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Japan's Robotics Edge: Automation amid Shifting Demographics

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Interview - August 3, 2023

Discover how Daiki Sangyo navigates the challenging terrain of Japan's aging population and shrinking labor pool by pushing the frontiers of automation and robotics technology.

HIROYUKI MORIGUCHI, PRESIDENT OF DAIKI SANGYO CO., LTD.
HIROYUKI MORIGUCHI | PRESIDENT OF DAIKI SANGYO CO., LTD.

Japanese manufacturing is experiencing an exciting time. The past three years have seen supply chain disruptions due to COVID-19 and the US-China decoupling. As a result, corporate groups are looking to diversify supplies for reliability. Japanese firms, being known for their reliability, are in an interesting position and on the verge of a unique opportunity due to the weak JPY. Do you agree with this sentiment and what advantages do Japanese suppliers hold in this current macro-environment?

Most of our sales are in the domestic market, so it is hard to answer that question. Regarding what advantages Japanese firms hold over regional options such as Korea, Taiwan, and China, I think it comes down to the precision and quality of Japanese products, as well as the after-sales service once the product is delivered to the end customer. Certain users prefer to choose Japanese products, and that is because of the accuracy and reliability you mentioned.



Japan is the country with the oldest and most rapidly shrinking population in the world. We are now seeing some side effects such as a shrinking domestic market and a shrinking labor pool for local companies to hire workers. What solutions does your firm offer to companies in order to solve these issues we are seeing as a result of Japan’s demographic shift?

 

To address the issue of the shortage of labor, we have tried to propose more automation solutions and equipment for automation, such as robots. We are working on a proposal that means that human labor does not need to be involved in the process. There are so many different makers, and we work with these makers to devise solutions. 

 

There has been backlash regarding robotics, and the perception for many years has been that these solutions are taking away people’s jobs, especially at gembas where people have worked for years. The counter to this has been that this is not the case at all, rather this was an opportunity to upskill those people and give them new positions within a company. Do you agree with this and how do you see the reputation of robotics in this day and age?

To this day, Japanese companies are slow to introduce automation technology and equipment. As you mentioned, plenty of laborers feared the introduction of automation equipment because they might lose their jobs. These laborers were desperate to stay in their current positions; however, as you also mentioned, once a company introduces this kind of equipment, it will quickly realize that these laborers can now spend more time on value-added jobs and processes. It is inevitable for us to face the challenges coming from Japan’s shrinking demographic, and like many other companies, we also have problems with hiring. That is why we have had to install robots for many companies and will probably continue to do so. That is where the issue comes in, though; a certain level of investment is required to acquire robotic equipment. To do so, we need companies to understand the value added by that investment. That is hard to do, and I think this is because of the mentality of Japanese people, who tend to avoid making mistakes and avoid trial and error.



As the robotics industry and technology continue to advance, it raises questions on how laws and regulations need to adapt, especially here in Japan. As a trader of robots such as autonomous mobile robots (AMR), what are your thoughts on the potential regulations or laws for robotics in Japan? What benefits or concerns would these present to your company?

So far, we have not seen any large-scale subsidies provided by the government; however, there is a particular subsidy for the renewal of parts factories.

There are a lot of subsidies related to the manufacturing of machine tools, but not so much when it comes to robotics and automation.

 

Daiki Sangyo recently concluded an agency agreement in Japan with Mobile Industrial Robotics from Denmark and Tiller, a personal lifter manufacturer from the Netherlands. Why did these companies choose you as a partner to distribute their products in Japan and what competitive advantages do you hold over some similar traders in the domestic market?

We received an introduction from a partner within the same industry. We used to deal only with industrial parts in the past, but as time passed and history changed, we realized the need to focus on robots. We found some collaborative robots that were launched in the market, and these robots can work together with laborers. When introducing industrial robots, for security reasons, you needed a fence to segregate robots and humans. Around 5-6 years ago, however, we saw the launch of collaborative robots that can work safely and in harmony with humans, and in Japan, those robots were under the spotlight. That is why we started handling these robots.

