Al Jazeera: “The mighty downfall of Japan’s tech giants” due to the lack of diversity in thought and innovation


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Hi Blog.  A bit of a diversion today, as we get into business issues.  The reason why this article is germane to is the claim that the lack of diversity within Japanese company ranks, as well as within corporate outlooks, is partially to blame for two of Japan’s mighty tech giants being downgraded to “junk” status in terms of credit rating.  While I’m not an expert on tech business or marketing, I find the quote below by Gerard Fasol, that “even today, many of these Japanese companies have a complete focus on Japan. All the board members are Japanese men in their 60s and 70s. All the core members are Japanese and anybody who is not Japanese is automatically a second-class citizen in these companies,” rings true.  Especially in light of what happened to former Olympus CEO Michael “incompatible with traditional Japanese practices” Woodford.  Most of “traditional Japan” (which places great cultural value on hierarchy) reflexively will not surrender power to “a foreigner” under any circumstances.  And as this article seeks to point out, that habit stifles innovation as Japanese society ages.  Arudou Debito


The mighty downfall of Japan’s tech giants
Credit ratings for Sony and Panasonic were recently downgraded to ‘junk’ status, showing how far the firms have fallen.
By Michael Penn.  Al 22 Dec 2012, courtesy of CC

Tokyo, Japan – Once the titans of electronic gadgetry, Japanese brands Sony, Panasonic and Sharp, have seen their fortunes dramatically change in recent years as their once-dominant technological innovation has dried up, a bad sign for an economy struggling to shake two decades of recession.

Sony’s announcement this month that it is ending production of the Walkman, its iconic device first launched in 1979 and a testament to Japanese postwar ingenuity, symbolises the passing of an earlier era.

In this contemporary age of smartphones and tablets, the consumer electronics of Japan’s golden age of the 1980s look positively quaint, as no doubt the iPhone 5 will look to shoppers in the 2040s.

But one question that haunts people in this proud East Asian nation is whether a substantial portion of those future electronics giants will still be Japanese firms, or whether they will be largely supplanted by rivals in Asia and around the world.

The hard truth is that Japanese electronics companies have done nothing more than tread water for a decade and a half, as Gerhard Fasol, founder and CEO of Eurotechnology Japan, points out.

“If you just look at the sales, the top eight companies of the Japanese electrical sector have about $600bn in sales combined… but for 15 years they have had no growth… so it is very clear that their business model doesn’t work anymore.”

Economic stagnation

Public opinion polls say what Japanese voters most desire from their newly elected leaders of the Liberal Democratic Party is to revive the struggling national economy.

The most recent figures suggest that Japan has once again fallen into an economic recession in the second half of 2012, in spite of earlier projections that massive budgets for rebuilding the earthquake-and-tsunami-hit north would stimulate growth.

All of this comes on top of what the Japanese now routinely call the “two lost decades” of the 1990s and 2000s, in which their once world-beating technological prowess slipped into the middle of the pack as global firms such as Apple, based in the US, and Samsung of neighbouring South Korea now dominate the highest ranks of the electronics industry.

National champions such as Sony Corporation and the Panasonic Corporation recently suffered the indignity of having their credit ratings lowered to “junk status” by Fitch, a move that may be followed by other ratings agencies in the near future.

“People in Japan understand that the competitiveness of Japanese electronics companies has deteriorated, and this downgrade has strengthened that impression,” says Masamichi Adachi, executive director of economic research in Tokyo for JP Morgan.

Explaining its decision on Sony and Panasonic, Fitch analysts noted, “The future of both companies will depend on their ability to curb loss-making segments and re-discover the kind of technological leadership which historically enabled them to develop must-have products.”

Fasol is among the relative optimists, believing that Japanese electronics companies could recapture much of their former glory if they effectively restructure themselves, end their focus on the Japanese domestic market, and take better advantage of global scales of production.

As in so many other fields, Japan has defeated itself in the cutting-edge electronics sector through its habit of looking inward rather than embracing a genuine form of internationalisation. Fasol observes that “even today, many of these Japanese companies have a complete focus on Japan. All the board members are Japanese men in their 60s and 70s. All the core members are Japanese and anybody who is not Japanese is automatically a second-class citizen in these companies.”

