TOKYO (Reuters) - For decades, their ability to sell masses of cars and oodles of televisions was how corporate Japan, and its government at home, benchmarked its progress in conquering overseas markets.
Car builders led by Toyota, and gadget makers such as Sony or Panasonic became global brands. Left behind in Japan were thousands of firms, big and small, that for the most part were content to vie for their share of a big home market.
The emergence of aggressive Korean and Chinese rivals has dimmed the global manufacturing stars of Japan Inc. For the rest who plumped for a domestic existence, the pickings have become slimmer after years of recession and consumption-sapping deflation.
Now China is surpassing Japan as Asia’s biggest economy and foreign fields beckon to a swarm of diverse ventures, ranging from fast food chains to house builders, which with enough talent and cash, might manage to burrow out of their home market.
But the guiding hand of government they might once have expected has gone limp, as Japan’s political masters stumble from one crisis to the next and the revolving door of leadership change keeps on spinning. In Japan’s post-war heyday, the government directed credit and capital to help build corporate titans. For better or worse, companies today are freer to fend for themselves.
Signs of an exodus are already clear. One is an 89-percent jump in the value of outbound mergers and acquisitions in the third quarter of the year, to 2.8 trillion yen ($33.53 billion) compared with a year ago. Overall, Japanese companies completed a record 367 deals, according to data compiled by Thomson Reuters.
Direct investments by Japanese overseas is rising too. At the end of June, it totaled 66.5 trillion yen, a jump of 46 percent from only five years ago, according to Japan’s finance ministry.
Reuters has profiled seven CEOs who are leading their companies overseas. These seven samurai are not necessarily he most successful or most renowned managers Japan has to offer, but together they represent the breadth of Japan Inc’s foreign foray and perhaps, too, defy the Japanese CEO stereotype of grey men in grey suits. None is well known outside Japan. And each of them has a battle on his hands.
By Sachi Izumi
Tomoko Namba’s only concession to being a woman in Japan’s testosterone-soaked business world is to leave early from parties to let her male underlings enjoy an evening out in one of Tokyo’s myriad of hostess bars.
Recently, however, she has been spending less time making her excuses at home and more time over the Pacific. For a week every month she leaves her husband — he is trained to do his own laundry — and her seven-year-old Shiba dog, Sakura, which is not, to fend for themselves while she networks in the world’s IT entrepreneur hub in Silicon Valley.
Though it has become her de facto second home, she still stays in a hotel rather than set up home in a house or apartment. Namba, she says, is too busy looking for deals and ideas that will take DeNA Co, her social networking mobile-phone gaming venture, global.
“I devote 99 percent of me to this company,” says Namba in Tokyo in between one of her trips stateside. “I want to make DeNA the world’s No. 1 social-gaming company. That is the most interesting thing to me right now.”
Gamesmanship is intense with her thirty-something rivals at home, including Gree’s Yoshikazu Tanaka and Mixi’s Kenji Kasahara, and now Namba must confront Japan’s anti-trust regulators.
They are probing her company over allegations it punished a game vendor who did business with one of her competitors by refusing to offer its games to DeNA’s customers. DeNA’s shares fell 6 percent on December 8 after the company confirmed it was being investigated for unfair competitive practices.
Namba declined to discuss that charge, saying only that she will “cooperate fully with the investigation.” But on the future of her business she is more forthcoming - and unapologetic. “DeNA wants to keep the spirit of a start-up forever, and one of the requirements to do that is to be greedy for growth,” Namba explains about her aggressive approach to doing business.
Namba established DeNA in 1999 and created its Mobage Town site, which now has 22 million subscribers who fill her revenue coffers with money they spend on virtual clothing and other baubles for their online avatars.
Growth at first, however, eluded her as she racked up four consecutive years of losses trying to win business for DeNA in its first manifestation as an online auction site.
Although being a woman is less of a rarity in the more gender clement United States, Namba stands out for other reasons. Unlike fresh-faced whiz kids such as Facebook’s Mark Zuckerberg, who define social networking, Namba is 48, and the Internet is her second career.
Holding an MBA from Harvard Business School, Namba worked for management consultancy McKinsey & Co for several years before she decided to try practicing what she preached, that is the M&A game.
In October, her company forked out $403 million for ngmoco Inc, a U.S. developer of games for Apple Inc’s iPhone and Google Inc’s Android phones.
