Seminar Report

A high-level workshop on the

challenges and business opportunities for EU SMEs in Japan

– and how intermediary organisations can help SMEs seize them

27 November 2012

1Seminar Report 2012:  A workshop on the challenges and business opportunities for EU SMEs in Japan– and how intermediary organisations can help SMEs seize them 

SSuummmmaarryy  SMEs play a critical role in both the EU and Japanese economies. This workshop looked at why Japan should be an attractive market for European SMEs; the issues they face when exporting or investing there, how support strategies should be rethought to ensure that SMEs get effective help; the results of a survey of the views of SMEs that are currently actively engaged with Japan or have a strong intention to do so; and support programmes organised and run by the European Commission, the EU-Japan Centre for Industrial Cooperation and the role for the Enterprise Europe Network. Participants heard the experiences of a European who has been in Japan for 30 years and of a Slovenian SME that has established a subsidiary in Japan, together with the views of other experts from Japan and Europe.

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Date: Tuesday, 27 November 2012, 14:00 – 17:00 Venue: Centre Borschette, European Commission, 36 rue Froissart, 1040 Brussels Organised by: EU-Japan Centre for Industrial Cooperation (EUJC) Programme:

Moderator Wolfgang PAPE, Research Fellow, The Centre for European Policy Studies (CEPS) and former General Manager, EU-Japan Centre for Industrial Cooperation

Introduction European Commission support for the internationalisation of SMEs Marshall HSIA, Policy Officer – Enterprise Europe Network, DG Enterprise & Industry, European Commission

Part One: Opportunities in Japan for European SMEs

Advantages of Doing Business in Japan Hiroshi TSUKAMOTO, General Manager, EU-Japan Centre for Industrial Cooperation

European SMEs: Rethinking their Needs and Potential in Japan Jean-Michel MOLLIER, Managing Director, ERAI Japan K.K.

Challenges and business opportunities for EU SMEs in Japan Honami YATAGAI, Representative, Kanagawa Prefectural Government

Experiences of Cosylab in Japan Mark PLEŠKO, CEO, Cosylab d.d.

Part Two: Issues faced by SMEs and possible solutions… … and some possible solutions: (EU-level initiatives to support EU SMEs who work with Japan or wish to do so)

SME Internationalisation to Japan – Survey 2012 Diane VAN BOCKSTAL, Director, EU-Japan Centre for Industrial Cooperation

The experience of an Enterprise Europe Network Partner helping SMEs with Japan Eva KUDRNOVÁ, Department of Business Development, Technology Centre ASCR

EU Gateway to Japan Ellen PEDERSEN, Service for Foreign Policy Instruments (FPI), European Commission Executive Training Programme (ETP) in Japan and Korea – General Overview Daniel VAN ASSCHE, ETP Project Manager, FPI, European Commission SME support activities managed by the EU-Japan Centre for Industrial Cooperation Jessica MICHELSON, Manager, EU-Japan Centre for Industrial Cooperation

Part Three: Panel discussion

Panellists:

Daniel CLOQUET, Director, Entrepreneurship & SMEs, BUSINESSEUROPE Luc HENDRICKX, Director, Enterprise Policy and External Relations, UEAPME Hiroshi TSUKAMOTO, General Manager, EU-Japan Centre for Industrial Cooperation Mark PLEŠKO, CEO, Cosylab d.d.

2  Seminar Report 2012:  A workshop on the challenges and business opportunities for EU SMEs in Japan– and how intermediary organisations can help SMEs seize them 

Photographs:

MMaajjoorr  iissssuueess  ddiissccuusssseedd The workshop looked at a wide range of topics – from why European SMEs should look to Japan in the first place, through issues they might encounter there and support programmes that are currently available, to how support strategies should be amended to improve the quality and quantity of help available to European SMEs that wish to be active in Japan.