Some analysts are now asking whether it may already be too late for Japanese electronics giants to make up the lost ground.

Cash-strapped Sharp Electronics Corporation is in the most desperate condition. This firm bet heavily on large-sized televisions and panels and has been losing billions as a result of sluggish sales in a highly competitive market.

On November 1, many were stunned when Sharp reported to the Tokyo Stock Exchange that there was “material doubt” about the company’s ability to survive over the next year. Since then, however, Sharp has recovered somewhat through the combination of a more favourable yen-US dollar exchange rate and help from foreign investors.

But even the more formidable companies like Sony and Panasonic are slashing jobs and selling off assets in order to improve their cash flow. Among the properties that Osaka-based Panasonic may let go of is its main building in the capital city of Tokyo.

Analysts agree that, in order to achieve a turnaround, Japanese electronics giants must develop next-generation products that enthrall consumers once again, rather than playing catch-up to companies like Apple and Samsung on already available technologies.

A major factor in Fitch’s decision to cut the credit ratings of Sony and Panasonic is a lack of faith that they still have the financial resources for research and development to match their larger rivals. As the Fitch analysts put it: “At the moment their weak financial performance does not enable them to invest in new technologies anywhere near the extent of their competitors.”

But Fasol believes that this analysis misses the most crucial point: The money is not as important as the people.

“They still think in terms of having big factories and having big friends in government,” he notes. “What they don’t realise is that the core is to have the best possible A-players around the globe [on your team], independently of whether they are Japanese or not.”

A related possibility suggested by Sandeep Tewari, the State Bank of India’s country head for Japan, is that Japanese companies may increasingly lend their highly recognisable brand names to lesser-known partners in other Asian nations, leading the Japanese giants to be “reborn in other countries”.

What these perspectives suggest is that Japanese electronics firms do indeed have a reasonable chance to become world-beaters again, but only if they can find the wisdom and courage to transform themselves into something less “Japanese” than they have been before.

In the end, that may prove too high a hurdle for the tradition-bound leaders of the last generation like Sony, Panasonic, and Sharp. But there may yet be hope for younger, emerging firms like Softbank, Rakuten, DeNA, Gree, and others whose names we have yet to hear.


29 comments on “Al Jazeera: “The mighty downfall of Japan’s tech giants” due to the lack of diversity in thought and innovation

  • One thing is missing in this story: Japanese youngsters are not also prepare to be a creative force. We all know that Apple and Samsung heavily rely on creativity, from locals mainly and also from foreigners. US Empire also attract skilled labor force from everywhere and that’s another difference in comparison to Japan: the country offers security for those who want to live there, encouraging people to stay. We can learn a lot with this. And it seems that bringing Abe, The Mummy back doesn’t make any sense in all of this.

  • Regarding the Al Jazeera posting and the Japanese Only hospital posting

    Japanese thinking at all levels of society is still basically predicated by
    the notion of Nihonjinron….that the Japanese brain is wired differently
    Perhaps that is why Japanese doctors can’t speak English and gaijin “can’t
    speak Japanese ”

    In order for Japan to become less Japanese and therefore truly international
    they have to somehow find a way to abandon this pseudo scientific/philosophical
    ingrained subliminal consciousness

  • Debito

    Just as an addition to my previous submission on the Nihonjinron

    At the time of the Kobe earthquake in 1995 offers of help were
    from around the world particularly from overseas doctors were rejected as they
    would not “understand the workings of Japanese bodies”.This was later
    ammended to lack of Japanese medical qualifications
    It has been an issue for a long time

    Reference: Japan Behind the Lines
    Ben Hills
    Hodder & Stoughton 1996
    ISBN 0 7336 0088 3
    Pages 179-215

  • Al Jazeera is right. Good post Debito. The root cause is Japanese corporate xenophobia and exclusionism, combined with an inability to make what the NJ customer wants, and then sell it to them. Made their own beds. Sayonara Sony!

