Dangou (Japan) - Revision history

Editor2018 at 10:56, 11 May 2020

2020-05-11T10:56:24Z

← Older revision		Revision as of 10:56, 11 May 2020
Line 11:		Line 11:
	\| authorofpiece =Shuwei Qian		\| authorofpiece =Shuwei Qian
	\| authorinstitution =Alumna, School of Slavonic and East European Studies, University College London, UK		\| authorinstitution =Alumna, School of Slavonic and East European Studies, University College London, UK
	\| authorwebsite =[https://cn.linkedin.com/in/shuwei-qian-720889131 Profile page at LinkedIn]}}		\| authorwebsite =[https://cn.linkedin.com/in/shuwei-qian-720889131 Profile page on LinkedIn]}}
	<big>'''By Shuwei Qian, Alumna, School of Slavonic and East European Studies, University College London, UK'''</big>		<big>'''By Shuwei Qian, Alumna, School of Slavonic and East European Studies, University College London, UK'''</big>
	[[Category:Market]]		[[Category:Market]]

Admin at 15:26, 29 September 2019

2019-09-29T15:26:44Z

← Older revision		Revision as of 15:26, 29 September 2019
Line 8:		Line 8:
	[[:Category:Market\|Market]] – [[:Category: Functional ambivalence\| Functional ambivalence]] – [[:Category: Gaming the system\| Gaming the system]] – [[:Category: Camouflage\| Camouflage]] – [[:Category: Playing the letter of the rules against their spirit\| Playing the letter of the rules against their spirit]]		[[:Category:Market\|Market]] – [[:Category: Functional ambivalence\| Functional ambivalence]] – [[:Category: Gaming the system\| Gaming the system]] – [[:Category: Camouflage\| Camouflage]] – [[:Category: Playing the letter of the rules against their spirit\| Playing the letter of the rules against their spirit]]
	\| categories =		\| categories =
	[[:Category:Japan\|Japan]] – [[:Category: East Asia\| East Asia]] – [[:Category: Bid-rigging\| Bid-rigging]] – [[:Category: Tender\| Tender]] – [[:Category: Public ~~Service~~\| Public ~~Service~~]] – [[:Category: Procurement\| Procurement]]		[[:Category:Japan\|Japan]] – [[:Category: East Asia\| East Asia]] – [[:Category: Bid-rigging\| Bid-rigging]] – [[:Category: Tender\| Tender]] – [[:Category: Public service\| Public service]] – [[:Category: Procurement\| Procurement]]
	\| authorofpiece =Shuwei Qian		\| authorofpiece =Shuwei Qian
	\| authorinstitution =Alumna, School of Slavonic and East European Studies, University College London, UK		\| authorinstitution =Alumna, School of Slavonic and East European Studies, University College London, UK
Line 22:		Line 22:
	[[Category: Bid-rigging]]		[[Category: Bid-rigging]]
	[[Category: Tender]]		[[Category: Tender]]
	[[Category: Public ~~Service~~]]		[[Category: Public service]]
	[[Category: Procurement]]		[[Category: Procurement]]
	[[Category:Entry]]		[[Category:Entry]]
Line 36:		Line 36:
	One illustration of how ''dangou'' practices work is found in the example from the late 1980s of an American company who decided to submit a bid for constructing toilet facilities at the US Yokosuka Navy Base. The American company participated in the bidding process, unaware that over 100 national and local contracting projects were in place at the base, rigged by the Yokosuka ‘teahouse’ network. The Americans were surprised that all the other companies bid at highly inflated levels and that there was little variation in the levels at which they bid. As the only foreign bidding company they won the contract with a reasonable bid price, which was half that of the bids made by the Japanese companies. Without the American company’s bid, the Yokosuka ‘teahouse group’ (an informal network of Japanese contractors) would have won the contract, but more importantly, at a highly inflated price. After the bidding process was concluded, the Americans overheard the Japanese complaining about letting a ''gaijin'' (an outsider) interfere with their internal rules of bidding. The Americans feared harassment and vandalism by the losing group, but some months later a raid on the offices of the Yokosuka ‘teahouse’ group, known as the ‘Star Friendship Club’, produced evidence of ''dangou'' and endemic bid rigging.		One illustration of how ''dangou'' practices work is found in the example from the late 1980s of an American company who decided to submit a bid for constructing toilet facilities at the US Yokosuka Navy Base. The American company participated in the bidding process, unaware that over 100 national and local contracting projects were in place at the base, rigged by the Yokosuka ‘teahouse’ network. The Americans were surprised that all the other companies bid at highly inflated levels and that there was little variation in the levels at which they bid. As the only foreign bidding company they won the contract with a reasonable bid price, which was half that of the bids made by the Japanese companies. Without the American company’s bid, the Yokosuka ‘teahouse group’ (an informal network of Japanese contractors) would have won the contract, but more importantly, at a highly inflated price. After the bidding process was concluded, the Americans overheard the Japanese complaining about letting a ''gaijin'' (an outsider) interfere with their internal rules of bidding. The Americans feared harassment and vandalism by the losing group, but some months later a raid on the offices of the Yokosuka ‘teahouse’ group, known as the ‘Star Friendship Club’, produced evidence of ''dangou'' and endemic bid rigging.

