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HOJUN Leverages Japanese Precision and Innovation to Meet Growing Global Demands

Interview - May 30, 2024

Amidst a shifting global economic landscape, HOJUN, a former mining company that is now a leading manufacturer in the specialized field of bentonite products, is strategically positioned to capitalize on the evolving needs of various industries worldwide.

MOTOZO NAKAMURA | PRESIDENT OF HOJUN CO., LTD.

Right now is a pivotal time for Japanese makers. Policies like the US Inflation Reduction Act are forcing corporations to diversify their supply chains for reliability and to reduce country risks, with nations such as China. Japan is known for its reliability, advanced technology, and a weak JPY, so for the time being Japan has never been a more cost-effective option. This means that Japanese firms have an opportunity to expand their existing global market shares. Do you agree with this sentiment, and in your opinion, what do you believe to be the advantages of Japanese companies in this current macroeconomic environment? 

First of all, I wanted to let you know that our company started out as a mining company for industrial use, but now we have evolved to have purified bentonite and organic bentonite in our lineup. These two substances are quite different in their usage, so we must think of them separately.  

Let me tackle industrial bentonite first. The JPY’s depreciation is somewhat good news to us because companies who are procuring from overseas are struggling with the price due to foreign exchange rates. We have an advantage in fulfilling orders from domestic manufacturers. We also must not forget the geopolitical environment. Many Japanese users have become wary of Chinese suppliers, so as a Japanese supplier, we have an advantage. 

As for organic and purified types, they are priced rather high compared to industrial products, therefore the impact of the JPY depreciation is not so much. Our main business partners are domestic rather than from overseas, so now that overseas products are more expensive to Japanese companies, we have an advantage in supplying those demands. We are focusing our efforts more on organic purified bentonite these days, and we have a very unique R&D process. Going forward, we believe that there is potential to sell these products to the Southeast Asian markets even though the share is still small. 

Recently we have been getting more and more inquiries in the field of cosmetics as well as semiconductors. Although we don’t have any direct business dealings with Europe, there are some companies using our products indirectly in countries like UK, France, US, Canada and other Europe. 

 

Japan is known worldwide for its aging population, and experts are now predicting that by 2050 the population of Japan will dip below 100 million due to low birth rates. This has created a labor crisis as well as a shrinking domestic market. From your perspective, what have been some of the challenges and opportunities you’ve seen as a result of this demographic shift, and how are you reacting to these changes?

What you said is correct, and as a country, we are facing a rapid decline in our population. That is naturally going to result in a GDP shrinkage, but I think this is also a starting point for working on labor-saving innovative technologies. One complaint I’ve heard is the lack of taxi drivers. Well, this is an opportunity to innovate with driverless technologies. Also, think back to pre-WWII, the population of Japan was only about 70 million people. I think it comes down to looking at things from a different perspective and this drop does present lots of business opportunities. I think we need to focus on creating products with more added value. Japanese products have always competed not by lowering the price, but by having better added value. 

 

You mentioned semiconductors earlier on, and there is a fabrication plant opening in Kumamoto run by TSMC and Sony. To this end, the Japanese government is putting a lot of incentives on the table when it comes to developing domestic production capabilities, something Japan actually led in the 1990s. If you go back just 30 years Japan was a world leader in semiconductor-related production. As a smaller company that is part of that supply chain, could you tell us, are those incentives trickling down to your company and do you see this as a market opportunity? 

Yes, you hit the nail on the head. The demand for semiconductors will multiply by a factor of 10 as this tribalistic approach continues. AI is also pushing demand forward especially as GPUs, CPUs, and APUs become more and more complex. We expect the volume of demand in this market to significantly increase. I think in that sense I believe the Japanese government is taking the right approach to invest in production capacity. As for us, we only deal with a very limited material that is used for slicing the wafer, so there will be opportunities to increase our business since we are dealing with such specialized material. In fact, there are only a few suppliers like ourselves in Japan, so that means that the value of our products will increase going forward. 

 

The global market valuation for bentonite reached USD 1.91 billion in 2023 and is expected to reach USD 3.21 billion by 2032. With that in mind, how are you foreseeing the next 12 months for your business and what do you expect to be the major drivers of growth for your company? 

Of course, there is the Trump factor that we need to consider. Apart from that, for industrial use in Japan, we do have business chances because there is a lot of talk about the new linear Shinkansen, which goes from Nagoya to Osaka. Unfortunately, it is not cost-competitive to export Japanese bentonite to the US so that will not present an opportunity for us, but in terms of the domestic market, we are pretty secure and expect growth for the next 5-6 years at least. In 30-50 years time we are expecting bentonite to be used for treating nuclear-polluted water. Also, in Tokyo, there are many subways and many buildings that are being built, and there is more need for bentonite to be used for civil engineering purposes. 

For casting, that caters to the automotive industry. This particular industry is seeing a massive shift with the move over to EVs. Although casting usage will decrease we are predicting that other usages will cover that loss and experience growth in the near future. 

 

Could you tell us how you see the organic bentonite changing over the next 12 months?

