While China’s growing investments in B.C. businesses have garnered most of the attention in Vancouver’s economic interactions with Asia, a couple of under-the-radar deals involving Japanese firms might result in local innovation hitting the global stage within years – if not by the end of 2018.
The deals – both finalized in the last year – centre around two companies in vastly different sectors:
•Daiya Foods Inc., a maker of plant-based cheese-replacement food products, was acquired by Japanese pharmaceutical giant Otsuka Holdings Co. Ltd. in July for $405 million.
•FCOM Services – a Japanese subsidiary of IT conglomerate Fujitsu Ltd. – opened its first office outside of Japan in Vancouver, aiming to take advantage of B.C.’s innovation and talent to create new products for the Japanese market.
In both cases, the B.C. component of the new deals appears to be based on providing new talent, technology and/or expertise in areas where the Japanese side felt a shortfall in terms of homegrown capabilities.
Daiya (pronounced DAY-yah), for example, gave Otsuka access to a fast-growing line of health/nutritional food products that the Tokyo-based pharmaceutical firm had difficulty reproducing in Japan.
As such, even though Daiya was bought outright, the Vancouver group will remain highly independent in its operations, said company vice-president of marketing Michael Lynch.
“It’s a highly collaborative environment.… They know they want to be more involved in the healthy-food space, and they have not been able to achieve the type of success they wanted to in the past,” Lynch said. “So they are looking to collaborate with us to see what’s the best way to build out our food platform. Part of the deal – and part of our wish as we went into the deal last year – is that we did not want significant change with our vision. So there’s been no change to our team here in Vancouver at all.”
He said Otsuka’s acquisition allows Daiya to realize its plan for establishing an unrivalled plant-based food product brand globally. The popularity of plant-based alternative foods has been rising rapidly in recent years. Whole Foods Market’s (Nasdaq:WFM) trend prediction in 2018 identifies the sector as likely to “continue to dominate the food world” in the coming year.
“There’s two reasons why we see opportunities around the world, and one is simply the global macro-trend for products under the ‘plant-based’ category – and we have everything from cheese alternatives and pizza to yogurts and cheese plates, and they are all plant-based,” Lynch said. “That’s a market that’s going to continue to grow into the foreseeable future by double digits annually, and on a global scale.”
Lynch also noted that the company gets weekly calls from abroad – from either consumers or retailers – asking it to bring Daiya products to new international markets. While Daiya had been overwhelmed keeping up with North American demand, officials are hoping they can leverage Otsuka’s robust networks throughout Asia and into other regions to present the Daiya brand to more people. The company employs 250 and has a current market valuation of $100 million.
“We absolutely believe we are just getting started,” Lynch said.
FCOM is at a much more fledgling stage. Its Vancouver operations just started last year. But general manager Jack Domitsu said FCOM executives saw the potential of setting up shop in Vancouver for at least a few years now, and the key potential is B.C.’s growing human resources on the tech front, whether they be students, academics or entrepreneurs.
“The company here was built to be more of a bridge, so that FCOM and Fujitsu technology from Japan can match with technology developed in Vancouver and elsewhere in B.C.,” Domitsu said. “As a starting point, we are looking at automotive, robotics and AI [artificial intelligence]; and when we say partners, it’s not just the companies, but schools and other groups, as well.”
FCOM is looking for specific knowledge in B.C.
Domitsu said it’s in touch with Thompson Rivers University and the University of British Columbia regarding drone technology for agricultural uses and linguistics programming in robots.
While still early in the process, Domitsu said he wants to secure some contracts within the year and gain traction on commercializing a tech product.
One boost, he noted, might come from the increasingly anti-immigration policies in the United States, which some observers have said could drive tech workers on certain visas to look to Canada as an alternative. That flow of talent, Domitsu said, is something FCOM would like to harness.
“People understand that there may be an outflow of very highly skilled workers that are looking outside the U.S. for work, and we see the effort here to attract those people to Canada and B.C. That’s when we realized there’s a growing level of talent here, and unless you start to tap the surface and meet with these people, you won’t know what kind of technology is located here.… And you are also not looking at the prices you are looking at in Toronto or in the Silicon Valley, and that’s part of the attraction, as well.”
Domitsu added that groups like the B.C. provincial government and HQ Vancouver have been “very helpful” in bringing FCOM to open an office in Vancouver, given this is the company’s first office outside of Japan.
“FCOM has been very domestic up to this point, but being able to set up an office internationally on another continent in Vancouver, that requires a certain level of global competence,” Domitsu said. “And luckily, governments and other groups have been very supportive, and there’s a large number of Japanese-speaking people here, as well. So this level of support – the ability to meet with a number of different groups in one day for business – it helps put our leadership’s mind at ease about coming here.”
