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  ICBTT2004 Technology & Society Division, JSME

Mutual cooperation between Small and Medium-sized Enterprises in South Africa and "Japanese Machikoujoo", specialized High Tech Small and Medium-sized factories in the area

(This survey project is supported by the Tokyo International Foundation)

Hajime SHIRAI, Eisuke SHIMADA and Mitsuo NAKAYAMA

South Africa is considered as the very modern state in Africa. However, due to apartheid policy for years, black people have had little opportunity to get skill training and up-skill. Therefore, the gap in wages and quality of life between white and black people has widened to more than ten times. It has become social issue; need to be improved urgently from humanitarian and economic standpoint. Our government aim to transfer Japanese industrial technology and technical skill to developing countries, develop human resources for poverty reduction and foster Small and Medium-sized Enterprises. In the meantime, we try to promote GLOBALIZATION of Japanese Small and Medium-sized Enterprises in the area.
In considering of demands of developing countries, we are going to report the results of field study in this country in the 1st International Conference on Business and Technology Transfer in Kyoto University on October 2002.

Fig. 1 Map of South Africa Republic

Key Words: Offering workplace and job to developing countries for poverty reduction

1. Introduction
Our NPO's work field is mainly around Shinagawa, Ota area, well known for "back-street factories" with extremely high technology lined close together. They are exceptional area even worldwide and they have been supporting expansion of Japanese industry to the present.
Japanese government has been conducted some human resource development projects, mainly for economic development and constructed facilities, such as elementary school or vocational training center. However, the government hasn't made proper arrangements for offering jobs to people who had finished those schools. Therefore, in developing countries with insufficient work place, people still have little opportunity to earn money by themselves for poverty reduction. Moreover, many cases have resulted in being no good for domestic industrial development because the fostered engineers often work away. Also past ODA projects by Japanese major companies haven't handled "fostering Small and Medium-sized Enterprises in developing countries", required a lot of attention and they couldn't offer enough "workplaces", most necessary for developing countries.

2.Project Target
2. 1 Support for Small and Medium-sized Enterprises, such as car parts manufacturers
To solve past system issues above, demand for preliminary survey by community-based NPO, trying to transfer industrial techniques is growing among concerned parties. Additionally, Japanese government is inclined to back up implementation of strengthening measure for small and medium-sized car parts manufactures, meeting demand of South African government. Therefore, Japanese government needs concrete proposal for developing small and medium-sized enterprises, based on the survey of technical ability, level, management performance and engineering training center's operation.
2. 2 Field survey report to local factories for their development and international exchange
After field study, we will conduct activities below.

  1. Field study report
  2. Preparation of visiting plan to South Africa for local Small and Medium-sized Enterprises.
  3. Preparation of inviting plan for administration executive and engineers from South Africa.

Considering demands of Japanese government, we are going to report the results of field study to local companies and promote their globalization and future-development. Our final goal is finding a way to make good use of high technologies in local companies for developing countries and contributing to development of local companies by globalization.

Fig.2 Assembling car in TOYOTA S.A

To accomplish those goals, we will continue providing mutual support actions after technical report session.
Specifically, we will invite young executives of Small and Medium-sized Enterprises in South Africa to give on the job training at local factories, while Japanese operators of local factories will be sent to South Africa to find a trigger for the development of technology and products meeting global demand. As you know, Japanese GDP is estimated about 500 billion and manufacturing industries makes up 25 %, 123 billions. Then Small and Medium-sized Enterprises have been served as major supporters of the industry. This project aims to support developing countries with required technologies of Japanese local companies and help Japanese local factories, serving as basis of Japanese industry, study in the world market to develop themselves.

