Daily Discoveries through Exceptional Appliances

If you look back at the 80s and the 90s, Japanese consumer goods and home appliances were ubiquitous. I remember listening to music on my Sony Walkman and watching France lose the soccer World Cup on a Panasonic TV. Then, what we saw in the decade that followed was the rise of China, Korea, and Taiwan, who, on the one hand, had excellent manufacturing practices and economies of scale that allowed them to reach a lower cost, while on the other hand, they also had a rapid technological acceleration that allowed them to produce products that were maybe not the same quality, just a little lower, but had a lower price. This has now been the case for the past twenty or almost thirty years, yet we still find in certain niche applications that Japanese brands have become quality leaders, and often these smaller companies have been able to protect this market share. How do you explain that?

When Japanese companies design and develop products, they have a mindset of omotenashi, or hospitality. Japanese companies also have a lot of pride in testing their products. For example, many times, the products are made to ensure that even if a customer misuses them, they will be safe. I think those are important keys to global success for a home appliance company.

I used to live in China for 20 years, and I was the vice president of a factory that produced seasonal products. During that time, the Japanese brand was so strong and was exported everywhere. Eventually, some brands were purchased by Taiwanese or Chinese companies. So, I was on the other side for those twenty years, producing the product at a cheaper price than in a Japanese company, and there are a lot of things that I learned from Taiwanese and Chinese companies about how quickly or how cost-effectively we can produce a product. I think that’s one of the keys for Siroca.

I joined Siroca in 2019, when the company was not doing well. Since then, we have doubled in size. One key to that growth is the people I had working for me before I joined the company. Another key is that many customers and manufacturers supported us, and I understand both.

When you joined the company in 2019, what were some of the key factors that made you think you could be successful with this business?

I loved the products. They were unique. My family was cooking with a clay pot on a fire, which was time-consuming. One of my family was a picky eater, but she ate all that I cooked by Kamado-San Denki(electric rice cooking clay pot). Since they started using these products, things got better, so I thought that a company that could make these kinds of unique products has the potential to grow if they have good financial and operations controls combined with quality and cost.

In the home and cooking appliance sector, there was a big expansion during the COVID-19 pandemic. Many people were stuck at home, and there was a boom in the demand for kitchenware. Today, the growth has slowed down, but the sector is still expected to grow by around 4% until 2030. What are some of the big trends that you’re seeing in the industry today, and how are you reacting to those trends?

I don’t see any growth in our sector, but we are still growing, probably because we are small, so we can move quickly, and because we aren’t afraid to develop some unique products. If we were a big company, we probably also could not have fun with product names like Pochi and Tama (famous Japanese pet names), but we are okay naming the products like that.

Talking about Siroca’s ability to develop unique products, one example is your in-house bread maker. An article in the Nikkei newspaper talked about the boom it had in sales during the COVID-19 pandemic. I’m from France, so I have an in-house bread maker, but this is generally considered a niche product. Can you tell us about the development of this product and why you entered such a niche sector? What made you expect the success that it would have?

When I joined this company, the bread maker was already one of our strong products, but since then, we have expanded the market share, and one reason for that is that we developed some unique features like a rapid bake. That came from my personal background, where my niece would wake up on the weekends and ask me for fresh bread, and the quickest machine option was two and a half hours. Naturally, she was too impatient to wait that long. I realized I could make it by hand much faster, in maybe an hour, so I was wondering why a machine took longer than that. Based on that experience, I worked with the R&D team to come up with a faster solution. The first model could finish in 58 minutes, and the next model could finish in about 47 minutes. I think that is much more suitable for people with a busy schedule. Those customers can also now make things like udon and mochi and even bake sweet potatoes, so it’s not only a breadmaker. We tried to innovate or adjust it to people’s food lifestyles while keeping a reasonable price. I think that’s probably the key to the success of this product, and we now have over 40% of the market share in one of the famous e-commerce sites.

You mentioned the importance of your R&D team for the development of this product. Finding such talented staff is one of the big challenges that Japanese firms, especially SMEs, are facing today. We also see that Japan’s population is the oldest in the world, and it’s rapidly declining, which is creating two big challenges. First, you have a problem in terms of labor, and this is particularly true in the R&D sector, where a lot of very experienced engineers are nearing retirement. Second, it’s also creating a shrinking domestic market. How is Siroca answering this dual challenge?

I worry about the shrinking domestic market, but I have two answers. The first is to expand into global markets. In fact, we are not looking at the market only as Japan because, in my previous career, I sold products all over the world. The second is to make and sell products targeted to the aging population and those who care for them.

