Monday, July 31, 2017 JAPAN · 2017. 7. 31. · JAPAN Monday, July 31, 2017 This supplement to USA...

JAPANMonday, July 31, 2017

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Since Prime Min-ister Shinzo Abe returned to office in December 2012, implementing his

pro-growth policy dubbed Abenomics, corporate earn-ings have surged, while U.S. and Chinese demand for Japanese products has driv-en profits up by nearly 40% from fiscal 2000 to 2016. Japan, which experienced breakneck economic growth throughout the postwar era only to plunge abruptly into recession in the early 1990s, is now showing encouraging signs of emerging from its prolonged period of eco-nomic stagnation. Japan, Inc. is back.

Growth through transformationWhile Japan’s first economic miracle was driven by the boom of the domestic mar-ket as increasing wages cre-ated consumer demand for domestic appliances and other goods, the next boom will come from tapping into new markets. Japan’s companies have long been household names around the world – Toyota Land-cruisers can be found on every continent, including Antarctica, while the ubiq-uitous Sony brand has domi-nated home entertainment over the last few decades – but a new drive from cor-porations to tap into high-growth business segments is seeing them transform from mere manufacturers to global brands.

“Japan 1.0 was character-ized by Japanese products gaining world fame rapidly. Nowadays, we need to take into account the increasing number of competitors from countries such as China and South Korea as well as the different desires that each country has. That is why it is very important to customize each product to its respec-tive market,” says Yoshiharu Katsuta, President of Hita-chi Maxell, a consumer elec-tronics company that pro-duces among other products batteries – the company’s name is a contraction of “maximum capacity dry cell” – beauty appliances, wireless charging solutions, and a number of industrial materials and energy prod-ucts. Its latest development, an LED-based lantern that generates electricity by us-ing water and salt, runs for around 80 hours and is being marketed as an emergency lamp for times of disaster and power failure, as well as for leisure and outdoor activities.

After a change in holding structure, the company will drop the “Hitachi” part of its name later this year, which it sees as an opportunity to re-launch its brand for the global market. “We want Maxell to be seen as a young, reliable and fashionable brand,” says Mr. Katsuta.

Out with the old and in with the newOut with the old and in with the new is almost a mantra for Japan, Inc. today. Re-ducing ties with monolithic conglomerates allows for a nimbler business approach, as Hidehito Kotani, Presi-dent, CEO and CTO of Pan-asonic Healthcare explains. “Panasonic Healthcare has a unique setup as Panasonic still owns 20% of our shares. The rest is owned by KKR Private Equity at 58% and Mitsui at 22%. We are one of first companies to be cut out of a big conglomerate, which means we now have our in-dependent operations and we are growing very nicely with the support of KKR and Mit-sui. Our unique history and business structure makes us one of the most innovative companies in the country.”

He adds that “Panasonic is a great brand, but it’s not a healthcare company. This can confuse people, and we want to transform people’s idea of our brand. We value our history of starting with Panasonic, and people can relate to Panasonic. But we are a new brand dedicated to healthcare, a new brand dedicated to innovation.” The company’s key product is its blood glucose meters, which

measure blood glucose in diabetics using current flow caused by enzymatic reac-tion.

“Today, they are the most accurate blood glucose me-ters, and represent more than 50% of the market share in Japan,” says Mr. Kotani. In addition, the firm’s biomedi-cal unit, which deals with re-search and development such as cell culture, is placed sec-ond in the world in its indus-try segment, behind Thermo Fisher. For Mr. Kotani, Japan’s incomparable technological prowess will be what drives the rebirth of its corporate sector. “In the past, Japanese companies were good at mak-ing machines. Now, these machines are able to talk to themselves, and drastically improve our results. I be-lieve these machines are the rebirth of Japan Inc.”

Quality is keyJapanese companies’ success continues to revolve around the monozukuri concept – loosely translated as the art, science and craft of making things and encompassing the concepts of technology and processes integrating devel-opment, production and pro-curement, as well as intangible qualities such as craftsmanship and dedication to continuous improvement.

Quality control is the cor-nerstone of the concept: “In Southeast Asia there are many companies that don’t use big machines, they can work with raw materials mak-ing foam very easily and in large volumes. We don’t dare

to compete with those com-panies in terms of volume, so we make higher quality products instead. This is our specialty; we don’t compete with cheap materials or prod-ucts. This means we don’t fo-cus on producing volume or sales. Our goal is to establish a good brand and customer relationship,” says Soichi In-oue, Chairman and CEO of INOAC Corporation.

Founded in 1926, INOAC has become a global sup-plier to the automotive sec-tor, making parts to meet American safety standards for Japanese cars such as Toyota and Nissan, as well as for General Motors and Ford. It now counts over 100 facili-ties operating in 20 countries and over 20,000 employees. The company, a world leader in the field of polymer chem-istry, specializes in polyure-thanes, plastics, elastomers and advanced materials for industries including infor-mation and telecommuni-cations, healthcare, cosmet-ics, industrial materials and housing.

Entering new markets through global collaborations Gone, too, are the days when Japanese manufacturers worked in silos, shielded from the rest of the world. Today, collaboration is key, and it is to the American market, with its huge consumer base and commercialization prowess, that Japan’s corporates are flocking.

“Japan has always been a world reference in the man-

ufacture of unique devices, whilst America is on the cut-ting edge of technology that then spreads worldwide. By combining the two, I truly believe that we will be able to create something special, for the benefit of humankind,” says Panasonic Healthcare’s Mr. Kotani. “Japanese qual-ity and American innova-tion are the perfect match.” His company is currently as-sessing M&A opportunities within the U.S. market. “We want to collaborate with a company who has high tech-nical competences and most importantly who has a vision in line with ours. Acquiring a company with the sole idea of generating profit is not part of the Panasonic Healthcare philosophy.”

“The U.S. market repre-sents a big market for our growth,” adds Mr. Inoue of INOAC. “If you look at the chemical industry, there are many applications over there. America is a very big and important market for us.” He adds that the com-pany has plants in Kentucky, Ohio and Michigan, as well as Canada. “We keep hiring local engineers to work in our plants, this means contribut-ing to their market economy and also to developing local industry.” A careful focus on building good relationships in new markets, rather than sim-ply copy-pasting the Japanese approach into a foreign coun-try, has been an important factor in INOAC’s expansion. “Since we have many plants in various countries, I always instruct our managers to be

aware we are going to build a factory in their garden,” ex-plains Mr. Inoue. “Even just 30 years ago, if a Japanese company went to Thailand they would start ‘mowing the lawn’. They would make a ceremony, put a Japanese flag and claim that territory as theirs without reserva-tion. I prohibited that. We are building our company in their garden so we should be low profile, and that’s why I appoint local people as man-agers. The Japanese are only advisors in this case. This is a principle I always keep.”

Indeed, INOAC’s U.S. op-erations are run by American chairmen and presidents with Japanese advisors. “Our big-gest strength is localization, our ability to meet local mar-ket demands, and to use lo-cal manpower. We not only understand the importance of producing locally, but we also take advantage of the unique Japanese high-quality technology,” says Mr. Inoue. Combining this Japanese technology with local needs is what led to the company’s 50:50 joint venture with Rog-ers Corporation, a Connecti-cut-based specialty materials company listed on the NYSE. “We are developing many new applications together,” says Mr. Inoue, who points to the protective cushions in-side Apple iPhone packaging. “Those products are made by our joint venture.”

The next step for this out-ward-bound piece of Japan, Inc. is to ramp up its joint R&D activities with Ameri-can firms. “America has a big chemical industry and many leading companies use our products so we are really in-terested in doing more R&D activities to meet our custom-ers’ needs and to keep a good relationship with chemical companies,” says Mr. Inoue, who is also scouting for sales channel partners to enable INOAC to better serve the vast U.S. market.

Made in America, by JapanWith a global shift toward protectionism, getting prod-ucts into new markets and competing with local firms could pose something of a challenge. Hozumi Yoda, President of Nissei Plastic Industrial, believes he has the answer. “For us, America is one of the most important markets and we are always thinking about it. Americans are always willing to pay the price for a good product,” he says. In February next year, the company will invest $20 million in opening a new factory in Texas, San Anto-nio. “We will be assembling heavy machinery there and selling it in the Midwest area around Detroit. We are going to sell our products under the label of ‘Made in the U.S.A.,’” he says.

This new energetic, nimble approach to doing business boosted combined net profit at Japan’s major listed compa-nies to a record level for the fiscal year ended March 2017. And the can-do attitude and focus on overseas produc-tion of Japanese businesses is driving a robust performance that shows no signs of slow-ing down. Japan, Inc. is back; bigger and better than before.

Our World

A UNITED WORLD SUPPLEMENT PRODUCED BY: Fabrizio Fitzgerald Farina & Jacqueline Vines, Project Directors. Livia Miron, Project Coordinator. Alexandre Marland & Alejandro Ruiz Luque, Market Analysts. SPECIAL ThANkS TO INTERPRETERS: Joseph Gabriella, Fumi Toyotake, Yutaka Tano and Julian Victoria.