The first robot we started to handle was Sawyer, a collaborative robot. From Sawyer, we started broadening our robot catalogue with other brands of collaborative robots, such as Universal Robots, Kawasaki, and Techman. However, in the specific case of Universal Robots, we were not the official distributor. On the contrary, we purchased these robots from another trader. It was this trader who suggested that we become an official distributor for a company called Mobile Industrial Robotics (MIR), a Danish manufacturer of autonomous mobile robots (AMRs) for internal transportation and material handling.



As for why MiR chose us as a partner to distribute their products in Japan, I think the main reason might be because we have a lot of branch offices across Japan, from Tokyo to Kyushu Furthermore, our customers are users from a wide array of industries. It also might be because we have focused on handling collaborative robots for some time now rather than just providing purely industrial robots.

 

Are you currently looking for similar international partnerships such as the one you have with MIR?

Yes, we would like to pursue similar partnerships in the future.

 

Is there any particular technology or type of partner that you would like to work with?

It is always complicated to find a partner, even when there is a willingness to become an official distributor for a vendor. Certain manufacturers might not want to handle the same products. Japan is still in the early stages of the development of collaborative robots just yet, whereas Denmark is very advanced in this field. We want to remain at the forefront by continuing to import state-of-the-art technology and offer it to the entire domestic market. In particular, we would like to focus on expanding the MiR robots into the food, medical, cosmetics, semiconductors, and logistics industries.

 

In June 2023, Daiki Sangyo participated in FOOMA Japan, the International Food Machinery and Technology Exhibition. Can you tell us a little bit more about how this event went for you and are you looking to participate in similar exhibitions overseas?

We had a good reception when we attended FOOMA Japan, and around 900 visitors visited our booths out of the almost 100,000 visitors that took part in the exhibition. It felt good to introduce that many visitors to our company. Last year, we also participated in the Robot Technology Japan exhibition in Nagoya, and we had a lot of visitors there too. Market trend information is crucial and these kinds of exhibitions are a great source. We took part in FOOMA Japan last year, so this year was the second time we joined.

We are shifting our focus in terms of exhibitions; however, in the past, we have tended to attend those exhibitions related to manufacturing, but we would like to participate more in exhibitions related to the pharmaceutical and cosmetics industries such as “Interphex Expo” as well as the logistics industry such as “Innovation Expo”. Since there are different customers, we believe we need to participate in more specialized exhibitions. Since we have already participated in different exhibitions this spring, we would like to participate in smaller regional exhibitions for the rest of the year.



Earlier we discussed Japan’s demographic situation, and as a result of that change, many Japanese companies are going to overseas markets to mitigate the effects. In your case, are there any countries or regions that you have identified for potential expansion, in light of the shrinking population?

We don't have any specific country or region in mind, but we are trying to expand abroad for the same reasons you mentioned. The population is declining, and we cannot ignore this. This situation has given us no choice but to look to foreign markets to mitigate market contraction. That is why we have started exporting products through Alibaba, and we are also providing quotations to interested parties over the Internet for selling our products to overseas markets.  E-commerce is going to be an exciting challenge for us and a valuable experience.

Since our company’s Overseas Business Division is trying to approach different markets overseas, we are taking a step-by-step approach while making good and solid connections along the way. Three years ago, we started to look overseas to hire global human resources. Last year and this year, we hired staff from Vietnam and Hong Kong.

So far, we have received good feedback in Southeast Asia, and we also have established connections in Europe; therefore, one of the reasons we try to hire people from overseas is to give our clients even more assuredness and peace of mind.

 

Imagine that we come back on the last day of your presidency and have this interview all over again: is there a goal you would like to have achieved by then?

I want to see the 100th anniversary of this company, and we also want to generate 20 billion JPY in sales. These will be key milestones in moving the company forward into the future.


Interview conducted by Karune Walker & Paul Mannion

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