Since 1972, Japanese firm Kodenshi has been involved in the manufacturing and sales of optical semiconductor devices with bases in the U.S., Europe and Asia. Its president, Mr. Hirokazu Nakajima, speaks to The Worldfolio about the company’s history and where it is going in the future
Despite hints that economic re-growth was expected in 2016, critics have it that Abenomics has fallen short of expectations. How has Abenomics impacted Japan, and most particularly your sector? What will the future of the Japanese economy look like?
We are an international company with global production networks in Japan, Korea and China and international sales centers in other countries. From the perspective of the company as a whole, Abenomics has had very little impact on our business. I cannot predict what Japan's future will be, but I can inform of what we do to help contribute to the development of Japan and the world. There are many world-wide problems related to energy consumption and consumption of resources, we hope to digitalize many of these problems and by doing so become a company who can produce energy as a contribution to our society.
During Minister Abe´s recent trip to Germany, he said "I want to push Japanese companies to get out of their comfort zone." Several interviewees have told us that one of the biggest changes of Abenomics was the change in mentality and mindset, in pushing Japanese people to be less risk adverse and more open to international influences. From your point of view (as a company that has been international for years): Have you felt this change in your competitors and in your own beliefs?
We have nothing to do with that and as such do not have any interest in the matter. I have not witnessed a change in mindset within the Japanese people, but at Kodenshi we focus on what we do within the company, so possibly Minister Abe's efforts are more relative to other businesses and our experience is not typical of the majority of Japanese businesses. Kodenshi was established in Japan in 1972 and later we expanded our operations to first Korea, then China. Many of our materials will eventually be incorporated for use in products such as printers and FA machines, so it is important that we also focus on these industries, because their purpose is wider than just the semiconductor market.
Kodenshi has five bases in Japan. Furthermore, your company has established subsidiaries and bases all around Asia (China, Thailand, Korea, Hong Kong, Shanghai, Singapore) and one in the USA (Kodenshi America Inc). Can you give us a sales breakdown by geography? Which market are you focusing on for growth?
As a sales breakdown; Japan generates 160 million dollars, Korea generates 200 million dollars and China generates 120 million dollars. The Japan, Korea and China offices are independent companies, each with our own culture which we mutually respect and unite with for our business operations. We need to send the same technology to each other and so, from very early on they developed our unique SCM system to help in our operations.
Your company has a big focus on South East Asia but at the same time Kodenshi is also present in the United States. Could you tell us more about the differences between the South East Asian market and the American one and what have been the challenges that you have faced in penetrating the more sophisticated markets like America and Europe?
The market for these operations, including South East Asia, have just begun and we recognize that it has a great deal of value and potential for the future. We are very interested in plans to penetrate the western markets, in particular Europe and America. At this stage, we have very few partners who we can cooperate with and we are currently in the process of recruiting those partners. Although there is not enough of a platform to expand operations into America at the moment, this is something we will prioritize when the opportunity arises.
Both nationally and abroad, the Semi-Conductor industry is increasingly competitive, where innovation is moving at an incredible rate. Not only are you facing cheap local competition in certain markets, but you also compete with large corporations. What differentiates you from your competitors? What are the competitive advantages of Kodenshi?
We are a company that specializes in optics and electronics and because it is our specialty we are very skilled in those fields. We do not consider such large companies to be our competitors, we walk a different path from them and our markets themselves are completely separate from each other.
We have an advanced QCD; Quality, Cost and Delivery and consequently a strong relationship with each of our customers. These relationships are definitely a competitive advantage.
You are mainly engaged in the manufacture of optical semiconductor devices, your company has acquired expertise in LED components, sensors and integrated systems. From phones to televisions, to printers to robots, we can find Kodenshi’s products in our daily lives. Can you describe to our readers the utility of your products in our everyday tools?
The photodiode is the product which gave us the foundation to establish and grow into other businesses. In 1979, the photo sensor was created and was widely used in computers and more recently in LEDs and Photo IC, but at the beginning we introduced the solar cell and we were number one in the world.
Solar cells and photo diodes are developed using similar technology and our company developed thanks to this solar cell business. It is mainly for input and output machines such as digitalized calculators, and it became one of our core businesses in the founding era – fundamental businesses which are a base business for us. In order to receive information, the machine needs information input apparatus. For example, putting a tape in a VCR, floppy disc, cards etc. At the time, the quality of the input and output machines used to be very poor.
Photo sensors have been widely used. Magnetic head for cassette tapes, Photo IC for picking up CDs and DVDs, Infrared Remote control, Receiver for TV and video, passage detection sensor of ATM (cash dispenser), paper detection sensor of OA equipment, encoder for printing control of printer, for FA Encoders, and so on.
Today, in everyday life, we cannot see scenarios where Japanese electronic equipment and its peripheral technologies are not used. And any electronic equipment requires information input by photo sensor, and our products are actively used inside of them.
Below are main markets our products are used :
We are thought to be a company that is based continuously in the third aspect and the LED and the Photo IC industries but we actually have a longer history of doing other things.
With photo sensors as your staple merchandise, your company also invests large amounts of money into R&D in order to create better products and to “Lead the future of Sensing Technology.” Can you tell us which are the main focuses of your R&D? And which problem will they help to solve?
Our next step is moving toward a smart society. When we are talking about building a smart society the elements are: first - smart city for example house and factory; second - smart transportation for example car, traffic and logistics and third smart life, for example medical, environment and amusements. These are solutions which make our lives comfortable.
One thing is focusing on a particular point with some air in between but this is a multi-dimensional sensing that incorporates the five senses such as noise, smell, gust of wind etc., and it separates energy by moving things we are able to do. Thereby, consuming the smallest amount of energy possible through our sensor. The more our products go overseas the more we will be contributing to the reduction of energy cost. The next one is the biological information including the iris of the eye detection and heart beat detection.
So, the AI is basically a collection of data and organizing software. Unlike GPS which is suitable for location identification outside, ultra-wide band, or UWB, is suitable for position measurement inside the house. And it can measure within several dozen centimeters, which is more precise than Wi-Fi. One of its characteristics is that it could detect location of a person by a millimeter. So, these are basically the solutions for production of a smart society.
Looking to the future, we will make good use of our partnerships with venture groups as well as universities because they also have their own advanced technology, so instead of us all handling the workload itself we partner with these companies to contribute to building the smart society.
Kodenshi is the first company to create the solar cell and the smart city, with a lot of ambition and history. As the President of Kodenshi, what would you like to be remembered for?
I wish to strive for the improvement of humanity and contribute to development through the advancement of manufacturing, without ever caving in to any sort of problems. I wish to utilize our exploring spirit to contribute to society and work hard to make lifestyle in our company as rich as possible.
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