Shinzo Abe is giving new hope to Japan’s unappreciated entrepreneurs

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“IT BEGINS from now,” tweeted Takafumi Horie, the former boss of Livedoor, an internet firm, two months after emerging from prison this spring. Mr Horie is involved in no fewer than 30 new companies, including a space-tourism venture. If any of them grow to be big, Mr Horie, who was convicted of fraud in 2011, may show that a fallen Japanese entrepreneur can make a comeback.

The mood among Japan’s would-be business moguls is at its most buoyant since the dotcom bubble burst a decade or so ago. A higher stockmarket is boosting the chances of a successful initial public offering. The prime minister, Shinzo Abe, is Japan’s first leader to treat entrepreneurs as something more than greedy hustlers. For the past few years Mr Horie, a brash self-publicist, has been exhibit A in the case for holding that view. But now Mr Horie says he is being welcomed back into the business world.

Mr Abe’s three-part plan to revive the economy, known as “Abenomics”, is designed to help start-ups as well as big business. First came monetary loosening from the Bank of Japan, and a fiscal stimulus. The third part, a series of reforms to boost long-term growth rates, includes radical deregulation in new “special economic zones” spread across the country. If this pledge is honoured, many new opportunities could emerge for entrepreneurs in industries ranging from medical care to agriculture. The reforms also involve pressing the banks to stop demanding onerous personal guarantees when entrepreneurs seek loans for their businesses.

Most of all, Mr Abe admits, Japan needs to become more accepting of initial failure. As a second-time prime minister after a disastrous first term, he is himself a comeback kid. He reportedly described for guests at his home this summer how the young Walt Disney ran his business into the ground five times before he at last succeeded. Digital types were delighted when he attended a meeting of the Japan Association of New Economy, chaired by Hiroshi Mikitani, the founder of Rakuten, an online-commerce giant. Mr Mikitani has been brought in to advise the government on its deregulation efforts.

For now, Japan’s vital signs on entrepreneurship are dire. The overall number of firms is shrinking, and the rate at which new companies are born as a proportion of existing ones is less than half that in America and Britain. In 2012 the Global Entrepreneurship Monitor, a survey by a group of universities, put Japan in joint last place out of 24 developed nations for levels of entrepreneurial activity.

Japan’s record on fostering new firms is worse even than continental Europe’s. Just 6% of Japanese participants in the survey thought there were opportunities to start a business in their country, and only 9% believed they personally had the skills required. The equivalent figures for the French were 38% and 36%. Other Asians, in contrast, were bursting with optimism. That lack of ambition means venture-capital firms have few big payoffs to look forward to, with the result that there is a limited pool of cash available for those who do want to have a go at starting a business: a vicious circle that will be hard to break. Young Japanese firms attract around one-twentieth of the venture-capital money that start-ups in America pull in.

The outlook for creating new businesses could begin to improve if Mr Abe succeeds in leaning on the banks to stop demanding extensive debt guarantees. Now many would-be entrepreneurs, faced with the risk of losing their homes, give up before they start. In the short term the reform may make capital a little scarcer as banks tread cautiously. But in the long run it could transform Japan’s attitude to entrepreneurship, says Yoshito Hori, the founder of GLOBIS, a business school.

The industry ministry is promising to provide generous funding with the aim of doubling Japan’s rate of business start-ups by 2020. To do that it will have to add another 100,000 start-ups to the current annual tally. However, its record on picking winners is not great: its bureaucrats famously tried to stop the young Sony importing transistor technology and Honda from moving into cars. So the risk is that it ends up backing many duds, draining the public coffers to little benefit.

The mother-in-law factor

There are other reasons to be optimistic. The success of the big firms born in Japan’s great period of post-war entrepreneurialism later discouraged graduates from joining newer ventures. Experienced managers are seldom keen to leave large companies. Wives, mothers and mothers-in-law exert a strong influence on men not to join risky start-ups, says Yoshiaki Ishii, head of new-business policy at the industry ministry. But the perceived balance of risk is shifting. Many of the giants are struggling. The cost of starting a firm is plunging thanks to cloud computing and other innovations. Mr Horie says he is financing his new ventures through crowdfunding networks such as Campfire.

The government could help to remove plenty of other hurdles to entrepreneurship. One difficulty for science and technology start-ups is that large Japanese firms have signed up exclusive rights for the bulk of university discoveries. Small, disruptive firms are not usually able to access and develop them. And a widespread “not invented here” mindset stops established firms joining up with small ones to commercialise new ideas.

As a result many recent ventures—such as DeNA and GREE, two social-gaming operators—have been internet and software businesses that depend less on research, notes Daisuke Iwase, a founder of Lifenet, an online insurance firm. “There is too much talent chasing after smartphone apps and social gaming,” he says. So, some experts have recommended forcing large firms either to develop the discoveries to which they have the rights, or else to pass them on.

