The one-stop service towards energy saving

We know that in the last twenty-five years, Japanese companies have been subjected to this stiff price competition from companies located in Taiwan, China, and South Korea who can replicate the Japanese technology and do so at a cheaper cost, taking advantage of economies of scale. However, when it comes to high reliability or high-quality products, Japan is still a trusted partner. For example, if we look at Daikin, one of the world’s premiere air conditioning manufactures, we know that their compact heat exchangers and capacitor-less inverters have allowed them to maintain a number one position. Can you tell us what in your opinion must Japanese companies do in order to face off this stiff price competition from regional competitors?

I think it would have to start with the introduction of our company. That is the best way to respond to your question. Our corporate philosophy and what our model has been, is to really contribute to creating an environment where people can live with the sense of ease and live lives of comfort. Towards that end, we are really a company that is dedicated to creating such environments. We can share with you that our greatest strength is that we are a part of a network, serving more than one hundred companies including Azbil, Yanmar, Daikin. You could say that our network that we service is both domestic and overseas. We serve as a trader for them as well as provide them with engineering and maintenance solutions. In a sense, we serve as a one-stop shop for all of their needs. I think we are able to do that and help them towards energy saving and really create the most efficient energy systems both new and existing.

One aspect is definitely that we actually really curate the best type of environments for each of the different facilities that we service, whether they are factories, offices, schools, or senior citizen homes. We create tailor-made environments that are each unique and adapted to that environment specificity. For example, we do not just necessarily use the machines that we get from Daikin or Yanmar. We do not just utilize standardized machines but rather we develop and improve infrastructure and are able to install the right equipment at the right facilities whether it be humidifiers or certain types of air conditioning facilities. We call this our own type of unique style of controlling or curating the environment and how we do that is we adapt to each of the facilities and their needs. We are able to then roll out automation and control of the buildings and we are able to provide this kind of tailor-made approach to each of the environments that we service.

Nowadays, there is less reliance on traditional energy sources such as oil, gas, and even nuclear power in Japan since the Fukushima disaster. Nowadays, we are seeing more distributed energy resources such as wind, solar power and battery power as the new sources of energy in the coming years. Such distributed energy resources are said to be less efficient because we will be getting energy from various different sources rather than one power plant as we traditionally did. Can you give us your take on how we can best utilize distributed energy resources moving forward? How can we overcome reliance on traditional energy sources?

One thing I can share with you is that up until now, the baseline of our business has definitely been electricity and gas. Rolling that out really made those energy sources the most efficient for our clients. We have been doing so as our core line of business, and we have one hundred and nine different offices and entities in which we function throughout the country. It had mainly been electricity and gas. But now with the rise of renewable energy resources and the roll out of renewable energy, we also utilize that. We are mainly dealing now with solar energy and geothermal energy. That is something that we are also providing for our clientele. Furthermore, when it comes to energy efficiency and really being able to optimise energy efficiency moving forward, we are looking to how we can better utilize Internet of Things (IoT), Artificial Intelligence (AI), and data in order to really provide the best needs to our future age of energy usage. It is quite interesting, but we are also putting a lot of effort into how to ensure that we have energy as backup in case of black out or when there are power outages in the case of different disasters such as heavy rain, flooding, or earthquakes. We actually have a Business Continuity Plan (BCP) strategy that we have in place in which we are rolling out domestically, V2X recharging stations, which are made up of energy storage. It is a stored energy from solar power, power conditioners, and electrical accumulators. These three serve together to create and power this V2X recharging system. We are also rolling out hybrid mobile generators that provide electricity by LP gas or gasoline. They are creating a hybrid power system that could run for three days in the case of any power outage and it is a compact storage.

What you said earlier about IoT was interesting because you said you are going to be utilizing it to make your systems more efficient. We know that IoT is sweeping across all industries as we expect that forty-six billion devices will be connected to the internet by 2025, for example. Here in Japan the building and infrastructure boom occurred more than fifty years ago around the time of 1964 Olympics so many buildings are in need of upkeep and maintenance. Can you tell us how you are using IoT and digital technology to do predictive maintenance, to continue to maintain without actually having to go to the location? How are you leveraging IoT for maintenance?

