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Eli Tidhar,
Partner, Asia Pacific Corridor Leader,
Deloitte Israel
Satoshi Yokota,
Head of Japan EMEA
Financial Advisory, Deloitte Japan
3
Japan-Israel Business Development Task Force
Tax
Financial Advisory
Audit
Shumon Mori
Tohmatsu
Venture Support,
Japan-Israel
Practice Leader
Ryohei Hirota
Vice
President,
TMT/CFA
Masaya Ueda
Partner
Global listing
Services
Leader
Satoshi
Yokota
Japan EMEA
Financial
Advisory
Leader
Koichi Tamura
Partner,
Corporate
Financial
Advisory (CFA)
Leader
Yigal Dor
Managing Partner
Audit Practice
Leader
Tal Chen
Partner
High Tech
Industry Leader
Kazumasa Yuki
Partner
Cross-border Tax
Leader
Nadav Gil
Partner
Grants & Incentive
Leader
In 2015 Deloitte has established a special task force to support Japan Israel business development
Consulting
Eli Tidhar
Partner
Head of Asia-
Pacific Corridor
Takeshi Fujii
Partner, Consulting,
Innovation Strategy
Leader
Lior Yekoutieli
Global
Technology
Alliance Leader
Ilan Birnfeld
Chairman & CEO
Deloitte Israel
Ogawa Yoichiro
CEO
Deloitte Japan
Moshe Bina
Senior Manager
Tax
5
Historically, Japan has been a rich source of innovation
Sources: Deloitte research, news articles
1597
19791954 1969
1964 1976 2011
Woodblock
Printer
WalkmanTransistor Convenience
Store
EndoscopeBullet
Train
Hybrid
Car
6
37
43
29
3435
2930
23
8
1314
13
1
15
5
16
56
2
19
4
7
15
8
3
9
26
28
22
27
0
5
10
15
20
25
30
35
40
45
2008-2009 2009-2010 2011 2012 2013 2014
*7 Pillars: Institutions, Human Capital and research, Infrastructure, Market sophistication,
Business sophistication, Knowledge and technology outputs and Creative outputs
However, Japan is falling in the Global Innovation Index(annual ranking of 143 countries’ innovation capabilities and outputs based on 7 main pillars*)
Source: Global Innovation Index
U.S.
Germany
Japan
Israel
Ranking
China
7
In addition, China is closing the gap with Japan and the
U.S. in terms of patent grants
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
No. of Patent Grants by Country
China
USJapan
S. Korea
8
Three events are driving Japanese companies to search
for innovation
Sluggish growth and
regional competition
Abenomics
encourages
companies to look
abroad
Japanese
companies
embrace Open
Innovation to grow
9
‘Abenomics’ aims to jumpstart Japan’s economy after
decades of slow growth
Source: Council on Foreign Relations, Japan Times
• Quantitative
Easing to combat
deflation
• Fiscal expansion
• $210B fiscal
stimulus
• Growth strategy
and structural
reforms
• Revitalizing
Japanese
Innovation
Abenomics aims to bring the
Japanese economy out of its slump `”
Post war economic growth ended in the late ‘80’s after the real estate bubble burst
Two decades of stagnation and deflation followed, prolonged by the 2008 financial crisis and
the 2011 earthquake and tsunami
Monetary Fiscal Structural
3 Arrows in Abenomics
10
• Create a “venture ecosystem”
University reform to launch a national system of innovation
Government ministries restructured to encourage innovation
Technological solutions for social problems
• New transport systems, automatic driving tech, robotic and medical tech, etc.
• Realize an Industrial ‘Robotics Revolution’ - Set-up the “Robotic Revolution Council”
• Government support is encouraging many Japanese companies to
invest in innovation
Innovation is a key ingredient in Japan’s strategy for
revitalization
Source: Business Insider, Council on Foreign Relations, World Bank
11
Global
Competition
Why is Innovation more important than ever for Japan?
