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Japanese SMEs a symbol of excellence

Interview - July 11, 2017

Between tradition and innovation, Tokuriki Honten Co., Ltd. has been thriving to deliver the best customer products and services for nearly 300 years. Its president, Jun Yamaguchi, speaks to The Worldfolio.

MR. JUN YAMAGUCHI, PRESIDENT OF TOKURIKI HONTEN
MR. JUN YAMAGUCHI | PRESIDENT OF TOKURIKI HONTEN

Despite certain hints of economic re-growth expected in 2016, critics have it that Abenomics has fallen short of expectation. How has Abenomics impacted Japan, and most particularly your sector? How   can   the   fourth   industrial   revolution   be   a   solution   to   Japan’s decreasing workforce?

Results of Abenomics were considered to be below expectations, but if we take into account that the expectations were set at a very high level, we can reflect that without Abenomics, we would be having a much larger sense of entrapment than what we have now. Abenomics consists of three policies; the first two are related to monetary and financial policies, which are the basics of any macroeconomy.

Prime Minster Abe’s commitment and practice meant a lot to us. After Abenomics was announced, we have seen benefits on a national level and as a company. Share prices have improved, the yen is getting weaker, employment has been enhanced and we have seen more inbound visitors to Japan. As far as our company is concerned, share prices have increased and drove a rise of wealth in financial assets. The affluent are strengthening our sales of gold art crafts and – because of the BOJ’s monetary easing policy – some people have shifted their savings to invest in precious metals.  

Awareness of the fourth industrial revolution feels low amongst the Japanese society, in fact the Japanese people have more awareness of the German industry 4.0. Japan has never been good at promotion and it could be said that Japan often lags behind the leading countries when making standards. As said, I think that industries should promote the fourth industrial revolution more actively. So far the United Kingdom, the United States and Germany took the lead in the Industrial Revolution, now Japan can be the leader of the forth industrial revolution which will contribute to solving the problems with the shrinking Japanese workforce, whilst improving Japan's GDP.

In the previous industrial revolutions, the steam engine, internal combustion engine, motors, computers and internet were invented. These revolutions brought General Purpose Technology. The fourth is being referred to as IoT, Robots and AI. Not only for the communication between the manufacturing devices, the Japanese forth industrial revolution may also include benefits like the introduction of AI which learns information from an insertion of an ID tag attached to materials and parts, cameras for inventory control shelves and sensors which read their operating environment for instance. Considering that, we can optimize the production planning, apply design that adds additional value and without human intervention, robots are the one to manufacture, which seems close to ideal. If we can make it happen, I think that it will be a solution for Japan’s shrinking labor force.

Our company is still on its journey to realizing the fourth industrial revolution, in the past few years we have introduced automatic machines using robotic arms for some of the inspection, weighing and welding manufacturing processes in order to respond to labor shortages and to operate cost reduction.

 

Japanese billionaire Hiroshi Mikitani has said that, "While Japanese companies have always excelled in terms of know-how and technical reliability on their home ground, they have struggled at commercializing their smart ideas”. What are your thoughts on this?

I understand well President Rakuten Mikitani's words, meaning we win in technology but we lose in business. When the iPhone was introduced, he’d mentioned that it could be manufactured with Japanese technology, although it couldn’t be created first. Maybe we have focused too much on technologies and also may have been weak in grasping needs. With that said, Japan has a foundation of high-quality technology. Although advanced technological skills can’t be achieved overnight, by turning focus on capturing what the market wants or needs Japanese manufacturing can remain strong.

I think there are three features in Japanese manufacturing. The first one is the customer-oriented manufacturing, which portrays national characteristics. In Japan, there is a famous phrase which is "The Customer is God". This was actually mentioned by the singer named Haruo Minami during his performance, which really captured the Japanese heart. Omotenashi has the same meaning and this phrase was used for the Tokyo Olympics bidding.

When the great earthquake happened, quake victims stood in long queues to get limited food supplies and they waited calmly and patiently. It was an impressive scene that people around the world watched on TV and in conversations with people outside of Japan we learnt that their country would not have reacted in the same way. Also, we line up well when waiting for a train, which is rarely been seen in other countries. This is an example of the Japanese way, their personality and sense of nationality.

The second one is the “art of crafting” with an acute attention to detail. The Japanese are very good at crafting and they are detailed orientated. As an example, I have been keen on origami since kindergarten. When origami is not folded precisely, you may see the white paper at the back and I always used to cut those white papers to make it perfect. Later I was very much into plastic models and electronic crafts and then I finally became an engineer and when I talked with my colleagues, I found many liked hand crafting.

We have had this kind of mindset for a long time, since the Heian period. Back then, we evolved Uchiwa, a flat round paper fan into a portable one known as Sensu, a folding fan. I think it led to the miniaturization of transistor radio, calculators, portable audio player and semiconductors. We have had a long history in this area and have become skilled in the production of small and precision components.

The third feature is that Japanese SMEs possess world-class technology. Japanese SMEs are better than our competitors in Asia, even in terms of numbers and quality. Sometimes we lose to our counterparts in the East Asian countries in assembly processes, though we are still better at making the key parts than our competitors and we are proud that, we are one of the manufacturers that do so.

 

TOKURIKI HONTEN´s philosophy of is: “to place the greatest value on the trust and confidence of our customers and society” and “Our unceasing passion to explore the possibility of precious metals” have been the driving force of our raison d’etre. How do you maintain this culture of social and client care?

We understand that precious metals are very expensive and as such are often used in important parts.  At the same time, every one of our employees understands customer’s greater expectations. Based on our “Customers First” policy, we will strive to meet customer’s expectation and continue forwards with that mindset to gain customer satisfaction and trust.

 

How is your company providing precious metals to companies that sell in the US or how is your company selling directly to US?

We sell automotive parts and materials for medical fields in Japanese domestic market. Once we sell our materials, they will be used worldwide through our customers’ networks. So although our parts have been used worldwide, we do not carry our business directly. However, this is something we would like to do in the future.

 

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 TOKURIKI HONTEN? What makes your products relevant on the international market place?

Our greatest competitive advantage is based on the Japanese style of manufacturing, we have a long history of almost 300 years and during this time we have always focused our business on precious metals and have built a reputation of creditability by selling high-quality materials to industries and jewelers. We have been internationally recognized as an approved melter and assayer both by LBMA and LPPM. Our brand of precious metal bars is recognized as “Good Delivery Bars” and they are widely known as a trustworthy international brand. In this way, we have earned our customer trust, which we identify as our source of competitiveness.

 

You are President of TOKURIKI HONTEN, a company that in ten years will celebrate their 300 years’ anniversary. What kind of message would you like to convey for future generations after being the leader of such an important company?

Since funded in 1727, TOKURIKI HONTEN has a long history of almost 300 years and the most critical objective is, simply and honestly survive, regardless of any changes to the market situation, whilst satisfying the customers and offering products to continue to build the credibility of the company and minimizing market fluctuation risk as much as possible. These things would be my message to the next generation.

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