Startups shine amid Japanese corporate gloom

By Yuri Kageyama

Terra Motors founder Toru Tokushige says startups have no problems recruiting quality people. Photo / AP
Terra Motors founder Toru Tokushige says startups have no problems recruiting quality people. Photo / AP

In a shabby back-alley office in Shibuya, a Tokyo district known for youth culture and tech ventures, defectors from corporate Japan are hard at work for a little-known company they fervently believe will be the country's next big manufacturing success.

Like a startup anywhere in the world, its bare-bones setup crackles with an optimistic energy and urgent sense of purpose. What's different, for Japan, is that this startup's talent is drawn from the ranks of famous companies such as Mitsubishi, Michelin and Nissan.

Kohshi Kuwahara, 26, worked for more than two years at electronics giant Panasonic before hopping to Terra Motors, a little-known venture that pays far less but is out to conquer the world with its stylish electric scooters.

As with his colleagues at Terra, he resiled from the hidebound culture of big Japanese companies and felt a deep sense of frustration at their eclipse by rivals such as South Korea's Samsung and America's Apple.

"If you're stuck in a system that promotes just by seniority, it's living a slow death like animals on a farm," said Kuwahara. "I wanted to be in a tough, competitive place."

Despite having some of the developed world's least hospitable conditions for starting a new business, Japan's "salaryman" culture of guaranteed lifetime employment at a household-name corporation is no longer the unquestioned ideal.

Ventures are sprouting again after a decade marred by some prominent failures and a striking aspect is their focus on manufacturing.

Terra Motors founder and president Toru Tokushige, 43, said one sign of progress for startups is that these days they have no problems recruiting quality people.

A few years ago, all he could hire were what Japan categorised as the losers, those who had no hopes of getting hired at an established company. As Sony and other mainstream brands lose their lustre, Terra is gaining a chance to shine.

Tokushige's 15 employees now hail from top-name companies, and the interns are enrolled in Hitotsubashi, one of Japan's top universities.

He acknowledges that plans for his tiny company to break into global markets still sound a little crazy by mainstream Japanese standards.

But he believes his way of doing business is superior to bigger companies, where decision-making tends to be bureaucratic, slow and oriented toward avoiding risks.

"Mainstream companies started out as ventures. That means old-time Japanese did it," he said of the humble beginnings of Honda, Sony, Panasonic and All Nippon Airways.

"We can do it, too."

Defections from the big corporates are setting a trend, said author Ryuichi Kino, who has written books about the Japanese motor vehicle and nuclear industries, and is working on a book about the advent of career switches and job-hopping in Japan.

"These people are searching for their place.

"For those with talent, they would rather go where they are wanted than endure suffering where they are," he said.

The office of Terra Motors is a tiny room in a building in the crammed slummy Shibuya district known as Bit Valley - Japan's equivalent of Silicon Valley for housing startups.

Recently, Terra came out with an electric scooter targeting emerging markets that connects to smartphones to gather location-based and electricity-consumption data. They charge from a regular plug outlet.

It already has top market share in electric scooters in Japan, and is eyeing overseas markets including Vietnam, India and the Philippines.

Its success so far is against the odds.

For innovations to happen, poorly performing large companies need to be allowed to fail, and innovative smaller companies must be nurtured and funded, said Masazumi Ishii, managing director of AZCA, a California consulting firm specialising in international corporate development.

The technological prowess is there. Japan still produces its share of Nobel Prize winners, ranking eighth in the world, and Japan's top universities file as many patents as do top US universities, according to Ishii.

"Japan has the capability to innovate. But the problem is that this capability does not translate to commercial value."

- AP

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