	Over time, ''Dangou'' has been viewed as part of the unique political culture and history of Japan. For this reason the Japanese mode of doing business is simply explained to Westerners by the word ‘''dangou shakai''’ meaning ‘society’. In the first instance it is necessary to explain ''dangou''’s embedment with Japanese society throughout history as part of the ‘iron triangle’. The ‘iron triangle’ here represents the relationship between politicians, government bureaucrats and business. The triangle functions in the following way: businesses take it in turns to win competitive bids, operating from a position of strength because they are armed with the prior knowledge of the ceiling price of the bid, which has been leaked to them in advance by government bureaucrats. In return for the information, the bureaucrats are guaranteed a high-profile position in the company after retirement. Meanwhile the politicians who are responsible for the public construction programmes receive a kickback (Black 2004: 603<ref>Black, W. 2004. ‘The dango tango: why corruption blocks real reform in Japan’, Business ethnics quarterly, 14: 603-623.</ref>). The retired bureaucrats are called ''amakudari'' (descents from heaven). This ‘iron triangle’ has its origins in ancient Japanese culture, but was also influenced by behaviours found in the centralised Soviet style of management (Ross 1994: 64<ref>Ross, L. 1994. ‘Understanding the Japanese way: a new look at the dango shakai’, World affairs, 157: 63-78.</ref>). A second reason for ''dangou''’s popularity is the fact that with the exception of big firms and tycoons, the major part of the Japanese economy consists of small and medium sized businesses, often family businesses, that have endured from one generation to another. Apart from being part of a personal network, ''dangou'' embodies a benign practice for the purpose of helping small firms survive harsh competition from business giants. Another contributory factor that explains ''dangou''’s unshakable position in society is the age of globalization. In the process of globalization, traditional Japanese businesses perceive themselves to be under constant attack from international corporations, thus practicing ''dangou'' provides them with protection (Black 2004: 611<ref>Black, W. 2004. ‘The dango tango: why corruption blocks real reform in Japan’, Business ethnics quarterly, 14: 603-623.</ref>). In the opinion of ''dangou'' participants, ''dangou'' has saved the Japanese economic environment from being polluted by outsiders and prevented unpredictability and instability in the global market (Ross 1994: 65<ref>Ross, L. 1994. ‘Understanding the Japanese way: a new look at the dango shakai’, World affairs, 157: 63-78.</ref>).		Over time, ''Dangou'' has been viewed as part of the unique political culture and history of Japan. For this reason the Japanese mode of doing business is simply explained to Westerners by the word ‘''dangou shakai''’ meaning ‘society’. In the first instance it is necessary to explain ''dangou''’s embedment with Japanese society throughout history as part of the ‘iron triangle’. The ‘iron triangle’ here represents the relationship between politicians, government bureaucrats and business. The triangle functions in the following way: businesses take it in turns to win competitive bids, operating from a position of strength because they are armed with the prior knowledge of the ceiling price of the bid, which has been leaked to them in advance by government bureaucrats. In return for the information, the bureaucrats are guaranteed a high-profile position in the company after retirement. Meanwhile the politicians who are responsible for the public construction programmes receive a kickback (Black 2004: 603<ref>Black, W. 2004. ‘The dango tango: why corruption blocks real reform in Japan’, Business ethnics quarterly, 14: 603-623.</ref>). The retired bureaucrats are called ''[[amakudari]]'' (descents from heaven). This ‘iron triangle’ has its origins in ancient Japanese culture, but was also influenced by behaviours found in the centralised Soviet style of management (Ross 1994: 64<ref>Ross, L. 1994. ‘Understanding the Japanese way: a new look at the dango shakai’, World affairs, 157: 63-78.</ref>). A second reason for ''dangou''’s popularity is the fact that with the exception of big firms and tycoons, the major part of the Japanese economy consists of small and medium sized businesses, often family businesses, that have endured from one generation to another. Apart from being part of a personal network, ''dangou'' embodies a benign practice for the purpose of helping small firms survive harsh competition from business giants. Another contributory factor that explains ''dangou''’s unshakable position in society is the age of globalization. In the process of globalization, traditional Japanese businesses perceive themselves to be under constant attack from international corporations, thus practicing ''dangou'' provides them with protection (Black 2004: 611<ref>Black, W. 2004. ‘The dango tango: why corruption blocks real reform in Japan’, Business ethnics quarterly, 14: 603-623.</ref>). In the opinion of ''dangou'' participants, ''dangou'' has saved the Japanese economic environment from being polluted by outsiders and prevented unpredictability and instability in the global market (Ross 1994: 65<ref>Ross, L. 1994. ‘Understanding the Japanese way: a new look at the dango shakai’, World affairs, 157: 63-78.</ref>).

