- The Washington Times - Wednesday, January 15, 2003

TOKYO, Jan. 15 (UPI) — The continued struggle of one of Japan's biggest retailers continues to flash across the nation's dailies. Its department store arm is expected to be the first company to take advantage of a soon-to-be established government agency that will focus on reducing bad loans in the private sector.

In fact, if Seibu department store does succeed in securing taxpayers' money to stay afloat, it would be the biggest bailout of a Japanese retailer since supermarket chain Daiei obtained $4 billion last February from creditors. It will also be going against the tide of some of its predecessors, namely the Sogo department store, which went belly-up in 2000 as a result of the post-bubble economic doldrums of the late 1990s.

Yet despite all its financial concerns, the man who started up Seibu Department Store and all the other Seibu affiliates is nowhere to be seen these days. But it wasn't always like that.

Taking advantage of his father's railway empire, Seiji Tsutsumi had built up the Seibu Railroad network from the rubble of World War II, eventually nurturing the Saison Group into something far broader and bigger than what his father had imagined. Seibu department stores, Seiyu supermarkets, Loft stationery shops, Seiyo property developer, and Credit Saison credit card company, to name but a few, all were the result of Tsutsumi's endeavors to expand his business opportunities under the Saison umbrella.

His empire has affected the daily lives of those living along the Seibu railroad lines, as the stations along the way more often than not have a Seiyu supermarket standing in front of them, whilst the major terminuses usually have a Seibu department store located above them. Not only do they commute and shop, courtesy of Tsutsumi, but they may even be living in a home developed by the group and even have credit card debt from them. But while the group was able to take advantage of a Japan devastated by its war efforts, it has not been able to stave off the pressures of the continued decline in Japan's finances.

The latest blow to the once upwardly mobile group is the likelihood that Seibu department store will be the latest retailer needing a government bailout from its ballooning debts. Seibu executives held a board meeting late Tuesday, and the company is pleading for a financial aid package totaling about $1.9 billion. Not only that, Seibu is projected by financial analysts to be the first company that will take advantage of the Industrial Revitalization Corp., a government entity that will start up on April 1. The IRC will be set up to help ailing companies get back on their feet by purchasing loans they may have from financial institutions apart from their main creditor.

Seibu will be having a meeting with its seven principal creditors next Tuesday to outline just how it hopes to restructure its debts with financial assistance, both from the banks that it had borrowed from, as well as public funding, according to one banking analyst at a Japanese bank. Mizuho Holdings, the department store's principal bank, has already said it would be prepared to provide assistance to the ailing company, which in turn has again fueled criticisms that Japanese banks are not serious enough about reform. After all, many analysts blame the banks themselves for getting involved in the first place, by trusting too heavily in the brand name when extending loans and allowing borrowers to over-expand during the real estate bubble of the 1980s.

Meanwhile, the IRC is expected to buy up loans that approximately 30 financial institutions — excluding the seven primary creditors — had provided. That sum is estimated by some analysts at $1.6 billion.

Nevertheless, it is clear that Seibu sees that its financial difficulties cannot be solved maintaining the status quo, and it has already stated it will nearly halve its staff numbers to 3,400 by the year end, and also extend opening hours to 11 p.m. in an effort to attract shoppers coming in after work, among other measures.

The department store, however, is not the only company in the Saison group undergoing significant changes in order to survive. Seiyu, its supermarket chain, sold 34 percent of its total shares to U.S. retailer Wal-Mart in December, making Wal-Mart the supermarket's biggest shareholder. As part of an equity and operations alliance between Japan's fourth-largest supermarket and Wal-Mart, the U.S. company could actually hold more than 66 percent of the total shares by 2007.

Wal-Mart's presence at Seiyu is likely to grow only stronger in coming months as five senior executives from the U.S. retailer will become board members on March 26, while six of the 14 board members of Seiyu resigned Wednesday. Japanese chain stores will no doubt be eyeing closely whether the U.S. method of mass retailing will actually take off with consumers here.

Oddly enough, though, the man who created the department store and all other Seibu enterprises has kept quiet throughout it all. Admittedly, Tsutsumi has rarely been seen in the public limelight since he stepped down as chairman of the Saison group in 1991, and he has shied from making his personal views known as the empire he steadily built up has slowly eroded.

Yet Tsutsumi is an executive who readily challenges the notion of the gray Japanese businessman. For it was he who won the rights to represent French designer Yves Saint Laurent, promoted Issey Miyake in his stores, and set up an office in Paris, all in the 1950s when Japan was only just emerging after the war.

He continued to combine business and pleasure by promoting modern art and avant-garde theater through the Seibu department network, and he extended his operations to include developing golf courses and resorts. But since his endeavors began to turn sour, Tsutsumi has not only stepped down as chairman, he has also declined to be interviewed and spends most of his time working on his Saison Foundation, promoting the arts.

Not even the latest blow could bring him out of retirement, and there is speculation that the inability to fill the void that he left has ultimately led to Seibu's steady decline.





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