“That was an amount of money we had never spent before. So if you ask me if I was scared, I am still scared,” she says in her Tokyo headquarters. “But I don’t doubt our decision. My rational side knows for sure that this was a bet we needed to make if we want to be No. 1 in the world.”
Taking the lead means trying to grab an early slice of an exploding and highly competitive market for social gaming. In the United States alone, the value of virtual goods will increase to $2.1 billion in 2011 from $1.6 billion this year, estimates social gaming research company Inside Network.
With her husband left to do the housework, Namba has her games to keep her company on her frequent foreign trips. Even then, the goal is growth as she tills the virtual soil on her favorite farming game, Noen Hokkorina.
By Mariko Katsumura
Every morning for the past 25 years when at home, Isami Wada, the boss of Japan’s biggest home builder, Sekisui House, has risen before dawn, donned a track suit and hiked 8 kilometers around his home city, Osaka, in western Japan.
“I find it a pleasure looking at budding leaves in spring and the reds and golds in autumn. It helps me focus and stay optimistic,” explains Wada in an earthy Osaka accent.
It helps him attain “mushin,” or no-mindedness, a Zen trance karate or judo masters use to fight instinctively, without thought or hesitation. Wada says it helps him to cope with the cut and thrust of doing business in an ever-changing market.
“The world’s moving so fast these days and things that may have taken 20 years previously can now be done within a year ... Good leaders, I think, are those who are ready to adopt change,” he says leaning forward on a stylish brown leather sofa.
His role model is a Japanese samurai lord, Oda Nobunaga, credited with unifying 16th-century Japan in a shrewd military campaign against his warlord neighbors. Sekisui’s boss since 2008, Wada is intent on expanding his housing fiefdom in neighboring nations.
The goal he has set his 1,700 army of workers is 200 billion yen of overseas sales by 2014 from nothing last year. His expedition has opened on three fronts, one to the south in Australia, another west in burgeoning China, and one more east in the United States.
“Japan is full of pent-up feelings. Everyone’s looking down and whinging. I would rather seek chances outside this stagnated country,” Wada says.
His first chance came in 2009, when he joined a residential property project in Australia, Sekisui’s first overseas venture in 50 years.
Now he is thinking about extending his antipodean foray by buying a slice of a $5.3 billion waterfront housing and office project that will turn 22 hectares of defunct Sydney dockland into what its local developer, Lend Lease, is championing as Australia’s answer to New York’s Central Park.
In China, Wada is building a factory in Shenyang that will build prefabricated steel-frame houses he hopes will lure the nation’s ballooning middle class.
Wada says his determination to make the jump to international business comes in part from his failures. A shoulder injury as a youth ended his childhood dream of being a baseball player. He only joined Sekisui, he says, after other companies rejected his job application.
“My life has been full of defeat,” he quips. “Really, defeat, defeat, followed by another defeat,” he adds, laughing.
At 69, Wada might not be around as the boss of Sekisui to see his business offensive through to the end, but he should, at least, avoid the fate of his hero. Betrayed by a treacherous underling, the marauding Oda in the 16th Century was forced to commit ritual suicide with his sword.
By Isabel Reynolds
Masatoshi Ito climbed the corporate ladder at Japan’s leading condiment maker, Ajinomoto Co, as much in his kitchen as in meeting rooms or in board room jousts. Named president in 2009, it’s while watching over bubbling sauces, grilling fish and other concoctions that he is now plotting his next assault on the world’s taste buds.
For the past three decades, Ito, 63, has been an avid cook, inviting over fellow executives to cook meals and chew on new ideas. Faced with a sales crimp as weak consumer spending ground down into profits, his latest dish is overseas expansion. He wants to inflate overseas revenue to 40 percent of the total by 2016 and eventually up to 50 percent.
As the creator of monosodium glutamate, a staple of fast food around the world, the Japanese company has been doing business overseas for decades. But rather than hawking a commoditized food additive that some food campaigners say — but have yet to prove — can cause headaches, nausea and itching, Ito’s challenge is to find a rack of flavors that appeal to palates across a patchwork of national preferences, where one taste doesn’t fit all.
In Thailand, it sells flavorings featuring oyster sauce, pepper garlic and chili. Indonesia gourmets like beef flavors. In the Philippines, onion and shrimp make mouths water. In Brazil, Ito says he has high hopes for a seasoning dubbed Sazon, versions of which can be used to flavor beans, eggs, vegetables, pasta and potatoes.
