zfreud
29th January 2007, 01:42 PM
This one is for Craig...
In 2006, Japan experienced an economic revitalization after nearly a decade of deflation, bankruptcies, and sagging profits. The stock market has bounced back, with the Nikkei 225 Index rising to more than 200% of the low it reached in 2003. Office space and labor are scarce. Corporate earnings are at a record high.
Analysts, the media, and the Japanese government attribute this growth to the turnaround of big traditional corporations, such as Toyota, Canon, Nissan, and Nippon Steel, and to industry consolidation, which has created financial giants like Sumitomo Mitsui Banking and JFE Steel. Structural changes implemented by the Koizumi government are often credited with sparking the comeback. But these observers are missing a big part of the story. Japan’s rebound is also being fueled by emerging companies in knowledge-intensive industries—companies led by entrepreneurs in their twenties and thirties. A newly entrepreneurial Japan, something that once would have seemed oxymoronic, may ultimately overshadow the much touted start-up cultures in China and India.
The rise of this new Japan—so different from the “old” Japan, characterized by capital-intensive industries in which big manufacturing companies are run by people who’ve patiently worked their way up through the organization—has come from a confluence of forces. One is a shift in public perceptions of employment. When the financial giant Yamaichi Securities collapsed in 1997, people began to question the long-standing assumption that working for a large company meant a job for life. This questioning has led to an erosion of employee loyalty. Young Japanese workers today have no expectation of lifetime employment or career advancement based on seniority; they focus on furthering their careers through switching jobs or acquiring advanced degrees.
The new mentality has in turn changed public perceptions of entrepreneurs, who for the first time are respected—and exciting—role models for ambitious young Japanese. Kenji Kasahara became an instant celebrity at 31 when the company he founded, a MySpace-like social-networking firm called Mixi, went public in September 2006 and reached a market capitalization of ¥229 billion (approximately $2 billion) within a few days. Hiroshi Mikitani, the founder and CEO of Rakuten, the largest e-commerce company in Japan, has imitated some Silicon Valley entrepreneurs by buying professional baseball and soccer teams.
An entrepreneurial Japan has been further nurtured by, and reflected in, a favorable IPO environment. From 2001 to 2005, 747 Japanese companies—compared with 617 in the United States—went public. Of those that went public in 2005, 96%—up from 94% in 2004—opened their first day of trading above their offering price. Chinese and Korean companies are increasingly looking to float their shares in the Japanese market.
New ventures also benefit from Japanese strengths. For instance, Japan has a highly developed telecommunications infrastructure, including a robust broadband network. Its average Internet user fees are far lower than those in other developed countries—just six cents per 100 Kbps, compared with 24 cents in South Korea, $1.77 in the United States, $1.89 in China, and $2.77 in Germany. Japan also enjoys the world’s highest penetration rate for the mobile Internet, with 90 million mobile phone users, many of whom have 3G handsets.
Perhaps most important, the Japanese economy is still the second largest in the world, representing more than half of the entire Asian economy. Its new ventures can reach critical mass quickly, which gives them an advantage over new ventures in, for example, China and India. Japan’s strong base in an array of key technologies and industries—from digital animation to robotics to nanotechnology—creates fertile ground for start-ups in these areas.
When the new Japan is noticed, the attention is often negative. People point to allegations of securities fraud made against the Internet service provider Livedoor, or to insider trading charges brought against the flamboyant financier and shareholder-rights activist Yoshiaki Murakami. But the country’s increasing entrepreneurial vitality suggests that in its next stage of prosperity, Japan will be a competitive source of innovation as well as a leading economic power.
Yoshito Hori (yhori@globis.co.jp) is the chairman and CEO of Globis Capital Partners, a Tokyo-based venture capital firm, and the dean of the firm’s Global Management School.
