22 October 2016
Hoshi Ryokan hotel has been owned and run by the same family for 1,300 years. Photo: Wikipedia
Hoshi Ryokan hotel has been owned and run by the same family for 1,300 years. Photo: Wikipedia

How to create a family business that lasts a thousand years

I’m interested in family business successions and spent quite a number of years studying Japanese companies that have been around for generations.

There are 5,586 companies worldwide that have existed for more than 200 years, 3,146 of which are Japanese, according to a survey by a South Korean bank.

There are more 50,000 Japanese companies that have lasted more than 100 years but only seven have been around for 1,000 years. All of them are in Japan.

Ikenobo, founded in the 15th century, is the world’s oldest school of Japanese floral art.

The company, which has existed for 1,428 years, is in the business of flower arrangement, driven by a philosophy that links beauty with nature.

That is the spirit of Ikenobo.

The world’s oldest family hotel, Hoshi Ryokan, was built in 718 A.D.

The hotel has been owned and run by the same family for 1,300 years.

It’s also the world’s oldest independent family business, having passed to the 46th generation.

The hotel is famous for its hot springs.

I was lucky to meet the owner, who told me the secrets behind a successful family succession.

He starts the day at 6:45 a.m. with a talk to hotel staff and customers about its history and culture.

The story goes that a great Buddhist teacher named Taicho Daishi built the spa hotel, setting a rigid succession plan in the process.

Each generation, the hotel would be managed and owned by only one successor, with other family members leaving the family business for marriage.

Daishi’s succession planning meant that family members were less likely to fight among themselves for control of the business which in the extreme could cause its demise.

Under that plan, the hotel will pass to the eldest grandson of the 48th generation because the eldest son of the current owner is dead.

Through all these changes, the hotel has preserved its history. For example, the old garden and teahouse are still there.

The hotel was devastated during World War II and for five years, it had no customer but continued to pay the salaries of its employees.

The owner treated his employees as family, a trait that is deeply embedded in the business culture.

The current owner and his wife are actively involved in the daily operation of the hotel.

They hope to bring a unique experience to their customers, building on the hotel’s long history and continuously making improvements to service quality.

A clearly defined philosophy is essential for the next generation to grow the business.

This includes making the best use of its assets and managing cost.

Come to think of it: These same principles can be adopted by Chinese family businesses.

Allan Lee Ka-fai wrote this article, which appeared in the Hong Kong Economic Journal on Dec. 18.

Translation by Julie Zhu

[Chinese version中文版]

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