Stephen Givens is a corporate lawyer based in Tokyo.
Evasion of difficult subjects is hazardous to corporate survival. As old Japan hands know, tatemae is a special mode of the Japanese language employed to obscure and soften "difficult" subjects.
A famous example of tatemae is "Let us take that back and consider it," in response to a well-meaning proposal. The correct translation for this tatemae is, almost always, "No."
The ongoing Toshiba saga is providing fresh and arresting examples of tatemae that require translation for the uninitiated. As a public service, I will do my best to render the true meanings hiding behind the words uttered by some of the Toshiba protagonists in recent days, recognizing -- with humility -- that this is an inexact science.
The Kabuki-like Apr. 14 press briefing by Toshiba Chairman Osamu Nagayama and once and future CEO Satoshi Tsunakawa, announcing the resignation of CEO Nobuaki Kurumatani, who was unable to attend the briefing himself, provided several gems of tatemae.
Question: Was Kurumatani fired? Nagayama: "There is no talk of firing. We will limit ourselves to saying the request for resignation came from the man himself today." Translation: Yes, he was fired.
Question: Will Kurumatani's resignation affect Toshiba's response to CVC Capital's buyout offer? Nagayama: "It wasn't a formal offer. Kurumatani resigned for personal reasons." Translation: Yes. We have requested that Japanese banks not cooperate with CVC.
On Apr. 20, Toshiba issued an announcement that it had received a letter from CVC containing another fine example of tatemae, this one in English: "We will step aside to await your guidance as to whether privatization of Toshiba will suit management's and the board of directors' strategic objectives." Translation: You win. Kurumatani wrong-footed us.
The announcement went on to express regret that, "although [CVC's proposal] was neither initiated, solicited nor publicly disclosed by the Company, the press came to know the facts... at almost the same timing as receipt of the proposal by the Company. This unfortunately caused worry among transaction counterparties, our employees and other concerned parties, as well as turbulence in the stock price."
Translation: Kurumatani is a rat for soliciting the CVC bid behind our back and trying to force our hand by leaking it to the press. We ask for support and forbearance from friends and family while we deal with un-Japanese behavior from the foreigners.
The announcement then closed: "The Company is now commencing a fresh review of measures to increase corporate value including capital allocation."
This statement, for a full understanding, needs to be juxtaposed against CEO Tsunakawa's remarks at the earlier press briefing: "The basic direction of the Toshiba Next strategic plan will not change, but market conditions have changed, so appropriate adjustments will be made. We will let you know when the plan has been formulated." Translation: Do not hold your breath for any major changes.
Correctly sensing that Toshiba was digging in its heels to avoid a private equity bidding war that would provide a profitable exit for existing shareholders, Toshiba's third-largest shareholder, 3D Investment Partners, a Singapore-based fund run by Japanese managers, sent an open letter containing its own nuggets of tatemae.
The letter begins by establishing 3D's bona fides as a good citizen motivated by altruistic ideals larger than panic at seeing a profitable exit slipping through its fingers: "We believe the Company has tremendous opportunities to create value for shareholders, provide rewarding work for employees, invent and develop important products for customers, and deliver benefits for all of society."
Midway, however, the foggy tatemae about Toshiba's multiple "stakeholders" lifts: "The Board and the executive team have the opportunity to build trust with shareholders, or for that trust to further erode... Toshiba should explicitly indicate that it is open to alternative ownership structures and correct media speculation that Toshiba's management team and Board have a strong preference for remaining a listed company."
Translation: Please, please, please invite a private equity bidding war so that we shareholders can enjoy a profitable exit. Toshiba's answer almost writes itself: "Let us take that back and consider it."
Tatemae is harmless and even charming when used to avoid unnecessary embarrassment or wounded feelings in social situations. It stops being funny, though, when the pilot of an airplane losing altitude is on the radio with the air control tower.
Given the life-threatening circumstances that Toshiba is facing, it is unnerving that the Toshiba Next strategic plan itself invites interpretation as an elaborate work of tatemae. The plan calls for Toshiba, from and after 2023, to morph into a "cyber-physical systems" technology company. But what exactly are "cyber-physical systems," and who will buy and use them?
The Toshiba Next plan is full of generalities: the new frontier will involve lots of data and artificial intelligence, eschew low margin, capital-intensive manufacturing. Left unexplained is how thousands of engineers who have spent their lives designing and making things will be gainfully employed no longer making things. The new Toshiba is defined in purely negative terms: it will not be the old Toshiba.
At the Apr. 14 press briefing Chairman Nagayama and CEO Tsunakawa reiterated that Toshiba Next would proceed, save possible marginal adjustments for current "economic circumstances," despite Kurumatani's "resignation for personal reasons."
Because it is by nature an inexact science, tatemae translation of official comments on Toshiba Next can be offered only tentatively and with caution. The closest approximation we are able to offer for the time being: "We have no idea."