‘I believe we are hidden heroes, invisible to the public’s eye’

Despite certain hints of economic re-growth expected in 2016, critics have it that Abenomics has fallen short of expectation. The monetary and fiscal policies were implemented in an attempt to trigger economic growth, and the Government must now enforce structural reforms, aimed at tackling the ageing population and the decreasing workforce. How has Abenomics impacted Japan? And most particularly your sector?

Abenomics had a favorable influence mainly on big corporations, not much on small and medium sized ones. The best result of Abenomics was the depreciation of the yen. This boosted opportunities for the manufacturing sector in Japan by increasing the price competitiveness of Japanese products when sold to overseas markets. In short, I do believe that Abenomics set Japan in the right direction. It created a change in the mindset of Japanese corporations by encouraging them to look beyond the domestic frontier.

With regards to the construction sector, the Tokyo Olympics will have an impact because investment will be needed to prepare our country for such an event. We have several segments dedicated to the Tokyo 2020 Olympics. One of the focuses is tunnel excavation to build more metros and highways, where we provide the parts - cylinders. Japan has little room on the ground, so we are expanding underground space to create new circulation routes. For instance, Narita International Airport will greet a lot of people from overseas during the Olympics, so we are digging extra tunnels to expand the underground route.

What does the Japanese brand have that its competitors like China and Korea do not?

By nature, Japanese people tend to be shy. In comparison to Americans or other competitors, we do not emphasize “how amazing our products are.” However, Japanese people have an uncompromising dedication to quality and reliability, and that is something you can see in our manufacturing processes and products. China and Korea compete on price efficiency, while Japan plays on quality.

Furthermore, Japanese corporations make a lot of efforts in customizing their products to fit to their customers’ needs. While customization is excellent for some markets, it is a challenge for others where clients prefer to buy cheap and chain-produced products. Therefore, this commitment to perfection, high technology and customization can even be a drawback, for it makes products and services more expensive. If a potential customer can’t recognize the difference in quality, or if he regards price competitiveness over other factors, Japanese corporations will not be able to win him over.

Your company operates in three segments: 1) Material segment, which serves various industries such as automobile manufacturing, ship building & energy parts; 2) Machinery segment, dealing with construction, civil engineering and injection molding machines; and 3) Civil Engineering Construction Equipment segment, regarding anti-seismic and vibration control measures for various infrastructures. What positive synergies does this diversification model allow for?

Our company started during WW2 as a casting provider for the military. We produced parts for tanks in the Kawaguchi area; a region very famous for manufacturing steel products 60 or 70 years ago. During the first 10 years, our focus was on steel production, but the first Tokyo Olympics in 1964 resulted in a construction boom for bridges, roads and railway. This created an increased demand for casting products, which we had been manufacturing since our foundation.

For over 40 years, the government’s budget in construction had been rising, and that is why many bridges were built. The increase in construction stopped with the Kobe earthquake in 1995. At that time, the bearings installed were not strong enough to withhold natural distaster, and the strong earthquake created dramatical damages and consequences to the country’s infrastructure. This catastrophy opened a new focus for our activity.

Bearings were usually made of steel, but after the Kobe earthquake, we started changing the bearing material from steel only to rubber, which is more flexible and absorbs the vibrations. This was a significant shift for us as we were a steel company and not a rubber one, so this was a great challenge for Kawakin. However, we understood the need to adapt to the changes and decided to start producing rubber bearings as well. This combination of materials complemented our expertise by integrating both technologies to our portfolio.

As time went on, we greatly diversified our product offering. Today, our material division produces cast steel and iron products that are used across industries, such as shipbuilding and automobile manufacturing. We also manufacture precision castings that abide to the highest global standards. Through precision casting, we can achieve higher levels of product sophistication. Our roll-shaped steel parts are used for robots, always satisfying our clients’ needs.

Furthermore, we are also specialized in infrastructural components, with a special focus on anti-seismic parts used for bridges and other social infrastructures. Our industrial machinery division offers a wide range of hydraulic equipments, mainly for construction machinery; but also advanced injection molding machines for rubber and plastic, a tehnology adopted across various industries.

Even though your sales ratio is mostly domestic, your company has exported its products abroad since the 70’s. You have a presence in China and Vietnam, and are currently in the midst of a US expansion, having established Kawakin USA, Inc. (NVD) and invested in Dynamic Isolation Systems, Inc. in 2016. What geographical markets have the highest growth potential?

