Yoshiharu Katsuta, President and Representative Director of Hitachi Maxell, speaks to The Worldfolio about how his company, the once-iconic cassette tape and CD manufacturer of the 80s and 90s, has adapted to the changing times to become business-to-business focused, always “striving to establish new product portfolios and innovative technologies”
Critics have it that Abenomics has somehow fallen short of expectations. From the point of view of Maxell of course what has been the impact of Abenomics on Japan and more specifically on your sector?
Since the enactment of Abenomics in 2013-2014, large-scale fiscal and financial policies were implemented, greatly affecting the industry and the major corporations. However, Abenomics cannot just be these two policies only. Abenomics triggered a growth pattern, depreciated the yen and it positively motivated the private sector to expand aggressively. The second stage of Abenomics, which was enacted around 2015-2016, was an attempt to transform our ideology and our way of working. It pushed companies to diversify their client portfolio in order to further stimulate a growth strategy. Furthermore, the implementation of negative interest rates was used as a tool to stimulate private sector investment. The second stage of Abenomics stimulated movement and incentivized companies to look for opportunities. Regarding Maxell, we are still in that phase, seeking opportunities. While nothing has been made official yet, Abenomics has had a positive impact on us.
What are the competitive advantages that Japanese manufacturing has that its competitors like China or Korea do not?
Japanese people are very precise, very modest and extremely methodological. When it comes to promoting our products, we are not “bad” per se, but we are very focused on the domestic market. Many products and services are so specific to the national market that they can only be accepted in Japan, as foreign customers fail to understand their utility. From an international point of view, Korean and Chinese companies are more successful in commercializing their products to a global audience. However, it does not mean that their products are better than ours. These nations focus on replicability and mass-production, while we focus on customization. Most technologies developed by neighboring Asian countries have already been made by Western firms, so their success resides in lessening the cost of operations. However, when it comes to constructing electronic components and structural parts, Japanese Monozukuri has a great competitive advantage. Manufacturing the pieces that will enable for the end product to be assembled requires technique, expertise and professionalism; and Japanese Monozukuri offers just that. So while we cannot compete in terms of assembling ready-to-use devices, we remain extremely competitive in technological manufacturing.
And the electronic manufacturing is a sector that has undergone an important evolution in the past 20 years especially. The rhythm of change and innovation is perhaps faster and greater than in any other industry. We are constantly finding new substitutes, new developments. My question is: which are the key trends that you would highlight in your sector in the upcoming three to four years? What have been one of the changes that you have been seeing?
We are currently concentrating on digitalization and IoT. With the emergence of technological devices, humans produce an incredible amount of data, and this information is an incredible source of knowledge. In the next three to four years, this trend will inevitably pursue its development, and it will result in a greater accumulation of data. By exploiting this information effectively, innovation will become inevitable and fast paced; and it is our entire way of life that will be affected.
Maxell is currently investing heavily into IoT. Back at the time you were one of the icons of pop culture in the 1980s. You were part of the music revolution of course. I mean I think everyone in this room had at least one item of Maxell in their house, and headphones absolutely. When we look at this evolution what are the key milestones that you would like to highlight? What do you think are some of the key moments that have contributed to the Maxell story?
Maxell was established in 1960s, and our core products were audio-cassettes and batteries. Maxell was an integral part of the path and development of recording technologies; starting from sound to image, and then from image to data. In terms of battery manufacturing, we followed the market’s trend of miniaturization by compacting a maximum amount of energy in a growingly limited space. Back in the days, the main pillar of our company was our recording business. However, as digitalization became the norm and as the semiconductor was introduced, our medias changed; and we had to do something about it, we had to keep on top of our market. We therefore shifted to a different realm in order to enable our company to keep on growing.
You recently were absorbed by Hitachi. What is your relationship with Hitachi because it's one historical company with another one?
Until 2010, Hitachi was our parent company. Back then, we were mostly concentrated on the consumer electronics sector. Because taping devices became obsolete, it is our market itself which shrunk, and we became a 100% subsidiary of Hitachi. From there on, we went through a complete corporate restructuring of our company. On the one hand, Hitachi has always been focused on social innovation, which is centered on the creation of new social infrastructures. On the other hand, Maxell’s business has always been closer to peoples’ daily life. Under this shareholding structure, we have established a collaborative relationship. Some sections of our corporation are centralized, such as research & development, and we also have business or sales ties to Hitachi group companies. We re-gained our independence from Hitachi in 2014, and they currently hold around 15% of our shares. Looking at the future, we will always keep a good relationship with Hitachi while simultaneously heading towards a more “autonomous” structure.
Your company passed from being a famous front-liner to a B2B organization. How important and how difficult was this transformation?
Before 2010, we specialized in recording media and batteries, and our main targets were direct consumer and end users. As the recording business changed from sound to image, and from image to data, we were forced to focus our efforts based on a B2B model. Previous to our restructuring, 70% of our product were aimed for a B2B clientele, leaving 30% for B2C. After the restructuring, our B2C approached largely diminished. However, the application of our devices is still the same; we still manufacture devices used inside consumer electronics. What has changed though is the sales model: we passed from making the end-device, to manufacturing components used in the end-device.
What are the competitive advantages of Maxell?
Maxell manufactures unique products. We make devices that no else but us is able to make. We are very careful when choosing our business sector, and we never enter a market that is saturated by stronger players. To a large extent, our strategy is to select the sectors in which we know we can win. For 50 years, Maxell has been at the forefront of every sector it has decided to operate in.
What markets do you believe have the highest growth potential and which will you prioritize upon?
Geographically speaking, we target countries that are growing economically. We have three main sectors of focus for the future: One, is automobile sector. Two, is home life & infrastructure. Three, is health & beauty care. In terms of the automobile sector, we are targeting China, the US and Europe. With regards to health and beauty care, our products will be targeted at the Asian region, for the people of this continent have similar consumption patterns. Because we have a similar lifestyle, when we develop one product it can be applied to all Asian countries. When looking at South East Asia only, we are currently investing in industrial tape, as well as in the resident’s market, for demand is increasing and we have the quality to answer it.
Historically speaking, which have been your best-selling products, and which will be the best sellers of the future?
It's a difficult question because we've been diversifying our portfolio for more than 30 years. We have never concentrated on one product only. Looking back at the past, I believe that computer backup tapes were best-sellers. However, it represents a minority of our sales at the moment, so I see great growth potential.
When talking about the best-sellers of today, our new line of batteries is at the top of the chart. Furthermore, our audiovisual devices are also a success. Since the use of conventional cameras has become more technological, it has resulted in an increased demand for complex sensing camera units and components. Regarding the automobile sector, we are developing devices that can accompany the automatic driving experience by acquiring outside information. Because of our historical expertise in the automotive sector, I do believe that we are in a strong position to become one of tomorrow’s market leaders.
Another example is the lenses for the headlights. With the appearance of LED technology, halogens have become obsolete and our lighting systems have changed. LED allows energy to be saved, for it enhances the distribution of light into the field of space. From an international point of view, very few companies have been able to successfully engineer and produce lenses for LED headlights, and Maxell is one of them.
What are your main goals as president of the company?
Our company believes that to be successful, we must always be one step ahead. We have been striving to establish new product portfolios and innovative technologies. Everything is not perfect, but we are working on our management structure to become more responsive to market trends and global demand. Furthermore, I want to target today, the markets that will bring us success tomorrow. To sum it up, the objective of my tenure as President is to secure the ground for the company by establishing the foundation for future developments.
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