In an exclusive interview with Koichi Nishizawa, President of Gate Japan CO., LTD, the company's core business and distinguishing advantages are unveiled. Established in 2005, Gate Japan specializes in precision molds and die casts, offering design, assembly, and manufacturing services. With a robust network of over 300 associated factories across Japan and Asia, Gate Japan provides one-stop solutions for clients in electronic devices, semiconductors, and automotive industries. Amidst global disruptions, Nishizawa emphasizes Japan's pivotal role, leveraging reliability, trustworthiness, and a depreciated JPY to meet evolving market demands. Gate Japan's resilience during supply chain realignments, demographic challenges, and Lehman Shock exemplifies its adaptability and the proactive hiring of foreign talent to navigate labor shortages. With a focus on quality, diverse partnerships, and a global expansion strategy encompassing India, ASEAN, Europe, and North America, Gate Japan envisions a future of innovation, flexibility, and enhanced customer solutions in the industrial parts sector.
If we could start with a short introduction to your company. What is Gate Japan's core business and what advantages set you apart from your competition?
Our company was established in 2005 by me, Mr. Koichi Nishizawa, as a manufacturer of precision molds and die casts. We have four domestic offices located in Kyoto, Tokyo, Tohoku, and Nagoya. We do have overseas offices as well including our office in Shenzhen, China, as well as Bangkok, Thailand.
Our products are mainly supplied to Japanese industry companies, but apart from pure manufacturing we also provide design and assembly services to our clients. Gate Japan offers a one-stop service, and it is how we've been able to generate the business we have so far.
We have over 300 associated factories that send us drawings which we then analyze. We then select the best factory for the job, meaning that we can also outsource to foreign countries.
Our clients are producing electronic devices, semiconductors, and automobiles. As mentioned, we have over 300 subcontractors, and while most of them are Japanese or Chinese, some are Korean or Taiwanese. Some factories are located in Southeast Asia in countries like Malaysia, Indonesia, Vietnam, and Thailand. In our customer portfolio, we have over 1,000 clients including some major companies in their fields.
We have a large amount of equipment at our disposal producing various parts, grossing over 1.2 million in sales. Although a large focus is on stainless steel products, we can also produce ceramic products, and as I mentioned, we can also assemble for clients as well as manufacture the parts they need.
Being a manufacturing company, we care deeply about quality, and as such we have developed several quality checks. Of course, after production, our factories check the product quality and then they deliver those products to our Quality, Cost, and Delivery (QCD) center. We also have a QCD center in China. Items produced in China are first checked in China before they are sent to Japan where they are once again checked by our QCD center in Japan. As you can see, there are comprehensive quality checks throughout our entire chain to ensure only the highest quality is delivered to the client.
I have worked in this industry for over 40 years now, so with that accumulated expertise combined with our powerful consulting power and our network of subcontracted factories we feel that Gate Japan is uniquely positioned to be a viable solution for any company looking for precision die cast and molding 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. This is where Japan can enter; a country known for decades of high reliability, trustworthiness, and short lead times when it comes to production. 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? What do you think are the advantages of Japanese firms in this current economic environment?
First of all, I do agree with your premise, but beyond that, our firm is not just focusing on the domestic market. We do have a strong domestic presence, but as mentioned, our partner factories include locations in other Asian countries. This allows us to benefit from cheaper labor costs, thus winning in terms of cost competitiveness. On top of that, we have our expertise in connecting the dots since we are an integrated company that finds the best solutions for its clients.
We do benefit from the expertise of many SMEs, but many of them are now experiencing a level of stagnation, so inevitably we need to utilize a wider range for our network, exceeding the boundaries of Japan,
We know that Gate Japan handles precision mold parts, automation parts, jigs, and many more. To achieve this you have a partnership with over 300 affiliated companies, and to ensure the quality you mentioned you have two QCD centers. Why do you believe it is important to have your inspection systems and what advantages do these QCD centers have?
I think this all comes down to the words “quality,” and “reliability.” I think these two words describe the beneficial points of Japanese companies and the reputation that has been built over centuries now. We as a company pride ourselves on this prestigious Japanese quality and reliability, so applying quality standards and embedding inspection systems is necessary in our business.
