With its R&D focused on alkaline electrolyzed water, Hattori Paper has been able to develop eco-friendly cleaning products that are good for the skin and the environment.
What is Hattori Paper's take on monozukuri? What sets you apart from regional manufacturing competitors like China, South Korea, or Taiwan?
My grandfather started the business with handwoven Japanese paper. Then my father succeeded him and started manufacturing paper tapes. These paper tapes were thrown in celebration when ships departed for long voyages. The market was very small, but we had about 70% of the market share at the time. Our products were used across Japan, even in Hokkaido located at the north end, when big fishing ships depart from the port. Because the market was small, they decided to expand to other fields. They began producing toilet paper when I was in my third year of high school. They invested in large equipment to manufacture toilet paper. At the time, toilet papers were hard, but they thought that customers would prefer softer toilet paper. My father and my older brother, who is now the chairman, focused on manufacturing softer toilet paper. Japanese toilet papers are very competitive because they are the softest and the cheapest in the world. As an SME, it was a challenge to remain competitive in that field so we discontinued this business in 2014. We decided to focus on other products to survive. We started making kitchen paper, filter oil paper and tempura oil absorbing paper. Around that time, environmental issues, especially those caused by industrial wastewater, were a big issue. We have the Setonaikai sea (Seto Inland Sea), which is an enclosed body of water, unlike the Pacific Ocean or the Sea of Japan. The problem is that the water does not flow out of this area. In university, this environmental issue became a big social challenge. I learned that it was largely caused by industrial waste from papermakers. I was not able to do anything about that issue at the time. A few years after graduating, I joined Hattori paper and I was in charge of sales. When I went to Tokyo, the same environmental issue was in the spotlight again, and a campaign started not to discard oil waste in the sink. This reminded me of my hometown and the inland sea. I wanted to clean up the ocean and produce a product that contributes to cleaner water. We developed the Katazuke paper used to wipe off the oil in dishes before washing them. Developing and selling environmentally friendly products was an important milestone.
To prevent climate change and increasing temperatures, we have to focus on photosynthesis. I learned that there is more photosynthesis happening underwater than on the ground. The ratio is about 70:30, so we decided to focus on marine forests and eco-friendly products to protect the underwater environment. Around 1995, someone from a company specializing in water R&D based in Yokohama told me that some people were very allergic to synthetic detergents and suffer from skin problems and as a solution, they developed the sodium bicarbonate electrolyzed water (slightly alkaline water solution produced by electrolyzing sodium bicarbonate water) detergent as an alternative to synthetic detergents. I also learned that sodium bicarbonate electrolyzed water has no negative environmental impact. However, this company was just an R&D company, so they did not know how to commercialize their product. Then we decided to collaborate to commercialize their product, and finally launched a product line of Wet Cleaning Wipes using this particular water. In cleaning the kitchen, we normally use a cloth to wipe and then wash the used cloth after. The wastewater eventually goes to the ocean. We developed disposable Wet Cleaning Wipes because they don’t have any environmental impact on the sea, which is more eco-friendly.
What a great development story, thank you for walking us through it. Throughout different developmental stages, paper remained your core technology, yet each leader added something unique to that core technology. Can you tell us in more detail about your time as president and your role in changing the direction of the business, specifically in introducing the electrolyzed water technology to Hattori paper?
As I have already explained about the introduction of products using sodium bicarbonate electrolyzed water, let me tell you about the other ones.
After a while, our partnering R&D company brought me good news that they developed the alkaline electrolyzed water (alkaline water produced by electrolyzing water) which was cheaper than the sodium bicarbonate electrolyzed water. With this new product, we were able to launch Wet Cleaning Wipes to wipe off oils in the kitchen at a lower price in 2001. Electrolyzed water is alkaline, but the Wet Cleaning Wipes are gentle on the skin and environmentally friendly.
These products are broadly recognized in the Japanese market, and sold in big retailers such as Seven Eleven, convenience stores, and drugstores.
By electrolyzing water, not only alkaline electrolyzed water, but also strongly acidic electrolyzed water is produced. We were also working on commercializing a product using strongly acidic electrolyzed water. The pH for strongly acidic electrolyzed water is 2.4 as opposed to 2.1 for lemon strongly acidic electrolyzed water is gentle on the skin. We are the only one developing 100% made of water.
