Preserving environment and traditions, a core strategy that pays profits

International media such as Bloomberg recently have questioned Prime Minister Abe reforms’ ability to stimulate business. You said: ‘uncertainty has spread over the future course of the Japanese economy’. However, from our experience here in Japan, many people think Abenomics has had both an impact on the economy and global mindsets. What are your thoughts on this subject?

As you know, there was a strong, stagnant feeling in the Japanese business world. What Abenomics did was implement many measures to activate the economy. I think the private sector has responded to it, and we are starting to see some response to these measures.

It’s common opinion among the Japanese business community that Abenomics is about allowing Japanese private sector to think globally and to act ambitiously outside of Japan. Would you say that Japanese CEOs are thinking today more outside of Japan, realising that there is a lot of growth potential on the international community?

Yes, I do think so. The Japanese population is aging thus the number of workers is dwindling and the pie is shrinking. However, companies have to grow. If you are thinking about growing in scale, it is indispensable to go global. We have to have two separate strategies, a global one and a domestic one.

Launched in June 2015, Suminoe Textile’s “Advance Ahead 2018” mid-term management plan is driven by the objective of reaching historic net sales of over 100 billion yen. The previous mid-term plan, “Global Evolution 2015” already resulted in a 21% increase in sales. What can you attribute this impressive performance to?

Mostly due to the expansion of overseas business. We subsidized several companies abroad. After we grew, the Lehman shock happened, forcing us to shrink. Then, there was the earthquake in Japan, and later the floods in Thailand, during which we were stagnant. After those events, things stabilized. During that time we implemented many measures, especially in the global business. The automotive sales abroad have grown tremendously since then. These are the results of strategies and investments that we have done here. When we invest abroad, it would take at least two to three years to get to reap the reward.

Abenomics places a great emphasis on opening Japan’s economy to the world. Suminoe Textile represents this spirit of internationalization. In the past decade, you have established subsidiaries in China, India, Mexico or Indonesia to mention a few. How important is globalisation for your business strategy?

North America is perfect for business, as are Asian nations. However, China presents many difficult problems for us to clear. 

You established Suminoe Textile of America in 2003 with state of the art facilities. Later acquired Bondtex to solidify your hold in America, which is within the automobile sector and textiles. What are your priorities for the American market and where do you see the biggest opportunities coming from?

First of all, I want to mention that we are the only Japanese company who can produce everything in a car interior, from seat coverings to floor carpets or ceiling materials and car mats. We have quite a large R&D department compared to the scale of our company. We have an interior decoration fabric department with many designers in it. It is in our company’s DNA that all these departments can communicate and learn from each other. In order to present our products to car manufacturers, we gather information from international interior world events like Milano, Salone or Domotex, as well as from the United States, which is an advanced automotive country, and that can make a huge impact on the market.

It normally takes about three years for auto interior brands to move from conception to sales. We have to know and foresee what the trends will be in the next two to three years. I think that one of our biggest strengths is that we are able to present a total interior with the upcoming trends. The acquisition of Bondtex, with 30 years of business history in the automotive interiors market in the U.S, was one of the measures we took to further enhance our strength.

Suminoe Textile has a very strong brand recognition in Japan. You supply all of the nation’s top automobile companies like Toyota or Nissan. You also equip the Shinkansen trains and Japan Airlines, both flagships of Japan and iconic transport companies. What would you say separates Suminoe Textile from your competitors? Why is Suminoe Textile the number one choice for all of Japan’s leading transportation vehicles?

I think we are exceptional in the trust we build with our customers because we focus on the functions for both airplane interior materials and car interiors. We have been able to supply on a stable basis for those companies. The reason why we are trusted is because we have a big R&D department, maybe even too big for us; that has a lot to do with our result. Our R&D department is so sophisticated that not only do they do research for our company, but other companies have placed orders to us for their research. When the economy is expanding, anything will sell. However, when the economy is stagnant, you really have to focus on manufacturing and selling good products in a proper way. We have so many B2B businesses and, the basis, and most important reason for this, is long-term trust.

