Network democracy: an intimate discussion with one of the leaders in Japanese networking hardware - Business Builders - Katsu Kubota - Statistical Data Included

Japan, Inc., Sept, 2002 by Henry Scott Stokes

Planex Communications Inc. (PCI) is a dynamic, young company blazing trails in the Internet devices sector. Founded in 1995, it listed on Jasdaq six years later. It is now fighting it out for position and market share in a very competitive sector So far, PCI is holding its own, analysts say, and it has the potential to grow by double digits in the years ahead.

PCI posted net sales of [yen]5.8 billion in 2001, its last full business year, and [yen]809 million in ordinary income, a year-on-year leap of 106%. Net income was [yen]470 million, up 180% from the 2000 level.

PCI is led by Katsu Kubota, a careful, experienced manager who got his start in the fashion industry with Issey Miyake. Regular contributor to J@pan Inc Henry Scott-Stokes met with Kubota and prepared the following profile of the CEO and his exciting, young company.

Katsu Kubota has good hands. It is one of the first things you notice about him when you meet him. When he picks up one of his devices and holds it, he is very natural. It is a useful attribute in a salesman.

He has always been good with his hands. When he was a very young man, Kubota went to work with one of the most famous fashion designers in the world--Issey Miyake.

He was 20 and he dreamed of being a world-class name.

If you look up the website of his company--www.planex.co.jp--there is a photograph of Kubota-san that gives you a clue what he looked like in his Issey Miyake International years. He looks not a day older than 23. Today, he is a mature man of 40. The passage of time has given his face a certain strength.

"What led you to go to work there?" I asked him.

"The business world was so conservative in those days," he responded. "My father worked for Kanebo all his life. I wanted to do something different. I had a great desire to go to work--not go to a university at all, but start work straight out of high school. I settled on Issey Miyake. At that time Issey had sales of [yen]2 billion, and they were in the red."

"What did you actually do there?" I inquired.

"I made clothes. I was on the production side," he said. Kubota-san travelled to Paris for the collections. It was a great life. Those were the booming 1980s. Issey Miyake sales shot up to [yen]15 billion a year by the time Kubota-san left fashion in search of pastures of his own. The experience of working with Issey Miyake left a lasting impression on Kubota-san.

"I got used to thinking ahead," he said. "The autumn collection, then the spring collection, always half a year ahead."

Today Kubota is constantly pondering what will come next in network devices. "Over the next half year, so much will change," he said during a chat in his office in downtown Tokyo, not far from Akihabara.

The most basic thing of all about a company is its name.

"How did you decide that name?" I ventured to ask.

"I started off with the name "Planet Japan Inc,"' kubota recalls. "The problem with that was that it sounded like a subsidiary of another company with that 'Japan' in there. So 'Japan' had to go," he said. In came "Communications" instead.

"But then I made a second change, it's true," he said, anticipating my next question.

"This arose when we opened shop in America. We discovered that someone else owned the name 'Planet.' It would cost us [yen]300 million to buy the name. So we changed it to Planex."

Kubota is a man who acts quickly when money is at stake. He is flexible as they come when the situation demands it. He has come up with a tidy expression for what he wants his company to be known as. "The Internet device company" I am reminded of that splendid slogan coined by Fuji Xerox. "The document company" Every time I see that somewhere there is a click in my head. "Right," I say to myself. "The folks over at Fuji Xerox know how to put three words together."

Kubota-san's company is basically a marketing outfit. "The Internet device company," then, makes a lot of sense as a slogan. But it's easy to see that this is a business which can't survive on slogans alone, What's needed is an ear close to the street, an almost suicidal sense of bravery and a willingness to duke it out with competitors. Kubota comes across as just such a person. Every five minutes or so, he's taking another call on his cell-phone -- buy this, sell that. His senior sales guys obviously have a direct line to their boss -- both literally and subconsciously. He clearly wants to know what is going on; he's the "networking hub" for the company. Of course, this makes investors nervous -- one-man company, they think -- but Kubota is already a step ahead of the competition.

"Last year was a tough one," he writes on the company's website. "We had to contend with an influx of new entrants from other industries, and resulting severe price competition." That's why PCI made lots more money in the first half of 2001 than it did in the second half -- and is now fighting to increase market share.

But Kubota and PCI already have some key components in place. For a start, Kubota has set up his international operation our of Taiwan, allowing him to both buy from and sell to the major sources there. Taiwan also has cheaper overhead and a pool of talented bilingual workers; it makes a lot of since for Kubota and company to avoid cost-ridden Japan wherever possible. This operation is moving quickly into markets around the world, and within 18 months, PCI will look a lot less like a Japanese company and more like the multinational that Kubota wants it to be.