Writing off the regulated home market: going abroad, and moving the group head office to Hong Kong (1990)

The origin of the company, and the distant cause of its end

Yaohan’s move overseas was born of an idea — turn the handicaps of being late and being regulated into an attack — and, in a mid-sized Shizuoka firm aspiring to be an international distribution group, it stands out among Japanese retailers. The unusual decision to relocate the head-office functions to Hong Kong followed from the same consistent instinct: make the decisions close to the growing market. But expanding at home and abroad at once while the domestic core was thinning, and paying for most of it with bonds, can be seen as the flip side of a dependence on the experience that things had always somehow worked out before.

Wada’s favourite line — “there is no chance where there is no risk” — was a hair’s breadth from expansion without adequate preparation. Going abroad was the origin that defined Yaohan’s identity, and, through the funding burden of fighting on two fronts, it was also a distant cause of the collapse. Had regulation eased earlier, could the company have secured its footing at home instead? Or was the essence of it simply that the control system never caught up with the expansion? That an aggressive strategy both shapes a business and undermines its footing is an ambiguity still worth re-examining whenever a latecomer goes looking for a frontier.