- 8 months ago
Japan’s generational corporate shift could reshape business across Southeast Asia.
Thousands of mid-sized Japanese companies — many family-owned and rooted in regional prefectures — are confronting a major transition: ageing founders, succession gaps, and slower domestic growth. Increasingly, that search for the next chapter is turning toward ASEAN.
Could cross-border mergers and acquisitions become the bridge between Japan’s succession challenge and Southeast Asia’s growth ambitions?
On Niaga Spotlight, Tehmina Kaoosji speaks with Yusuke Ojima, Regional Head for Southeast Asia at Nihon M&A Center Inc., one of Japan’s leading SME-focused M&A advisory firms, about what this emerging investment corridor could mean for Malaysia’s business ecosystem, regional partnerships, and the next wave of Japan–ASEAN economic collaboration.
Thousands of mid-sized Japanese companies — many family-owned and rooted in regional prefectures — are confronting a major transition: ageing founders, succession gaps, and slower domestic growth. Increasingly, that search for the next chapter is turning toward ASEAN.
Could cross-border mergers and acquisitions become the bridge between Japan’s succession challenge and Southeast Asia’s growth ambitions?
On Niaga Spotlight, Tehmina Kaoosji speaks with Yusuke Ojima, Regional Head for Southeast Asia at Nihon M&A Center Inc., one of Japan’s leading SME-focused M&A advisory firms, about what this emerging investment corridor could mean for Malaysia’s business ecosystem, regional partnerships, and the next wave of Japan–ASEAN economic collaboration.
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NewsTranscript
00:09Hello and welcome to Nyaga Spotlight with me, Tamina Kaosji. Nyaga Spotlight takes us through
00:13the week in economic analysis and future affairs. Today on Future Affairs, our spotlight falls on
00:19Japan and ASEAN SMEs' opportunity amid global uncertainty. Across Asia's business landscape,
00:27a shift is underway. In Japan, thousands of mid-sized companies, many built by first-generation
00:33founders and deeply rooted in regional economies, are approaching a pivotal moment. As leadership
00:40transitions loom and growth prospects at home become more constrained, more of these firms are
00:45beginning to look outward. And increasingly, that surge for opportunity is bringing them to Southeast
00:51Asia. So, what could this emerging wave of Japan-ASEAN partnerships mean for the region's business
00:57landscape, especially amid growing geo-economic risk? Joining me now to break this down is Yusuke
01:04Ojima, Regional Head for Southeast Asia at Nihon M&A Centre Incorporated. A very good morning to you,
01:11Yusuke. How are you doing today? Thank you for making time for Nyaga Spotlight.
01:16Hi, good morning. Thank you very much for providing for this opportunity. I hope we can have a very
01:22good, meaningful discussion today. Absolutely. Yusuke, so let's start off with you providing us
01:29with some insights. Now, Japan's SME sector, it often sits outside the global spotlight, yet it represents
01:36the backbone of the country's domestic economy. How significant is the succession crisis among
01:44Japan's mid-sized companies today? Tell us a little more about this. Okay, thank you very much for your
01:52questions. Actually, the succession issues in Japan is a very critical issue in Japan. And, yeah,
02:00surprisingly, the, of course, very similar, like, Malaysia, the SME, the number of the SME, quite the big
02:09portion of the number of the company in Japan. And also, the number of the SME owners is getting age
02:18now,
02:18and the average age of the SME owners in Japan is now around 70 years old. This is a very
02:25surprising
02:26figure even for me. But the issue is, now the most of them doesn't have a successors. So meaning, even
02:35though
02:35they want to retire, it's very hard for them to choose that options. And obviously, they cannot choose
02:42the close, closing the company or liquidate the company, because they have many employees, and they
02:49have many customers, and also they have suppliers as well. So that's why this succession issue is very,
02:56very severe issues in Japan at this moment. Absolutely. And what data also shows is that
03:03around 99% of the domestic economy actually comes from SMEs, together with about 70% of employment,
03:12depending on it. So clearly, if founders are not able to find domestic successes, this can lead to
03:18certain issues coming up. But at the same time also, it is facing a real opportunity for
03:26looking for differentiation. So Yusuke, when these companies start looking for options of how to,
03:34of course, solve the succession issue, they're not only looking for growth, they are also looking to
03:40manage risk. Now, in today's environment of plenty of geopolitical tensions, many of which we've seen
03:47bubbling since last year, and continuing on into 2026, and also supply chain realignment. How much is
03:56overseas expansion looking at diversification? It's not just looking at expansion alone, right? It's about
04:03hedging the risk that all businesses are looking at currently.
04:09Yes, that's very true. And I totally agree with that. So, of course, the succession issue is a very
04:16huge issue in Japan. And now the major and the questions, so-called M&A, are now very common
04:23cooperative strategy for the Japanese company to continue the business, and also to expand the
04:30business. But as you mentioned, because nowadays, we face many difficulties, of course, such as pandemic
04:38and geopolitical issues, not only in China and US, but also the Middle East nowadays.
