For decades, Japanese corporations hesitated to dip a toe into the Israeli high-tech scene, just watching the successes of the Start-Up Nation from afar. Now, after years of work by Kazunari Okada, director of the Japan Innovation Center (JIC), one Japanese conglomerate appears ready to take a chance on Israel.
In October, Toyota’s ITC (InfoTechnology Center), an important R&D arm of the Japanese car giant, will be holding the first ever tech event for a large Japanese corporation in Israel — a hackathon in which Israeli programmers and entrepreneurs will present their ideas on improving car safety and performance.
That’s the kind of thing Okada is hoping to see more of. “I realized already years ago that Japan was missing out on something important,” he told The Times of Israel in an exclusive interview. “People in Japan know Israel from the news, and of course as a religious center holy to Western religions. But these are both not very relevant to most people in Japan, so awareness of the more esoteric points of Israel has been very low.”
As savvy businesspeople, Japanese executives have increasingly been looking at what Israel has to offer in the area of high-tech – and they have begun to realize that they are late to the party. “There is only one fair-sized Japanese company with an R&D center in Israel, and even that belongs to the Tokyo firm’s German subsidiary,” he said. “While Intel, Samsung, Microsoft, Deutsche Telekom and all the other European and American giants have large research and developments facilities in Israel – and while Chinese companies increasingly hook up with Israeli start-ups – Japan has been left behind.” Total trade between the two nations in 2013 was a relatively modest $1.83 billion, but they signed a research and development support pact last month that might provide a boost in the high-tech sector.
Okada believes he can change that. He has dedicated the last two and a half years to trying, via the JIC. The group runs programs in Israel and especially in Japan, where it organizes seminars and events introducing Japanese business people to Israeli companies. “We have a database of about 6,000 Israeli companies chosen for their compatibility with Japanese industries and businesses,” said Okada. “We have been introducing Japanese companies to these Israeli firms, and already some promising relationships have developed.”
Those ties have merged despite the fact that Japan Inc. has been, and to an extent remains, nervous about a potential relationship with Israel. “There are a few factors preventing a more open relationship between our countries, both economic and cultural,” said Okada. The former is due to Japan’s heavy reliance on imported Arab oil and its business ties with Arab countries. Although the secondary Arab boycott, in which Arab countries boycotted companies that did business with Israel, is pretty much a thing of the past, the conservative Japanese have found it hard to change their ways and drop the habits formed during the 1970s, when Saudi-dominated OPEC was able to dictate the terms of who would get oil and who wouldn’t.
That conservatism also reflects itself culturally. In many ways, the Japanese don’t “get” Israel, said Okada. Risk is generally discouraged in Japanese society; most university graduates prefer the safety of large corporations to risking the possibility of failure in business, something that doesn’t bother Israeli entrepreneurs in the least. In fact, according to many in Israel, you can’t consider yourself a real success until you’ve had a few “learning process” failures under your belt.
This Japanese conservatism even filters down to the level of investors, said Okada. “Most small investors in Japan will put money only into companies that have a strong track record, where the possibility of loss is minimal.”
If Japan wants to create a start-up ecosystem, those attitudes are going to have to change, or at least soften – and Okada believes that dialog is the best place to start. “Corporate Japan knows it has a problem and has been searching high and low for solicitations,” said Okada, describing the country’s long-time economic slump. Encouraging entrepreneurship, especially in the technology sphere, is an important part of Japanese Prime Minister Shinzō Abe’s plan to revive the moribund economy – but without role models, entrepreneurship will have a hard time getting off the ground.
That’s why Okada does what he does – and Japanese business people are starting to get the message. “We have run numerous events in Tokyo, and representatives of some of the country’s biggest companies in all industries – automobile, computers, electronics, and others – have attended. There is a new awareness of Israel’s success among many key people, and companies are seeking a path to connect with Israeli start-ups and veteran firms. That’s what we try to do.”
Okada, who is working with Japanese accelerator Samurai House to get the ITC event off the ground, is very excited about the upcoming hackathon. “This could be the icebreaker,” he said. “If Toyota can do it, why not Honda, Mazda, and all the rest? Working together, Israel and Japan can do some amazing things, and I firmly believe that the relationship between both countries will soon grow significantly.”