Fig.3 Province map of South African Republic

3. Description of the project
3.1 Implementation schedule and process
  1. Field study : 11 to 27 May, in 2002, 16 days
    This project includes field survey at training institution for engineers and business promotion agent mentioned below.
    1. South African Technicon:
      Higher job training institution in South Africa. According to introduction from South African embassy in Japan, we are going to visit 2 institutions of 15, one in Kwazulu-Natal and another in capital Pretoria
    2. Technical college:
      Technical education institution, having credit transfer system with technicon 14 institutions are located in South Africa, mainly giving professional education for carrier minded students
    3. Durban factory of TOYOTA South Africa:
      Japanese vehicle assembly factory in Durban, state capital of main objective area, Kwazulu-Natal. We received introduction to vendor of supplying parts to this factory and to conduct field survey.
    4. Japanese Embassy and JICA South Africa office:
      JICA South Africa office has been implemented ODA projects of Japanese government in South Africa. Since we have been conducted surveys on ODA projects in cooperation with JICA offices in global major cities, we are going to ask them for related information service in this project again.
    5. Business promotion agent in Durban and their introduced companies

    Poverty reduction in black community
    The survey on training institution was conducted in cooperation with JICA Africa, Middle East/Europe, Economic Department of South African Embassy in Japan, and on the site, with JICA South Africa branch office. Our final goal is proposing "technical cooperation project, involving marketing and operational support for Small and Medium-sized Enterprises" to foster medium and small industrial parts manufacturers, mainly car parts and achieve economic independence of black community, based on the policy of South African government.

    Total South Africa76.

    Fig.4 Population rate(P/R) and Unemployment rate(U/R) by race(in 1999) (%) Estimated total population in South Africa: 42,741,000 Source: Statistics South Africa & MS Encarta 98

  2. Debrief Session:
    1. General session at Kyoto University, in the 1st International Conference on Business and Technology Transfer.
      • Status of black people community and actual conditions of human resource development in South Africa
    2. Community session in our work field "Sumida, Shinagawa, and Ota area"
      • Present productivity, technical level of Small and Medium-sized Enterprises in South Africa and human resource development.
      • Possibility of opening workshop for international exchange between community companies and South African.

    "Inter-visitation and Cross-fertilization"
    In the debrief session, we will try to make the practical proposal on inter-visitation and cross-fertilization, next step in this project. Exchanging with China, Asian countries and European countries have reached the most interesting part and economic societies have been exchanging deeply. However, far African countries are turning their eyes to Japanese medium and small countries and expecting our support. As South African Republic cannot become a true independent country without escape from poverty, we hope the debrief session of this project will be a foundation for "Liberation of developing countries in Africa".
3.2 Project scale
On May of this year, we sent 2 people for preliminary study. Also 1and 2 peoples from cooperative institutions joined them on the site.

This survey was to be conducted as a first step in our 5-year plan. Starting with field survey and debrief session in this year, our 5-year plan by 2007 is planned as follows.

Second year:
Sending staff to South Africa for preparation of engineer foster plans and visit with community companies concerned.
Third year:
Inspection visit with community companies concerned.
Fourth year:
Inviting individuals related to South African micro enterprises to Japan. (inspection visit and training at local companies)
Fifth year:
Sending Japanese specialists to technical training institution in South Africa.
3.3 Organization

  1. Member of the secretariat :
    2 member of the secretariat, handling overall planning, negotiation with authorities concerned in objective country, JICA, companies, preparation of reports and lecturer. (Lecturer: Mr. Eisuke SHIMADA)
  2. Member of survey mission:
    2 members of research group, conducting preliminary research in Japan, field research on the site, preparation of reports and presentation to authorities concerned.
    1. Head of mission:
      Mr. Hajime SHIRAI (in charge of machinery), Handling operation and maintenance for industrial and construction machinery, technical guidance expert study and overall arrangements.
    2. Vice head of mission:
      Mr. Mitsuo NAKAYAMA (in charge of factory operation and management) Field study and preparation of proposals as factory operation, machinery design and production expert.
  3. Cooperation and cooperative institutions:
    1. South African Embassy in Japan:
      Information service on authorities concerned in South Africa and presentation on national policy or demand of South African government.
    2. Japan International Cooperation Agency (JICA) and JETRO in South Africa:
      Presentation on national policy of Japanese government for ODA projects in South Africa, arrangements for visiting their local office, information service on visiting company or institutions in South Africa.
    3. Infrastructure Development Institute-Japan (IDI) and Japan Construction Mechanization Association(JCMA):
      Review and implementation of full survey based on preliminary survey report.

