Hosoda, since its inception, strives to be an expert in food equipment development, prioritizing genuine customer engagement and a philosophy against exploiting users, partners, and employees for profit, aiming to translate customer needs into simple, effective solutions.
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. Enter Japan; a country known for decades of high reliability, trustworthiness, customer-centric production, and advanced technology. 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?
Expanding our business in international markets remains a significant objective for our company. However, our current primary focus lies on the Japanese market. To succeed domestically, we are diligently engaged in the development and launch of new products in Japan. While our financial readiness for international expansion is established, regrettably, a scarcity of human resources hinders our progress. We possess a limited number of English-speaking employees, yet we have consistently strived to respond promptly to inquiries from non-Japanese companies. For instance, we have successfully received orders from countries such as Australia, the United States, Canada, and France, where these companies proactively approached us.
Indeed, the weak JPY presents a compelling opportunity for us to broaden our presence in international markets. However, the key to actualizing this growth lies in augmenting our human resources. As you are aware, Japan's population is declining, prompting my belief that offsetting this trend can be achieved by shifting our business operations overseas, a vital element of our long-term strategy.
Regarding products with high potential in foreign markets, we have great confidence in the prospects of our vegetable washing machines and noodle manufacturing lines. Our technological excellence in these food-related domains sets us apart. Nevertheless, the scarcity of human resources poses a bottleneck to further progress. In the past, many Japanese youth sought work opportunities abroad, but regrettably, this trend has waned over time.
Do you see the declining and aging population as more of an opportunity or a threat to your business continuity?
Addressing the challenges posed by the declining population, our company has dedicated substantial efforts to automation as a primary theme in recent R&D endeavors. Our ambitious objective is to achieve full automation for all our machines, including the complete automation of vegetable washing. We have already made significant progress in this direction, particularly evident in our automated noodle boiling equipment, and we are determined to extend this automation to vegetable washing as well.
From our perspective, the declining population presents an opportunity, as manual vegetable washing is increasingly less cost-effective. Unlike humans, automated machines can achieve flawless results consistently, offering significant advantages. We believe a well-rounded approach would involve embracing greater automation while maintaining human oversight to ensure top-notch quality.
Regarding recruitment, our firm is actively seeking skilled professionals in design, machine engineering, and electrical engineering roles. However, even after three months, we have not been able to procure the human resources we need, and the situation continues to be difficult. In this way, especially for niche talents, has become a demanding task in the current environment. We recognize the growing importance of automation in the production site, particularly as individuals are increasingly averse to laborious tasks and hard work. As a testament to our commitment to automation, we offer two distinct versions of our dehydrators; one is manually operated, while the other is fully automated, facilitating seamless and efficient cleaning processes.
When you say the complete automation, do you mean the cleaning of the machine or the washing of the vegetables?
I mean both the cleaning of the machine itself and the washing of the vegetables.
Can you talk about the specifics of your noodle-boiling machine and how you are able to make them automatically clean themselves? How do you plan on applying this technology to other lines?
After the noodle-manufacturing process is completed, the baskets are moved in order while the hot water is full, and the residue is discharged. After that, the tank and basket are thoroughly washed by sprinkling water with chemicals while draining water and rinsing with a high-pressure shower. Currently, it is installed only in large equipment that meets the conditions, but in the future we plan to develop a simple type that can be operated on small and medium-sized equipment.
How are you going to apply this kind of technology to other machines such as a vegetable washing machine?
The feature of the noodle boiling machine is that it has a hood and is airtight. So you can use chemicals and boiling water. Vegetable washers usually don't have hoods, so you'll have to think of another way. Therefore, we use our experienced robot arm technology to spray detergent foam to remove dirt and then rinse it in the shower. We have already made notable progress in this area, and before the COVID-19 pandemic, we showcased this cutting-edge technology at various exhibitions and events.
While we anticipate completing these advanced machines in the near future, the adoption of such technology can be a challenge as not all companies readily invest in expensive machinery. Therefore, striking a balance between advanced features and cost-effectiveness remains a significant challenge for our company.
