Survivors: two approaches to survival in Japan's unkind economy: meet the fighter and the surfer - H.I.S. president Hideo Sawada and Goodwill Group CEO Masahiro Origuchi

Japan, Inc., Dec, 2002 by Sumie Kawakami

ANYBODY CAN MAKE A buck in good times. But making money now is no easy feat, especially if you've had to maneuver your business through the bleak conditions of the 1990s. It was Albert Camus who said, "What doesn't kill me makes me stronger," and two businessmen--H.I.S. president Hideo Sawada and Goodwill Group CEO Masahiro Origuchi--seem to have taken the French writer's words to heart.

Of course, both Sawada, 51, who is also chairman of Skymark Airlines, and Origuchi, 41, downplay the idea that they have "made it back alive" from the wreckage of the 1990s. Sawada, for one, points out that H.I.S., parent company of No.1 Travel, one of the largest travel agencies in Japan, has never gone in the red in its 22 years of business. Likewise, the people at Goodwill Group, Origuchi's outsourcing firm specializing in routine temp work and home nursing care for the aged, claim that the company had only a couple of bad years as it launched a new business in the new market of home nursing.

But let's face it: Both companies suffered, and both are now doing well in an unfriendly economy. How did they do it? For one, they did what many companies have been unable to do: They tapped domestic demand.

The two shacho, 10 years apart in age, started their entrepreneurial careers in different socioeconomic settings. Having founded H.I.S. in 1980, Sawada calls his business an "old venture." When he started out, there was virtually no venture capital, no "angles." Waves of deregulation were yet to come, and the Japanese government and banks had little incentive to support venture firms. Origuchi, on the other hand, started his first business--discos like Juliana's and Velfarre, in the heart of Roppongi--in the early 90s. It took Sawada 15 years to go public; it took Origuchi only 2.

What the two have in common, however, is their readiness to change their ways when necessary, their instinct for what consumers want, and their determination to succeed.

The Fighter

Sawada is known as an advocate of deregulation. Be it market domination by established giants, bureaucratic control over industry or other structural impediments, Sawada has made a career out of fighting obstacles that get in his way. When he entered the travel industry in 1980, it was dominated by big name agencies such as Japan Travel Bureau (JTB) and Kinki Nippon Tourist (KNT). Nobody expected Sawada's tiny startup to one day compete with these giants. The same was true when he started Skymark Airlines in 1998; skeptics asked why on earth Sawada would even think about challenging Japan Airlines and All Nippon Airways.

Sawada is used to being challenged by companies with more muscle. When H.I.S. placed a large buy order for tickets on one particular airline in its early years, other travel agencies pressured the airline not to sell to H.I.S. Wholesalers sometimes refused to give him choice tickets during peak seasons. Skymark's airplanes, until recently, had been forced to take off or land at the gates farthest from airport entrances.

Sawada has also steered his companies through the collapse of the bubble economy in the early 90s, the impact of the Gulf War, the end of the IT bubble at the turn of the century and the 9/11 attacks in the US last year.

But Sawada doesn't seem like a fighter in person. He smiles and says that fighting "wasn't my intention. In retrospect, though, I did fight because it was necessary for our survival, while those that didn't have disappeared. More importantly, I acted on what I believed: Prices (of airline tickets) were way too high in Japan by any international standard and the (overseas traveling) market was going to be big."

When he was in his early 20s, Sawada went to what was then West Germany to study. During his four and a-half years in university, he organized sightseeing tours for Japanese travelers. That was a time when $1 was worth [yen] 360, but he made enough to pay for his education and to travel through Europe, the Middle East, Asia, Africa and India.

Upon returning to Japan, he thought something was definitely wrong with the travel market. He recalled: "When I came back, airline tickets were all priced the same, whether you flew with JAL or another carrier, whether you bought your ticket from JTB or KNT, or whether you made reservations early or late. And they were extremely expensive. What amazed me more was the fact that the Japanese people didn't think it was strange." The young Sawada pondered why a Japanese person would have to pay double the price a European would pay for a ticket. "I was sure I was right to think this way and other consumers would agree with me," he says.

Sawada also saw the potential of the overseas travel market. When he returned to Japan in the 1970s, he recalls, "Only 3 million Japanese traveled abroad annually. That was only 3 percent of the population, compared with 10 to 15 percent in Europe. I was sure that the number would go up to 10 percent --about 10 million soon."

This conviction pushed him to start a discount airline ticket office in a dilapidated corner of West Shinjuku in 1980. Word of mouth spread slowly and his office gradually became a favorite place for backpackers to hang around. Some of them joined the company, while others became the company's core clients. Business increased. Sawada admits the bubble economy during the 80s worked in his favor, but even after the collapse of the bubble, the company's sales continued to rise, reaching over [yen] 23.5 billion in 1990 and [yen] 51.2 billion in 1993.