Beyond corona – finding a home for a startup-guy in Tokyo in the Nordic Innovation House

This year the Nordic countries in Japan open a Nordic Innovation House in Tokyo. The purpose is to make it easier for a startup to arrive in Tokyo and establish on the Japanese market. Services such as workspace, network connections, mentoring and...

This year the Nordic countries in Japan open a Nordic Innovation House in Tokyo. The purpose is to make it easier for a startup to arrive in Tokyo and establish on the Japanese market. Services such as workspace, network connections, mentoring and others will be available. But what is the experience of a startup-guy who wants to go to Japan?

When you speak to a startup-guy in Sweden, and you mention that you work in Tokyo, unmistakably, their interest will suddenly spark and a twinkle will appear in their eye: “Tokyo, you say?”

For many Swedes, Japan and Tokyo are synonyms with the latest technological gadgets, the Sony Walkman, Nintendo etc. The neon electro-heaven of Akihabara captured the imagination of many a youth. For others, it was the “cool” and weirdness of strolling on the backstreets of Harajuku picking up the latest fashion and ogling steampunk-clad teenagers. And those who ventured on through the throngs at Shibuya-crossing, supervised by a forest of skyscrapers, were overwhelmed by a sense of unparalleled dynamism. Then, they were struck by an urge to stop and sit down by the counter in a small Japanese joint and be floored again by the sublime food produced by the chef.

While these sentiments may be romantic, all romance is, in essence, true. And the startup-guy will, equally unmistakably, fall in love when he or she visits Tokyo.

Yet, after those first days, when the startup-guy has to get down to business another reality, equally true, appears. Japanese businesses may be efficient and productive, but they will still ask you to send a fax, produce a physical stamp of approval (a “hanko”) and pay by cash (only 20 % non-cash payments). If you have not met to deliver your business card personally by elaborate ritual, you have not established a proper relationship and it will take many more meetings until you are considered a trusted associate.

You will also quickly discover that the Japanese business world is a world of dark suits, gray hair and vertical relationships. Japan’s position as number 121 in the World Economic Forums Gender Gap Report is primarily due to the low number of women in politics and corporate management (only about 5 % women in top management). Business practices such as these have contributed to the fact that, despite recommendations to stay at home during the Corona-crisis, some surveys show that only about 30 % of employees are in fact able to do so. The relative lack of proficient English-language speakers is another barrier both to market-entry and future recruitment.

If the startup-guy is now ready to reassess the drive to Japan, he or she will be encouraged by certain other inescapable facts about the Japanese business environment. The lack of digitalization is not as prevalent as first experienced, and it also provides an opportunity. Some technical solutions and practices that we take for granted in Sweden are yet to become ubiquitous in Japan. Due to an ageing society and thereby shrinking domestic market, Japanese firms are increasingly looking abroad for opportunities. According to a survey of the Swedish companies in Japan more than 2/3 said that Japanese business had become more open to international cooperation in recent years.

This is also true for innovation. Japanese companies have traditionally been very good at incremental innovation. But they are now becoming increasingly interested in strengthening their capacity for transformative innovation. In this work they are eagerly seeking international partners to join up in open innovation. Japanese corporations are also flush with cash and are ready to spend it on interesting tech-companies, not least from Sweden. Many Japanese companies are also global in scope and will offer a trusted partner sincere support and vast sales networks.

Now the startup-guy is again ready to go to Japan, but in the final analysis the obstacles seem to demand a permanent presence in Japan and access to networks that they do not yet have. All in all, leading to costs that a young startup-company is not able to afford. Instead they consider starting with an easier, closer market, perhaps in the EU.

The Team Sweden Japan’s Embassy of Sweden and Business Sweden are together with our Nordic friends now taking further measures to ensure that our startups overcome these barriers to arrive and stay in Japan. With seed money by Nordic Innovation, an organization under the Nordic Council of Ministers, the Nordic Countries through their business promotion agencies (such as Business Sweden) establish a Nordic Innovation House in Tokyo this year. Similar houses already exist in Silicon Valley, New York, Hong Kong and Singapore.

The idea is to establish a landing platform for startups wanting to establish in Japan. The house will be able to provide working spaces, connection to local networks, mentoring, events and other programmes to help the startup grow in Japan. The Innovation house will be run by a full-time community manager (sorry dear readers, the position has already been filled) and it will be housed in a workspace in central Tokyo.

When the corona-situation has abated we aim to celebrate the opening of the house with a proper party. Further down the line we will invite startup- and expert delegations to visit and contribute to the House.

With these efforts we hope that the startup-guy will be able to keep that glimmer in his or her eye even long after arrival in Tokyo.

Guest blogger Johannes Andreasson, First Secretary for Trade and Economy, Embassy of Sweden Tokyo