing, and they have to make themselves more and more invisible. While there remain some big business opportunities, like drug trafficking, they don't make as much money as before. And what you read in the media about their profits, he said, is exaggerated.
Even in finance, they're weakened. For a long time, they flourished with insider trading because they got the information before anyone else. That's no longer the case. As the recent scandals have shown, everybody engages in insider trading, and yakuza have lost their edge. In fact, he says, there is no longer any dividing line between the legal financial world and yakuza.
According to police estimates, already half of the revenues are derived from legal activities that were acquired or built up with illegal gains, such as construction, finance, and real estate. Many of these legal activities are performed by "associates" who are experts in finance, law, etc., but don't have the signs of true yakuza, such as tattoos.
It's time to look for a new business model, he said. Yakuza operate locally, but they need to expand overseas, which is hard because they've never tried to build relationships with other mafia organizations. Focused on Asia, he's making deals in China and South Korea and recently invested in a casino in Macao. It's difficult to do for a Japanese, he said, and he is the only Japanese so far who has been able to do it, thanks to his contacts in these countries.
"And we have to improve our image," he said. The Japanese people and the government are no longer afraid of yakuza and might reject them entirely. It's already difficult to recruit young talent. To join is less attractive for them than it was before, when they were showered with money, girls, and cars. Young people are different today. They no longer observe the rules. When they screw up, they run away (instead of cutting off part of a finger, wrapping it in cloth, and offering it to their boss as sign of contrition). "When we catch them and beat them up to put them back on the right track, they denounce us at the police," he added. "We used to say 'thank you' at the end."
And prison sentences have become longer, he lamented. Instead of 15 years, someone might get 30 years or life. Back in the day, yakuza were promised a higher position in the organization once they came out of prison. Today with the crisis, it's no longer possible to promise that "when we don't even know if we'll still exist."
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Yakuza are now the retail "Buy Gold" operators in Japan today. Making a nice spread of course.
Wholesale Golf Products
Wholesale Clothing
Stuffed Animals
Wholesale Mouse
Wholesale Clothes Rack
Wedding Favors
Wholesale Frisbee
Wholesale Glass
Wholesale USB Products
Wholesale Bag
Giveaway Material
Solar Products
Wholesale Playing Card
Promotional Gifts
Wholesale Glove
Industrial Supplies
Pen Holder
Wholesale Scarf
Wholesale USB Flash Drive
Wholesale Cap
Writing Instrument
Automotive Products
China Suppliers
Wholesale Cap
Wholesale Bag
Promotional Gifts
Promotional Gifts
Fishing Supplies
Wholesale Binoculars
Wholesale USB Flash Drive
Crystal Gifts
Wholesale Playing Card
Wholesale Racks
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Personal Safety Products
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Giveaway Material
Coin Bank
Wholesale Puzzle
Wholesale Stationery
One of the reasons their insider trading failed is because they were not particularly knowledgeable about markets. One time they were trying to ramp a stock and assumed they could force another trader to cry uncle because that trader had a huge short position in the equity. Flush with cash from banks who knew better than to turn down a loan request, they pushed this stock up to what were then stratospheric valuations, such as 600x earnings for a company in a stagnant industry. What was unbeknownst to them was that the trader was running a equity-warrant arb book. When the warrants were exercised, the short interest fell to zero.
I do not believe the ramper paid back the loan.
It's called the war for talent... even our company has the same problems with finding the right kind of people.
It's like whenever you pay somebody something close to the minimum wage, tell them to do 50% more hours than mentioned in their contract, insult them on a hourly basis THAT THEY EVEN DARE TO SPEAK UP!!
I think that's the problem with the economy today. Products must be priced 5 times above nominal value with a 10% yearly increase, BUT THE WORKING DRONES ACTUALLY WANT A WAGE THAT ALLOWS THEM TO MAKE ENDS MEET SO THE BANKS CAN'T KEEP ON ISSUEING LOANS TO THEM TO KEEP EM DOWN!!
ps: I LOVE THE ARTICLE! :)
#Amakudari
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#DPJ
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#IronTriangle
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#ClientState
In Italy it's still pretty strong. And in every government on earth, the government is the mafia... pay them or they kill you or jail you.
