Merrill Lynch in Japan

Essay by schmitalexUniversity, Bachelor'sA-, January 2010

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University of PhoenixDecember 16, 2009According to Hill (2009), Merrill Lynch is a US-based financial services investment-banking titan. The company began to successfully globalize in the mid 90's through acquisitions and mergers. Merrill Lynch was "the first foreign firm to enter Japan's private client investment market…[and] found it extremely difficult to attract employee talent and customers away from Japan's big four stockbrokerages, which traditionally had monopolized the Japanese market (Hill, 2009)."ChallengesThe legal system of Japan is very different from the United States. "Restrictive regulations made it almost impossible for Merrill Lynch to offer its Japanese private clients the range of services it offered clients in the United States (Hill, 2009)." This made it extremely difficult for Merrill Lynch "to sell non-Japanese stocks, bonds, and mutual funds to Japanese investors (Hill, 2009)."A cultural challenge to the investment titan was how the American company was perceived in Japan. Merrill Lynch in Japanese literally translates to .

To an uneducated Japanese national, the word meaning may be quite unfamiliar, and the word Lynch may be misinterpreted to be something more offensive.

Merrill Lynch's attraction to the Japanese market was based on the financial assets owned by Japanese households ", amounting to ¥1,220 trillion in late 1997, only 3 percent of which were then invested in mutual funds (Hill, 2009)." Getting these individuals to invest in an American company's idea of investing was difficult at first, however, with the previous failure of Japan's stock market and the bankruptcy of a trusted stockbrokerage, Merrill Lynch was in the position to influence the Japanese to invest in its financial services.

Government RolesAfter the 1991 crash of Japan's stock market and the bankruptcy of one of the four major stockbrokerages, the Japanese government decided to deregulate much of its financial services industry. "Recognizing the country's financial system was...