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japan’s emerging toy prince

Japanese Entrepreneur Nakao Sanguine About Expansion Plans In Asean

Mr. Shinya Nakao, an entrepreneur from Kobe, Japan, is upbeat about business prospects in Asean in the immediate term of 1 year onwards. Although his customer base across his business is made up primarily of Japanese businesses and consumers in the country, the goods and services in which his companies source the products from come from the US, Europe and various countries in Asean including Thailand, Vietnam and Singapore.
As CEO of Edute Co. Ltd., Nakao oversees this edutainment business that provides pre-school education toys, materials and literature to the Japanese market. Although Edute’s customers are newborn babies to toddlers of around 3 years old, their paying customers are the parents and grandparents of the babies and toddlers. Established in 2003, the company has grown healthily over the last 15 years and is now on the path to further diversify its range of product offerings to its loyal customer base in Japan.
Edute has a long-standing working partnership with two toy companies in Thailand: I’M Toy and Voila. Edute is now the exclusive distributor of I’M Toy for the Japanese market. In the interview, Nakao was proud to point out that Edute is currently I’M Toy highest grossing distributor in the world. Each year, around 50 types of I’M Toy products are sold in the Japanese market. Some of the toy models are jointly designed and developed by Edute and I’M Toy for the Japanese market. Every year for both I’M Toy and Voila, the product mix differs and Nakao’s staff is kept busy coordinating the designs for the next season’s sales and shipments to Japan. From sales starting in the tens of thousands (US dollars), the business has grown to close to US$2 million from just these two Thai partnerships alone.
In Vietnam, Edute has a long-term OEM working relationship with Nam Hoa since 2008. In this partnership, Edute provides the toy designs and product specifications to Nam Hoa, while Nam Hoa manufactures these toys exclusively for Edute for the Japanese market. These products are marketed under the brand name “Edute Toys” in Japan.
The story of how Nakao came to work with Nam Hoa is an interesting one. As an active member in the Junior Chamber Japan (Kobe Chapter) in the early 2000s, Nakao was made a Development Officer in 2004 in the Asia Pacific Development Council (APDC). In this role, he was a representative of Junior Chamber for the Asia region to help develop a Junior Chamber Chapter in Vietnam. As part of his responsibilities in this position, Nakao traveled to various cities in Vietnam numerous times that year and subsequent years. It was during his time of travel into Vietnam that he actively sourced for potential partners to work with for Edute.
Finally in 2008 after many trips on behalf of the APDC to Vietnam (where Nakao was then the APDC Treasurer) and discussions with the management of Nam Hoa (including meetings held in the sidelines of the Spielwarenmesse Toy Exhibition in Germany), Edute started a long term working relationship with Nam Hoa based out of Ho Chi Minh City. In the 10 years of partnership between Edute and Nam Hoa, sales of the “Edute Toys” OEM products from Nam Hoa grew from US$20,000 to over US$600,000 annually.
When it comes to business partnerships, Nakao’s mindset is one of working towards a long-term and mutual win-win outcome. Even if sales demand may be down and profit margins are under pressure, Nakao would not be pressured to conduct short-term wins but sacrifice long-term relationship building. Instead Nakao takes a qualitative approach to grow the business with long term capacity building, even if it means absorbing losses over an extended period of time for future sustainability of the business.
One example of this happening is with the Emergenetics business which started in 2008.
Fresh from the great financial recession in the 2007 and 2008 period, the country representative contract was signed between Edute and Emergenetics International (Asia Pacific) based out of Singapore. The parent company’s headquarters operate out of Denver, Colorado, USA.
Emergenetics is a human capital consulting company that provides solutions to develop human capital through their assessment tools, training methodologies, and learning tools. The company’s solutions enable businesses large and small to hire smarter, develop talent and create a cohesive, effective, and successful workplace. Edute became the sole distributor and Japan representative of Emergenetics in 2008.
In the years from 2008 to 2012 in which Nakao was the CEO with training partner Yasuhiko Nakamura, the business initially had several obstacles to overcome including the difficulty of getting the acceptance from the Japanese market. Nakao persisted nevertheless. Fast forward to 2018, Nakao has since handed the reins of the business to Mr Masanori Kagawa in 2015. The business has now taken off with close to 450 Associates in Japan. The mainstay Emergenetics certification classes are now held every month in Japan, up from only one to two per year in 2008 to 2009. The Emergenetics profiles sold per year now number in the five digits, up from a few hundred in 2008.
In the immediate future and onwards, Nakao is looking at further expanding his business partnership in Asean to broaden the product and service offerings of his businesses to the Japanese market. For example, Edute is now working with another Thai Company (Pasawee Co. Ltd.) to customise their EVA materials to be manufactured into toy materials. While Pasawee is trying to expand into the toy business, Edute has the market expertise and distribution reach in the Japanese market. Edute is currently conducting its due diligence and test marketing. If the initial product offerings from Pasawee are well received by the Japanese market, Edute plans to more aggressively market their products in the country. For now, Nakao will continue to remain sanguine about his outlook of his partnership with Asean companies, and will continue to build long lasting business relationships with his key partners here in Asean.

Shinya Nakao, CEO of Edute Co. Ltd., Director of Emergenetics International (Japan), and Hyogo Block Cou–ncil President, Junior Chamber International, Japan interviewed by Mr. Josh Teo.