Coming up with new flavorings is a hit-and-miss process, Ito notes. “You can’t expect to succeed straight away,” he says outside a function room of a Tokyo hotel where he had just delivered a speech. “You have to stick at it, sometimes for years.”
A constant crusade as well is to improve the MSG maker’s image as a creator of healthy fare. In July, Ito, who spent a chunk of his career marketing frozen food for Ajinomoto, burnished the brand by signing a pact with Kellogg Company, whose products it distributes in Japan, to jointly develop healthy foods to tackle obesity and reduce salt intake.
An ardent defender of MSG, Ito also insists on his company’s website that Ajinomoto’s core product is kind to the environment, because the fermentation process means it can be made with relatively small amounts of basic ingredients such as sugar cane and cassava.
Ajinomoto’s expansion has meant a lot more travel for Ito, including recent trips to China, Brazil, Cambodia and Europe. It was in the United States that Ito says he learnt how to market flavors. In 1970, he was given the job of setting up a soup business as part of a joint venture with Corn Products, bringing him into contact with advanced American marketing techniques.
Ajinomoto’s overseas adventures have also spiced up Ito’s cooking, as he adds new condiments to his seasoning rack at home and expands his menu to Chinese and European dishes.
Guests who want to know what business ideas the Ajinomoto CEO intends to serve up next will, as always, have to look for him in the kitchen hovering over his pots and pans, wrapped in his bright red Ajinomoto apron.
By James Topham
Fumitaro Ohama has no interest in exclusive fashion shows for selected followers of haute couture. The last event he arranged in Tokyo in September attracted some 30,000 people and was watched online, he asserts, by 50 million more.
In little more than five years his Tokyo Girls Collection (TGC) has become a must-see event for hordes of 20- and 30-something women who need to know what bag they should be carrying or what clothes they absolutely must wear next season.
“The goal for (Girls Collection) is not to be an event aimed at getting people to buy more and more; rather, it is to provide a fully satisfying fashion show experience,” says Ohama, founder of Branding Inc, describing the shows that feature musical bands, laser beams and catwalks as long as 80 meters.
In a showroom in Tokyo’s trendy Omotesando neighborhood, Ohama is surrounded by merchandise, Kitson apparel from Los Angeles and Japanese brands like Alba Rosa, hanging from racks and sitting on shelves around him.
In Japan, he explains, Kitson had sold only 150,000 bags priced between 9,800 to 12,000 yen, before they were showcased on TGC. After models carried them down his catwalk in March 2009, that figure jumped to 1.3 million, grossing 13 billion yen.
Half of those ended up with buyers in other Asian countries, including China or Taiwan, where Kitson has yet to open up any stores. Ohama doesn’t hawk the bags and clothes at his shows, fashion seekers instead buy them online at one of his sites.
Born in Tokyo, Ohama said his time as a university student in the global showbiz capital, Los Angeles, gave him not only a new outlook on Japan but also experience that would prove key in generating large audiences for his fashion shows.
“If you don’t have a concrete theme and collection, then people won’t show up,” Ohama explains. Rather than trying to trick people with gimmicks, it is best to give them an enjoyable experience so they will come back again and again, he says.
Returning to Japan in 1996, Ohama worked briefly as an office clerk and later as a script writer for TV and radio shows in programs for young women, the core of his client base. Three years on, he established Branding, followed a year later by a fashion site, girlswalker.com.
The first mass fashion show debuted in 2002 in Kobe, in western Japan. The first event in Tokyo was in 2005. He wasn’t new to organizing, however, having been at it since he was in high school. Dressed in torn jeans, a purple and green check shirt, and purple and grey scarf, he recalls the first, a rock band gig, attracted 150 people.
Having become a fashion icon at home, Ohama has set his sights on exporting his mass fashion shows overseas. Already he has done one in Beijing and even in the fashion Mecca of Paris. He is planning to expand to as many as seven other Asian countries by 2012, and will eventually extend himself to other parts of Europe and North America.
Eager to project Japan’s “soft power” the nation’s government is lending a hand. The trade and foreign ministries have already have begun sponsoring TGC shows and are helping with negotiations for the expansion overseas.
