A pioneer of visual inspection systems for half a century, Daiichi Jitsugyo Viswill has embraced digitalization and collaboration with global partners as it looks to develop cutting-edge technologies at the vanguard of its industry.
Japan is at an exciting time right now. Supply chain disruptions and tensions between the US and China, combined with a historically low yen and the availability of high-quality Japanese products, have made Japan highly promising and appealing once again. Do you agree with this premise? What do you think is the key advantage of Japanese companies within this macro environment?
In general, it's true that the depreciation of the Japanese yen has garnered more interest from overseas markets toward Japanese companies. However, we have yet to fully capitalize on these advantages. Our primary product, inspection systems, is purchased after evaluating the performance of the system using the customer's product before installation, and the results are satisfactory. In other words, performance is as important as price. Additionally, there is fierce global competition in this product category, and we aim to avoid engaging in price competition. As pioneers in the industry and technology, it's crucial for us to emphasize our uniqueness, particularly the high quality, reliability, repeatability, precision, capacity and speed of the inspections our devices can handle.
The global lockdowns caused by COVID-19 had a significant impact on our overseas sales operations. Remote sales became challenging, and many of our customers' facilities were temporarily shut down, resulting in a sharp decline in demand for new devices. Since last August, we have been actively pursuing overseas sales by directly visiting customers to expand our business in international markets. While the depreciation of the Japanese yen should theoretically benefit our sales efforts, we have also observed an increase in material and energy costs for domestic production. Therefore, we need to carefully evaluate the overall profitability of operating with the significantly low yen in this situation.
The Pharmaceutical market in China is picking up momentum faster and faster. We are preparing for sales expansion for our tablet visual inspection systems in this market so that when the Chinese market fully rebounds, we can make a strong entry into it.
Could you talk in more detail about the main advantages of your regular products and company? What differentiates you from your competitors besides your high-quality products and reliability?
We take pride in being industry pioneers. In fact, we were the first to develop the world's tablet visual inspection system, consistently leading the market. There are three key technologies that define the quality of our products. First, there's the precise handling and orientation of items as they pass through our inspection system. Second, we place a strong emphasis on our lighting and camera system. Lastly, our processing system, which identifies items based on images captured with optimal lighting, is the third critical component.
In the 1980s, we manufactured everything in-house, including the lighting and cameras. We even sourced components from a French company and assembled the CCD cameras ourselves. However, we eventually realized that maintaining all these technologies in-house was a significant and challenging endeavor. To address this, we embarked on collaborations with multiple companies possessing cutting-edge technologies. By combining these exceptional and highly relevant technologies, we strive to create the most advanced and up-to-date products in the industry.
Japan’s aging population is creating a labor force shortage and a shrinking domestic market. To tackle this population issue, digital transformation and automation can optimize the design and planning, as well as help pass on technical expertise to the new generation. How are you integrating digital tools and technologies in your products and in your role as a system integrator?
Initially, we operated as a comprehensive product manufacturer, and we also produced cameras, lighting and transportation systems. Over time, we have accumulated a rich history of expertise in all these components, both in manufacturing and integration. However, our current strategy centers on the integration of cutting-edge technologies and essential components into a single system to deliver top-tier products. Thanks to our collaboration with partner companies, we have the capability to achieve this. Our products now incorporate the latest digitalization, automation and other latest technologies, ensuring they remain at the forefront of innovation.
What role do partnerships play within your business model? Are you still looking for new partnerships for your overseas expansion?
At present, we are not actively seeking additional overseas sales partners as we have already established a robust global network in key regions such as India, China, Korea, the US and Europe. Our current focus lies in fortifying our relationships with existing agents and engaging in meaningful discussions to better understand and address our customers' specific needs.
As a company founded in the 70s and a pioneer of visual inspection systems, you have become an indispensable partner for many industries. Can you highlight some of the key milestones of your history, and how do you foresee the next stage of your evolution?
Looking back at our company's history, our journey began in the 1970s, when we were initially established as the research department of Kanebo. We started as a manufacturer and achieved a significant milestone by introducing the world's first tablet visual inspection machine in the 1980s. This marked the beginning of our expansion into international markets when we established an agent relationship with a European company in 1990, representing our first foray overseas.
In 1997, our contract with a US agent did not yield the expected results, prompting us to switch to a different agent in 2001. This experience taught us valuable lessons about the challenges and strategies involved in overseas business endeavors. In 2005, we took a significant step towards independence by separating from Kanebo and rebranding our company as Daiichi Jitsugyo Viswill, operating under a new parent company. (Daiichi Jitsugyo Co., Ltd. is our parent company, the sole agent in a specific area, and a very reliable partner.）A pivotal moment in our product history was the introduction of the TVIS-EX Series, which received widespread recognition domestically. Our successful conversion and upgrade of the visual inspection machine were instrumental in shaping our success today.
