Saturday, Oct 21, 2017
Industry & Trade | Asia-Pacific | Japan

Sansei Technologies, Inc.

Niche expertise in stages and amusement rides


1 year ago

Makoto Nakagawa, President & CEO of Sansei Technologies, Inc.
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Makoto Nakagawa

President & CEO of Sansei Technologies, Inc.

Collaborating with international clients such as Disney, Universal and Six Flags, Sansei Technologies has built up a solid reputation for the quality of its amusement rides and stage installations for theaters, concert halls and opera houses throughout the design, implementation and maintenance stages. It has also amassed a wealth of unique know-how in the industry since it started in 1951. President & CEO Makoto Nakagawa provides an insight into this niche sector, its partnership potential for companies looking at the Southeast Asian market, and its vision “to create a unique global enterprise”.

 

Abenomics has pushed companies to go abroad, which also means seeking investors from foreign companies. What do you think has impacted your industry in terms of Abenomics?

We think going overseas is very important. We respect the foreign markets very much. However, it is not because of Abenomics, it is very much a natural conclusion for Japan as a whole to go abroad. The Japanese market has been shrinking for the last 20 to 30 years. Therefore, we need to expand our market not only for our shareholders but also for our employees and vendors. It was an extremely natural process for Japanese companies and us in particular.

 

If it is ratified, what will the impact of the Trans-Pacific Partnership (TPP) be on your industry, of manufacturing and installing equipment?

Especially for some countries in Southeast Asia, they will have a high demand for products, which will heavily benefit us.

For example, we succeeded in creating four amusements ride for Shanghai Disney. They have roughly 20 rides and Chinese manufacturers created 10 or 11 of them. Two rides were manufactured by European companies, and another company was in charge of an other ride.

Sansei Technologies’ main clients are the US and European countries. We do not have many clients in Asia so we imagine that the TPP will help us expand our share in the Asean region as the countries are growing and we see potential in the area in the next five to 10 years.

 

People are seeking to have more Kando, joy, and excitement in their lives. Do you think this trend is going to increase benefiting the entertainment sector as a whole? And can you outline some background to Sansei’s impressive history and how it first started?

Our company was founded about 65 years ago. First, we started as a manufacturer of elevators and escalators. Then, we expanded to a state business because Mr Kobayashi, who founded Hankyu and Toho Group, went to the US and came back to join us. He sold stages, round stages that have the shape of a Christmas cake, and he asked us whether or not we could manufacture a similar stage. We succeeded. We actually succeeded in producing two of those stages. That was the start of our stage business. Then, we expanded that business.

Nowadays, I think our market share for commercial stages, like halls owned by municipalities, schools, is probably around 60%. We also expanded it to temporary stages. For example when a concert is organized in a Baseball Park or when Lady Gaga came to Japan, we would create temporary stages with some LED lighting adapted and TV studios.

Also, at the same time, we started manufacturing roller coasters and some other amusement rides. It was probably in 1970, for the Osaka’s Expo, that our business changed and shifted to the amusements. At that time, we had about 35% of the market share for elevators and escalators at expos. We were the largest manufacturer of elevators and escalators at that time. But companies like Mitsubishi, Toshiba, Hitachi, realized elevators and escalators were a very good business and entered the business as well, so we decided to expand to other areas. We still manufacture elevators and escalators of course, but only a very small portion, just for service elevators. Our elevators are very expensive as we offer a unique quality tailored for our clients. For example, the rocket launch platform at Tanegashima Island by JAXA was designed and built by us.

Unfortunately, in the world, we did not get a patent for it. A few years after the Osaka Expo, Disney opened Tokyo Disneyland in 1983; they brought seven to nine products from overseas but they manufactured directly 10 to 12 rides in Japan. We supplied all of their products because we had already made roller coasters at the Expo so it made much sense. The roller coaster named Didara Zaurus had five different tracks with five trains. The length and the shape of the tracks were all different. The smallest one is for kids. The longest one is for young guys. But all trains start at the same time and come back to the station at the same time. My guess is that some people from overseas got on that ride and decided to ask us to manufacture some similar things. That is the first step we decided to develop, our amusement ride business worldwide. Then we went to any place where people would want to buy from us.

