Thursday, Apr 25, 2019
Industry & Trade | Asia-Pacific | Japan

Toyo System, Japan

The Power Behind the Battery


2 weeks ago

Hideki Shoji, President & CEO of TOYO SYSTEM CO., LTD.
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Hideki Shoji

President & CEO of TOYO SYSTEM CO., LTD.

In this interview for the Worldfolio, Mr. Hideki Shoji, President of Toyo-System, discusses the competitive advantages of Japan’s SMEs and the unique role his company occupies in the battery manufacturing market.

 

In recent years, we have seen that manufacturers from Asian economies have increased their production level and quality. Despite this fact, Japanese firms have retained a top market-share in niche fields. How do you explain this phenomenon?

The advantages of Japanese manufacturers is found in their approach to “Monozukuri.” In Japan, creating a product isn’t seen as a “job” but as “commitment” to the client. Japanese makers differentiate themselves thanks to their high production precision, optimum quality and long-term product performance. Furthermore, Japanese firms have a client-centric approach where customer satisfaction is considered a top priority. All Japanese manufacturing companies believe that their role is to create something that will make their customers happy.

At Toyo Systems, we manufacture testing equipment for batteries. As an SME, we only focus on producing one particular product: secondary battery testing systems. Throughout the years, we accumulated expertise in the production of secondary battery testing equipment and today, we're proud to cover all types of different batteries.

As an SME company, we have mastered the skill of manufacturing a specialty product. On one hand, we have covered all customers within the battery industry supply chain. On the other hand, we  cater to the needs of a wide array of industries.

Regarding our diverse clientele: Firstly, one must understand that there is a wide variety of companies involved in the battery industry. We provide our services to universities and laboratories for their research equipment , and our products are sold to battery-related raw material makers. Our business caters to battery manufacturers, IT related machinery makers and automobile makers. .We also  collaborate with industrial equipment producers, for example, forklift and power tool manufacturers.

With regards to where we fit in the supply chain, we provide the products and services to those who develop and manufacture batteries . For  battery development, we manufacture battery testing equipment and battery assembling machinery to meet our customers’ purposes. We also produce simulators and measuring devices for quality control purposes. Furthermore, we provide safety equipment for battery monitoring. Depending on the battery size our clients request, we can produce battery packs of different scales.

To reach to such a diverse clientele, we have had to integrate our production systems to offer testing equipment and rechargeable batteries for the different needs of the customers. We cover different industries all over the world and we're proud to say that we're a one-stop company. We originated in Fukushima and through the company's development over the past 30 years, we're proud to say that we can do anything in our field of knowledge.

 

In 2017, Samsung was hit by an industrial catastrophe as the battery of its Galaxy S exploded. What's your analysis of this situation?

As we truly believe that batteries are living creatures, the testing equipment we provide are designed and manufactured to meet the specific requirements of each individual battery. Therefore, we have never experienced this kind of accident. The rechargeable battery equipment we provide are of the highest quality. From the first step of the R&D development stage, we devote our time to ensuring precision and utter reliability. We consider batteries to be our child, and we as the fathers must treat it with the outmost care and sensitivity. All the tests we conduct are done so analogically, and the simulation has to be conducted with extreme precision as several patents are required to reach the final result. We have to be careful not to miss any kind of problematic aspect.

That “father-children” metaphor is embraced by all employees. Throughout the entire company's life cycle, we have yet to experience a situation where our customers reported any kind of problem with our product.

 

Li-ion batteries are experiencing an extremely rapid growth in America. By 2022, the market will reach 69 billion USD, and that's only in the USA. The rising demand for EVs and of electronic devices that use Li-ion batteries, such as power tools and smartphones, are fuelling that growth. How do these trends affect your company?

As Lithium-Ion batteries become more present in our daily lives, special attention must be given to the safety of the battery itself. Batteries are hidden from the eyes of users. Batteries are installed inside mobile devices or cars, and the consumer cannot choose the battery he would like to have. Consequently, we have to be absolutely certain that the battery is safe to use. Of course, we follow the trends that are happening in the world such as EVs and the introduction of mini-sized batteries for mobile phones. As a matter of fact, we opened our American branch to answer to these growing trends.

I went to America several times and I recently witnessed an accident. Children were playing with a small car that was run by rechargeable batteries. The battery blew up and the child suffered major injuries to his hands and arms. That event greatly impact the corporate vision of Toyo System. Today, we believe that we are serving humanity by making our society as safe as possible. The next target for us is the European market. Wherever we are, our mission is to ensure the safety of all citizens.