INTRODUCTION

Marshall HSIA, Policy Officer – Enterprise Europe Network, DG Enterprise & Industry (DG ENTR), European Commission European Commission support for the internationalisation of SMEs

Mr HSIA stated that as the European Commission attaches considerable importance to the internationalisation of SMEs particularly in terms of encouraging smaller companies to take advantage of opportunities outside their home markets. Initially, the Commission focused on encouraging the internationalisation of SMEs within the internal EU market, but increasingly it also encourages them to look to third-country markets – such as Japan. Their important economic role explains why the focus is on the internationalisation of SMEs – the 21 million EU SMEs make up 98% of all EU enterprises, and are responsible for creating nine out of ten new jobs in the EU. They therefore play a crucial role in the EU’s economic recovery. Currently, only 25% of EU SMEs export outside their home market and only 13% export to non-EU markets. There is therefore considerable scope for growth. The 2008 Small Business Act laid out the Commission’s SME strategy and addressed priorities in relation to access to markets, access to finance, reducing administrative burdens and encouraging entrepreneurship. With regard to market access, the Commission is involved in a number of actions in this regard: establishing business centres in China, India and Thailand; conducting bilateral SME dialogues; and participating in multilateral dialogues (e.g. within the EUROMED region). The 2011 Small Business, Big World Communication provided to raise the visibility of existing programmes, avoid the duplication of support and seek sustainable and cost-effective support. A mapping exercise will identify and document support measures (to be completed by the end of the year with policy recommendations to follow). The results will be fed into an ‘international business portal’ which will provide a single entry point for information on international SME support programmes. The Commission is working to ensure that SMEs are kept at the heart of EU policy-making and that they are provided with the best possible conditions to expand their businesses both within the EU and in international markets.

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PART ONE: OPPORTUNITIES IN JAPAN FOR EUROPEAN SMEs

Hiroshi TSUKAMOTO, General Manager, EU-Japan Centre for Industrial Cooperation Advantages of Doing Business in Japan

Mr TSUKAMOTO began his presentation noting that the Japanese Government provides similar assistance to help Japanese SMEs in their overseas activities (collecting and providing information, giving marketing help, providing HR support and facilitating access to financing). JETRO is the main Japanese organisation that provides help to foreign firms planning to start activities in Japan – foreign firms should first approach their local JETRO office to discuss their needs, once in Japan they may be able to use one of the six Invest Japan Business Support Centres (IBSCs) and benefit from consultations (on marketing, tax and other issues) or use its facilities (get office space rent-free for up to 2 months and access to advisors in various fields). Since its 2003 creation, more than 10,000 firms have used this service (including 320 from Europe – almost all of them were SMEs).

Although foreign firms may look to other Asian countries, Japan is an attractive country as it can be both a good place to export to and invest in. Japanese consumers are sophisticated, have a high purchasing power and they appreciate innovation. Japan’s surface area may only be 1⁄10 that of China, but it has a similar-sized economy and the Tokyo region’s GDP is similar to that of Italy. A survey of Japanese attitudes shows that European products are seen as being the ‘smartest / most fashionable’ and being ‘unique and the clearest’ (when compared with Japanese, US, Korean and Chinese products). Provided a product has these characteristics, it should succeed in Japan. European companies enjoy good sales in Japan and are the biggest foreign direct investors in Japan. Success stories range from chocolates, through furniture, to advertising on bus-stop shelters. An example of a recent SME entrant is Maison Dandoy that opened its first overseas outlet in Tokyo in August. It sells a unique and characteristic product.

Attractive and growing sectors that offer opportunities for large companies and for SMEs alike include: - Future energy systems – Japan’s environment business market is expected to grow by more than 40%

between 2005 and 2015 and there will be considerable business opportunities (e.g. the PV and wind sectors have seen rapid growth and various European firms are already active in Japan);

- Healthcare – Japan’s ageing population wants to remain active. ‘Healthy ageing’ has created a big business opportunity for the healthcare industry (e.g. for medication for age-related conditions);

- Automotive components – the Japanese component market is open – already a considerable number of European and other companies supply parts;

- Retail – Japan’s retail sector is growing. Many European brands (such as Chanel, Bulgari, H&M, Zara and IKEA) have established flagship stores in the Ginza area of Tokyo;

- ICT – Japanese ICT firms face strong competition from the likes of Samsung and Apple but are still among the world’s most competitive are ranked the highest for R&D and there are opportunities for European firms in ICT areas; and,

- Biotechnology – there has been a big increase in the number of bio venture companies established in Japan. Functional food is a growing sector and also offers business opportunities.