	Considered from the socioeconomic perspective, ''dangou'' can be regarded as a rational corollary of the specific economic environment of post war Japan (Woodall 1993: 298<ref>Woodall, B. 1993. ‘The logic of collusive action: the political roots of Japan’s dango system’, Comparative politics, 25: 297-312.</ref>). Firstly, as understood literally, the process of ''dangou'' requires consultations taking place among participants. The optimum number of dialogues is considered to be N(N-1)/2. Since the tendering system designed by the procurement department of government normally regulates the number (N) of participants in the bidding pool to a range from 10 to 12, the actual number of dialogues taking place in the process of ''dangou'' is limited to a manageable number (Woodall 1993: 301<ref>Woodall, B. 1993. ‘The logic of collusive action: the political roots of Japan’s dango system’, Comparative politics, 25: 297-312.</ref>). Secondly, as mentioned above, this tendering system is designed by the government to guarantee the quality of participating businesses, and to provide a natural barrier against opportunistic outsiders who might be attracted by the potential profit created in the collusion process (Woodall 1993: 302<ref>Woodall, B. 1993. ‘The logic of collusive action: the political roots of Japan’s dango system’, Comparative politics, 25: 297-312.</ref>). Thirdly, to stabilize the illegal group behavior, mechanisms of punishment were developed. Thus to ensure loyalty, if one of the conspirators broke the ''dangou'' (''Dangou yaburi''), they were automatically ostracized from all trade associations as they had lost the confidence of the group (Woodall 1993: 303<ref>Woodall, B. 1993. ‘The logic of collusive action: the political roots of Japan’s dango system’, Comparative politics, 25: 297-312.</ref>). These informal devices elicit compliance since in Japanese society no business can survive without close associations, nor survive the loss of social capital. Another layer of protection for ''dangou'' participants are the disincentives for whistle blowing (Woodall 1993: 303-4<ref>Woodall, B. 1993. ‘The logic of collusive action: the political roots of Japan’s dango system’, Comparative politics, 25: 297-312.</ref>). In Japan, a pension is paid according to one’s longest length of service. Hence, no one can afford to change jobs frequently or to suffer the loss of their social network; therefore the price of opportunistic bidding is too high.		Considered from the socioeconomic perspective, ''dangou'' can be regarded as a rational corollary of the specific economic environment of post war Japan (Woodall 1993: 298<ref>Woodall, B. 1993. ‘The logic of collusive action: the political roots of Japan’s dango system’, Comparative politics, 25: 297-312.</ref>). Firstly, as understood literally, the process of ''dangou'' requires consultations taking place among participants. The optimum number of dialogues is considered to be N(N-1)/2. Since the tendering system designed by the procurement department of government normally regulates the number (N) of participants in the bidding pool to a range from 10 to 12, the actual number of dialogues taking place in the process of ''dangou'' is limited to a manageable number (Woodall 1993: 301<ref>Woodall, B. 1993. ‘The logic of collusive action: the political roots of Japan’s dango system’, Comparative politics, 25: 297-312.</ref>). Secondly, as mentioned above, this tendering system is designed by the government to guarantee the quality of participating businesses, and to provide a natural barrier against opportunistic outsiders who might be attracted by the potential profit created in the collusion process (Woodall 1993: 302<ref>Woodall, B. 1993. ‘The logic of collusive action: the political roots of Japan’s dango system’, Comparative politics, 25: 297-312.</ref>). Thirdly, to stabilize the illegal group behavior, mechanisms of punishment were developed. Thus to ensure loyalty, if one of the conspirators broke the ''dangou'' (''Dangou yaburi''), they were automatically ostracized from all trade associations as they had lost the confidence of the group (Woodall 1993: 303<ref>Woodall, B. 1993. ‘The logic of collusive action: the political roots of Japan’s dango system’, Comparative politics, 25: 297-312.</ref>). These informal devices elicit compliance since in Japanese society no business can survive without close associations, nor survive the loss of social capital. Another layer of protection for ''dangou'' participants are the disincentives for whistle blowing (Woodall 1993: 303-4<ref>Woodall, B. 1993. ‘The logic of collusive action: the political roots of Japan’s dango system’, Comparative politics, 25: 297-312.</ref>). In Japan, a pension is paid according to one’s longest length of service. Hence, no one can afford to change jobs frequently or to suffer the loss of their social network; therefore the price of opportunistic bidding is too high.

