Riken Corp: will to innovate remains key component of industrial leader’s future drive

Although political critics have raised concerns about his Government’s policies, Prime Minister Abe’s reelection signaled a continuum in the political direction of Japan. What do you think has been the impact of Abenomics on the economy?

Everybody has a different opinion about Abenomics. From the perspective of the automotive industry, we have to recognize that car sales and production in Japan have been slowing, and we expect more of the same in 2016. However, Riken Corporation, as a global company, is generating more and more of its revenue from sales in markets outside of Japan. For the past three years, the Japanese currency has been relatively stable, properly reflecting the real economy and has helped to create a healthy business environment for many Japanese companies, including Riken Corporation.

After three years of Abenomics, the Abe government established a new policy that is meant to set the path for the future. The overall objective of this new policy is to create a society in which all citizens are dynamically engaged. The basic goal is to enhance overall GDP through more pro-active engagement of all citizens. No matter one’s age, gender or family background, all Japanese individuals should have the means and opportunity to fulfill their professional dreams. This policy calls for various structural reforms that will be implemented along with Abenomics. One of the core issues is the re-activation of Japanese society from the standpoint of changes in the workplace and in workstyle. To effectively tackle Japan’s structural and economic problems, many recognize that the mindset of the Japanese people must be changed. It will be both a mid- and a long-term initiative, aimed at transforming Japan from within, and I am a firm believer in its merits. Now is the time to address our aging population and aging workforce by motivating all of the country’s demographic segments. Our company is no stranger to this need. We are adopting a pro-active attitude in this regard.

Do you think Japan has the means to tackle its decreasing population and aging workforce challenges?

All countries go through structural changes. For example, France and the UK have experienced such structural challenges in the past, and they have effectively managed to address them. I have no doubt that Japan is fully capable of addressing and resolving the current challenges it is facing through the structural reform initiatives that are being put in place.

Western critics have attacked Japan’s rigid corporate structure, blaming it for impairing creation. Do you think that Japan has lost its innovative and entrepreneurial spirit?

I don’t think so, and I refuse to believe so. If you look at the number of Japanese Nobel Prize winners, you will see that Japan is one of the most represented countries. Also, look at our average educational levels, our continued and deep involvement in the development of new technologies as well as our participation in global networks across many professional areas. With these points in mind, one cannot say that Japan has lost its innovative and entrepreneurial spirit. Perhaps, it could be said that a negative trait of our country is that our youth seem to be inward looking, instead of looking outward.  In fact, there have been fewer and fewer young people going abroad to study for the last decade or so. We must work to change the social environment and create conditions that lead to changes in that mindset to ensure a better future for Japan.

From its foundation in 1927 with the development of the piston ring manufacturing process, to its R&D center constructed in 1991, Riken Corporation has become a major player in the field of automotive parts and machinery, as well as thermal engineering products. It is clear your company is well established, not only in Japan, but also internationally.  Could you tell us more about the key milestones of Riken Corporation?

Riken Corporation’s root is the Institute of Physical and Chemical Research (known as “RIKEN”), a historically well-known R&D institute in Japan. We are a global manufacturer and supplier of highly functional parts, with piston rings as one of our core products. Riken Corporation does business across multiple market segments, including the automotive, motorcycle, truck and other vehicular and industrial machinery sectors.　

Riken Corporation originally started its business in 1927 when Rikagaku Kogyo, the predecessor company of Riken Corporation founded by “RIKEN”, commercialized the epoch-making piston ring manufacturing process that was developed by Dr. Keikichi Ebihara of “RIKEN.”

Riken Corporation has consistently worked to provide advanced technical solutions to the domestic car and truck makers as well as to the industrial machinery makers. Because of this, I’m confident to say that Riken Corporation has contributed to the development of the Japanese industry.

Riken Corporation also recognized the importance of overseas markets for the growth of the company in the years after its foundation and has been expanding its global footprint in countries around the world. It is now positioned as one of the leading piston ring makers in the world.

While expanding our piston ring business, we have developed various other automotive products, as well as products for other markets, such as thermal engineering products, and EMC anechoic chambers. All of these developments were made possible by the innovative spirit inherited from Riken Corporation’s root, its core technological competencies, and through its historical activities in global markets.

We are proud that Riken Corporation has become a globally dynamic automotive parts company with a portfolio of leading-edge products like piston rings.

What are Riken’s core corporate values?