  • Well, the true is that I have seen the development of really great products that simply were just not presented to the rest of the world. One example is the MD format that could have been the media storage per excellence, but it simply wasn’t promoted enough abroad. In my opinion, what is missing here is the ability to engage the world with true japanese creativity and I think that is because of a shameful state of mind incapable of assimilating any valid critic opinions from outside. Hyper sensibility and fear of rejection is what is driving this country inwards, and sadly that is not in any way a winners state of mind.
    On the other hand you can see the ridiculous GangNam style music breaking all the charts around the world…

  • Right all around. On a microcosm level, I see this same philosophy at work in the film & entertainment industry. Preferred status to major companies, an unwillingness to create cooperative opportunities with international filmmakers, protectionist policies that make it difficult for international productions to shoot in Japan, the stifling of independents, and the stubborn reliance on a production system called “the Production Committee” which is a closed group of companies working in association to promote their own brands/products/stars through film even though many of called for Japan to adopt more international business practices to help open up the country and its filmmakers to opportunities abroad.

    You only have to look at South Korea’s ever expanding international film profile to see the results of a nation that is moving and shaping itself to compete on an international level. You have prominent Korean directors making large-budget Hollywood studio films and international actors asking to star in Korean film productions. The differences couldn’t be more evident.

  • @ Jjobseekr #7

    You are absolutely right. I remember ‘the good old days’ when great Japanese movies had (admittedly) limited international release with English subtitles (I’m thinking of any Kurosawa film). This is one of the ‘roads to an interest in Japan’. Now the J-film industry can’t be bothered with subtitles in English. Watch the Korean film industry jump in there and steal that market share for the last 10 years or so!

  • @ Jeff #5

    ‘As a participant in this field, the problems are global and have nothing at all to do with anything uniquely Japanese.’

    Well, don’t keep us all guessing, tell us what the problem really is then!
    Let me guess, it’s not Japanese xenophobia, it’s just that the rest of the would doesn’t sufficiently appreciate all those great products the Japanese are making, right?

  • @Jim

    Surely it’s not the Japanese film industry’s job to put English subtitles on their movies; it’s the job of the movie distributors in the relevant English-speaking countries. I doubt the big Hollywood companies themselves produce versions of their movies with Dutch, Swedish, Swahili, Vietnamese etc. etc. subtitles.

    — Who hires Toda Natsuko?

  • @comment #8 (Jim), “cant be bothered” is a major factor in Japan’s downfall.

    Its the “mendokusai” syndrome, on all levels.
    Take top 80s Japan band, YMO. They had Peter Barakan check or even co write all their lyrics, which is why it such high quality stuff and made it big time overseas.

    Name any other J band that does this. Answer, they cant be bothered getting a gaijin involved. Hence, they do not make it overseas, except to the anime freak niche.

  • @ Jim #9

    Wow. No, seems you may have me confused with someone else ;^)

    Not every problem that manages to affect something in Japan is of it’s own making (even if it manages navel gazing and to kick the can more than any other country I’ve worked with), nor is it a victim in most every (or any) case. Sometimes, it’s just that everyone in an industry is suffering as the economic climate, market dynamics (race to the bottom) and exploitable labor bases change. I could talk about how conventional wisdom is going to fail also (consolidation, mergers…) but it looks like they are going to try (again) in any case… Which is not to say I’m advocating doing nothing, or perpetuation BAU (again, I’m not who Jim thinks I am).

    Anyway, some are trying to make a serious effort to try and understand what is happening… e.g.

  • @ Jeff #12

    ‘I’m not who Jim thinks I am’

    I’m not sure what you mean. I don’t think you are anyone, except for the guy that made this statement;

    ‘As a participant in this field, the problems are global and have nothing at all to do with anything uniquely Japanese.’

    Seems to me to be a classic case of only positive things benefitting from being labelled as ‘uniquely Japanese’, where as negative things are, of course, to be ‘found in every country’.

  • @ Joe #10

    ‘Surely it’s not the Japanese film industry’s job to put English subtitles on their movies; it’s the job of the movie distributors in the relevant English-speaking countries.’

