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Illuminating success: Unity's innovative approach to lighting solutions

Interview - February 16, 2024

Discover how Unity, a leading Japanese luminaire company, navigates global competition, leverages brand differentiation, and pioneers unique lighting solutions in a rapidly changing market landscape.

KEN ISHIMOTO, PRESIDENT OF JAPAN HEADQUARTERS, (LEFT), KATSUTOSHI KAWAMURA, CEO OF UNITY LIGHTING (TAIWAN) CO., LTD. (RIGHT)
KEN ISHIMOTO & KATSUTOSHI KAWAMURA | OF UNITY INC.

Over the last 25-30 years, Japan has seen the rise of regional competitors who have replicated Japan’s model for success but done so at a cheaper labor cost, pushing Japan out of mass markets. However, we know that Japanese firms are still leaders when it comes to niche fields. How have Japanese firms been able to maintain that leadership despite the stiff price competition?

After World War II, Japan experienced a major economic boom, the growth of which was supported by the USA. With this economic boom, Japanese products were exported abroad. I did some research prior to this interview and found a quote from an American from the 1980s. According to this, 'Japan is number one.' This meant that at the time Japanese products were recognized for their quality. This was actually achieved by taking American products, imitating them, and improving their quality. This imitation of improved quality is something the Japanese are very good at. Cost-effectiveness is important here, and Japan now excels with low-cost, high-performance products.

But now I feel that if a Japanese company can create a 100% complete product for JPY 10,000, its competitors in China and Southeast Asia can create a 60% quality product for JPY 5,000. As you know, China is known as the factory of the world and has improved its technology to live up to its name. They are still rapidly improving quality, reaching about 80% of JPY 5,000 quality, but keeping costs low. The tendency of many societies around the world to opt for more cost-effective products, regardless of quality, has created a situation where Japanese companies are struggling to survive.

In the future, it is important for Japanese small and medium-sized enterprises (SMEs) to learn how European countries do business. Functionality is important in Europe, but there are other important factors such as product design and the story behind it. The accompanying mission is embedded in the company's branding.

In the Japanese market, Japanese luminaire companies like ours have evolved not only the equipment they offer but also the comprehensive service they provide to their customers. The industry is now home to many companies that offer comprehensive services that create a comfortable market for their customers. This means that they have simultaneously grown their own strong community and built a fan base. However, this service is not adapted to the overseas market development of small and medium-sized enterprises like ours. In developing overseas markets, companies should focus on the product itself. This means that branding is important in this respect. (Katsutoshi)

 

Part of your international branding is Sumi, which you describe as a lighting fixture that is a means to enhance others. How do you plan on further growing this Sumi brand, and are there any specific markets that you would like to introduce it to going forward?

We have strong confidence in the sales potential of our products. In general, the market is segregated into three main categories: i) economy (reasonably priced), ii) premium, and iii) luxury. The first category (economy (reasonable)) is aimed at the economic segment characterized by a low-cost market, with a large market size but low profit margins. The second is the premium segment, and the third relates to luxury offerings. The economic segment is characterized by a large market size and low profit margins, whereas the luxury category has high-profit margins but a small market size. The premium category occupies the middle ground between these two extremes. This concept (segregation) is easier to understand when looking at the automobile industry. In the (i) economy category, Toyota cars offer affordable prices and advanced functionality, making them a force to be reckoned with in the industry. And in the case of (ii) premium brands, such as Mercedes, they enjoy extensive demand, even if expensive. This phenomenon underlines the importance of Mercedes to the brand, which is universally linked to quality. This perspective suggests that the decision to buy a product depends not only on functionality but also on brand identity and the ethics of the manufacturing company.

(iii) Luxury cars such as Lamborghini in the luxury category, for example, these cars have strong branding and high cost, but have limited utility and are not suitable for everyday tasks such as grocery shopping. Similar examples exist in the world of fashion, where Louis Vuitton is a brand that has effectively exploited the essence of its brand image. While the appeal of Louis Vuitton bags is undeniable, it is important to realize that they are essentially bags. The high price is mainly attributed to the brand's reputation. The economic categories at the lower end of the spectrum are already represented through Chinese brands. This is because Chinese manufacturers are able to build manufacturing processes for a market of 1.4 billion inhabitants. It is therefore not easy to beat Chinese companies in terms of costs. Therefore, the idea is that Japanese brands should move towards a more premium positioning.

In Japan, the Product Safety Electrical Equipment and Materials (PSE) Act works in our favor. With our products and services, we have effectively captured the Japanese domestic economic market segment. Recognizing that these regulations do not apply abroad, we recognized the need to establish a brand identity for our Unity products. From this realization came the creation of the Sumi brand.

While 'Bulie' serves as branding for the Japanese market and is derived from the French word for 'brilliance,' 'Sumi' is closely positioned for the international market. As a result, Sumi embodies a more premium identity. Fortunately, it offers high accessibility with regard to price and is highly functional. (Katsutoshi)

 

Bulie is a relatively new brand, released only in June 2022. What are your expectations for the next year for this new brand you have built?

The brand rests upon three fundamental concepts: brightness, lightness, and easy mounting. While the Sumi brand emphasizes design and branding elements, the Bulie brand takes a divergent approach, with a stronger emphasis on usability. A prime illustration of this divergence is evident in our recently introduced Bulie Spotlight, a notably straightforward model.

Unity Japan has the manufacturing capacity to produce Bulie-branded products, but nevertheless, our primary role is primarily as a distributor company. It is important to strike a balance, as an excessive focus on our own brand can lead to competition from the companies we work with. Essentially, we carefully tailor our own branding initiatives.