Mr TSUKAMOTO concluded by encouraging SMEs to look to JETRO for support.

Jean-Michel MOLLIER, Managing Director, ERAI Japan K.K. European SMEs: Rethinking their Needs and Potential in Japan

Dr MOLLIER based his presentation on his 30 years of experience in Japan. His role at ERAI (a French regional public organisation specialising in the promotion of exports, FDI and clusters) brings him into contact with many potential exporters who he encourages to make Japan a priority. Crises (such as the bursting of the Japanese ‘bubble’, the Asian economic crisis, the failure of Lehman Brothers and last year’s Great East Japan Earthquake) do not help. Despite potentially convincing arguments (the number of Japanese consumers, the facts that Japan is the world leader in carbon fibre and robotics and second for investment on R&D) an ‘invisible’ factor means that problems remain.

Established concepts should be rethought, as too often SMEs can fall through the ‘net’: - SMEs should not be seen as being a homogenous group, but divided into sub-groups based on their

experience and needs: – ‘Beginners’ have almost no experience of the Japanese market and need information, financial support and marketing assistance. ‘Intermediate’ SMEs have some experience, some knowledge and some sales, but are unstable and would withdraw from Japan if dissatisfied so need a good partner (such as a distributer) to sell their technology. Together, these sub-groups can be seen as being ‘potential demanders’, whilst ‘Advanced’ SMEs are knowledgeable, experienced firms

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and have long-term relationships with distributers / partners but have clear and specific needs (e.g. help with regulatory issues) and do not need much persuasion to get them to invest further in Japan;

- Mono-conceptual approaches should be avoided – campaigns are often designed for a specific sector (e.g. an automotive promotion campaign for companies in the car industry). However, many SMEs may not belong to that sector directly, despite being involved in it. Instead, a sub-sector approach (e.g. differentiating between parts, production equipment, etc.) will involve more SMEs;

- Run campaigns around themes – use themes that apply to many sectors (e.g. an innovation event could have a range of themes – a ‘security’ one would apply to a firms active in data security, patient security in hospitals, production security, etc.) and therefore to a broader range of companies. According to this approach, sectors are no more than points of entry to a ‘navigation system’ made of transversal themes allowing much more SMEs belonging to the ‘potential demand’ category to put Japan in their export targets. This should lead them be more open to export to Japan campaigns.; and,

- Greater coordination is needed between organisations that ‘help’ – public and private consultancies provide useful services, but if we unify to find synergies between our expertise we can ensure that there is a genuine ‘value chain’ with coordinated assistance.

Three case studies show the kinds of needs of the different sub-groups: - Raidlight is a ‘beginner’ example – a small firm with an ecological and innovative niche product, it

needed ERAI’s help to get market information and to find a distributor; - European Stretch Fabrics is an ‘intermediate’ example – ERAI worked with it so it could use a step-

by-step approach to enlarge its business by acquiring new customers; and, - Petzl is an ‘advanced’ example – already successful in a given market segment it wanted to sell its

product in another market segment. ERAI helped it find a new distributer for the other segment.

Dr MOLLIER concluded by re-emphasising the need to realise the differentiation that exists between SMEs when designing support mechanisms.