The Rebirth of Japan Inc.Thanks to a strong showing from exporters, Japan has racked up five quarters of uninterrupted economic

expansion; its best run since 2006. Its highly-specialized companies have found their footing once more in the global market, injecting a burst of newfound optimism into the economy

Our World Insert is produced by United World. Neither USA Today nor any other media participated in its preparation or are responsible for its content


2 Monday, July 31, 2017 Distributed by USA TODAYJAPAN

Although Japan’s multinational firms have turned “doing e v e r y t h i n g ”

into an art form, recent years have seen the growing suc-cess of highly specialized, niche players, who take the spirit of monozukuri to the next level by concentrating their manufacturing prowess and innovation capacities into highly-defined industrial seg-ments. Now, the focus is on exporting this know-how into new markets.

Nissei Plastic Industrial is one such niche company. Established in 1947, it does one thing: injection mold-ing; and it does it exceed-ingly well. So, well, in fact, that its production sites, in Japan, China and Thailand, make products for sale in 80 countries worldwide.

“The production process of plastic materials is simple, but the most important thing is maintaining the machinery so as to keep the machine moving for a long time doing continuous work, which can be quite challenging,” says Ho-zumi Yoda, President of Nis-sei Plastic Industrial. “In the case of other countries, for example the ones in South East Asia, the machines sud-denly break down and stop due to lack of maintenance; this represents a lot of trou-bles for manufacturers. Our job is to be able to succeed in maintaining machines oper-ating 24 hours. The quality

and investing in upgrading of machineries is important as well, but it’s even more important that they keep run-ning continuously. At Nissei, we are always able to provide such machines and this is how we can survive against the global competition.”

According to forecasts, the injection molding machine market will grow by 2.2% every year to $4.86 billion in 2021. According to Mr. Yoda, this growth will come from three main areas. The first is the automobile sector, due to the ever-increasing use of lightweight plastics in manu-facturing. The second is the cosmetics packaging industry, as a ballooning middle class drives consumer demand for beauty products. The third is the health industry, where in-jection molding is increasing-ly used to provide researchers and doctors with precision equipment that is safe, sterile and disposable.

Knowing which area pres-ents the greatest opportuni-ties in each market his com-pany operates in has been key to Mr. Yoda’s success. “The sector with the highest growth potential in the U.S. is definitely the automobile sector,” he says. “It is much more stable than before, so we are planning to expand through it.” The hybrid type molding machines used by the company allow it to make “very good-quality plastic merchandise through a more efficient process,” he says, adding: “That is where our advantage is.”

Another niche sector be-ing filled by a nimble Japa-nese firm is that of household kitchen appliances, a segment which is forecast to grow by a compound annual rate of 4.3% by 2023, reaching revenues of $150 billion, with North America being the largest market.

Zojirushi, which began operation in this niche more than 90 years ago with the launch of its first glass-lined vacuum bottle, has gradually gained respect and influence in overseas markets – most notably in the United States, which accounts for 10% of its turnover – as a result of its at-tention to detail.

With products ranging from coffeemakers to rice cookers, the firm has set its sights on global expansion.

“One characteristic of this business sector, household appliances, is that it is differ-

ent from country to country because of the culture. Be-cause of this, there isn’t a com-pany that can dominate this industry globally,” says Norio Ichikawa, President and CEO of Zojirushi. “The strategy to survive in the global envi-ronment is just understand-ing that we have to keep the Japanese standards. When we enter the foreign markets, we are looking at mid and top-tier markets. So, focusing on the quality is the way to survive.” He points out that while in the American and Chinese mar-kets, there is clear differentia-tion in quality between lower and higher tiers of products, “in Japan, all the companies have the same level of qual-ity: high quality.”

For Mr. Ichikawa, there is a balance to be struck between figuring out what will work well in foreign markets and adapting production to that; and simply taking a new, high-quality product into a new market and waiting for it to be adopted.

“The household appli-ances market is very differ-ent from country to country because the culture is differ-ent, so it’s difficult to say we are going to start research or innovation in one area or other areas. We are going to adapt and adjust to different cultures and countries as we expand internationally,” he says. However, he points to the success of Japanese cars in the American market as a sign that quality sells, no mat-ter what the format.

“Up to the 1980s Ameri-cans only bought large cars. But sales of Japanese cars were

increasing greatly. The Japa-nese cars were smaller, and they were also fuel efficient. The fact that Americans were buying cars that were very dif-ferent from what they were used to, shows you that as long as the quality is good you can sell anything, anywhere.”

The success of Zojirushi’s vacuum insulated flasks and bottles in the U.S. market is another such example. “Ten years ago, the kind of bottles the American consumer bought were bigger and heavier. Now, ours are becom-ing very popular in the U.S. This model was made for the Japanese market, but is the one that is selling in the U.S. because it’s more colorful, smaller and better,” he says. When Zojirushi America was founded 30 years ago, it mostly sold its rice cook-ers to the Asian American population. Today, it has be-come more mainstream, to the extent that at the most recent International Home and Housewares Show in Chicago, Zojirushi occupied the center of the main area. “Zojirushi is staying in power,” says Mr. Ichikawa.

With strong competition from other Asian manufac-turing countries, Japanese companies have to work hard to maintain their competitive edge, offering that little bit ex-tra to win clients.

“China has big fast-paced production. They have their own demand inside the coun-try and they are also export-ing to the United States. Their production batch size is very big. In our case, we choose to deal with more specific prod-ucts, and we can prepare small quantities. For example, if a customer requests just one ton, China will not be able to

respond to that demand for being so small, but we will try our best to satisfy the custom-er and deliver what is being re-quested,” says Tsukasa Ando, President of Nippon Seiro.

The company, which man-ufactures and sells petroleum waxes for use in paper, rub-ber, candle and chemical ap-plications, generates annual sales of 29.3 billion yen ($260 million), and exports to cus-tomers in Asia and North America. “Big customers use large volumes of wax. How-ever, some small customers need small volumes for spe-cial applications. Sometimes they approach the supplier in China and United States but in these countries, companies are unable to deliver these products. This is where Nip-pon Seiro comes into play, as we have the ability to comply with all sorts of specifica-tions,” says Mr. Ando, who adds that Nippon Seiro’s pro-duction quality is highly ap-preciated by U.S. customers.

The company is now spe-cializing even further, pro-ducing different products for domestic and overseas mar-kets. “In Japan, the trends are shifting towards the special wax market while the situa-tion overseas is different. We are still exporting our wax to the United States. Custom-ers over there appreciate our quality, and they can use our wax to manufacture candles and paper coating,” he says. Already number one in Ja-pan for wax manufacturing, the company’s short-term goal is to take the top spot in the greater Asian market, and then the world. “Ten years later, we will become a wax supplier with a strong pres-ence worldwide in three big locations: the United States,

Europe and Asia,” says Mr. Ando.

There are some pitfalls, however, to expanding from a booming domestic niche in Japan to the international market, as transportation company Toyo Denki has discovered. “We are actu-ally participating in a railway project in Los Angeles. Half of the employees that we are employing there are Ameri-cans, and I must say it is not easy because Japanese people have a very particular way of manufacturing. We have principles like monozukuri and that’s what sets us apart,” says Kenzo Terashima, the company’s President.

Celebrating its centenary in 2018, Toyo Denki engages in three core businesses: trans-portation systems, industrial systems, and information equipment systems, and is a leading manufacturer of electrical equipment for rail vehicles. “Toyo Denki started operations in Yokohama and has been the main leader in the train sector,” explains Mr. Terashima. Currently, there are four major players serving the sector: Hitachi, Toshiba, Mitsubishi and Toyo Denki, but what sets Toyo Denki apart is its specialization. “The other three companies are manufacturers for many other industries, and we are the only ones that are very customized, and have a deep knowhow and expertise in trains. And because we have been concentrating only on this, we are very knowledge-able,” he says.

In many sectors, Japanese companies have the upper hand. For Mr. Terashima, this is because Japan has over the last 70 years developed a manufacturing industry that creates everything, from the smallest part to the biggest one, and can assemble all of them to create a final product. “In China, they don’t have all these companies that com-plete the chain and build the final product. And that’s why we have a good position in the market. It is a cultural thing. We have lots of family-run businesses that have worked very hard for many years and know how to create each step of the chain.”

Taking that inbuilt capa-bility, highly-skilled Japanese firms are venturing out to make their presence felt in ev-ery single niche sector around the world. For example, Toyo Tanso, which started mak-ing isotropic carbon graphite material in 1974 – the first company in the world to do so on a mass scale – has had an enormous impact on the re-newable energy sector. “Soon after, with the development of new technologies, we started collaborating with many dif-ferent industries like the so-lar panel one. Without Toyo Tanso’s graphite products, solar panels couldn’t be made. Our company is a big part of the fourth industrial revolu-tion,” says Takashi Konishi, President of the company.

“Our main characteristic is that we are always looking forward to challenges; we are trying to do things that other companies do not do. This is the key to our success.” With 60% of its sales now coming from foreign markets and 17 facilities and subsidiaries around the world, the com-pany now has its eye on the automotive industry, with Southeast Asia, Mexico and the U.S. seen as key targets. “We are always trying to im-prove and expand our opera-tions, and one of the options is definitely M&A,” says Mr. Konishi. “We are not only implementing collaborations and cooperative efforts with other companies in the sec-tor, but we are also thinking of other industries as well.”

With an aggressive ap-proach to expansion and the quality and know-how to back that up, Japan’s highly-spe-cialized firms have become a force to be reckoned with.

