Big in Japan conference highlights Israel-Japan tech cooperation

Big in Japan 2021 Conference Photo: Hila Levy

The conference stressed the potential for multilateral cooperation between Israel and Japan, especially in high-tech.

"Globes" report last week that SoftBank has appointed former Mossad chief Yossi Cohen to head its Tel Aviv Office came several days after the Big in Japan conference was held in Tel Aviv. The report reflected the accuracy of the conference's main message that Japan is on the radar of Israeli investors while Israel is on the radar of Japanese investors.

The Big in Japan conference was organized by the Pearl Cohen law firm in cooperation with the Israel Innovation Labs of Sompo, Japan's giant and second largest insurance company, and Samurai Incubate, a Japanese venture capital fund that invests in early stage companies and one of Japan's most active venture capital investors in this market in Israel.

The conference, which aims to bring together Israeli and Japanese entrepreneurs and businesspeople, was held in the shadow of the Covid-19 pandemic, which still makes it hard for businesspeople to fly from country to country. However, the conference participants, and especially the guests, were able to look beyond the coronavirus crisis and describe why there is potential for multilateral cooperation between Israel and Japan, especially in high-tech, and how the way in which Israelis work with the Japanese can be simplified in order to produce results for both sides.

The first panel, which was moderated by Pearl Cohen Senior Partner Adv. Guy Lachmann, touched on the diplomatic relations between Israel and Japan, as both of the participants are diplomats: Gilad Cohen, Israel's Ambassador designate to Japan who takes up his post in the fall and Kazuhiko Nakamura, the Consul General in the Japanese Embassy in Israel. "The relations between Israel and Japan are very solid at the moment but there is a good infrastructure for broadening it," said Nakamura. "Between August 2020 and June 2021, Japanese investors invested $2 billion in 42 Israeli high-tech companies. Despite the lower total investment than in previous years because of coronavirus, the number of investments that were made was the second largest in the history of investments by Japan in Israeli high-tech and that is an important statistic. Japan has a much bigger presence in Israel than in the past."

Figures that were presented during the conference showed that out of the $2 billion, one third was invested in fintech companies ($665 million) and one third in artificial intelligence ($686 million). "In addition to fintech, Japanese investors are beginning to take an interest in Israeli agro-tech and food-tech companies," stressed Nakamura.

Cohen said that he would focus mainly on strengthening economic cooperation between the countries. "I am going to Japan in order to serve businesspeople," he told the conference participants. "My aim is to increase Japanese investments in Israel and bring as many Japanese investors to Israel as possible and as many Israelis as possible to come and work in Japan." Nakamura reinforced Cohen's words and remarked that, "It is hard to miss the size of the Japanese market. In Japan there are many giant corporations, with global activities that very much want to absorb Israeli technological innovations. There is a lot of room for cooperation between Japanese companies and Israeli companies.

The panel moderator Adv. Guy Lachmann, a Partner in the High-Tech Group at the Pearl Cohen law firm added, "Despite the lack of being able to fly and conduct face to face meetings, the major interest by large Japanese companies in Israel has not been reduced and as our conference shows, the seriousness and determination that there is among them is continuing with full force to work in Israel and to seek opportunities here."

The statistics and the more technological information were provided at the conference by the Head of Sompo Digital Lab in Israel Yinon Dolev, who outlined what are the high tech sectors that most interested Japanese investors and what are the technological changes that are taking place in Japan and creating demand for technological innovation, of the kind being created in Israel. Sompo, which is as already mentioned the second largest Japanese insurance giant, has tripled its activities in other sectors such as smart transportation, information security, digital health, and more. "Coronavirus has absolutely no negative influence on our activities, and only stresses the growing interest of Japanese industry in Israeli innovation," he said and added that incidentally the innovation center that he heads is expanding and hiring employees.