    What’s this? J-victim mentality by proxy? So the Japanese film industry is just clamoring to get their films out, but movie distributors are discriminating against them by refusing to subtitle them? Are you seriously making that assertion? Gee, god forbid that Japanese film makers should think outside the box and actually subtitle their own films. I mean, take some responsibility. It wouldn’t really be so hard to hire a native speaker or two to do the translation, would it? But, this is a problem that typifies the Japan Inc. problem. It’s just so ‘meiwaku’ to have even one NJ full timer, that the J-management get all ‘mendokusai’, and then go into the denial that the outside world doesn’t matter, and can be fobbed off with over-priced galapagos products (or even ignored altogether), right until the bottom line hurts, and then it’s the fault of ‘the strong yen’, or the ‘gaijin that doesn’t understand our unique culture’, or even ‘government inspired anti-Japanese unofficial boycott’; Japan the victim.

    It’s simple. If J-companies wanted to keep the large market shares they should have internationalized management, practices, and products. Offices that still use fax machines? Seriously? C’mon.
    They didn’t, and now they are struggling to survive on the proceeds from a shrinking domestic market. China doesn’t need to cultivate any quality brands. It can just wait for all the big J-names to go bust when there isn’t enough tax cash to provide them with endless credit lines via the banks, and then buy the name and the image at rock-bottom prices.
    And before you all start the ‘but Japanese products are superior in quality to Samsung’ etc mantra, ask yourself if you are sure that’s true? How many J-automobile company recalls in the last 3 years? With domestic electrical appliances having a life cycle of 6 months, I don’t really care if a Panasonic TV will last 10 years, where a Samsung will last only 7 (although, given that the Panasonic is likely to be about 50% more expensive, maybe I should!).

  • Jim #13,

    Last time, since this is leading no where at all, and perhaps you’re just baiting:

    “Seems to me to be a classic case of only positive things benefitting from being labelled as ‘uniquely Japanese’, where as negative things are, of course, to be ‘found in every country’.”

    Only you (in that sentence) said there was something positive -or- negative that was “uniquely Japanese” in this situation. Other than METI’s predictable (wrong) reaction to this particular situation (read above re: cans) that is. The situation in Valley (I remember when we couldn’t find an office there for love nor money) is just a few years ahead. Colleagues in Taiwan are also seeing profits and capital reserves evaporate (not to mention the imposition of foreign capital controls through rules and tax levies).

    You think I’m a Japan fanboy… you thought wrong, it’s your eyes that are shut this time, not mine :0 We’re all here to advocate for change in Japan, but this issue is broader. And I wish it wasn’t…

    Not sure I get this post. What do you mean by “Valley”, for example?

  • These companies are still fairly good at most aspects of tactical business, the day to day running of the business, but they lack strategic direction as they only have insiders, often very old ones at the helm, not just at the top but further down. These companies need to hire the best project leaders, designers and thinkers available in the world, whether they are Japanese or not, Sony insiders or not, and put them in charge of giving direction to the workers. How can a 70 year old Sony executive know what makes a good smart phone for 20 somethings, it is the height of arrogance for them to think that they would even understand the known factors, nevermind the unknown unknowns, instead they will focus on the financial numbers surrounding a potential project, hence Sony mobiles are average in every way and would probably give Sony a high margin – IF anyone actually wanted to buy a less then cutting edge mobile, and this applies across their range and across other Japanese giants.

  • Ultimately which companies are able to operate and grow comes down to which companies banks will lend to, unfortunately the lack of imagination shown in Japanese corporate giants is even worse in Japanese banks and among Japanese investors generally.

  • Not all of these companies R&D divisions are being led by old men. I believe one of the most significant things holding Japan back is the made in Japan or unique Japan factor. Anything that comes into japan, including humans, animals, language, machines, is considered gai, outside, and thus must be changed. The original idea gets crushed or changed to conform to this nationalism. When a westerner looks at something foriegn, they dont automatically assume its foriegn, they reason the good and bad points. It seems to me that many Japanese assume that something foriegn must be changed or “improved” by over engineering. I have had many English students inform me that only Japanese can make certian products. To sum up what Im trying to say- Japan needs to join the rest of the world; being a country that makes unique products can only get you so far in this progressive global world. Unfortuanetly, this is what Japan is known for; making high quality technical products in all sectors. Its what many overseas have come to expect from Japan so there is no incentive for japanese to become internationalized. We can see how long its taking TPP to get approved while we pay ridiculous prices for a small amount of imported foods. Would Japans quality of life disappear if they open up to the world and embrace English and loose the uniquely Japan paradigm? Id like to see more comentary on this.