4. Findings from the investigation
4.1 Requests from local agencies and institutions

  1. Embassy of Japan
    Embassy of Japan expects South African Government to suggest concrete project plans to improve their technological capability in automobiles industry. The Government has already presented some plans but they seem not be well studied enough to convince the Embassy. For Technology Transfer, people exchange is essential, so the Embassy is very interested in the new concept of technical assistance through international exchange with small factories in Tokyo.
  2. JETRO
    JETRO has already sent Japanese experts in automobiles industry to South Africa and provided some advice. Present situation of South African automobiles industry is quite different from Japanese one, so it seems hard to provide them quite practical advice. But JETRO hopes to help sending field experts in automobiles industry and people exchange.
  3. Technikon Pretoria
    Technikon Pretoria has a desire to promote a project for strengthening international competitiveness in automobiles industry.

    Fig.5 Mr. D Louwrens of Technikon Pretoria is introducing activities to support Micro, Small and Medium-sized Enterprises in Pretoria.

    For that, Automotive Industry Development Center was established and has been operated since 1997. The University recognized the importance of human resources development program, so it expects Japan to provide Know How and instructions in the field. Furthermore, since Management and Marketing are keys for strengthening international competitiveness, the University will put more emphasize on those fields.
  4. Soshangume College in Pretoria
    Soshangume College has promoted a project to encourage Black people and start new businesses. College has already set up incubation facility for micro enterprises run by Black people and 30 enterprises have already started their businesses at the facility. And fostering facility manager is required.

    Fig.6 An entrepreneur in incubation facility in Pretoria conducted by this college

  5. DUMAC (Durban Manufacturing Advisory Center)
    DUMAC has a lot of requests, but they have no idea where to start. They have had a meeting with people from JICA and talked about establishment of Manufacturing Technology Center, Computer Network, e-learning System. However, they are divided over details and still discuss on it.
  6. Technicon Natal
    Technicon hopes to foster micro enterprises in the area. And professors have organized NGO to help housewives and Black people to start businesses.
  7. Thekwini College in Durban
    6 Colleges in the region become combined into this College. College hosts wide range of workshops on human resources development for Hotel management, hair dressing skills, metal processing, and sewing machine maintenance. Exchange with Japanese Universities and Colleges are desired.
  8. Small and medium-sized enterprises in Durban
    According to business managers, regular training at "Basic Educational Facility", "Advanced Machine Processing Technology Center" and "Management and Quality Control" training should be held and accordingly more facilities for those trainings will be required.
  9. Mining machinery agent in Johannesburg and Africa Academy (Training Center)
    South African Republic has a lot of mines. In addition to famous gold mines, diamond and coral mines are there. At those mines, a lot of construction machinery is operating and skilled machine operator and maintenance staffs are required. Consequently, demand for training institutions will be higher.

Keys found from the investigation at the institutions and agencies above are as follow. And we will explain more for each in the lecture.

4.2 Keywords to understand South African Republic

  1. Long term "Apartheid policy "
  2. South African Republic is considered to be developed. However, "Black people seem to be left unevolved"
  3. Long term national isolation:"Stagnant Technology"(National isolation in Japan , Madagascar, and Apartheid in South African Republic have experienced)
  4. South African Republic is" half a world away from Japan" (same latitude in north and south)
  5. At first subcontractors of Toyota SA, "Toyota Manufacturing System" has been introduced indirectly.
  6. Black people run enterprises with "seat-of- the pants":Brick and Ceramic industry, Chair covering shop and carved souvenir maker has no design drawing
  7. "Globalization" policy and "Strengthening International competitiveness in the industry"
  8. Highest "crime rate" in the world
  9. Longing for beauty("Straight permanent on curly hair" is popular among Black women)
  10. "European meister" with 30 years old method has been giving technological assistance
  11. Some companies have no overseas experience and became " Subcontractor of Toyota SA" by in-house effort
  12. Some companies have made several visits to Japan to learn "Japanese car production method"
  13. "Black people in the isolated facility had no clothes 10 years ago. But now they are all dressed."(Pretoria University Professor)