Obviously, Japan is at the forefront of this aging trend, but it’s not the only aging country. Almost every advanced economy is aging today. Can you tell us more about your strategy to create products that cater to this older population?

We just launched a blender that is suitable for both babies and the elderly. It focuses on food for people who cannot chew.

I was making pottage for my grandma because I wanted her to eat homemade food, not something canned or frozen because it didn’t taste of home. That’s why I made this, but of course, we have to be commercially successful, so it can make smoothies, it can make soy milk from dry beans, etc. It has a heater that can be turned on or off. It doesn’t get hot like other products because of a unique insulation structure prevents heat conduction from the motor. It’s also compact. You will be surprised at how smooth the final food produced can be, regardless of the ingredients you use.

We are also developing a special model that uses pressure cookers that can achieve high pressure to produce very soft food. It also has special pressure and temperature controls that make it easier for older people to use.

It’s interesting to hear you talk about the developments of these products because it seems you were quite involved directly. Is that a typical role for you?

I was very involved in the engineering of this project. For example, because we are using the DC motor, it is very difficult to achieve a good product life, especially because it has a high torque, so we developed a special motor just for this product. I studied and then talked with motor engineers, and because magnetic power gets reduced at certain temperatures, we used special magnets that are much stronger than usual. We also control the temperatures around the motors to make sure the power doesn’t diminish.

The predecessor company of Siroca was founded in 2000. You mentioned you joined the company in 2019. Could you run us through the history of the company and what you consider to be some of the key milestones in the firm’s development?

The founder of Siroca started the business as a closed auction retailer, which was a new concept in Japan. At that time, it was not a manufacturer.

Around 2008 or 2009, the founder started manufacturing rather than buying and selling goods that other companies made. The first product was a vacuum cleaner. The branded goods in this product category sold for around JPY 15,000 to JPY 20,000, but our pricing was very competitive at JPY 5,980. That was the start of Siroca as a manufacturer.

The next big milestone came in 2010 when the company launched a home bakery product, which became a big hit. The experts say that in this home bakery product category, a hit product only comes once every ten years, so we were lucky, perhaps because, at that time, the Japanese dietary customs started to change from a traditional Japanese style to a Western one, which meant eating more bread.

Our product development engineers are serious about making bread that tastes great, and they added some unique product design aspects. The design team went to China’s manufacturing facility, and they spent a year and a half eating bread every day, tasting their designs. So, that was a really important milestone. Currently, we command a very number of products shipped stands at 1.4 million units.

Another milestone came in 2013 when the company launched a convection oven, which is like a conventional bread toaster, but you can make deep-fried food without using a fryer.

We then launched a fully automatic coffee maker in 2015. This became very popular because around that time, office workers would buy very reasonable cups of coffee at convenience stores, so they got quite accustomed to having coffee before starting work and the product appealed to these people and also allowed them to enjoy the same taste and flavor at home. Now we have a smaller one and a larger one that can make six cups. In the larger one, you can simply enjoy coffee because water and beans are automatically measured with freshly grinded beans.

Coffee makers are a very competitive market because you have some big brands, like Nespresso or Nescafé. What are the distinguishing features of your machine in such a competitive sector?

It’s handy to use, the taste of the coffee it makes is good, and the price is very reasonable. We are also always improving the product. For coffee machines on major e-commerce site, last year, we had 33% of the sales, and then this year, we are aiming to reach 40%.

We can break down your product portfolio into four main divisions. First, you have cooking and kitchenware. Second, you have seasonal goods that change depending on the weather. Third, you have home goods, including a lot of cleaning products. Fourth, you have a distribution, where you have partnerships with other brands. Looking to the future, which of these four business divisions do you believe has the highest growth potential, and why?

It’s very difficult to say because we are releasing many new kitchen products, as well as some upcoming climate products and home products, like a dishwasher. These three divisions will probably develop equally. However, the distribution of other branded products is very difficult in Japan at this moment because of the exchange rate.

Regarding the distribution of products, you mentioned you work with foreign brands. You have a deep knowledge of China because of your twenty years of experience there. The exchange rate is difficult for foreign brands today, but have you thought about collaborating with Japanese brands to help them go overseas?

Actually, I have another company that is separate from Siroca, and I’m already helping them go to foreign countries through that company.

One of your standout products that won the iF Gold design award is the Kamado-San Denki rice cooker. One of the unique features of this was that you were able to integrate an earthenware pot into an automatic electric system. Why do you think no one else thought about doing this before?

