For 2 1/2 years, he remained a party member and was eventually expelled after leading campus movements against tuition increases and professors who had supported Japan's emperor system during World War II.
His mother, he said, was appalled. She got him reinstated only by promising to "cure" his communism. A believer in the teachings of Seicho no Ie (House of Growth), a sect founded in 1930 that claims 840,000 members in Japan and 1.1 million others overseas, she arranged for the transformation at a training center of the sect.
Wada said he went not to seek "salvation" but to "stage a Communist revolution at that place. But it was I who wound up being converted."
As a Communist, he believed "the revolution we were seeking was to save poor people by seizing riches from the bourgeoisie and dividing them among the poor . . . to bring about a society of peace. But the Seicho no Ie people believed that love, consideration for others and forgiveness would create a society of peace," Wada said.
Seicho no Ie's spiritual approach won out over communism's materialism, he said, even though the sect had grown rapidly during the war years by preaching the emperor worship that Wada had opposed as a student.
"There were many things (in the sect's teachings) with which I could not agree," Wada said. "What I was interested in, however, was whether the heart comes first or whether materialism comes first."
Now, however, Wada said he subscribes to the Seicho no Ie belief that all life pivots upon a nucleus and that "for a country, something like a president as the nucleus is necessary."
"The person who becomes the nucleus has to have the heart of a god," he said. It is the same belief that led to emperor worship.
Wada said he applies Seicho no Ie teachings, such as the need to rid oneself of ego, to business dealings with customers, suppliers and employees. "If you can rid yourself of ego, you can understand the person with whom you are dealing."
Full-time employees in Japan have been given the opportunity to buy Yaohan stock at bargain prices. They also put in a four-day week on a flexible time schedule, a rarity in Japan. None of Yaohan's 16,000 employees, 10,000 of them overseas, has been forced to join Seicho no Ie, but all job applicants, foreign and Japanese alike, are handed a booklet of the sect's teachings on "how to live," Wada said.
As part of company training, what Wada called "heart education" for new employees is conducted at Seicho no Ie training centers for five nights and six days, he said.
"Seicho no Ie philosophy teaches that all religions are one--that all religions are wonderful. Therefore, if a person is a Christian, he should pursue Christianity fervently. If you study the principles of Seicho no Ie, you will understand the wondrousness of Christianity," he said.
Wada saw a measure of salvation even in the disaster of Yaohan's venture into Brazil, which he said he took on the advice of his own Seicho no Ie spiritual leader. "If we hadn't experienced that failure, we wouldn't be where we are today. We learned what a fearful thing 'country risk' is. No matter how well one might run a company, if the country itself is in chaos, management efforts are reduced to zero," he said.
He cited his decision to move Yaohan's international headquarters to Hong Kong as another example of a Seicho no Ie inspiration. "If we had thought of our own profit, it would have been judged an extraordinarily risky decision. We may, indeed, suffer a great loss. But if Hong Kong returns to China's control in 1997 in a prosperous condition, that would be the happiest thing for China and for England. For us to go there when others were fleeing was a happy event for Hong Kong people," Wada said.
Since he and his wife moved to Hong Kong in May, 1990, Chinese business leaders have offered him opportunities that would not have been available had he and Yaohan stayed in Japan, he said.
Wada admits there was an earthly incentive, as well.
"On profits earned overseas, taxes cost only 16.5% in Hong Kong. If those profits were brought to Japan, taxes would be 50%," the chairman said. And in Japan, establishing a holding company such as Yaohan International is illegal, he added.
His judgment that the southern Chinese region adjoining Hong Kong will become a center of future growth also figured in the decision, he said, noting, "I thought the flowering of south China would come in the 21st Century. Now, it appears it will come about five years earlier."
After the Tien An Men Square incident, "the people in Hong Kong concluded that China would renege on its promise to Hong Kong to allow 'one country, two systems' and permit capitalism to continue for the 50 years," Wada said. "I reached the opposite conclusion.
"Because of the Tien An Men incident, American and Japanese managers left China . . . abandoning factories and leaving hotels that were in the midst of construction."