Honami YATAGAI, Representative, Kanagawa Prefectural Government Challenges and business opportunities for EU SMEs in Japan

The presentation of Ms YATAGAI focused on the attractiveness of Kanagawa Prefecture and the help it offers foreign companies. Kanagawa is located to the south of Tokyo and has very good rail, road and air links. The Prefecture is the second largest with 9m inhabitants and 4.1m workers and its GDP is roughly the size of Thailand’s. Its 275 foreign companies (418 if including sales offices, etc.) are mostly of US, German, French, British or Swiss origin. Many of Japan’s cutting-edge companies are based there and / or have research laboratories there. Important industries include automotive and machinery; electronics, computer and IT; energy, environmental and materials (Yokohama has, for example, one of the world’s biggest smart city projects and a European company is already in contact with Yokohama for it); and biotechnology and life science industries. Kanagawa has the second highest levels of researchers and technicians and 37 science / engineering schools.

Kanagawa works with JETRO to assist foreign companies that face complex procedures when establishing a business in Japan. Foreign firms should first contact either one of Kanagawa’s overseas offices or their local JETRO office. (They must register with JETRO to use its services.) Help can be given for research and to set-up business-to-business meetings or for a place on an Invitation Programme, as well as for use of an IBSC office or for a press campaign to announce the opening of a local branch office (the opening of a Japanese branch office for the German firm LPKF was reported in the Nikkei Shimbun). Follow up help can also be given (such as advice on taxes or on labour law, or the organisation of a seminar). 46% of the 50 foreign companies that have been helped since 2005 have been European, and mostly SMEs. Oxford Immunotec KK, for example, benefited from information services, an IBSC office and a press campaign and achieved its expected first year results in just 3 weeks! It took 2-3 years for the company to secure the necessary licences for its type product, as it was new to Japan. JETRO and the Prefecture supported it. Other success stories include a Norwegian company and a telecoms research unit of a Finnish university. Kanagawa also provides services to non-investors (e.g. organising seminars and inward trade missions).

Ms YATAGAI concluded by suggesting that Kanagawa could be a gateway to the rest of Japan and that the stability and reliability of Japanese business should make it attractive to European companies.

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Mark PLEŠKO, CEO, Cosylab d.d. Experiences of Cosylab in Japan

Dr PLEŠKO began his presentation by introducing his company. Cosylab is the leading supplier of control system integration of nuclear accelerators and other large physics projects, providing both software and hardware to projects such as CERN or ITER. An SME, it employs 62 people and its €7m turnover gives €2-3m in profits. Because of the need to be close to its market, it has established an office in Japan. 10 years after his initial (1992) personal trip to Japan, Dr PLEŠKO had been back to attend conferences and visits and had founded his company in Slovenia and worked with Hitachi Zosen for the institute RIKEN. He realised that Japanese laboratories respected Cosylab but were unsure whether its services would suit them and then was advised that services cannot be ‘imported’ into Japan. In 2009, Cosylab took on a Japanese work placement student under the EUJC’s Vulcanus in Europe scheme and subsequently employed him and a well-respected retired Japanese professor to run their activities in Japan.

In 2010, Cosylab defined its Asian strategy – gain footholds in the key markets in the following order: Japan (as it was already known there), Korea and then China (it would be the most promising but hardest market to enter), using small projects to gain a reputation and, where possible, to start local branches. It estimated each branch would cost €200k and would need a senior distinguished person for the reputation, a young Cosylab-trained engineer and a Cosylab manager. Dr PLEŠKO emphasised the importance of being fully committed to any foreign venture (management must be completely behind it). He therefore set the objective of establishing a Japanese subsidiary that would be self-sufficient with big physics projects and with clear financial targets and then identified real business opportunities in Japan. He then had to decide whether to use a representative from a third company to sell Cosylab’s services or to have his own sales staff and decided that because the company’s know-how is so specialised sales should be run in-house. His initial requests for help got friendly, but not very useful responses and there were few other Slovenian companies with direct experience of Japan. Moreover, many Japanese Government websites only provided information in Japanese. However, he did receive help from JETRO Wien and identified legal and accounting offices that specialise in helping foreign firms and provide help in English.

Establishing a branch office in Japan can be challenging (with issues such as double taxation or relating to documents) and the process was complicated by unforeseen challenges, however, the company was set up as planned on 1 April 2011 and found that Japanese people tend to prefer a fixed salary to receiving company shares and have an honest and direct approach. It made an unforeseen profit in its first year. If large European world-class companies can open large branches in Japan, there is no reason why a world-class European SME cannot open a small Japanese branch. Cosylab hopes to expand in Japan and possibly use the branch to run activities elsewhere in Australasia.

