Monday, Mar 4, 2024
Update At 14:00    USD/EUR 0,92  ↓-0.0007        USD/JPY 150,25  ↑+0.186        USD/KRW 1.330,96  ↑+0.5        EUR/JPY 162,93  ↑+0.224        Crude Oil 83,64  ↑+0.09        Asia Dow 3.793,62  ↑+57.72        TSE 1.748,00  ↑+19.5        Japan: Nikkei 225 40.062,41  ↑+151.59        S. Korea: KOSPI 2.673,72  ↑+31.36        China: Shanghai Composite 3.033,63  ↑+6.6079        Hong Kong: Hang Seng 16.578,95  ↓-10.49        Singapore: Straits Times 3,14  ↓-0.006        DJIA 22,50  ↑+0        Nasdaq Composite 16.274,94  ↑+183.041        S&P 500 5.137,08  ↑+40.81        Russell 2000 2.076,40  ↑+21.555        Stoxx Euro 50 4.894,86  ↑+17.09        Stoxx Europe 600 497,58  ↑+2.97        Germany: DAX 17.735,07  ↑+56.87        UK: FTSE 100 7.682,50  ↑+52.48        Spain: IBEX 35 10.064,70  ↑+63.4        France: CAC 40 7.934,17  ↑+6.74        

FujiClean: ‘Our mission is to protect global water resources’

Interview - May 14, 2021

As we become increasingly aware of water shortages, the ability to recycle wastewater becomes vital. For this reason, FujiClean has developed its Aerobic Treatment Unit (ATU) solution. Founded in 1961, Fuji Clean Co. now has 500 employees, manufactures 50,000 systems annually, and has over two million systems installed and operating in Japan. The company has recently begun to expand worldwide and now has subsidiaries and dealers in Australia, Europe, Vietnam, and the United States. We speak with chairman of the board, Kaichi Watanabe, to learn more about the FujiClean’s revolutionary ATU system and, with it, how the company aims to contribute to wastewater treatment around the world.


In the last 25 years, we have seen the rise of regional competitors, such as China, South Korea, and Taiwan that are replicating the Japanese monozukuri at a lower cost; ultimately, they are providing cheaper and low-quality products to the world. As a company that provides high quality and reliable products that are important for the environment and our health, how would you define the essence of Japanese monozukuri and how do you implement it in your production process?

I am struggling to come up with a clear definition of monozukuri, so I will interpret the question as something that is asking for the difference between the Japanese and foreign manufacturing processes. The leading manufacturers in Japan, such as Sony, Panasonic, and Toyota, entered the foreign market after WWII when the Japanese industrial power was not impressive, and the Japanese manufacturers were not evaluated highly. In the end, they did very well in the overseas market. They successfully established the ‘Made in Japan’ brand. When we entered those markets, although the name FujiClean was not well-known, they welcomed us and regarded our product as high quality. Therefore, I have a deep appreciation for those Japanese predecessors succeeding in the overseas market. There must be an essence of Japanese monozukuri there. As a follower, we should not direct the brand as FujiClean in order for us to be successful in the overseas market. It is important to meet the expectations of the overseas market, and that is the philosophy I have.


Japanese companies tend to face an obstacle called the Galapagos syndrome, in which they are unable to market themselves in the overseas market. In your specific case, what should the Japanese companies do to overcome this challenge?

With FujiClean, we introduce our products to the market with no familiarity with our kind of products. Therefore, we start by listening to requests from the customers, including individual needs as well as requirements from local authorities, and work to meet those needs. To be clear, we do not produce septic tanks which are still commonly used all over the world. We produce Aerobic Treatment Units (ATU), which injects air into wastewater to activate microorganisms to purify the water very efficiently. Our ATUs can be installed alone or attached to traditional types of septic tanks in order to upgrade the performance.


Many Japanese companies are investing massively in R&D in order to create new products for the domestic market, but also to penetrate new markets. Many of them are partnering with overseas companies to engage in co-creation, creating a synergy between the Japanese monozukuri and the foreign know-how. In your specific case, could you tell us the role that co-creation and R&D play for your company?

There are many manufacturers of ATUs in the world, but there are few that have a long history of ATU production since septic tanks have been widely used for a long time. I feel that a lot of manufacturers do not have the knowledge of how the ATU functions. I think those manufacturers neither have strong R&D nor experience. In terms of the purification effectiveness of ATU, FujiClean is one of the top companies in the world. However, our technology of making the tank or the hard shell of the unit is still weak compared to our competitors. It is a possibility to work with partners who can complement that weakness.


80% of wastewater is dumped into the environment, which is jeopardizing the world. When we look at freshwater, only 1% of it is accessible to us. In this matter, how is FujiClean contributing to society?

We all have to contribute to society, but we are producing the units for business reasons. Any company that is not business-oriented will not exist continuously. Although societal contribution is something to think about, we are just focusing on expanding into new markets. Eventually, we want our products to be introduced to new markets and be acknowledged as the superior brand of ATUs compared to other competitors, but we obviously have to be paid in order to continue existing as a company. We want to be number one in the market, and the result of people implementing our superior units will essentially lead to cleaner water.