Admin at 10:23, 22 May 2019

2019-05-22T10:23:13Z

← Older revision		Revision as of 10:23, 22 May 2019
Line 51:		Line 51:
	<References />		<References />

	==~~References and Bibliography~~==		==Further reading==
	# Hiyoshi, J. 2006. ‘The problem of dango in public construction and the reform of bidding system’, 13 March, https://www.jri.co.jp/page.jsp?id=5623 In Japanese		# Hiyoshi, J. 2006. ‘The problem of dango in public construction and the reform of bidding system’, 13 March, https://www.jri.co.jp/page.jsp?id=5623 In Japanese
	# Kyodo News. ‘2010. 1,757 got jobs via amakudari from 07 to 09’, 24 August, http://www.japantimes.co.jp/news/2010/08/24/national/1757-got-jobs-via-amakudari-from-07-to-09/#.VyFRYiMrJhB		# Kyodo News. ‘2010. 1,757 got jobs via amakudari from 07 to 09’, 24 August, http://www.japantimes.co.jp/news/2010/08/24/national/1757-got-jobs-via-amakudari-from-07-to-09/#.VyFRYiMrJhB

Admin at 09:10, 22 May 2019

2019-05-22T09:10:56Z

← Older revision		Revision as of 09:10, 22 May 2019
Line 10:		Line 10:
	[[:Category:Japan\|Japan]] – [[:Category: East Asia\| East Asia]] – [[:Category: Bid-rigging\| Bid-rigging]] – [[:Category: Tender\| Tender]] – [[:Category: Public Service\| Public Service]] – [[:Category: Procurement\| Procurement]]		[[:Category:Japan\|Japan]] – [[:Category: East Asia\| East Asia]] – [[:Category: Bid-rigging\| Bid-rigging]] – [[:Category: Tender\| Tender]] – [[:Category: Public Service\| Public Service]] – [[:Category: Procurement\| Procurement]]
	\| authorofpiece =Shuwei Qian		\| authorofpiece =Shuwei Qian
	\| authorinstitution =Alumna, School of Slavonic and East European Studies, University College London, UK ~~and George Mason University, USA~~		\| authorinstitution =Alumna, School of Slavonic and East European Studies, University College London, UK
	\| authorwebsite =[https://cn.linkedin.com/in/shuwei-qian-720889131 Profile page at LinkedIn]}}		\| authorwebsite =[https://cn.linkedin.com/in/shuwei-qian-720889131 Profile page at LinkedIn]}}
	<big>'''By Shuwei Qian, Alumna, School of Slavonic and East European Studies, University College London, UK ~~and George Mason University, USA~~'''</big>		<big>'''By Shuwei Qian, Alumna, School of Slavonic and East European Studies, University College London, UK'''</big>
	[[Category:Market]]		[[Category:Market]]
	[[Category: Functional ambivalence]]		[[Category: Functional ambivalence]]

Editor2018 at 16:24, 16 May 2019

2019-05-16T16:24:56Z

← Older revision		Revision as of 16:24, 16 May 2019
Line 47:		Line 47:
	</div>		</div>
	</div>		</div>

			==References==
			<References />

	==References and Bibliography==		==References and Bibliography==
Line 54:		Line 57:
	# Oyamada, E. 2015. ‘Anti-corruption measures the Japanese way: prevention matters’, Asian education and development studies, 4: 24-50		# Oyamada, E. 2015. ‘Anti-corruption measures the Japanese way: prevention matters’, Asian education and development studies, 4: 24-50
	# The Japan Times. 2006. ‘Enough of make-believe bidding’, 7 February, http://www.japantimes.co.jp/opinion/2006/02/07/editorials/enough-of-make-believe-bidding/#.VyFS-yMrJhA		# The Japan Times. 2006. ‘Enough of make-believe bidding’, 7 February, http://www.japantimes.co.jp/opinion/2006/02/07/editorials/enough-of-make-believe-bidding/#.VyFS-yMrJhA

