When Hatano presented his proposal, the air in the Board of Directors meeting tightened once more.
Two weeks.
This deadline was razor-sharp.
Hatano clearly had no intention of letting anyone continue to play games.
Either approve it or reject it—no more stalling.
Takuya Nakayama spent two days weighing his options. Instead of immediately approaching Hatano, he first knocked on his father's office door.
Nakayama Hayao was reading the newspaper.
His reading glasses perched on his nose, and a cup of long-brewed green tea—now a dark, murky color—sat in the corner of his desk.
He turned a page of the newspaper without looking up at the knock. "Enter."
Takuya closed the door and sat on the sofa, remaining silent.
Hayao turned another page before removing his glasses.
"What do you think of Hatano's third production line?" the old man asked first. Takuya wasn't surprised.
News of Hatano's formal proposal at the Board meeting had spread throughout the building the day before. Hayao couldn't possibly be unaware.
"I think we should approve it."
"Reasons."
"The cartridges are far from obsolete. Demand for handheld consoles remains steady, and GamePocket's install base speaks for itself. While the Mega Drive is in decline, third-party cartridge manufacturing orders are still coming in. More importantly—" Takuya Nakayama paused for a beat. "The logic behind building a factory in Mexico isn't about gambling on how long cartridges will last. It's about dominating the North American supply chain. Shipping from Shenzhen to Los Angeles adds customs duties and freight costs that would make Hatano wince for six months. Tijuana, right on the US-Mexico border, allows trucks to cross the border the same day. By any calculation, this makes perfect sense."
Nakayama Hayao placed his reading glasses on the table, remained silent, and waited for his son to continue.
"But the opposition last year wasn't entirely baseless. Hatano's North American data only proves that the North American market can sustain itself. The fence-sitters on the Board of Directors need a more compelling reason."
"So you've come to me." Hayao picked up his tea, took a sip, and frowned—it had gone cold.
"I'd like you to authorize the Sales Department to contact TecToy and request market statistics for the major South American countries."
Hayao set down his teacup and glanced at his son.
"TecToy?"
"Yes. We've been tracking Brazil's data, but it's fragmented and hasn't been compiled into a formal report. I need a report that can be presented to the Board of Directors."
Both father and son understood the ins and outs of the situation.
South America was Sega's second major expansion after the successful implementation of its "downward strategy" in Eastern Europe.
The Eastern European approach involved dumping older console models to build a loyal user base, then harvesting profits with new products.
When Takuya Nakayama first proposed this strategy at the Board of Directors meeting, everyone present thought he was scavenging for scraps.
Yet those scraps turned out to be a gold mine.
The South American strategy was inspired by the Eastern European model, but the reality there proved far more complex.
The Brazilian government had long maintained a protectionist policy toward electronics imports, imposing exorbitant tariffs that made importing foreign hardware prohibitively expensive.
For Sega to establish a foothold in Brazil, the only viable option was to partner with local companies and manufacture locally.
This is how TecToy became Sega's Brazilian partner.
TecToy was responsible for locally producing all SG-1000 consoles and game cartridges in Brazil. Sega provided technical licensing and core components, while TecToy handled manufacturing, sales, and Portuguese localization.
Interestingly, Brazil has a large population of Japanese descendants.
These Japanese-Brazilians naturally served as linguistic and cultural bridges, making the Portuguese localization process go much smoother than anticipated.
The translation quality was decent, and the localized game manuals and packaging didn't cause any embarrassing blunders.
TecToy even had several Japanese-Brazilian employees on its sales team, fluent in both Japanese and Portuguese, which greatly improved communication efficiency.
As a result, Sega not only avoided losses in Brazil but also made a considerable profit.
The brand's popularity spread from Brazil throughout the Portuguese-speaking regions of South America, and even players in some Spanish-speaking countries began seeking out Brazilian versions of Sega consoles through various channels.
Nakayama Hayao was well aware of this history; he had personally pushed for the South American expansion through the Board of Directors.
"Hatano's proposal has been left open for two weeks," Nakayama Hayao calculated the days. "If you have TecToy conduct an investigation, can they finish in time?"
"Not a full report. Three days—a rough one will do."
"Three days?" Nakayama Hayao's brow twitched.
"TecToy already has the raw data. Over the past few years, they've built sales channels in major South American cities, and they receive monthly sales figures and end-user feedback. Have them pull existing sales data, then do a quick assessment through their distributors. A framework report in three days will be sufficient. Precision isn't key—the goal is to show the overall trend."
Nakayama Hayao leaned back in his chair and tapped his fingers twice on the armrest.
"You want to use data from South America to support Hatano's proposal."
"Demand for cartridges in North America is one thing, but global demand is another," Takuya Nakayama said, spreading his hands. "Hatano's plan to build a line in Mexico won't just serve North America. Tijuana is close to the port, making it convenient to ship orders to South America by sea. If the South American data proves that cartridge demand remains strong in emerging markets, then those fence-sitters on the Board of Directors will have no reason to stall any longer."
"You're doing all this for Hatano. Does he even know?"
"Not yet."
Nakayama Hayao snorted.
"So you're making the bullets first, and then you'll slip them into his hand when he's ready to fire."
"Let Hatano's proposal pass on its own merits. I'll just give it a nudge from behind. If he knew I was the one pulling the strings, it would undermine his credibility."
Nakayama Hayao stared at his son for a moment, then shook his head and pushed the cold cup of tea on the desk aside.
"You're better at playing these games than I am."
"It's in the blood."
"Stop being so cheap," Nakayama Hayao said, pulling open a drawer and flipping through the address book. After a moment, he pointed to a name and double-clicked on it. "I'll handle the Sales Department. Give Koguchi the TecToy contact information directly; have him send the fax. Tell them we need it in three days. Emphasize that flashy formatting isn't necessary—just accurate data. We'll have our team redo the layout later."
"Understood," Takuya Nakayama replied, standing up.
As Takuya reached the door, Hayao called after him.
"You know Hatano. He's not someone who cares about sweet talk—he cares about numbers. Feed his magazine with the South American report, and he'll remember it. But don't expect him to thank you face-to-face."
"I don't need his thanks," Takuya turned back. "The best reward will be when he finishes the third production line and our North American cartridge supply is no longer unreliable."
Hayao put on his reading glasses again and flipped the newspaper back to the page he'd been reading.
"Go ahead. After sending the fax, have Koguchi keep a close eye on it. TecToy is twelve hours ahead of us, so don't let anything slip through."
Takuya nodded, pulled the door open, and left.
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