Japan, Inc. bets on specialization to conquer the global marketJapanese highly-specialized companies aim for success in every niche

Highly-skilled Japanese firms are venturing out to make their presence felt in every single niche sector around the world

Norio Ichikawa, President and CEO, Zojirushi

Hozumi Yoda, President, Nissei Plastic Industrial

“The quality and investing in upgrading of machineries is important as well, but it’s even more important that they keep running continuously. At Nissei, we are always able to provide such machines and this is how we can survive against the global competition”

HOZUMI YODA, President, Nissei Plastic Industrial

“The household appliances market is very different from country to country because the culture is different. We are going to adapt and adjust to different cultures and countries as we expand internationally”

NORIO ICHIkAWA, President and CEO, Zojirushi


JAPAN 3Monday, July 31, 2017Distributed by USA TODAY

Japanese companies with more than a century of history have become household names all over the world. An-

chored by their deep roots in history, new generations of innovators continue to seek solutions for the challenges of the century to come.

On the ball (Mikasa)If you’ve played volleyball even once there’s a better than fair chance the ball being smacked back and forth over the net bears the Mikasa logo. However, few players realize that the pledge of reliability and outstanding performance signaled by that logo is the re-sult of a century of hard work.

“My grandfather founded this company 100 years ago,” recalls Yuji Saeki, Mikasa’s Chairman and CEO. “We were a simple ball manufac-turer at first but due to our ef-forts we soon were recognized internationally. We had to be outstanding, different from other companies. At that time soccer was popular but he thought we should focus on volleyballs since soccer had matured already.”

When it came time to look around for opportunities overseas, Mr. Saeki’s grand-father decided to contact the FIVB (International Volleyball Federation). By the time that volleyball was finally acknowl-edged as an Olympic sport (at the Tokyo games of 1964), Mi-kasa had become official sup-plier of beach and indoor balls to the FIVB. Under a recently signed deal, Mikasa’s balls will be back in play when the Olympics are once again held in Tokyo in 2020.

“While making balls for the Olympics, we have always had good relationships and com-munication channels with players,” the company chair-man says. “We always listen to players’ comments and official requests in order to produce better balls.”

The feeling is pretty much mutual, if you go by FIVB’s current head, Dr. Ary S. Gra-ça. He has praised Mikasa for “sharing the FIVB’s commit-ment to providing the finest possible service to athletes around the world. In sport, it is important to know that you are working with the very best in the industry. Mikasa are leaders in ball technol-ogy which helps us ensure a more spectacular game every season. I look forward to con-tinuing our great relationship with Mr. Saeki and his team for many years to come.”

So many decades of manu-facturing sports balls also gave Mikasa an incredible expertise in all things concerning the key ingredient in those balls, rub-ber. That knowledge was lev-eraged onto the balance sheet when the company branched out into rubber parts and ac-cessories for uses in nautical

sports (on underwater bear-ings, propeller shafts, etc.) and other devices (rotary printing rolls) where water is available as an eco-friendly lubricant.

In 1973 Mikasa arrived in California. “True to our roots, we established our reputation in volleyball. But we didn’t stop there. We took this same drive and passion and applied it to basketball, soccer, foot-ball, water polo, rugby, teth-erballs, kickballs, dodgeballs, and playground balls. While we made great inroads in both professional and Olym-pic sports, we never forgot the place where all sports began – the playground.”

With that in mind, Mikasa was able to spot an opportu-nity when beach volleyball emerged as the fastest grow-ing sport among the colle-giate public. The firm signed a sponsorship deal with the fledgling National Volleyball League (NVL) founded in 2010, which styles itself as “a professional beach volleyball league built by players for all players, united in one mission: to create a sustainable future for pro beach volleyball in the U.S.”

MeidenshaInstalling, maintaining and upgrading the infrastructure that delivers reliable electri-cal power usually takes place behind the scenes, but the technical challenges involved in ensuring that power is generated, transmitted and distributed are still formi-dable, especially when some are sited in a developed ur-ban context while others are geographically much more challenging. In the view of Yuji Hamasaki, however, a handful of players are adapting to the rapidly changing markets and performing well. It is his job as chairman to see that Meiden-sha Corporation continues to be one of them.

“We supply all types of elec-tric infrastructure on demand, not only tapping into profit-able operations, but also con-tributing to society,” he says. In 2015, the electric heavy ma-chinery sector accounted for 10% of Japan’s share in terms of market capitalization but the fact that many potential customers were subject to budgetary constraints had a negative impact on the sector.

“In 1901, our founder suc-cessfully developed a three-phase induction motor which became the first domesti-cally produced motor of its kind. He then diversified the technology into the sector of electric equipment. Currently, we have three main business segments: social infrastruc-ture, industrial systems, and maintenance and service.”

Meidensha specializes in sectors such as water treat-ment plants and environ-mental engineering, facility maintenance, and railroads.

Not least on the list are power transformers, increasingly be-ing replaced by more efficient and eco-friendly models in the strategic U.S. market, where the company also hopes to interest the big three auto-makers in its integrated test-ing systems for cars (engine benches, chassis dynamom-eters, operation measurement control systems, etc.)

Lately Mr. Hamasaki sees a horizon of opportunity open-ing up in the field of IoT, the so-called Internet of Things, which has been defined as “enabling advanced services by interconnecting (physical and virtual) things based on existing and evolving interop-erable information and com-munication technologies.”

Mr. Hamasaki agrees with that. “The customized net-work is the way to go now. An example for us would be connected and distributed power generation systems that include hydro, biomass, solar, wind and other renew-ables,” he says.

“We are a 120-year-old very traditional corporation, but we are eager to collaborate with new-generation compa-nies,” he adds. “The U.S. is a very important platform not only in terms of technologi-cal advancement, but also for the development of innovative business models. Definitely it’s a win-win situation.”

TanakaIt used to be that you would only have heard about them in high school chemistry class, but changing times and tech-nological breakthroughs have made so-called “precious met-als” like palladium, iridium or indium essential for everyday items such as automobiles, long-life storage batteries, and cellphones. So-called rare earths become even rarer when laptops, circuit boards and LCD displays reach the end of their product life and disappear into the ecosystem’s discard bin. Recovering, re-claiming and recycling these materials is how the 130-year-old Tokyo-based Tanaka Pre-cious Metals has made a name for itself as a major player.

“One aspect that makes our company unique is our cycle process – from procurement, processing and selling to refin-ing,” says the company Pres-ident-Chemical & Refining Company of Tanaka Precious Metals, Mr. Satoshi Ichiishi. By way of example, he describes how engineers developed an exclusive process to efficient-ly extract platinum from light bulbs and sell it to customers for use in automobile exhausts. At a later stage, Tanaka will repossess the discarded car catalysts, extract the metal and purify it with an exclusive smelting process before initiat-ing the cycle all over again.

Collecting scrap from the companies they supply and recycling them is another com-mon operation. An advantage

for Tanaka’s customers is that when acquiring ingredients from scrap, there is generally no need to go to the market-place. If platinum prices are trading up, the production process is not affected.

“Because of our experience in this industry we have con-nections we can use and so need no help in terms of pro-curement. And since we deal with expensive precious met-als, we can also provide leas-ing services for companies with limited funds,” says Mr. Ichiishi.

Last year it was announced that Tanaka would be supply-ing the platinum electrode cat-alysts for the stacked fuel cells in Honda’s brand-new Clarity vehicle. Apart from the deal’s commercial impact, it repre-sents a major step closer to the “hydrogen-based society” that Tanaka is committed to help develop and proud to be involved with.

Yanmar Since 1912, Yanmar enterpris-es has been widely known and respected for its global leader-ship at the forefront of power generation, and engine and ad-vanced machine tool technol-ogy, but when one of its diesel engines was rated “Tier Four compliant” in 2012 it caused a sensation in the industry; it was the first of its kind to meet the demanding U.S. government standards which call for a 90% reduction in NO2 emissions phased in over a period of years. To Mr. Hiroshi Kanda, the firm’s representative direc-

tor, it was a great honor but no great surprise.

“In 1933, Yanmar developed the first small diesel engine, which showed the world that our engineers can innovate in ways that people thought were impossible. In 1960, we developed in countries such as Brazil and Indonesia, and in 1980 we expanded in the U.S.A. Today, we are proud to say that 51 % of our foreign sales are in the U.S.A.”

It is a matter of no small satisfaction to Mr. Kanda that engines manufactured by his firm already comply with the EPA’s Tier 5 standards, which will not take effect until 2019. In addition, they are within the parameters of Switzerland’s particle count legislation, which is tougher than the European Union’s. “We can therefore say that we are at the forefront concerning emission regulations.”

In the nautical sector, Yan-mar makes engines for sail-boats powerboats as well as propulsion and maneuvering systems used in heavy duty commercial marine opera-tions. Their range of state-of-the-art construction equip-ment includes loaders, carriers, and excavators while agricul-tural vehicles cover a range of multi-purpose tractors that can be easily adapted for use in grading, tillage andseeding. And at the present time, work is underway on hybrid technol-ogy that will allow for fully elec-trically powered construction equipment.