	~~==References==~~

Editor2018 at 11:42, 16 May 2019

2019-05-16T11:42:45Z

← Older revision		Revision as of 11:42, 16 May 2019
Line 1:		Line 1:
	{{infobox		{{infobox
	\| nameofpractice = Dangou~~/Dango~~		\| nameofpractice =Dangou
	\| location = Japan		\| flagemoji =🇯🇵
	\| imagemap = Japan map.png		\| definition =Bid-fixing in supposedly competitive tenders
	\| ~~imageflag~~ = Japan ~~flag.png~~		\| location =Japan
	\| authorofpiece = Shuwei Qian		\| imagemap =Japan map.png
	\| authorinstitution = School of Slavonic and East European Studies, University College London		\| clusters =
	}}		[[:Category:Market\|Market]] – [[:Category: Functional ambivalence\| Functional ambivalence]] – [[:Category: Gaming the system\| Gaming the system]] – [[:Category: Camouflage\| Camouflage]] – [[:Category: Playing the letter of the rules against their spirit\| Playing the letter of the rules against their spirit]]
			\| categories =
	'''''~~Original text by~~ Shuwei Qian'''''		[[:Category:Japan\|Japan]] – [[:Category: East Asia\| East Asia]] – [[:Category: Bid-rigging\| Bid-rigging]] – [[:Category: Tender\| Tender]] – [[:Category: Public Service\| Public Service]] – [[:Category: Procurement\| Procurement]]
			\| authorofpiece =Shuwei Qian
	~~<div~~ class="~~toccolours mw~~-~~collapsible mw~~-~~collapsed~~">		\| authorinstitution =Alumna, School of Slavonic and East European Studies, University College London, UK and George Mason University, USA
	''Dangou'' (sometimes spelt ''Dango'') consists of two Japanese ''kanji'' characters, ''dan'' meaning ‘dialogue’ and ''gou'' meaning harmony. Originally, the meaning of ''dangou'' was consultation or conference, but the meaning has changed and come to refer to a practice of cartel- a mutually agreed position to pre determine the successful bid for a contract within the Japanese procurement system. Thus, its equivalent English term is bid rigging.		\| authorwebsite =[https://cn.linkedin.com/in/shuwei-qian-720889131 Profile page at LinkedIn]}}
			<big>'''By Shuwei Qian, Alumna, School of Slavonic and East European Studies, University College London, UK and George Mason University, USA'''</big>
	~~<div class="mw-collapsible-content">~~		[[Category:Market]]
			[[Category: Functional ambivalence]]
			[[Category: Gaming the system]]
			[[Category: Camouflage]]
			[[Category: Playing the letter of the rules against their spirit]]
			[[Category:Japan]]
			[[Category: East Asia]]
			[[Category: Bid-rigging]]
			[[Category: Tender]]
			[[Category: Public Service]]
			[[Category: Procurement]]
			[[Category:Entry]]
			[[Category: Volume 2]]
			[[Category: Alumni]]
			[[Category: SSEES]]
			{\| class="wikitable"
			\|-
			\|style="font-size:1.1em;"\| ''Dangou'' (sometimes spelt ''Dango'') consists of two Japanese ''kanji'' characters, ''dan'' meaning ‘dialogue’ and ''gou'' meaning harmony. Originally, the meaning of ''dangou'' was consultation or conference, but the meaning has changed and come to refer to a practice of cartel- a mutually agreed position to pre determine the successful bid for a contract within the Japanese procurement system. Thus, its equivalent English term is bid rigging.
			\|}
	''Dangou'', has a long history dating back 500 years to the Edo era, and as such it may be argued there is no other case in the world that has such a pervasive and codified system as is found today in the Japanese public construction system (Woodall 1993: 297<ref>Woodall, B. 1993. ‘The logic of collusive action: the political roots of Japan’s dango system’, Comparative politics, 25: 297-312.</ref>). Japanese citizens were so accustomed to this practice that it was not until not until after the end of the Second World War, with America’s intervention in the Japanese domestic market that scandals relating to ''dangou'' were publically acknowledged and reported by the press (McMillan 1991: 201<ref>McMillan, J. 1991. ‘Dango: Japan’s price-fixing conspiracies’, Economics and politics, 2: 201-218.</ref>).		''Dangou'', has a long history dating back 500 years to the Edo era, and as such it may be argued there is no other case in the world that has such a pervasive and codified system as is found today in the Japanese public construction system (Woodall 1993: 297<ref>Woodall, B. 1993. ‘The logic of collusive action: the political roots of Japan’s dango system’, Comparative politics, 25: 297-312.</ref>). Japanese citizens were so accustomed to this practice that it was not until not until after the end of the Second World War, with America’s intervention in the Japanese domestic market that scandals relating to ''dangou'' were publically acknowledged and reported by the press (McMillan 1991: 201<ref>McMillan, J. 1991. ‘Dango: Japan’s price-fixing conspiracies’, Economics and politics, 2: 201-218.</ref>).