Japan’s entrepreneurs still feel vulnerable to sudden crackdowns, and fear they would be punished more harshly than big-business chiefs. Last year GREE unexpectedly found itself under investigation for possibly violating gambling laws. Its young, billionaire founder, Yoshikazu Tanaka, has since tried to ingratiate himself with the establishment: he now appears in a suit, not a T-shirt.

In all, much has to change before Japan becomes a kinder place for those trying to create businesses. There is a risk that Abenomics fails and brings about quite a different sort of rupture in the corporate climate, says Jeffrey Char, an entrepreneur and investor. If the central bank’s radical monetary loosening is not followed by thorough deregulation and strong growth, the result could be a sovereign-debt crisis (Japan’s debt stands at close to 250% of GDP). In such a crisis many of Japan’s biggest firms could collapse, says Mr Char: that would leave people with no choice but to start their own businesses. Boosting entrepreneurship through reforms would certainly be less painful.

Read more: Koyal Group Tokyo Japan, Koyal Group Tokyo Japan News Articles

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NEW ORLEANS, LA—DECEMBER 12, 2013—They are coming to New Orleans to talk science with their fellow members of the American Society for Cell Biology (ASCB) on Monday, December 16, but the ASCB winners of the 2013 Nobel Prize in Medicine, Randy Schekman, PhD, and James Rothman, PhD, are speaking out on controversial issues they believe threaten American science and American society.

On Saturday in Stockholm, Rothman of Yale University closed his Nobel lecture with a warning that "brutal cuts" in federal research funding are destroying American competitiveness in science. On Tuesday in an opinion column published in the British newspaper, The Guardian, Schekman of the University of California, Berkeley, said that the world's three leading scientific journals—Cell, Nature, and Science—are warping science for their own commercial purposes. Calling them "luxury" journals, Schekman wrote, "These journals aggressively curate their brands, in ways more conducive to selling subscriptions than to stimulating the most important research."

Longtime ASCB members, Schekman and Rothman won the 2013 Nobel Prize in Physiology or Medicine for their discoveries of how molecules move through the cell in vesicles and fuse to target membranes in a process known as "trafficking." Schekman who was ASCB President in 1999 and Rothman who has been an ASCB member since 1982 will share their joint prize of roughly $1.2 million US with Thomas Südhof of Stanford University for their work on the machinery regulating vesicles in the cell as they move along cytoskeletal roadways, delivering cargoes to different parts of the cell. This basic work was a huge boost for researchers studying conditions such as diabetes and neurodegeneration.

Both men are concerned that the work for which they won their Nobels would be much more difficult in the future because of an climate of budget cutbacks and branded scientific publications. Schekman has been particularly critical of "journal impact factors" or JIFs, a statistical measure of how often a journal is cited in other papers, as "a deeply flawed measure" that is damaging scientific integrity. JIFs have become the widely accepted measure for scientific hiring, advancement, and funding, Schekman wrote, despite their well-known flaws.

The JIF became a major issue at last year's ASCB Annual Meeting when a group of scientists and journal editors drew up the San Francisco Declaration on Research Assessment (DORA), calling for scientists to turn their backs on JIFs and find new measures of individual research value. This week, just six months after the DORA petition was first posted publicly, the number of scientists and scholars including many from the social sciences and the humanities who have signed DORA passed the 10,000 signature mark. An additional 423 scientific and scholarly organizations have also signed. Schekman, a former president of the ASCB and an early DORA supporter, is expected to expand on the DORA premise in his address to the cell biologists on Monday night.

"When we first talked about the ideas that became DORA last year in San Francisco, none of us thought that it would explode like this," said Stefano Bertuzzi, the Executive Director of the ASCB. "As cell biologists, we thought it was our issue but now the 10,000 plus signatures for DORA so far prove that JIFs are seen as serious threat in many fields of science and scholarship. This is not just egghead, ivory tower stuff. What comes out of our labs and our universities is the power that drives our future economy. Research will make or break our future health. DORA is not about footnotes. It's about keeping research honest and vital."

Bertuzzi continued, "The ASCB is delighted to have two of our own—Randy and Jim—coming from Stockholm to New Orleans to use their new fame to stand up for critical issues like budget cuts and DORA."

In his Nobel lecture last Saturday, Rothman of Yale University pointed out that the science of biochemistry which undergirded his Nobel-winning research on how cells package and deliver vital secretions such as insulin was developed around the turn of the last century in Germany. The Nazis destroyed that scientific culture in a matter of years, driving many of the best biochemists to the U.S. where it took root and blossomed, Rothman said. It gave the US an unquestioned scientific leadership form World War II to recent. "Now that culture stands deeply threatened by brutal cuts in support for basic research," Rothman said. "And it can go away."

Both Schekman and Rothman are longtime members of the ASCB, the world's largest society of cell science researchers whose basic discoveries have driven advances in modern medicine and pharmacology. They will address many of the 6,000 attendees at the ASCB Annual Meeting at a special Nobel session in the Great Hall of the New Orleans Morial Convention Center at 6:00 pm CST, on Monday night.