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March 15, 2003

A Family Affair

Mark McBennett
Japan Zone

The recently announced merger of fierce rivals Tuttle Shokai and Yohan is not just a major development in the foreign book distribution business in Japan. It is also many tales in one: the story of how one man dreamed of creating a bridge between East and West; mixed with elements of the Prodigal Son; and a dose of harsh reality for the fossilized businesses in Japan that refuse to enter the 21st century.

Spanning East and West
There was a time in Japan when, if you were able to pick up a book in English, you owed a debt of gratitude to a man named Charles E. Tuttle. In Japan today, several separate firms bear his name. They may be moving in different directions and no longer related as companies, but they share the same roots.

Most people think it all began after the Second World War. In fact, the link between the Tuttle family and books goes back much further. In the words of current Tuttle Publishing president Eric Oey (whose mother is Charles E. Tuttle's cousin), "We go back to 1832 in Rutland, Vermont when one of the Tuttles bought over the newspaper. But one ancestor, Richard Tothill, was active in printing in Elizabethan England in the 1550s."

But we pick the story up in 1948, when Charles E. Tuttle founded a publishing company in his own name with a mission to publish "books to span the East and West." The US occupation had created a market for English language books, which the company imported from the US. Tuttle was aware that the language and cultural barriers neded to be overcome if there was to be understanding between Japan and the West. In the early 1950s, he started publishing books on Japanese language and culture and became one of the earliest and most active publishers of books to teach Japanese to Western readers, and English to the Japanese.

Many of Tuttle's publications received awards from the Japanese government, and in 1983 he was awarded the Order of the Sacred Treasure by the Emperor for his contribution to Japanese-American understanding. When Charles died in 1983 at the age of 78, there were two publishing companies, based in Boston and Tokyo, but today his legacy lives on in a company that has become part of a global enterprise. As a relative of the founder who had built up his own publishing business, Periplus, Oey was offered the chance to buy out the Tuttle businesses, and his decision to do so in 1996 has kept them "in the family".

A pretty straightforward rags to riches success story. Perhaps the only blip is that Japan's stagnant economy forced Tuttle Shokai, the company's distribution arm, to be sold to relative newcomer ICG-Muse at the end of 1998. But let's go back to the good old days for a moment.

The Golden Years
In the 1950s and 60s and with Tuttle expanding in both distribution and publishing, some employees saw a demand in areas that the company couldn't handle, translation rights, magazines and later on education books. Tom Mori set up the Tuttle Mori Agency, to handle the translation rights of English books in Asia. Another was Frank Watanabe, who understood the book trade and realized that the English market was getting big enough to be able to support several companies. With support from Charles, he founded Yohan in 1963 to import more books especially from the US. As both companies grew in slightly different directions, Charles focused on publishing and Frank on new import partners. The market continued to grow as the "economic miracle" hit full steam and the Japanese developed a real taste for all things Western.

It was also a period when the ELT publishers first started knocking on the door. The earliest to arrive were Prentice Hall (now part of Pearson) and Oxford University Press. Yohan had developed a nationwide distribution network and the publishers quickly saw that this was the best way to make their materials available to key bookshops from Hokkaido to Okinawa. At this time, the focus at Tuttle was on publishing but it was still importing books also, through Tuttle Shokai. The historical relationship was that Yohan handled US publishers and Tuttle Shokai handled UK publishers. What must have been a friendly rivalry at first now became much more fiercely competitive as Yohan saw explosive growth. For the overseas publishers there were now two major players who dominated the distribution of foreign books in Japan: Yohan (magazines, paperbacks and ELT) and Tuttle Shokai (paperbacks and visual books).

By the time of the "bubble years" towards the end of the 20th century, age had caught up with Frank Watanabe and, though he still spent a lot of time at the office, his son and successor Nori now ran the business. And business was good. Yohan had the country's largest network system, with strong relationships with the big US publishers and key ELT publishers. Chief rival Tuttle Shokai was now the clear underdog and, perhaps due to this market domination, Nori made a fateful decision. He was convinced that Yohan should move into publishing but, in the words of former Tuttle Japan General Manger and Vice-President John Moore, "as many distributors worldwide have found to their cost, this was a classic mistake." Under Shinsuke Suzuki, Yohan Publishing was hemorrhaging money with only a couple of hits among their several hundred titles and distribution only within Japan.

Reality Bites
The bubble burst in the 1990s and the book market was one of the many casualties. Sales fell year by year and to make matters worse, the ELT and trade publishers were establishing their own distribution routes. Harlequin, who were said to account for 30% of annual turnover, set up their own office. The arrival of the Internet and Amazon in particular further eroded the position of distributors, whose special bookrates were a major reason for inflated foreign book prices. Local bookstores such as Kinokuniya and Maruzen were quick to see the importance of online presence but Yohan failed to realize its own predicament.

On the ELT side Yohan had created School Book Service run by the publishing head Suzuki but, due a lack of understanding of how to sell to the foreign community, they lost direction despite benefiting from very favorable terms from major publishers. Small enterprising companies such as English Resource (under the enlightened leadership of David Harrington), Little America (formed by ELT News contributor Helene Uchida) and Nellies were able to adapt to the evolving market and change the face of distribution. Yohan's all-important nationwide network started to break up, with layoffs and branches being close in various parts of the country. Yohan ceased publishing and the final straw for the company was the selling of its head office building to Waseda University and moving personnel to rented property.

It was amidst this dramatic shift in fortunes that Yohan turned to the unlikeliest of places for help. Though the merger had been discussed behind closed doors for six months, the industry was taken completely by surprise when the deal between Tuttle Shokai and Yohan was announced early this month.

A New Start, or Full Circle?
The new company -- to retain the name Yohan -- is to start on June 1st and will have 70% of the general-interest Western book market, excluding specialty publications. Tuttle Shokai President Hiroshi Kagawa (photo, left, courtesy of Tuttle Shokai) will become President and CEO while Nori Watanabe will be appointed as Chairman. But insiders say that the arrangement is very much a buyout of Yohan by Tuttle Shokai. There is bound to be overlap and the company is expected to close branches and shed more staff. Also the question of market monopoly may yet arise, but Shokai will be able to benefit from Yohan's experience in ELT and the marriage may turn out to be a good one.

According to Watanabe, "The foreign books still account for a very small percentage in the English Language Teaching market, which is estimated to amount to two trillion yen. By the formation of the new company, we hope to play an important role and make a positive contribution to the sales growth of imported materials in the ELT market." He adds, "We hope to put our efforts on reversing the recent downward trend of book sales by shifting our focuses from competition for the market share at bookshops to promotion and expansion of the foreign book business in and beyond the traditional market."

Like several other people contacted while researching this story, Watanabe was at pains to point out that the various companies that today bear the Tuttle name are unrelated. But the fact remains that over the last half century, many of Japan's major publishers as well as the companies that have controlled foreign book distribution all grew out of one man's dream. Kodansha International, Weatherhill, Stone Bridge, Taschen. All these companies were founded or led by former Tuttle people. It is said that even long after her husband had given up running the business, Charles's widow Rieko Tuttle always liked to know how Yohan -- "the competition" -- were doing. Well now they're all just part of the family again.

Related Web sites
Tuttle Shokai | Yohan related News | Tuttle Publishing (no longer related to Tuttle Shokai)



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