Tech among the temples

In beautiful Kyoto, business booms

Hiroyuki Ueba | McClatchy Newspapers

5/12/2008 - 5/13/08

TOKYO — Although Kyoto, Japan, is best known as one of that country's top tourist destinations, the city also has carved a name for itself as the home of booming, global market-oriented high-tech firms, such as Kyocera Corp. and Nintendo Co.

While many Japanese companies faced an uphill struggle after the end of the economic bubble in the early 1990s, many Kyoto firms awed counterparts across the nation with startling growth.

Between 1991 and 2000, the average growth rate for sales at the 10 leading electronics manufacturers in Kyoto, including Kyocera, Rohm Co., Nidec Corp. and Omron Corp., was about four times higher than that of Japan's seven electronics giants, including Hitachi Ltd., Sony Corp. and Mitsubishi Electric Corp.

These successful Kyoto-based firms share several features that are often absent from other Japanese companies, according to Prof. Chihiro Suematsu of Kyoto University's Graduate School of Management.

First of all, they were venture firms founded by charismatic leaders whose unique business philosophies imbue every aspect of the companies.

For example, "joy and fun" is the corporate philosophy at Horiba Ltd., which has about 80 percent of the global market for instruments to measure and analyze exhaust gases. This philosophy originated with company founder Masao Horiba, who established the firm to make electronic measurement and analysis instruments in 1945 when he was still a physics student at Kyoto University.

"(Horiba) hoped the firm's employees would find joy and fun in their work. He thought people who enjoyed their jobs were more likely to be proactive and get better results than if they were ordered to do something boring by others," Horiba spokesman Tetsuya Jinba said. "If our employees are happy, then we're more likely to be happy with their achievements."

Horiba, Kyocera founder Kazuo Inamori and former Nintendo President Hiroshi Yamauchi, who successfully turned the playing cards maker into a global video game champion, are among the stars of the city's vibrant business culture. Instead of encouraging homogeneity, Kyoto is a place that gives business mavericks the freedom to go their own way, Suematsu says.

"Kyotoites take great pride in the city's long history as the country's one-time capital, leading them to rebel against the Tokyo-centric attitudes that developed after the capital moved there (in 1869)," Suematsu said.

"They're conservative, but simultaneously, they've been flexible about accepting outsiders and people with different ideas because a lot of such people have come and gone in Kyoto over its 1,200-year history," he said. "The fact that the city has attracted a lot of tourists since the Meiji era (1868-1912) also forced Kyotoites to maintain their tolerance toward outsiders."

In other parts of the country, especially Tokyo, homogeneity and conformity are more appreciated, and any nails that stuck up — like the entrepreneurs of the Kyoto-based firms — would have been hammered down, the professor contends.

Yasuhiro Minagawa, public relations manager of Nintendo, agrees with Suematsu.

"Kyoto people don't like to meddle in other people's businesses or drag other people down," he said. "When a person does something new, others just wish him or her luck. Regardless of the person's success or failure, people aren't that bothered."

"In addition, Kyoto people have no respect for those who simply emulate others," he said.

This environment has helped Nintendo, which is under constant pressure to develop original video games. In that sense, it is more of a creative company than a manufacturer, according to Minagawa. Consequently, the company plans to stay in Kyoto.

The special features of Kyoto-based firms have attracted attention overseas.

In 2005, Prof. Yang Jun Ho of South Korea's Incheon University — an alumnus of Kyoto University and its graduate school — wrote a report on the strong points of these firms, such as their technology-centered business models and independent spirit, when working as a senior economist at the Samsung Economic Research Institute.

"I wanted to introduce the entrepreneurs' management styles and mentalities to South Korea, where many small and midsized firms are tied up in conglomerate-centered, hierarchical relationships," Yang said.

The report attracted attention among small-firm owners, especially those involved in information technology and electronic parts production, the professor said.

"To succeed in the global market, I believe it's necessary to change the ethos of Korean society, which still values conformity, to tolerate diversity in the way that Kyoto does," Yang said.