Japan: A New Way Forward

Japan is ushering in a “new form of capitalism” to reinvigorate its economy after more than two years of closed borders due to the pandemic. Japanese Prime Minister Fumio Kishida’s new economic policy, unveiled last June, aims to achieve a “virtuous cycle of growth and distribution” through public-private partnership. As part of the policy guidelines, the government aims to pave the way for wage growth to offset the impact of inflation and boost investment in technology, startups, human capital and decarbonization.

On the back of these ambitious plans, the government revised its economic growth forecast for fiscal 2023 to 1.5%, up from the previous forecast of 1.1%. The overall GDP is projected to reach 558 trillion yen (US$4.31 trillion) this year, exceeding the pre-pandemic record of 554 trillion yen (US$4.28 trillion) in 2018. Companies are projected to increase investments by 5.0%, with exports and imports set to rise by 2.4% and 2.5% respectively, despite concerns of a global recession.

Focus on Long-Term Growth and Innovation

Central to Kishida’s economic strategy is incentivizing long-term growth and strengthening Japan’s capacity for innovation, particularly in industries such as biotech, smart cities, artificial intelligence (AI) and space technology. As part of this push to champion innovation, the government is also taking steps to cultivate a world-class startup ecosystem and help local startups succeed on the international stage.

Indeed, Japan has always been a leader in innovation and technology. Japanese companies continue to create maximum value at home while making their mark on the global stage.

Take THK, for example. The global automation giant has set the standard for innovation in factory automation technologies and processes since 1971. Today, the company is leading the way with solutions bolstered by AI and IoT applications, and more than 60% of its sales come from overseas markets.

THK’s latest digital offerings include a customer communication platform that adds value to the purchasing process and an IoT platform that can predict faults in components and automatically minimize malfunctions without human intervention.

Meanwhile, soy sauce manufacturer Kikkoman has penetrated more than 100 countries since its establishment in 1917. Kikkoman Corporation Chairman and Honorary CEO Yuzaburo Mogi attributed the company’s long-term growth and success to the foresight of its top management. He says, “Now, more than ever, it is critical for top management to have a clear grasp of the global business environment and an ability to see ahead.”

Kikkoman aims to keep expanding in Asia, South America and eventually Africa in the next decade.

Global expansion is also on the agenda of Japanese advertising firm ADREX, founded in 2018. The company’s client-first philosophy, coupled with its business transparency, has contributed to its success. While many young enterprises are focused on immediate profits, ADREX believes in investing in long-term growth. The company celebrated a couple of milestones last year: the launch of its first in-house data analytics tool and the setup of its first overseas base in New York City.

With the domestic economy finally reopening—alongside government support—Japanese businesses are poised for further growth in the year ahead.

Global Vision in an Era of Constant Change

Youthful CEOs may be grabbing headlines these days, but the best perspective on today’s business trends comes from the most experienced voices. No one in Japan has seen more changes in the business environment than Yuzaburo Mogi, the Chairman and Honorary CEO of Kikkoman Corporation.

Mogi is a true internationalist, the first Japanese to receive an MBA from Columbia Business School (1961), and the driving force behind his company’s early expansion into overseas markets. His perspective on both domestic and global issues continues to command great respect in the Tokyo business community.

CEO’s Job: To Steer Through the Fog

How does Mogi see the challenges facing today’s executives?

“I think this is a very difficult situation. Now more than ever it is critical for top management to have a clear grasp of the global business environment and an ability to see ahead. In a sense, that was always the case, but now I think it is even more essential. Essential but increasingly difficult! Management has so many options… there is so much to analyze! We need to pay close attention not only to global business trends, but to geopolitical shifts as well.”

“Now more than ever it is critical for top management to have a clear grasp of the global business environment and an ability to see ahead.”

“Of course, management skills are still important, but I think foresight is more important. Things are much more complicated now than they were 30 years ago. Back then, there was much less risk, whereas now there are risks everywhere. And the future will be even more complicated. This is why I say that an ability to see ahead is one of the key requirements for corporate leaders.”