Dr PLEŠKO concluded by identifying the main challenges and solutions he encountered: - Sales – it can be particularly hard to sell a service; - Recruitment – because Japanese tend to change jobs less often it may be worth hiring students; - Distance and time are not an issue – a cheap return flight to Japan can cost the same as a day return

between Slovenia and Brussels; - The need for a ‘match’ of cultures – you must either build / acquire a social network in Japan,

exchange people and invest the time necessary; and, - European subsidies should not just focus on R&D and investment – they could also cover the costs of

sending a worker to live in Japan for a fixed period (e.g. for 6 months or a year).

Questions & Answers

Dr PLEŠKO responded to three questions: - Whether there were other markets that might have been more appropriate than simply going to Japan

‘by chance’ – Cosylab was already present in the other two big markets (the US and Europe) so it made sense for them to look to the third market for science (Japan);

- Why was Japan more attractive than China? – Cosylab sells services. Services can be charged at a higher rate in Japan. In 5-10 years the Korean market will probably be similar to that of Japan, China is the hardest of the markets to enter which is why it has been kept to last; and,

- What steps has he taken to protect his key resource in Japan (the staff) – across the IT sector, the challenge is to keep staff motivated and loyal. Good human resource management is crucial.

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PART TWO: ISSUES FACED BY SMEs AND POSSIBLE SOLUTIONS…

Diane VAN BOCKSTAL, Director, EU-Japan Centre for Industrial Cooperation SME Internationalisation to Japan – Survey 2012

The presentation of Ms VAN BOCKSTAL was devoted to the results of a survey conducted by the EUJC to assess issues confronting SMEs in relation to Japan. 17 EU Member-States were represented by the respondents. 75% were already active with or in Japan, the rest were considering starting activities with or in Japan if their conditions were met. 60% of the respondents were manufacturers, 35% were involved in technology transfer and c. 25% were service providers. A majority of the SMEs who responded met the European Commission criteria for micro societies. Key sectors represented among the respondents included ICT, software engineering, electronics, high technology and food and beverage. Of the ¾ who were already active with or in Japan, 65% exported to Japan and 25% were involved with technology transfer. Only 14% imported from Japan and 9% already had invested in Japan.

The main obstacles identified can be classified as: - For all responding SMEs – language issues (mentioned by most respondents), complex business

practices, costs, difficulties understanding laws & regulations and conformity with local standards; - For SMEs that already have trading links with Japan – language issues, costs, business practices,

laws & regulations; - For SMEs that are active with Japan, but in non-trade-related areas – language issues, business

practices, laws & regulations and bureaucracy; and, - For SMEs that were yet to begin activities in Japan, but were at an advanced stage of planning –

language issues, costs, business practices and conformity to standards.

Three kinds of needs can be identified: for ‘basic information’ (usually available for free), for ‘advanced information’ (requiring customised research, often requiring payment) and ‘operational support’ (practical help and services). Information needs generally addressed market and distribution (40%) or products and services (25%). Common requests were for potential partners, market surveys, information on business practices, details of trade fairs and advice on technical standards. Operational support needs tended to focus on help arranging meetings with potential partners or for participating in trade fairs, translation and interpretation services and financial support.

Satisfaction levels with current support varied according to the kinds of need. People requiring basic information tended to be most dissatisfied with information on sources of finance and on public procurement. Advance information users tended to be least satisfied with FDI-related information, information on logistics, distribution & storage or on how to lobby the Japanese Authorities. Respondents who had sought operational support were most dissatisfied with help relating to financial support, PR & marketing services, headhunting services or to real estate services.

Ms VAN BOCKSTAL concluded by re-emphasising the problems that language barriers, business practices and the search for new business partners could pose. SMEs also want more financial support. The survey had been sent directly by the EUJC to SMEs it was in contact with and had also been sent on its behalf by bodies that work with SMEs, notably via the Enterprise Europe Network (EEN).