For those in the world of vogue who might sniff that mass fashion is a contradiction in terms, Ohama promises an even more brazen idea, which he calls “runway wars.” He describes it as a world cup-style competition where different nationalities do battle on the catwalks for the attention of the masses.
“I think there’s the chance it could be a megahit and get more than the 50 million viewers we get for TGC,” Ohama predicts.
By Junko Fujita
When Shuji Abe at 18 packed his bags and moved 900 kilometers to Tokyo from his home town on the southern island of Kyushu, it wasn’t to wash dishes or serve bowls of braised beef on rice. He wanted to be a rhythm and blues guitarist.
But finding Japan’s capital full of other aspiring musicians, it wasn’t long before he was doing just that, feeding hungry salarymen and students with one of Japan’s most popular fast foods at the chain that made it popular, Yoshinoya Holdings. He also cleaned buildings and waitered in a coffee shop after arriving in Tokyo.
“I had an illusion that I might be Japan’s No.1 guitarist. Then I came here, and for the first time, I realized there were so many guitarists everywhere who were much better than I was,” Abe recalls, sitting in the reception room at the Tokyo headquarters of Yoshinoya, a company Abe, 61, has been running since 1992.
Still, Abe and his beef bowl company have had to face the music several times in Japan’s relentless fast-food wars. Founded in a Tokyo fish market in 1899, Yoshinoya went bankrupt in 1980. In 2004, it faced ruin as mad cow disease cut off supplies of American beef used to make its hit dish. Most recently, it reported a six-month group net loss of 934 million yen for the period ending August 31, though the group is projecting a 100 million net profit for the 2010/11 fiscal year.
Yoshinoya is locked in a vicious deflationary price war with a pair of homegrown foes, Zensho and Matsuya Foods. The rivalry has hammered revenue, which at existing outlets between December to August shrank by a tenth every month.
“That was probably my most stressful experience,” Abe says. “I knew we had to do something but I didn’t know what to do. I couldn’t communicate with my staff about measures to be taken.”
Yet it’s the string of crises that keeps him at the company he only intended to work at for a few months. Every time he thinks about leaving, he quips, something goes awry and he has to stay to sort it out.
Part of the solution to Yoshinoya’s domestic siege is beefing up overseas. His benchmark is to score a fast-food megahit as big as McDonalds.
“One day I hope our beef bowl will become a measure to gauge the world’s consumption price, like McDonald’s Bic Mac,” Abe admits.
The initial focus of Yoshinoya’s overseas expansion was the United States, but has shifted to China. Like his Western fast-food counterparts, Abe employs a one-size-fits-all strategy with the basic design and menu the same everywhere. It does, however, offer some dishes to appeal to local tastes, such as pork bowls in China and chicken elsewhere.
Hard-pressed at home, Abe and his executives will emphasize foreign expansion in a five-year business plan to be completed by February.
He has a head start. Although still only a fraction of the 31,000 restaurants that the American fast food giant operates around the world, Yoshinoya has 432 outlets outside Japan, mostly in Asia, in addition to the 2,400 at home. The next foreign restaurant is slated for Moscow, he says
He also thinks he has what it takes to get his staff to dance to his business plans. It’s a long time since Abe hung up his guitar, but music can be the means to persuade his 3,710 workers to get behind his business plan.
“When you want to convey an important message, you don’t need to become logical or you don’t need many words. You just need one key word to grab their pain. It’s about sharing the same feeling in the same air. And that is very similar to a live concert.” Abe explains
By Nobuhiro Kubo
At breakfast in 2001, a few hours before Takahisa Takahara was to be named the president of Japan’s leading nappy and sanitary towel maker Uni-Charm, it wasn’t a hearty slap on the back that he got from his father, Keichiro the founder and outgoing boss. Instead, Takahara senior lectured him.
Since Uni-Charm had announced his appointment, its share price had slumped by a quarter and the father laid the blame squarely on his inexperienced 39-year-old son.
“I could understand investors’ concerns. No wonder they were worried whether a young kid could handle the company,” Takahara recalls a decade later at Uni-Charm’s headquarters in Tokyo. The experience, he says, taught him that everything he says or does will be scrutinized.
Four months into his job, shareholder anxiety about his succession had faded and the company’s share price rebounded. Ten years on, Uni-Charm’s revenue has doubled what it was and Takahara can boast of five straight years of record operating profit. The share price in the meantime has tripled to more than 3,000 yen.