Fortunately, our great product portfolio combined with our historical expertise allows us to be competitive abroad. The specialties of our technology allow us to enter international markets, expanding our activities in Asia, South America, Europe and the USA. The demand to prepare for earthquake risk with existing technologies is growing around the world, and that is a need we can satisfy by leveraging on our extensive experience. Now, we must find market drivers and expand our sales network worldwide.

We had three production bases outside Japan, in China and Vietnam, but no sales representatives outside Japan. We had partners outside Japan but no sales network yet. After investing into Dynamic Isolation Systems (USA), we gained a foothold to penetrate the American market. Dynamic Isolation Systems has already established numerous achievements and it has a recognized name in the USA. For example, they contributed to the Golden Gate Bridge in San Francisco, one of America’s landmarks. Furthermore, as a foreign company, we are not allowed to bid for certain infrastructural projects. Now that we have Dynamic Isolation Systems and a sales network in the USA, we are able to make bids for extra projects. Our foothold in the American market greatly increased our brand’s recognition in the international arena.

As a company that is expanding to the US and to Asia. What are the main challenges faced when penetrating international markets? And most particularly the USA?

The biggest challenge when going abroad; which I can say applies to any market, is the requirements to comply to every standard. Standards, especially in our industry, vary from country to country. It is therefore difficult to penetrate a new market because we first need to understand the standards, and then meet the local requirements. This challenge is linked to the characteristic of the Japanese market: the quest for high quality. Japanese corporations make highly customized products that exactly meet the demand of their customers. Furthermore, the standards in Japan are very strict, which means that we are expected to produce high-quality products abiding to stringent norms, and that comes with a certain price. Therefore, when we penetrate a new market with less need for high quality and customization, we tend to struggle. It’s not only about the USA, the same is true to all other markets.

What are the competitive advantages of Kawakin?

Kawakin’s competitiveness comes from its integration of specialized companies. To fill in the gap between what we can do, what our customers expect and what added-value we can create, we have invested time, money and human capital in R&D. Our main competitive advantage is our extensive and diverse product portfolio. When you look at our product line-ups, you can find comprehensive solutions with different kinds of oil dampers and steel / rubber bearings combined with steel parts, for all of which we have technologies. We are the only anti-seismic product supplier that can offer such a range of products. We can adapt to all kinds of structures, from bridges to buildings, including schools, hospitals and factories. The ability to offer to our customers so many different components makes us a one-stop shop. Instead of establishing business partnerships with separate companies, Kawakin’s customers can rely on us as a sole provider for all products needed. 

What project are you the proudest of having contributed to?

Concerning our domestic achievements, we have contributed to many different projects all around Japan.  Amongst all, we provided support for recovery from the great East Japan Earthquake (2011) and Kumamoto Earthquake (2016) by offering our products and services to damaged areas, which was the most honorable for us.  As for international ones, the Nhật Tân bridge, Vietnam-Japan Friendship Bridge was an amazing accomplishment. We are very proud to be a part of  “the bridge between two countries”.

In its corporate philosophy, your company prides itself in being an organization which realizes “tomorrow’s technologies, today” in order to create “living and social infrastructure lifecycle innovation.” Can you tell us more about your corporate philosophy?

Our philosophy and mission is to be a business entity that improves the lives and social infrastructures of the world. We are not only a profit driven company, and we take great pride in our work. At Kawakin, we are very focused on the safety that goes along with our products. We want to make sure that houses, buildings and overall infrastructure will stand firm in case of an earthquake, while remaining in excellent shape for the many years to come. Our objective is to create a safer world today, for tomorrow. I feel very proud of it when I think that people are using our products every day.  I believe we are “hidden heroes,” invisible to the public’s eye but contributing to their safety and daily lives.

What legacy would you like to leave behind at Kawakin Holdings?

Of course, as the president of this company, I would like to leave a solid business with a strong foundation for future. In order to grow more, I will make efforts to expand our bases and raise our brand recognition with more worldwide achievements.

We are “hidden heroes” as I mentioned, but to some extent, I want people to know the name “Kawakin”  so that my employees can feel proud about the work that they do: contributing to the lives and safety of people from around the world. Our products are not in the public eye, and many individuals do not know what we are doing at this moment, so I would like to change this situation into one where the public is aware of our company and the efforts that we put into creating a better and safer society.