How to Run Small Businesses in Japan: Kaizen in Japanese Companies

Shibuya crossing and 109 building lighted up by many neon signs at night


Small and medium enterprises are lower in productivity?

In Japan, most of the small and medium enterprises (SME) like us may disappear in the near future. The SME Basic Act defines SME are companies with a capital of less than 300 million JPY or with the number of employees less than 300. According to the definition, 99.7% of the companies in Japan are categorized in SME. Soon after the change of government last year, the current prime minister organized an advisory board and has implemented economic policies based on the advice of the board. The board members always treat SME like an enemy. They claim SME are the main cause of low productivity, though I strongly object to it.

The cause and effect are reversed

They always bring up a gap in wages in order to claim the low productivity of SME. I admit there’s a wage gap by company size, but I think the cause and effect are reversed in their argument. Large companies in a better position in competition earn more money and pay more salaries to their employees. Their better salaries make them look better in productivity. I’ve worked for large companies before and found SME are more desperate to increase productivity because it’s a more serious life-or-death issue for SME.

The machine to upholster round seats in our furniture factory.

Kaizen, innate needs of craftspeople

The same as many other Japanese makers, CondeHouse has an improvement proposal scheme. We submit improvement proposals from time to time, and the annual total number of proposals reaches to more than 1,000. For example, the white holders for electric drills in the above image are hair dryer holders sold at one-dollar stores. The woman in charge of upholstery came up with this idea during shopping. She always placed electric drills on the platform on her left side. The improvement has reduced time and labor of switching hands. Indeed, some incentives are offered for good proposals, but such incentives are not a big driver. This case shown in the above image tells us kaizen is something more primitive or voluntary for them.

Kaizen, continuous improvement

I know the above case is not so outstanding, but you can see how serious we are about improving productivity. Our craftspeople continuously make such efforts to reduce costs without reducing quality. We believe that makes what we are, but SME including us are flickering in the wind of unjust criticism by the government advisory board.

Photo Credit:

Shungo Ijima

He is travelling around the world. His passion is to explain Japan to the world, from the unique viewpoint accumulated through his career: overseas posting, MBA holder, former official of the Ministry of Finance.