Behind every great smile is a great toothbrush, and people from all walks of life are focusing on their dental hygiene more than ever. Yamato Esulon offers its partners the opportunity to sell the most innovative dental products with the assurances and know-how that 90 years of experience in the business brings. As an OEM, the company prides itself on its ability to tailor its industry-standard machinery to meet the needs of its business partners, working to strict deadlines, and preventing leaks of company information. As president Toshiharu Matsushita says: “Our ability to deliver on our promises is what builds trust with our customers.” Mr. Matsushita gives more details on the company and some of its unique products, including a new rapid PCR test for gingivitis and a new tufting head part for toothbrushes that makes the head extremely streamlined.
Over the past few decades, Japan has seen the rise of regional manufacturers who are able to replicate certain manufacturing processes and products from Japan at a lower cost and with economies of scale. How have Japanese companies been able to remain so competitive in the face of this stiff price competition?
We are an OEM company and our products are sold by our business partners. We are always thinking about how we can create competitive products that can be successfully sold in the market.
We use all of our experience and know-how to design products that are useful to our customers, and although we are a smaller company than some of the larger companies in the market, we are capable of handling the production volume at the mass production level required by our customers.
On the other hand, major toothbrush manufacturers such as P&G already have mass production capacity, but their production lines are quite fixed and inflexible. They cannot easily switch to quite different product designs even if their customers demand it. They can only adapt their products as much as their production lines allow them to.
Therefore, large companies have to compromise between innovation and production capacity. Small companies like ours are more sensitive in adopting new designs because our production capacity is smaller. The production line can be changed more easily, which gives us a competitive advantage over larger companies in terms of innovation and speed to market.
When our product designers and researchers think of new products, they are thinking of ways to shape them to meet the needs of our customers. At the same time, they think about how the new design will affect the manufacturing process and the equipment needed to produce them.
The equipment that we have used for production is standard in Europe, but if a customer wants a specific specification, we tailor the necessary machinery to meet their needs.
The customer is given a schedule for the entire product development cycle, from design to launch. We must ensure that the product is finished within the time frame specified in that schedule and according to the agreed upon quality and cost. Our success in achieving this is why we remain competitive and are able to survive in this industry. Our ability to deliver on our promises is what builds trust with our customers.
Additionally, as an OEM company, they manufacture toothbrushes for large brands like Panasonic, all of which compete in the same market. By placing an order, they may be exposing themselves to the risk of information leakage and loss of trust, but they still place the order with Yamato Eslon. Why? We have overcome many of the hurdles these customers have faced in the past, always meeting their goals, keeping our promises, and not leaking information. We have always accumulated good performance results, and over time, we have built a strong relationship of trust with them.
Japan's population has the oldest average life expectancy in the world at 85 years. Over the next 15 years, more than 1/3 of the population will be over 65. This maturing demographic has caused both a labor crisis and a shrinking domestic market. What challenges does Japan's declining population present to your company? And how do you plan to overcome those challenges?
It is a difficult challenge for us. It takes a lot of people to design and manufacture a complex toothbrush and we have a lot of difficulty recruiting new people. We are trying to automate our production line as much as possible. We are also trying to use cameras for the inspection process.
As for oral care related products, despite the shrinking population, sales have increased slightly year after year. While the usage rate of regular toothbrushes is 100%, the usage rate of products like Dental Floss and Interdental Brush is less than 50%. However, as the number of elderly people increases, the demand for oral care products should increase. Each year, we see growth of just over 100% in these categories.
Additionally, the number of items used by one person, for example tongue brushes, is also increasing. In Japan, most people use three to four toothbrushes per year. In Europe, on the other hand, people use five to six toothbrushes per year, so there is still capacity to increase the number of toothbrushes used in Japan.
In addition, awareness of oral hygiene has increased in recent years. This is because oral hygiene is linked to overall health of the body which is especially important during such Covid. Therefore, despite the declining population, there is still room for growth as far as oral care products are concerned.
What has been the impact of the COVID crisis on Yamato Eslon? And what medium to long-term changes have been accelerated in your company?
Over the past year, all cosmetic related products have been negatively impacted, as well as containers for moving sets/kits, since we did not move last year. Skin care products such as lotions and sunscreens also saw a decline in sales.
However, sales of face cream increased due to skin problems caused by wearing masks. Sales of food-related products increased due to the lack of food for the home and cooking.
There are a variety of plastic products. We supply everything from hairbrushes to cosmetic bottles to food products. Can you tell us what synergies can be created between the different product lines and what benefits those synergies bring to your customers?
We started out as a toothbrush manufacturer making toothbrushes out of wood, bamboo and animal hair such as house or pig. The change in material to plastic enabled us to introduce new machinery and carry out integrated manufacturing, which improved efficiency and lowered costs and delivery times.