  • I have worked in the high tech industry in Japan for over 15 years including the experience before moving to Japan.

    Mike, I am glad you brought that up. In my specific industry standard Japan is still considered the global leader and I believe will be for some time. These companies R&D Divisions are aggressively implementing new technologies, creative, highly adaptive, and very forward thinking (I have seen them allow pregnant woman 18 months leave and return to the same job, etc.). These are not the “giants” in Japan. Most are mid sized (by no means small) companies, which are providing high levels of growth and good paying jobs. I have also seen foreign engineers from Europe, the U.S., India, Malaysia, etc. in the engineering departments of these companies.

    I also have clients that are very, very large corporations and they do have problems as they are locked in Showa Japan. About 4 years ago I had a very large contract with one of these very large companies which could not be completed as the company was not willing to change fast enough to meet the needs of overseas clients. This company lost a potential large order to a large international manufacturing company. These companies do indeed reflect what is written.

    Mike, regarding what you say about “over-engineering”, this is very true in some instances but there are companies here that have adapted and resisted the urge to do that. For my clients this change is mandated by external forces (the fast pace of the industry) and they have risen to the challenge. For me this is an issue with leadership as there are many capable engineers in Japan with creative minds and skills to adapt. They just need a culture that encourages and demands this.

    Japan still leads the world in high precision items, however Korea and Taiwan are catching up and thus Japan is losing the “lower tech” manufacturing related to the technology sector (TV’s, consumer electronics, etc.) which happened to be a large contributor to Japan’s GDP.

    In one way, this is a natural progression (this happened to the U.S. too and I think that it should have been addressed in this article as well) but this also reflects some of the “old guard” thinking (as identified in this article), which in my opinion should change (I think some of the facts reflect this).

    I found this article to be quite an interesting read.

  • @#17 . “How can a 70 year old Sony executive know what makes a good smart phone for 20 somethings, it is the height of arrogance for them to think that they would even understand the known factors”

    Even in the 80s it was a common western complaint that Japanese gadgets were not user friendly, and needed too many button pushes.Yamaha and Panasonic being the commonly held up examples at the time.

    Fast forward to 2012 nothing seems to have changed; my Japanese phone is very, very mendokusai (oh, the irony). Maybe anal Akiba geeks like to be mothered by machines but if I just want to search a name it actually asks me to push at least 3 buttons that are completely unnecessary on other phones, and keeps asking me if I am sure I want to do it. Taking a picture with a flash also needs to be set every time.

    Its a nice color though, a tad garish, probably would suit a hosto in Kabukichou. Or some 70 year old with time on his hands. And yes, it does take high quality pics but was very expensive.

    The products are representations of the society that made them, and reflects their tastes and ills.

  • Doug, you are right about smaller companies breaking the mold of . We dont see, however, much from the outside making it into Japan. costco is an exception, how they made it here remains a mystery to me as Japanese are flocking to buy goods at wholesale prices for their business and personal use. Im sure thats hurting the domestic supply chain in Japan but they continue to make it big here. I think allot of whats behind the resistance to change in Japan is the need for comformity. In WW2, for example, you could almost excuse many Japanese for supporting the declaration of war on the west due to all the propaganda of the Anglosaxon colonization of Asia and little exposure to anything foriegn. Yamamoto Isoroku, however, had lived in the U.S. and knew its capablity. His decision to attack the U.S. made little sense- to sting the U.S. so that they loose the will to fight. How could someone who admired the U.S. and knew its capability make such a bizarre choice? I think conformity had something to do with it. Nothing seems to have changed; Abe/Aso/Hashi/Ishi are at it again. Seems the majority fall in step to elect them. Group think or comformity playing a role in this?