Dolev gave as a first example the entry of digitalization into the health system in Japan: 85% of hospitals in Japan are using Electrical Medical Records EMRs and regulation in Japan is very supportive of the transition to digitalization and has therefore created a regulatory framework for using new technologies for the medical world. In addition, overall expenditure on healthcare in Japan is 11% of GDP, compared with 17% in the United States. According to Dolev, the remote healthcare market in Japan last year was worth $1.1 billion and is expected to be worth $6.7 billion in 2025 - a figure that reflects the major potential in the market, with this potential backed by the Japanese government's supportive regulatory framework.

The second sector that could yield cooperation between Israel and Japan is fintech, or more specifically digital banking. In Japan, 66% of the population uses mobile banking solutions and online banking. Because one third of the population of Japan is made up of the elderly, who are less inclined to adopt remote banking solutions, in practice all the other Japanese are using digital banking and because Israel has proven its capabilities in the fintech industry, there is much room for collaboration between Israelis and the Japanese in this sector.

The third sector and less recognized, Dolev continued, is smart cities. "We are talking about a sector that is unique to Japan compared to other countries," explained Dolev. "And the main reason is that regulation is very supportive and promotes the establishment of smart cities." If in 2020, the size of the market for smart city platforms was $7 billion, in 2026 it is expected to have climbed to almost $12 billion.

According to Dolev, "The Japanese government is operating and financing a program called "Super City," which aims to create a more efficient and better social environment. In order for a smart city in Japan to be awarded the title of "Super City," it must adopt the five following criteria: remote education; energy, water and waste treatment; brief and efficient administrative procedures; reduced use of cash; autonomous driving; and as already said remote medicine. An additional aspect is cooperation by the city's residents and their positive feedback in adopting the various criteria. Last year, smart city infrastructures were set up in nine cities in Japan, and the forecast is that there will be 335 such smart cities by 2030.

Dolev stressed that this initiative by the Japanese government is based on big data. In other words, the information that is coordinated and managed in the smart city will be the source of its success, and so there is in the initiative a lot of potential for cooperation with Israeli companies that specialize in big data management. "There is in Japan must less competition than in the US and it is much more business friendly," concludes Dolev.

The conference ended with a panel on investors and startups moderated by Adv. Shirley Binder, who manages the Israeli branch of the Samurai Incubate fund. Samurai launched some time ago its sixth fund, which is aimed at investment in early stage software companies; the fund focuses on the fields of enterprise software and also provides, in addition to the investment, close support during growth, and assistance in entering the Japanese market. Participating in the panel was also: Noa Asher, CEO of the Innovation Laboratory Israel of NTT, Japan's largest telecommunications company; Eitan Naor, Managing Partner and Cofounder of IN Venture, (the investment arm of Sumitomo); and Yonatan Hatzor, CEO of Israeli startup Parametrix, an insurtech company, which recently began a huge business collaboration with Sompo in Japan.

Most of the panel discussion dealt with the various aspects of cooperation and investments with Japanese organizations - investors and companies, and shone a spotlight on the challenges, the successes and the accepted practices from the experiences of the participants. Among other things, Binder said that over the past year there had begun a significant rise in the number of investments from Japan in Israeli startups and she also mentioned that the investments made by Samurai over the past year were done "remotely," and only now were local staff getting to meet face to face with the entrepreneurs in whom they invested.

Towards the end of the discussion, the panel members spoke about their personal experiences in working with Japan and shared with the audience that the biggest lesson that they had learned as part of their work with the Japanese was to listen to the other side and to hold and to conduct an open dialogue. Noa Asher added that her experiences had taught her that "You don't always need to win," and that there is great value in creating business harmony, understanding, and cooperation based on realizing the needs of both sides.

Published by Globes, Israel business news - en.globes.co.il - on July 15, 2021

© Copyright of Globes Publisher Itonut (1983) Ltd. 2021

Big in Japan 2021 Conference Photo: Hila Levy
Big in Japan 2021 Conference Photo: Hila Levy
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