04:45At the same time, particularly in Japan, we always face some issues because of the earthquake.
04:54So we need to think about the supply chain, and we need to, how can I say, we cannot rely
05:00on too much
05:01single production base and also market as well. So that is a kind of main reason. Many Japanese
05:10companies start to looking for overseas expansions. Of course, the last 20 to 30 years, many Japanese,
05:18especially large corporations, already enter into the Malaysia market or overseas market in
05:23Southeast Asia, such as Panasonic or even Toyota or Honda, such a very big corporation. But for the SMEs or
05:33mid-sized companies in Japan, they also need to survive and they also need to continue the business.
05:40So that's why they try to expand their business to the overseas nowadays.
05:45And now the other interesting factor is while Japanese economic fundamentals remain really
05:52strong, there is also slightly lower domestic demand since about 2008. In particular, of course,
05:59Japan's population has also been shrinking, despite the fact that, of course, the population is aging and
06:06healthily. So of course, lots more opportunity for the legacy owners to then look towards ASEAN.
06:14So Yusuke, going into ASEAN now. So ASEAN in particular, our group of 10 and now 11 countries,
06:22is attracting growing interest from Japanese mid-market firms. From Nihon M&A's experience,
06:30what are you able to share about characteristics which make markets like Malaysia and even neighbouring
06:38Singapore attractive compared to any other markets currently?
06:46Okay. Yeah. So actually, almost 10 years ago, our company, Nihon M&A Center, entered into the Singapore
06:54office first. I mean, Singapore market first.
06:57So these 10 years, we also established a company in Malaysia as well, and Vietnam,
07:04Indonesia and Thailand. And that is the main, that is because the many Japanese companies are
07:11looking for the opportunity for the investment, including a margin and acquisition in Southeast Asia.
07:18And specifically mentioning about the Malaysia, maybe also including Singapore,
07:24the basically what we can highlight for the Japanese investor is the, maybe how can I say,
07:33the business environment in these two countries is quite well established.
07:38So for example, of course, the language is very important. The, we can speak English and the Chinese in both
07:47Singapore and Malaysia. And at the same time, the, even from the M&A perspective of view,
07:55the accounting system, finance system, and the legal system is also very important.
08:02So these, uh, three factors are very well structured in Malaysia.
08:07And, uh, at the same time, the, because last few decades, the, many Japanese companies on, on, on already
08:15enter into the Malaysia market and Singapore market, and are very well familiar for the Japanese companies.
08:21So that's why the relatively easy for the Japanese company to enter into the, these two countries, yeah, compare with
08:29the other markets.
08:30Yeah.
08:31Absolutely. And, uh, Yusuke, would you also say that, uh, looking at Malaysia and Singapore as entry points,
08:38is that also part of a wider ASEAN picture, considering that this is, uh, of course,
08:45these 11 countries represent more than a 670 million strong, uh, consumer market that is also fairly young in age.
08:55And this could be a good starting point building on the 30 years of history or so to then, uh,
09:02have a larger presence business-wise for Japanese companies.
09:08Yeah, totally agree.
09:10Yeah, because, uh, the, the market is quite big and, uh, especially like, uh, Indonesia and Vietnam,
09:16the population has been increasing very sharply and, uh, especially in, uh, Indonesia,
09:21now the population is more than, uh, around the 300 million.
09:25So, yeah, the, that is a huge market for the Japanese companies, uh, Japanese, uh, Japanese economy as well.
09:33And, uh, maybe another angle is, uh, back to the, my point about the Malaysia and Singapore, uh,
09:41geographically, the, the Malaysia and Singapore is a kind of middle of the Southeast Asia.
09:46So, uh, enter into the, these two countries first, and then after a few years, the many Japanese,
09:52Japanese company also expand the business to the other, uh, countries like, uh, Vietnam or Indonesia or Thailand.
09:59So, again, the entry point, uh, perspective, uh, for the Singapore and Malaysia, uh, I think it's, uh, relatively easier
10:09for the Japanese company to consider to faster expansion.
10:13Absolutely. And also the strong infrastructure and the financial regulatory systems, which help with regularizing everything.
10:21Uh, Yusuke, uh, one last area before we take a quick breather. Now, many still, um, perceive overseas expansion as
10:29building new factories or offices.
10:32However, we are seeing a shift towards acquisitions or partnerships with existing companies.
10:39Uh, tell us a little bit more about, um, the work which MNA does, uh, which allows for Japanese firms
10:46that may not have such deep, uh, international or regional operating experience, which helps with this new format of business
10:55expansion.
10:57Thank you very much. Yeah. Actually, that is a very important, uh, the, how can I say, the consideration.