For semiconductor-related uses, our bentonite is exported to other countries indirectly as a source material. This means that we are not selling it directly overseas. As for cosmetics, I mentioned earlier that we have a very innovative R&D process for skin-care & color cosmetic. Such special devised bentonite for cosmetic uses can sell for double the price, so with this particular sector, we are trying to focus on creating products that cater to the Southeast Asian market, which would be direct sales. 

With these cosmetic cases, we don’t just present the materials, we also present how they work for real use cases. Other companies only list some major elements such as viscosity but we list other deltas that we have discovered by reviewing and studying the material carefully. This is what we consider our efforts as considerable efforts to sell to the Southeast Asian market. 



Out of all the industries you cater to, which do you believe has the greatest growth potential? 

As you mentioned earlier, there is a risk of the domestic market shrinking for industrial use, therefore we are looking to put efforts into developing organic and refined bentonite in the future, which means basically catering to cosmetic services. Thanks to these efforts we are getting lots of orders and we also believe that we are in the process of increasing capital investment. Increased production capacity will be coupled with innovative technology for processing the material, thus allowing us to achieve a level of higher-grade bentonite. I am really looking forward to seeing where this will take us. 

 

Hojun is the sole company in Japan producing organic bentonite and therefore there is a need to meet high international demands and maintain product competitiveness in the field of cosmetics. How does the S-BEN Series maintain international competitiveness and what unique properties contribute to its appeal in cosmetic formulations?

In order to ensure the quality that each user requires we have a very meticulous process of managing and controlling the raw materials and any kind of solvents. At each critical process, we make sure that everything is up to standard. We also pay close attention to the moisture rate and the size of the powder particles. 

 

What measures are taken to ensure organic bentonite products comply with cosmetic raw material standards for skin care, hair care, and makeup?

To put it simply, we only provide what meets requirements. In addition, if the inquiry is from overseas then we will naturally meet those specific requirements. Purified Bentonite Organic Bentonite have the ability to fine-tune their physical properties to meet customer needs. Furthermore, there is great scope for developing specialty purified organic bentonite brands for the cosmetics field in the future.

 

You are also promoting your purified bentonite, known as the BEN-GEL Series with anticipated growth in infant and baby care products. The BEN-GEL Series actually has a wide range of applications, from water-based pens to raw materials, food additives, and cosmetics. How does the BEN-GEL Series strike a balance between versatile applications and meeting specific standards?

In order to meet the standards set by each customer we put an effort into striking the right balance of their requirements with an additional effort on our end in processing. Unfortunately, those extra steps are company secrets, but I can at least say that we do everything we can to meet the specific use case requirements of each customer. 

 

The challenges faced by HOJUN Group in the context of civil engineering applications of bentonite involve tailoring the product characteristics to meet specific requirements for different construction methods. For fresh water-based stabilizers, emphasis is placed on stability characteristics for trench walls, while shield backfilling agents require a balance of suspension characteristics and viscosity/specific gravity. Could you elaborate on how stability characteristics for trench walls are achieved in fresh water-based bentonite stabilizers, and what specific properties are emphasized in this context?

Again, this comes down to providing bentonite that meets specific specifications. The way we do this is by always having on hand a prepared lineup of the ore that meets their needs. 

We procure bentonite from alliance global partners like China, India, Turkey, and other countries, and we might blend different kinds together to get what we need. This is why we have a lab, and our lab will provide consultancy on how to use bentonite in order to achieve what the customer wants. Basically, we are providing a product coupled with consulting services. Bentonite doesn’t actually swell with water normally, but we are developing a product that can do that. 


Catering to all of the industries you do requires a wide range of skills which can be very hard to concentrate in one company. This is why when we’ve conducted interviews the theme of collaborations and partnerships has almost always come up. By combining efforts companies can create new products and penetrate new markets. Can you tell us the role that partnerships play in your business model and are you currently looking for any new partnerships either domestically or overseas?

As for GSE and Tremco, they are dealing with the sheet product, and they only account for a small fraction of our overall sales. For business partners, we actually have more dealings with overseas alliance partners with bentonite mine but we also conduct business with India, Europe, and Latin America. For us, it is essential to have a good lineup of ore, which accounts for 80% of the success of our products. 

Up until this point, we have supplied basically to the Japanese domestic market, but moving forward we are considering focusing more efforts on refined products to provide to overseas markets. The reason why we can’t sell too much overseas right now is because India provides a much cheaper product and therefore we cannot compete. 

Although we may be small compared to say, Mitsubishi, Mitsui, Sumitomo or Itochu, we do have our own talented employees. This allows us to ensure the quality we provide, and in order to do business overseas we do not have to go through some intermediary; that is a big advantage. 

 

Imagine that we come back and interview you on the last day of your presidency. What goals or dreams do you hope to achieve by the time you are ready to pass the baton onto the next generation of Hojun executives?

We have slightly less than 100 people working for us, but despite that, my desire is to have everyone working here feel happy and pleased with their working environment. In Japan, the wages are increasing a little bit, and I want to reward my employees. Regardless of the wages, people here spend eight hours a day working together, so my job is to make that experience as enjoyable as possible. On the day I pass the baton onto the next generation I want to tell everyone a huge thank you for making the company as successful as it has been. 

 

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