To summarize what I heard from Mr. Nagatani, the owner of that clay pot company, and our collegues, many people tried to do this and then approached the clay pot manufacturer Nagatanien, but they refused because a lot of those people tried to change the clay pot, but we were different. In order to cook rice well, the clay pot needs to be breathed, but if we want to use induction heating (IH), then we need to put metal in it. If we do that, it cannot breathe, so in order to take advantage of the good point of using a clay pot, we cannot use IH. We have to use a traditional coil or heating system around it. Of course, we still need to put a sensor into the clay pot, which is very difficult, so if you don’t have the patience to convince Nagatanien, you will fail. Mr. Nagatani was convinced by Siroca to collaborate. Many big companies approached him as well, but he felt the respect from us for his product.

What is quite interesting about this product is that it’s a perfect combination of a historical cooking technique and materials with modern technology. From an R&D or marketing standpoint, are there other types of products like this that you’re looking to develop?

Yes, we do. In Japan, we used to have irori, sunken fireplaces with tatami mats around them. There’s a square with a fireplace, and we used to hang a pot from the ceiling over the fireplace to cook, or we would grill something on the fire. During COVID, we didn’t have enough places to eat around this office, but people were still coming to the office to work, so I often cooked for my colleagues, and we thought it was heartwarming or fun to eat together even if we had to keep enough distance. So, we developed a grill product that doesn’t let much smoke escape and which also lets us use a pot as well. We didn’t want something cheap. Rather, we wanted to make something good enough to use every day that can provide fun for families by cooking on the table. So, this is based on the irori concept because people used to gather around it to eat and talk and enjoy each other’s company.

Many of your products target consumers directly. Have you ever thought about targeting restaurants or taking a B2B business approach?

Actually, some restaurants are already using the Kamado-San Denki rice cooker, microwaves, and other appliances.

As you mentioned, the global market is one of Siroca’s priorities, and you already have an international network that started in 2014 with Taiwan and was then expanded across Asia. Looking at the future, which do you believe will be the key regions or countries of growth?

The cooking styles are similar in Asia, so that’s why we started there, but in the future, I think we have the possibility to expand our products to Europe and probably some of the Arabic countries. In the end, we would like to be in the United States, but that could be a little difficult.

Do you have a plan for how you will expand into those markets?

Yes, we will probably collaborate with local enterprises.

You acquired Siroca in partnership with the Japan Growth Investment Alliance (J-GIA). Can you talk about the synergies that you’ve been able to realize through this investment structure, with you owning 51% and J-GIA as a strategic partner?

Obviously, the financing was an important thing, especially since they are an investor who has broad societal trust and support from big, well-known companies in Japan. Having a partner with such a good reputation, directly and indirectly, supports our company and lends it an air of credibility and trust by association. They also sent two good people to help me organize and improve the operations. We worked closely together. We even ate dinner together almost every day because we always worked late. We ended up reorganization, but we didn’t fire almost anyone.

You have obviously had some good success because of the restructuring doubling business, as you mentioned before. That’s impressive, given the competitiveness of the segments you are operating in. What would you say were the key features that allowed you to be so successful?

Our products are unique, and we can develop new products quickly. Even during COVID, when we couldn’t go to China, we had an office there and could maintain communication. Some of us, including myself, also speak Chinese, so we could still easily design new products.

You mentioned your history and how you began your career working for twenty years in China. You built a lot of experience in the home appliance field and then took over this company, among other firms that you have. As you look back on your career since 2019, what’s something you’re the proudest of having achieved at Siroca, and what is the next thing you want to achieve?

One thing that I am proud of since I started with Siroca is that most of the key people are still in the company, and occasionally, I hear from them that their families are proud of their work here, so that’s probably what I am most proud of.

I rarely do media interviews because it is important for me as the president of the company to give the stage to everyone so they can develop themselves and have an opportunity to be the star by themselves. This company is not for me. It’s for the people who work here.

I joined this company near the age of 50 and it is important to me to successfully pass this company to the next generation. I grew up spending a lot of time in foreign countries, so when we go to foreign countries, although we want to keep our core values, we also want to localize the product. For example, to sell our rice cookers in other countries, we want to adjust the machine based on the rice they eat. It might be different from other Japanese companies, but it’s an important point for us. We also want to be a company that can be useful to whatever society we have a presence in. For example, in Japan, we are still supporting the Noto area after the earthquake. We want to support the families who need help. For us, this is important, and it is important that we continue to do things like that in all the countries where we operate.

For more information, please visit their website at: https://www.siroca.co.jp/en/