11:04So even, uh, even for us, Mihoi and Mande Center, uh, established a company in Singapore almost 10 years ago,
11:10and, uh, we are the one who need to establish a company from the scratch.
11:14We need to hire the people and we need to, if we are the manufacturer, maybe we need to find
11:20a resource, a resource such as suppliers and the customer as well.
11:24Uh, and we need to establish a new factory and we need to buy the facility, the machinery equipment from
11:32the scratch.
11:33So, uh, usually, uh, it takes very long time and to make a profit and, uh, to make a, uh,
11:39generate cash.
11:40I think at least, uh, it takes three to five years. So, uh, we often say the merger and acquisition
11:49is kind of to buy the time.
11:51And especially for, uh, the overseas, uh, expansions for the Japanese companies, it's not really familiar and not, uh, well,
12:02how can I say,
12:03I don't get used to the local cultures. So if we can buy the company, if we can invest to
12:10the company in local, uh, such as Malaysia,
12:13we can suddenly, uh, acquire the clientele and also the human resource, including a sales person or the management person
12:22as well.
12:23And, uh, maybe the supply chain network, I mean the suppliers.
12:29And also we can get, uh, the know-how or knowledge, how we can operate the business and how we
12:36can product, uh, produce a product.
12:39So again, I think the, the big advantage for the merger and acquisition is to buy the time and including
12:46a human resource and a management resource.
12:49Yeah. So that's why nowadays many Japanese companies consider the merger and acquisitions, uh, to their faster expansion into the
12:56Southeast Asia.
12:59Exactly. Um, perhaps if you can offer us any perspective on the fact that, uh, for midsize companies,
13:05especially shortening this learning curve with a deep local knowledge is what is most beneficial because then it allows you
13:13to,
13:13without, uh, further time invested to actually come in and begin operations or continuance of operations almost immediately.
13:23Usually what does that timeframe look like Yusuke for firms that are, uh, working with M&A?
13:32Mm hmm.
13:33I think usually, I mean, it's depending on the transaction or depending on the, the, uh, companies, but, uh, yeah,
13:41uh, maybe we can say around one to two years, uh, for the, those, uh, how can I say the
13:47M&A process and the M&A deal transactions.
13:52All right. Thank you very much for the insights.
13:54And so far, Yusuke, we do take a short break now. Don't go anywhere.
13:57We'll be right back with the rest of the interview only on Niagara Spotlight.
14:21Welcome back to Niagara Spotlight. Still with me, Tamina Khosji. And today we're going through Japan and ASEAN SMEs and
14:27opportunity amid global uncertainty.
14:30On the line with me is Yusuke Ujima with M&A Incorporated.
14:36Yusuke, continuing the conversation. Now, looking a little broader, cross-border deals, they can look attractive on paper, but also
14:44have a high chance of failing in practice.
14:47From the deals that you have seen and participated in, what are some of the most, uh, important, um, challenges
14:55that can be underestimated once, uh, Japanese companies begin the process of evaluating ASEAN businesses?
15:06Okay. I think there are the three points. The, maybe the first point is, uh, I think this is not
15:14only in Malaysia, even in Japan. The most, there are so many SME, right? And, uh, basically they're very, doing
15:22very well. And, uh, there are many, uh, they have many, uh, good technology and, uh, very well, uh, production
15:31operation teams.
15:32But at the same time, uh, sometimes, uh, especially for the accounting or, uh, maybe financing system or maybe IT
15:41system, the, this kind of things is, uh, not well, very organized.
15:46So the, from the buyer perspective, because usually the buyer is more mature or larger companies. And, uh, sometimes they
15:55are listed company as well.
15:56And, uh, then, uh, they, they will ask about, uh, how they are reporting internally and how the governance is
16:03works and how the compliance is also works.
16:06So this kind of, uh, the, the, the expectation from the buyer is challenging even for the, the seller side
16:14as well, target company as well.
16:16So to manage that, this, uh, to, uh, expectation, expectation is very important for the both side.
16:24And the second, uh, uh, point from view is because from the business owner, especially for the seller side, the,
16:33because usually they don't disclose too much.
16:36About their information or their details because they are private company and, uh, they are not public company.
16:45So it's not necessary to disclose that much information, but obviously the, for the M&A transaction, the buyer or
16:52investor, uh, will request, uh, many information, including a very details such as, uh, employee details or client details, separate
17:01details.
17:01And yeah, sometimes it's a bit, uh, the, uh, the challenges are challenging for the, uh, sellers to disclose those
17:09sensitive informations.
17:11So this kind of, uh, the challenges, uh, we always, uh, face.
17:16So I think to having, uh, the good advisor, uh, especially for the merger and acquisition or corporate advisor, uh,
17:24very important for the M&A transactions.
17:28And the last point is so-called, uh, PMI, the post-merger integration.
