Daiko Electric: Lighting up the future

Why do Japanese companies like Daiko dominate in developing niche technology?

The shipping and construction sectors, as well as home appliances, are on the decline. We can see that Japan is putting forth a lot of effort in components that are indispensable to our world. It is the same with semiconductors, isn’t it? Japan may not be at the top in terms of the volume of production, but they have the expertise in being meticulous to details and the ability to polish to a nanometre. We are not able to compete when it comes to cost, so we have put our emphasis on the niche sector and ensure that we can provide the components. It has been the strength behind our continual leadership up to today.

Even though the phone has a lot of Japanese components it eventually becomes known to be an Apple product. It will not be a finished product without the Japanese components. Similarly, these components are needed for a wide range of lighting1 according to their usage, whether it is an office building or another type of building. I believe that Japan is taking the correct strategic business direction. Our strategy is not to try to do everything but focus our energy on specific areas and be selective in areas where we concentrate our efforts.

Daiko, our company, has constantly determined the parts of the business we want to focus on and set clear targets. We make sure to organise our business in a way that will enable us to draw forth the strengths, skills, expertise, and the history of our employees and our company, as well as, to challenge the market. I think that this kind of thinking or strategy is behind our premier products like the ZERO outdoor lighting product.

I have a question about the lighting sector. Since the 90s, the appearance of LED lights, together with environmental regulations, has dramatically changed. We have seen a lot of low-cost products emerging in the market that kind of strip away the beauty of lighting. Within a market that is constantly being driven down in terms of cost, how important do you believe it is to keep a sophisticated lighting that appeals to emotions?

Of course, the number one function that we ensure is brightness. Aside from that, there are also other needs of lighting that change according to the customers’ needs. With regards to competition, if we were only to compete with how bright our light is, we would not be able to stay in the game. The outdoor lighting market – our ZERO outdoor lighting, is very small, but our goal is to take on a 30% share of the market.

Now Maeshiba-san, I have a philosophical question. Throughout history, light has played a major role in our daily life; it has revolutionised medicine, interior design, and arts. Could you tell us how you see the future of lighting and what role do you believe it will play in our society in the near future?

Right now, we see that the big issues are climate change and global warming. So, I believe that the value of lighting is subject to a bit of change. Being in the lighting and electricity industry, we want to contribute to reducing the environmental impact of our products.  It will not be just about how bright the lighting is, but we also want to lessen how much electricity our lightings use. Especially now that Japan has made restrictions on energy sources such as coal or petroleum, but now nuclear power which is quite vague. In that sense, in order to provide the optimal lighting for cities, towns, and office buildings, we consider more than the brightness of the lighting. We want the lighting to make the people feel at ease while striving to control and reduce the amount of electricity used. Our company has a very strong network with Japanese architects and interior designers who truly prioritise lighting in their projects. They do not limit themselves to options shown in catalogues. Thus, one of our strengths is our ability to provide custom-made lighting equipment to our architects for each environment that they are trying to create. The kinds of orders that we take are unique. Let me explain a bit as to how this process works. Our company works directly with the architect and the interior designer to consider exactly what kind of lighting, feelings, and emotions a space requires. In a close conversation, we work together to create the best light and shape that realises what they want.

You mentioned several things that are interesting, but I would like to tackle one specific thing. Our society is trying to maximize the usage of light and to reduce the amount of electricity along with the advancement of technology and the rise of new innovative technology such as AI and IoT. The smart lighting uses collected data in adjusting the lighting depending on the weather and time of the day. Your company has specialised in a lighting-controlled device called the D-save. Could you please talk to us about D-save and its competitive edge?

D-save has all the properties that you mentioned, but actually this October, we are due to put out a new product that is an extension of D-save. Using a programming system, we can designate how and where the lighting should be used in order to best fit the needs. It is an upgraded version of D-save. We are going to announce this product to the market in a few months.

Only in Japan or also globally?

Just Japan for the moment. It will be available in the market starting around next year.

