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Startups

Three Vietnamese entrepreneurs push into Japan's AI industry

Nagoya startup finds niche selling low-cost services to small manufacturers

Hachix President Nguyen Cong Thanh intends to take his startup to Hanoi and Da Nang, and expand into medical services for older adults.

NAGOYA, Japan -- A software development startup founded by three young Vietnamese in Japan intends to grab big opportunities by catering to details that Japanese companies often overlook.

"We would like to offer systems that are easy to use even by small and mid-size companies," Hachix President Nguyen Cong Thanh said in fluent Japanese.

Hachix was founded in July 2017 in Nagoya, Aichi Prefecture, with capital of 5 million yen (about $43,600 at the time). Half of the capital was put up by Thanh and two other co-founders, and the rest by a businessperson they are acquainted with. The company develops and markets artificial intelligence and data analysis systems for retailers, manufacturers and information technology vendors.

Hachix delivers software that predicts and analyzes stationery sales. It offers an Internet of Things system to factories that uses sensors to monitor production lines. It also provides sensor-derived data to optimize the arrangement of plant workers.

"We strive to meet customer needs as inexpensively as possible," Thanh said.

Hachix cuts the cost of developing made-to-order systems by using free software, general-purpose sensors and other devices.

The orders it receives range from 1 million yen to 2.5 million yen. Clients are mostly small and mid-size manufacturers with 50 to 100 workers. Since many such companies have yet to computerize their systems, Hachix believes it has a lot of growth potential.

Its first order came from a Vietnamese restaurant operator in need of a food ticket vending system. Hachix created a tablet-based program for processing orders and payments. Hachix learned that it could win orders only among new restaurants since the market was already crowded with competitors.

The first year of business was "terrible," Thanh said.

The bitter experience led Hachix to begin targeting manufacturers and IT vendors, and in the year through June 2018, Hachix logged some 3 million yen in sales. the following year its sales were worth 16 million yen.

The pandemic has since dampened Hachix's growth, though the company nevertheless expects sales to expand 50% for the current business year.

Foreigners rarely start IT or other cutting-edge businesses in and around Nagoya, according to the Organization for Small and Medium Enterprises and Regional Innovation, Japan.

Praising Hachix's overseas network, Yutaka Matsuyama, a manager at the organization's Nagoya Life Science Incubator said the startup needs to "improve its quality guarantee and maintenance services, and accumulate experience by winning large-lot orders."

Work visas have often hindered foreigners trying to start businesses in Japan. There have been cases of foreigners running out of funds while waiting for their visas. But new startup visas that are easier to qualify for can now be obtained through programs like the National Strategic Special Zone system, under the supervision of the Ministry of Economy, Trade and Industry.

The central and local governments are encouraging foreigners to launch IT and other cutting-edge technology businesses as they prioritize the revitalization of domestic industries. Japan remains attractive to foreign entrepreneurs because of its public security and other standards it has maintained throughout the pandemic.

"I leisurely began to think of starting a business when I was a junior high school student," said Thanh, who was born in the northern Vietnamese city of Nam Dinh. Watching Sony TVs and riding Honda Motor motorcycles, he gained an affinity for the made-in-Japan brand.

Despite passing an entrance examination for a Vietnamese university and opposition from his family, Thanh decided to go to Japan.

While studying at a Japanese-language school in the city of Hiroshima, Thanh washed dishes at a hotel and took other menial jobs to get by. He entered Osaka University in 2005 and eventually received a master's degree in information networks.

Thanh then joined Brother Industries, an electronic and electrical equipment maker based in Nagoya, and developed programs for use in multifunction copiers for six years. After quitting Brother, he began to prepare for launching his own business while attending startup seminars and other programs.

"I'm lucky if one out of every 100 people I meet agrees to hold talks about our business," Thanh said, adding that his emails often receive no replies and that once in a while he hears derogatory remarks during business talks because of his ethnicity.

Hachix has eight full- and part-time workers, all of whom are Vietnamese and experts in AI and others, embedded networks and other cutting-edge fields. "The presence of many experts is one reason why we can quickly develop systems and deliver them at low cost," Thanh said.

The company, which is considering Japanese hirers, is also planning to set up branches in the Vietnamese cities of Hanoi and Da Nang. "We want to help older adults and people close to them in Vietnam," Thanh said, adding that he is considering the development of medical systems, such as a combination of face authentication and body temperature measurement programs, and new diapers.

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