 

SMEs employ over 70% of Japan’s workforce and can be considered to be the backbone of the Japanese economy. What is your analysis of the role of SMEs in the manufacturing field?

We believe that SMEs main responsibility is to speed up the market. Even though we are smaller than the large brands, we can easily make forecasts as to what will happen over the next 10 years to come. Due to our relationship with larger firms, we gather a great deal of information from their Tier-1 and Tier-2 suppliers. According to our information, the demand for EVs will continue to surge and it is our mission to ensure the safety of these cars.

Due to our limited size, we are greatly flexible to change quick to react to market trends. That is the strong point of Chuken Kigyos (SMEs). As a part of the supply chain, it's easy for us to fit into the right place at the right time. Our ability to speed up the market is very strong.

 

The regulations for Lithium-Ion batteries are extremely strict. How do you ensure that you meet all these regulations?

We possess the UL and CE marks, which are specific regulations necessary to export. The next step for us is to increase our capacity to conduct research testing on local premises, such as Europe. We definitely see that the market dictates having a local presence. As a non-listed company we have great freedom as we do not answer to stakeholders. Nevertheless our budget is tight and we have to be sharp when making decisions. The next step for us is to follow the big Japanese electronics companies as they venture internationally.

 

Can you tell us more about your current sales and future objective?

At the closing of our last fiscal year, we had 5 billion JPY in revenue. Our number employees stand at 120. In 10 years from now, we hope to reach a target of 10 billion JPY with 200 people working in the company.

 

How do you plan to reach that target?

To advance, we must pro-actively develop service-related areas.

As our employees conduct testing on a daily basis, they gather an incredible amount of data. We must systematically collect that data and analyse it to further understand our market. Investing in data-management is a crucial factor for our company’s development. From this data, we will be able to create more services, ultimately allowing us to diversify from an integrated manufacturer, to an integrated manufacturer and service provider.

To understand our role in the industry, we use a metaphor of Mount Fuji. At the top of the mountain, you can find the large corporations and famous brands. The middle is where battery manufacturing companies are found. At the lowest level are the material manufacturing companies that provide components and raw materials. Below the lowest level, at the roots of the mountain, is where you will find TOYO SYSTEM. Our role is to support the entire structure from the ground. Without our everlasting support, those on the top couldn't maintain their altitude and they are always leaning upon our quality.

 

In 2013, you established yourself in the USA. I'd like to know if you're targeting the USA in particular or if you are also looking at Europe or China, in particular which is a big EV market. Secondly, I'd like to ask that one of your items on your mid-term plan was to follow Japanese corporations that were going abroad. Are you also looking for international markets such as in Europe. For example, Germany is looking to sell 90% of EVs by 2030. I'd like to know if you're looking for international partners to continue your corporate growth.

We are currently doing business beyond the US. It's not on a huge scale, but we are hoping to expand our presence in Europe. We already have customers in the UK, France and Germany. As a third-party involved in a long supply chain, our role is to understand what each market requires.

 

Japan is one of the developed countries with the least amount of start-ups with company loyalty being omnipresent in the corporate culture. You won the 2009 Grand Prix award at the National convention of the 9th Entrepreneur of the Year. What message do you have for the Japanese youth to re-boost the entrepreneurial spirit that was strong in the 60s and 70s?

I have several messages towards emerging companies, such as start-up firms, both in Japan and internationally. Before we reached the Entrepreneur of the Year prize in 2009, and even in the 20 years before that, we focused on reaching 100% client-satisfaction. This customer-centric approach allowed us to understand what our mission was and how we could contribute to the world.

Therefore, my first message to new companies is to serve your clients and understand how you are making a social contribution. Changing our world for the best is in your hands.

As a Fukushima-base SMEs, I believe that contributing to local areas is our duty. After the 2011 Fukushima earthquake, we increased our support to local communities and invested funds to help the local people. By living in Japan, which is a developed economy with an abundance of wealth, citizens may not understand that in other areas of the world, food scarcity, water shortage and war are common. Each time you are making a step as a company, don't just consider your final revenue target, but try to think globally and support the people around you.

Furthermore, we want to set the stage for the next generation to flourish. What we do today will contribute to the success of tomorrow’s youth.

Every year, corporations release how much capital they invest into CSR activities. The top companies are automobile manufacturing companies. The data  as of 2013 shows that Toyota Motors invested 22.4 billion JPY in social contributions, which represents 2.3% of their  profit. In comparison, TOYO SYSTEMS invested 18% of its  profit. Contributing to society is our mission and it will remain our motivation to succeed.

 

 


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