A century of top-notch monozukuriJapan’s oldest companies continue to invest in quality and innovation to stay ahead of the pack

Mikasa’s balls will be back in play when the Olympics are once again held in Tokyo in 2020

Satoshi Ichiishi, President-Chemical & Refining Company of Tanaka Precious Metals

“True to our roots, we established our reputation in volleyball. But we didn’t stop there. We took this same drive and passion and applied it to basketball, soccer, football, water polo, rugby, tetherballs, kickballs, dodgeballs, and playground balls. While we made great inroads in both professional and Olympic sports, we never forgot the place where all sports began – the playground”

YUJI SAEkI, Chairman and CEO, Mikasa

“In 1933, Yanmar developed the first small diesel engine, which showed the world that our engineers can innovate in ways that people thought were impossible”

HIROSHI kANDA,Representative Director, Yanmar



With a flurry of new global environmen-tal regulations and initiatives,

many in the corporate world have expressed concerns about the potential impact on profits that the “greening” of operations would entail. But for Japan, Inc., an envi-ronmental focus doesn’t just mean toeing the line of inter-national rules, but taking the idea a step further, innovating to generate profitability from sustainability.

Japan has proven its com-mitment to tackling climate change with its ratification of the Paris Agreement in No-vember of last year. The agree-ment, which calls for drastic reduction of greenhouse gases produced by social and eco-nomic activities in order to keep a global temperature rise this century well below two degrees Celsius, has seen the involvement of both the Japanese government and the private sector, which have implemented leading-edge initiatives. But even prior to the signing of the landmark climate deal, many of Japan’s corporations were already working to combine environ-mental protection into their business models.

Once such example is in the shipping sector. Amid increasing worldwide aware-ness of the contribution of the industry to exhaust emissions, the international marine transportation sector is facing tight regulations to curb air pollution. The United Nation’s International Marine Organi-zation’s regulations governing marine emissions, called IMO Tier III, which came into ef-fect on January 1, 2016, force a reduction in nitrogen oxide emissions (NOx) by approxi-mately 70% compared with the previous Tier II standards. While North American and European firms scrambled to comply, Japanese diesel engine manufacturer Yanmar was al-ready a step ahead.

“We have already developed a Tier 4 compliant engine, so we expect our sales to grow considerably in the upcom-ing years,” says Hiroshi Kanda, representative director. This is not the first time the company has pre-empted environmen-tal regulations.

As well as striving to meet and beat international regu-lations, Japanese companies are working hard to optimize business processes in order to reduce waste and energy usage. “We have a goal to re-duce energy consumption by 30% for activities related to manufacturing,” says Takashi Konishi, President of iso-molded graphite firm Toyo Tanso. The company plans to achieve this through the use of a silicon carbide (SiC) power semiconductor. “Currently, many of the products in the market use silicon semicon-ductors. They can be found in smartphones or automatic driving cars internal chips. However, the problem with

this type of semiconductor is that it has high electric power consumption when compared to SiC ones.” He explains that by using the SiC semiconduc-tor in applications such as electric vehicles, Toyo Tanso can reduce energy waste by 10%. “It’s groundbreaking.”

Combining good environ-mental practices with a focus on healthy living is a key part of the Japanese outlook for a sustainable future. When de-fining his company’s brand, Yoshisato Kikuchi, President of Tiger Corporation – a manufacturer of rice cook-ers, stainless steel beverage bottles, bento lunch kits, and home appliances – speaks of health-consciousness and ecologically friendly practices.

“We plan to work on the health field to make innova-tive products for each market,” he says. “We can contribute to society as a company because health has always been one of our major concerns, whether for the domestic or the inter-national market. We feel that there is a high demand for this from those who are health conscious and eat a healthy diet.”

When the company entered the American market, which now makes up a quarter of its overseas sales, it mostly tar-geted the Asian population, who snapped up its range of rice cookers from retailers such as Target. But the vast U.S. consumer base present-ed a much wider opportunity for the company than simply the sale of rice cookers, and Tiger has moved quickly to position itself as a healthful kitchen appliance brand. To make sure to create the best possible impact on consum-ers around the world, Tiger has researched into the eat-ing habits of other countries to ensure its products meet the mark, going as far as to publish easy-to-follow reci-pes for versions of American favorites such as BBQ pulled pork and macaroni and cheese for its slow cookers to ensure customers feel right at home using its products. What’s more, Tiger has adjusted set-tings on its rice cookers to enable them to cook unpro-

cessed rice and quinoa, which is very popular in the U.S. “In each country the product looks exactly the same, but the machinery operating inside is completely different. For our rice cookers as an example, the program inside is completely different as the rice used is dif-ferent in every country,” says Mr. Kikuchi, who adds that as well as developing further in the U.S. market, “it is crucial that the company continues to grow and expand in countries that have the same culinary culture as ours, namely Asian countries.”

While Tiger Corporation has grown into a manufac-turer of electronic goods, this healthy, green outlook also reaches down to its more traditional items, such as its stainless steel bottles. “Our bottles are finely processed

by our proprietary technol-ogy and are light and easy to carry. They are more eco-logically friendly compared to the heavy and sturdy materi-als that other companies use. While some of our competi-tors apply chemical coatings, our company polishes with electropolishing to make the inside smooth, easy to clean, free of odors and harder to stain. By using this process instead of adding chemi-cals, we achieve a healthier, lighter weight product,” he says. Of course, the fact that these stainless steel bottles have near-infinite reusability means that they can replace the use of disposable contain-ers, too. “Currently, the Amer-ican population is very health conscious and we are focusing on this field. Our consumers are helping the environment,” says Mr. Kikuchi.

This drive toward green living and wellbeing among Japanese companies spans the whole gamut of industrial segments, with the most envi-ronmentally-friendly compa-nies found in the unlikeliest of sectors. Take Yamato Scale. Established in 1920, it pro-duces weighing equipment and systems for the industrial and commercial markets, cov-ering virtually any packaging application. Because of its success in providing innova-tive, high-quality combina-tion scaling solutions to the

packaging industry, it broke into the U.S. market in 1998, where it has an office in Me-quon, Wisconsin, and has since become a world leader in the weighing equipment and systems industry. In ad-dition, Yamato has expanded into the consumer market by developing new technologies for home-use health manage-ment devices.

“At Yamato Scale, profit is not the main driver of our business. We want to pro-tect, and most of all to inno-vate constantly,” says company President and CEO Shozou Kawanishi. “The first factor is the positive influence that our products have on the world, for example, the effi-cient way of using resources, the conservation of our world resources, and cutting down

the emissions of carbon diox-ide. Without a doubt, this is-sue is a world issue, we are just happy to help and contribute to get to this goal. It used to be a problem that everyone talked about, but now, each country is individually ana-lyzing the effect it has on its own economy.”

He points out that the world is facing three major issues. “First and foremost, we need to find out economically vi-able ways to save natural re-sources. The second is energy saving, and the third is CO2 reduction. Everyone is talk-ing about global warming, but in reality very little has been done to tackle the prob-lem. We continue to cause ir-reparable damage to the earth. We have a positive influence on the global economy, as we are helping other companies to constantly get more effi-cient in terms of use of their resources.”

To do this, the company has developed innovative applica-tions for its weighing prod-ucts, which cut down on waste and optimize energy con-sumption. “With the increase of the world’s population and global demand, the distribu-tion model has changed dra-matically. Hypermarkets have replaced retail shops, and this has resulted in the growth of fixed-weight packaged prod-ucts,” explains Mr. Kawani-shi. As an example, he gives a 500-gram packet of cat food. “Regulations dictate that the package must not weigh less than 500 grams. Normally, manufacturers input an excess amount in case of scale error, so this package may in reality contain 507 grams. These ex-cess seven grams are a huge loss for the company.” Taking this loss across the huge va-riety of different products in the food sector that are packed by fixed weight such as snacks, frozen products, vegetables, cheese, rice, grains and other products like cement and chemicals, the amount being packed per year all around the world is enormous: in just the U.S. alone, there are 200 billion fixed-weight packs - excluding tobacco products - produced per year.

“However, the issue we are facing in fixed weighing is that on average most products con-tain more than 1% than is ac-tually shown on the package, which causes additional costs for companies. Even for con-sumers, the price is calculated based on the actual amount, making prices go higher.” This has consequences on food se-curity and availability around the world.

But Yamato Scale has the solution. At Interpack, the

world’s largest packaging ma-chinery show held in May this year, the company unveiled its phenomenally accurate com-puterized weighing machine, the Dataweigh. “With Yamato Scale’s accuracy and innova-tion, we are able to reduce the excess weight by less than 1%, so we can save our planet’s re-sources,” says Mr. Kawanishi. By his estimation, implement-ing Yamato Scale’s solution into the U.S. market could bring about 147,000 tons of material saving per year, with the resultant savings in ship-ping, fossil fuel use, and costs.

It is not just in packaging that Yamato Scale’s solutions are having a positive impact. Worldwide, fish is a major source of animal protein for millions of people, with the UN’s Food and Agriculture Organization (FAO) estimat-ing that between 15% and 20% of all animal proteins come from aquatic animals. But, as Mr. Kawanishi points out, the quality of marine products is still very subjective, as there is no way of measuring it in numerical terms. To address this, the company joined forc-es with various universities and the Fisheries Research Institute to develop the Fish Analyzer, to promote quality control of fish by using tech-nology. “The way to identify a good fish is by the amount of fat it contains,” says Mr. Kawanishi. “The Fish Ana-lyzer can measure the fat per-centage of 14 fish types such as mackerel, yellowtail, tuna and many others. It will tell you which fish contains the ideal amount of fat and sell it at the appropriate price.” He adds that this can help fishers get a fair price for their catch at auction and the market. “The Fish Analyzer is a com-pact and easy-to-use device, which is essential to measure fish quality.”