I think the key here is about how to manage the large amount of data. In terms of how you are able to accumulate all the data from the different machines that you have running in a building; for example, the chiller, air conditioning, pump, all of that goes through a sensor, the data is recorded. Up until now, it has really been landlines and a huge amount of communication towers in order to enable heavy communication flow. I think now, that is going to be done wirelessly. How to manage that kind of large amount of data wirelessly is going to be the key. We can definitely say that right now we are looking to find the solutions for our clients that incorporate IoT, AI, as well as wireless data transfer. That is something that we are now in the progress of doing. Precisely because they come to us for such solutions, that is exactly what our business is all about. Another thing that we do in order to help them enhance their energy efficiency, we replace the old machinery and obviously all of that eventually comes down to the data. The most important thing is to really be able to gather data to be able to provide information and services to inform them when the most optimal timing is to replace and upgrade, and when they need to actually replace the machines. In doing so, data is key.

Through our interviews especially in businesses similar to yours in building management and energy systems, we have heard throughout the potential of AI and IoT which by utilizing data, allows you to have better control. If we fast forward ten years from now in the future, how do you believe building management will have changed? How do you envision the evolution of building management and energy systems ten years from now?

I do believe that with wireless becoming the foundation of everything, you are going to start to see that when it comes to even the maintenance of all of these different machines in a building such as air handlers, chillers, pumps, heaters, all of that can be serviced, monitored, managed, and controlled by one serviceman with his smart glass for example. Up until now, you might have needed two or three people to take care of such different services but now you are going to find that there is going to be a greater efficiency even when it comes to the labour. You are going to find that one person is able to take care of all of these different things. I think through the accumulation of data, we are able to forecast and predict the timing that the machine might break down or when it is the best optimal for it to be repaired in order to enhance its lifespan for the best of usage. Since we are able to get that data, you are going to see that also makes a big difference. Basically, to do the data accumulation, you are able to prevent and predict. A serviceman can rely on this data and can actually monitor the building remotely from their headquarters or wherever they are located in the office utilizing their smart technologies and not necessarily even have to go to the site in order to do such servicing. In that sense, the servicing of the machinery is quite challenging. It is actually a complex job to be able to control all kinds of machines and ensure that they are running smoothly. I believe that utilizing smart glasses for example, you are able to then monitor everything from your headquarters.

We were very interested in the business model that you have been able to create. On one hand you can procure parts such as your heat exchangers, fans, and various other machinery for building maintenance, on the other hand you have your service and building management system where engineers operate the entire network of a building via a control unit. Can you please tell us what synergies you have been able to create between this side as a wholesaler trading company and this side as a management service provider? What benefit does it bring to your business?

We are able to procure the machines and relevant various parts for the running of a building at a competitive price because of our unique position within the supply chain. Not only do we actually procure the machines themselves at a competitive price, but we provide technical and engineering solutions. To be able to modify and make adaptations and upgrade and develop those machines to best fit the needs of our clients is key. We also have services that we are able to provide through our servicing and maintenance business.

Up until recently we worked together with the general contractors and subcontractors and the three divisions of our company would then roll out different services to where they were needed. Nowadays though, the structure has changed, and we are able to directly work with end users, we do not need to go through general contractors or subcontractors but rather we are able to go directly to our end users. We currently have more than ten thousand maintenance jobs that we are taking care of directly with the end users. We have created this rich and broad network of end users from which we are able to understand their needs and provide our solutions and this is one of our greatest strengths and what enables us to do what we do.

When you are doing large-scale maintenance projects, actually the benefits that you are able to reap are less when compared to smaller scale projects. Even just one small request for changing one machine, if you think of that being multiplied on scale by volume, it is actually something that is much more valuable to us and helps us to be able to create this really rich and prolific network of direct relationships with end users. As I mentioned, we have actually one hundred and nine offices from which we operate throughout those whole areas and they channel and pick up the specific needs, requests, comments, and feedback from our clients. In this way we are able to create a business where we provide the best type of support and continue to contribute to our clients in the best way to serve their needs.

