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ENTREPRENEURS: ENTER THE RISK-TAKER (int'l edition)As Japan's financial giants totter, a new breed gets set to profit from deregulation
When Naoki Togashi, 37, a rising young star at the Bank of Japan, announced his resignation last fall, his bosses--including the deputy governor--were incredulous. ''So, BOJ is no longer an attractive place these days for people like you,'' said one.
Actually, it's not. Togashi figured Japan's financial marketplace was changing so fast that the central bank was the last place to learn how to thrive in the new environment. Says Togashi: ''I wanted to be in the forefront of that tide of change.'' So he joined a new investment-banking boutique, IntellAsset Inc., as a managing director for its new retail banking practice.
Japanese business has long gotten the rap that it can't generate entrepreneurs, the risk-takers who quit jobs, start companies, and pursue new opportunities--the men and women who are celebrated in the U.S. There's truth to that charge, but these days more Japanese are taking the plunge and joining start-ups. Their success or failure could provide a crucial gauge of how well an entrepreneurial culture takes root in Japan overall.
SELF-STARTERS. One especially fertile patch for entrepreneurs is the financial sector, which for decades was shackled by rules that discouraged risk-taking and protected established players. Now, the Big Bang deregulation of the industry should open up a new array of financial services for Japanese. That means someone can make money, provided he or she takes a risk or two.
As product planners and marketers at an investment trust company, Nobuhiko Masaki, 33, and Kumi Fujisawa, 31, saw the need for a tracking system that compared the performance of different domestic mutual funds. ''I always thought it would be useful if we had a tool like that and kept hoping that someone would start such a service,'' said Masaki. No one did, so he and Fujisawa set up their own fund tracker, IFIS Inc., in 1996 and started compiling scoreboards for the Reuters network. Today, data put together by IFIS pop up throughout Japanese media, and IFIS is one of the most visible players in this growing niche industry.
Some of these self-starters are trying to raise money for smaller companies, which in Japan are often starved for capital. Morihiro Matsumoto, who headed an investment-banking division at Yamaichi Securities, created a financial consultancy after Yamaichi's collapse. Matsumoto says his firm, called Artis Group, will have sales of $2.5 million this year and is on course to turn in a profit.
''VIRTUAL CFO.'' Cultivating contactsand deals with foreign money managers is a good way to starT a business, too. Shuhei Abe, founder and CEO of Sparx Asset Management Co., an independent asset manager, counts among its major clients Swiss private banks, overseas governments, and U.S. and European hedge funds. Today, Sparx's assets under management approach $500 million and are invested mostly in small-cap companies traded on the Japanese over-the-counter market. And its newly formed brokerage unit, Sparx Securities, sells Bermuda and Cayman Island-based instruments that invest in high-performing U.S. and European hedge funds for wealthy Japanese. Such catering to rich clients is a totally new concept in Japan.
These new financial players are very ambitious for their size. Takashi Araki, president of IntellAsset, preaches the virtue of comprehensive strategic financial planning, which many Japanese firms sorely lack. ''Japanese companies [often] do not have a chief financial officer,'' says Araki. So, he offers to become a ''virtual CFO'' to his client firms, helping them devise long-term fund-raising schemes, including public offerings. He predicts a financial revolution at Japanese companies when they adopt a more transparent accounting system starting in 2000. Araki is telling his clients the best way to prepare for this change is to adopt Western-style financial management.
Matsumoto of Artis Group says that more entrepreneurs will soon be appearing. Japanese companies are revamping to make their operations more like their Western counterparts, so employees will have to produce a high return if they want more perks and pay, while seniority-based benefits--and job security--will increasingly be a thing of the past. Under those circumstances, the appeal of the entrepreneurial life just gets stronger.
By Miki Tanikawa in Tokyo
Updated Nov. 19, 1998 by bwwebmaster
Copyright 1998, Bloomberg L.P.