Line 37:		Line 55:
	# The Japan Times. 2006. ‘Enough of make-believe bidding’, 7 February, http://www.japantimes.co.jp/opinion/2006/02/07/editorials/enough-of-make-believe-bidding/#.VyFS-yMrJhA		# The Japan Times. 2006. ‘Enough of make-believe bidding’, 7 February, http://www.japantimes.co.jp/opinion/2006/02/07/editorials/enough-of-make-believe-bidding/#.VyFS-yMrJhA

	==~~Notes~~==		==References==
	~~<references />~~

	~~[[Category:Informal Practices]]~~
	~~[[Category:Asia]]~~
	~~[[Category:Japan]]~~
	~~[[Category:Gaming the system]]~~
	~~[[Category:Playing the letter of the rules against their spirit]]~~
	~~[[Category:Entry]]~~

Admin at 15:15, 29 June 2018

2018-06-29T15:15:51Z

← Older revision		Revision as of 15:15, 29 June 2018
Line 45:		Line 45:
	[[Category:Gaming the system]]		[[Category:Gaming the system]]
	[[Category:Playing the letter of the rules against their spirit]]		[[Category:Playing the letter of the rules against their spirit]]
			[[Category:Entry]]

Admin: Admin moved page Dangou to Dangou (Japan) without leaving a redirect

2018-05-31T12:29:17Z

Admin moved page Dangou to Dangou (Japan) without leaving a redirect

← Older revision	Revision as of 12:29, 31 May 2018
(No difference)

Admin at 12:20, 15 May 2018

2018-05-15T12:20:42Z

← Older revision		Revision as of 12:20, 15 May 2018
Line 44:		Line 44:
	[[Category:Japan]]		[[Category:Japan]]
	[[Category:Gaming the system]]		[[Category:Gaming the system]]
	[[Category:Playing the letter of ~~their~~ rules against their spirit]]		[[Category:Playing the letter of the rules against their spirit]]

Admin: Created page with "{{infobox | nameofpractice = Dangou/Dango | location = Japan | imagemap = Japan map.png | imageflag = Japan flag.png | authorofpiece = Shuwei Qian | authorinstitut..."

2016-09-16T15:52:20Z

Created page with "{{infobox | nameofpractice = Dangou/Dango | location = Japan | imagemap = Japan map.png | imageflag = Japan flag.png | authorofpiece = Shuwei Qian | authorinstitut..."

New page

{{infobox
| nameofpractice = Dangou/Dango
| location = Japan
| imagemap = Japan map.png
| imageflag = Japan flag.png
| authorofpiece = Shuwei Qian
| authorinstitution = School of Slavonic and East European Studies, University College London
}}

'''''Original text by Shuwei Qian'''''

<div class="toccolours mw-collapsible mw-collapsed">
''Dangou'' (sometimes spelt ''Dango'') consists of two Japanese ''kanji'' characters, ''dan'' meaning ‘dialogue’ and ''gou'' meaning harmony. Originally, the meaning of ''dangou'' was consultation or conference, but the meaning has changed and come to refer to a practice of cartel- a mutually agreed position to pre determine the successful bid for a contract within the Japanese procurement system. Thus, its equivalent English term is bid rigging.

<div class="mw-collapsible-content">
''Dangou'', has a long history dating back 500 years to the Edo era, and as such it may be argued there is no other case in the world that has such a pervasive and codified system as is found today in the Japanese public construction system (Woodall 1993: 297<ref>Woodall, B. 1993. ‘The logic of collusive action: the political roots of Japan’s dango system’, Comparative politics, 25: 297-312.</ref>). Japanese citizens were so accustomed to this practice that it was not until not until after the end of the Second World War, with America’s intervention in the Japanese domestic market that scandals relating to ''dangou'' were publically acknowledged and reported by the press (McMillan 1991: 201<ref>McMillan, J. 1991. ‘Dango: Japan’s price-fixing conspiracies’, Economics and politics, 2: 201-218.</ref>).

One illustration of how ''dangou'' practices work is found in the example from the late 1980s of an American company who decided to submit a bid for constructing toilet facilities at the US Yokosuka Navy Base. The American company participated in the bidding process, unaware that over 100 national and local contracting projects were in place at the base, rigged by the Yokosuka ‘teahouse’ network. The Americans were surprised that all the other companies bid at highly inflated levels and that there was little variation in the levels at which they bid. As the only foreign bidding company they won the contract with a reasonable bid price, which was half that of the bids made by the Japanese companies. Without the American company’s bid, the Yokosuka ‘teahouse group’ (an informal network of Japanese contractors) would have won the contract, but more importantly, at a highly inflated price. After the bidding process was concluded, the Americans overheard the Japanese complaining about letting a ''gaijin'' (an outsider) interfere with their internal rules of bidding. The Americans feared harassment and vandalism by the losing group, but some months later a raid on the offices of the Yokosuka ‘teahouse’ group, known as the ‘Star Friendship Club’, produced evidence of ''dangou'' and endemic bid rigging.