We then started insourcing our products, which led to advances in injection molding technology. We also started manufacturing vacuum-formed products such as blister covers, and are now producing containers for food products such as curry. The founding members actually developed metal food containers, but they were difficult and cost inefficient to mass produce. It was also difficult to transport these particular products.
However, the founding team developed a new technology to replace the old metal containers with plastic, which helped to increase productivity and actually expanded the market for those products. At one time, vacuum forming technology was heavier than injection molding equipment.
In the past, there was a large demand for refillable containers for foods manufactured using vacuum forming technology. So, as vacuum forming technology has advanced, we decided to produce the sheets in-house. Prior to this, we had procured sheets from outside sources, but some of the sheets were so complex and specialized that it was difficult to procure all the sheets we needed. We wanted to achieve a consistent production rate, so we decided to manufacture our own sheets and films, which ultimately led to advances in film forming technology.
Some countries are seeing that plastic manufacturers are required to change the materials they use to more biodegradable or paper alternatives. In the United States, for example, plastic bags are currently banned from supermarket markets in California. How is your company adapting to this demand for more environmentally friendly packaging systems?
It is a very difficult challenge and we need to address this issue urgently. For some of our products, we are trying to reduce our carbon footprint by using less materials, and we are also working on material recycling for some of our production lines.
However, there are other areas where we are not yet able to undertake such initiatives. For some products, we recommend our customers to use alternative materials such as vegetable resins instead of oil-based materials in order to reduce CO2 emissions. Currently, progress is being made towards more environmentally friendly products.
Japanese companies have found that employing co-creation partners, especially overseas, is an effective way to explore new markets and expand their operations. What role does co-creation play in your business model, and are you currently looking for new international co-creation partnerships?
Our goal in going into foreign markets and setting up factories was not to expand our sales in those markets. We wanted to manufacture our products in foreign markets and supply them to the Japanese domestic market at a lower cost.
The local market products first made in Japan were replaced by cheaper products from places like Thailand. Lately, the cost competition has been so fierce that most of our customers have been asking us to reduce our costs. If it were merely about cost, we would not be able to succeed because it must cost some amount of money to produce the level of quality we offer.
Also, due to the high level of trust our customers have placed in us and the quality of service we provide to them, their orders have been renewed. We are also able to provide the same level of service from our overseas factories. Currently, 11 to 12 Japanese employees are located in the factory in Thailand and monitor more than 1,200 employees.
Whenever we receive an order from a local company, we send our Japanese sales representatives and engineers to meet their requirements. For this reason, we produce our products in our Thai factory. These types of products are differentiated from local products, which is how we get good feedback from our customers.
We are not competing on price, but on overall service, including product design and customer care. However, the challenge we are facing is that it is very difficult to communicate our competitive edge to local manufacturers. The challenge is that we believe that it is quite common among companies operating in foreign markets.
We were actually approached by companies like Colgate, Philips, and P&G, but only to focus on costs, which is quite different from the Japanese companies. Their representatives came to our company and just talked about costs. Probably because their company is very large and they have to strictly follow strict guidelines.
Are there specific markets that you are prioritizing as part of your future expansion plans and can you elaborate a bit more on your international expansion strategy?
The inventors will fabricate a PCR (polymerase chain reaction) device that can be easily used to detect oral infections within 45 minutes. It can detect gingivitis, a major dental disease. We worked closely with the PCR device manufacturer of this product for 6 years from the development stage to production.
The biggest advantage of this product is that it allows the dentist's office itself to check the oral health of the patient. In the past, samples were sent to specialized institutions, but since these test kits are made in-house, they can be supplied directly to dental clinics.
The company that manufactures the devices is orcoa Corporation, a wholly owned subsidiary of Yamato Esulon. Therefore, this is Yamato Esulon's first original product using our interbrush and plastic molding technologies. It has been on sale in Japan since last year; more than 100 dental clinics have ordered the machine.
We specialize in plastic molding and need to address the various environmental issues surrounding the use of plastics in the manufacturing process. The technologies involved are becoming increasingly complex and it is difficult to recruit people with the necessary expertise. Automation of production lines must be enhanced, otherwise we will not be able to survive in this industry. At present, we still do not have all the proper sales channels.
Therefore, we are now very diversified and will focus on oral care related products to expand our business as such. We have started selling our own new oral care products online and have just launched a crowdfunding campaign for a new type of brush for the tongue. We are currently in the process of applying for relevant patents.
The main feature of this product is the tufting head part, through which the hair is implanted, making the head very thin, a special technology that we are trying to get patented. The demand for thinner products is increasing, and the company aims to meet this demand.
We would like to launch this special technology not as an OEM but as our own product and contribute to the growth of the healthcare industry with our unique technology.
What do you hope to achieve by the end of your term as president of your company?
We have completed many tasks so far, and we would like to further streamline our production process to improve our profit and sales performance. We would also like to expand our oral care related products.