Eva KUDRNOVÁ, Department of Business Development, Technology Centre ASCR / EEN Czech Republic The experience of an Enterprise Europe Network Partner helping SMEs with Japan

During her presentation, Ms KUDRNOVÁ introduced the EEN and specifically support ASCR had given Czech firms attending a nanotech exhibition. The ASCR is the leading consortium for European research in the Czech Republic and coordinates 11 partner organisations within EEN Czech Republic. EEN’s main activities are promoting technology transfer and business support, offering IPR services, providing financial services (20% of its budget) and organising events, missions and issuing publications.

EEN Czech Republic has supported two missions to take part in a Japanese nanotech exhibition. Several partnership agreements have been reached as a result of the last exhibition. It is already preparing for the next exhibition to be held in late January and hopes to have 16 exhibitors in its pavilion. It will also organise direct meetings and will provide translation and interpretation assistance. It also supports contacts between innovative companies and research bodies in China, Malaysia and Brazil.

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… AND SOME POSSIBLE SOLUTIONS

Ellen PEDERSEN, Service for Foreign Policy Instruments (FPI), European Commission EU Gateway to Japan

Ms PEDERSEN presented the EU Gateway to Japan programme. Over the past 20 years, it has helped 3,000 firms develop business in Japan. In 2009, a similar programme was started for Korea and was modelled around the Japan programme to help all SMEs from micro companies to larger SMEs. It is a sector-focused programme. Each year, separate Gateway programmes are organised for a range of sectors (currently separate fashion design; interior design; construction & building technologies; environment & energy-rated technologies; and healthcare & medical technology missions). To create a regular presence the same sectors are targeted each year to reinforce the programme and create consistency.

The Gateway programmes address obstacles highlighted in the EUJC survey and participating firms are helped to prepare, receive sectoral / market studies, helped to arrange individual meetings and get logistical support for the trade fair part of the mission. These services are provided free of charge. Additional customised services are available on a co-financing basis. Interpretation is essential – participating companies must have their material available in Japanese to make the mission work. Where relevant, legal advice is also given (for example, healthcare companies are advised to check that paperwork accompanying shipments is exhaustive and includes details of everything contained in a package as each box may be inspected). The programme has been developed over time. Its 20,000 odd business contacts in Japan are invited to attend the fairs and have individual meetings with EU companies. Each mission lasts 5 days with an additional pre-event informal get-together, and includes a briefing session, study visit, 2-day trade fair, 2 days of individual meetings and then a debriefing session (to get feedback to adapt the programme for the future). A Japanese-language web catalogue including details on each company is used to publicise the events. Participants must ensure that they commit the time (to prepare their application and participation and to attend the whole mission) and money (for travel and customised services, etc.) if they are to take part. Participants receive follow-up questionnaires six weeks and one year after the programme. Whereas participants in the creative sectors tend to understand their markets and gain contacts quickly, it is the participants in the technical sectors who see the bigger impact on their sales figures. Interested participants should approach the Gateway promoter for their region.

Daniel VAN ASSCHE, ETP Project Manager, FPI, European Commission Executive Training Programme (ETP) in Japan and Korea – General Overview

Mr VAN ASSCHE began his presentation noting that although much had been said about problems EU SMEs may face, entering into and operating in the Japanese market may be difficult but is not impossible. ETP is a European Union programme giving companies the necessary business, language and cultural training to succeed in Japan and to act as the foundation to the company’s Japanese business strategy – participants are required to present a draft business plan that will be revised throughout the year-long programme. With the prospect of an EU-Japan Free Trade Agreement, business expectations are high.

