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Hikari Dendoki: trading company enhances clients’ monozukuri

Interview - May 27, 2023

A trading company specializing in semiconductors and electronics serving some of the biggest Japanese companies in the industry, Hikari Dendoki helps to enhance its clients monozukuri thanks to its hands-on approach and well-cultivated know-how.
 

TOSHIHIRO NAKAO, PRESIDENT OF HIKARI DENDOKI CO.,LTD.
TOSHIHIRO NAKAO | PRESIDENT OF HIKARI DENDOKI CO.,LTD.

Where do you believe the competitiveness of Japan’s industry comes from today?

I recently met with a board member of Screen Holdings, they are the leading business in terms of cleaning equipment for semiconductor manufacturing. In order to improve the yield there is a very large need for cleaning equipment that is used. We talked about how in the past Japan was very competitive, because we had a vertically integrated production system, where there is a top maker for consumer electronics like televisions from Panasonic and there is the component maker for the screen of the TV. Vertically they were connected to establish the whole production system. On the other hand, the western countries had a different split of work where there is a company for the design of the product and companies for component manufacturing, assembly and they worked together for the production of one product. Japan stopped growing because it no longer produced consumer electronics or any products that can sell very well and that's why the crown of manufacturing was transferred to the other countries, which have a horizontal split of work system. We can see the growth in the assembly companies and the component manufacturers, Japan used to produce TVs, and cell phones, and these products used to be the biggest seller, however, we lost that position.

 

What role do you play in Japan's industrial supply chain?

For example the feature of having us as a trading company, we are dealing with firms that are relatively big and have a high credit level. We don't work with small or even medium-sized companies that do not have a certain level of credit. Companies like Ebara Corporation or Tokyo Electron are our customers and other firms like ORIENTAL MOTOR and CKD are our vendors. We talked about the decline of the Japanese industry and now that the component manufacturers are getting more competition. Japan's fabrication used to be competitive in terms of technology, quality, and cost control. That's because the equipment manufacturers knew about their client’s manufacturing and they were able to share that recipe with the users. This is why they got their strength and it's represented by the manufacturers of semiconductor equipment like Tokyo Electron and other machine manufacturers as well. We were able to produce a kind of machine that can do end-to-end manufacturing processes. This used to be one of our strong points and then we had a lot of transactions with such companies, especially the large scale ones. We can gather information about technological innovation and based on that knowledge we can make proposals to the customers about monozukuri. The conversation style we have with the clients is mainly face-to-face meetings and directly listening to them about their needs so that we can give the appropriate proposal. By using this business style, we contribute to the industry.

 

Could you tell us more about the strengths of your company and how you believe your role as a trader will continue to evolve in Japan's market?

Daido is a fantastic company and I respect their president Mr. Yamada a lot. They have facilities all over Japan and their business style is wholesale and direct sales while we are dedicated to direct sales and that's why we deal with the top users of each industry. We also have a relationship with ROHM which is very famous in the semiconductor field. Because we work with these breakthrough companies, we're able to gather the top-level market information so that we can make the best proposals; I think that is one of our greatest strengths. Compared to Daido who can test robots and address the customers needs at the organizational level, we are trying to empower face-to-face ability with our sales reps. By talking face-to-face with our customers, we train our sales reps to talk about all the relevant areas like mechanics, motion control, and networking. Normally the sales reps are just specialized in area of product knowledge but our sales representatives try to be able to talk about product knowledge and technical fields, this is because we educate and prepare them to a certain level before deploying them. We also developed software internally so that our sales agents can select the best equipment, like motors or the power reduction system and while they have the conversation with the clients based on the specification that they want, we can select the best combination of the components. We work quickly to match customer needs and give the best advice on products, like which is the cheapest, the fastest delivery time, the smallest, the best combination, we give them as much information as they need. The proposal ability is a domain where we are very strong as well.

 

Are you working with any overseas collaborators to understand foreign market conditions? how do you plan to extend the scope of your services?

Without the components and technology for manufacturing, Japanese makers are very competitive compared to their counterparts around the world. Companies like Yaskawa or Mitsubishi are good examples, there is high demand for Japanese components, especially in South-east Asia and China. If you go further to the West, to India for example, they can procure those from European countries but in South-East Asia this is not the case. I took up the project to open a subsidiary in China back in 2012. In 2021 we opened another subsidiary in Malaysia, we are mainly focused on the procurement of components made by Japanese companies in the local markets. There is a company called Nippon Densan that specializes in motors which are in high demand by China for EV production. Nippon Densan is developing multiple production plants for the expanding EV market not only in China and South America, but also in Europe (Poland, Serbia, etc.), the next EV market. It is very hard in China to expand into new business areas, so we are focusing on certain sectors like EV motors and trying to expand the line within that area of business, the same goes for Malaysia. This is why for these countries we nail down the industries to focus on, in China, this means EV production, and in Malaysia, this means mostly semiconductor. There is a very good mode-press company called TOWA and they are also specialized in the semiconductor industry. In Malaysia and China, we procure the components produced by Japanese companies and then supply them to the local industries. This is our business model for the overseas market. TOWA requested us to open a subsidiary in China after the East-Japan earthquake, they had problems with the power outage and the descending value of the Yen. They wanted to start production in China and wanted us to support them, this is another example that a top company invited us to the overseas market. Nippon Seiko is another top company and they have a production site in China. We built a local production for local consumption scheme to sell Nippon Seiko's products made in China to Japanese affiliates in China (semiconductor manufacturing equipment manufacturers). This is another example of how we support top manufacturers.

I'm not somebody who talks a lot about my ideas, I am 61 years old now and it is going to evolve further when I hand the business to the next generation. At least within my generation we will not go to India. We are based in China and South-east Asia and in these markets there are a lot of Japanese manufacturers, especially for components. They are very competitive markets. In Southeast Asia, we considered Singapore as our hub, but decided to expand into Malaysia due to low prices and the lack of Japanese companies. The bases we have in these three countries will be our main focus in the future. This includes our plans for expanding further into Indonesia, Thailand, the Philippines, and maybe Vietnam as well. We would like to conduct our business in these countries by using our 3 main facilities. As a trader, we should purchase products and components and sell those goods to the clients. It would be best to sell them where they are produced. It is very hard to find manufacturers of these parts in South-East Asian countries, so we would like to help Japanese manufacturers expand to these countries by selling products made in Japan by Japanese manufacturers or made in China by Japanese manufacturers. Machines can not be produced without quality components, and Japanese manufacturers are very competitive for components. Customers in China and South-east Asia have been waiting a long time for Japanese-quality components.

 

We have talked about the goals during your presidency, but what if we come back on the very last day when you are about to pass the company to the next generation and we interview you again. What message or legacy would you like to leave for the next generation that you would like to see them carry with them in the future of the company?

In three to four years from now, I will step down as president and succeed this company to the next generation. What I would like for that person to keep or strengthen is the meaning of the existence of this company. I believe that's our ability to have a conversation or dialogue with clients so that we can contribute to the monozukuri manufacturing of the client. I believe that this ability is the driver for our growth. I would like this company to further contribute to monozukuri for the clients and for the company to keep getting bigger. I don't have any intention to go into the e-commerce business, but I would like to continue the face-to-face conversations with customers and to continue growing and fostering people who have the skill to listen and understand what our client's need.

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