As an empowered SME, Japan Machinery’s mission is to enable access to global manufacturing excellence.
In Japan, traders have historically played a significant role, with over 90% of employment being in small and medium-sized enterprises (SMEs) that lack the means, capabilities, or interest to conduct their own sales activities domestically and internationally. Please tell us about the role Japan Machinery plays in the industrial supply chain and how you support SMEs.
That is an excellent point you raised, and our significance and raison d'être stem from being a bridge between overseas users and Japanese manufacturing companies. Similarly, we exist to bring the technological excellence of overseas manufacturing companies into the industrial sectors of the domestic market. This is a matter of pride for our company, and we have been engaged in these activities since our founding 64 years ago. We have no plans to stop and will continue these activities for many years to come.
In other words, we contribute more on a societal scale to the entire industry and function in a bidirectional manner from overseas to Japan and Japan to overseas. This is true when discussing the Western markets in particular, where there are SMEs that cannot introduce excellent technology from overseas. They need someone like us to connect the dots between these different regions of the world, promoting their products, technologies, and machinery.
You may wonder how we accomplish this, and as you may know, it is sometimes very challenging to find information about these types of SMEs that need our guidance and services. We have firsthand experience by participating in numerous international exhibitions and physically seeing the machinery offered from a global perspective. We gather as much information and data as possible to analyze products that are most suitable for introduction to the Japanese market. This process defines our core strength and has been successful for us in the import business over the years.
Over the past 60 years, Japan's role in the global economy has undergone significant changes, particularly in recent decades. How have these changes and transformations affected your activities as a trader? What do you think has been the evolution of your role as a trader over the years?
Actually, this is one of the starting points for our company when we met a California-based company in 1975. It involved a groundbreaking feature incorporated into Wilden's air-operated diaphragm pumps, which were not widely used by Japanese people at the time. For us, it was a great opportunity to bring something from outside the domestic market and introduce it to Japan.
However, times are changing, and nothing is permanent. The flow of time is always cruel, and we must adapt our needs and services to everything happening in the industry. From this past experience, we learned that nothing in this world is ever easy, and simply introducing products here is not enough. We had to learn that we need to apply other functions by adding services for our clients, including maintenance, inspection, repair, replacement, and supply of consumables and spare parts. This entire range has come to define Japan's trading companies today.
Later, we encountered another product from a German company called Volkmann, which helped us further progress on the path of evolution and discover more needs of the times. That company offers air-operated powder and granule vacuum conveyors, which were not widely developed in the industry in Japan at that time. Once again, we became a bridge for the introduction of industrial equipment from overseas companies, leading our company to the next stage of evolution. As we have emphasized multiple times today, adding more functions and services is necessary to fulfill the role of a modern trader. The benefits are evident, and we feel it is the only way to conduct our business more profitably. It also enables us to be flexible and adaptable to the advanced needs of the domestic market.
We obtained permits from the Japanese government for plumbing, machinery installation, and construction work. As time goes on, more needs come in, and those needs become increasingly sophisticated. We began introducing engineering capabilities and system development functions into our company. We will continue this improvement over time and plan to introduce even more diverse services and products to our customers as the future unfolds.
When you look at our company's brochure, you can see various pumps used in factories across different industries. To summarize, it is insufficient to introduce just one product; we need to complement the equipment we introduce with other machinery and accessories such as compressors. We can introduce any product that customers may need and conform to services that take care of customers even after the initial sale.
In Canada, there is a company called KELK that manufactures equipment such as load cells and sensors adopted in the production lines of steel companies. We serve as a bridge, assisting in the importation of this equipment and components for steel companies.
Your company has a long history of cooperating with various international companies. Are you seeking more partners in terms of supply, and if so, in which industries or types of products are you currently targeting?
We are aware of the specific details of the industry we are currently aiming for, and there is undoubtedly movement and increasing demand in the Japanese market. As you know, products like iPhones are excellent devices with layers of various components from Japan and abroad. Things are happening in terms of manufacturing, and Japanese companies are increasingly looking to introduce more technology, for which they need machinery that helps them step up to the next level. Unfortunately, the drawback, as you know, is that things are slow here. R&D expenditure lines are not as high compared to the United States and Europe, where much is happening in these venture capital countries. There is a tendency for divisions and companies to become independent and introduce new technologies and techniques. It is essential to catch onto those technologies and equipment early and bring them to Japan.
We would like to know how you identify and establish those connections. The biggest strength as a trading company lies in our network. We create as many touchpoints as possible to fully address the needs of our clients.
Seeing is believing, but unfortunately, due to the COVID-19 situation, there haven't been many opportunities to see what products are being introduced worldwide in other countries. Recently, travel restrictions have been lifted, and we have been able to attend exhibitions again. It is a lengthy process, and we have to visit many booths there and gather a lot of information. Due diligence is important in this regard, but it is not enough to merely meet other companies. Often, the machinery is not yet complete, and there may be a long process until the equipment reaches the hands of customers. We understand this.
The magic of the internet still comes in handy at this point, and anyone can log on to the worldwide web and gather information about some of our customers in the domestic market. It functions bidirectionally for the needs of customers, and we genuinely care about our customers' needs.
We actually traveled to an EV trade show for a week in June with our sales manager, engineers, and a group of employees. It took place overseas.
One advantage for us with pure manufacturing companies is the fact that we do not need initial investment capital for equipment. Most companies require capital to acquire the appropriate machinery, but that means we have surplus that can be effectively utilized for overseas travel, for example. This flexibility is indeed necessary for trading companies.
I would like to learn more about your strategy for exporting Made in Japan quality products overseas. Are there specific markets where the demand for these types of materials and components you supply is high, or are there any markets you are targeting from an international expansion perspective?
To be frank, exports are not our focus, and we primarily act as an importing company. Essentially, our top priority is to bring overseas technology into Japan. Establishing an office in Moscow in 2014 was due to the demand for Japanese machinery from Russia. Unfortunately, with recent developments in Ukraine, it has become a significant issue, and we had to put our office there into hibernation.
Nevertheless, we are still attempting to introduce Japanese machinery in a different approach. We are looking at things from a maintenance perspective by cooperating with other Asian countries. It is a great blessing to have our location very close to Haneda Airport, and it means we are just a short flight away from several neighboring Asian countries. We can send engineers for maintenance work. Needless to say, many Japanese companies have already established production lines in neighboring Asian countries, and the demand for maintenance and services is increasing.
The facility near Haneda Airport is a new technical center, which serves not only as a warehouse but also as a logistics hub. It can function as a demonstration for potential clients and existing buyers who come to see how foreign equipment operates and functions. Visually, it works very well to demonstrate the types of services we can offer.