Beyond the framework of finance, promoting regional industries. The future of the region created by Kyushu Mirai Creation (Part 2)

Established in April 2023, Kyushu Mirai Creation Co., Ltd. is a wholly-owned subsidiary of Kyushu Financial Group Co., Ltd., which includes Higo Bank Co., Ltd. and Kagoshima Bank Co., Ltd. The three southern Kyushu prefectures of Kumamoto, Kagoshima, and Miyazaki possess high potential in food, tourism, history, and culture. However, local businesses face challenges in areas like digital transformation (DX) and expanding overseas sales channels. Recognizing this situation, Kyushu Mirai Creation is tackling overseas business support and e-commerce mall operations to solve regional industry promotion challenges in non-financial fields.

Dentsu Consulting Inc. has been a constant partner throughout the establishment of this company. In this article, we discuss the background of its founding and its business activities with Mr. Taizo Hagiwara, President and CEO of Kyushu Mirai Creation, and Mr. Masataka Sugimoto and Mr. Takuya Kagata of Dentsu Consulting Inc. In the second part, we will delve deeper into the e-commerce mall business, the other pillar alongside the overseas business support services.

An Aggressive Strategy with Tourism in Mind, Essential for Regional Trading Companies

Kagata: Kyushu Mirai Creation launched its e-commerce mall " Yokamall " this past June. Could you first tell us about the background behind starting this e-commerce mall business?

Hagiwara: When I was at the bank, the offensive from the internet intensified as banks successively launched internet banking services and online banks rose to prominence. Then came the era of GAFA, and the pandemic accelerated the digital shift. Now, we've entered an era where consumers choose the tools they use to buy things.

Our parent bank has long walked alongside local businesses, including neighborhood retailers. However, as digitalization advances and consumption shifts online, simply continuing business as usual no longer generates sufficient profit. Moreover, this reality is often difficult to grasp in regional areas. That's why we concluded it was necessary to create a "Regional Digital Platform" that brings the authentic local experience directly into the digital realm.

Kagata: It's fascinating that Mr. Hagiwara, who felt the threat of digitalization right at the heart of the financial industry, is now using digitalization to revitalize the local economy.

Hagiwara: To put it another way, I believe we're now witnessing a battle for economic spheres. Every company is expanding into diverse businesses and increasing the means to build close relationships with customers of their core operations. In the financial industry, deregulation has allowed entry from other sectors, intensifying competition with existing banks for customers.

That's precisely why we must venture into non-financial domains. We need to build even closer relationships with our customers within our economic sphere—the three prefectures of Southern Kyushu. To achieve this, we concluded we must firmly establish digital channels and protect our economic sphere.

Kagata: That said, major domestic and international companies are already involved in the e-commerce mall business, so I imagine it will be quite a tough battle. What strategies are you considering to protect the economic sphere of Southern Kyushu?

Hagiwara: Southern Kyushu's greatest strength is its natural capital. For example, Amami Oshima is a UNESCO World Natural Heritage site – something you can't simply create. Leveraging this natural capital is the biggest challenge for our business. Considering both the resident population and the visiting population, tourism, including inbound tourism, is something we cannot ignore.

Sugimoto: This is my personal interpretation, but I believe an aggressive strategy is crucial for regional trading companies. Centered on the fertile natural heritage of Southern Kyushu, we should produce regional sixth-sector industries and build platforms to sell agricultural and marine products outside the region. Then, export Southern Kyushu's products to earn foreign currency and circulate funds within the region. That's how we generate vitality in Southern Kyushu and build a sustainable regional society – that's the approach of Kyushu Mirai Creation. Furthermore, incorporating tourism would be even better. Beyond the two current projects, we've been exploring other plans since last year, so I believe we will gradually expand our proactive business initiatives going forward.

Kagata: How has the response been so far for the e-commerce mall "Yokamall"?

Hagiwara: Surprisingly, watermelons were the first items to sell well. Watermelons are bulky, so it's difficult for visitors from far away to buy them at physical stores and carry them home. That's probably why they're well-suited for e-commerce. Another top seller is frozen mango ice cream. While major department stores also sell it for limited periods, customers in the Tokyo metropolitan area seem to prefer "Yokamall" because the price, including shipping, is cheaper.

Currently, we're selling products, but as I mentioned earlier, we want to expand into experiential consumption and time-based consumption going forward.

Aiming to become "Minami Kyushu Co., Ltd." that unites regional businesses

Kagata: With the launch of "Yokamoru," I imagine new points of contact with local businesses have emerged. What are the expectations from these local businesses, and how has the Kyushu Financial Group reacted internally?

Hagiwara: We just opened in June, so awareness is still low. However, the message I'm conveying to Kagoshima Bank and Higo Bank is that "the EC mall represents a new value-added service for banks." With Yokamoru's launch, regional businesses now have a seamless B2C sales funnel. When banks introduce "Yokamoru" to their customers, it contributes to the customers' businesses and ultimately leads to revenue for the Kyushu Financial Group. Starting in the second half of this year, we aim to deepen our collaboration with the banks to leverage their sales networks.

Kagata: Having "Yokamoru" makes it easier for customers to visualize what kind of business or service we are aiming for. Now, please tell us about your future outlook. What kind of position do you envision establishing in Southern Kyushu in the next three to five years?

Hagiwara: Rather than focusing on short-term spans like three or five years, we envision a ten-year horizon. Ultimately, we aspire to become an entity like "Minami Kyushu Corporation," building solid connections with each local business operator. We want to take a bird's-eye view of Minami Kyushu and consider what we can do to strengthen the region. A former president of Kagoshima Bank once said, "Focus on the big picture, but start with the small details." That's exactly right. We want to keep our eye on the big picture while steadily executing each action we can take.

Kagata: Finally, please tell us what you expect from the Dentsu Group.

Hagiwara: The reason we partnered with Dentsu Consulting Inc. is that, after speaking with Mr. Sugimoto, we found we shared a common vision. Mr. Sugimoto is from Miyazaki, and I felt a kinship with him as fellow Kyushu men. There are many consulting firms out there, some chasing only short-term profits. But both Mr. Sugimoto and I genuinely care about the future of our region. It's embarrassing for someone like me to say "for the sake of the region," but sometimes you just have to say it. When I thought about which company could be that partner, committed to running alongside us long-term when we need it, Dentsu Consulting Inc. was the only choice. Also, the Dentsu Group has diverse resources, so I felt they could offer comprehensive support.

Sugimoto: After working at several global consulting firms for over ten years, I joined the Dentsu Group. I believe the Group's strength lies in creativity and execution—right-brain imagination and left-brain execution. Moving forward, while aiming for business success, I want to work with Kyushu Mirai Creation to build a regional foundation for Southern Kyushu that can be passed on to the next generation.

Kyushu Financial Group was established by Higo Bank and Kagoshima Bank, which have built their business foundations as regional banks over many years. Its subsidiary, Kyushu Mirai Creation, is tackling a new initiative: promoting regional industries in non-financial sectors. It aims to revitalize the region from a different angle than local governments, solving challenges for regional industries through DX and expanding overseas sales channels. Could this hold the key to future regional development?

Check out "Yokamoru," where the finest products from the three southern Kyushu prefectures gather here.