A further innovation from the company has been in health. A recent study, com-piled by the Institute for Health Metrics and Evalu-ation at the University of Washington and funded by the Gates Foundation, found that more than 10% of the global population is now obese, with obesity-related diseases now posing a threat to communities around the world. Yamato Scale has de-veloped an innovative human body fat scale that can be used in both measurement and weight loss. “In 1998, we de-veloped a body fat scale that presented a unique and very accurate way of measuring human body fat using a small electrical current in the fin-gertips,” says Mr. Kawanishi. The scale then applies mul-tiple frequency methods to measure the entire body, us-ing waist size information in order to measure visceral fat. Yamato was the first compa-ny in the world to sell such a product. Because factors such as race and environment have an influence upon body size, the original scale took infor-mation from a database of the population in order to define whether a person is healthy or not - data only available in Japan. By applying multiple frequency methods to mea-sure the entire body, the com-pany has been able to create a new product, launched In 2014 which measures levels of visceral fat, which is linked to increased risk for cardio-vascular disease and type 2 diabetes. A new algorithm, which calculates the fluctua-tion of body fat compared to the body weight, enables the scale to be used by anyone, anywhere in the world.

Spanning sectors as diverse as healthcare, packaging, in-dustry and technology, the Japanese companies of today are not just meeting interna-tional standards on health and the environment, but exceeding them in new and innovative ways, throwing open new markets and new opportunities for growth. While others struggle to balance regulatory burden with business growth, for Ja-pan, the future looks green, healthy and very profitable indeed.

Japanese companies think greenJapan, Inc. rethinks the way of doing business with innovations for a better environment and healthier lifestyle

Japanese companies are working hard to optimize business processes in order to reduce waste and energy usage

“In our business philosophy, the first factor is the positive influence that our products have on the world, for example, the efficient way of using resources, the conservation of our world resources, and cutting down the emissions of carbon dioxide. Without a doubt, this issue is a world issue, we are just happy to help and contribute to get to this goal”

SHOZOU kAWANISHI,President and CEO, Yamato Scale

“We can contribute to society as a company because health has always been one of our major concerns, whether for the domestic or the international market... . Currently, the American population is very health conscious and we are focusing on this field. Our consumers are helping the environment”

YOSHISATO kIkUCHI, President, Tiger Corporation



From chat app to one-stop shop: how LINE is evolving to meet (almost) every need

Six years after the service launched in June 2011, LINE, Japan’s most popu-lar messaging ser-

vice, has grown from cutesy chat app to a platform that offers its users and business partners alike a wide-ranging choice of services. Now, with flagship and pop-up shops around the world and new offerings from AI to mobile payments, LINE is cement-ing its dominant position in the Asia region while eyeing other markets, as part of its corporate mission of “CLOS-ING THE DISTANCE” be-tween people and the kinds of services that the Internet of Things (IoT) offers.

A look at the numbers demonstrates the sheer commercial might of LINE. The app has seen runaway success in both its home market – fully 44% of iPhone users in Japan have the LINE app installed – and further afield, grabbing top market share in Taiwan and Thai-land. While many social platforms struggle to gen-erate revenue, this growing, diversified business makes an annual $270 million in the sale of digital stickers alone. That’s not all. LINE charac-ters, the figures which star in its stickers and are viewed as a more expressive version of emoticons, now have their own TV show, and are avail-able to buy as merchandise from a number of physical stores in Asia and beyond. What’s more, ad revenues and tie-ups with big brands bring in a further 40% of its revenue, with another 30% garnered from gaming, with 640 million total downloads for game titles by February 2016, among which the puzzle game “LINE: Disney Tsum Tsum” yielded over 13 million monthly active users (MAU). In total, the compa-ny makes around $1 billion every year, which helped in some part to boost investor confidence in the firm as it launched the biggest tech IPO of 2016, raising $1.3 billion from selling shares that then gained a further 33% when they started trad-ing on markets in New York and Tokyo.

A social platform pioneerIn effect, LINE pioneered the business model its larger competitors like Facebook and Snapchat have emulated as they turn their apps into platforms providing paid-for services. To ensure its future success, LINE now needs to win over new users, which requires innovation and a knack for customizing its features to fit the local cul-ture.

To this end, the company plans to harness the oppor-tunities thrown up by the global digital revolution to become an online portal to, well, everything. “The Fourth Industrial Revolution is an important shift that is connecting the Internet with physical manufacturers,” says Takeshi Idezawa, the com-pany’s CEO. “This is a big chance, but probably also the last, for Japanese companies to be at the forefront.”

As part of this online-of-fline linkage, the company recently announced a flurry of new features and concepts designed to continue the evolution of the LINE app beyond a communication tool, adding features and concepts to make people’s life more convenient, richer and more fun. A new “Portal” tab within the app will pro-vide weather, horoscopes, public transport times and other key information, per-sonalized for each user’s life-style. The company also aims to establish the LINE app as a gateway for all purchases and payments – both online and offline – with its LINE Pay service, which already boasts 38 million registered global users and over $709 million in gross merchandise value. A P2P version, where users can send each other money without a financial institu-tion middle-man, will be-come available later on in the year. This development will give LINE the ability to tap into the half-billion-dollar annual remittances market of money sent home by migrant workers around the world.

Embedded in daily life Carrying out day-to-day business and personal activ-ity through a chat app may seem counter-intuitive to some, but for Mr. Idezawa, the proposition makes per-fect sense. For instance, he points out that “search en-gines lose potential when used through smartphones,” whereas the LINE app pro-vides a native and intuitive interface to users. One such example is LINE Shopping,

another new offering from the company, which trans-forms the app into a shopping gateway for over 100 brands and companies. Meanwhile, LINE’s newly-launched food delivery service allows users to easily order a wide range of foods over the main LINE app, wherever they might be. “As people spend most of their time in chats, we want LINE to become a gateway providing a smart type of communication,” he says. “Chat apps are also bots. Behind the scenes of bots, there is AI, which can create

a smart way of communica-tion bringing in more con-text and learning through the usage.” As an example of this smart B2B usage, LINE has a delivery company in Ja-pan that utilizes chatbots for the user to specify the dates they will be at home to re-ceive their package, cutting down on missed deliveries and reducing wasted trips for couriers. “Moreover, you can book flights through LINE,” says Mr. Idezawa.

Interaction with public sector agencies is also a re-ality through LINE, which has entered into agreements with the local governments of the cities of Shibuya, Fu-kuoka and Kumamoto to use the messaging app to send in-formation on childcare and other government services. LINE’s appeal to govern-ment entities is growing: the Taiwanese government

currently operates 11 LINE accounts across different entities, with Taipei City and Pingtung County using the accounts for flood notifi-cations and tourists enquires respectively.

Beyond localization “We have succeeded in pen-etrating markets that have previously rejected Western competitors, because we ap-proach the countries with a tailored strategy instead of offering the cookie-cutter approach which would give different markets the same

services. We call it ‘cultur-alization’ which is basically localization at its deepest level,” says Mr. Idezawa. One example of this is its Thai spin-off app LINE MAN, an on-demand assistant app that offers a courier ser-vice, shipping service, mes-senger service and grocery delivery from 7-Eleven. It has also become Thailand’s top food-delivery service to more than 500,000 users per month in Bangkok and its surrounding areas. “LINE MAN is the first service that is fully implemented by our local team for Thai consum-ers,” said Ariya Banomyong, managing director of LINE Thailand in a statement.

LINE’s appeal is not limited to the Asian mar-ket, however. In 2014, the company created a pop-up shop in New York’s Times Square, which welcomed

over two million visitors ev-ery day, curious to discover the 360-plus LINE FRIENDS products. The store sought to provide a chance for the people in North America to feel and experience LINE in a personal way, and helped consolidate LINE’s brand image as a global messenger app. Since then, the service has grown, surpassing one billion users and achieving an MAU (monthly average users) figure of 214 million as of March 2017, with organic growth coming from as far afield as the United States, Saudi Arabia and Mexico, as well as the Asian market.

LINE’s offline capability provides diverse busi-ness portfolio Following the 2014 success, LINE is unveiling a perma-nent LINE FRIENDS offi-cial store in Times Square this August, the latest of its 84 official and pop-up stores in countries around the world. The 4,628 square foot retail space will be lo-cated at the prime location of 1515 Broadway, also home to the renowned Lion King musical. The store open-ing commemorates LINE FRIENDS becoming the first Asian character brand to open a large-scale official store in the U.S., and also the one year-anniversary of LINE’s listing on the New York Stock Exchange. “The opening of our first store in New York City highlights the rapid popularity our be-loved characters are gaining not just in Asia, but in North America and other countries around the world,” the com-pany said in a release. To further cement the brand’s entry into the U.S. market, LINE FRIENDS participated in the Las Vegas Licensing Expo 2017, the world’s larg-est licensing trade show, in-stalling the biggest indepen-dent booth in history as an Asian character brand, with Licensing Source report-ing that the brand caused “something of a stir, with a number of execs looking to find out more.”

