In the face of barriers thrown in their way by the government and the corporate elite, Japanese entrepreneurs have succeeded largely through their own remarkable persistence and ingenuity. When Tomoji Tanaka returned home to Kyoto from the Navy after World War II, he hoped to follow the model of his father, who had founded a cottage factory making waterproof oil paper in a nearby village. But in the early years after the war, Tanaka, a mere sole proprietor without government connections, could not qualify for ration coupons for paper, then in short supply. To survive, the resilient Tanaka, who had seen action at Pearl Harbor and later witnessed the atomic bomb blasts from a cruiser off the Sea of Japan, sold his clothes to buy rice and some paperration coupons. With the latter, he started fashioning little waterproof hats and peddled them to the children of American GIs.

In 1949, however, Tanaka first showed the prescience that later would lead to his outstanding success. Visiting a customer, he spotted, for the first time, a cardboard box -- and immediately recognized that such packaging would have a great future once the economy picked up. Still without capital, he went to one of the manufacturers in the Muromachi garment district and persuaded him to issue a promissory note for packing cartons. Taking the note to the bank, he received enough money to begin manufacturing.

"This is how I found a way to start a business without cash," recalls the gray-haired Tanaka, who keeps a picture of a World War II Japanese cruiser in his office. "The bank wouldn't give me a loan. All the bank would do is take the promissory note and loan off that. It wasn't easy to persuade them, but it was the only way."

For the next 20 years, Tanaka labored to develop his packaging business. He established close relations with his customers in the manner described by Japanese small business consultant Yasunobu Nagura as enishi, a concept that stresses the close interrelationship, the give-and-take, among different parties in a business transaction. But networking proved of only limited value. From 1960 to 1970, Tanakaya Inc.'s sales grew modestly, from $85,000 (20 million Yen) to $214,000 (50 million Yen) per month. To build a larger company, Tanaka realized, he needed to provide customers with something his competitors could not supply.

Tanaka finally came up with his unique product in 1971, a durable wrapping paper using fiber threads. Not only was this paper stronger and less likely to get dirty than the rice paper traditionally used by his customers, but it was also far easier to print company logos on. Without being fully aware of it, Tanakaya began to turn from a small box-making company into a fast-growth, design-oriented business.

"Times were changing, society was changing, and to survive as a small business we had to provide a unique product. I didn't want to be stuck in an area where someone bigger could cut the price and lure customers away. As a design business, we could always provide a product that was better than anyone else's," the 64-year-old Tanaka explains over tea. "I wanted to go into every design-oriented area of the paper business, except printing money."

Spurred on by Tanaka's artistically inclined son Keiji, Tanakaya, which now employs 25 full-time artists among its 200 employees, started producing a staggering array of decorative products, ranging from posters and wrapping paper to props for department store displays. Sales jumped from $5.6 million (1.3 billion Yen) in 1975 to more than $38.5 million (9 billion Yen) last year. The man who once sold paper hats to foreign children on street corners now shuttles around Kyoto in a chauffeured Mercedes-Benz.

Published on: Apr 1, 1984