Research, Experience, and Instinct Yield Strategic Action

Few executives have the foresight that Mogi displayed back in 1973 when, as a young manager, he convinced his company to set up a plant to produce soy sauce in the U.S. At that time no Japanese company had a full-scale plant in America, and soy sauce was all but unknown. However, Mogi had conducted his own market research while still a student in New York, and his instincts told him that Kikkoman’s business would succeed in America. He didn’t rely on instincts alone: “I analyzed the risks from a dozen different perspectives. I had data and graphs and projections, but underlying it all I had my own experience, which told me that if we set up in the US everything would ultimately work out.”

**Yuzaburo Mogi** Honorary CEO and Chairman of the Board
*Yuzaburo Mogi is a descendant of one of the founding families of Kikkoman, which is among the oldest continually running businesses in Japan. Mogi holds an MBA from Columbia University.*

His hunch proved correct, and that first overseas plant became a springboard, launching Kikkoman as a global force in the food business.

“Kikkoman is sold in over 100 countries,” Mogi says, “But we have so much room to grow! Even in the U.S. and Europe, our two biggest markets, there is still plenty of room for growth.”

Continuing to Grow Globally and Strategically

What other markets is he looking at?

“My vision for our international business is to keep expanding in Asia, then gradually expand in India, South America, and in the next decade, Africa.”

That is an ambitious plan for any company, but Mogi insists that soy sauce is an all-purpose seasoning that can be enjoyed anywhere, in any culture and with any kind of cuisine. He is convinced that bottles of Kikkoman soy sauce will ultimately grace dining tables around the world.

“We will continue to grow globally and strategically, as we always have—examining risks carefully, localizing our products and our operations appropriately, then meeting challenges flexibly.”

Considering today’s geopolitical instability, economic insecurity, and rapidly changing business environment, isn’t planning for two decades of future expansion a bit risky?

Mogi smiles knowingly. “Yes—calculated risk! Without risk, there is no growth.”

www.kikkoman.com

THK Rises to Meet Industry's Demand for Prediction Detection Devices

Global automation giant announces transition to a manufacturing and innovative services company.

Since 1971, THK has set the standard for innovation in factory automation technologies and processes with its pioneering Linear Motion (LM) Guide technology. Today, THK is leading the way with solutions bolstered by AI and IoT applications that give manufacturers a heads-up on potential breakdowns while generating constructive feedback for THK engineers, which they then apply to improve products.

Omni Solutions

Two THK digital offerings making headways are Omni THK, a customer communication platform that adds value to the purchasing process, and OMNIedge, an IoT platform that can predict faults in components and automatically minimize malfunctions without human intervention. These are working to transform THK into a “manufacturing and innovative services company.”

“We want to make it easier for machinery developers to make their products,” Akihiro Teramachi, CEO and President of THK says. “Automotive-related makers are asking us to install the system in their factories worldwide, and OMNIedge lets us provide a variety of services directly to the people who actually use the products, in addition to the machinery and equipment manufacturers who have been our main customers in the past.”

Global Expansion

The demands of THK’s business compelled the adoption of a local procurement system for each region worldwide. “We are responding to the need for a system that can supply materials in a decentralized manner,” explains Teramachi. “The logistics system has been disrupted, making it difficult for goods to flow and, in many areas, lockdowns have interrupted shipments, resulting in shortages of goods.”

With more than 60% of THK’s sales coming from overseas markets, the company is working to improve the quality and reliability of products produced everywhere it operates—with positive results soon expected in Vietnam and India.

“We are responding to the need for a system that can supply materials in a decentralized manner.”

Akihiro Teramachi Chief Executive Officer and President, THK Akihiro Teramachi graduated from Keio University in 1971 and joined THK Co., Ltd. in 1975. He became a Director in 1982, Vice President in 1994 and President in 1997.

New Businesses

THK technology is also being expanded to fields close to consumer goods, including automobiles, medical equipment, aircraft and service robots, plus for risk reduction from natural disasters and climate change. Seismic isolation, damping equipment and renewable energy-related products are a growth sector.

“These systems leverage our core products, including LM Guides, and reflect THK reliability, experience, creativity and technological expertise,” says Teramachi. They can stabilize entire structures in the event of an earthquake, protect valuable art and cultural assets and provide quality control at the micro level in the manufacturing of semiconductors.

