Amidst the explosion in popularity of instant ramen, Tokyo Menki's quest for precision in instant ramen machinery is second to none
Japanese manufacturing is at an exciting time. Over the past three years, significant disruptions in the supply chain have occurred due to COVID-19 and the US-China decoupling situation. As a result, numerous corporate groups are seeking to diversify their suppliers to ensure reliability. Consequently, Japanese firms, renowned for their advanced technology and reliability, find themselves in an interesting position. Observers argue that the weakened Japanese yen presents a highly unique opportunity. Do you agree with this sentiment? What advantages do Japanese companies possess in the current economic-macro environment?
As you rightly pointed out, the current macroeconomic environment exhibits a notable trend, and I agree. While some may view the weak JPY yen market with pessimism, from my observations, we have experienced increased earnings and profitability over the past three years. It might be challenging to fully appreciate this situation while operating within Japan, but from an external, exporting perspective, the weak JPY acts as a tailwind, and our customers share this sentiment. Particularly, those customers with factories outside of Japan benefit significantly from exporting.
While your macroeconomic viewpoint has its merits, on a micro level, I must admit that our company has not achieved the performance level we aspire to. Despite it being an opportune time for customers to invest in equipment, we have faced considerable challenges in the past three years due to the semiconductor shortage. Consequently, related businesses have also encountered difficulties, as we struggled to deliver products during the last two years. Reviewing our company's performance from the previous year, we observed a significant sales drop, although our earnings remained sufficient. Our customers understood the challenges we faced with product deliveries, which led them to prioritize the maintenance of their existing equipment rather than seeking the implementation of new machinery. Consequently, our focus has been on diligently operating our maintenance services over the past few years.
Japanese machinery holds high expectations worldwide, while competition from countries like South Korea, Taiwan, and China also intensifies. Our company, Tokyo Menki, was established in 1998, following a predecessor dating back to 1935. During the second generation of our company, in 1960, we ventured into instant noodle manufacturing machinery, which facilitated the expansion of our business. Our main customers at this time were the major instant noodle manufacturers of today, customers who have been an integral part of our company's history and have helped us grow.
As a result, we have played an important role in the expansion of instant noodles in Japan. It was not just our own growth, but the trial and error of working with the manufacturer to create a machine that was capable, safe and easy to operate, and as a result we were able to provide the essential machines and solutions to meet the most important requirements and achieve such a high reputation.
The market often emphasizes speed, with the most popular machines capable of producing 300 instant ramen noodles per minute. Tokyo Menki has adeptly catered to the escalating speed demands, with machines now achieving production rates of 300, 600, 800, and even 1200 noodles per minute. Nevertheless, alongside speed, we prioritize accuracy, a vital aspect as instant ramen requires noodles with a specific thickness of approximately 0.9 mm. Ensuring uniformity in these thin noodles while increasing speed remains a paramount mission for us. Thus, accuracy at speed holds the highest priority within our company. To expand our advantages onto the global stage, our machines must exemplify both high accuracy and durability.
Despite being a relatively small company, with only 35 employees, we understand that creating a sought-after instant ramen production machine necessitates a workforce of approximately 120 people. Consequently, we face a shortage of around 85 employees. To address this gap, we occasionally sign contracts or outsource to external partner companies. However, achieving solidarity with external partners presents a challenge distinct from having 120 internal employees. Differences in motivations, understanding, and significance emerge between internal and external team members. Nonetheless, our gratitude extends to our partners who have met our high expectations, enabling us to manufacture highly accurate machinery. Clear communication and specifications become crucial factors, especially when dealing with intricate aspects on a smaller scale. The mutual trust we share with our partners allows us to meet the increasing demands of customers.
Today Japan exports around 92 million packets of instant ramen every year, and Japanese cuisine is increasingly becoming popular overseas. In 2013, UNESCO registered Japanese cuisine as integral to Japan’s heritage. As Japanese food culture continues to grow in popularity, what opportunities do you see for your firm?
As you say, the instant ramen industry, which originated in Japan, has spread around the world, including through the operation of the World Instant Noodle Association (WINA). I am also convinced that instant ramen was one of the factors behind the registration of Japanese cuisine on UNESCO's list of culinary specialities, and that instant ramen was a driving force behind Japanese food culture.
Many people in the world today cross national borders. I believe that cheap, high-calorie instant ramen will be accepted by them. Along with this, research by various noodle manufacturers has led to the development of instant ramen with high nutritional value, and we believe that instant ramen will become increasingly popular among middle- and high-income groups. In other words, demand for instant ramen could increase on a global scale, and we imagine that demand for equipment will increase as well.
Other Japanese noodles are available fresh, chilled and frozen, and demand for these Japanese noodles, as well as other Japanese foods is also increasing. There are many imitations of Japanese food abroad, and noodle dishes have been no different, but in recent years a preference for authenticity has emerged and Japanese noodles are becoming more popular.
The noodle-making machine was invented in Japan in 1877 and has a 146-year history. We expect more and more users to demand quality in machines as well.
Are there any other products or technologies you are currently working on that you would like to showcase for us today?
As mentioned above, we are confident that we are second to none when it comes to producing stable products at high capacity. We will continue to pursue stable production and high capacity that is unrivalled. We are also working on unmanned production, but it is difficult to proceed without the cooperation of customers. We will continue to work together with our customers to create good products.
You have talked about partnering with larger companies. Are you also looking to partner up with overseas companies as well?
Regarding partnerships, we are actively exploring various opportunities. However, due to the niche nature of the industry, we will proceed with caution.
When it comes to countries in Southeast Asia, is opening a distribution office or consulting office something of interest to you in order to help penetrate that market even further?
Right now, we do not have such plans, rather our plan is to work from our hub in Japan. This is because, at the moment, it is not possible to procure components with the same level of precision as in Japan.
Imagine that we come back in five years and have this interview all over again: What goals do you hope to achieve by then?
One of my personal aspirations is to establish a presence in the African market with our machines. Notably, instant ramen noodles have experienced significant growth in popularity in the region in recent years, and I am confident that this trend will continue to expand. At present, none of our machines have been deployed in Africa, but I genuinely hope that when we reconnect in the future, I will be able to share the exciting news of our successful product exports to the continent. Approximately 10 years ago, we had the opportunity to visit five African countries, witnessing the initial signs of instant noodles' rising demand in the region. We are patiently awaiting the opportune moment, and once the stars align, we will be well-prepared to take decisive action and seize this promising opportunity.
Interview conducted by Karune Walker & Ana Ruiz