The spirit of innovation, quality, dependability and trust that you outlined are the foundation of the Japanese concept of Monozukuri. This concept is quite unique for an American company. Can you outline how this Japanese philosophy drives Suminoe Textile and why it’s behind your success?

There is a saying in Japan that defines happiness in three directions. Everybody is happy in three directions: when the seller is happy, the purchaser is happy and so the society is happy. In a way, that embodies contribution to society.

Suminoe textile has a strong corporate responsibility towards promoting the traditions through its extense experience and knowhow. How do you apply this philosophy in your business model?

We are talking about the three directions of happiness, but we are also talking about past, present, and future. Preserving the traditions from the past, then connecting them to the future is a very important thing, and it is prerequisite for all companies. Of course, we have to focus on the short-term profit and we have people working for us. This is a natural thing. Sometimes we have to ignore gaining profits in order to preserve the culture, tradition and trust in our company. This can also be a nice advertising appeal to our customers.

During the G7 summit the concepts of sustainability and socially responsible business practices were some of the main themes Prime Minister Abe put forward. Could you elaborate on your KKR+A philosophy and why having long term objectives, like looking out for the prosperity of society, goes hand in hand with profitability being both not mutually exclusive?

In the end, it becomes a profit. We started KKR+A (K- Kenko(Health), K- Kankyo(Environment), R- Recycle and A- Amenity:Comfort) in 1998, one year after the Kyoto protocol. Until then, the issue of that formaldehyde contaminated houses and schools was the focus of Japanese society, because these chemicals caused people to become sick. What our lab came up with was a compound that would absorb the formaldehyde, then break it. We started to incorporate this product into carpet and interior materials. That was the start of our business with KKR+A.

This product turned out to be very efficient in breaking down the smell from cigarettes as well, so this function of the product became our main focus. As you know, hotels spend a lot of money on deodorizing their rooms from the smell of cigarettes. They found out that when they used our material for their carpeting, their problem of cigarette smell was resolved.

Did you know we have carpets that are like tiles? When you dispose such carpets, if you use a high temperature burning method is fine, but, if you just use the normal method of burning, then it will emit dioxin into the air. What many people does is disposing the used carpets by landfill; that is not a good long-term solution, especially for us who produce those materials. Following the R (Recycle) in our KKR+A philosophy, we determined that it is best for us to recycle what we have manufactured than dispose it. We collect all the industrial waste that we have produced and then recycle it into a new product. That is our R (Recycle) in our KKR+A philosophy. This might seem an unimportant point but when you look at the cost of recycling yo see it is augmenting worldwide. When we started doing business in recycling we knew it was a good product, but then we are always asked how much it will cost. Of course, if it is expensive they say, “The idea is good, but we cannot afford it.” We cannot be competitive in this kind of picture so we have decided to review our cost structure. Thus, we have realized that our super environmentally friendly and competitive product it is totally comparable in price to the other products that are not environmentally friendly. It has been about four years since we started selling these recycled carpets, but it took us three to four years to develop this line. It is an original facility, and there is nothing like this in the world. The system of recycling or collecting the wasted material is one of a kind as well. Normally, Japanese tile carpets are not competitive globally, however, because our product is environmentally friendly, we are capable of competing globally. We are able to export our products to Australia and other countries that have very high environmental consciousness.

As you grow internationally, how are you communicating the strengths of your corporate brand?

To enhance the strength of our corporate brand, we have two main focuses: we will deploy car interior materials globally and comprehensively in the automotive interiors market, and supply environmentally friendly products to the architectural interiors market under the theme of “What interiors can do for human being and the earth.” I talked about the three direction of happiness; that is, we desire happiness to our customers and suppliers as well as to our company. Our strategy for further developing Suminoe Textile brand is to cultivate the tradition and customer and supplier confidence of our company, while gaining their agreement on our concept about the environmental business.

What would you like the world leaders attending the G7 Summit to remember about Japan and what do you think the Japan brand should stand for to the eyes of the world?

Love your neighbors and don’t be self-contained.

The Japanese are like that, we are educated in this way. You just have to think about other people. This is Japan. You cannot be happy just by yourself; you have to think about the happiness of others. To the leaders I would say, if you are really upset with your neighboring minister and really feel the need to hit him, just wait.