Japan’s smaller companies represent a “niche and overlooked” asset class, but that’s precisely the growth opportunity, says Brian Lum. The Baillie Gifford investment manager reveals some of the standouts he’s recently met, including a firm using AI to forecast the weather more accurately and another helping people with disabilities get hired.

Background:

Brian Lum became lead manager of Baillie Gifford Shin Nippon investment trust and joint manager of our Japanese Smaller Companies Fund in May. In this episode, he shares stories from a busy trip to the country, his first in his new roles. And he explains why Japan enjoys some of the world’s best conditions to nurture innovative and disruptive growth businesses.

Companies discussed include:

Weathernews – a business safeguarding ships and planes from storms and helping convenience stores anticipate which goods will experience surges in demand.

LITALICO – a firm that specialises in providing training to people with mental and physical disabilities.

Soracom – a company blending generative AI with Internet of Things sensors.

Seria – the retailer obsessing over every detail to make a profit from selling goods for the equivalent of 50p (65 cents).

Kohoku Kogyo – the manufacturer demonstrating high craftsmanship to ensure electric cars run safely and smoothly.

Resources:

Baillie Gifford Shin Nippon

Disruption Week

Japanese Smaller Companies Fund

Quantum Computing Since Democritus

Short Briefings on Long Term Thinking

SWCC Showa: rewiring Japan

Virtual visionaries: Japan’s Cover Corp rules the VTubing realm

Companies mentioned include:

Kohoku Kogyo

LITALICO

Nikkiso

PsiQuantum

Seria

Soracom

SWCC

Weathernews

Timecodes:

00:00 Introduction

01:55   Japanese influences

02:25  A focus on smaller companies

03:55  The Galápagos Syndrome

06:25  Learned lessons

08:00  Face-to-face meetings

08:55  LITALICO training workers with disabilities

12:55   Weathernews and climate change

15:00   AI-enhanced weather forecasts

16:35   Soracom mixes generative AI with the Internet of Things

20:40  Seria’s detail-obsessed 100-yen shops

23:15   Kohoku Kogyo’s crafted components

25:30  The long-term perspective

26:30  A niche, overlooked opportunity

28:30  Book choice