3D printer boom lures new wave of Japan entrepreneurs

TOKYO Tue Dec 3, 2013 9:32am IST

A staff member of Nihonbinary points to their 3D printer MakerBot Replicator 2 printing a Polylactic acid bracelet as he demonstrates the printer during the International Robot Exhibition 2013 in Tokyo November 8, 2013. REUTERS/Yuya Shino/Files

A staff member of Nihonbinary points to their 3D printer MakerBot Replicator 2 printing a Polylactic acid bracelet as he demonstrates the printer during the International Robot Exhibition 2013 in Tokyo November 8, 2013.

Credit: Reuters/Yuya Shino/Files

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TOKYO (Reuters) - Junichiro Asami gave up a stable job to join a group of Japanese entrepreneurs building businesses based on 3D printing, showing the sort of pioneering spirit Prime Minister Shinzo Abe hopes can revitalise a calcified economy.

Whether these entrepreneurs can lay the foundations for a new era in Japanese products though may depend on whether Abe can tear down barriers in a wider business culture that shuns risk and supports the status quo.

Asami, 38, formerly a management consultant at Deloitte, is in no doubt about the prospects for 3D printing, potentially a game changing technology that will allow households and companies to bypass manufacturers by producing their own parts and goods.

"I expect that entire business models and manufacturing systems will have to change to adapt to the 3D printer," Asami said at a seminar for start-up businesses.

If history is anything to go by, Asami's and Abe's task will not be easy. After World War II businessmen built companies that turned into the likes of electronics giant Sony Corp (6758.T), but since then Japan has not produced a new global technology powerhouse as people have become less tolerant of risk and of failure.

Abe, who took office almost a year ago with bold promises to end almost two decades of economic malaise, wants to encourage innovation and make Japan an easier place to do business. But he is trying to shake up a political and economic system largely built around well established industries.

Expectations were high for deregulation that would tear down barriers broadly across sectors, but Abe's economic growth strategy in June left many areas unaddressed.

He has struggled to push through bigger economic reforms, such as making it easier for companies to hire and fire, which analysts say would allow for a more dynamic economy.

How a 3D printer works: link.reuters.com/mux64v

3D printer market growth: link.reuters.com/fag84v

But there have been smaller successes that could help Asami and other start-up businesses.

Executives and consultants say it is becoming easier to get government subsidies, which can help secure additional funding from the country's risk-averse banks.

Earlier this year the government revived a nationwide subsidy scheme for start-ups that had been mothballed for about six years. So far this year, the scheme has granted subsidies to 77 percent of all companies that have applied.

The number of firms applying for funds is also growing rapidly, from 15 in April to 2,302 in June.

When it comes to 3D printers, the economy ministry sees potential. It is pushing for 4.5 billion yen to be included in the budget to subsidise development of high-end 3D printers.

CRAFTMANSHIP

Tomoko Mitani, principal analyst at technology research firm Gartner, doubts the sector will spawn another Sony-like company but as the technology improves, it should make it cheaper for Japanese manufacturers to develop specialised goods.

The technology is likely to spread to medical devices, non-manufacturers and lead to the creation of new companies and services, which will benefit the economy, she said.

"Companies are providing 3D printing services over the Internet, which could allow some manufacturers to order goods and have an interesting economic impact," Mitani said.

Another entrepreneur, Nobuki Sakaguchi, says the 3D printer sector has struck a chord with some who hope it can reignite passion for Japan's long tradition of perfectionist craftsmanship, known as "monozukuri" or "making things."

"The real value is this can inspire people and lead to new ventures in the future," said Sakaguchi, chief executive of Open Cube Inc, which makes personal 3D printers that melt plastic thread and deposit the resin to form an object.

Sakaguchi, 39, who works from a small office in Yokohama, south of Tokyo, said one of the main obstacles for entrepreneurs is a culture that favours getting a secure job at a big Japanese company, many of which do not tend to reward creativity.

New ventures have also found it difficult to get bank loans, navigate the application process for government subsidies and even rent office space.

Only a very small number of companies, such as on-line retailer Rakuten, emerged successfully from Japan's last wave of technology entrepreneurs. Most other firms faded away, which has discouraged other start-ups, Sakaguchi said.

If Japan's nascent 3D printer industry can produce some success stories, the field could really take off, he argued.

Internationally, the 3D printer market is already dominated by the United States and Germany, with 75 percent and 15 percent market share, respectively. Japan's share is just 0.3 percent.

However, there is substantial growing room, figures from Wholers Associates, a U.S. consultancy and authority on the market, suggest. It sees the global market in 3D printers and related services growing to almost $11 billion by 2021 from $2 billion in 2012.

Some technology evangelists say the spread of 3D printers will unleash a wave of do-it-yourself "makers," because people will no longer have to wait for a company to design and build things they want.

Gartner's Mitani is sceptical, partly because products made by personal 3D printers that use plastics are still somewhat crude, especially when compared to a high-end printer that can fuse metals and ceramic powder.

That may be the case, but first the government needs to create an economy where entrepreneurs can flourish, said Mariko Obayashi, 50, who runs a 3D printer business.

"Japan needs a more fluid labour market, where people can quit a major company, start their own and get re-hired somewhere else if they fail," Obayashi, who spent 26 years at camera-and-printer-maker Canon Inc (7751.T) before starting her 3D printer business Smilelink last year.

"A lot of Japanese people think entrepreneurs are strange, but they are good for the economy."

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