5. Proposals
Based on acquired information, we found necessary conditions for Technology Transfer to South Africa as follows.
5.1 Technology Transfer should be carried out in their everyday language
In the investigation, we hired a car from rental car agent JICA usually use. We also hired 3 drivers and 2 Black drivers couldn't speak English fluently though it is their public language. Another Indian driver traveled with us to Kwazulu-Natal had English proficiency. He said, "Everyone really want to get a job at Toyota SA, but it is quite difficult to pass their job interview." Actually, the company requires an applicant to have high reading and writing skills in English in addition to conversation skill. So it is not good to equate Black people working at Toyota SA with other Black people and it wouldn't be a target of this Technology Transfer project.
Technology Transfer in everyday language of Black people seems to be most effective and English should be used as an intermediate. If we wait for their advance in English proficiency, it will take long time to achieve our original goal. Considering the fact even European countries such as Sweden, Germany, France and Switzerland have a few English speakers at construction sites, appropriate perception of the present "language environment" is most important.
It is true that many of technical terms are English, but most technology has been transferred through observing actual operation of the trainer engineer. Therefore, I believe that "implicit communication" is superior to "communication in words" and technology should be transferred through observing experienced engineer's operation. In other words, it is important for technology transfer to absorb knowledge, and then practice until you can.

Fig.7 Japanese Abacus, which requires to practical training much more than calculator to use it.

Key to proceed on this project
  1. "Cross-fertilization of small and medium-sized enterprises in Tokyo and South Africa"
  2. "Radical reduction of factories" in Tokyo
  3. "Interactive international exchange"
  4. Assistance to "Development for improving living standard" beyond ready-made idea of development is needed
  5. "What is development or real affluence for us?"
  6. What is "Quality Management"
  7. "Research and Academic value" of Technology Transfer

5.2 Support measures through international exchange(Cross-fertilization with back street workshops in Tokyo)
"Manufacturing" is at the new stage
It has been said that Manufacturing is "Dangerous, Dirty and Hard" and avoided. Instead of that, people had an idea "Affluent is in the Society people don't manufacture but machine or robot do."
However, recently manufacturing industry has come under review and entered into a new stage. In Marxism, free from hard "manufacturing" or "labor" meant to be freed And in advanced capitalist state and even in developing countries, people have not found high value in labor as manufacturing Newspapers or magazines seem to insist that the business cycle is leaded by lawmaking, administrative agency and financial institutions as bank.
The situation of Japanese micro, small and medium-sized enterprises in Sumida, Ota and Shinagawa, bolstering manufacturing industry is tough and a lot of gloomy news has been made. They are suffering from training up their successor under changing industrial structure and declining birthrate. In addition to that, owing to error in administrative measure of excluding large-scale factories from inside Tokyo, many subcontractors changed or retired from their businesses. Accordingly, the number of local factories is decreasing as follows:

  • Changing number of factories in Ota-ku:
    In 1983: 9,190 factories > in 2000:6,165 factories(At present less than 6,000 factories)
  • Changing number of factories in Sumida-ku:
    In 1965:9,700 factories > in 2002:4,874 factories
  • Changing number of factory workers in Sumida-ku:
    In 1963:112,000 workers(at peak periods) > in 2002:29,000 workers
5.3Support for small and medium-sized enterprises in Sumida-ku
Many small factories in Tokyo have manufacturing skills and know how, but they are suffering from keeping up with changing situation. While in South Africa, consumers and laborers are young and there is big potential for expansion. However, due to sad history, the country has developed unevenly and Black people, majority of nation is left in low standard of living. Although small and medium-sized enterprises run by White managers have been survived, micro enterprises run by Black manager have rarely been survived. And even if they are survived, due to lack of technical capabilities and management experience, their business development is delayed.
In South African society, it is said that people have no way to live but to thieve. And actually, South African Republic has the highest crime late in the world. Therefore, our original purpose was to find a way to develop cooperative relationship between countries considering situations mentioned above. While Japanese society has entered into a new stage of "Foreign production and production by robot". So South African Republic hopes to be our partner in overseas production.

