Bringing Japan’s best to the world
Better known for its focus on international business opportunities, Mitsui has recently started incubating exciting new business models in Japan.
Mitsui & Co. is often described as having been “born in Japan, but grown to adulthood overseas”—a reference to the large proportion of the company’s business that is conducted abroad. In June 2011, however, we established a new department to promote regional business within Japan (now a full-fledged division) to reshape that balance. Its mission is to discover regional Japanese businesses with promising products and services, grow them and ease their way into global markets. It does this by ensuring that Mitsui’s “verticals”—the 15 business units specializing in areas such as energy, food and IT—intersect with its “horizontals”—the 11 Japanese regional offices and Tokyo head office—in the most synergistic way possible. What follows are three case studies showing how Mitsui is helping innovative venture companies around Japan expand and prosper.
Giving shape to Japan’s invisible assets
Each of Mitsui’s 11 regional offices office maintains close contacts with local businesses, universities and governments, generating networks that constitute a major competitive advantage. For example, when Hiroshima University approached our Chugoku Office—Chugoku is the westernmost part of Honshu, the biggest of Japan’s four main islands—seeking to monetize its intellectual property (IP) portfolio, we saw the opportunity to road-test an innovative business model likely to be of benefit to the wider Japanese economy.
Firstly, the IP business is expanding at a breakneck pace. According to the World Bank, IP-related global royalty and license fees are expected to increase almost twentyfold—from $27 billion to $500 billion—between 1990 and 2020. Secondly, despite ranking third after China and the United States in patent application numbers, Japan remains a relative laggard when it comes to exploiting IP.
We were confident that through our networks we could find companies eager to commercialize Hiroshima University’s IP. After reviewing all the IP assets in the portfolio, we selected L8020—a lactic-acid bacterium that helps foster stronger teeth—as having the most commercial potential. And sure enough, a Kansai-based confectionery company with which Mitsui had a preexisting relationship proved eager to incorporate L8020 into its products.
The confectionery company began marketing tablet (January 2017) and candy (April 2017) featuring L8020 with its promise of healthier teeth and gums. Mitsui and Hiroshima University, meanwhile, will receive a licensing fee from every packet sold.
For a company best known for extracting tangible commodities like iron ore and crude oil from the ground, generating value from licensing intangible IP represents a new and exciting business model. With Japan among the world’s most innovative nations, the potential gain in national wealth from more creative management of its IP could be enormous.
Food for thought
Our Hokkaido office up in the northernmost of Japan’s four main islands, is pursuing a similar high-value-added food venture with Daisaku Okamoto, a PhD from Hokkaido University. With its expansive green spaces, Hokkaido is a key food-producing region. Professor Okamoto has developed a new variety of onion called “Sarasara Gold.” Sarasara Gold onions contain three times as much quercetin as ordinary onions. Quercetin, an antioxidant flavonoid that thins the blood, improves blood flow and protects the veins.
Since June 2014, Mitsui has been working with the university venture company headed by PhD. Okamoto to commercialize Sarasara Gold onions. On the production side, we are developing a network of farmers to grow the onions. On the marketing side, we are doing three things. First, we are funding research into Sarasara Gold’s health benefits; second, we have developed a brand name and a brand mascot to give the onions a distinctive identity; third, we have got the onions, and related products such as salad dressing and instant soup, into department stores and high-end supermarkets.
While production so far is modest—just 400 tons of Sarasara Gold onions were harvested in 2016—the ultimate goal is grand: we want to use Sarasara Gold as a test case to see if we can establish a whole new category of functional foods in Japan, not dissimilar to the positioning of organic in the West.
Sleeping treasures to the world
Japan has a total of 20 World Heritage sites, but the ingenuity and creativity of the Japanese themselves is also very much part of the country’s living legacy. Mitsui is proud of the role it is playing in incubating innovative Japanese ventures, finding partners and customers for them and helping to create markets for their products. We are leveraging our marketing know-how and domestic and international networks to bring the very best of Japan to the world.
Posted in February 2017
Updated in May 2017