17:34So M&A is the, the, one of the transactions, but, uh, once we finish the transaction for the both
17:42buyer and the seller, that is, uh, how can I say?
17:45The, uh, the real start for the, uh, the future collaborations.
17:51So to manage that, this, uh, post-merger integration is very important, especially for the first three months or first
18:00six months is a very important for both parties.
18:03So to communicate well and to think about the first expansion together and how the mixture, uh, for the organization
18:12and the human resource and how we can incentivize for the, the human resource, uh, that's kind of things is
18:20a very important.
18:21So what I want to highlight is basically to manage the both parties' expectations and also well-prepared and well
18:30-planning for the faster expansion and the planning is a very successful key, uh, for the, uh, buyer and the
18:38seller as well.
18:39Thank you, Yusuke. Some very interesting perspectives there.
18:43And in particular, what stood out is, um, the highlight on, um, SMEs and digitalization, which is certainly an ongoing
18:50challenge, which many Malaysian SMEs are quickly learning to onboard so that it does not form a barrier for further
18:58expansion.
18:59Um, now moving on to another, um, interesting feature for Japan is the role of your regional banks as long
19:07-term advisors to SMEs.
19:09Uh, Yusuke, could you tell us how influential are these banks in shaping whether companies even consider overseas M&A
19:18in the first place?
19:21Okay.
19:22Thank you very much.
19:23Yeah, actually the Japanese regional bank, uh, having a very important role, especially for the Japanese SMEs or mid-sized
19:31companies.
19:32And they are also always kind of the very strong and the close partner for the business owner in Japan
19:38to think about the, the strategic planning and also the succession issues as I mentioned.
19:53And, uh, of course they are, because they are a bank, they provide, uh, the, uh, funds, uh, for the,
20:00maybe some investment, uh, in, even in Japan.
20:04But nowadays, because, uh, the regional bank is the one who also expand the business to the overseas.
20:11And, uh, obviously they have many clients.
20:14They are also looking for the faster expansions.
20:17So, yeah, uh, that's why actually we invite around the 20 Japanese regional bank to the Malaysia and, uh, Singapore
20:27last month.
20:28And, uh, because some of the, the regional banks, they are quite familiar, uh, in the faster expansion in Japan.
20:36But for the overseas strategy and overseas business, some of them, uh, still doesn't have a much experience, uh, know
20:44-how or network.
20:46So that's why we invite them to understand the local market in Malaysia and Singapore and how, uh, attractive market
20:54for the Japanese company.
20:55And how we can, uh, integrate the, the both countries technologies and, uh, the operation, uh, skills and the technology
21:05as well.
21:06And, uh, I think the interesting things, uh, for the, this event is we also, uh, collaborate with the wider,
21:13the Malaysia investment authorities.
21:15And also the, some of the, the Malaysian bank as well, so that we can, uh, encourage the more Japanese,
21:23uh, banks and, uh, even their clients, uh, to consider the, uh, overseas expansions.
21:31So, yeah, I think we will continue, uh, for taking place at this kind of event.
21:36This is kind of the matchmaking, uh, between the Malaysia and the Japanese, uh, financial institution.
21:42But of course, uh, eventually we are aiming to encourage the more Japanese SMEs to invest to the, the Malaysia
21:52and in Southeast Asia as well.
21:55And of course, if these partnerships, um, work out well, it also deepens, um, regional and ASEAN economic integration too.
22:03Uh, thank you, Yusuke.
22:04Now, moving into looking at the broader economic landscape, which industries are you predicting, uh, most likely to see deeper,
22:12Japan-ASEAN collaboration over the next decade to come.
22:17And are you seeing that these are driven more by technology transfer or is it more supply chain resilience?
22:26Mm-hmm. Yeah, that's true. Uh, technology is, uh, one of the very attractive, uh, sectors in Malaysia.
22:32Uh, we also, uh, did the several deals related to the IT, including the cyber securities and, uh, some softwares.
22:39Uh, because, uh, the IT industry in Malaysia is quite organized and now still, uh, developing very well last few
22:46years.
22:47So, we can see the huge demand from Japan side as well.
22:51Uh, and, uh, other than that, uh, of course, how can I say the, the, still the semiconductor sectors and
22:58other ones, uh, E&D electronics as well.
23:01And, uh, specifically in Malaysia, uh, we can see the huge demand for, uh, Halao ecosystem.
23:09Uh, Halao is, I understand that is not only the food and beverage, but, uh, at the same time, we
23:15can see the consumer product like, uh, skin care or, uh, personal products.
23:21And the pharmaceuticals and even logistics as well.
23:25So, we understand Malaysia offers a more than domestic markets and, uh, Japanese company perspective.
23:33Of course, the, because the Halao standard and the Halao certificate in Malaysia is very high.
23:38So, eventually, the-