It is almost inevitable to maintain quality control and ensure that the products we process and deliver to clients are of the utmost quality. Most of our clients are Japanese companies, and some of them are big names in their industries. Needless to say, they expect high-quality products.
The last three years have seen very large supply chain disruptions as the dust settles on the COVID-19 pandemic. Asia in particular was impacted due to China’s very tough lockdown measures, which resulted in not only disruptions but also sometimes the unavailability of certain components. If you look at the semiconductor industry, there were huge shortages. As a result, many companies looked to mitigate the damage by breaking their supply chain across many countries instead of being reliant on just one region. They also began localizing their production basis, which in turn created many challenges. During that time traders saw huge growth, companies such as yours. How did these supply chain realignments impact your firm and what are some of the new opportunities that you are seeing?
We honestly cannot say that the COVID-19 situation has caused any effects on our business. We were fortunate to be stable throughout the entire pandemic period and business is pretty much the same before, during, and after.
Let’s first talk about the volume of production because it might give some clues as to why we didn’t feel any side effects. Some companies produce mass volume whereas some produce smaller lots. We are on the side of smaller lots, but our products are very precise, and we only provide the needed quantity to our clients. You have to remember too that we aren’t just providing products, we also offer one-stop services to customers, giving those customers the options for a full package of solutions. This whole package solution approach did not feel any damage from the COVID-19 pandemic since so many of our customers still demanded products and services.
One of the more pertinent challenges that Japan is facing right now as a whole is, of course, the demographic shift. Japan is known as the world’s oldest society with a shrinking population due to low birth rates. Experts believe that the population will dip under 100 million by 2050, with over 30% of people over the age of 65. This creates a labor crisis and a shrinking domestic market. What are some of the challenges you have seen as a result of this demographic shift and how is your firm reacting to the demographic changes in Japan?
This demographic shift is creating more negative points than opportunities for Japanese companies. Unfortunately, the elderly population is growing, and this presents real challenges to manufacturing companies in particular. There is a smaller pool of graduates to hire into our factories, and with the increased elderly population the overall population of Japan is inevitably going to shrink as you mentioned. The approach that Gate Japan has taken to solve this issue is quite simple, the recruitment of foreign personnel.
We are not a big company, with only 60 personnel working here, but out of the 60,50% are from outside of Japan. We have people from Korea, China, Thailand, Vietnam, Myanmar, and Indonesia. A lot of our foreign labor comes from the ASEAN region, and I think it illustrates nicely how we are flexible when it comes to hiring foreign personnel. Honestly speaking, most Japanese companies are going to have to open up to the idea of bringing in foreign workers if they are going to avoid the labor deficit. It also works to open your business to a foreign perspective, and this openness has allowed our company to flourish internationally, creating a thriving network of affiliated factories to subcontract work out to.
There are stark differences between Asian countries like Japan, Korea, China, and Thailand for example. You have differences in terms of regulations, machinery, equipment, and even cultural differences. One such example might be the level of defect that might be acceptable will vary wildly from country to country. As your firm acts as a total solution provider, bridging the gap between factories and clients, how do you deal with these differences to ensure the delivery of your products?
Yes, this problem does exist, and we share the same ideas that you have. This is the very reason why we employ so many foreign workers, roughly 50%. The language barrier is a very good representation of this problem you speak about, and both factories and clients need to communicate effectively through us to ensure that both clients and factories are on the same page in terms of the products and services expected. Everyone needs to speak the same language and share the goal we are trying to achieve together.
However, language alone does not solve all problems, and cultural differences are often things that cannot be expressed with words, and that is why we’ve chosen to hire such a diverse cast of workers. The idea is to understand the cultural aspect from many different perspectives, which in turn will allow us to better cater to a client's needs. These foreign workers can help relay the messages we want to get out to local companies and vice versa.
Beyond all this, quality matters, and frankly, I think quality talks too. We cannot let our customers down with the quality they expect from products, and that is why we have our QCD centers. Of course, we trust our partners, but we would be letting our clients down if we didn’t follow through with proper QCD procedures. All of this is designed to make sure the customer receives the best product or service in terms of quality standards.