Regarding Taiwan, we operate a dedicated manufacturing facility for Sumi-branded products. These products are consumed not only within Taiwan but also find traction in other overseas markets. Similarly, in Shanghai, our subsidiary Shanghai Unity operates a manufacturing facility. This facility caters to both the Japanese market, delivering even Bulie-branded products. This delineation underscores our adaptive strategies contingent upon the specific market dynamics. (Ken)

 

What makes Bulie unique when compared to similar brands?

We have successfully designed a color lighting rail that accommodates spotlights. Remarkably, in the Japanese market, no other company was producing colored rails of this nature. This achievement positions us as the pioneering domestic entity in this domain. Recognizing the limited scope of this market, we were still compelled by the prospect of leveraging our uniqueness within this niche. The absence of competition in this sector presented a modest yet strategic occasion to set our brand apart. (Ken)



Your company has its own lighting plan design department, and this is unusual because lighting spaces are usually designed by lighting manufacturers or interior designers. Why did you decide to set up your own lighting design department, and what are the benefits? Could you give us a brief overview of the work that goes into designing the lighting for an interior space?

To be honest, we sometimes wonder why our customers choose us over so many other companies. Recently, however, we have realized that this in-house design department is the reason why many of our customers choose Unity. As you say, we have a specific department dedicated to lighting space design, which allows us to provide our customers with specific plans based on actual lighting design. In Japan, lighting manufacturers used to offer this service for free, and their real aim was to sell more of their products. We basically tried to do the same thing. As a way of using this service to sell Bulie branded products. However, our spatial design is quite different from that of lighting manufacturers. Our strength is that the Bulie-branded product catalog does not cover all luminaires, so it is important for us to combine products from several manufacturers to offer a more comprehensive design solution to our customers. This ensures that customers get the best possible effect from the most suitable combination of manufacturers. Traditional lighting manufacturers' spatial designs, on the other hand, are based on their own products. This means that our services are better suited to the needs of our customers.

Before we launched our Bulie brand we did actually have Unity branded products, and we realized that customers chose us because of our ability to combine different products to create a lighting space that customers really liked. (Ken)

 

Do you have a favorite project that you have worked on with your design department?

In our lighting design department, we hold an annual contest for new business plans. A female designer from Osaka won the second prize last year, after working with us for seven years. She created a lighting plan for an apparel store that was not flashy but effectively illuminated the products. When she received the second-place award, she was moved to tears. This recognition meant a lot to her, as she had never been acknowledged for her work before. So this project became more meaningful in many ways, making it one of my favorite projects with the design department. (Ken)

 

When it comes to Sumi do you only sell the products or do you also sell the lighting space design?

With regard to Sumi, the current focus is solely on the product offering. In particular, our main international customers are lighting space designers. The main difference between the domestic and international markets concerns the remuneration regime. In Japan, although there are some lighting designers that charge for their services, the majority of the designs are provided free of charge by luminaire manufacturers; whereas, in the international market, lighting designers are paid for their services. (Katsutoshi)

 

Could you explain the role that partnerships play in your business model and are you currently looking for any partners in overseas markets?

We are a small and medium-sized enterprise (SME) and it is not easy to find the right people to do business abroad. In this respect, it is very important to find the right local distributors and work together with them to develop a market strategy for each country. In order to find new distributors around the world, we joined the Hong Lighting Exhibition every year. Although during the pandemic, we weren’t able to attend the exhibition as we had hoped, we look forward to joining again next year to find more partners that we can collaborate with in the future. (Katsutoshi)

 

Japan is the oldest society in the world with a shrinking population. What have been some of the challenges this demographic shift has presented to your company and how are you reacting?

This aging population is a serious situation and a problem throughout Japan, and Unity is adopting a multi-pronged approach: the company is working with a consultant to make our company more compact and efficient. The lighting industry in Japan is saturated and it is important to transform the company into something more compact and efficient. It is also important to ensure that everyone shares the work, rather than specializing in one thing. And keeping young people motivated is key.

Today, just because a company has a ‘long history' is not enough to attract employees. In this respect, it is important to create a clean and comfortable working environment. It is also important to share the vision of the company to employees, each of whom needs to feel involved.

Thanks to these efforts we are now acquiring new university graduates who are interested in going abroad. However, I would like them to get a bit of work experience first before sending them overseas. We train them in Japan for five years and once they have proven themselves, we send them overseas.

With the population decline and the smaller pool of graduates hiring is becoming competitive. I think that our young management team actually gives us strength in this regard and makes the company more attractive to young graduates. The average age of a president of a company in Japan is 60.4 years old. Our company actually has five different companies under the umbrella and collectively we have four presidents with an average age of 43. That gives us a 20-year advantage by my count. In terms of employees, the average age in Unity Japan is 38.5 but the executives are a little higher than that. (Ken)

 

Moving forward, what countries have you identified for further expansion into?

Our overseas strategy is not to set up new legal entities, but to find partners in different countries for cooperation. We have recently met a very nice Indian company and are very keen on creating new business together. (Katsutoshi)

 

Imagine that we come back in three years and have this interview all over again: what goals would you like to have achieved by then?

One of the main focal points of our company is the Share Light initiative. Traditional luminaire companies sell products, but ultimately these products are disposed of at the end of their lifespan; Share light is a completely new lighting service that allows you to hire high-quality lighting for your shop for short periods (from one day). Pop-up stores, pilot shop opening events, special events, etc. can significantly upgrade a shop's space for a limited period of time and at a low cost. This service is highly suitable for today's environmentally conscious generation. This type of temporary lighting installation was, in fact, recently introduced at an international sporting event.

Unity is aiming to become the ultimate light solution company, one that is designed to offer the ultimate comprehensive service to customers. This idea is something that I want our employees to remember when they go about their daily tasks. (Ken)

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