Cutting Through Time: KAI Corporation Merges Centuries-Old Craftsmanship with Cutting-Edge Innovation

The Japanese manufacturing sector is experiencing a dynamic period, with food and entertainment-related exports reaching all-time highs. When combined with macroeconomic trends, such as the weakened yen against the US dollar, making Japanese exports more competitive, this creates unique opportunities for Japanese companies. Do you share this sentiment, and what opportunities do you see arising from these conditions?

Yes, the depreciation of the yen is certainly benefiting our business. Over 50% of our sales come from overseas markets, while just under 50% is domestic. The yen’s depreciation has bolstered our overseas business significantly. In 2022, our consolidated group sales reached JPY 50.3 billion, and in the last fiscal year, we achieved JPY 53.5 billion. We expect further growth this fiscal year.

This advantage is amplified by the global perception of Japanese products as high-quality, technologically advanced, and meticulously crafted. The weakened yen has made these products more affordable and, in some cases, undervalued, which has increased their appeal to overseas customers.

Japanese craftsmanship is often regionally distinctive. For instance, Okayama is famous for denim, and Niigata for metalworking. KAI Corporation originated in Seki City, which has a rich history of sword-making. Could you elaborate on the cultural significance of Seki to your company?

Seki City in Gifu Prefecture, where we originated, has a 700-year history of sword-making that dates back to the Kamakura period. During the samurai era, Japanese sword craftsmen gathered in Seki due to its favorable natural resources: clean water, abundant pine trees for fire, and quality soil for crafting high-grade swords. Iron used for the swords was sourced from Yasugi in Shimane Prefecture and transported to Seki.

After sword-making was banned during the Meiji era, the blacksmiths shifted their focus to knives and other daily utensils. KAI Corporation was established in 1908 as a pocket knife maker in Seki. This tradition of craftsmanship has evolved over centuries, and today, Seki is recognized as one of the world’s top three knife-making cities, alongside Solingen in Germany and Sheffield in the UK.

Japan is experiencing a boom in inbound tourism, with over 35 million visitors in 2024. Have you observed an impact on your business, and are you taking steps to capitalize on this trend?

Yes, inbound tourism presents a significant opportunity to expand our business. Before the COVID-19 pandemic, most visitors from China and other Asian countries purchased our nail clippers, which were particularly popular. During the pandemic, there was a sharp decline in tourism, but since then, we have seen a strong resurgence, supported by the depreciation of the yen. Notably, the current wave of tourists includes more Western visitors alongside the traditional influx of Asian travelers. The popularity of our nail clippers has not only endured but grown, as reflected in our sales figures. Of course, nail clippers are not the only sought-after item; our knives have also become highly popular souvenirs from Japan.

Additionally, we have observed a steady increase in foreign visitors to Kappabashi, near Asakusa, which is well-known as a hub for kitchenware. Our sales in this area have been consistently growing. Another key initiative was the opening of a retail shop in Narita Airport’s Terminal One.

As a primarily wholesale-focused business, we were initially hesitant to establish directly managed shops, as maintaining strong relationships with our retail partners is a priority. However, at the request of Narita Airport to offer unique Japanese products, we opened our store there last October. The shop features a selection of our knives and other KAI products, catering to the growing demand among international travelers.

Do you plan to open other shops like this one if it is a success?

If our airport shop proves successful, we plan to replicate the model at other airports in Japan that serve as entry points for international visitors. However, this expansion would likely remain limited to airport locations to avoid interfering with our wholesale business model. Operating direct retail shops could potentially affect our relationships with retail partners, so we aim to proceed cautiously and remain supportive of them.

One significant advantage of having our own shop at the airport is the opportunity for market research. It allows us to gather insights into the demographics, nationalities, and preferences of customers who are interested in our products and what they choose to purchase from Japan. With established shops and bases in the US and Europe, we can leverage this data to better understand market segmentation, identify emerging customer needs, and explore new areas for growth.

We’ve discussed the opportunities for your company, but challenges remain, particularly for a company like yours, where craftsmanship is at the core of your identity. One significant challenge is the loss of institutional knowledge due to Japan’s declining population. This issue is especially pronounced in regional areas like Gifu and Seki City, where population decline has been ongoing for over a decade. As a result, many artisans, small shops, and businesses have either closed down or face uncertainty due to the lack of clear successors. We’ve also seen trends of consolidation, with larger corporations acquiring smaller businesses to revitalize regional industries. Is this a part of KAI’s strategy, and could you elaborate on your efforts to support the revitalization of Seki and the Gifu region?

First, let me explain the situation regarding the blade and knife industry in Seki City. A traditional Japanese sword is composed of many parts—not just the blade, but also the handle, joints, and cover. The unique aspect of sword manufacturing lies in its segmentation, where multiple craftsmen specialize in different components to create a single sword. This culture of specialization and segmentation remains a defining characteristic of Seki City, even though production has shifted from swords to blades.