Since 2005 you have become a specialized handler of parts for automotive and automation jigs. As a relatively young company, what are some of the challenges you’ve had to overcome over the past 18 years?
Yes, indeed, we are still a young company, and I would say throughout the 18 years of our existence things have been pretty good. The only blip on the radar is the Lehman Shock, which not only affected us but also other companies all over the world. Two of us started the company back in 2005 with the simple idea of connecting the dots between manufacturing and the customers. Year one and year two were great, showing excellent promise, but then disaster struck and financial institutions around the world collapsed because of the Lehman Shock. 2008 was the only year we experienced a deficit and that was because of the Lehman Shock. Surprisingly our company took very positive steps, and it only took us about 6 months to get back afloat. Everything else is history and every year we have grown more and more to the point we are at now with so many companies standing side-by-side with us.
The key to our company is the network and the number of affiliated companies we have standing with us. It creates a strong point, allowing each company to almost become greater than the sum of its parts. The fact is, gathering this many companies together is very hard and, in the beginning, we only had one affiliate factory in Korea. We started at this point and brought products to our clients here in Japan. Unfortunately, I’m not particularly good at speaking English, however, since English was the main language used for business communication, I had to level up my skills and go to Korea. I had to travel a lot and talk to many companies to get them on board with our plan. There were a lot of hardships, but the ends justify the means.
As you look back at everything that has happened since 2005, would you say there are any key moments or milestones that were paramount to the success of Gate Japan?
First, I don’t feel that we have reached the level of ultimate success just yet, and in fact, ultimate success may be an ever-fleeting dream; completely unobtainable. There are so many things that we should do and will do in the future. The key factors I feel that have contributed to the success we have achieved thus far I would say comes down to trust. Relations and bonds between ourselves and our affiliate companies are significant, creating a mutual understanding.
Another key factor is flexibility as well as foreign human capital. Being capable of adapting to foreign workers speaks to our flexibility and allows us to better capture the customer needs. I believe all of these elements combine to create our strength as a firm and with these elements working well in unison, we have achieved success.
Among your wide range of products, which particular sector do you believe has the most potential for future growth? Are there any new products that you handle and you would like to showcase for us today?
There isn’t a specific area that we are looking to grow in the future, and that is because our growth often comes down to our customers. From the perspective of where we are seeing the most demand, however, we do see a lot of demand from the semiconductor, automotive, and medical fields. Future growth of our firm will come from moving beyond Japan and not limiting ourselves to just Japanese customers. To some extent factory automation (FA) and labor force shrinkage will be a tendency that won’t only affect Japan, but advanced nations around the world. Already you can see the start of these issues in China and Korea, with both of those countries suffering from low birthrates and no signs of population increases.
Luckily, we already have a presence in Southeast Asia thanks to our network of affiliated companies. We can use this network to solve local problems, ones that are taking place outside of Japan.
In other interviews, the theme of partnerships often comes up, with major players saying that collaboration and co-creation with local partners are the keys to unlocking international markets. Are you searching for any new partnerships in international markets?
The answer is quite obvious and we have no plans to stop expanding our network. We have a team that is focused on increasing the number of affiliated factories across Asia in countries such as Indonesia, Vietnam, and Malaysia. The reason is because of the China Factor, and there is now considerable risk in the Chinese market that we would rather avoid if possible. By not limiting ourselves to just the Chinese market we are trying to capture a wider geographical area as much as possible.
In addition to the increases in our network, we would also like to expand our sales capabilities too. The idea is to procure, produce, and sell, all in the locality of the customer, allowing the affiliated factories to act as satellites for Gate Japan.
Are there any specific countries that you would like to expand your sales network to?
Our next steps will ultimately lead us to India, which is the next target for us. ASEAN is also a focus, and then finally we might make steps towards Europe and North America.
Is there an ultimate goal or dream that you would like to achieve during your time as president of Gate Japan?
As far as goals go, I would like to see my company become more global, with the targets being ASEAN countries, India, Europe, and then North America. I would love to see my company reach those new horizons. We already have set up good foundations for our success, especially with our restructuring as a holding company in 2023. At the end of the day however, the most important aspect of our business is our human capital, so by taking care of the skilled people we have we can achieve better standards and solutions for our customers, thus creating a better company together.
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