Stagnant
Growth
Aging
Population
Pressure
from Foreign
Investors
Accelerated
Changes in
the Market
Diversifying
Customer
Needs
Changing
Rules of the
Game
Large
national debt
13
Open Innovation acknowledges the fact that not all good
ideas are, can, or should be, developed internally
Source: Open Innovation: The Response of Japanese Firms, Prof. Henry Chesbrough, SoftBank website, Recruit website
Open vs. Closed Innovation
Open Innovation
assumes…
• Work with smart people both inside
and outside the company
• External R&D creates value; internal
R&D claims some of that value
• Not necessary to originate research
in order to profit from it
• A good business model is better
than being the first to market
• Best utilization of internal and external
ideas wins
• Profit from others’ use of our IP and
buy others’ IP when it advances our
business model
Closed Innovation
assumes…
• The smartest people already work
for us
• R&D must be developed by us
• First to discovery means first to
market
• First to market means success
• Creators of the most and best ideas
win
• Control IP to prevent competitors
from profiting from our ideas
14
Japanese companies stepping up innovation efforts
internally and externally
Open innovation program
- Seek ideas from outside the organization
- Joint R&D and product development
- Leverage external experts in academics, VCs, businesses, etc.
Accelerator program
Corporate venture capital (CVC)
Cross-border M&A (incl. JV) and alliance
15
Japanese companies are now part of a 2nd wave
seeking innovation in the U.S. and Israel
Asia Pacific Americas
Second wave:
Israel and
Silicon Valley
First wave 90’s:
Silicon Valley
Japanese companies are realizing that they cannot
match the speed of market change by internal technology
development, so they begin to re-invest in Innovation
Clusters – both in the US and in Israel
© 2015. For information, contact Deloitte Tohmatsu Financial Advisory LLC
16
The
Company’s
Bridge
The People’s
Bridge
The
Opportunity’s
Bridge
200 Japanese tech SMEs will be sent to
Silicon Valley over the course of five years
Meetings with investors and designers will
help companies “rebirth” themselves
30 prominent venture capitalists and
entrepreneurs will be sent to Silicon Valley
Stanford and a Japanese university will co-
sponsor a biomedical education program
Networking and business matching events
in both Tokyo and Silicon Valley
Promotion of cross-border business
partnerships, investment, business
restructuring (M&A)
Source: Global Entrepreneurship Training Program HP(http://sido2015.com/#toppage) Toyo Keizai HP(http://toyokeizai.net/articles/-/69247?page=2)
“Together with the people of
Silicon Valley, we would like to
set up a bridge project
between Japan and
Silicon Valley.”
~At Stanford University’s
Public Symposium~(2015/4)
始動 Next Innovator 2015
Next Innovator is a training program, held over three months in
Japan and two weeks in Silicon Valley
(Sponsor: Ministry of Economy, Trade and Industry; Administered by
Deloitte Tohmatsu, Wil)
The Japanese government launched the Silicon Valley and
Japan’s “Bridge” Project to jumpstart innovation
18
Source: Thomson One.
Japanese In-Out M&As reaching an all-time high (1/2)
(JPY billion)
In-out M&As by volume (announced 2005 – 2015YTD)
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Financials Industrials High Technology
Materials Consumer Staples Consumer Products and Services
Media and Entertainment Healthcare Retail
Telecommunications Energy and Power Real Estate
1,715
4,699
2,795
6,842
1,670
3,439
5,517
7,107
4,590
5,778
7,200
(8 months)
19
Japanese In-Out M&As reaching an all-time high (2/2)
In-out M&As by number (announced 2005 – 2015YTD)
0
100
200
300
400
500
600
700
800
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
High Technology Industrials Materials
Financials Consumer Products and Services Media and Entertainment
Consumer Staples Retail Energy and Power
Healthcare Telecommunications Real Estate
344 350 375
434
356
535
639
720
621
655
436
(8 months)
Source: Thomson One.
