Innovative thinking does not always entail the invention of something new, but often it is the reimagining of how a product can be used. Japanese manufacturer Oak Tree is taking this approach with its diverse uses for its forward-thinking technology.
It is our view that Japan is at a very exciting time for manufacturing. On one hand, we have had major supply chain disruptions in the last three years, caused by the COVID-19 pandemic as well as tension from the China-US decoupling situation. As a result, we are seeing many multinational groups try to diversify their supply chains with a focus on reliability. This is where Japan can enter; a country known for decades of high reliability, trustworthiness, and short lead times when it comes to production. Now, with a depreciated JPY, it is our view that there’s never been a more opportune moment for Japanese manufacturers to meet the pressing needs of this macroeconomic environment. Do you agree with this premise, and why or why not?
When you think about the weaknesses of Japanese businesses right now, many businesses are very hesitant about new things. Even if you come up with a good product or solution during R&D it is in actuality, very hard to sell your product as a finalized commercial item. I certainly believe that there is a bottleneck present. Of course, in business you have two sides; the buyer and the seller, and I would say in the Western world the line between them is quite thin. In Japan, there is a difficulty in getting a product out and promoting it to potential customers.
Take a company like Toyota as an example; there is a big corporate structure in place and the company is doing its best to enhance its R&D capabilities and come up with solutions for the company. Apple is no different, and honestly, a lot of those massive famous companies operate in a similar manner. If Apple asked a company to create a component for them you would drop everything and put all your best efforts into the project. That brings me back to my point about Japan and the fact that it is very hard for businesses here. We are all connected by a single string, and if you don’t have connections, it is very hard to promote any product.
Another weakness of Japanese business is the lack of charismatic people. We are running out of these kinds of leaders that each and every company in Japan needs. Fast decisions are not made and if I’m frank, nobody has the guts anymore to make the tough decisions. Additionally, there is a lot of hierarchy between the CEOs and the bottom management, making final decision-making a laborious and slow process. These days it feels like anytime you attend a stakeholder meeting for Japanese companies, 80% of the time it is going to be a negative experience. Someone is bound to have frustrations and no one has any definitive answers. This sort of flow has been happening for the past several decades now, and it has now reached the point where Japanese businesses are becoming known for slow decision-making. With this speed issue, it makes it very difficult to promote any product on a global scale.
This leads to the political situation, and ever since WWII a lot of things in Japan have been directly affected by decisions made in the US. Many businesses also have been sustained by American heritage and the decisions being made by American companies. Europe and America do make decisions very quickly, and the case in the West is that companies tend to be easy to understand. With Japanese companies, in comparison, it is almost like domestic firms would rather stay in the shadows, make no decisions, and simply not market themselves.
As a president who understands all the weaknesses of Japanese companies and markets, what makes your company different?
Our company is different because I’m the only boss and I make decisions very fast. As I mentioned, in general, Japanese companies are very hesitant to adopt new things, and this is engraved in the common sense of Japanese people, not only in business. For example, our company came up with a technology called CNT Dispersion, and we succeeded in uniformly dispersing carbon nanotubes. This technology can be used in a variety of different fields. When it happened, everyone was happy and congratulated us, but when we asked companies if they were going to be using our new technology, they said that they would rather stick with the old-fashioned oil heaters. It means that when Japanese people get used to something it becomes very difficult to persuade them to try something new; they can be very stubborn in sticking with the old ways.
Japan's agricultural companies tend to be influenced by what is going on in the US and Europe before adopting new technologies. Is there a way for you to export your products to Western markets so that Japanese agricultural firms might adopt your technologies after seeing their use overseas?
The agriculture sector in Japan is facing hard times, and there are many factors contributing to that fact. Human resources and land scarcity are big issues the industry is facing. Conventionally growing crops is something that humans have been doing for thousands of years, and in that sense, it is very hard for the sector to be accepting of new technologies. Of course, there are systems being introduced that are computer-based, but I think if you take a look at any industry right now you will see digitalization taking place. With agriculture being so traditional there is an obvious push back and it is increasingly difficult to embed new technologies into the traditional workflow. Even something as simple as cooling or heating technologies are techniques that workers are resistant to, preferring to stick to their usual habits.
You raised a point about the shortage of labor there, and this is quite the prevalent issue when it comes to the demographic shift taking place in Japan. With a low birth rate, an aging population, and increasingly urbanized living, it is predicted that by 2030 700,000 farmers will leave the industry. What impact is this demographic shift having on your business and in the future do you see this change as more of a challenge or an opportunity for your firm?
The answer is that we will try to do our best to provide and procure products for the agricultural sector. Frankly, as I’ve alluded to, this industry is facing a lot of problems right now. The shrinking population is one of the big ones, and it is becoming much more difficult to promote careers in the agricultural sector to young people these days.
Even the area of Saitama where our company is situated is changing. If you look outside, you will notice that there are no sparrows around anymore. This means that there is no food for them so the birds have flown elsewhere. The approach of having to work to put food on the table is not working anymore, and I think people are more conscious than ever of where their food comes from. I think this is where we need to really get back to basics, specifically when we talk about an island nation like Japan that suffers from a lack of natural resources. There isn’t a lot of land, yet we see a lot of construction, especially for infrastructure. There is less land left for growing crops, and we forecast that this situation is going to continue for many years to come.
With all the doom and gloom, it is important that companies in the industry don’t give up. There are still a few of us who are trying our best to promote our products in the industry, and we are going to go at that full power to the best of our ability.