The state is the ultimate gangster. Its revenue model hasn't changed in thousands of years: tax, spend and go to war. Periodic losses of legitimacy get the head lopped off, but another always grows back Hydra-like and that coldest of cold monsters carries on.
"And we have to improve our image," he said. The Japanese people and the government are no longer afraid of yakuza and might reject them entirely. It's already difficult to recruit young talent. To join is less attractive for them than it was before, when they were showered with money, girls, and cars. Young people are different today. They no longer observe the rules. When they screw up, they run away (instead of cutting off part of a finger, wrapping it in cloth, and offering it to their boss as sign of contrition). "When we catch them and beat them up to put them back on the right track, they denounce us at the police," he added. "We used to say 'thank you' at the end."
You know its bad when the bad are demoralized.
Yep even the tough guys are crumbling in Japan, like much else ...Japanese society is in full 'soul-searching' mode trying to find an identity
when you give yourself up to a hierachal culture and become subserviant to an authority sturcture and that structure is led by morons (politicans) who are aimless, clueless and forever failing then you too become absolutely lost
Collectivism has never worked in human history ...the answer for Japan, the answer to everything, is individualism
Yeah right...
The US individualist mentality has destroyed the world and put millions of people into poverty but nevermind...
If you want up to the minute information on yakuza developments, in English, go here: http://www.japansubculture.com/
It's funny that organized criminals like the "Yakuza" are getting squeezed outa work by Fund managers and government. The carcass they feed on is just sun bleached bones but they take solice in diversifying to the marrow.
At the outset of the Depression, Capone, the notorious gangster from Chicago, established the first soup kitchen. He started it because he wanted to clean up his shady image. Capone's kitchen served three meals a day to ensure that everyone who had lost a job could get a meal. Taxes is another story.
". . . there is no longer any dividing line between the legal financial world and yakuza." There lies the pefect solution to his "problem."
the biggest Mafia (racket) in every country is actually Government, not these small beer hard men... look at the Jap' Govts Fukinshambles nuclear balls-up. That's caused more mahem and destruction than the Yakuza could ever wreak in a decade of bad boy behaviour.
Government, and the parasites behind its curtain, Stinks Society Out
Whatever the new model becomes, it should include more hot Yakuza women with full body tattoos
Non-government organized crime has a lot to learn.
Yes but they work their way into the fold. Amaeuter organized crime eventually goes pro.
never a truer word spoken Sir
When I was in Japan in 1995 I made a Yakuza joke and my guide nearly killed me for saying it. She scolded me telling me that people don't TALK about Yakuza. My how times change.
They need to start a mortgage company and makes some real Yen.. "Okuni-wide Mortgage Company"?
the mexica used to have wars with obsidian laced cactus mostly just to capture prisoners in seasonal warmaking with rival tribes so they could make blood sacrifices to the sun god in a absolute show of power
.
honor aint what it used to be
They still make one hell of a motorcycle.
sarc
Interesting. Thanks for the post. I can't read French, so I doubt I would be able to read the original article myself without google translate, which is less than ideal.
Sorry about the French.
Particularly interesting to me is his assertion that yakuza can't compete against regular insider traders, now that the playing field has been leveled.
Bummer when crime doesn't pay.
Obviously, the problem is that these are honest criminals.
Unlike the criminals in the political and banking systems throughout the Western World (where crime *does* pay, and which exemplify growing industries).
All businesses must ultimately deliver value, or they cease to exist. Here, we merely see the Yakuza has failed to deliver value, and they are now accountable to their customers.
On a very serious note, it is quite-a-shame that this type of accountability is absolutely impossible to be practiced nor enforced upon governments, and upon the banking system. It's funny, except that it's not funny.
Of course crime pays, but criminals often fight criminals, as they often work together. Look at the political parties, sometimes they fight sometimes they work together. When money gets tight the criminals are more likely to turn on each other, hell the whole drug war south of the border is criminals fighting criminals over drug profits. The lowly mass man exists as feed stock for those who can pillage, and really this has been the way of things since recorded history. I would bet on government backed criminals over all others, after all when the feed gets low they will look after their own first and foremost.
I do not think we can link criminality to the need to create value. By definition they are monopolies (of their service) or cartels fighting to gain a monopoly. It's not like the masses have a choice in government, it's the governments way or the highway, until the masses can no longer bear it. Still years away from the level of hunger necessary to create any real change, way to much wealth left over.