 

We could see some great Guinness records you break at the time: world’s tallest ferris wheel, world’s tallest elevator, world’s longest roller coaster. Japan is known to be the pioneer in terms of achieving things that no one else could think of. We could see that some Japanese companies for example Obayashi are working on creating elevators in space. How important is it for Japan to be the first one, even in niche markets?

Engineers get excited when they try to explore or make new products. Otherwise, engineering is a very boring job. People in our company, especially good engineers, are trying to be assigned to do new projects that nobody has tried. Probably that is the nature of engineers, to be challenged continuously and this is how we got to innovate in the past and that we still do.

 

Seeking challenges and create the best is indeed a very Japanese mindset. Looking at the company’s growth strategy, I could notice that your operating income has more than doubled from 2014 to 2015, and your net sales increased by nearly 18%. What is your new strategy?

A few years ago an American company invested in Sansei Technology and we regretted this decision. It took us a long time to re-own the company, to be able to make our own decisions again, and the numbers show that we were right to do so. Now, our strategy is to expand our amusement business to overseas, of course, and our stage business as well. We created some stages overseas in China and Korea and in the Middle East. Now, especially with many artists going to Southeast Asia, we supply them with temporary stages. We are in very niche markets, but two niche markets, not only one: the stage and the amusement ride markets. Fortunately, we are number one in Japan. Probably I have only one or two competitors in the world, which is not so many.

Now it is time for us to go abroad, especially to Southeast Asia. My main markets are the US and European markets, but markets in Europe are not so good at this moment. The Middle East was good about two, three years ago, but not so good now. The US has been growing constantly, or US companies are growing, and they are going out of the US, to China and sometimes the Middle East. We believe we can help such US-oriented customers to expand their business to Southeast Asia.

 

How are you working to grow your international operations even further and how will you attract more partnerships? How do you get people to know you as a trustworthy, reliable Japanese company?

I believe that our company’s reputation naturally expands without making special efforts because potential future partners have been exposed to us by seeing our products in famous theme parks and theaters. The problem is that we do not have the capacity to manufacture or to design to respond to the growing demand. We sell our products in Japanese yen, not in foreign currencies. Of course, we quote two prices: one in Japanese yen and one in US dollars (if working with the US for example). When we make the contract, we fix the rate of foreign exchange, which means exchange rate may or may not be affected on business.

Having said that, we do not think there is an easier way to earn a strong reputation from customers overseas, so we actually take a long time to work for the customers in the United States. The reputation built with these major companies is not via a shortcut, it is through a long experience of trust that we have built with them over the years. Of course, safety is one of the most important factors in our business, and we have not experienced major problems with our products for many years.

 

Japanese companies are known all around the world for their quality and to be extremely trustworthy, this is also the concept of Monozukuri, that your attention to detail comes first before profit driven – can you touch upon the measures that you take to ensure safety at all time?

Of course, profit is very important for us, but safety and customer satisfaction is more important for a long-term relationship with our clients. Even if we provide good products, if parks did not do a good proper daily maintenance, the product might have some accident. I would like to sell our products to the parks that only do the daily maintenance correctly.

 

Do you see potential for growth, for example, of your stage buildings, stage equipment, and amusement parks because of major events such as the 2020 Olympics coming up?

In this amusement park industry, for the first time at the beginning of this September, about 200 people came to Osaka for a safety institute educational session from all over the world. Next year or the year after they are planning to have a trading show in Japan. We are actually building the new theme park in the Nagoya district. Currently it is under construction: Legoland. It is going to be opened next year. They have about 20 amusement rides. We only chose to create two of them. They asked us how many amusement rides we could supply for them. We thought two is enough. We are so busy with other business. We decided to buy the majority of rides from European companies and US companies. We buy them and do the paperwork for the government and all the installation, and provide customers with the perfect park in the best conditions.

It is still hard to believe that the Japanese economy is getting better and better. You talk about the Olympic event. I think we should not focus on those events. We should keep a stable business and maintain that stability over the years, whatever happens.

