WIT Life #86: 日本の企業家精神

WITLife is a periodic series written by professional Writer/Interpreter/Translator Stacy Smith (Kumamoto-ken CIR, 2000-03). She starts her day by watching Fujisankei’s newscast in Japanese, and here she shares some of the interesting tidbits and trends together with her own observations.

Last night I attended a symposium on Entrepreneurship in Japan (日本の企業家精神; nihon no kigyouka seishin) hosted by the Columbia Business School’s Center on Japanese Economy and Business.  The three panelists (two present, one via video from Tokyo) represented a variety of generations and backgrounds.  In 1985, American-born Ernest Matsuo Higa revolutionized Japanese home pizza delivery after obtaining the exclusive license to Domino’s Pizza.  Atsushi Imuta (participating from Tokyo) quit his job at a Japanese bank to found RISA Partners, an invesment banking firm.  Kohei Nishiyama, the youngest of the group who was raised in Columbia and went to university in Japan, invented the Design To Order system which allows manufacturers to reduce risk by carrying out product development based on customers’ requests.

An article on Japanese entrepreneurship in last month’s Eurobiz Japan highlights how within the Japan’s educational system there is the idea of entrepreneurship and risk-taking being undesirable, and that in order for things to change education needs to be used as tool advocating entrepreneurship.   Higa expressed that the climate for entrepreneurs was improving, perhaps as a side effect of the economic recession.  Before the best and brightest would have automatically entered the top companies, but now that this option is not always available, many have no choice but to become entrepreneurs.  But rather than a default option, the next generation needs to hear the message that starting something new is cool and making money as an entrepreneur, something often criticized in Japan, is not a bad thing.

According to Higa, all entrepreneurs in Japan are mavericks as they are pursuing something uncertain that is high risk and low return.  One reason is the government’s pro-establishment stance, which includes high personal income and inheritance taxes which are a disincentive for entrepreneurs. Also in terms of social status, even someone who is a successful entrepreneur receives less acclaim than someone who took the traditional path and entered a large company.  Whereas in the U.S. we might support the underdog, in Japan they tend to side with stability.  Also, whereas here failure can be seen as a badge of honor before you dust yourself off and try again, in Japan it has more negative associations.

Risk aversion also factors into the financing of entrepreneurs.  In Japan there is lack of a venture capitalist network, hindering access to sophisticated investors.  You can get loans from banks if you have collateral, but they tend to shy away from taking a chance on something different.  Nishiyama (pictured above, courtesy of John Ellis-Guardiola) detailed how he had to get his start-up money came from angel investors based in the U.S. or those who had spent a significant amount of time in the U.S.

Imuta emphasized the importance of spreading the culture of entrepreneurship in Japan, namely the fact that it’s fun to start something new and manage a company and its risks.  He recalled that when he quit his job at the bank, 10% of the people admired him but 70% were suspicious of why he did, thinking he was involved with embezzlement or other illegal activity.

Clearly, in order to further cultivate Japan’s budding entrepreneurs societal and regulatory changes are necessary.  This is occurring on an incremental basis, as evidenced by the appearance last fall of the Japan Times column The Wisdom of Entrepreneurs, which profiles up and coming entrepreneurs .   At Columbia Business School, entrepreneurship is the most popular track for students, and getting the Japanese as passionate about this concept could go a long way in exploiting the country’s latent entrepreneur culture.

Toyota Brake Recall – Japanese Reactions to the Current Crisis

It all started on a usual family outing in California. It was there that a highway patrolman and his family were driving on the highway, when they realized the accelerator petal was stuck to the floor. After careening through the highway and eventually crashing though a guard rail, the car rolled over a few times and burst into flames.

Toyota has gotten lots of press lately for their recall of cars across America and the so called stuck accelerator problem. Americans have reacted with shock as their  top quality car maker has had to recall some of the highest selling models on the American market. But how have the Japanese reacted to this?

Each Japanese newspaper today had a different take on the current crisis at Toyota, its affects on America and the overall financial health of the company:

Asahi – “Although the Nikkei Average Climbs, Toyota’s Stock Falls” – The Asahi talked about how for the past three business days the Nikkei Average has gone up. Yesterday following the recent rise in American and European exchanges, Tokyo’s stock exchange also went into the black.

Despite this, the Asahi claims that “the environment of multiple complaints” from the Pirus Break problem have lowered Toyota’s stock. Since yesterday it dropped 5.8%, or 205 yen.

Nikkei – “Toyota’s Sales Drop 15% in the U.S.” The car market in the U.S. has recently shown growth of 6% compared with last month, according to the Nikkei. Despite this, Toyota’s new car sales slumped 15%.

The effects can be seen from looking at Toyota’s competition. According to the Nikkei, for the first time in 7 months Ford replaced Toyota as the #2 car seller in America. Sales of both Ford and GM have gone up, where as Toyota when comparing with Jan 2009 has had sales slip almost 14%.

Yomiuri – “The Vice President of Toyota Talks about the Response to the Crisis” – After meeting with various heads of the Japanese government, Toyota’s Vice President announced today that “Toyota will be able to make changes to their brake computer.” Also adding “we will investigate each case one by one.”

The Yomiuri focused on how much Toyota has been collaborating with the Japanese government to work out a countermeasure that will hopefully restore the public’s trust in Toyota’s cars.

Toyota’s Debt: The Biggest Japan Has Ever Seen

Car companies are part of the corporate identity of Japan, and at the head of the pack is Toyota. With car sales higher than GM, they’re the number one car company in the world. What the economic crisis has taught both America and Japan, however, is that being big isn’t necessarily always best. The newspapers released today the most dismal earnings forecasts that Toyota has had in its 70+ year history.

