It’s bad enough for a would-be entrepreneur that Japan is suffering a protracted economic slump and the country is bound — still — by archaic business practices.
But on top of this, Optorun Co. President Daiyu Son is foreign-born, often “strike three” for many trying to set up a venture business here.
Despite these hurdles, the 53-year-old says Japan is the only country where he could have launched his technology-based venture business.
“Japan has the best infrastructure for precision machinery,” Son says, pointing to the quality, speed and especially the finishing touches provided by parts suppliers in Japan’s precision machinery sector that cannot be matched in other countries.
“Operating a venture business in Japan is difficult, but it is the only country where I can conduct my business. And I’ve studied and worked here.”
Son, originally from China, first arrived in Japan to study in 1987 and became a naturalized citizen in 1996.
After eight years working for a Japanese precision machinery maker, in August 1999 he started up a company in Kawagoe, Saitama Prefecture, that designs and manufactures precision optical thin film coating systems.
Son decided to start his own firm out of frustration with the Japanese company, where he was not able to optimize his technological background in electronics engineering to help develop new products.
The firm did not place much importance on research and development, while decisions on whether to make a new product took a long time, Son says.
He began with startup capital of some 100 million yen, collected by combining his savings, money borrowed from relatives and funds from a Chinese investor.
The optical coating systems developed by his firm can be used to make a wide range of products, from optical fibers and solar power systems to digital media such as compact discs and DVDs.
Optorun quickly produced results, earning a profit of about 860 million yen on sales of 3.75 billion yen in fiscal 2001. Last year, the firm succeeded in attracting investment from major venture capitalists.
It even expanded its operations in China, setting up subsidiaries in Hong Kong, Shanghai and Taiwan.
With his growing business as a tail wind, Son is now tackling the innate conservativeness of Japanese companies, which gave his fledgling venture company such a hard time.
For instance, when Japanese firms procure, they usually choose a supplier based on past business ties instead of seeking new suppliers and better products.
“Japanese firms do not want to take risks in procurement,” Son says. “They tend to stick to (a supplier’s) past record. It is 100 times as difficult as (selling products) in the United States.”
Consequently, Son’s first customers were foreign firms, with Japanese companies only taking an interest after discovering that Optorun was dealing with these foreign companies, Son says. Companies in China, Taiwan and the U.S. currently account for about 80 percent of the firm’s sales.
Although Optorun is financially secure and steadily increasing sales, it faces problems recruiting new people as Japanese people still want to join a big company because they believe it will offer them greater security and stability, according to Son.
“I have no worries about money, market demand or technology,” he said. “But it is difficult to recruit people.”
As a result, Son hires Chinese engineers, who he says are particularly good at research and development due to their creativity. Chinese now account for more than half of the company’s engineers.
Hiring foreign employees however is another hurdle for Son as obtaining work visas and finding places for them to live is a complicated process.
Despite all this, Son said he enjoys the challenge of operating a venture business in Japan, turning his dream into reality. Son even says that he has discovered abilities he didn’t know he possessed.
“Before I launched this company, I had no idea that I could accomplish so much. It’s like testing my abilities every day.”