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Like many Americans, I watched the tragic events in Japan unfold over the past week with a mixture of fear, morbid fascination and a desire to reach out and help. You might have noticed the impact the events have had on the global markets, which I find to be an unfortunate, knee-jerk reaction that could put our global economic recovery at unnecessary risk. There have been reports of delicate supply chain problems that could trigger longer term problems. I am not an economist, but the market reaction seems unfair and short-sighted. I decided I’d like to talk with a Japanese company in our mobile industry to explore their point of view on the short and long-term implications of Japan’s natural disasters.

ACCESS Ltd is a Tokyo-based software company best known as one of the largest suppliers of mobile browsers in the world. According to recent financial statements, the company expects (pre-disaster) net sales of more than $300 million in their fiscal 2010. The company has offices in many parts of the world, including Silicon Valley. I spoke with several individuals from the California office on a group call yesterday, including Albert Chu, VP of Ecosystems and Alliances, Kei Noguchi, Director of Engineering, IP Infusion, Raiko Funakami, Project Director and Kathleen Hedde, Sr. Manager Product Marketing. First, the group noted that the disaster impacted nearly every Japanese company – workers have had difficulty getting to work, as trains in and around Tokyo are not running on time. There are rolling power outages. ACCESS has taken an unusual step to allow its employees in Japan to work from home.

Shifting corporate culture

Kei noted that this is an extraordinary measure for Japanese companies. Most have very strict company security in regards to internet access, and very few , if any allowed telecommuting. This is not the case for ACCESS in the U.S., and the team noted they understand and leverage the productivity telecommuting gives them here. They believe that companies in Japan will realize now the productivity gains of telecommuting, and that we will likely see a significant shift to soften the strict “in office only” model prevalent in Japan today, as companies adapt a different work culture.
ACCESS provides its software solutions to a lot of Japanese OEMs, like Panasonic and Sharp. The group said there is a bit of a slowdown for ACCESS in delivering for their customers in Japan at this time, but they believe this is a short-term issue. Some global companies will have more than a short term problem. Ford has said they are shutting down production of a particular plant in the U.S. because a key part made in Japan is not currently available. Toyota has also stopped production of the Prius in certain plants because of the battery is made in Japan. For most global companies, this is an exception, not the rule. ACCESS is a software company, their production is only impacted short term as workers quickly adopt alternative ways to work. Intel and Qualcomm have stated their businesses will not be impacted, as they use multiple source supply chains for this very reason.

Letting go of manufacturing

But again, ACCESS pointed out a potential silver lining for Japan’s economy – a diversification away from manufacturing. For years, Japanese companies have resisted outsourcing manufacturing to other countries, even though it would be significantly cheaper to do so. In this way, Japan’s economy begins to evolve much like the U.S. economy, which is increasingly focused on developing industries that can sustain highly paid workers – namely those that focus on intellectual property and software. Raiko pointed out that along these lines, it will be important for Japan not only to disperse manufacturing but to also move its brainpower to centers outside of Japan. As a software company ACCESS might be in the vanguard of such a movement. “You can write software anywhere, you don’t need to be in Tokyo to do so, said Mr. Funakami, “our company has benefitted greatly from being able to work in a software hotspot like Silicon Valley’.
Lots of other items were discussed – Japan will have to embrace alternative energy and there will be opportunities in that shift – how fascinated the group was that in trying to reach loved ones in Japan from outside Japan, the most reliable ways were Facebook and Twitter – how ACCESS might pursue an idea of developing a private SMS club modeled after GroupMe, to allow families and friends to communicate with each other when other systems are down – but I will leave you with one other significant thought.
Kei told us on Saturday he tried to reach his father who lives in Japan. He is recently retired. When he finally got through, Kei urged his father to leave Japan and come to the U.S. “until things settle down,” said Kei. His father refused. “He told me, I’m going back to work on Monday. That is the right thing to do to get us back to normal.” Albert pointed out that there has been a total absence of reports of looting or chaos. That is simply not the Japanese way.

The ethic and spirit of the Japanese people, more than anything to me, means this economic crisis, spurred by natural disaster, will be very short term. And the Japan will learn from this tragedy and come out stronger. And that will be a good thing for all of us.