Exceeding Expectations

THK’s transition to a manufacturing and innovative services company is having a positive effect on the bottom line. Medium- to long-term environment related investments have helped meet the needs of increased semiconductor related demand, accelerated automation and robotization and the growing popularity of electric vehicles.

“We have been working since FY2022 with an eye toward the five-year period ending in FY2026,” explains Teramachi. “The entire company is working to achieve our targets of 500 billion yen (US$3.87 billion) in consolidated net sales, 100 billion yen (US$773.30 million) in operating income, 17% Return on Equity and 590 yen (US$4.56) in Earnings Per Share.”

www.thk.com

ADREX: Taking on the United States Following Exponential Growth in Japan's Digital Advertising Market

Full transparency and its client-first philosophy ensure that ADREX clients are fully informed.

Honest, meticulous operations are a Japanese specialty. That might well be due to the tenacity born of a spirituality rooted in the teachings of Zen Buddhism, says ADREX President Hayato Tashiro.

Japanese advertising company ADREX has managed to achieve astonishingly fast growth by putting clients’ interests first and making all its advertising operations transparent. According to ADREX President and CEO Hayato Tashiro, “The Japanese advertising industry has become dominated by a sales first mentality, and company structures are all sealed in a black box.” Building on his success in Japan, Tashiro is taking that truly client-first philosophy global.

“We keep our cards on the table because we consider ourselves to be our clients’ growth partner.”

Revolutionary Transparency

“Why cannot things be out in the open?” This thought had plagued Tashiro long before he decided to open his own advertising company, as he tried to deal with a bad-faith agency that kept all its costs and operations sealed in a black box. How are measures progressing in relation to the invested advertising budget? How are budgets consumed across multiple companies? What is the basis for the figures offered up as results? The answers to all these questions were hidden by the secrecy of the old Japanese advertising system.

Digital Ads Show Numerical Results

Tashiro got fed up with the advertising agency industry and its questionable practices. An industry full of businesses trumpeting vague results with no explanation as to how they were generated. As a result, Tashiro started his own digital ad agency and has since succeeded with innovative advertising operations that break the traditional mold by offering full transparency.

“All digital ads can show numerical results. We understand what measures lead to how much profit and how cost-effective they are. We can convey all that information to our customers, so they are better informed,” Tashiro says.

In 2018, Tashiro founded and became the President of ADREX, instilling it with his powerful client-first philosophy.

A Growth Partner

Those who joined him were like-minded star players who formerly worked for major advertising agencies LINE and Google. Tashiro established a system to make everything visible to clients, from measures, status and effects to the company’s margins. These glassbox advertising operations are characterized by support for client accounts by advertising operations and bringing things in-house.

“ADREX does not sit across from its clients as an agency but stands beside them to help them grow. We keep our cards on the table because we consider ourselves to be a growth partner supporting our clients’ success with advertising operations know-how.”

**Hayato Tashiro,** President Hayato Tashiro became the top sales executive at IT venture Collabos. Then, in his late 20s, he established Cyber Children, becoming the youngest head of a 30-billion-yen (US$232 million) company. In 2018, he founded ADREX and became its President. In 2022, ADREX opened a branch office in New York, where it is now based.

Aiming to be America’s Top Japanese Ad Agency

ADREX’s main focus is the benefit of future growth rather than immediate profits, and that focus is paying off. Making business operations transparent has become a means of demonstrating the company’s honest and meticulous operations to clients and its greatest weapon in winning their trust. The company’s sales grew from 1.12 billion yen (US$8.66 million) to 3.84 billion yen (US$29.70 million) over the three years of 2020-22.

In January 2023, ADREX launched its first in-house product, AdRex^©, which enables automated analysis of more diverse access logs. This tool will enable traditionally difficult in-depth, automated social media trend analysis and will also expand the company’s line of business.

This innovation is no longer limited to Japan as Tashiro has decided to move his base of operations to New York where he has opened a branch. The goal is to become the top Japanese global advertising agency in the U.S.

“We are not just a Japanese company adept at handling precise numbers, but we have also succeeded in Japan, with all its strict advertising regulations, by deciding to operate in a client-first, transparent way. We are confident that this client-first service model will have a natural global appeal.”

https://ad-rex.com