Business

Japan's business gift culture says it with orchids

by Yuko Takeo

Bloomberg

In Japanese business celebrations, there’s one thing you’ll almost always see: orchids.

Pots of the exotic flowers, which often sell for about ¥20,000 ($176), will be there in a newly appointed president’s office, at the entrance of a company that just finished its initial public offering, and in the lobby of an investment fund that hit, say, ¥100 billion in assets.

Giving moth orchids in the business world, a practice that took off during the high-growth era of the 1980s, is so ingrained that the country now has its own listed orchid seller, ArtGreen Co. Its shares have surged 111 percent since it started trading on the Nagoya Stock Exchange in December 2015. ArtGreen President Yutaka Tanaka, who founded the company as a way to hit back after being bullied at school, says he owes his success to the custom and the flower itself.

“Japan has a deep-rooted culture that values human relationships, and there’s the habit of gift-giving between corporations as well,” Tanaka, 51, said in an interview in Tokyo. “Only orchids are available all year round in the same shape and size. That’s why the market grew so much.”

Tanaka says ArtGreen, a tiny company with a market value of just $10.9 million, is also succeeding because the company found a way to win orders from the nation’s biggest corporate groups: locate the one subsidiary, whose name usually isn’t disclosed, that provides miscellaneous business services for the entire group, including buying their orchids.

ArtGreen’s bestselling arrangement, which has at least 30 individual flowers in a pot with chiffon paper coverings, retails for ¥20,000. Pricier versions can feature company logos or designs spray-painted onto the white petals using specially developed powder. They can cost as much as ¥60,000.

Tanaka founded ArtGreen when he was 25 after noticing in a handbook on Japanese business leaders that one of their most popular hobbies was gardening. He says he was bullied and called nicknames from elementary school on and wanted to become a company chief executive officer so that he could go back and flaunt his success at class reunions. Today, he says he’s never been to one of those gatherings and has no plans to do so.

In a country where finding alternative indicators of the economy has become something of a national pastime, with everything from the width of men’s neckties to the thickness of women’s eyebrows linked to economic health (the bigger, the better, for both), ArtGreen’s good fortunes raise a broader question: are Prime Minister Shinzo Abe’s policies stimulating the nation’s animal spirits?

“This business is clearly tied to the economy,” Tanaka says. “After the financial crisis, companies lost their budgets and started to send telegrams instead.”

But the data show a more muddied picture.

The number of potted orchid arrangements sold annually in auctions tracked by the Japanese Flower Auction Association stood at 1.92 million in 2015, the latest year for which data are available. That’s broadly similar to the 1.89 million level two decades earlier in 1995. It’s fallen since Abe returned to power at the end of 2012, and ArtGreen’s own sales haven’t budged since it started disclosing quarterly earnings in 2015.

On price, the numbers are more positive. The wholesale price of a potted arrangement of orchids has risen more than 40 percent over two decades, with increases accelerating under Abe, climbing 14 percent in the three years through 2015.

For Akiyoshi Takumori, chief economist at Sumitomo Mitsui Asset Management Co. in Tokyo, orchid sales are an imperfect indicator of economic strength. “These things get sent even in tough times,” he says. Takumori has his own alternative indicator for the economy: he goes to sumo tournaments and counts the number of advertisements paraded around the ring before bouts.

Whatever the case, the flowers have certainly been kind to ArtGreen’s Tanaka. When ArtGreen listed its shares it got lots of orchids as presents.

The supplier, in many cases, was itself.

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