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Friday, April 14, 2006

Japanese loan sharks


The news today is that Japan's most profitable loan shark company, Aiful Corp, is to have its operations forcibly suspended for several days by the Financial Services Agency.

Some estimates are that up to a quarter of the Japanese population is in thrall to loan shark companies. They are ubiquitous, with branches everywhere (Aiful alone has 1,700: that's one for every 70,000 Japanese), billboards everywhere, and constant advertising on TV.

Japanese loan sharks' interest rates are phenomenal, and what proved to be Aiful's downfall was their excessive zeal in recovering their 'bad debts.' Visits to the workplace, calls late at night - outright harassment. Stories abound of similar tactics by other loan sharks in Japan leading to homelessness and suicide, the original loans often being relatively paltry sums that are rapidly inflated to overwhelming and often impossible proportions. Those sent out to collect them are usually gangsters who by definition operate not only outside, but out of reach, of the law.

Significantly, Aiful Corp has been consistently posting gargantuan profits for the past 5 years, the latest declared one being that for the 2004-5 business year of 75.7 billion yen (USD6.3 billion). That's Indonesia's annual defense budget! (And about 14% of Japan's).

It's amazing how they manage to keep a sugar coating on the extremely bitter pill that they peddle. The name "Aiful" is based on the Japanese word for love: 'ai'; the subtitle is 'With heartful communication'; and the homophonic 'Eiffel' is no doubt meant to carry overtones of chic and carefree Paree. The advertising is highly polished, brimming with breezy images of wholesome intelligent young women clearly "in control of their lives", the mood is chirpy and upbeat, and there is lots of clean white space and sanitariness.

However, it seems that government regulations make clear posting of the interest rates involved mandatory, and just before the 30 seconds is up, sure enough, the interest rates are prominently placed in the middle of the screen for a good few seconds. The top rate is nearly always over 25%. It's a grotesque disconnect that conjures up horror movie scenes of a howling long-toothed alien bursting out of a Pond's beauty queen, but with consummate skill the jingling sweetness and light is made to somehow smooth over it, and the ad ends on an upbeat cutesy high.

The same tone comes through on their webpages. Here's Aiful's fairy tale front door. Click on the young lady on the right-hand side sporting the medical outfit for samples of their screen ads.

Good luck Maneki-neko cat figurines

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