20
Source: Japan Venture Research
VC funding from businesses increasing over time
(\10 bn)
0
10
20
30
40
50
60
70
80
2008 2009 2010 2011 2012 2013 2014
Financial player Strategic player Others
Amounts of Funds Established for Domestic Venture Investments
Financial Institutions Business Enterprises Independent
22
Source: Companies’ HP: Nikkei: Capital IQ: Globes
Recent activities between Japan and Israel (1/2)
Sector Japanese Co Israeli Co Summary
Technology
N.A.
Softbank seeks Israeli start-up partnerships esp. those related to
smart homes, connected vehicles, digital marketing, and
healthcare. (2015/08)
Sun Corporation agreed to invest in Infinity Augmented Reality and
Bacsoft to gain technologies such as Augmented Reality and M2M
solution. (2015/08)
AbaGada
Dentsu acquired digital performance agency AbaGada for est. $60-
90m to turn it into the hub of internet advertising business in the
Middle East. (2015/04)
SHIFT invested in Online Permissions Technologies, supporting a
foreign company looking to expand in Japan. (2015/07)
Pixela and Altair Semiconductor formed an alliance. Pixela’s
objective is to use Altair’s know-how to develop an IoT applications.
(2015/07)
Patient monitoring supervision platform operator, EarlySense
announced a strategic cooperation agreement with Mitsui Co to
gain foothold in the Japanese market. Mitsui invested $5m in the
company. (2015/04)
IQP partnered with Fujitsu to develop IoT applications. (2015/02)
MA Alliance Others
23
Recent activities between Japan and Israel (2/2)
Objectives Year
Sector Japanese Co Israeli Co Summary
Technology
Rakuten acquired Viber for $900m to expand its user base to help
realize the vision of becoming of the world’s No.1 internet services
company. (2014/02)
Toshiba acquired both OCZ Technology Group, a solid state drive
manufacturer, for $35m and their R&D center in Ramat Hachayal –
making this Toshiba’s first R&D center in Israel. (2013/11)
Yaskawa Electric, a Japanese robotics company, provided $17m to
Argo Medical Technologies (makers of the ReWalk exoskeleton for
spinal injury victims), for R&D in return for exclusive distribution
rights. (2013/09)
Healthcare
A consortium consisting of Takeda Pharma, Johnson & Johnson
and Orbimed opened FutuRx a biotech incubator. (2014/04)
Sony invested in Rainbow Medical to further its R&D efforts in
medical devices business. (2013/05)
Teva and Kowa Co formed a 50-50 JV (Teva-Kowa Pharma) in
2008, and in 2009 acquired majority stake in Taisho Pharma which
led the firm to be a Top 5 generic player in Japan. In July 2011, the
JV acquired Taiyo Pharma, and on September Teva bought the rest
of the JV’s stake for $150m to further expand its presence in Japan.
(2011/09)
MA Alliance Others
Source: Companies’ HP: Nikkei: Capital IQ: Globes
24
Special task force has been set up in Deloitte Japan to bridge Corporate Japan and
Israel
Deloitte Japan is planning to organize an event in Tokyo in beginning of
next year for Israeli companies that are interested to partner with Japanese
companies to capture business opportunities in Japan that stand to
emerge towards the Tokyo 2020 Olympic Games.
Participating companies are expected to pitch their business ideas to
Japanese companies, interested in working with Israeli companies
in the context of the Olympic Games.
Please stay tuned for details!
See you in Tokyo!
Jan 2016 Deloitte event in Japan
25
For more Details
Eli TidharAsia-Pacific Corridor Leader
Strategy consulting partner
Deloitte Israel
03-6070500
Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee (“DTTL”), its network of member firms, and
their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not
provide services to clients. Please see www.deloitte.com/about for a more detailed description of DTTL and its member firms.
© 2015 Brightman Almagor Zohar & Co. Member of Deloitte Touche Tohmatsu Limited.