From:
http://harvardbusinessonline.hbsp.harvard.edu/hbrsa/en/issue/0702/article/R0702A.jhtml;jsessionid=0JB2ELYCIQCKWAKRGWDSELQBKE0YIISW?type=F#section1
In 2006, Japan experienced an economic revitalization after nearly a decade of deflation, bankruptcies, and sagging profits. The stock market has bounced back, with the Nikkei 225 Index rising to more than 200% of the low it reached in 2003. Office space and labor are scarce. Corporate earnings are at a record high.
Analysts, the media, and the Japanese government attribute this growth to the turnaround of big traditional corporations, such as Toyota, Canon, Nissan, and Nippon Steel, and to industry consolidation, which has created financial giants like Sumitomo Mitsui Banking and JFE Steel. Structural changes implemented by the Koizumi government are often credited with sparking the comeback. But these observers are missing a big part of the story. Japan’s rebound is also being fueled by emerging companies in knowledge-intensive industries—companies led by entrepreneurs in their twenties and thirties. A newly entrepreneurial Japan, something that once would have seemed oxymoronic, may ultimately overshadow the much touted start-up cultures in China and India.
The rise of this new Japan—so different from the “old” Japan, characterized by capital-intensive industries in which big manufacturing companies are run by people who’ve patiently worked their way up through the organization—has come from a confluence of forces. One is a shift in public perceptions of employment. When the financial giant Yamaichi Securities collapsed in 1997, people began to question the long-standing assumption that working for a large company meant a job for life. This questioning has led to an erosion of employee loyalty. Young Japanese workers today have no expectation of lifetime employment or career advancement based on seniority; they focus on furthering their careers through switching jobs or acquiring advanced degrees.
The new mentality has in turn changed public perceptions of entrepreneurs, who for the first time are respected—and exciting—role models for ambitious young Japanese. Kenji Kasahara became an instant celebrity at 31 when the company he founded, a MySpace-like social-networking firm called Mixi, went public in September 2006 and reached a market capitalization of ¥229 billion (approximately $2 billion) within a few days. Hiroshi Mikitani, the founder and CEO of Rakuten, the largest e-commerce company in Japan, has imitated some Silicon Valley entrepreneurs by buying professional baseball and soccer teams.
An entrepreneurial Japan has been further nurtured by, and reflected in, a favorable IPO environment. From 2001 to 2005, 747 Japanese companies—compared with 617 in the United States—went public. Of those that went public in 2005, 96%—up from 94% in 2004—opened their first day of trading above their offering price. Chinese and Korean companies are increasingly looking to float their shares in the Japanese market.
New ventures also benefit from Japanese strengths. For instance, Japan has a highly developed telecommunications infrastructure, including a robust broadband network. Its average Internet user fees are far lower than those in other developed countries—just six cents per 100 Kbps, compared with 24 cents in South Korea, $1.77 in the United States, $1.89 in China, and $2.77 in Germany. Japan also enjoys the world’s highest penetration rate for the mobile Internet, with 90 million mobile phone users, many of whom have 3G handsets.
Perhaps most important, the Japanese economy is still the second largest in the world, representing more than half of the entire Asian economy. Its new ventures can reach critical mass quickly, which gives them an advantage over new ventures in, for example, China and India. Japan’s strong base in an array of key technologies and industries—from digital animation to robotics to nanotechnology—creates fertile ground for start-ups in these areas.
When the new Japan is noticed, the attention is often negative. People point to allegations of securities fraud made against the Internet service provider Livedoor, or to insider trading charges brought against the flamboyant financier and shareholder-rights activist Yoshiaki Murakami. But the country’s increasing entrepreneurial vitality suggests that in its next stage of prosperity, Japan will be a competitive source of innovation as well as a leading economic power.
Yoshito Hori (yhori@globis.co.jp) is the chairman and CEO of Globis Capital Partners, a Tokyo-based venture capital firm, and the dean of the firm’s Global Management School.
From:
http://harvardbusinessonline.hbsp.harvard.edu/hbrsa/en/issue/0702/article/R0702A.jhtml;jsessionid=0JB2ELYCIQCKWAKRGWDSELQBKE0YIISW?type=F#section1