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Japanese SMEs look further afield

Feb 17, 2018
Credit : GMI Post


Until recently, small Japanese companies were viewed as businesses that prefer to transact only with other Japanese companies. Many of them expanded their international presence mainly to support long-running relationships with their loyal customers.

As continuing globalization makes the business landscape increasingly competitive, many of these Japanese SMEs have had to accept the need to expand overseas if they are to survive and grow sustainably.

Showa Denki, a manufacturer of wind machines such as electric blowers and fans, is an example of how these SMEs are seeing their global potential.

Shachihata’s Headquarters in Nagoya

“I started our overseas business in 2010 by myself, after finding out through internal research that 38% of our products ended up being exported overseas through clients here in Japan,” President Kensaku Kashiwagi said.

However, Shimizu Densetsu Kogyo President Hiroyuki Shimizu was steadfast in maintaining his company’s international operations following a slump in the demand for coating technology in the automotive and medical equipment sectors.

“When our U.S. subsidiary faced some challenges in the past, most of the executives wanted to close it down. But I believed in the market and decided to run the operations myself until it became profitable,” Shimizu recalled.

“Now, after our customers in the U.S. experience our service, they tell their Japanese counterparts to reach out to us in Japan for their coating needs,” Shimizu added.

For Shimizu and Kashiwagi, leading an SME has not discouraged them from expanding overseas and promoting the “Made in Japan” brand.

“The strength of small companies lies in being able to quickly adapt and deliver customer requests. Customers keep demanding for better, so we keep innovating for the better,” Shimizu explained.

“In Japan, there is a philosophy called magokoro, which means sincerity or devotion. It is the ultimate made-in-Japan asset. And we’ve made it a point to center our operations around this philosophy,” Kashiwagi said.

With the compelling need for Japanese companies to find stronger and more sustainable growth prospects, packaging products maker Ohishi Sangyo has identified Southeast Asia as its most promising market.

“In the last 20 years, Japan lost a lot of big players and demand sharply declined. Many companies decided to open in other Asian markets. That is why we now have a branch office in Singapore and a plant in Malaysia,” says President Norio Okubo.

“It is not very easy to do business overseas. To ensure international growth, companies need to modernize products and processes. But Japan will remain important because we still lead in technological innovation and high-quality manufacturing,” Okubo added. 

Meanwhile, President Masayoshi Funahashi of Shachihata, a leading maker of writing instruments and stampers, attributes the company’s success to its ability to design pens, markers and stampers that address and adapt to the ever-changing consumer taste.

“Using skills we have cultivated, we have developed our latest machine, the QuiX, where you can easily customize your stamps,” Funahashi said.

“The domestic market is diminishing and competition grows more stiff. That is why I expect more potential from our international operations. In fact, we mostly offer our latest markers to the international markets first,” Funahashi said.

Helping out small companies that want a bigger global presence but don’t have the resources, trading company Yashima Sangyo has acted as a major connector between Japanese and foreign businesses.

“Our company aims to introduce Japanese quality products to the global market, and vice versa. We aim to be a partner in global expansion for companies worldwide,” President Masatoshi Takamuku said.

“Many SMEs have the right products with the perfect quality, but find global expansion to be challenging. My dream is to have an exhibition for the ‘Made in Japan’ brand as a means for Japanese companies to introduce themselves to foreign markets, and help raise the profile of Japanese quality in manufacturing,” he added.

Some local government units and nonprofit organizations, such as the American Chamber of Commerce in Japan and the City of Kobe, have joined the efforts to promote bilateral trade and cooperation.

“With this, we applaud the launch of the U.S.-Japan Economic Dialogue by Vice President Pence and Deputy Prime Minister Aso in April 2017,” ACCJ Representative Christopher LaFleur said.

“Its focus on setting high trade and investment standards and reducing market barriers aligns with the need we see on both sides, and we hope the positive agenda will continue,” he also said. 

Already known as one of Japan’s most dynamic cities and the base of many major global companies, Kobe has intensified efforts to spur further growth through programs aimed specifically at helping entrepreneurs turn their ideas into reality.

“We are making Kobe into a city where startups can thrive. Kobe has developed into a thriving, multi-faceted city and we, with the rest of Japan, will continue that pioneering spirit for years to come,” Mayor Kizo Hisamoto said.

Recently, Kobe collaborated with US-based seed investment fund 500 Startups in an accelerator program. It was the first such collaborative program with a Silicon Valley venture capital fund in Japan.

Kobe: Crossroads of Industry and Culture

Feb 17, 2018
Credit : GMI Post


“Ever since our port began operating 150 years ago, Kobe has been very much open to the world. The city, in terms of industry, has developed over the years to the times and the needs of its people,” Mayor Kizo Hisamoto said.

Kobe Mayor Kizo Hisamoto

In the past few years, Kobe has been home to Japan’s largest Biomedical Innovation Cluster, which hosts more than 340 companies on Port Island, joining heavy industries manufacturing as major pillars of the city’s economy.

This growth would not have been possible if it weren’t for the highly skilled and talented workers who live in Kobe. The mayor is now focused on efforts to attract new and innovative companies to this bustling seaside metropolis.

Amid so much optimism about the future, Kobe has intensified its efforts to develop clean energy.

In December, the city conducted the world’s first test to supply energy from hydrogen power.

It has also collaborated with the government of Aberdeen in Scotland to develop a marine industry cluster.

“We’ve made the most of international knowledge to develop Kobe into a thriving, multi faceted city. Looking to the future, we intend to continue this pioneering spirit,” Hisamoto said.

Japan 2018 was prepared for and originally printed in Foreign Affairs magazine.

PDF of the printed report

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