For business engaging any sort of products, the supply chain for manufacturing is a key issue. We are seeing growing numbers of small enterprises, so-called “micro-multinationals”, heading for global businesses. In this article, We’ll explain how small factories in Tokyo (machikoba in Japanese) can be a part of the global supply chain for micro-multinationals.
A new path for small companies to enter global market
Have you ever heard of a word “Micro-Multinationals”?
It’s a new style of business for small and medium enterprises (SMEs) seeking international business from the start. They structure their business globally connecting talents, knowledge, network, and finance, taking advantage of modern progress in information technologies, transportation, and finance.
“Multinational” is a word usually used for large-scale companies.It takes a lot of money, time and human resources to set up the system and manage it: you need to understand local regulations and know the market dynamics. Finding a good local partner is a must.
However, these types of information are hard to find and it could be pricey to obtain. Hence, global business was considered something beyond what a small company can afford. Consequently, the traditional way of business was to set up business locally and grow it domestically. And after establishing a stable business in one market, you get to seek another.
Rise of the micro-multinationals
Well, not anymore.
Nowadays, the barriers to entering global business have diminished significantly. For instance, a small company in San Francisco can hire a designer in Finland. Then, they manufacture the product in China and sell them in UK or India. Until several years ago, it was quite costly and risky to do so. But modern SMEs can now enter a foreign market in a lean and agile way without pushing the limits too far.
This became possible by a combination of various factors.
- Information Technology and the Internet has spread all over the world, making communication easy and cost less.
- Transportation and freight cost came down constantly due to continuous improvement in infrastructure.
- Various innovations in manufacturing (e.g. Additive manufacturing, Fourth Industrial Revolution)
- Innovation in Finance (e.g. Blockchain technology on the way)
We are now in the age of micro-multinationals: a small company can start business globally from the start.
Benefits of being micro-multinational
Being small has its own merits. You can decide fast and act speedily. And it’s easier to make pivotal changes in business strategy. But what makes micro-multinationals different is their ability to exploit global variation in knowledge, skill, network, and labor cost.
Of course, there are still many challenges to remain. Having a stable supply chain is crucial. Especially finding a good manufacturing partner is a key challenge. Price matters, but that’s not the only criteria. You need a partner you can trust and depend.
Manufacturing for micro-multinationals
So where to find a good manufacturing partner? We believe Tokyo can be an attractive candidate for micro-multinationals. Let me explain four areas where small factories in Tokyo (machikoba) can work for micro-multinationals abroad.
Draw mechanical design
Drawing a mechanical design for a product is a crucial process for manufacturing. However, finding a right engineer is always a headache.
Due to continuous advance in technology, the area of technology has been subdivided into small fields. No engineer knows all. And small companies don’t have the luxury to retain a number of talents in house. So finding a right support outside is a key to success. But Good talent is scarce everywhere.
Tokyo is no different. It’s quite difficult to find all around player. However, Tokyo has clusters of small factories in Tokyo, a source of widely diversified talent. Each factory is small and their coverage is narrow. But they have deep and profound knowledge in their specialty. There is a good chance you’ll find a right match for your product.
They can be a good source for reviewing your design as well. Advice based on their long experience in the field is precious. A small investment for advice may save big money and time.
Machikoba can be a good partner for manufacturing prototype. Having a long history of manufacturing in Japan, each factory has accumulated deep knowledge and experience. As these factories form a cluster, a client can take advantage of the network. Read Five reasons to manufacture prototypes in Tokyo for more information.
Make “Made in Japan” product
You can have machikoba manufacture your product in Tokyo. There are many benefits of doing so.
- Japanese consumers have high confidence in Made in Japan products. More than 57 percent of Japanese prefer buying Japanese product if the quality and the price are same or less*. They are likely to pay a higher price for Made in Japan brand. Therefore, this will give a micro-multinational advantage to enter the Japanese market.
*Consumer survey to 10,000 Japanese conducted by Nomura Research Institute in 2015
- You can reduce the total cost of manufacturing and transportation. Transportation and duty related costs are saved. You can directly deliver products from the factory to your distributor or the end users. You may have a chance to get a better deal from small factories. They mainly work as third or fourth tier suppliers, and their cost is reasonable and competitive, in general.
- You are able to start to lean with small production. Unlike big factories in China, machikoba works for small production, say, about 100 to 5,000 pieces. This will help you start small. Consequently, you can save money and avoid unnecessary risks.
Make custom machine and tools
Japanese products tend to be high quality. And it sometimes becomes over performance and over budget. If you ask for any customization, it might cost you high. On the other hand, there are machines and tools manufactured in other countries, lacking quality.
As an alternative, you can have machikoba produce custom machine or tools within a reasonable budget. They will form a team to design, manufacture and assemble the machine according to your specification.
Until recently, it had been quite difficult for foreign companies to access small factories in Japan. Information was limited. Websites were mostly written in Japanese. Furthermore, there are more than 29,000 factories in central Tokyo alone. It’s quite difficult to find the right factory for outsiders.
However small factories in Tokyo are gradually opening their doors. There are activities like our Tokyo Fabhub to help machikoba connect with global enterprises. Opportunities for micro-multinationals to work with machikoba will expand in coming years. It shall bring more flexible mode of collaborations for those open for new innovation.