The most important feature to transmit, to all of our employees, is the will to innovate. Since its foundation, Riken has been positioned as a technical leader in its field and as a manufacturer with constantly evolving technology. As the automotive and other industries evolve, we must evolve to maintain our technical leadership in the markets where we participate. We want to be recognized as a solution provider for the challenges our customers will face in the future. All of us within Riken must never forget that our customers and the market have an image of Riken as a technology leader. Riken is synonymous with technological advancement.

Over the past few years Riken has been building capacity outside Japan with new facilities in Indonesia, China, India, and Mexico. The company has a long history of operating overseas both independently and through joint ventures with local partners. What is your reflection regarding the expansion of Japanese corporate culture?

Many Japanese companies have encountered difficulties when expanding to new international locations. The Japanese way of doing business is not simply exportable. However, we want to cultivate and foster the spirits of our overseas operations and their employees in a way to be more aligned with what we have established in Japan.  Our first overseas manufacturing operation was established in Taiwan in 1968, and we continued to rapidly expand overseas up to the 90’s. During this expansion period, Riken encountered many challenges to its efforts to introduce and install Japanese corporate culture to its new overseas plants.  In our overseas companies recently established in China and Mexico, we have been sharing the philosophy of “Monozukuri” with our employees. We believe that “Monozukuri”, with its focus on generating effective solutions while maintaining the well-being of employees is a core component of successful manufacturing. Safety, quality and BCP can be achieved through “Monozukuri,” making our philosophy applicable to all of our worldwide locations. The implementation of our culture creates a bond between the employee and the company, fueling inner competition and enhancing success.

Can you tell us more about “Monozukuri” in your company?

“Monozukuri” is a continuous effort, an unstoppable concept. In 2007, one of our factories sustained major damage from a devastating earthquake.  The damage from this earthquake resulted in the shutdown of our production lines. With the help of various carmakers, suppliers, and other stakeholders, we were able to resume production within a week. However, that episode really opened our eyes as to the necessity of further strengthening the application of “Monozukuri,” and making sure that it was fully ingrained in our organization. We learned that creating a safer work environment through “Monozukuri” is one of the keys to achieving long-term benefits and success for Riken.

While the domestic market is shrinking, the global car-manufacturing sector is steadily growing. What impact has this had on Riken’s strategy?

Our domestic car and truck assembly and sales volumes are slowing down.  But the Japanese market does not represent the overall business of Riken. Today, approximately 50% of our business is generated from the domestic market. Our strategic market will be more and more outside of Japan in the future. As I mentioned earlier, we have effective overseas operational bases in strategic locations, and are constantly looking abroad for expansion opportunities. We are driven to becoming an even more global company.

To what extent are M&As and partnerships important for international growth? 

Automobile technologies are advancing at an alarming rate. Components and the technologies needed to develop and support them are growing in complexity. We cannot fully rely on existing resources to keep up and ensure Riken maintains its technical leadership position. In this regard, looking for the right M&A opportunities and forming strategic technical and/or business collaborations make sense as we seek global expansion. This is a worldwide trend: we cannot do it all by ourselves.

Can you tell us more about your diversification strategy?

People speculate that the engines of today will disappear in the future. We therefore are investing time and effort in the creation of engine components specifically for hybrid engines and in the development of various technologies and products unrelated to engine components. Given the constant evolution of technologies in the different fields where we operate, I believe there should be many diversification opportunities for us across a broad range of industries. Another focus is to expand the application of our core technologies to non-automobile areas.

Customer demands for fuel efficiency gains in cars and trucks are increasing. How critical is this trend for Riken?

There is no end to fuel efficiency. We must therefore make our best efforts to provide innovative solutions that help lead to more efficient fuel consumption. The general public may not be fully aware of the incredible utility and impact our products such as piston rings and other critical power train parts have on fuel consumption.

If you buy a new car once every three years, you would easily recognize the dramatic improvements of vehicles in terms of technology, safety and overall performance. Riken is working in an ever-changing industry, one that is transforming and driving societal change. I have no doubt that Riken will continue to play an important role in this market.

As the leader of a company, what would you like your legacy to be?

Every Japanese person strongly believes in the perpetual success of their company. We believe in sustaining a long-term, renewable vision. Japanese corporate leaders are more focused on long-term management. This unique mentality is the result of being part of a unique population, different from others. I used to be a typical Japanese person. I came from a small town, and my transformation began when I moved to Tokyo in the early days of my career. I was assigned to work in the USA in 1978, and during my 11-year stay there I became exposed to a different world, and quickly realized the great cultural gap that separated Japan and America. That experience permanently affected my mentality and behavior. However, despite these cultural transformations, I remained true to many of my Japanese core values, and have never stopped working for the never-ending future of Riken Corporation.

18th Oct, 2016.