  • I have been doing some research on how adverse economic prospects affect management in Japan. Without banging on in detail, I found that many J-company employees who went job hunting just after the bubble burst (around 45 years old now, and in positions of mid-level management) are (secretly) rated by younger colleagues for being far more old-fashioned, slow to make decisions, risk averse, and generally narrow minded, than senior levels of management who were rated as being far more open minded, international in thinking, progressive, and quick to make decisions (bear in mind that this is still Japan I am talking about, so it is all relative). When asked what they thought the reasons for this were, they commented that senior managers graduated in the era of Japans growth and expanding command of overseas market share, leading to a (perceived) confidence (over confidence?) in contrast to the immediate post-bubble ‘new-hires’ who are seen as timid and conservative. This timidity and conservatism was a trait that the 30-40 age group of respondents also saw in the new-hires in the last couple of intakes of new-hires, blaming the post Lehman shock slump in the J-graduate recruitment prospects for producing another generation of future managers who are inward looking and ineffectual.
    It will be interesting to see what the state of J-companies will be in 15-20 years time when the ‘post-bubble’ generation are the senior management, and the ‘post-Lehman shock’ generation are the middle management.

  • I think Jim is spot on; I have found the older generation to actually be easier to work with than people my age or younger. I have even met many WW2 veterans who disapproved of the Emperor and had nothing but great things to say about the U.S. occupation and reconstruction. Its like they are nostalgic of a better time. Many dont know, but allot of the Yokohama area was once occupied by the U.S. army and they also were resident at the Okura hotel. This generation of Japanese had much more exposure to foriegners than what we see today. Younger Japanese seem to be just the opposite.

  • Just a thought says:

    Interesting views so far and I agree with many of the points presented.

    Attempting to look to the future, do you think this will change with a fresh group of Japanese youth? (Proactive youth, not the mendokusai type)
    Youth who are exposed to western cultures and ideologies a lot more than their ’60-70 year old executives’ counterpart?

    Their perception of foreigners and international business must be significantly different.
    Perhaps this water treading and stale innovation will come to an end.

    — Sorry to get all “you young whippersnapper” on ya, but we’ve been hearing of this “change with the passing of the older generation” argument since the 1980s (and probably earlier before I began studying Japan). I would argue that we’re seeing conservatism percolating down through Japanese youth just fine, especially these days where there’s an “external threat” given that Japan is no longer the largest economy in Asia and is being outspent in terms of regional defense budgets. For a case in point, have a look at this: (watch the video in particular).

    Anyway, how this will affect the corporate boardroom is for others who know more to comment on, as they have been (thanks).

  • I think that japan is more lost then people want to admit:
    1) The tech innovation of japan is largely over-rated, do to the fact that from 1978 onwards tech achievements rained from the skies and most inventions have been done by other countries then japan.
    2) Japan however was perfectly industrial structured to take these new techs and improve them or think them to the end.
    3) All this was only possible because of hardcore business rules, where workers lives didn’t much count.

    Take germany, where people never worked more then 35 hours a week since the last 40 years, is at least twice as productive as japan if you think japanese worked more then the double.

    We should never forget that japan emerged from 1945, from a world of low-tech and made huge profit by simply quicker adopting industry changes before europe or partially the US. This game is gone for ever, as for the next centuries any country has access to high tech and can build an innovative industry.

    Then come the japanese culture of competition: A view where you challenge other countries by sacrificing yourself and thinking you won the competition that way, when in fact western competitions essence awards the actual competitor with something other then just childish pride to have won by all means.

    BMW engineers build brilliant cars for decades, surely japanese industry innovation made the BMWs more reliable too, but at the end the working for BMW is rewarding for employees as they can enjoy a true safe, good payed and relax work life . . . where toyota employees live like rats with their families in small apparts, on the edge of karoushi, just to make the Prius possible.

    Japan has no other choice to adopt western business ethics and drop its feudal culture from its industries . . . .

  • @#26 Chris

    “Take germany, where people never worked more then 35 hours a week since the last 40 years, is at least twice as productive as japan if you think japanese worked more then the double.”
    You can actually back this up with numbers from the British NIS reports – Japanese workers are shown to be the least productive of the G7 nations. The baseline was Britain at 1.0 and Japan was something like 0.83 GDP per hour worked, pretty much the only country below .9. Germany and America were sitting healthy at 1.33.