As LINE starts to pick up a greater international fol-lowing, it is also rolling out more daring initiatives that it hopes will take the world by storm.

Harnessing artificial intelligence to facilitate everyday lifeThe Clova cloud AI platform, unveiled at Mobile World Congress 2017 in March, looks set to become Asia’s answer to Amazon’s Alexa

with a dedicated Clova app and a smart speaker called WAVE. “We have to think about how people are going to use and connect with the different ‘things’ over the in-ternet; and what they will use as the controller of Internet of Things (IoT) products and services. From our point of view, we want to improve the usability of the applica-tion and make it the remote controller for a wide variety of services,” says Mr. Ideza-wa. For the company, which already offers users the abil-ity to become LINE “friends” with home appliances such as their refrigerator or vac-uum cleaner, the WAVE device is the obvious next step in facilitating people’s interactions with the world around them. Users can use WAVE to play music, main-tain calendars and to-do lists, talk with WAVE to get infor-mation about the weather and other things they might need throughout the day, and even control chat messages on the LINE app. WAVE also comes in a more casual ver-sion, CHAMP, in the form of popular LINE FRIENDS characters.

LINE is currently studying collaborations with major tech companies for Clova. One such tie-up is with Sony, whose Xperia Ear Open-style concept proposes a new method of in-ear, hands-free voice communication. Yama-ha Corporation is already on board, and will be develop-ing AI-based music creation using Yamaha’s VOCALOID voice synthesis technology and LINE’s Clova cloud AI technology. The company also has a partnership with Korean electronic appliance maker LG. Meanwhile, LINE has signed an MOU to ex-plore business opportunities using the Smart Device Link, a standard promoted by Toy-ota and other companies that connects automobiles with smartphone and tablet apps.

Initiatives like these repre-sent the start of LINE’s goal of creating a world in which AI blends into every device and every environment in everyday life. And for LINE, the upside potential is tre-mendous. “Going forward the interface of the future is more about voice commands instead of smartphones. You will be able to open your emails, browse the internet with one word. Looking even more forward in the future, we may communicate with each other using brainwav-es,” says Mr. Idezawa; and LINE is expected to play a key role in that future.

Launched in the wake of the Great East Japan earthquake as a reliable communications service, messaging app LINE’s innovative development model has seen it expand into an online entertainment behemoth with an ambitious growth plan

Takeshi Idezawa, CEO of LINE Corporation



There’s no doubt that another industrial revo-lution is taking place worldwide

with the growing support in bringing to life of the Internet of Things (IoT) and robots. The convenience and nov-elty of appliances that tell you when to re-stock house-hold commodities, climate controls that manage energy consumption, and health and wellness tracking in fashion are very quickly becoming a part of daily lives of citizens all over the globe. With an expected 30 billion con-nected IoT devices by 2020,

industry leaders and innova-tors from all sectors are well aware of and preparing for the demand of these kinds of services.

TSI Holdings is one of the first companies to integrate IoT technology into the fash-ion retail space. President and CEO Tadashi Saito says, “There are two ways for the fashion industry to apply IoT. One is to take advantage of IoT in the store itself. IoT al-lows us to improve the mea-surement of our KPIs (key performance indicators). By installing highly sensitive cameras, we can count the number of people passing by

the stores and how many en-ter the stores. We can moni-tor how customers move inside the store, and in front of which shelves they spend more time. We can catego-rize the moving patterns of the customers who end up buying and not buying. We can also monitor how many people touch and try on the products. Each of these de-cision making processes gets analyzed with the use of IoT.”

This kind of integration and analysis can lead to a better understanding of con-sumer behavior, which then later affects the company’s overall efficiency and per-

formance. As companies in the fashion retail space be-come increasingly criticized for overproduction, applying this kind of technology has the potential to save on cost, but also to help the environ-ment. “With the application of IoT and AI (artificial in-telligence), we are able to reduce the markdown and therefore eliminate waste,” says Mr. Saito.

He also explains, “The sec-ond way we apply IoT and AI is to increase our business and sales strategy and reduce operational cost.” Through testing simulations TSI has found that “AI could also tell the number of inventory we should have in stock for certain items” and “can accu-rately predict the volume of the additional procurement,” meaning less opportunity loss. While many people may think that IoT technology is just for connecting devices, it’s clear that applying it in the fashion retail space, like TSI has done, has some im-pressive benefits for business operations.

IoT has potential in other arenas too, specifically when it comes to safety. Kenzo Terashima is the President of Toyo Denki, a leading manufacturer of electrical equipment for rail vehicles. He says, “A very important is-sue to consider always is safe-ty. And in the case of trains, this is crucial: arriving on time and safe. With regards to IoT, we are linking each part of the electric system of the railway to the IoT. Trains are a very important part of the Japanese economy. If in any case the train gets delayed, the company doesn’t only have to fix the problem that is causing it as fast as possible, but it also has to inform pas-sengers about the situation. And IoT is a very helpful tool to monitor the situation and progress constantly and with accuracy.” IoT technology al-lows for the monitoring of parts on the rail system indi-vidually as well, keeping real time information available for technicians. Toyo Denki will celebrate 100 years in business in 2018 and has re-cently begun participating in a railway project in Los Angeles.

Other companies special-izing in parts and machinery, like Nissei Plastic Industrial, are also implementing IoT and sustainability initiatives to increase the effectiveness of their products that are in use around the world. Hybrid cars, for example, call for motors that are increasingly made of plastic components and with more countries moving to energy efficient alternatives, Nissei has op-portunities abroad. The com-pany has plans to expand to the United States soon.

Partnerships with the U.S. automotive industry have

seen positive results, encour-aging Japanese manufactur-ers to maintain relationships and concentrate on expan-sion and investment oppor-tunities, as well as exploring new technologies. “America is the most suitable place for us to develop and test our technology,” says President of Nissei, Hozumi Yoda.

“One of our strategies is related to IoT. We are work-ing on our capability to main-tain the machinery with less people, doing it remotely. We are developing a concept that wherever you are and wher-ever you go, you are able to do the maintenance.”

RoboticsLong-time leaders of the man-ufacturing sector like Yanmar, which recently celebrated its 105th anniversary in March of this year, are accustomed to evolving with the market and are preparing for the future with research and develop-ment that enhances their of-ferings while keeping the end consumer in mind. Yanmar is perhaps best known for their engine equipment, most fre-quently found in machinery used for farming.

“We are currently develop-ing smart farms, to handle is-sues such as energy consump-tion. Also, we want to focus on productivity. We want to help farms develop solutions for their soil, their harvest, all the way to their trade place,” says Representative Director Hiroshi Kanda. Helping farm-ers, a cultural staple of many principles in Japan, is a prior-ity, especially as technology continues to develop.

“Our goal is not to replace men with robots. We want to combine men with robots in order to increase productiv-ity. An example of this would be our driverless tractor, the Robot Tractor, where the leading tractor driven by a man would plough the soil, followed by a driverless trac-tor in order to plant crops. They would be working hand in hand to increase produc-tivity,” says Mr. Kanda.

Their dedication to re-search and development of environmentally conscious equipment makes them a leader in the industry, al-ready meeting standards for requirements that will be put into place in 2019. The la-bor shortage in Japan means making products more com-petitive in international mar-kets is a must and to achieve this, robots are often used in order to accomplish pro-duction goals. But will robots replace the human workers completely?

Tadahiro Kawada, Presi-dent of Kawada Technolo-gies, explains, “We don’t want to cut jobs, but create productivity. And that’s ex-actly what we are doing right now with the next generation robots. The mainstream in-

dustrial robot companies’ products are developed to replace human workers with robots. In Japan, the people whose jobs were replaced by robots are now doing more value-added work, such as continually improving fac-tory processes. When people and robots work together, people are the masters, not the slaves of the machine. That’s the kind of society I en-vision. Robots are tools. Hu-man innovation can be used to come up with new ideas and improve manufacturing processes. The synergy be-tween human and robots is the way forward for Japan.”

Kawada Technologies is taking part in the construc-tion of the new national stadiums and facilities for Olympic sports and also some of the projects for the new hotels needed for the influx of tourism that the event will bring. The Japa-nese construction industry is expected to increase to approximately $637.2 billion by 2019 and industrial robot revenue is forecast to reach $24 billion in 2020. As the field of robotics continues to develop, a divide is hap-pening amongst the types of robots being produced.

Traditional, industrial ro-bots are still in high demand, especially for manufacturing facilities for the automotive industry, but service robots are also being integrated into the workforce. They are designed to operate in less predictable and unstruc-tured environments where they interact with people in a number of applications ranging from medical to construction to agriculture. Kawada is known for build-ing bridges and is doing this within the field of robotics too. Their collaborative ro-bots are a mix between the industrial and service robots. The NEXTAGE model is easy to install and deploy and dis-plays the advantages of being safe, flexible, space saving and mobile.

The embracing of the ap-plication of robotics, IoT and AI technology is present-ing Japan with opportuni-ties to once again showcase high-quality electronics and manufacturing equipment on a global level.

