FAMILY FIRMS, STARTUP SPARK
Japan’s new entrepreneurs
While it may not be known as a land of startups, Japan has no shortage of entrepreneurs — they are just more likely be found reinventing a family business than starting a new one.
Take Smartvalue, for example. Established in 1928, it operated as an auto repair shop in the city of Sakai, Osaka, until Jun Shibuya took over the business from his father in 2012. Now it is a cloud solutions company, offering a smartphone app for logging commercial driver data, a medical appointment system for local governments, and an app for helping mothers with child rearing.
Jun inherited the company when it was on shaky ground and decided it was time to carry out drastic changes to save it. Nevertheless, he is modest about his achievements.
“We had established relationships with a wide range of companies before I took over, and they made us what we are today,” he said.
He also said the jump to becoming a tech company was not as radical as it might seem. While operating a factory as its core business, Smartvalue began working with the telecommunications giant Nippon Telegraph and Telephone installing car phones. This connection led to NTT asking Smartvalue to serve as a sales agent for mobile handsets. The new business helped stabilise the company’s operations, which in turn allowed it to set up its information solutions business.
“In addition to the customer trust built up by my predecessors, we also have an advantage over startups when it comes to moving quickly on investments and selecting new business areas,” Shibuya said.
Japan has relatively few startups compared with its total number of companies. At the same time, it has an abundance of small, established businesses whose ageing leaders are having trouble finding successors. The Small and Medium Enterprise Agency, under the trade ministry, has set up a study group to come up with policy recommendations in the coming months.
One problem is perception: The typical image of business succession in Japan is of a son with little ambition taking over a company he is not qualified to lead and continuing it without much effort.
“Business succession often has a negative image among younger generations,” said Chie Yamano of Osaka Innovation Hub, a business incubator established by the Osaka municipal government. “But I know many successors who are breaking new ground and reinventing their companies, like entrepreneurs.”
A prime example is Airweave, a Tokyo manufacturer of innovative mattresses that began as a maker of weaving machines for fishing nets in Aichi Prefecture in central Japan.
The company had been losing money for years when Motokuni Takaoka took over from his uncle in 2004, having previously run a maker of power distribution equipment inherited from his father.
Takaoka soon concluded that manufacturing weaving machines was not a sustainable business for the company. Casting around for ideas, he noticed that the thread the company made was resilient to the touch and began thinking of new uses for it. The idea he hit upon was mattresses.
At first, Takaoka struggled to develop sales channels for his new products. He eventually realised the key was to focus on quality, enlisting external talent when necessary.
A breakthrough came when figure skater Mao Asada, the 2010 Olympic silver medallist, began using an Airweave mattress, putting the product on the map and opening up new sales channels along the way.
Another success story is that of Toru Yamai, who took over the outdoor equipment maker Snow Peak from his father in 1980, when the company focused mainly on mountaineering gear.
Yamai worked for a foreign trading company after graduating from college, but he caught the entrepreneurial bug and decided that he wanted to make products he would use himself.
He initially thought of starting a new company from scratch but realised it would be easier to take advantage of the family business’s factory and existing sales channels. He created a new division to produce the range of apparel and outdoor gear that has since become the core business of Snow Peak. The company has been listed on the first section of the Tokyo Stock Exchange since 2015.
“Only 6.5% of Japanese go camping. That means 93.5% of the population are non-campers,” Yamai said. “The aim of our listing was to connect those 93.5% to nature.”
Snow Peak has provided its huts and camping cutlery to a hotel in Kanagawa Prefecture so that guests can touch the products and may consider trying camping.
Similarly, when Tsuyoshi Matsuyama took over the Tokyo-based soap maker Matsuyama, it only made soap on an outsourcing basis. He decided to expand the business into retailing cosmetics and lifestyle products.
Realising that the existing soap business was not compatible with such retail operations, he set up a new company, Marks&Web. Combined sales of the two companies are now 16 times those of the soap maker alone, when Matsuyama took ever.
Finding successors for the country’s many small and medium-sized companies is becoming a serious challenge, one that threatens to weaken the “made in Japan” brand. However, success stories such as these could convince the next generation of family business chiefs that inheritance and entrepreneurship can go hand in hand.
“Business succession often has a negative image among younger generations. But I know many successors who are breaking new ground and reinventing their companies” CHIE YAMANO Osaka Innovation Hub