I would like to bounce off what you mentioned before. You mentioned how you collaborate with architects and construction firms; I find that quite interesting because lighting has a very strong effect on emotions. This is particularly relevant in your outdoor lighting. You might be doing shrines or more commemorative facilities like churches or museums where there is a need to create emotions and create lighting that is specific to the place. My question is how do you ensure that you are able to understand the emotions and translate the feeling or the culture of the place through lighting?

I can share with you the power of lighting in connection to emotions. Even before you step into the lobby of a resort hotel, the magic of lighting begins with the way our lighting equipment is installed. Visitors feel that they are in a resort before entering the hotel or when they are still around 200 metres away outside on the street. Our lighting creates the kind of ambience that inspires a relaxing environment even before entering a building. This is a holistic and comprehensive way in which we do our work.

We are in Honshu in the Japanese archipelago. There is no prefecture in Japan that is completely surrounded by water. In some places, the water is just on one side, but Okinawa is greatly impacted by the environment as it is narrow and is surrounded by water on both sides. Due to this, the devices and equipment are a lot times more subject to corrosion and get more exposure to UV rays, infrared rays, and solar energy than in other parts of Japan.

We must ascertain that we are able to provide high-quality products that are resistant and resilient to such strict environmental and weather conditions. In addition, we also have to create a very relaxing atmosphere. We need to consider other colour variations, apart from white, that match the set palette. There are two things that we must fulfil, one is the durability to extreme weather conditions and the other is the emotionally appealing aspect of the lighting. The crystallisation of these two elements is our ZERO outdoor lighting product. When such conditions arise, we can prove our true strength. People who see our work will right away notice and say, “Ah, that was done by Daiko.” It is not so expensive. That is what I believe. It is lighting that does not come down to outrageous costs. We continue to be a leader in this niche market. It is a very very important strategy that we put into place.

Now Maeshiba-san, you mentioned throughout this interview that one of your strengths as a company was that you are to make custom-made LED lighting and you work with architectural firms to be able to cater to the needs of the market in which you operate. We know that your company is global, you have your presence in the Philippines, China, Thailand, and Hong Kong. I have two questions for you. The first one is how are you able to cater to the needs of foreign markets as the design in Japan is not the same in Asia or North America? Are you looking to find an architectural firm to work overseas and capture new markets?

Up until now, we have never gone out on our own accord to set up our business overseas. We worked with Japanese architects, who were in charge of certain projects overseas. Through these projects, our lighting products were sold and delivered to the hotels in Shanghai, Hong Kong, and Singapore. For the second question, we believe that it is very important not to do this in a half-hearted way. We cannot be vague in our targets but have clear and large projects. If we are going to do it, we need to go all out and make sure that we can reduce the risks involved in a big project. If we were to do it, we would consider something of a volume of ¥2-3 billion and take our entire team, those in the supply chain, and create it as a big project. We do have interest in that; however, we have not done so yet.

Speaking about opportunities, according to experts the global LED lighting market is expected to grow in the coming years reaching nearly 10% due to two main reasons. The first is the growth in the Asia Pacific region with the construction boom and new residential buildings that are being built. Secondly, when it comes to North America, consumers are becoming more sophisticated, and they are looking to have better LED lighting with better design. Could you please tell us what is your international strategy and how do you plan to take advantage of this growth?

Well, Japan was early in entering the LED market. I think Japan is the earliest in the world when it comes to LED lighting equipment. Currently, LED represents 98% of exports within the lighting sector. Moving forward, Thailand, Malaysia, and Indonesia are promising markets, but China and Korea have a lot of LED lighting made domestically. These are the three countries in Southeast Asia that seem to have potential. Like I mentioned earlier, if we were to go and export our products and our equipment, we want to do it on a large scale. We will start from ¥2-3 billion projects and take our entire team with us to provide all the infrastructures needed, including a mini-factory and a local site. Some of our employees who were transferred to China and Hong Kong are taking care of the trading. We do have some personnel working on our export and import business there. As we already have the channels in play like our contacts and distributors in these countries, it will not be hard to pursue these markets if we decide to. In my opinion, if we were to go for it, we need to have a very clear vision in mind. I think we need the perfect timing to seize the opportunity to expand since the Japanese market is not going to increase in growth.