From theory to practice: real applications of IoT and roboticsTo many, the Internet of Things, or IoT, may sound like a buzzword and robotics could evoke an image of a workforce dominated by humanoids. Is this the case? Japan Inc. companies have been at the forefront of these emerging trends and have developed real applications to increase efficiency and productivity

Japanese companies want robots to work hand in hand with human workers It is expected that there will be 30 billion connected IoT devices by 2020

“Our goal is not to replace men with robots. We want to combine men with robots in order to increase productivity. An example of this would be our driverless tractor, the Robot Tractor, where the leading tractor driven by a man would plough the soil, followed by a driverless tractor in order to plant crops”

HIROSHI kANDA, Representative Director, Yanmar



With just three years to go until the opening of the Games,

the 2020 Tokyo Olympics is already changing both the shape of the city’s skyline and its business environment.

Companies across almost every sector are ramping up production to deliver Olym-pics-related goods and ser-vices, scrambling to ensure their brands become associ-ated with the Games. Mean-while, the face of Tokyo itself is being transformed with the unmissable Shinagawa New Station complex, its origami-inspired steel and glass roof creating a new rail gateway for the city, a $1.5bn new national stadium, and 45 new skyscrapers all being constructed within the city limits, will all contribute to cementing Japan’s Olympic legacy.

The result of this Olympics fever is enormous inward in-

vestment into the city as well as a chance for Japanese firms to hone their skills before tak-ing them out to the rest of the world.

The enthusiasm is palpa-ble. “We are definitely ready for the 2020 Olympics with new exciting products,” says Yuji Saeki, President and CEO of Mikasa, a 100-year-old rubber manufacturer that has made its name producing high-quality athletics balls, from volleyballs to water polo balls. “Ever since the 1964 To-kyo Olympic Games, exclud-ing Mexico City 1968 and Montreal 1976, each Olympic volleyball game was played with Mikasa balls,” he says, adding that he believes the Japanese team became better over the years as a result of this homegrown brand being so prominently featured. This year, the company is sponsor-ing the Games, as well as en-riching its relationship with the FIVB (International Vol-leyball Federation), to bolster its global position as a truly Olympic Japanese brand.

“The 2020 Summer Olym-pic Games will be a great driv-er for growth,” says Tadahiro Kawada, President of Kawada Technologies, which designs and builds bridges and steel structures as well as devel-oping robots and unmanned vehicles. “Although everyone expects a dip in the aftermath of the Olympic Games, I feel confident that the sector will keep growing steadily. We will have demands to add more Shinkansen lines and there are the new cutting-edge

projects, such as the Shinaga-wa to Nagoya linear maglev that will be implemented.” The company, a major play-er in the bridge industry and high-rise steel structures, has a long history of involvement in the construction of dome stadiums, and the upcoming Olympics means new proj-ects and new contracts. “We will work on the new national stadiums and facilities for the Olympic sports, as well as on some projects for the construction of new hotels,” adds Mr. Kawada.

Nikkei 225-listed Tokyu Land Corporation (TLC), a comprehensive real estate company that operates ur-ban development, residen-tial, overseas and wellness businesses in a quest to cre-ate beautiful living environ-ments, is in its element in the run-up to the Games. “We have experienced steady growth in each of these busi-nesses, and have commit-ted to further expansion in advance of the 2020 Tokyo

Olympic Games and Para-lympic Games,” says Hitoshi Uemura, Vice Chairman. Be-cause TLC pioneered real es-tate securitization in Japan, it has a solid balance sheet and strong financial situation which enables it to partici-pate in a number of projects simultaneously. Nonetheless, the Japanese corporate prin-ciples of prudence and sta-bility take precedence. “TLC is careful to strike a balance between development risk and our real estate leasing business, so that the com-pany can maximize profits without excessive develop-ment exposure. We do not wish to participate in a tran-sitory development boom in the run-up to the 2020 Tokyo Olympic Games; rather, we prefer to engage in efficient investment with a long-term horizon,” adds Mr. Uemura. He shares Mr. Kawada’s op-timism about the overall im-pact of the Olympics on the Japanese economy, however his outlook is more cautious. “The construction of facili-ties will be completed when the Games start. Therefore, I expect the Japanese economy to somewhat slow down after the event. Until 2020, I be-lieve the economy will grow at a steady pace.”

The Tokyu Group holds more than 1 trillion yen ($8.8 billion) of assets, and is ranked third among Japanese real estate companies, but it stands out due to its focus on business diversification, participating also in the man-agement of resort facilities, senior housing and member-ship sports clubs. As a result, it has been able to benefit from Japan’s recent econom-ic upswing in more than one area. “We can see some posi-tive effects from Abenomics on TLC businesses, especially the so called ‘inbound effect’ in terms of foreign tourists. Abenomics is, of course, a set of domestic Japanese economic policies, but they influence the currency mar-kets and therefore have global effects. As TLC owns hotels and commercial facilities, the impact of the booming tour-ism industry driven by Abe-nomics is definitely positive,” Mr. Uemura says.

Among current domestic projects, TLC is currently focused on large redevelop-ment projects in its home-town of Shibuya, the beating heart of the city of Tokyo and made famous most recently after its image as the hub of Japan’s information industry was bolstered during the clos-ing ceremony of the Rio de Janeiro Olympic Games, in

which Japanese Prime Min-ister Shinzo Abe, dressed as Super Mario, leaped off a clay pipe. With four large redevel-opments around Shibuya Sta-tion, the company is working to ensure that Shibuya will attract more attention as the 2020 Games approach, as a base of easy access to both the Tokyo Bay area and the New National Stadium.

One of these redevel-opments, Sakuragaoka, is positioned to be the most important project among on-going redevelopment projects around Shibuya Station. The company is up-grading urban infrastructure in the area, and developing a business, residential and en-tertainment complex. “The complex is designed to be friendly to our foreign resi-dents and visitors, equipped with important facilities like multi-lingual medical services, kids’ support and serviced apartments,” says Mr. Uemura. The new proj-ect also aims to transform the area into the foundation of a Shibuya-based business sector, with the creation of support facilities for startups.

However, Mr. Uemura points out that is important to note that after the 2020 Tokyo Olympic Games, there is a risk that demand for new development will dwindle. “Furthermore, as our society ages, it seems obvious that the demand for real estate will be shrinking in the mid-to-long term,” he adds. As a result, TLC is now looking to over-seas markets where it foresees

stable and continuous growth in real estate.

Today, the company is en-gaged in the 425 Park Avenue project in New York, which it was introduced to by its U.S. partner, GreenOak Real Estate Advisors. “We had a strong business relation-ship with GreenOak, so they brought this investment op-portunity to us. Given the sizable equity commitment this project required, our par-ticipation was indeed a water-shed moment in the history of our U.S. business,” says Mr. Uemura. The other partner in this project is L&L Holding Company, a major devel-oper in New York. “The key driving factors behind our investment were the unique location and our confidence in our partners.”

While the 425 Park Avenue deal is the company’s largest in the U.S. to date, It has not lost time in building a portfolio of smaller investments through-out the country, including multifamily and office invest-ments in New York, Califor-nia and Texas, with two new investments expected to close before the summer is out. “Our strategic focus, going forward, is to seek out value-add type investments in major markets, in partnership with strong local operators, with a focus on office and residential properties. We continue to build our portfolio with an eye toward establishing a sound track record and a repu-tation as a trusted and capable partner,” says Mr. Uemura.

It is not just dwindling do-mestic demand that is driving

Japan’s companies to seek out new opportunities. The op-portunities presented by the American market to develop dynamic partnerships serve as an important pull factor. “Many Japanese companies are still closed minded. When we propose a collaboration, they often reply negatively, limiting our options for ex-pansion,” says Yoshitake Ito, President and CEO of Iwasaki Electric.

The company, a worldwide supplier of lighting prod-ucts and industrial systems whose floodlights illuminate stadiums in Yokohama, Tosu City, and beyond, is excited about the potential that the Games brings in developing new technological solutions in lighting for urban, resi-dential, commercial and in-dustrial applications. “Tokyo 2020 is a perfect opportunity for our country to rethink the way we see sports, and entertainment in general,” says Mr. Ito, adding that the opportunities that the Inter-net of Things (IoT) offers to the company are immense. Today, the company is open to “all opportunities, whether it be through alliances, joint-ventures or other types of col-laboration.” For Iwasaki Elec-tric, the U.S. remains its most important market, and that is where its strategic focus lies, driven by its factory in Bos-ton. “Our competitive advan-tage isn’t the price, but rather the quality, the reliability, the safety and the sturdiness. In addition, we put a lot of em-phasis on customer service.”

An Olympic transformationAs the countdown begins to the opening of the 2020 Tokyo Olympic Games, Olympic fever has hit the Japanese capital, bringing with it a tremendous amount of development

The face of Tokyo itself is being transformed with the unmissable Shinagawa New Station complex, a $1.5bn new national stadium, and 45 new skyscrapers all being constructed within the city limits

“We are definitely ready for the 2020 Olympics with new exciting products...Ever since the 1964 Tokyo Olympic Games, excluding Mexico City 1968 and Montreal 1976, each Olympic volleyball game was played with Mikasa balls”

YUJI SAEkI, President and CEO, Mikasa

“We do not wish to participate in a transitory development boom in the run-up to the 2020 Tokyo Olympic Games”

“We prefer to engage in efficient investment with a long-term horizon”

HITOSHI UEMURA, Vice Chairman, Tokyu Land Corp.