Another milestone came in 2009 when we became the first in the industry to integrate 3D imaging inspection into our tablet visual inspection system. Subsequently, our competitors followed suit, incorporating this technology into their own systems. By using the optical-cutting method, we were able to capture a 3D image of each tablet for inspection. This development was followed by the introduction of our TVIS-EX3 and TVIS - Series in 2011. In 2015, we introduced the TIPS system, a combination of a tablet visual inspection system and an inkjet printing system, which has gained increasing popularity in the market.
Looking ahead to our midterm plan until 2030, our goal is to continue growing both our company and our workforce, contributing to the sustainability of the global society. Moreover, we aim to achieve a turnover of 10 billion JPY by the fiscal year 2031 by supplying our products to various industries, including pharmaceuticals, electrical components, automotive, batteries and new functional materials.
Components in the electronic industry are becoming smaller, which require not only improved compactness, density, accuracy and precision but also higher speed. The product you developed is the CCVIS Series. Could you talk to us about the development of this product and the challenges you have encountered to cater to the needs of the electronic industry?
We developed the CCVIS by starting as a tablet visual inspection machine manufacturer. However, we soon realized that this technology could also be applied to smaller electrical components such as chip components and MLCCs. To facilitate the transportation of these smaller components, we implemented a glass turntable, which proved to be well-suited for chip components handling.
Moreover, we recognized the adaptability of our existing system to this new industry. Our continuous efforts are focused on enhancing our camera and lighting technologies to support miniaturization and increase chip density. This approach allows us to achieve higher image resolution and boost the processing speed of our software without inflating costs. Striking the right balance between cost-efficiency and cutting-edge technology is a key objective for us, ensuring that we provide the best possible product to our customers. Our products represent a fusion of a stable transportation system, a high-accuracy lighting and camera system and high-speed image processing capabilities.
Do you think there is a limitation going forward when you improve all these technological components altogether for improved accuracy and high-speed processing, where one won't function at its maximum capacity?
I don't see any inherent limitations in the progression of camera, lighting or image processing technologies. While the pace of development and improvement may vary, there is a consistent upward trend. Even when we implement the most modest upgrades, they still represent advancements compared to previous iterations. In general, technology tends to keep pace with ongoing advancements and continues to evolve.
You have a wide range of visual inspection systems: pharmaceuticals, chip components, rubber products and custom-made ones. In your opinion, which of these Visual Inspection Systems has the most growth potential? Is there any other use, application or industry you can help with using your expertise and technology going forward?
We've recently expanded into a new market, focusing on the visual inspection of rubber products like O-rings. This strategic move aligns with the increasing demand for autonomous driving and the proliferation of CASE technologies, which necessitate the integration of more cameras and sensors into a car's exterior. Additionally, the need for O-rings and gaskets for sealing becomes crucial in these applications, making this a growing field.
Furthermore, we've identified a promising growth trajectory in the automotive-related parts and battery industry. There's a substantial untapped potential in this sector since visual inspection has not yet reached its full penetration, providing us with ample opportunities for expansion and development.
Are there any new products you could share with us, and what is the main focus of your R&D?
We've recently introduced an innovative product to the market: a combination of a tablet visual inspection device and a tablet printing inspection unit. Additionally, we've enhanced our O-ring inspection device to accommodate larger diameters and a wider range of sizes. Recognizing the cost challenges in overseas markets, we've also introduced a higher cost-performance model of this product.
What would be your main goal and strategy to expand and strengthen your international operations in all your locations across Asia, the EU and North America? Would you be interested in M&As or doing a joint venture with some companies to develop some products?
At this time, we are not actively seeking new partnerships because of the global market for visual inspection machines. Because there are partners with whom we already have a cooperative relationship. However, as the market continues to grow, there may be opportunities in the future. Our current priority is to reinforce our relationships with our existing agents and assist them in expanding their local markets.
Your company is celebrating its 53rd anniversary this year. Imagine we come back three years from now and have this interview again. What would you like to tell us? What are your dreams for this company, and what goals would you like to have accomplished over the next three years to come? And as a company, how would you like to be seen in the global market?
When you return, I look forward to sharing my achievements as the President & CEO. I assumed this role in last April, so I haven't accomplished anything concrete or definitive thus far. However, my objective is to enhance all aspects of our business during my presidency. We aim to address the numerous challenges within our company and make substantial progress toward our ultimate goal of becoming a 10-billion JPY turnover company. When we reconvene in three years, I hope to report that we are well on our way to realizing this ambitious vision.