Yomiuri “850 billion yen for two years” Yomiuri states in their first paragraph that Toyota’s debt forecast will reach a whopping 850 billion yen (8.5 billion dollars), the largest debt on its balance sheet history. According to the Yomiuri, due to the economic slowdown in the world car market, next year’s debt will be twice as much as this year’s.

Nikkei550 billion yen” The Nikkei paints a very different picture of Toyota, listing their losses as only 550 billion yen (5.5 billion dollars), instead of 850 billion yen. They then cleverly go on to state that if you add the taxes, the total adds up to 850 billion yen. Still, the Nikkei cites factors out of Toyota’s control such as the quick drop in car sales globally and the strong yen that have led it to have such dismal sales forecasts.

Asahi “The Whole Market will Freeze” Asahi also focuses on the 8.5 billion debt figure, and goes further to state that Toyota’s forecast for debt losses will have a ripple effect on the stock market as a whole. They then claim that for Japanese companies, 8.5 million dollars is the largest debt on record. The release of debt will be coupled with effects on the labor market and profits on Toyota’s auto part suppliers, leading to a ripple effect for all Toyota’s sphere of influence.

The Release of the Mini Coop, in Japan

BMW has just released a new version of their convertible in Japan, the Mini Coop Convertible S and the Mini Coop Convertible. Each newspaper focused on different features that its readers would enjoy.

Nikkei (New Functionality) The Nikkei focused on the new engine and catchy functionalities that come with the “newly improved mini coop.” The car “employs an effective new engine, with gas consumption performance increased by 40%.” The roof is now able to close mid drive, in reaction to unexpected rain storms. Its closing time has also been decreased to 15 seconds; quick enough so it can close in the time it takes for a stoplight to turn green. Although both newspapers list the car has come out in two models, the Nikkei lists the models as a selection process, with the faster type “more equipped with a 1600cc engine”.

Asahi (New Comfort) The Asahi describes the car as a “new release” in Japan, with different characteristics than previous models. The Asahi talks about the space available in the car, both when driving with the top down and top up. Not only is there luggage space which exceeds 170 liters when the top is up, but it then goes on to elaborate how 2 people can fit in the back comfortably. The space overall has increased by 55 liters as compared to the last model.

NHK and Yomiuri (Crane Accident) Both the NHK and Yomiuri this morning did not run articles on the mini coop but instead focused on the tragic crane accident in Tokyo. 6 people were injured when a large crane suddenly collapsed on its work site and nearby sidewalk. The cause of the accident is currently being investigated.

The Economic Downturn and its Effects: Most Pessimistic to Most Optimistic

4 – NHK: The biggest news on economic glum came from the NHK news station today. Within the financial community the highly anticipated “Tankan Survey” done by the Bank of Japan stated record pessimism amongst company executives. 61% stated their companies were doing poorly, while only 3% stated they were doing well. This measure is the worst it’s been since the survey’s inception, about 30 years ago.

3 – Nikkei: Not to be outdone, the Nikkei then reported that bankruptcies from listed companies in 2008 had reached 45. This is the highest rate of bankruptcies since WWII. To underscore this point, the second worst year of bankruptcies in Japan was 2002, with only 22 bankruptcies.

2 – Asahi: The Asahi ran a headliner this morning about how lay offs and the economic downturn are good for some companies. Reporting from within the headquarters of a recruiting agency that hires part time workers (a company called あず) executives were rejoicing on how this is their chance to get more recruits for part time work than ever before. They referred to the “” the furi-ta- or “seasonal worker” spirit!

1 – Yomiuri: The headlines at Yomiuri this morning topped the optimism radar. They made no mention of an economic downturn, but instead decided to focus on North Korea. So you’re probably expecting some kind of article regarding missile launches accidently dropping missiles on Japan? Nope, the headliner read: Kim Jong Ill’s thinness is due to dieting, he’s getting thin due to health reasons.”

Construction Projects for Fixing and Rebuilding Roads Freeze Across Nation

All across the nation local governments are calling the national government to figure out what to do with construction projects where the funds have frozen. The transportation minister made a speech stating that due to “economic concerns” certain projects have had to be cancelled. In response a local governor stated “I don’t think we should be stopping construction projects due to economic concerns. Safety should be our #1 concern. “

Nikkei Index’s Drop is Lowest in 8 Years

Japan’s Nikkei Index was actually looking pretty good in the summer of 2008, with modest gains due to developing country’s demand for Japanese stocks. Then came what is called in Japan as the “Lehman Shock” in September, which sent stock prices on an unending downward spiral. Compared to March of 2008, the Nikkei has fallen 35%, in 2000 after the tech bubble it had fallen 36.5%

Discount on Highway Tolls Increases Highway Usage, in Some Cases 60%

If any of you have driven in Japan you’ll know it costs about 40 dollars to drive the distance of the state of New York. That all changed on March 28 + 29th, where the Japanese authorities decreased their artificially high toll system to 1,000 yen (with some exceptions).

In most cases the traffic increased around 50%, on the busiest roads of Okayama interchange, and the Tokkaido roads. However the roads around Nagoya and the “central” road (Hachijyoji Junction) only increased their usage by a mere 3-5%.

How many more traffic jams does Japan now have? It has 30% more in some areas, but according to the authorities that is less than what they expected. “Please look at this from the perspective of in the long run, this will be good for our economy” a transportation ministry official said.