Sunday, Apr 22, 2018
Industry & Trade | Asia-Pacific | Japan

Toshiba-Carrier collaboration

“A sky-high vision and down-to-earth mindset”


4 months ago

Mr. Hirokazu Kondo, President of Toshiba Carrier
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Mr. Hirokazu Kondo

President of Toshiba Carrier

Mr. Hirokazu Kondo, President of Toshiba Carrier, sit down with the Worldfolio to discuss the incredible history of this collaboration between Toshiba and Carrier; the state of the market at home and abroad; and the innovations that are transforming the industry

Can you tell us about how your operations here in Japan, what has been the impact of the aging population and shrinking domestic market in your sector, and how important are your overseas operations?

If we look at our own segment, namely Heating, Ventilating, Air Conditioning and Refrigeration (HVACR), our domestic sector has been almost flat and manufacturers are fighting to win over customers from competitors. As you take a close look at the industry, however, you notice that the product mix is changing and some particular HVACR customer segments are evolving a little faster than others, such as the convenience store segment, for instance.

There are major reasons why Japan’s convenience store sector has outgrown others.  From a viewpoint of the aging society and low birth rate, studies of elderly people’s shopping behavior here in Japan shows that they prefer shopping at a nearby small store rather than driving to shop at a massive shopping mall.  

Convenience stores are one of our biggest customers. We offer a variety of commercial air-conditioning and refrigeration solutions to suit their different needs; from refrigerated cabinets inside the store, air-conditioning and ventilating systems to provide comfort to their customers, hot water supply systems if they have a small kitchen and serve some freshly cooked meals, and condensing units to power such equipment. The ability to provide a complete package for a convenience store customer is one of our strengths, as we are one of the few HVACR manufacturers that can do so. We are looking into some of the growing segments here in Japan and trying to offer products suited for these particular segments. In such a manner, we have been transforming our business, listening to the voice of customers.

The energy service provider (ESP) sector is another segment we focus on here in Japan, especially on the new entrants that show rapid growth. We have long-standing and close collaboration with traditional utility companies such as electric power companies. In the electricity industry, the deregulation of the power retail segment is taking place and we see new players emerging. Thus, we need to look into opportunities with such new ESP operators and discuss how efficiently we can use electricity, thereby contributing to ecology as well as reducing cost through energy efficiency. This is just a part of our domestic strategy, but these areas are the main pillars of our business.

The overseas segment is very important for us, with the ratio of the overseas business against our total business showing growth. Our overseas distribution is operated by Carrier with the exception of China, in collaboration with us. We, Toshiba Carrier, develop products that are distributed by Carrier overseas; the core technologies and system platforms are developed here in Japan and our overseas subsidiaries develop localized products with regional product variations. In other words, we develop platforms here in Japan, which can then evolve outside of Japan.

For example, Toshiba Carrier North America, Inc. (TCNA), our collaboration with Carrier, is responsible for localized development and sales engineering functions. In the United States, where ducted HVAC systems have traditionally been dominant both for residential and commercial applications, ductless and Variable Refrigerant Flow (VRF); light commercial and large residential HVAC systems have been recently well accepted as new products. A VRF system connects many indoor units (or zones) in a building and individually controls temperature in each zone, resulting in increased energy savings. The VRF condensing unit features sophisticated inverter control that optimizes compressors’ rotation speeds, which may also contribute to energy savings.

We began introducing our VRF systems to the U.S. several years ago, at a time when VRF was relatively new to the country. Through TCNA we plan to better understand U.S. needs and develop targeted Toshiba Carrier solutions. For example, TCNA is working on the development of various products and controls that ensure compatibility with technologies commonly applied in North America. TCNA is also involved in the development of systems that allow our VRF products to work with Carrier’s automation controls so that both Toshiba’s and Carrier’s products can operate as if they were one single integrated system. As a result, the user could enjoy significantly improved energy efficiency for the entire building. 

 

Your market is currently living undergoing a very interesting shift. On one hand, the demand from emerging markets is rising as the world’s middle classes are growing richer.  On the other hand, mature economies are demanding eco-friendly alternatives to address challenges related to climate change. How do you adapt your products to the demands of the market? What innovative products and technologies are you currently developing to create a more sustainable world?

The SMMS-e, our latest VRF series, is one of the examples that can contribute to energy efficiency and savings. We are just starting to sell chillers outside of Japan, firstly with the Japanese owned factories in Asian countries outside Japan. Since the factories are actually operating and using air conditioning around the year, unlike residential users, who use air conditioning only seasonally, it would be a great advantage for them if they could contain their energy consumption with ecofriendly and energy-efficient systems.