Over time, ''Dangou'' has been viewed as part of the unique political culture and history of Japan. For this reason the Japanese mode of doing business is simply explained to Westerners by the word ‘''dangou shakai''’ meaning ‘society’. In the first instance it is necessary to explain ''dangou''’s embedment with Japanese society throughout history as part of the ‘iron triangle’. The ‘iron triangle’ here represents the relationship between politicians, government bureaucrats and business. The triangle functions in the following way: businesses take it in turns to win competitive bids, operating from a position of strength because they are armed with the prior knowledge of the ceiling price of the bid, which has been leaked to them in advance by government bureaucrats. In return for the information, the bureaucrats are guaranteed a high-profile position in the company after retirement. Meanwhile the politicians who are responsible for the public construction programmes receive a kickback (Black 2004: 603<ref>Black, W. 2004. ‘The dango tango: why corruption blocks real reform in Japan’, Business ethnics quarterly, 14: 603-623.</ref>). The retired bureaucrats are called ''amakudari'' (descents from heaven). This ‘iron triangle’ has its origins in ancient Japanese culture, but was also influenced by behaviours found in the centralised Soviet style of management (Ross 1994: 64<ref>Ross, L. 1994. ‘Understanding the Japanese way: a new look at the dango shakai’, World affairs, 157: 63-78.</ref>). A second reason for ''dangou''’s popularity is the fact that with the exception of big firms and tycoons, the major part of the Japanese economy consists of small and medium sized businesses, often family businesses, that have endured from one generation to another. Apart from being part of a personal network, ''dangou'' embodies a benign practice for the purpose of helping small firms survive harsh competition from business giants. Another contributory factor that explains ''dangou''’s unshakable position in society is the age of globalization. In the process of globalization, traditional Japanese businesses perceive themselves to be under constant attack from international corporations, thus practicing ''dangou'' provides them with protection (Black 2004: 611<ref>Black, W. 2004. ‘The dango tango: why corruption blocks real reform in Japan’, Business ethnics quarterly, 14: 603-623.</ref>). In the opinion of ''dangou'' participants, ''dangou'' has saved the Japanese economic environment from being polluted by outsiders and prevented unpredictability and instability in the global market (Ross 1994: 65<ref>Ross, L. 1994. ‘Understanding the Japanese way: a new look at the dango shakai’, World affairs, 157: 63-78.</ref>).

Considered from the socioeconomic perspective, ''dangou'' can be regarded as a rational corollary of the specific economic environment of post war Japan (Woodall 1993: 298<ref>Woodall, B. 1993. ‘The logic of collusive action: the political roots of Japan’s dango system’, Comparative politics, 25: 297-312.</ref>). Firstly, as understood literally, the process of ''dangou'' requires consultations taking place among participants. The optimum number of dialogues is considered to be N(N-1)/2. Since the tendering system designed by the procurement department of government normally regulates the number (N) of participants in the bidding pool to a range from 10 to 12, the actual number of dialogues taking place in the process of ''dangou'' is limited to a manageable number (Woodall 1993: 301<ref>Woodall, B. 1993. ‘The logic of collusive action: the political roots of Japan’s dango system’, Comparative politics, 25: 297-312.</ref>). Secondly, as mentioned above, this tendering system is designed by the government to guarantee the quality of participating businesses, and to provide a natural barrier against opportunistic outsiders who might be attracted by the potential profit created in the collusion process (Woodall 1993: 302<ref>Woodall, B. 1993. ‘The logic of collusive action: the political roots of Japan’s dango system’, Comparative politics, 25: 297-312.</ref>). Thirdly, to stabilize the illegal group behavior, mechanisms of punishment were developed. Thus to ensure loyalty, if one of the conspirators broke the ''dangou'' (''Dangou yaburi''), they were automatically ostracized from all trade associations as they had lost the confidence of the group (Woodall 1993: 303<ref>Woodall, B. 1993. ‘The logic of collusive action: the political roots of Japan’s dango system’, Comparative politics, 25: 297-312.</ref>). These informal devices elicit compliance since in Japanese society no business can survive without close associations, nor survive the loss of social capital. Another layer of protection for ''dangou'' participants are the disincentives for whistle blowing (Woodall 1993: 303-4<ref>Woodall, B. 1993. ‘The logic of collusive action: the political roots of Japan’s dango system’, Comparative politics, 25: 297-312.</ref>). In Japan, a pension is paid according to one’s longest length of service. Hence, no one can afford to change jobs frequently or to suffer the loss of their social network; therefore the price of opportunistic bidding is too high.

''Dangou'' not only inflates government expenses, causing government deficit and wasting taxpayers’ money, but it also avoids fair competition and encourages particularism and corruption, which could eventually hurt the development of the Japanese economy. It is estimated that ''dangou'' is responsible for inflating Government expenditure by between 30% and 50% (McMillan 1991: 209<ref>McMillan, J. 1991. ‘Dango: Japan’s price-fixing conspiracies’, Economics and politics, 2: 201-218.</ref>). The inflation of government expenses can be used as one of the measurements of ''dangou''. The second method of estimating the extent of the practice is to evaluate the number of scandals reported in the media. Thirdly, it is possible to estimate levels of ''dangou'' according to the extent of legislation passed to prohibit this crime. Since the legal reforms of the early 2000s, laws such as the anti-monopoly law, and a law against ''kansei dangou'' have been passed, yet little success can be observed thus far in deterring the practice (Yoshida &Park 2014: 144<ref>Yoshida, D. & Park, J. 2014. ‘Japan’, in Latham and Watkins (eds.), GLI-Bribery and corruption first edition. London: Global Legal Group: 142-149.</ref>). Research on ''dangou'' also heavily depends on the findings of investigations of suspect companies and subsequent convictions, but the networks of participants are extremely hard to break.