We know that you work with a number of prominent institutions here in Japan in helping them to save on their energy bills and reduce their CO2 emissions. Could you tell us about these completed projects which are you most proud of? Which is closest to your heart?

We have actually been taking care of many landmarks in Japan, many imperial institutions as well. That is something that we are quite proud of. We have many big projects underway that we have signed agreements and contracts with. For example, a Nihonbashi project, a Marunouchi project, a Shinagawa project, a Hamamatsucho project, a Uchisaiwaicho project and a Shinjuku project. We have many large development projects all over the Tokyo metropolitan area and we do have some business in Osaka, Kyushu and Fukuoka too.

In an effort to restore Tokyo’s status as a global financial city and to transform Tokyo into a world-leader in fintech and green finance, the Tokyo Metropolitan Government unveiled an ambitious plan entitled “Global Financial City: Tokyo Vision.” Following this plan, the public sector implemented a series of measures, including the creation of the Tokyo Financial Award and the launch of Tokyo’s ESG fund, along with regulatory and tax reforms aimed at attracting foreign companies and personnel. In a global environment marked by the uncertainties linked to the COVID-19 crisis, the Honk Kong protests and the US-China trade dispute, why is Tokyo well positioned to restore its status as “a global financial city?”

I do believe that the Japanese government is greatly pushing this initiative. They really want it to happen especially considering the state of Hong Kong. In a sense, they really advocate for this to happen. So different plans are underway. There are the redevelopment projects of Mori building, the Mori Trust, Tokyu, Mitsubishi and Mitsui. I think in that sense, different plans are solid.

We know since 2015 you have established in Indonesia where you sell your air conditioning systems and are looking also to roll out your automation-based system there. Can you tell us why you chose Indonesia to start your overseas expansion? What other territories or areas will you be looking to further expand to internationally?

We started our international expansion in China, but it did not go so well. We looked around Asia for markets with good potential and we saw that Indonesia was an attractive market for us because of the population. The large population was a very appealing point, in that sense it is a solid country, and this was a major factor in us entering. This year, we are going to go to Vietnam and Singapore. After that we are looking at Malaysia.

You also appear to be choosing countries that have a very big strategic role in the supply chain. Singapore, for example, is the financial headquarters of ASEAN countries while Vietnam is becoming the factory of the world. We are seeing many American and European companies moving their headquarters there. Does part of your strategy cater for international first rather than looking for the growth of ASEAN?

Yes, one of the companies in our group is I.B Technos who are creating building automation open systems and utilizing CEM from Schneider. They are actually catering to the makers of open systems but also work with domestic trading distributors. A lot of these data monitoring and data analysing processing systems are coming into Japan. Also, we have decided to acquire Quantum Automation Pte Ltd. based in Singapore. That is our strategic approach of really being able to do our sales and marketing to cater to such firms that are all based in Singapore. In that sense we do realise that we need to definitely have an office branch in Singapore. We are making plans right now. In June we will be able to open up our office in Vietnam. We already have our staff dispatched and they are under training now to be able to do that. I hope the Vietnam office will provide additional benefits for original products from Daikin, Azbil and so on. I believe that the additional benefit offered by Totech will be fit for the Vietnam market. In the near future, I want to expand the way to the ASEAN market.

Let us imagine that we come back to have an interview with you again in five years’ time, what objectives or vision would you like to have achieved in five years and tell us in an interview both from a business and a personal perspective?

Right now, we have been working on our long-term vision for the company and we have some numerical targets that we want to hit; ¥150 billion 2025 and ¥250 billion by 2030. Considering the fact that we are facing an ageing and declining demographic in Japan and the shrinking of the Japanese market, we believe that it is important that we continue to strengthen our foothold in Asia where there are still many developing countries and great growth potential. We always keep our base, the clients who we service, and always make their needs our utmost priority to be able to expand that network of clients and to be able to contribute to such an environment where they can feel at ease and comfortable. To that end, we are hoping that we can really unite as a company with all our employees facing in the same direction, holding the same vision and expanding with this as our greatest priority and value.