Compressors, the heart of an AC system, are another example of eco-friendly products we are developing. We have compressors that are available not only for internal consumption but for external sale as well. Among them, we have compressors with CO2 refrigerant for commercial refrigeration systems, which have been adopted by supermarkets and convenience stores. In the world of refrigerants, CO2 is one of the more environmentally sustainable refrigerants. In Europe and some of the other industrialized countries, there is a growing interest in CO2 refrigerant in the supermarket and convenience store segments. Therefore, CO2 refrigerant is one of the directions in which we are heading. We have very sophisticated technologies to optimize CO2 refrigerant, and as the segment matures, we can jump on the opportunities.

 

When we meet with the CEO of GFH - one of the biggest retail real estate developers in the Middle East - he mentioned that refrigeration requirements differ from region to region, due to factors such as humidity. You mentioned before you try to adapt the product to your different markets. What are the main differences you face when you are developing a product to be used in Japan or when you are developing a product to be used in North America?

We examine a variety of factors when we localize our products, ranging from differing environmental regulations to the climate in which the products will be used and the preferences of customers in each region. We work to address all of these considerations, while still offering our customers an excellent solution at a competitive price. I would like to stress that one of the great strengths of our products is partial-load operation efficiency, which is extremely important in optimizing the indoor temperature and saving energy.

We see opportunity for our products around the world. In North America, we’re focused on highlighting VRF; in India, South East Asia and Africa we see potential for ductless and VRF. In India and Africa specifically, we’re offering fix-speed models that are an entry-tier product, suitable for those regions. To the contrary, Europe is a highly sophisticated region requiring high technology, which is energy efficient and sustainable. Europe is also one of the most advanced regions in terms of sustainable products, so it is a very good region to leverage our technology.

 

Both nationally and abroad, your company faces tough market competition, with industrial giants and local competitors wanting to get their slice of the pie. What are the competitive advantages of Toshiba Carrier corporation?

Toshiba Carrier benefits from a legacy of technology expertise, agility and a strong, global distribution network, courtesy of our collaboration with Carrier. Our legacy of pioneering various technologies serves as the DNA for our business today. We focus on three pillars in our technologies: the first is the invertor, which is how you can control the entire system; the second is the compressor, which is the heart of AC systems; and the third is the control, which drives how you operate, how you match and control different types of equipment.

We’re also able to serve niche segments. Whether it’s convenience stores or heat source conversion, finding a niche has worked for us. As has utilizing customer feedback. We have an interactive and comprehensive approach, from both sides, and do not solely concentrate on sales. Of course, this is just how we can proceed in our business and we have an engineering advantage as well.

 

In the relationship that Toshiba has with Carrier, do you consider yourself to share the same philosophy or to have a completely different one?

Toshiba Carrier is the joint venture between Toshiba and Carrier, founded in 1999 and majority owned by Toshiba. Now we are seeing many new alliances and partnerships of HVAC manufacturers today; I would say we are the pioneer in this field.

Toshiba Corporation has split into three segments since July 1, 2017, and we are now under the umbrella of a new company called Toshiba Infrastructure System Solutions Corporation (TISS). One of the core business segments of TISS is the HVAC sector along with a cluster of different other businesses, such as elevators, water services and railway systems. Toshiba Corporation announced that its social infrastructure business will be the core of their business and that TISS is the social infrastructure company. That means that we will be the very core of the core business domain, as pointed out by Toshiba Corporation.

Toshiba Carrier is a collaboration between two very strong, established and innovative companies. Hisashige Tanaka and Ichisuke Fujioka are Toshiba’s founders and renowned inventors in Japanese history. Willis Carrier, the founder of Carrier, invented modern air conditioning in 1902.

Our attitude has always been to try to create our own segment ever since our company was founded. We are proud of many ‘world-first’ products in our company's history including the world's first commercial and residential invertor air-conditioning system, which was launched by what is now Toshiba Carrier. The modular type of products are something that we first commercialized in 2000 for the multi AC systems. The introduction of the modular type systems has made it possible for the system to continue operation in case one of the modules encounters issues because the other modules can keep working and back up the failed one. In fact, we developed and commercialized this epoch-making modular configuration, inspired by feedback from some of our customers.

 

As an important leader of such an institution of Toshiba Carrier, what are your key objectives that your leadership is seeking to reach in order to ensure the future of the company?

I have a motto which I am always telling my employees "have a sky-high vision and down-to-earth mindset." You need to have a high vision for pursuing an aggressive goal but yet you should not forget the basics and need to solidify your foundation.

We are committed to offering high-quality products, systems, and services featuring our signature heat-source application solutions. Our heat pump technology is obviously the backbone of the solutions we offer in various areas. It is our ultimate goal to contribute to society and the global environment through our business operations and to grow as a global leader in environmental initiatives.



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