Okabe sets the wheels in motion in China

The construction sector is undergoing a deep transformation with the introduction of more efficient and sophisticated techniques aimed at ensuring sustainable growth by minimizing the impact on the environment, which remains one of the most important challenges to be addressed. What is your personal viewpoint on the main drivers determining the rapidly changing market requirements in construction-related products?

To begin this interview, I would like to talk about the automotive industry. Around 2-3 years ago, China has become more and more concerned about environmental awareness, especially with metal products which used to create large amounts of pollution. Quality inspection has therefore been heavily increased, and the expertise is getting better. These trends have also been confirmed in the construction sector. In the past, we were supplying mostly to Japanese companies in China. We used to manufacture our products in China and sell them to Japanese companies working in China. However, recently we have started to shift our model by trying to supply to Chinese based companies, and they are undoubtedly becoming more concerned about the quality and the environmental issues and criteria. Complying to all these environmental criteria is definitely time and money consuming but it is one of our trademarks.

What are the main challenges and opportunities arising from the rapid urbanization of China’s major cities?

We are not particularly interested in following all the trends regarding the rapid urbanization of Chinese cities. We are mostly focused on the Shanghai area, which is already a huge market. We have quite a few customers in the battery production sector there. We are mainly looking for local partners in Shanghai to expand our automotive sector in the country. Many Chinese companies have sent their employees to Japan. Here, they are in constant contact with our products on the construction sites. When they return to China, they realise all the advantages that our products offer and continue to use them.  

I would like to focus a bit more on your company now, Sengyo are Japan’s hidden champions, namely medium-sized companies that thanks to their investment in R&D have been able to conquer large shares of the global market in their respective sectors of activity. Okabe celebrates the great milestone of 100 years of history, can you give us a brief overview of the company’s genesis and evolution?

As you’ve just pointed out, our company is 100 years old. The company was founded in 1917, on the very same spot as our office is today. Originally, we were producing small bolts, but we then invested a large amount of money into R&D and became a producer of building structural products. Recently, we have focused on producing products which are earth quake resistant, because as you probably know, Japan is one of the most exposed countries in the world when it comes to earthquakes. Therefore, having products which are resistant to earthquakes is a necessity.

Around 40 years ago, our company went global and we established Okabe Inc., in America, which distributes automotive parts in America. Then, in 2005, we acquired a company, which is an automotive parts manufacturer, called Water Gremlin in Minneapolis, and this has been a success as the company is constantly generating profit for the last 10 years. We acquired a similar type of manufacturer in Milan, Italy in 2007, and founded another subsidiary in China in 2012 to expand our auto business. In 2002, we founded another subsidiary in America called OCM, which mainly trades construction material. Finally, in 2012, we established our subsidiary to sell construction-related products in China.

As we can see, you started from creating small bolts, but thanks to your investment in R&D, you were able to tackle many different markets. What is, for you today, the business segment with the most growth potential for Okabe?

In Japan, our most profitable activity is the manufacture of our anti-earthquake products. Not only is it profitable, but it is also a necessity, as it saves countless lives every year. Now if we look at the Chinese market, we are mostly concentrated on the Automotive sector. In addition, the recent environmental trends in China have undoubtedly augmented the demand for our products. Concerning the construction business, we don’t produce any of our products in China and therefore we are looking for partners in China to better sell our construction related products. For us, the market with the biggest potential is the US, as it is easy to implement the “Made in Japan” branding. We are looking forward to succeeding in this market, along with the Chinese Market.

And what kind of alliances are you looking for in China – M&As or joint ventures?

As you probably know, there are many Japanese manufacturers who have a local production in China. But they are often lacking the distribution and sales network in the country. What we are looking for is more a M&A activity, to have a stronger presence in the Chinese Market and therefore expand our sales in the country.

As you probably know, China is undergoing a deep economic transformation that requires an upgrade of their supply chain. Why should Chinese clients pick Okabe’s products over its market competitors?

The main reason is the quality. Now going more into detail concerning our automotive sector, there are two main points. Firstly, we comply to all the environmental issues, which is quite rare in the Chinese Market. Chinese battery manufacturers are therefore starting to come to us in order to comply with all these rules and regulations. Secondly, we use the same equipment in the Chinese Market as the United States Market. We can therefore guaranty our quality. In addition, all our Chinese staff is trained in the US, which means they acquire a very high level of competence.

China has been well known in the past 20 to 30 years for cutting down costs, using cheaper products. In terms of the demand side of your customers, can you see them becoming more demanding on quality than before?

The Chinese Market is a huge market, and there are many different segments. Okabe’s policy is to not aim for the bottom market but rather the upper-scale market. We want to aim for customers who are willing to pay the price for a top quality product. This is our strategy, and will remain our strategy. Previously, Japanese companies used to manufacture products in China and then would export it back to Japan. However, we are not keen on this, because we want to produce in China and sell in China.

I have recently watched your video NEXT100, can you tell us a bit more about the vision and strategic objectives behind NEXT100

For the next years to come, there are many projects that will need our expertise and products. Firstly, in 2 years there are the Paralympic games, and they will need our help for the production of huge facilities. Also, the demand for our anti-earthquake products will most probably continue to rise, and we will invest more money in R&D for this matter. In addition, we have found another business segment that requires our expertise: the fish aggregating device. Thanks to our buoys, fish are attracted to it and therefore it is much easier to fish, and the amount of fish caught is multiplied by two or three. We started this business by analysing world trends, and we are happy to say we are the number one in the sector worldwide. We are always on the look out for new business activities.

I recently read this article on Reuters stating the importance of branding for Japanese companies. For all our Chinese readers, can you please define what the Okabe brand stands for?

Firstly, the most important is the quality. Our quality is unbeatable. Secondly, the environmental factors are very important. We are one of the only companies in China that is accredited for all the environmental regulations. This is undoubtedly making people become more and more aware of our brand as people are becoming more aware of the importance of environmental issues.

Your company used to operate mostly in the shadows, as most of your products were invisible to the eye. However, recently you have started to become more visible through your fishing products and your automotive sector. Is this also a way of communicating your brand around the world?

Of course, as a company you have to remember the importance of brand image and brand recognition. We still think we can do more, and are working on it everyday. However, the thing we are the proudest about is the fact that our products save many lives. When the terrible earthquake of 2011 happened, none of the towers that used our products collapsed. We are very proud of this, and we think that thanks to our earthquake resisting products, we will continue to save many lives in the years to come. This is our philosophy, and will continue to be our philosophy for the many years to come.