5.4 Concrete project plans for international exchange between small factories in Tokyo and those in South Africa Training at Sumida Small & Medium-sized Enterprises Support Center

  1. Exchange with cross-industrial association in Sumida(Anyone in the association could be in charge of development in South Africa? )

    Fig.8 Sumida Small & Medium-sized Enterprises Support Center

  2. Inter-visitation between small & medium-sized enterprises in South Africa and in Sumida, Ota, Shinagawa area (Only comparison of GDP could be used as the indicator?)
  3. "Quality Control Manager training course" by Association for Overseas Technical Scholarship(AOTS)
  4. Interuniversity exchange between South Africa and Japan (What is the development for?)

Pretoria University, Natar University and other Colleges are very interested in exchange with Japanese Universities or Colleges. So we hope that Japanese school officers will also join our project. Managers of Regional Development, Department of City Planning Division and Industrial Economic Affairs Department of Industrial Development Division in Sumida-ku, Tokyo and Sumida Small and Medium-sized Enterprises Support Center have already joined and provided support for our project. And also we requested cross industrial association in Sumida area to join Furthermore, in cooperation with "Set UP'99", publisher of local newspaper "Avenue", we started public relations activities for this project and grass-routs international exchange. We are quite sure this shows that people concerned hopes development in their area and Japan.

Fig.9 Thekwini College members, introduced their activities to foster Micro, Small & Medium-sized Enterprise in Durban want to exchange with Japanese Universities or Colleges.

6. Conclusions Actually, we are not completely agreed with Japanese Government's policy, "Technical Assistance for strengthening international competitiveness in automobiles industry". But we are perfectly agreed with Technical Assistance for fostering micro, small and medium-sized enterprises and improving living standard of Black people left unevolved owing to Apartheid policy.
Japanese founders of postwar industries such as supermarkets, convenience stores, catering and home delivery service visited Euro-American developed countries for investigation then with findings from the investigation; they started their businesses and made tremendous success. However, all of those new businesses are service industry and major manufacturers expanded their businesses to information, telecommunication and semiconductor related business worldwide and seemed to have made a big success. But at present, many of them draw off or in a decline.
Consequently, business managers of subcontractors and sub-sub contractors have become depressed with major manufacturer. And to survive, young business managers of small and medium-sized enterprises take a leading part and hold cross-industrial party and various workshops. In fact, some of them are successful, but many of them made little success and just hold regular meetings in the end.

New style of development
Ordinary venture companies have just been transferring European or American goods to Japan. But I believe that new venture companies, creating revolutionary products will emerge from micro, small and medium-sized enterprises. And for that, we must learn from Africa, origin of man with nature and primitive existence. With that opinion, we joined this investigation.

Fig.10 Beauty School training on curly hair in Thekwini College Workshop in Durban.

This report mentioned that Japan with tremendous affluence and equality and Black people in South African Republic, far from affluence and equity due to Apartheid policy started exchanges from Technological Transfer in micro, small and medium-sized enterprises. And we feel a premonition that small factories in downtown Tokyo and micro, small and medium-sized enterprises in South Africa can catalyze each other and revolutionary management reforms can be achieved. So we hope this project will be starting point of civilization and technical innovation in following generation. In conclusion, we would like to develop this economic support project through international exchange into academic study on Technology Transfer. And we want to express my appreciation for cooperation of Japan Society of Mechanical Engineers and other participants, institutions of technical education and University officials in holding this meeting. With their instructions and support, we would like to contribute to Technology Transfer for opening a new era.
Some of basic data of South Africa from the investigation are as follows. And as for details, we would like to explain in the lecture.(End)


  1. Investment SA, Automotive Trade& Investment SA.
  2. Description of the project by SECONEQ, 2002
  3. Collected Document during this Project.