Listing on the Tokyo exchange as a wholly domestic connector maker (1972)

Capital from the market, technology from within

A listing is no more than a procedure for shifting where a company’s money comes from — from the banks to the market. What is distinctive about Hirose Electric is that the procedure was bound up with technical independence. On the industry map of 1972, four of the top five makers were joint ventures with, or licensees of, large American firms; taking in capital and technology together was the standard road into the leading group. Hirose raised only the capital, from the public market, and went on developing the technology itself. Had it imported both, the specifications and the prices of its connectors would have had to follow its partner’s convenience.

The irony is that going public did not leave it flush with cash. Money for plants was held down, subcontracting spread as a result, and out of that grew a production system that carried neither capital equipment nor labour costs. In the year to March 1995 Hirose’s ordinary profit margin was 19.2%, more than three times the 6.0% average of the thirty leading electronic-component makers — yet the profit was being generated not in its own plants but in the cluster of cooperating factories around Miyako in Iwate. A single remark in 1970, that he had no wish to bow his head to the banks, brought with it both the listing and a way of making things without factories.