Shameful,
Where have you been? Thought you were dead...
Agreed, but the Yakuza wasn't previously rejected by society because society accepted their role as delivering value. Yakuza helicopters with aid relief (when none came from the government) are an example. Similarly, the Mob in Chicago and New York (USA) are accepted because, in part, they deliver value: It's a "tax" on society, but accessing Mob resources permit you to have a crime-free business, and to "get things done" (such as approving permits, removing red tape, and accessing resources that were previously unavailable to you).
In the case of the political parties (USA), they both screw the populace, and the populace doesn't get sufficient value in return. That's why we see their single-digit approval ratings. But, unlike the Mob, people cannot hold their government accountable. The system is designed to ensure you grant "Titles Of Royalty" with life-long Tribute to at least one of two idiots each election cycle.
Agreed, but their drug market *is* delivering value. People want the drugs. If we lowered the demand curve for illegal drugs, their business would *collapse*, and they would have nothing to fight over. Their business model is mostly independent of the "supply curve" (e.g., it's a "vice"). The fact that the demand curve for illegal drugs exists is evidence of the value these cartels provide (delivering things people want).
Reasonable point, I was being "cute", the guy that steals the stereo from your car didn't "create value". However, that guy isn't a "criminal enterprise". I'd assert that criminal enterprises are quite similar to businesses, and they *do* create value, because the institution must feed itself through providing goods-and-services that society *wants*. For example, an illegal "chop shop" creates value by providing spare parts to satisfy demand and feed a healthy secondary auto-parts market. The only reason it is "illegal" is because they pay "criminally low prices" on their raw materials.
That's my assertion: Because governments are not accountable, and not delivering value, their existence is only through coercion. The people are powerless to hold their governments and banks to account. Specifically: Criminal enterprises are accountable to their customers, whereas governments and banks are not.
Yes, I still assert that people *do* hold their local Mob, Yakuza, or Warlord to account. Not so governments and banks.
Yes, I am asserting (quite seriously) that this lack-of-accountability is the same reason that governments and banks enjoy less moral and social authority than do the local Mob, Yakuza, or Warlord.
Except in this case, where the Yakuza are re-doing their business model to regain that social support. Probably, they should just try for an IPO like did Groupon.
"the Mob in Chicago and New York (USA) are accepted because, in part, they deliver value"
mikla, please cite an example where the modern-day Mob delivers value in the US, outside of providing a drug market (which i agree provides value).
Was not the next sentence a sufficient example, or did you want something more specific?
Examples of specific criminal enterprises would be those that typically provide for high-cash-transactions, or with high-infrastructure requirements. When laundering money, they are willing to reduce prices to induce transactions, providing higher-than-otherwise economic activity (and money velocity). Wholly fictitious examples for the purpose of illustration would be trash collection, glazier (glass, especially commercial), hardware stores, toll roads, and commercial trucking. And, restaurants and food delivery are always great as social settings to do business, as well as being high-cash-transaction locations.
Not to get off-topic, but the same quoted sentence applies to Unions. Merely flashing the Teamsters Card "solves" all kinds of problems, simply by illustrating you are, "in the club".
First-hand accounts in both settings are too numerous to list.
[UPDATE] I can't believe I forgot (one of) the most important social and economic benefits functions of the Mob in the USA: They are the "Third" Political Party. They serve as your protection racket local advocate to *protect* you from the other Organized Crime units political parties. You can give your protection money campaign contributions to either of the "regular" political parties, or you can give them to the Mob, who will tell the "regular" political parties what to do. While Guarantees are not offered in all areas, you can check for Locations Near You for whether this Very Useful service is available *Illinois*cough* *New York*cough*.
And, by "Very Useful", the assertion is literal: The Mob is often both *cheaper* and *more reliable* than buying your local Congress Critter (e.g., their service provides greater value than does the alternatives). They can be cheaper and more reliable by "buying in bulk" and passing their "savings" on to you, the Little Guy. (In essence, they are "pooling" "contributions" from many "little guys" to let them compete against contributions from other sources.)
i was phishing for something more specific, thanks for your cogent response. and your OT and UPDATE was not OT at all, in fact, this is exactly where i hoping you would take it. of course, we're just speaking in the theoretical, of course, none of this stuff ever goes down in the real world.