ETP participants will understand the Japanese way of operating thanks to their classes and will get direct experience through their in-company internship. Many ETP graduates go on to work in Japan or elsewhere in Asia. Since 1979, 1000+ people (from 800 companies) have completed the scheme. According to a 2010 survey, within 10 years of completing the ETP, the participants’ salaries have increased by 350% and their companies’ turnovers have doubled. More than 65% of alumni go on to take senior roles in their companies. ETP participation benefits companies by helping them develop an effective business plan, acquire knowledge of consumer behaviour, gain in-house expertise of Japanese business practices, language and culture, acquire a thorough understanding of their sector and product in Japan (through the internship) and increase their exports / investments and therefore promotes job creation in the EU.

A 3-week pre-departure training course on culture, business practices and civil society is held in Europe. It is followed first by a 30-week intensive business and language course in Japan, and then by a 12-week in-company internship allowing the participant to implement the skills and knowledge (s)he has acquired. The Commission covers tuition fees and pays a scholarship (€2,200/month) to participants. The participants’ employers are invited to cover any additional living expenses. Eligibility requirements include: for participants – be EU nationals, employed, have a good command of English and either have a degree + 3 years experience or at least 5 years of professional experience; for companies – have exports to Japan / investments there (or plan to do so, or provide support to European firms that do), be EU based and have a turnover > €500k.

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Jessica MICHELSON, Manager, EU-Japan Centre for Industrial Cooperation SME support activities managed by the EU-Japan Centre for Industrial Cooperation

Ms MICHELSON began her presentation by introducing the EUJC – created in 1987 by the European Commission and Japanese Government, it organises seminars, runs the secretariat of a high-level dialogue between industry and the EU and Japanese Authorities, manages training activities for industry and students, offers information and support services (via EEN) and encourages R&D cooperation: - HRTP – this course gives managers responsible for Japanese affairs an integrated in-depth view of

Japanese industrial structure and business practices (with language and cultural classes, business lectures, optional home-stays, company visits, negotiation simulation with Japanese managers, trips to study the economy outside Tokyo and an optional week of individual business meetings). Pre-2006, only 46% participants were from SMEs. Following a realignment of the course, in 2009 and 2010, SMEs accounted for 84% of participants, and since 2011 for 100%. SME participants should allow c. €1,500 for travel and living expenses. Other costs are covered by a €3,000 grant from the EUJC;

- WCM – this course will improve participants knowledge of best-practice principles such as KAIZEN, JIT, TQC and TQM and includes factory visits;

- Cluster missions – the inaugural cluster support mission sought to promote international cooperation between clusters with a view to benefiting their SME members. Clusters have an important role to play in helping SMEs develop and sustain their international activities. The 4-day programme included 1 day of lectures, 1 day of company visits and 2 days of business-to-business meetings on the sidelines of the annual Green Innovation Expo organised in Tokyo. Participants came from both clusters and their SME members. The SMEs were looking to penetrate the Japanese market, whilst the clusters were wanting to identify partners for R&D cooperation or for technology / knowledge transfer activities. During the mission some Japanese attendees expressed the unforeseen wish for EU clusters and SMEs to help them penetrate the EU market with their products / technologies, and cooperation ‘synergies’ appeared between the EU participants; and,

- Vulcanus – earlier, Dr PLEŠKO had said that Cosylab had hosted Japanese students for 8-month placements under this scheme.

Ms MICHELSON emphasised that the EUJC’s services should be seen as being complementary to help provided at a national or regional level. Some of the SMEs that have taken part in the EUJC’s activities have already taken part in Commission-funded programmes and / or benefited from national or regional logistical or financial help. It is essential that SMEs get comprehensive information on help that is available to enable them to take maximum advantage of this assistance to develop further their internationalisation capacities.

PART THREE: PANEL DISCUSSION

Daniel CLOQUET, Director, Entrepreneurship & SMEs, BUSINESSEUROPE

Mr CLOQUET welcomed the principle of brokerage events and company missions in Japan which sought to promote ‘matchmaking’ between European and Japanese firms. However, BUSINESSEUROPE thought that it was possible to upgrade their effectiveness. The participation of Japanese companies could be widened by better informing Japanese companies of the possibility and encouraging them to participate more actively. Cultural factors can also come into play: Japanese companies generally feel trust must be established before a relationship can begin. More could be done to promote the EEN ‘databank’ in Japan. He was happy to hear that the cluster mission had been successful and that it would be the start of long-term cooperation, not a one-off activity. Therefore, considerable attention should be given to the follow up of the mission. As regards the internationalisation of SMEs, more action should be given to ensure good visibility – particularly for those provided under EEN. He supported the idea of a new division of labour between service providers of European origin in Japan and elsewhere.

