From sports apparel and working uniforms to baby garments, Kaji Tech is providing the best materials to ensure high-quality apparel.
Japanese manufacturing is living in an exciting time. The past three years have seen severe supply chain disruptions due to COVID as well as the US-China decoupling situation. As a result, many corporate groups are looking to diversify their suppliers for reliability. Known for their reliability, advanced technology and high-quality products, Japanese firms are in an interesting position, and due to a weakened JPY, many observers argue that this is a unique opportunity. Do you agree with this sentiment, and what are the advantages of Japanese firms in this current macroeconomic environment?
I do agree with this sentiment. The JPY is depreciating quite considerably and US-China decoupling will continue in the future. There were indeed huge disruptions to supply chains during COVID. Companies are now looking for a stable supply chain, with Japan now being a viable option since Japan already has high-quality products and can ensure a stable supply. Before, when products from China, Taiwan, Hong Kong and Korea were compared to Japanese products, Japan was considered as more expensive. However, the deprecation of the JPY and the overall rise in the cost of materials has reduced this price difference. Now, Japanese products are price competitive in the global market. Having said that however, the biggest issue for the Japanese industry is Japan’s population decline. It is difficult to foresee how Japanese manufacturing will progress due to the sharp decline in the population. The key here is the introduction of DX, robotics and IT. Japan also needs to welcome immigrants to help sustain the Japanese labor force and manufacturing sector.
You just talked about the labor crisis and the ways to address this as through IT and hiring foreign workers. Another side-effect that we are seeing from this is of course a shrinking domestic market. There are fewer people to sell to. What are some of the other main challenges that this demographic shift has presented to you and how have you reacted to them?
Our main target is babywear and baby garments. Our snaps are widely used in garments that are manufactured by the biggest SPA brand in Asia with thousands of retail stores and the No.1 baby brand in Japan.
However, with the decline in the birth rate, the number of babies being born has decreased. This means that the market for babywear is shrinking. Currently, our domestic market share is over 50%. Increasing this share of the domestic market and at the same time focusing on overseas markets are our targets. While the birth rate in China is also decreasing, the birth rates in Southeast Asia and South Asia are steadily increasing. In India for example there is a population boom. Therefore, opening up new overseas channels is the means for us to address the issue of Japan’s population decline.
While your main focus is on babywear, we know that your products are used in different applications as well, such as general clothing, electronic components, bags, sports equipment and more. Are there any new applications or fields that you would like to introduce your products to?
Finding new applications and new markets is crucial for us. Opening up a path to overseas markets especially is our current focus. Having said that, for example when it comes to the shackle, we were recently able to apply it to the logistics area, which is a new market development for us. Our main customers are in the apparel field and babywear in particular. However, we also have sports apparel, work uniforms and outdoor-related applications.
Increasing our markets and the applications of our products is very important for us. During the pandemic when people were staying at home and social distancing, handicrafts became a popular activity to do. We started to provide products for the handicrafts market not only in Japan but also in Taiwan and the US too. We want to continue strengthening this field going forward.
Due to COVID, many people stayed at home and physical retail struggled. We saw a 13% jump in online sales, and Japan became the 4th largest e-commerce market in the world. How has your business adapted to take advantage of this growth in e-commerce that we have seen?
We are not a large-scale company. Therefore, working together with major e-commerce companies is important for our business. We conduct social media activities that indirectly contribute to sales through e-commerce. For example, we have a Facebook page and an Instagram page. Our employees do Instagram Lives to promote the products. These online activities have enhanced the sales of our products that are provided through major e-commerce companies.
Our main products are secondary materials which require an extensive explanation for usage. We do both B2B and B2C business. However, after the sales are made, our products need a certain amount of explanation and understanding for their utilization. As a result, we receive a lot of contact through emails and phone calls. Making our website more informational is therefore very important.
The Japanese government enacted a law just last year to encourage municipalities to collect and recycle post-consumer plastic product waste, which excludes packaging plastic waste of course. We know that you offer environmentally friendly products such as snaps recycled from resin, or Mycel, a sustainable material for leather derived from Mycel mushrooms. Could you tell us a little more about your environmentally friendly products and what other initiatives are you employing to contribute to a more sustainable society?
Within our corporate philosophy, we have four core values. One of those values is coexistence with the environment. Our mission is to supply products that are friendly to both humans and the environment. We have acquired ISO9001 and ISO14001 which are environmentally related ISO standards, as well as GRS, which is the global recycling standard.
Most of our plastic snaps have been certified with Oeko-Tex certificates. Having said that, the advantage of manufacturing snaps with plastic compared to metal is that it creates zero waste and does not require any water in the process of manufacturing. Therefore, it is more eco-friendly in terms of processing. Every month we issue a “Kaji-sus” report which stands for Kaji Tech sustainability report. We provide this report to our customers. It introduces our environmentally friendly products and promotes the use of environmentally friendly secondary materials.