You said that you showcased some of the projects that utilise your lighting here in Japan, such as in Okinawa. We are an international media, and we have international readers; do you have an overseas project that your company has proudly contributed to or a specific product that is being used overseas that you would like to showcase?

I guess they are the hotels. We worked together with Japanese architects on a number of hotels and their restaurants overseas like in Seoul, Shanghai, and Singapore.

Is there a particular project that you like best?

It is old, is that okay? It might be too old. It is Japan’s most popular inn, ryokan, in Ishikawa prefecture. It is called Kagaya, which is number one in popularity for many years in a row with a special hot spring called Wakura in the area. The building is named Setsugetsuka; it is the best of the best and the lighting is amazing, but it is not LED. We have been providing all the lighting equipment to Kagaya Group who is taking care of the building of this ryokan.

We have been involved in many of the most amazing inns in Japan such as Hakone and Atami. We do a lot of projects that are related to resorts, accommodations, and inns. I think we have been the shining star in the order-made lighting equipment until now. We are doing a lot of custom-made products, which represents the greatest volume of our products. We can do the blueprints here, as well as provide the different supplies and products because we have several architects, engineers, and designers within the company. I don’t think other lighting companies do not do large-scale custom-made projects. Therefore, we are able to play a big role in this area. In a few months, we are starting projects that are ¥ 1billion in size. I can say that this project cannot be done without the know-how, history, or capable staff in this field. We need to make sure that we have all the tools at our disposal and foster our staff. Also, those who are involved in the projects must love the work because if they are only thinking about profitability, it will not be sustainable.

Forty-six percent of our employees are women, and we hire more female employees each year. Moreover, we hire employees that may have disabilities. Very early on, we have endeavoured to respond to the diversity in our society through our recruitment. We were earlier than other companies to employ these, for sure. Another thing that we need to put forth effort into is the SDGs in, which we are creating and developing products towards these. Once we have 100 products, then we will announce it to the market and start that business. I believe that we can start with our range of products that are in line with the SDGs this year.

Is it not challenging to be forced to develop lighting that considers functionality and aesthetics because of the SDGs and environmental goals?

I think the hardest part of the project is the selection of materials, in which the key is not to use any plastic products. Our projects include the Hyatt Regency in Shanghai, Hong Kong, among many others, the Island Shangrila in Hong Kong, the Shanghai Andaz, and the Four Seasons in Dubai.

We aspire to create products and an environment that appeal to the emotions and at the same time respond to broader SDGs and global goals such as energy-saving or efficiency. Surely as a business, we want our products to sell and earn profit. However, in my opinion, it is important to not only set our sights on what is the most profitable product or project. Instead, it helps to explore ways to create classy and high-quality products that respond to the SDGs. We are proud of being able to do this. There are over 70 employees who are more than the age of 60. It shows that a business cannot run if it is simply pursuing profit.

I have one last question to ask you because you said that the next president is sitting next to you. Next week, when you hand over the company, what philosophy or vision would you like to leave to your successor?

I have been doing that for 10 years, and he already knows even before I open my mouth. It is called Maeshibaism, Maeshiba’s spirit of successorship. The fact that 46% of our employees are women, 2.4% with disabilities, and 9.5% of our employees are over 60 years old show the needs that Japan is requiring moving forward. It is a step for society to become more embracing of diversity. I have been doing this together with my successor. It is not just about us gaining profit and benefit.  The Daiko philosophy is to ensure that everybody involved prospers in order to harmoniously coexist. It is a mission statement that all our employees share. The three parties that coexist are the stakeholders, employees, and clients, plus everyone in our supply chain.