As our company has grown, we have worked to fill gaps by integrating various processes within our operations. However, this does not mean we handle all manufacturing steps ourselves. We collaborate with local factories for parts or entire processes, which keeps many small businesses in the industry active.

Unfortunately, we are seeing an increasing number of small family businesses discontinuing operations due to financial difficulties or the lack of a successor. This poses a risk to the segmented production system; if one company goes out of business, it can disrupt the entire process.

As the leading blade manufacturer in Seki City, we see it as our role and mission to ensure the longevity and sustainability of Seki’s craftsmanship. To this end, we have undertaken two key measures. First, we are collaborating with Gifu University to establish a course focused on blades. This will be the first comprehensive blade studies program in Japan, located right in Seki City.

Second, traditional craftsmanship in Seki has typically been passed down through apprenticeships, where learners observe and imitate their masters without asking questions. Our goal is to modernize this approach by standardizing the elements of craftsmanship. By leveraging AI and sensors, we aim to make the learning process more visual and scientifically grounded, ensuring that this invaluable knowledge is preserved and passed down to future generations.

One of the remarkable aspects of KAI Corporation is your ability to seamlessly blend innovation in design and materials with traditional craftsmanship. For example, your latest knife, the SEKIMAGOROKU Kaname, features a very sharp tip reminiscent of a traditional Japanese sword, yet it incorporates a new steel material sandwiched between two layers of stainless steel. This balance of innovation and tradition is impressive. From a development perspective, how do you integrate new technologies with historical craftsmanship to stay true to KAI Corporation’s identity?

Our company was established in 1908, making us a centennial company that will celebrate our 117th anniversary this fiscal year (FY 2025.) Being based in Seki City, which boasts over 700 years of blade-making tradition, we have a deep respect for the culture, craftsmanship, and legacy established by our ancestors. However, while honoring tradition is important, being confined solely to it can hinder growth. That is why we emphasize the need to embrace new innovations while maintaining the traditional craftsmanship that we have cultivated for more than a century.

Shun Classic series

The global popularity of KAI knives is closely tied to the rise of washoku (traditional Japanese cuisine) on the international stage. As washoku gained recognition worldwide, particularly in the early 2000s, the demand for high-quality knives to prepare it also increased. Among our various brands, Shun has become our flagship line, with the Shun Classic series achieving significant popularity overseas. Its unique feature is the undulating Damascus-like pattern, which reflects both craftsmanship and aesthetic appeal.

The inspiration for the KAI Shun Classic manufacturing method comes from the techniques used in Japanese sword-making. Swordsmiths would pull and fold the iron 50 or more times, creating over 30,000 layers that result in an undulating pattern known as the Damascus pattern. The Shun Classic design reflects this traditional aesthetic, resembling a Japanese sword, which is one reason it has gained such global popularity.

Technically, a Japanese sword is made from a single sheet of iron that is folded to create the Damascus pattern. In contrast, our industrial knives are crafted from multiple layers of material that are rolled and shaved to achieve a similar effect. While the method differs, the inspiration remains rooted in traditional sword-making.

At KAI, we are committed to continual innovation. While knives are often viewed as commodities with little room for advancement, we challenge this perception by introducing new industry trends and elevating the standard of operation.

One unique aspect of KAI Corporation is our annual launch of new product series. For instance, within the Shun brand, we not only offer a variety of sizes but also knives designed for different purposes. Additionally, we regularly introduce new product lines, such as Shun Premium, which are based on fresh inspirations.

Our international success has allowed us to bring those results back to Japan. For example, the SEKIMAGOROKUseries is priced affordably in Japan, and we sell a wide array of products ranging between JPY 2,000 to JPY 5,000, catering to the commodity market. However, we’ve also introduced premium high-end lines, such as the SEKIMAGOROKU series, which exemplify our focus on innovation and quality.

Our strength lies in our ongoing research and development. We continuously explore new materials, manufacturing methods, and designs, enabling us to bring fresh ideas to the market and stay ahead in a competitive industry.

In recent decades, KAI has diversified into other categories, including medical equipment, kitchen products, and grooming goods like razors and tweezers. Can you tell us more about your diversification, and are there any product areas you’re looking to strengthen and grow?

We have formulated a midterm plan built around three core business pillars. The first pillar is our medical device business. We initially began by making blades for men’s razors, and this expertise evolved into producing specialized knives for ophthalmology and dermatology surgeries, as well as for extracting tissue samples. While general surgery knives have become more commoditized due to competition, we focus on ophthalmology, dermatology, and microtomy—three key areas where we see significant growth potential. Currently, the medical segment accounts for approximately 10% of our group sales, and we are actively working to expand this contribution.

The second pillar is our knife business. We have established branches in the US, Germany, China and other markets, where our Shun and SEKIMAGOROKU brands perform exceptionally well. While the US and Europe represent the majority of our overseas sales, there are still many untapped markets around the world. With the global rise in popularity of Japanese cuisine, the demand for high-quality knives has grown considerably. This trend presents a tremendous opportunity for us to expand into new regions.