The agricultural industry in Japan is slowly dying, but thanks to companies like yours I don’t think it will truly die out, and in fact, you, as well as others, will be the ones to push it forward. It seems that one of the main challenges is optimization; reducing waste to optimize production yield. Many think that digital technologies will be the key to addressing this challenge and your company will be very useful in that regard. We know that you’ve developed a new diagnostic model that inspects the surfaces of strawberries. How do you see digital technologies transforming the agricultural sector of Japan looking forward 20 years?
This might not answer your question directly, but I would like to point out something more about the agricultural sector. If we look at human beings, we all live close to plants and animals such as pets. These pets only really think about sleeping and eating, I don’t think they are concerned with paying bills or going to work. It is only humans that have expanded their definition of “essentials.” We all have very advanced brains that demand more than sleep and food.
When you look at the drive of many humans living today, it tends to be the accumulation of wealth. There are fewer people thinking about the state of agriculture, especially as it is becoming a less lucrative business these days. For that sake, sometimes nature can be left outside of our perspectives. This to me is a sad fact about the world we live in today. It is my personal belief that perhaps the human race is heading in the wrong direction and soon enough the world is going to reach a total population exceeding 10 billion. The question I have is what is going to happen with that many people living on the planet. More food is needed, and therefore more agricultural initiatives are needed to put that food on people’s tables.
I think the point I’m trying to make is that when everyone focuses on agriculture as a viable business then things can become very productive. It is the need to reach a new evolution of agriculture that sticks in the forefront of my mind.
Unfortunately, there are companies like Amazon out there that are conducting very monopolistic activities. They are building warehouses all over the planet and it is burrowing its way into each and every industry. With their next-day delivery, they are creating a generation of people that are impatient, and not willing to wait for things. Crops and food aren’t grown in a day, so I think the whole approach to agriculture needs to change.
We know that your products have applications in the agricultural industry and you’ve mentioned that you’re here to support it, but we also know that your products have applications outside of agriculture. Which other industries are you focusing on considering the shrinking agricultural market?
We are entering the field of electronics, basically films and other products for computers. They have become a necessity for the human race and people who own computers take them everywhere they go. In fact, cell phones are now essentially computers in our pockets and we pretty much live hand-in-hand with those devices.
Of course, there are a lot of different technologies being implemented into computers, and new generations are always coming. We see opportunities and we are going to be introducing more original products to the industry.
I try to promote our products and as a manufacturer, we see a lot of potential in the usage of our products in different industries including electronics. This actually includes semiconductor manufacturing because single-walled carbon nanotubes (CNT) and having the feature of metallic-type dispersion allow us to go to that area. In this sense we are talking about radio-frequency identification (RFID) and ICT chips, thus taking us to the printing industry. Telecommunications need to be mentioned here too because CNT films offer unique properties including high conductivity, flexibility, and sensitivity, making them suitable for various kinds of industries.
Unfortunately, we come back to the first point I made during this interview; that it is difficult to promote products. Major companies frequently say that they are not interested and they might have products that can complement their production without the use of CNT film.
We don’t have any strength in marketing unfortunately and I account that as due to the lack of human resources needed to reach out to possible customers. However, despite this, I believe that seeing is believing, and this could be a good way of promoting our products. One approach might be to create samples and take those to potential customers and show them how the products work. We work very hard on these prototypes; sometimes up to 6 months on a single one, and it's disappointing that just because we produce an excellent product doesn’t guarantee a sale. This is the pessimistic point of the domestic market, so it might be necessary for our company to look to foreign countries such as the US and China.
A theme of a lot of our interviews is partnerships. Many Japanese firms use these collaborations or partnerships as a way to penetrate overseas markets. What role do partnerships play in your business model, and are you looking for any partnerships with overseas companies?
Yes, although I’m a little hesitant in China. We are not conducting R&D by ourselves and we do have a partnership with Tsukuba University. There is a professor there that is researching CNT dispersion and that individual has been doing so for the past 5-6 years. We’ve put in a lot of investment into the project but we’ve yet to reach the stage where we can create a commercial product. Despite this, we consider these kinds of partnerships as crucial to our company.
There are different types of CNT dispersion, and while multi-layered CNT dispersion research is conducted by our own company, single-walled CNT dispersion is much more complex, thus necessitating the need for collaboration.
Have you considered trading partners in markets such as Europe as a way to market your products to a completely new market?
We are at the stage where we are open to cooperation and if we finalize a good product then we would like to work with an affiliate company that could promote our products to foreign countries. There are a lot of activities being done in our R&D center.
One approach might be to do something about grape fields for wineries in Europe. We have a similar situation here in Japan with strawberry crops and we are trying to introduce our products as cooling and heating solutions for the agricultural field.
What is your international development strategy going forward?
The Japanese mindset is quite stiff and we often describe it as the island mentality. We don’t yet have a strategy to go outside of Japan and penetrate foreign markets.
One way to promote our agricultural products might be through the ethos of SDGs. Practically every company in the world is looking at ways to decrease their carbon footprint and products that could decrease their carbon emissions. Our products fit that bill and allow companies to save energy when cooling or heating.
Imagine that we come back in 3 years and have this interview all over again. What goals or dreams do you hope to achieve by the time we come back for that new interview?
I mentioned RFID tags earlier, and I envision a future where information is stored on a person themselves. No longer would you need to carry a cell phone or visa card, instead you could just pay for things with your finger. Through the chip, we might be able to access information like required medication saving peoples’ lives. The single-walled CNT is a technology that is contributing to RFID tags, so if my company can contribute to this kind of future, it will be a dream come true.