An early offensive to grab market share by Takahara, whose family is still Uni-Charm’s leading shareholder, explains much of that growth. In Asia, it has a 24-percent market share for its main product.
His new battle, he reveals, is to push that share to 30 percent ahead of main rival Proctor and Gamble. “I think we can survive by focusing only in the Japanese market, but the goal of doing business is maximizing profits. I aim to be No.1 in Asia to achieve the goal,” Takahara says.
He stamped his leadership on Uni-Charm by closing down some of the non-nappy companies his entrepreneur father started. Gone is a fragrance business and an education venture.
Having spent three years living in California, first as a homestay student and then working at a bank, as well as a year at a Unicharm subsidiary in Taiwan, Takahara feels he is better placed than the Uni-Charm’s patriarch to take the brand to new markets.
By doing so, Takahara predicts he can quadruple Uni-Charm’s sales to 1.6 trillion yen in 10 years. His focus, and the reason for many recent business trips, is Latin America and Sub-Sahara Africa. It’s an expansion that will mean knocking up against his big American rivals, P&G and Kimberly-Clark more and more.
“I know we can’t spend as much money as they do. I know we can’t produce more if we play in the same game,” Takahara says. His strategy, therefore, is to forgo splurging as much cash as his competitors do on market research. Instead, in the same way that Uni-Charm’s shareholders scrutinize him, he sends workers to dissect the choices of his customers to find out firsthand how they use his products.
“Women do not want to talk about sanitary napkins, babies don’t talk about nappies and elderly people won’t tell you they wet their pants. So we get into their lives and observe,” he explains.
No longer the untested junior, his grip on Uni-Charm firm, Takahara says he faces a new problem.
“Recently, I’ve felt a sense of crisis. Fewer people disagree with me in the company,” Takahara reveals. Pampering the boss, he says, isn’t good for business.
By Yumiko Nishitani
As a kid, Yutaro Shintaku, 55, wanted to be an astronaut, or a least a star-gazing astronomer. Realism he says, however, pricked that bubble of ambition and instead, he says, he decided “to join the ranks of salarymen” who were then the foundation of Japan’s emergence as an economic superpower. But the “lost decade” of Japan’s economic stagnation took the luster off that aspiration as well.
The collapse of Japan’s asset price bubble and the economic havoc it wreaked in the 1990s brought him to Japan’s leading medical device maker, Terumo, in 1999 after the oil refiner he worked for merged with a competitor.
Shintaku didn’t know much about catheters, needles or blood plasma, but as a graduate of Japan’s prestigious Tokyo University, and with an MBA from the University of California at Berkley, Terumo bet he had the acumen to take on the job. In June, the company named him president with a mandate to expand globally.
From just over 300 billion in revenue, the Japanese maker of stents, artificial veins and mechanical hearts is aiming to triple revenue within a decade and make its business overseas the principal driver of profit.
That means waging war in the marketplace and making acquisitions. In 2002 he did just that, leading Terumo’s purchase of Vascutek, a Scottish maker of prosthetic arteries used to treat heart disease.
“We consider acquisitions to be one of the main pillars supporting our strategy to speed growth globally,” says Shintaku. “Our deals in the past were worth tens of billions of yen each. We are now going to look into transactions that are at least several times larger than that.”
Shintaku is chasing a global market for devices worth $246 billion in 2010 and growing by around 5 percent a year, according U.K.-based medical device research firm Espicom Business Intelligence. The United States is by far the biggest market by far, accounting for $95 billion of the total, four times as much as Japan.
After less than six months occupying the CEO’s office, Terumo, who by Japanese business norms is young for a top executive, still has to prove he is enough of a warrior to make further conquests overseas. He has at least convinced Merrill Lynch he was the right pick for the job.
Analyst Ritsuo Watanabe in a recent report recommended investors buy the shares of Terumo stock in part because of Shintaku and his team are accelerating implementation of the company’s strategy.
Like the fictional warriors in Akira Kurosawa’s classic film of the same name, not all of these Seven Samurai or their companies may succeed. Only three of his hired swords made it to the final credits and Reuters is making no predictions about which of the preceding seven will make it either.
Reporting by Tokyo Companies team; Editing by Tim Kelly and Bill Tarrant