Shibuya Station Sakuragaoka Exit District Redevelopment”

425 Park Avenue in the Plaza District of Manhattan, New York



As the Japanese capital prepares to welcome the world at the 2020 Tokyo Olympic

Games, another city in the coun-try, Nagano, reminisces about its stint as Winter Olympics host in 1998. The city, nestled in the Japanese Alps, boasts hot springs, snow monkeys – a type of macaque – and outdoor activities, from skiing to hiking. But like much of Japan, it is yet to be fully discovered as a tourism destination.

“What is lacking is a com-prehensive strategy to publicly promote the whole of Japan. We lack the brand image of Japan as a whole country and we are not good at presenting it such way,” says Yoshio Horigome, Chair-man of Alpico Group. The company, which is the primary transportation company of Na-gano Prefecture, offers services including buses connecting main cities through Japan, as well as hotels and lodges, golf courses, retail establishments and travel and leisure services. It is current-ly working hard to raise aware-ness about cultural gems in the inland region, which counts nine of the 12 highest mountains in Japan and a famous lake resort at Lake Kizaki.

“Japan has always focused on sectors such as manufacturing, trade and commerce and servic-es. We did not realize the poten-tial of tourism until much later compared to other countries. There isn’t still much knowl-edge about how to get around, where to stay at, or how to get to Nagano,” he says. “We must emphasize and promote such information as a whole nation, with private and public sectors working together.”

To get the word out, the company is combining tradi-tional advertising with the global reach of social media, with an English-language Twitter feed that includes evocative photos of Nagano along with little-known facts about the prefec-ture, such as the history of the Zenkō-ji Kaido mercantile and

pilgrimage route that ran be-tween Nagano and Matsumoto City. “In earlier days when we strategized the promotion of Nagano, our focus was to show what distinguishes Nagano from the neighboring prefectures – and it was ski resorts,” says Mr. Horigome. “The 1998 Winter Olympic Games made the Na-gano prefecture world-famous as a place for winter sports and attracted many tourists for ski-ing.” But for him, the focus on winter alone misses the greater year-round beauty of the region in summer and fall. “For the last several years, we’ve been pro-moting these seasons, and we can see it’s becoming known in

Southeast Asia, but not quite in the U.S. and Europe.”

Given the opportunities pre-sented by the outbound U.S. tourist market and the large number of Japanese living on the West Coast of the United States, Alpico is looking to beef up its promotional activities there, in partnership with American agents as well as via a represen-tative office. For Mr. Horigome, the tourism potential is endless. “Japan is a very fascinating coun-try from different perspectives. It is blessed with nature, and the Japanese have worked hard to safeguard and maintain the beautiful environment. There are historical sites and facilities such as castles, shrines, and temples, and the modern influ-ence from the West co-exists smoothly with Japanese tradi-tional buildings. What is more, the country is safe. I believe tour-ists can enjoy this diversity, and come home feeling relaxed and to some extent healed.” He adds that it is a near-travesty that the Nagano Prefecture remains all-but unknown to American tour-ists. “Every season here presents its own beauty. We have pristine water and delicious fruits, Sake breweries and Nagano is known for being a big producer of wine. Guests who come will take with them an unforgettable memory of our volcanic hot springs and Japanese cuisine.”

The company’s strong local knowledge and long operating history – it was founded in 1920 as Chikuma Railway Company – has enabled it to put together sightseeing routes to showcase to visitors the area’s many at-tractions.

“We are promoting sight-seeing in Matsumoto but also in wider areas by working with neighboring prefectures and local transportation provid-ers,” says Mr. Horigome. “This is the way to promote Japan to overseas visitors. We are pro-moting tourism collaborating with other prefectures, rather than doing it alone because we believe that can attract more visitors.”

Meanwhile, its range of tour-ism establishments provides ample choice for visitors to the region. “We currently have five hotels and the sixth will be open this fall,” says Mr. Horigome. These include Hotel Shoho, which is set on the hills over-looking Matsumoto city. All of its rooms are furnished in the ryokan style, allowing guests to experience traditional Japanese hospitality. The hotel also boasts the biggest size hot spring in the whole of Nagano prefecture. An-other one of the company’s hotel, the Kamikochi Lemeiesta Hotel, is tucked away in the Kamikochi mountain resort and is ideal for hikers. “We also have another Japanese style ryokan hotel, Sousen-no yado Suhaku, which is the only ryokan in Kami Suwa with hot springs coming from two different sources,” says Mr. Horigome. Rooms there have a breathtaking view of Suwa Lake, which is the site of an interesting natural phenomenon known as “The God’s Crossing”, where the water’s natural hot spring com-bines with the frozen surface in wintertime to create foot-high ice ridges.

The year 2020 marks the 100th anniversary of Alpico Group’s foundation, which is coinci-dentally the same year in which Japan will host the Olympics Games. “This is therefore an aus-picious year for us to implement a new strategy and determine which path the company takes in the future to make another 100 years of breakthroughs,” says Mr. Horigome. “This is how we came up with our mid-term manage-ment plan ‘Value up Alpico 2020’, with a mission to go public on the stock exchange and increase the company’s recognition and credit worthiness, along with the overall market value of the company.”

For a slightly more sedate ex-perience, visitors to Japan can also take advantage of the grow-ing cruise industry. In 2016, a to-tal of 1.99 million tourists came to Japan by cruise ship, nearly five times the level in 2014. The Circle Japan Grand Cruise, a luxurious

one-month voyage operated by NYK Cruises, which won an Award of Excellence at Japan’s 2016 Cruise of the Year Awards, is one such option. An early summer voyage circling Japan and taking in a northern stop in Petropavlovsk-Kamchatsky in Russia and a southern visit to Keelung, Taiwan, provides a truly Japanese way of discov-ering the country and its sur-roundings. NYK Cruises, which originally started doing business in the Meiji era in 1885, aims to become a world reference for luxury cruising. “Our advantage includes having the best hard-ware in Japan,” says Hiroshi Hat-tori, President of the company.

With three ships including the Asuka II – the largest and most luxurious cruise service in Japan by far – the company, which up until recently tended to serve solely the domestic market, is now increasingly welcoming Americans and Europeans aboard. “We offer a bit of taste of the Japanese atmosphere. Asuka II has onsens [hot springs] inside it, from where you can see the sea; it’s a very relaxing experi-ence. We also have a tea room with tatami,” he says. Inside the ship, the company offers the very best of omotenashi, or Japanese hospitality, as well as some more familiar fare. “We serve French cuisine as well, that is probably better than what you can eat in Paris,” says Mr. Hattori, who adds that the company sometimes in-vites guest chefs aboard to serve their cuisine.

Such is the importance of on-board gastronomy to the com-pany that Crystal Cruises, the American luxury cruise line set up by NYK Cruises and owned by the company until its acqui-sition by a Hong Kong buyer in 2015, has a restaurant aboard run by Japanese celebrity chef Nobu. “We tied up with him and he runs our restaurants on the Crystal Cruise,” says Mr. Hattori.

Leisure companies around Japan are keen to work together and with the government to promote the lesser-known as-pects of the country, the storied

history and fascinating culture of which provides a patchwork of different experiences to any visitor bold enough to venture outside of the more familiar destinations.

Such a visitor will be well-rewarded. Masayuki Goto, President and CEO of the Ja-pan Racing Association (JRA), is keen to see more foreigners take in the country’s phenom-enally popular and extremely competitive horseracing. While Japan may not be the first coun-try that springs to mind when one thinks of the sport, the his-tory of horseracing in Japan can be traced to the beginning of the eighth century, where it was held as a religious ceremony for the Imperial Court, before spread-ing throughout the country to the extent that horseracing ap-pears frequently in the historical journals and literature of that era. “Every year since then, horserac-ing has been held each May at Kamigamo Shrine in Kyoto. Its style and tradition has remained nearly intact since the 11th cen-tury, lasting through the aristo-cratic and feudal eras of Japan, for more than 900 years,” says Mr. Goto. Today, horseracing in Japan has reached interna-tional standards, with the in-auguration of the Japan Cup in 1981 opening the competition to horses trained outside the country. “We have observed an increasing trend of repeating tourists,” says Mr. Goto. “Nor-mally the first time or even the second time the tourist journey is centered in the cuisine or in the shopping spree or other tourist spots. However on their third trip, foreigners want to experi-ence the traditions of Japan or more local trends. We hope that the horseracing spectacle would be one of their venues.”

To this end, the company has, over the last decade, translated its brochures and put in place ini-tiatives to make betting easier for foreigners, as well as introducing a tablet application for internal use to enable its employees to communicate with tourists in their own language.

New tourism attractions to discover Japan all year around

“Japan is a very fascinating country from different perspectives. It is blessed with nature, and the Japanese have worked hard to safeguard and maintain the beautiful environment. There are historical sites and facilities such as castles, shrines, and temples, and the modern influence from the West co-exists smoothly with Japanese traditional buildings. What is more, the country is safe. I believe tourists can enjoy this diversity, and come home feeling relaxed and to some extent healed.”

YOSHIO HORIgOME, Chairman, Alpico group

A look at the authentic Japanese tourism experience

Shoho Hotel Matsumoto Castle Alpico Bus

Monday, July 31, 2017 JAPAN · 2017. 7. 31. · JAPAN Monday, July 31, 2017 This supplement to USA...

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