In addition to these environmental efforts, we developed Mycel as well as apple leather and wood leather, in which we use wood powder to make the leather. Also, we have been collaborating with a local Japanese company, FUKUI TAIYO, to up-cycle the used EVA foam so that we can make them into sandals with up-cycled material. These are some of our attempts to help the environment.
Could you go into more detail about the role that partnerships and collaborations play in your business model, and are you currently looking for any partners in overseas markets?
Partnerships are important in our business. We have a wide scope when we consider partnerships. Domestically, our suppliers for plastic snaps and other secondary materials are indispensable partners of ours, since we deal with over 35,000 items. We also consider our customers as partners too. With the change in the global market, Japanese companies need to unite together to increase their international competitiveness with countries such as China and others. We want to thrive together as a team working with all of our partners. Enhancing our status globally is the key to growth.
When it comes to overseas markets, partnering with local companies is crucial. As the saying goes “When in Rome, do as the Romans do.” Learning and understanding the local culture is important when entering into a new market. Therefore, we have partnered with an Indian and Bangladeshi local company that does sales and provides machinery maintenance. We want to take this business model and enlarge it so that we can expand across Southeast Asia.
We already have bases in Southeast Asia and South Asia. The people in these areas have a huge affiliation towards the Japanese. They are open and have a sense of respect towards Japanese manufacturing. Conveying the essence of Japanese monozukuri and combining it with the local culture and knowledge is key for us. Recently, we had contact from a Turkish company that is interested in trading our products. Expanding to other global markets is part of our vision.
While you are known for manufacturing snaps and other products for clothing, you also provide solutions for battery configurations, whether that be single-use batteries, secondary batteries for rapid recharging or lithium-ion batteries for electronic applications. Why did you decide to diversify into batteries and how do you plan to grow this specific aspect of your business going forward?
We used to provide metal spikes to one of the biggest sports companies in Japan for a famous Japanese MLB player. We worked together with our supplier to do so. We provided him with a very specific and unique type of material and its own design. Working with them, that was converted into his spike shoes. One of the engineers from the supplier that we worked with came to retirement age. We asked him to join our company so that we could retain the knowledge of the spike design and continue to provide to the sports company. This engineer was actually involved in the battery business with his previous company. We realized that batteries are not that far away from our main apparel business, as to operate electronic devices, batteries must be used. Similarly, when it comes to apparel, snaps are an important component. It is basically the secondary material.
Our focus when it comes to batteries is more on secondary batteries that can be reused a number of times. This adheres to the environmental standards that we have within our company. We started our battery business around the year 2011 when the Great East Japan Earthquake occurred. We foresaw the growing need for batteries.
If we look at Kaji Tech, it was founded in 1922, and you celebrated your 100th-anniversary last year. What recent evolution has the company undergone in order to ensure its longevity?
I believe that the essence that underlies our 100-year history is that the founder of the company, who was my grandfather, always insisted on three keywords for our business. The first is “sincerity”, the second is “making efforts” and the third is “gratitude”. On top of that, when my father became the president, he made the company credo to respect the past and respect tradition, but to always be innovative and cater to the current needs of society. When I became the president, I made the company credo to weave, connect and attach the smiles of people all around the world. We have our company philosophy and core values, as well as our employee code. It is a combination of the hard side and the soft side of our philosophy that has allowed us to continue our business for over 100 years.
Looking back at our history, our company started off as a supplier of secondary material for shoes for the Japanese army. For example, we provided buckles, shoe eyelets and shoelaces. We converted that business into children’s shoes with characters loved by children all over the world. We deviated from the shoe business when our customers went out of business, and we decided to focus on babywear. The metal snaps that were being used in babywear were dangerous and could cause injury to the babies. To solve this issue, we introduced plastic snaps which are safer for babywear. We would like to continue to meet the needs of our society by understanding and providing solutions to underlying social issues. We want to provide safety and soundness to people around the globe and connect their smiles through both our products and our mindset that is endorsed in our products.
Imagine that we come back in exactly five years and interview you all over again: what goals would you like to have achieved by then?
I will probably say the same thing in five years when you come back. Our business and my heart are set on our company’s philosophy and code as well as our employee's conduct code. Of course, with time this will need to be reflected upon to some extent. However, our core mindset will never change. I feel that as a secondary materials provider for babywear, it is our mission to provide safety to babies. Metal snaps are dangerous as they could be swallowed or could cause injury to the baby. By converting them to plastic, we are providing safer babywear, not only in Japan but also throughout the world. I want our products to create smiles.
There is a global clock that is ticking when it comes to the environment. We only have a certain period of time to save the earth. I feel that if we do not take strong actions now, the future generations will not be able to live on the earth. Therefore, it is our mission to be environmentally friendly and provide products that are environmentally sound.
Metal snaps can be dangerous as defects happen every day. Many brands around the world have this kind of issue due to the structure of the metal snaps. However, many Asian baby brands including the biggest SPA brand in Asia do not have this issue as they use our plastic snaps. There are also issues such as metal allergies as babies’ skin is very sensitive. It is our mission to provide safety to children, both in Japan and worldwide. That is our goal for the future.
Interview conducted by Karune Walker & Ana Ruiz