About 40 years ago, I got to know an equipment manufacturer that produces strongly acidic electrolyzed water. At the time, strongly acidic electrolyzed water was used mainly in medical facilities to prevent infection. It is highly effective for sterilization and disinfection. We started developing a new product together. During the process, I found out that strongly acidic electrolyzed water can help with skin problems and burns. In 1992, there was a TV program hosted by a famous journalist, Yoshiko Sakurai, that focused on water that has a special feature and focused on how water is used to sterilize in the medical and food sectors. They put a spotlight on electrolyzed water which was used for hospitalized people. Although wet sheets using strongly acidic electrolyzed water are not pharmaceutical products, they have many medicinal effects. We successfully commercialized them in 1998. When I visited the United States in 2015 to introduce this product to that market, I demonstrated this by dropping the water in my eyes. Everybody was surprised to see it because no one had seen something like that before. We wanted to introduce this to many markets, but it can be challenging and difficult to enter other markets. We are still working on introducing this product, which has been certified as a cosmetic product by the Ministry of Health, Labour and Welfare in Japan, globally.
It has almost been a decade since you went to the US and introduced your technology and product in that market. What have been your experiences overseas, and what challenges have you encountered in your global expansion?
At the beginning of every fiscal year, I gather all my employees to discuss the direction for the next fiscal year. We are a small manufacturer, but we have a big dream. Our mission for alkaline electrolyzed water is to make kitchens around the world safer and cleaner. Our Vice President is currently visiting Vietnam and Cambodia to introduce this product. He sent me a photo of our product lineup in the Aeon shopping mall in Cambodia. This is one of our initiatives, but we need to do more in the future. We entered the US market in about 2015, participating in an exhibition for household products in Chicago. At that time, our Wet Cleaning Wipes using alkaline electrolyzed water contained only 20 sheets per pack. In the US, bigger sizes were preferred so it was difficult to sell our products. Our products were of good quality, but they seemed to be only for portable use. So we decided to change our packaging volume and increase the number of sheets to 80. They are currently sold in Japan. We expect this product can attract consumers in the US and Europe.
What is your strategy for the Southeast Asian and the United States market? Are you looking to establish your presence and representative offices to impact direct channels, participate in exhibitions, and find distributors to help you enter those markets? What do you see as your next step?
In Japan, we provide OEM (Original Equipment Manufacturer) services and PB (Private Brand) services. We are partnering with a major drugstore in Japan. We are developing and manufacturing about 24 million units per year, which means that our products and technologies are highly recognized in Japan. We can be competitive in other countries as well by planning an effective strategy. Some companies are trying to replicate our technology and products, even in Japan. At this moment, we are the only company in this industry with this technology. We have huge potential, but we need more English-speaking employees to deal with potential foreign partners. We worked with a trading company to discuss with a foreign counterpart, and they suggested that we have a branch or warehouse in the United States to start selling our products. However, our financial resources are limited, so we are planning to use US supermarkets and retailers’ warehouses or branch spaces to deliver our PB products for those companies directly. We are also negotiating with some potential clients and continually participating in exhibitions. These are the only ways we can enter the market. This interview is a great opportunity for us to introduce our product to the world. We are hoping that some companies will be interested in our products.
Sterilized water has many applications, especially in the medical field. General casual sterilization (of smartphones, door handles etc.) has become much more commonplace since the covid pandemic started. What impact has covid had on your business, and how did your company respond to the pandemic?
We launched Wet Cleaning Wipes using alkaline electrolyzed water in 2001. When Covid-19 was going around, these products sold well after a TV promotion broadcasted those products that used sterilized water can wipe off coronavirus bacteria left on surfaces. Our product is different from the sterilizers that other companies produce. Since it does not contain any synthetic surfactants after wiping off a table with it, you can touch the table without any issues. Covid-19 increased the sales of this product. It became our top-selling product. On the other hand, Covid-19 impacted us negatively too. Face masks and our OEM products using strongly acidic electrolyzed water used to be purchased by foreign tourists. With no foreign tourists, sales for these products have dropped significantly. However, they are gradually coming back.
If we come back on the very last day of your presidency and interview you all over again, what dreams or goals would you like to have achieved by then?
I always tell my employees that I want to clean up the ocean's waters around Japan, especially the closed waters, such as the Inland Sea, Osaka Bay, Ise Bay, and Tokyo Bay. I also want to further reduce household wastewater and contribute to the campaign against climate change with our technology. Our sodium bicarbonate and alkaline electrolyzed water is good for the skin and the environment. Our products using this water are eco-friendly, as they do not contain synthetic surfactants.
At the same time, I would like to use our strongly acidic electrolyzed water technology to help relieve skin problems around the world. To that end, I would like to spread our product in every way. Finally, we already have a certain level of market share in Japan, but we would like to enter foreign markets as well. I would like to pass on our mission to clean up kitchens worldwide safely and securely to the next generation.