The third pillar focuses on men’s grooming and women’s beauty care products—both of which are rapidly growing markets. Our diverse range of products includes disposable blades, for which we hold the highest market share, as well as tweezers, nail clippers, and other beauty tools.

What sets KAI apart is the sheer diversity of our product portfolio. While we face competitors in specific categories, such as blades or nail clippers, no other company offers the comprehensive range of products that we do. This diversity gives us a unique competitive advantage.

We are now intensifying our efforts to engage new audiences, particularly younger generations who are increasingly focused on self-care. As interest in beauty and personal grooming grows, we aim to ensure that KAI products are the preferred choice.

Domestically, we have a strong market share in men’s grooming and women’s beauty care products, but we are working to expand our reach internationally. Our primary focus is on neighboring Asian markets, where we believe our unique products can drive further growth.

While medical products align with your technological capabilities, they require different certifications and face specialized competitors. How are you overcoming the challenges of regulation and competition in the medical field?

Our history in making razor blades led us to enter the medical field. Razor blades require ultra-thin blades, often less than 0.1 mm, and the technology behind producing these blades was directly applicable to the medical field. We entered the medical market in 1984, and the microtome blade made a significant contribution to our growth in this field.

Globally, there are few manufacturers of razor blades due to the high cost of establishing comprehensive production facilities. This barrier to entry is similar for medical blade manufacturing. By leveraging the expertise we’ve accumulated in razor blade production, we have been able to horizontally apply our knowledge to develop medical products and build a robust network.

You are correct that the standards and regulations for disposable razors are entirely different from those for medical products. These regulations grow stricter every year, which is necessary to prevent medical errors. Compliance with these standards is the baseline for operating in this industry, and we have a dedicated team that specializes in ensuring regulatory compliance.

Interestingly, our experience in the stringent medical industry has allowed us to enhance our overall quality assurance systems. While this isn’t a direct impact, it is a valuable byproduct of our work in the medical field.

As our chairman, my father, often says, a blade is just one part of a larger process. For example, our microtome blade is used to take tissue samples from patients for testing. Its effectiveness depends on being integrated into the entire manufacturing and inspection process, which requires us to remain diligent and aware of the broader ecosystem.

Similarly, in ophthalmology surgeries, our blades are used alongside complementary devices like lens inspectors. In this field, we actively partner with companies that produce complementary products, combining our efforts in both manufacturing and sales.

Another notable aspect of our medical business is collaborating with hospitals and doctors to develop new surgical methods. These methods often require specialized tools, and we work closely on their development before supplying them. Typically, the new techniques are published in academic papers, which showcase the cutting-edge advancements we contribute to. This continuous innovation reflects our persistent drive to excel in every field we operate in.

Beyond your core business activities, KAI Corporation is involved in various social and community initiatives. For example, your KAI House Club series shares recipes and cooking tips to engage customers, and since 1997, you have organized a concert series in Seki City to contribute to the local cultural scene. Could you elaborate on how these initiatives support the local community? Additionally, how do they align with your company’s mission and bring value to KAI Corporation as a brand?

At KAI, we specialize in culinary and beauty products, but our goal is not just to sell products. We aim to offer a complete experience by providing concepts and services that enhance the use of our products. For example, when someone purchases a KAI knife, the purpose is not just to own the knife but to create and enjoy delicious food. To support this journey, we provide information and resources that help customers achieve this end goal.

Our mission includes bridging the gap between experts, such as Michelin-starred chefs or cooking specialists, and everyday home cooks. One way we do this is by sharing expert insights and demonstrating how to make the most of KAI knives. Similarly, for our beauty products, we share knowledge from professional makeup artists on how to enhance one’s appearance using KAI tools. While these efforts also help promote our brand, they primarily focus on adding value to the user experience.

Regarding social contributions, we place great importance on supporting the next generation. For instance, we manage a foundation that funds groups engaged in activities and studies aimed at nurturing future talent. We also sponsor a sweets competition for high school students, which has become a recognized entry point for aspiring patissiers.

Additionally, we collaborate with Gifu University to establish Japan’s first blade studies department, a significant step toward preserving and advancing the craft. Beyond blades, we’ve also partnered with Mr. Nobuki Hizume, a hat designer and craftsman, to help sustain and pass down the tradition of hat-making to future generations.

I plan to gift my parents a KAI product this Christmas. What do you recommend I get them?

Our Shun brand offers a wine opener, which stands out for its exceptional design and functionality. While there are many types of wine openers available, KAI’s combines both practicality and aesthetic appeal, making it a strong candidate. Of course, our knives are also an excellent option, particularly the SEKIMAGOROKU Kaname or any of the various models in the Shun series.

For more information, please visit: https://www.kai-group.com/global/en/