 

Could you tell us more about your R&D and how Sansei Technologies manages to stand on the frontline of innovation to keep offering technological development?

Again, we know this industry. The amusement ride industry is very volatile, always up and down. Based on our long-term experience, we do not want to make that division bigger. We want to keep a certain size. Of course, if we want, we can hire some more people. We are doing that relatively very slowly, to not give pressure to engineers. Otherwise, too much work is not good for engineers to develop new ideas. Being gradual is everything. We need to take our time to guarantee that everything is done properly to reach the best quality possible.

We have so many things to finish in a certain period. Our engineers are always exposed to business competition to achieve some goal in a certain time period. It is not physical strategy, but it is important to keep the engineers’ mentality, to create something new. Engineers have to see some fabulous, interesting, out-of-this-world things and think about something new. Sometimes there are inevitable reasons to make something, but we have to cut costs while giving some special equipment for the customer. Such specific requests sometimes make a great goal, but it is not easy. I think our company size and the company target market is probably something that motivates our engineers to think about creating something new that has never been seen before.

When we develop new products, we are usually in charge of the important creative parts, collaborating with our clients like Disney, Universal or Six Flags. They have their own idea of what kind of new products they want to develop. They do not know if it is feasible or not. We spend a lot of time to develop the concept and how we turn their ideas or dreams to an actual thing.

 

One of your quotes is Sansei Technology offers joy and excitement and safe and comfortable lives. Can you tell us how important it is in your success to really keep that in mind?

We have temporary stages and permanent stages. Some stages were made 30 or 40 years ago. Our business started with permanent stages for kabuki theaters, opera houses or some concert hall for classic music, they all have different type of built for rigging system and everything. The director, he has specific ideas for the request that they have in mind.

For temporary stages, the equipment for stages is prepared for the specific performance. The temporary stages are only for one day or two days. The point is that we do temporary stages and permanent stages. If anyone wants to sample their performance here in Japan by using stage, they should come to us.

 

You are a 360º solution provider: before, during and after. You are there “before” with the clients to understand their needs and create what they want. “During” you install the equipment; and you are there “after” for maintenance. Would you also say this is also a part of your success, as a total solution provider?

Yes, in different ways. Our business is designing products and manufacturing products and installation, then, maintenance. Sometimes we make money by only maintaining our products. I do not know how many, but between 1,000 and 2,000 theaters, have maintenance contracts with us. It depends on types of theaters, but sometimes twice a month, every two months, or sometimes once in six months’ time, we are there to make sure everything is fine and in good repair.

For elevators, we have maintenance contracts. In theaters, we have maintenance contracts. For amusement rides, again, the most important part is daily maintenance, which should be done by parks. By law, all the products we sell should come back to us every year, so that we can check if those products are okay. When foreign manufacturers make some products and they are in need for an annual checkup, those products come to us.

 

What would you say is the brand of Japan today and the brand that you would like to transmit and export to other countries?

It is very difficult, because after all, we are behind the curtains. In the amusement business, we provide our services, and we make the performance shine. When I see people who got off the rides, when I look at them and hear them say, "Oh, let's ride it again. Let's queue again," even if they had to wait for two hours, I really get satisfaction, and I am really glad that I am doing this business.

Do you know Kuroko? Kuroko is someone who is completely dressed in black at the back of the stage, helping the actors without anyone seeing them from the audience.

That is the point. All business, our products are not completely exposed. We are hidden at the back of the stage. We are not completely exposed to the audience's view. However, customers outside of the country help with the Japanese mentality, and help the big achievement, so we are the Japanese Kuroko.

Disney does not allow vendors to say, "Disney is our client." However, we are among the few companies in the world allowed to say it because they trust us and are not worried about being associated with our brand.

You know, we are very slow in everything. Let's say the Tokyo Stock Exchange asks us to step up to the first rank, and all the fears and risks are all clear, but we would not say yes. We are very slow. Currently, I do not feel any necessity to be in a first rank stock exchange. We live in our own world, in some sense and this is what makes us great. Because we take the time to be great.



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