OSAKA — In 1977, the yen’s rise forced Showa Plastics Co. to set up its first overseas factory. The Osaka-based plastic components maker said there was “no (other) choice.”
Now, opening the Singapore factory has turned out to be the best decision the firm could have made. Kenzo Nakagawa, president and chief executive of the company, said overseas investment and expansion is the best way to reduce business risks and increase management stability. “We want to be viewed both as a multinational company that originated in Japan and as a nonnational company based in Asia,” Nakagawa said in a recent interview.
Showpla Asia Ltd., a Singapore-based subsidiary of Showa Plastics and the company’s Asia headquarters, is expected to receive approval, possibly by next week, to become the first company to be listed on the Osaka Stock Exchange’s foreign section, according to Nakagawa. The listing is expected in late August. The foreign section was established last October and created with the intention of offering financing opportunities to medium-size firms in fast-growing Asia. It is open only to companies based in East Asia (excluding Japan), Southeast Asia and Oceania. Subsidiaries of Japanese companies in such regions are allowed to join.
To differentiate itself from the Tokyo Stock Exchange’s foreign section, which is targeted more toward major companies and privatized firms, the OSE set the requirements for listing at a minimum of 1 billion yen on assets and 200 million yen or more in net profits, both one-tenth the requirements of the TSE. “I believe Osaka has the potential to develop its own unique role as Asia’s financial center,” Nakagawa said in explaining why Showpla Asia decided to apply for listing on the OSE.
He noted that overseas and mainland Chinese businesspeople now control most of Asia’s important business functions, including finance and distribution, and that Japanese businesses have to think of ways to get involved in this network. “There are many Asian firms with growth potential that are in need of capital, and their needs match the OSE’s wish to operate more globally and to find a way to make use of its surplus funds,” he said.
Nakagawa, also chairman of the small and medium-size enterprises committee of the APEC (Asia-Pacific Economic Cooperation) Business Advisory Council, stressed that the Japanese government should dispense with the image that small firms are something to protect. “The government’s task is to create an infrastructure, such as quality inspection and credit-guarantee systems in order to offer a better business environment to small firm owners developing themselves independently,” he said. Showa Plastics group, which produces components used mainly in audiovisual products, has 22 companies in 10 countries, including Japan, employing some 3,700 people in total.