Earlier you talked about having recruitment issues for the past 3 months. Are you drawing from a Japan-only pool, or are you actively recruiting overseas talent?
Given our recent experience of spending a lot of time and money on recruitment activities without any successful candidates, we are now considering ways to explore talent acquisition from outside of Japan.
Overseas expansion seems to be the next step and we know that you’ve been in Korea since 2005. Additionally, you briefly had a location in Shanghai as well if we are not mistaken. What have been the key takeaways or lessons you’ve learned during your experience in having an overseas business?
In the past, we established an office in Shanghai to handle the significant inquiries we received from the Chinese market. Consequently, we hired local Chinese employees to manage operations. However, in the absence of Japanese management, we encountered challenges as some staff members did not maintain the expected level of productivity. We attribute these issues partly to suboptimal recruitment practices, and we observed lapses in responding to inquiries effectively. Although our Japanese team contributed to some degree of success, ultimately, the mentioned challenges led us to discontinue operations in the Chinese market.
On the other hand, in the South Korean market, we have maintained a presence through one dedicated staff member over the last 20 years. This individual successfully hired local Koreans, resulting in the effective and diligent management of our operations there, even without direct Japanese supervision.
Our key takeaway from both experiences is that managing operations outside of Japan necessitates proper management and training. Such ventures demand careful attention to detail. Currently, we are exploring a different approach by focusing on developing relationships with local distributors as we move forward.
You mentioned how in the past you participated in some exhibitions to showcase your technology. Are you interested in participating in these kinds of events to maybe connect with distributors around the world?
That could be an interesting starting point, but I feel that it might be a difficult task to find a distributor from those kinds of exhibitions.
If it isn’t through exhibitions, how do you plan on connecting with these kinds of distributors or partners?
In Taiwan, we successfully established a partnership and collaborated with a sales company to cater to the needs of a particular user. This venture proved successful and has solidified trust in Taiwan. While we foresee future collaboration with this partner, our ultimate objective is to find such distributors in every region of the world.
In the global market for cut vegetable washing machines, Dutch manufacturers are competing with us, but I believe that our company has a technological edge. However, we acknowledge that many parts of Asia have a culture of eating vegetables that are cooked rather than consuming them raw. For instance, in the Chinese market, simmering or steaming vegetables is common due to concerns about the safety of raw vegetables. In that case, our proprietary technology, which reduces bacteria and ensures safer consumption of raw vegetables is extremely over-specked. We recognize that different markets have varying demands, and we appreciate the need to cater to these specific requirements.
When Dole initially entered the Japanese market with cut vegetables, while we received inquiries from them, they perceived our equipment to be expensive and over-spec. They believed that simpler washing equipment from Taiwanese and American manufacturers could achieve the same effect for the Japanese market. However, this assumption proved incorrect, and eventually, they had to procure our equipment. Taiwanese or American offerings could not meet the stringent specifications demanded by the Japanese market.
Imagine that we come back in 5 years time and we interview you all over again. What dreams and goals would you like to achieve by the time we come back for that new interview?
The company has a comprehensive 5-10 year mid-term to long-term plan, with a significant focus on international expansion being a key objective. In our niche market, we hold a prominent position as the leading player in Japan, and while it might be challenging to further increase our market share domestically, we recognize that pursuing growth lies in exploring opportunities beyond Japan's borders. As such, seeking markets outside of Japan becomes pivotal for sustained progress.
While our existing product lines demonstrate robust performance, we are currently engaged in internal discussions to introduce a new product line. This exciting venture revolves around the automated removal of foreign materials, a pressing concern for Japanese customers. Specifically, this technology addresses issues like insects or worms inadvertently finding their way into vegetables. Through our cutting-edge equipment, we enable image detection and swift automatic removal of such foreign bodies. This innovative solution holds tremendous potential and promises to address a significant customer need. I eagerly await the opportunity to discuss further advancements and outcomes when you revisit us in five years' time.