    Pretty much blows a giant hole in that whole “we Japanese work so hard” line we all hear so often.

  • Debito,

    I apologize if I intrude on this old article, but I didn’t know where to show you this particular article from NPR (that include an audio report). Japan’s also suffering from lack of entrepreneurs:

    A Startup Scene That’s Not So Hot: Japan’s Entrepreneur Shortage
    by Elise Hu, National Public Radio, May 7, 2015

    Toshiba. Sony. Sharp. You know those brand names because they dominated the Japanese economy’s global rise in the ’80s. But that was 30 years ago. As the Japanese economy stagnates, it’s unclear which new companies will replace them.

    Doga Makiura is Japanese, and a startup founder. But he’s not a startup founder in Japan. He created businesses in other Asian countries instead.

    Why not be an entrepreneur in his native country?

    “Cause I think it’s boring,” he said. “There’s a huge, bigger market in everywhere in the world. Japan is a shrinking market and I don’t really understand why you’d do business in Japan.”

    He’s not alone. Only 6 percent of Japanese surveyed by the Global Entrepreneurship Monitor said they thought there were opportunities to start a business in Japan, and other indicators show the country has one of the lowest levels of entrepreneurship in the developed world.

    Part of the problem is the past. After the success of the pioneering postwar electronics companies, the lure of working for established places created a risk-averse culture.

    “[Entrepreneurship] is all about whether you take a risk or not, and parents have great authority and power in Japan. So parents say, ‘No, you’re actually getting into these companies that pay you a stable income,’ ” Makiura says.

    As parents promote the promise of stability at Japanese giants, the economy misses out on the kind of entrepreneurship it needs.

    But lately, energy behind startups is picking up. At Slush Asia, a brand-new tech festival held in Tokyo in late April, the scene and the energy resembled a small-scale South by Southwest Interactive. With the fest’s futuristic-looking blow-up domes for talks and demos, an endless line of food trucks, and a focus on bringing together investors and innovators, young Japanese told NPR they felt inspired.

    “We’re not allowed to wear suits, apparently. That kind of casual event is the first [of its kind] in Japan,” Makiura says.

    As things are now, young Japanese companies attract only a fraction of the venture capital that American startups do. But talk with venture capitalist Akio Tanaka, whose firm backs Japanese companies — and the outlook isn’t so grim.

    “Lately we are starting to see larger ideas,” Tanaka says. “Ideas we like to back. People who are trying to change the infrastructure of how things are getting done.”

    He says Japan’s economic downturn has helped encourage entrepreneurship.

    “Young people now watch what’s happening with Sony, Panasonic, all those companies and realize that none of those companies actually are able to offer the kind of lifetime employment they used to offer,” Tanaka says.

    “We really have to thank … the failure of some of the big companies, because if they didn’t fail, I don’t think it actually [would] fuel this growth of startup industries,” he says.

    Among cheerleaders for this kind of growth is Prime Minister Shinzo Abe, who wants to make life easier for risk-takers. During his visit to Silicon Valley last week, he announced a new government-funded incubator. It will send Japanese companies to the Bay Area for learning and launch.

    Abe said unless Japan focuses on the future, the country will get left behind. So policy changes to reduce bureaucracy and encourage investment are happening, and events like Slush Asia are aiming to show young Japanese workers a different path.

    “One of the major purpose or goal of this movement is encouraging the younger generations, in the sense that the elder people are discouraging. That’s why we need this kind of event,” Slush Asia founder Taizo Son said.

    It will take more than just one cool event, but if the burgeoning Japanese startup community can start humming, it’ll make a tradition-bound country a kinder place to create business.

    *article end here*

    — Sound like a lot of talking-up. No mention of what happened to Horie Takafumi, and how things have changed so it won’t happen to someone else?

  • @Debito,

    Thanks for posting my link to the NPR article and to answer your questions: No, I never heard of Horie Takafumi (to be honest, that’s the first time I’ve heard of him). That NPR article I linked above was the first time I’ve heard of Japan’s issue with entrepreneur and companies start up. Prior to that, I didn’t know about it. But thanks for posting.


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