Luc HENDRICKX, Director, Enterprise Policy and External Relations, UEAPME

Mr HENDRICKX said it had been sometime since the Commission approach could be applauded. Rather than only looking at internationalisation in terms of SMEs exporting or investing abroad, SMEs that import should also be considered. If so, the proportion of SMEs that are ‘international’ would be 45%, not 25%. Bearing in mind that half of SMEs are 1-person firms, 45% is a significant proportion.

9Seminar Report 2012:  A workshop on the challenges and business opportunities for EU SMEs in Japan– and how intermediary organisations can help SMEs seize them 

Furthermore, the strong JPY ¥ should be taken into account as should the fact that Japanese tourists in Europe will use services offered by SMEs in Europe. Mr HENDRICKX fully shared the analysis of Dr MOLLIER – SMEs need personalised support and differentiation should be made between ‘experienced’ and ‘beginner’ international actors and between larger SMEs and micro-companies. Japan should not be seen as a gateway to Asia – Japan does not have much in common with the rest of Asia.

SMEs looking to Japan must be willing to adapt their products to take into account Japanese culture and needs (e.g. labelling a product by the number of pieces rather than by weight, or having smaller sizes for food packages). Larger SMEs can often be less willing to tailor their product. Products should be 可愛い (kawaī or ‘cute’). Attracting women’s interest is essential – Louis Vuitton brought out a pink handbag that is popular in Japan but is not available in Europe. Japan is a difficult market, but once you have established a relationship you will have it for the long-term. Language can also be a problem in Europe – language issues can be solved with interpreters. There are no quick solutions. Better recognition should be given to European and international standards and greater access for SMEs should be given to public procurement in Japan.

Hiroshi TSUKAMOTO, General Manager, EU-Japan Centre for Industrial Cooperation

Mr TSUKAMOTO welcomed initiatives taken to support SMEs as small-scale industry is important. SMEs must be prepared to commit themselves to launching into the Japanese market. Many Japanese students find it hard to find jobs in Japan and so look for work overseas. Many European students can speak Japanese and have experience of Japan. Both groups could provide workers. Dr MOLLIER was right to highlight the importance of having a good advisor. It will then be rather easy for a ‘cute’ product to penetrate the Japanese market, provided the product is tailored to meet Japanese tastes – for example Procter & Gamble adapted its Pampers nappies to be thinner and softer. After the product succeeded in Japan, it was launched onto new markets – Japan can be a gateway for sophisticated products.

Mark PLEŠKO, CEO, Cosylab d.d.

Dr PLEŠKO reiterated the importance of an SME looking to Japan to be 100% committed to Japan. This is the key issue because Japan can offer high rewards but is not a cheap market. So merely seeking contacts in Japan is not enough – companies must show real commitment and travel to Japan regularly.

PPaarrttiicciippaannttss  &&  EEvvaalluuaattiioonn  Thirty-four people attended the event. Enterprise Europe Network partners and think-tanks/consultancies each made up almost 30% of all participants, 24% were from business organisations, 15% from the national, regional or EU Authorities and one participant was from further education. 81% of people who completed the event questionnaire viewed the event as having been either ‘good’ or ‘excellent’.

This report is published by: 

The EU‐Japan Centre for Industrial Cooperation 

Shirokane‐Takanawa Station bldg 4F 1‐27‐6 Shirokane, Minato‐ku,  Tokyo 108‐0072, Japan 

Tel:  +81 (0)3 6408 0281 Fax:  +81 (0)3 6408 0283 URL:  www.eu‐japan.eu 

November 2012