Nippon Shinpan Company, Ltd.
Nippon Shinpan Company, Ltd.
33–5, 3-chome Hongo
Incorporated: 1951 as Nippon Shinyo Hanbai Company Employees: 6,369
Assets: ¥4.52 trillion (US$36.18 billion)
Stock Index: Tokyo Osaka Nagoya Frankfurt Luxembourg
When Mitsunari Yamada convinced four Japanese department stores to accept coupons in lieu of cash in 1951, he started what would become Japan’s first and largest consumer credit company, one that today handles credit cards, loans, credit guarantees, real estate, financing and leasing.
Yamada pioneered Japan’s credit industry during a time of high consumer prices and economic uncertainty. In the years following World War II, Japan faced not only rampant inflation, but a shortage of resources amid a boom in population. This economic plight was ripe ground for Yamada’s credit services. With the founding of Nippon Shinpan’s forerunner, Nippon Shinyo Hanbai Company, in Tokyo in 1951, Yamada offered consumers a chance to pay for goods on installment. Yamada had negotiated an agreement with four major department stores to accept Nippon Shinyo Hanbai’s coupons as payment for goods. In the years to follow, the company, which soon changed its name to Nippon Shinpan, gradually added stores to its network, to make credit payment more convenient and appealing to consumers.
Just five years after launching its credit business, Nippon Shinpan moved into another industry, real estate, marketing Japan’s first luxury condominium in 1956. The successful endeavor lead to handling mortgages and selling homes and home sites.
Nippon Shinpan’s housing business would prove vital after the Ministry of International Trade and Industry (MITI) in 1959 set restrictive guidelines on credit services. Designed to help small retailers, the MITI guidelines limited coupon use geographically, severely curtailing Nippon Shinpan’s credit business.
The company responded by stepping up its housing-related activities. In 1960, Nippon Shinpan became the first company to offer housing loans, with more housing and condominium development to follow. Taking a bold step, the company also began to guarantee unsecured cash loans made by other financial lenders. The move brought new opportunities to consumers and, according to the company, the service grew “phenomenally” after it was initiated.
By 1963, Nippon Shinpan had found a way to sidestep MITI guidelines by offering “shopping loans.” These loans involved no coupons and as a result were not covered by the MITI rules. Under the procedure, consumers would apply for credit at member stores. Once credit was approved, Nippon Shinpan would pay the purchase price for goods and consumers would pay the loan back in installments.
Nippon Shinpan began issuing credit cards in 1966, launching what would turn into its largest business. Also during this time, the company made plans for an extended network of offices and branched into loans backed by securities.
The 1970s marked Nippon Shinpan’s first ventures abroad. In December 1969, the company struck an agreement with MasterCard International (then Interbank Card Assocation) to make the Nippon Shinpan card accepted internationally. By June of 1973, Nippon Shinpan was issuing MasterCards overseas.
Its ventures overseas prompted the company to establish liaisons with retailers and banks in Hong Kong and Hawaii, two popular Japanese tourist destinations. Leisure had already become an important sideline for Nippon Shinpan. In 1971, the company opened its exclusive U-Topy tennis club in the resort area of Karuizawa.
Foreign bonds became company business in the late 1970s; Nippon Shinpan issues Swiss franc bonds in 1976 and deutsche mark bonds in 1978.
In 1981, Nippon Shinpan entered a joint venture with the BankAmerica Group to set up the International Factoring Corporation, a financing concern targeting small and medium-sized companies. The newly formed company focused on purchasing debt and servicing accounts. Japan’s sluggish loan business prompted BankAmerica to pursue the partnership, according to the Financial Times.
Though continuing to expand both its financial and real estate businesses, growth in the credit card arena was Nippon Shinpan’s signature for the 1980s. During a four-year period between 1984 and 1988, card circulation grew from 10 million to nearly 18 million. Member stores in Japan hit 334,000 in 1988. The company also entered joint-card agreements with Japan’s Postal Savings system, a major savings organization, as well as MasterCard and Visa International.
The Visa deal, in 1987, put the Visa logo on the 13 million cards Nippon Shinpan had in circulation in Japan at the time. Most of the cards were private-label cards for companies like Shell Oil and Shiseido, a cosmetics retailer. The remaining cards Nippon Shinpan issued itself.
In 1988, the company established the International Credit Card Business Association, an organization with a goal of promoting MasterCard and Visa credit cards, ensuring that credit cards will continue to be the backbone of Nippon Shinpan’s business well into the next decade.
International Factoring Corporation; Nippon Shinpan General Finance Company, Ltd.; Nippon Shinpan Money Shop Company, Ltd.; Nisshin Kensetsu Company, Ltd.; Seibu Nippon Shinpan Company, Ltd.; Nippon Shinpan Information Systems, Inc.; Nippon Shinpan (Asia) Ltd.