You were founded in 1961. Could you tell our international readers what makes your company a go-to when it comes to waste water management? What is your main competitive advantage?

In terms of the understanding of what happens in the water treatment tanks, like what microorganisms function in a particular way, we believe we are more knowledgeable than other companies. Also, when we see ATUs built by other companies, we sometimes wonder if their creator is truly understanding what he or she is doing; it seems like they are just following the “text-book” way of manufacturing an ATU. In contrast, we first understand the problem and then manufacture our ATUs to solve that problem.


When we look at the global wastewater industry, it is expected to grow at a rate of 8%. The major markets expected to grow are Asia-Pacific, North America and Europe. In your specific case, how are you planning to take advantage of this growth?

There are a lot of competitors in the water treatment market. Currently, we are targeting more advanced countries than developing countries; particularly, the advanced countries with regulations regarding water treatment. The market we target values the quality and reliability of our products, even though our product is more expensive than that of our competitors.

Advanced treatment units occupy 5% of the global market, which is small, but the rise of environment conscious trends, such as the shift to green energy, will enlarge this market. In the developing countries, we know that their waters and rivers are getting dirty, so we sell our products to those markets as well. However, as you mentioned earlier, competitors in those areas tend to replicate our products at a cheaper price with a lower quality. That is why we are not putting much effort into those markets. We rather establish a brand in the advanced countries by providing them with high-quality products.


Is there any specific product that you want to showcase to our international readers?

There is an example of how our product contributed in the overseas market. In Suffolk county Long Island in New York state, USA, there are many residents; because of that, the water is polluted. As a result, fisheries in that area suffered, resulting in a decrease in the overall catchment. The local government stepped in and subsidized companies that install water treatment systems to remove not only organic carbonaceous substances but also nitrogen from the polluted water. The performance of the water treatment systems were tested by third party testing companies, and the government reported that the system installed by FujiClean was the most effective. When we visited Suffolk county, the local government made a presentation showing how our product is effective.


Are you implementing any new technologies to improve the efficiency of your products?

We are pursuing new technology, as you said. However, under Japanese law, we have to perform three maintenance operations per year on water treatment systems. Even though we introduce a new product, in which it requires only one time of maintenance in three years, we still have to check it up three times a year. So there is little incentive in producing a new product for the domestic market. This is why new technologies, such as IoT, are not implemented much in the domestic market. However, we recognize that there is a need for those technologies in the foreign market and Japan in the future. If we can meet those needs, we can increase our shares in the overseas market. It is important for us to look into those markets, in fact, we are focusing now on remote maintenance using IoT and automatic control systems.

Earlier, you mentioned co-creation with other manufacturers, and I said we are not skilled at making the exterior hard shell of the ATU therefore we are looking for a company that can help us with that field. Similarly, we would like to find partners who can help us in the field of IoT and automation.    


It is challenging to be the best in the world, but it is what you are aiming to achieve. Could you highlight the strategies you are implementing to achieve your goal? What is your mid-term strategy to continue your corporate growth?

A lot of companies in our field do not have deep knowledge on microorganisms in charge of treating water. We don’t have perfect knowledge either; but we are one step ahead of those manufacturers, and I think it is important to enlarge that gap between us and them. If we engage in more research investigating the activities of microorganisms, I think we can find more opportunities. The key is to deepen our knowledge on microorganisms, so we can compete with the world.


Japanese companies have different strategies regarding global expansion: engaging in M&As and joint ventures, penetrating markets independently, or looking for trading companies and/or local partners. Could you tell us your international strategy? What countries are you planning to tackle?

We penetrated the Australian, the US, and the German markets, in that order. We used different strategies for each one of the cases; meaning, if we have the opportunity to penetrate a market, we will do it so with whatever strategy it takes. In the case of entering the Australian market, an engineer from an Australian construction company who saw an article about Japanese water treatment systems, was coincidentally living right next to a Japanese person. With the help of that Japanese person, the engineer visited the FujiClean website, which did not have an English translated version at that time, and contacted us to see if we were interested in working with him. Then, we established a company from ground zero in Australia.

In the case of entering the US market, when we were searching for partners there, we were interested in buying this company that was on sale. However, the price was too high, so we gave up on the purchase of the company, and another company ended up buying it. From the communication we were having with the company that was on sale, they started to notice our strength or the quality of our products. At the end, two top-ranked employees from that company quit their job and joined FujiClean. That is how FujiClean USA started.

When entering the German market, we first attended an exhibition in Germany trying to sell our products. A wastewater treatment company in the exhibition came up to us asking if we were interested in buying their company, so as a result, we engaged in M&A and bought that company.  If there is an opportunity to expand, we would take any form in order to achieve it.


Imagine if we came back in 3 years, to interview you all over again. What would you like to tell us? What are your dreams for your company? What would you like to have accomplished?

We would like to study more about the microorganisms and be able to use the power of nature to reduce energy and stabilize our wastewater treatment systems even more.