Another informal practice related to ''dangou'' is ''Ten no koe'' (voice from heaven). This term is used as a metaphor to describe a practice whereby before a bidding process starts, a government official claims to have heard a voice from the Gods urging him to use a particular company. As a result the bidding process is ignored and the ‘recommended’ company is automatically appointed (Logan 1994<ref>Logan, T. 1994. ‘On dango: the famous Yokosuka navy base toilet job’, November, http://www.jpri.org/publications/occasionalpapers/op1.html</ref>). On one hand, the absence of any competition makes this informal practice even more suspect than ''dangou''. On the other hand, on certain occasions it may be explicable- for instance if specific technologies, skills or patents are required, which only the chosen company is in possession of, it may be considered ethical. However in practice, ''Ten no koe'' is usually seen as excuse invoked when the ''dangou'' process has broken down and an emergency solution is needed to obtain the ‘right’ result.

In China, ''dangou'' is known as ''Weibiao''. Literally, it means ‘bidding being surrounded by companies in a union’. ''Weibiao'' and ''dangou'' share cultural similarities. Thanks to the same influences of Confucian culture, the tradition of gift giving is widely used not only in ''Weibiao'' but also in the infamous informal practice called [[Guanxi]]. The starting point of gift giving, in both cases, is to maintain and strengthen [[Jinmyaku]] (Japanese for personal networks), which is directly translated as [[Guanxi]] in Mandarin. However, there are significant differences between the two informal practices of ''Weibiao'' and ''Dangou'', which may be explained by crucial differences in the economic and political environment of the two countries. Firstly, although both China and Japan passed anti-bid rigging law, in neither case has the legislation made a significant difference in prohibiting the practices. Yet, the problem of the Japanese anti-''Kansei'' ''Dangou'' law is in its enforcement, whilst the problem in China is that the law itself is less detailed, leaving loopholes for people to continue practicing ''Weibiao'' (Weishaar 2010: 409<ref>Weishaar, S. 2010. ‘China’s public procurement regime comparative and theoretic insights’, Maastricht Journal Europe, 17: 406-441.</ref>). Secondly, as a socialist country, a huge percentage of the Chinese economy is taken by state run businesses. However, state run companies are eliminated from the anti-''Weibiao'' law thanks to complicated measures in force to protect national reserves. As a consequence, this encourages a certain level of bid rigging because state run companies cannot be prosecuted. (Jingshifaxun 2009<ref>Jingshifaxun. 2009. ‘Advices about including procurement in state-run companies in legal surveillance’, 9 June, http://www.jingsh.com/Research/MeetingContent/3076 In Chinese</ref>). In the Chinese case, bid rigging often happens in less developed states along with other traditional informal practices, whilst in Japan the practice occurs within a well established, developed market economy in a democratized system. Furthermore, although defined as illegal by the government and outdated, dangou is both traditional and habitual within the Japanese economy.
</div>
</div>

==References and Bibliography==
# Hiyoshi, J. 2006. ‘The problem of dango in public construction and the reform of bidding system’, 13 March, https://www.jri.co.jp/page.jsp?id=5623 In Japanese
# Kyodo News. ‘2010. 1,757 got jobs via amakudari from 07 to 09’, 24 August, http://www.japantimes.co.jp/news/2010/08/24/national/1757-got-jobs-via-amakudari-from-07-to-09/#.VyFRYiMrJhB
# Kyodo News. 2010. ‘ASDF chief sacked, 49 disciplined for Chiba supply depo bid-rigging’, 16 December, http://www.japantimes.co.jp/news/2010/12/16/national/asdf-chief-sacked-49-disciplined-for-chiba-supply-depot-bid-rigging/#.VyHWniMrJhA
# Oyamada, E. 2015. ‘Anti-corruption measures the Japanese way: prevention matters’, Asian education and development studies, 4: 24-50
# The Japan Times. 2006. ‘Enough of make-believe bidding’, 7 February, http://www.japantimes.co.jp/opinion/2006/02/07/editorials/enough-of-make-believe-bidding/#.VyFS-yMrJhA

==Notes==
<references />

[[Category:Informal Practices]]
[[Category:Asia]]
[[Category:Japan]]
[[Category:Gaming the system]]
[[Category:Playing the letter of their rules against their spirit]]