Having developed its unmistakable quality through a high level of craftsmanship and manufacturing standards in Japan, Emuden has exported the Japanese monozukuri manufacturing philosophy to Southeast Asia, where it is poised to experience huge growth thanks to growing demand for electronics in the region. We speak with president Yasunori Yanagida to learn more about the Emuden’s shift overseas, as well as the company’s rich history.
The term “Chuken Kigyo” is a Japanese concept that defines a Strong-Small & Medium Size firm. While largely invisible to the general public, these corporations are the strength of the Japanese industry, being 95% of total companies, 75% of total employment, and 55% of total added-value manufacturing. What is the role of Japan’s “Hidden Champions” in the manufacturing chain?
Small firms like ours, also named SMEs, are the ones supporting the Japanese Economy. SMEs are behind some of the world’s largest companies because often we are market leaders in niche fields. This means that we are constantly improving ourselves, and producing high-quality products with regional technologies, which makes small firms unique.
Small firms are behind the scenes; we are like the bottom of an iceberg. Therefore, we have a large role to play. This is why we are called “Hidden Champions” because we are the backbone of the Japanese economy and have become indispensable for the country.
Your company has facilities overseas. As a manufacturer company, how do you ensure that the quality of your product remains top quality whether its produce in Japan or overseas?
The key to maintaining our high-quality standards in each of our overseas subsidiaries is to create a manufacturing structure where we share a common philosophy, process, and discipline. To achieve this synchronization and to ensure the quality of our products in every plant and country, we conduct training and education to our employees overseas.
The Global Power Supply Market is projected to cross $33 Billion by 2023, growing at a CAGR of over 6% during the forecast period. Growing demand for home and building automation, the emerging telecommunications sector, and increasing demand for energy-efficient devices are the key factors driving the growth of this market. The Asia-Pacific market for power supply is projected to grow at the fastest rate during the forecast period. Could you give us your insight on this trend? How do you plan to take advantage of this growth?
We provide power supply components to several Japanese and international customers such as TDK-Lambda. As we have clients in other Asian countries, we decided to shift the manufacturing plants of these components to those countries where our customers are, such as China, Vietnam, and Hong Kong.
The purpose of this decision is to be closer to our clients and provide them better support. Moreover, producing in other Asian countries is also cheaper than producing in Japan, which allows us to generate a bigger volume of our products.
Therefore, in a sense of future direction, we will continue working in the power supply sector. Moreover, we also aim to shift all our factories to South East Asia to be closer to our clients and to offer them the best possible service.
Today, Emuden is a manufacturer of power supply equipment and AV equipment such as BNC connectors, terminal blocks, AC inlets, and cables, among others. What is your overview of the different products you manufacture? Which segment occupies the biggest share of your market?
Emuden was founded by my father as an audio, TV, jacks, and pin-jacks company. Those products were our best sellers and our main client was Panasonic. However, nowadays, this sector is not a trend anymore. Therefore, we are moving in the direction of completely stopping the manufacturing of these components. The same thing happened with the BNC connectors used for communication devices. In the past, those components were a trend, however, nowadays, they are disappearing.
For this reason, we decided to adapt to the evolution of society, which has guided us to other kinds of equipment components. Nowadays, half of our sales are based on our terminal blocks. We have many different types of these components, which are useful for several kinds of equipment.
Emuden is known for its unique technologies such as your “Cell Production Method”, enabling you to provide high-added-value products. What are the competitive advantages of your unique technologies?
We work on the reform of the production method to get better results in terms of productivity and efficiency. One of the solutions to change and improve this process is a cell production method.
This method implies to be in charge of all the manufacturing process to do it faster. This is why, in our factories, we are in charge of designing, developing, progressive press and plastic molding, processing, and molding. Moreover, we also create the assembly, the molds for the assembly, and even the machinery used in the manufacturing assembly line.
Furthermore, we have also implemented other innovative technologies such as the “Insert Molding Wiring Board Technology”, the “Lead Frame Connection Technology”, or the “Labor-Saving Technology”.
Emuden was founded in 1963. What key milestones of your company would you highlight?
One of the key milestones of Emuden was in the 1980s when other audio makers started to shift their manufacturing facilities from Japan to Southeast Asian countries. At that moment, my father really struggled to decide whether he should follow the other Japanese audio makers and shift our facilities overseas, or to remain in Japan.
Moreover, he also had to decide if he wanted to continue in the same sector or to shift to the automation business. Finally, he decided to focus on the second one and supply components for automation equipment to other companies. The facts that made him decide to carry out this change were the big opportunity to grow technically in the automation business, and the dynamism of creating products in response to the needs of each of our different costumes. Moreover, this change also developed our flexibility and engineering skills.
Finally, another key milestone has been our contribution to the environment through our implication in energy and solar panels, a sector that is huge in Japan.
Throughout the years, your company has expanded beyond the Japanese border, with overseas business networks including China, Hong Kong, and Vietnam. What will be your mid-term strategy to pursue corporate growth? Can you tell us more about your international strategy?
Our mid-term strategy is to continue growing, especially overseas, supplying the Southeast Asian market with our components. To this end, we will dedicate our plant in Vietnam to the manufacturing of our components to produce a bigger volume at a cheaper cost. Regarding our factory in Japan, it will be dedicated to R&D activities and to create higher-value products.
Furthermore, regarding our turnover, we plan to double it by February 2023, getting a turnover of $23 million. Upon now we were selling to Japanese clients. However, once you go out to other Asian markets, the amount of sales that you can earn with just one client is huge, multiple times larger than in Japan.
Are you interested in international partners (M&A, Joint Venture)?
We would like to find partners in any Asian countries such as China, Vietnam, or Thailand, especially regarding the automotive factory. Our strength is not only quality control but also the control of the cleaning environment of the factory, which is something that is lacking in the Chinese factories. We are quite strict with the factory environment, and the emissions of different gases or chemicals. Therefore, there is a lot that we can support there.
Furthermore, with the trade war last year between China and the US, we have received a lot of requests from Chinese clients to make some products for their costumer as a result of that. Moreover, a US company that was working with Chinese manufacturers to make some of its components also contacted us to work with Emuden instead of with their Chinese suppliers. Therefore, even if those products are not related to electronics, we decided to help them temporally as we had the technology to do it. Hence, we are open to new partnerships that make both of us grow.
10 years from now, what do you wish to have achieved?
Our objective is to solidify our overseas facilities and the overseas manufacturing structure environments between Vietnam, China, and Japan. Moreover, we would like to get into the automotive industry to provide the electric components for those clients.
Finally, unlike the rest of the Japanese manufacturing companies who give the highest-ranked charges in their overseas facilities to Japanese people, we would like to evolve this habit. Therefore, we are hiring local staff to give them managerial positions in their countries. They are the ones that know their countries the best. Hopefully, in 10 years, all our managers overseas will be local people.