VLC Holdings Co., Ltd. Case Studies on Japan-Israel SMEs Collaboration 【2020/11/20】

VLC Holdings Co., Ltd.

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　Established in 1994 as VLC Co., Ltd. in Sakura City, Chiba Prefecture. The company's business had been focused on marketing research since that time. When the company changed to a holding company structure in 2007, it changed its trade name to VLC Holdings Co., Ltd. (hereinafter referred to as VLC Holdings). In 2018, Norihiko Ishihara was appointed CEO and the company entered the cyber security business with the Israeli company CyberGym Control Ltd. (hereinafter referred to as CyberGym) as a joint business partner. CYBERGYM JAPAN Co., Ltd. was established in collaboration with CyberGym and provides practical training services to respond to cyber attacks mainly in the United States, Japan and Asia as well as cyber security-related consulting services.




　CyberGym, VLC Holdings' joint venture partner, was established in 2013 as a joint venture between Israel Electric Corporation and Cyber Control Ltd. The government-owned Israel Electric Corporation (IEC) is Israel's only electric power company with 99.85% of the share of the power generation, transmission and distribution business in Israel. IEC protects the nation's extremely important power infrastructure from external attacks by collaborating with CyberGym and its group of cyber security specialists with experience in the information security department of the Israeli Ministry of Defense as well as practical experience. Currently, IEC is hit by more than 200 million cyber attacks a year, and 1,000 to 3,000 attacks a month cannot be defended, and these attacks receive a response when they invade. The ability to protect the critical infrastructure from cyber attacks is not reliant only on specialists, and all employees of IEC, from management to general employees, are trained in cyber security. The training provided by CyberGym enables IEC to swiftly take the necessary response even if a cyber attack cannot be defended and invades.


Norihiko Ishihara, VLC Holdings CEO (center right) and
Prof. Nobuhiko Hihara, Director of the Center for Finance and Innovation, Waseda University (center left)

VLC Holdings CEO Ishihara met with IEC officials through the Jewish community in the United States and started planning a joint business venture with CyberGym when a sense of crisis regarding cyber security arose in Japan around 2016. The two companies jointly opened a training facility called an ARENA in Japan and the United States in 2018 to provide practical cyber security training.
VLC Holdings' cyber security business is based on the idea that people are the key to a successful defense against cyber attacks, and it is important that those people are trained. Programs are available not only for training engineers with little practical experience in the ability to respond to cyber attacks from hackers, but also for a wide range of personnel from general employees to management with a focus on the necessity of responding to cyber security as a management issue. In Japan, the company is currently providing training to about 350 clients, including government offices and major companies. In the consolidated financial results for the fiscal year ending March 2020, cyber security business sales registered a dramatic increase at 502 million yen (a year-on-year increase of 207 million yen or 70.5%), and with a view toward the upcoming Tokyo 2020 Olympics, the importance of cyber security is receiving more attention in Japan.
Japanese engineers are said to be overwhelmingly lacking in practical experience, although their abilities are very high. A feature of the company's programs is that they are partly provided directly by the Israeli team, allowing them to experience world-class cyber attacks while in Japan and learn through practical experience what happens when a hack occurs and how to recover from it.


CYBERGYM Akasaka Training Arena


Israel's strength in cyber security is known worldwide and stems from a history of working in this field as a nation that is surrounded by hostile nations. All Israeli citizens are required to serve in the military, and they have a very strong connection as a team through the military units they served in. Based on such strong ties, the company is promoting the diversion of military-developed technologies and expertise to the private sector, and this will lead to the further economic development of the nation. In addition to this background, Ishihara has stated, "Israel is also characterized by its abundance of outstanding human resources and task forces who have the ability to put into practice and execute the plans and goals that they have set."
With a focus on the high level of cyber security in Israel, there are two main reasons why VLC Holdings was selected as a partner among the other Japanese companies that were seeking to collaborate with CyberGym. One is the speed of its decision-making and action, and the other is the company's "openness". "The good thing about Israel is that regardless of whether the Japanese company is a large company or a startup, if they think that there are business benefits, it's place where you can come together face to face over issues and properly deal with them," said Ishihara. Israeli companies not only value speed in business decisions, but often share technology and information with their business partners with the intention of increasing each other's value. Rather than just providing Israeli cyber security technology to Japan, they expect partners to share information and technology openly, and attaches great importance to whether value can be created by collaborating.
VLC Holdings has also invested in CyberGym to enhance its relationship as a joint venture partner. In order to maintain a good partnership with an Israeli company, it is necessary to build personal relationships of trust between individuals. It can be said that the key to a successful collaboration with an Israeli company is to have "project ownership" and to earnestly build relationships with the company.


Interview: Center on Finance and Innovation, Waseda University
Editor: Center for International Economic Collaboration

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