The hidden yet indispensable strength behind Japan’s industrial might

Over the past several decades, the solid reputation of Japanese manufacturing has been cemented by the major companies that represent the nation worldwide. Household names from the electronics and automotives industries, such as Toyota, Honda, Sony and Panasonic, have been the ambassadors of the ‘Made in Japan’ brand and Japanese quality internationally and will continue to be so.

But these companies represent just the tip of the iceberg. The true strength of Japanese industrial might lies in the nation’s SMEs, which account for more than 97 percent of all companies, 70% of total employment, and 50% of all added-value manufacturing in Japan.

Many of these SMEs are B2B companies that supply parts, components and machinery to larger corporations like those mentioned above, as well as to clients all over the world. Largely unknown to the general public, they are often called the ‘hidden champions’ and their importance will remain quietly understated.

These so-called hidden champions of Japanese industry generally share a few things in common: they are, in most cases, private family-run firms with deep roots in regional communities with 150 to 300 employees, whose manufacturing and technological prowess have led many to hold leading market shares in niche industries.

Many already export or have factories abroad however the shrinking domestic market in Japan has prompted the call for greater international expansion. While they face stiff competition from regional manufacturing powerhouses that have emerged in recent decades, what sets Japan’s hidden champions apart is their adherence to the tenets of monozukuri (‘the art of making things’), the Japanese manufacturing philosophy that focuses on craftsmanship, attention to detail, and high quality over low cost.

“We once had one