KEM: Innovation in analytical and measuring instruments

If we look at companies like Sony and Panasonic who are producing consumer electronics, we see that they have been facing stiff price competition from overseas competitors in countries such as South Korea, Taiwan and China. Could you tell us how should Japanese companies beat this stiff price competition? What should they do to overcome this?

I heard that such consumer electronics companies have been suffering from the price competition against Asian companies. But when it comes to the analytical instrument industry, we have been facing price competition mainly against companies in Europe and the U.S., rather than such Asian companies. I would say our competitors in those western countries are a little bit ahead of us regarding analytical technology and price competitiveness. We have been long challenging those competitors with our mind of KEM’s monozukuri, which I will explain later.

When you produce your analyzers, we can see that they are made with passion and a fine attention to detail as the glass needed for such devices is unique and takes time to perfect. This focus and attention to detail is part of the phenomenon known as monozukuri which we hear about time and again as we conduct our interviews. Could you tell us more how you are using monozukuri as a means to gain a competitive advantage from your overseas competitors?

We know that they have good products in other countries as well so when we compete with these other countries, what we think is important is that we should produce the product that gives a sense of security or assurance to clients. In relation to monozukuri, we are trying to make something that gives clients or users the feel of satisfaction after they use that device. That is what we think is important.

Japanese products are competitive in terms of the quality of the product. Why do we believe so? Because we try to provide the proof that the devices we produce, for example, analyzers, are highly accurate. This accuracy gives the users a sense of security or assurance. We also prove that our analyser or the results that come from using it are extremely precise and in line with the international standard, so we put great focus on the traceability as well. When we talk about security or assurance, that is directly linked to the actual value that comes out from the analyzers or the measurement devices we produce.

There is one interesting story about this, we are now producing the density meter and the refractometer, which we started developing thirty years ago. We needed to provide proof that these devices give an accurate outcome, but we did not have the reference materials labelled with true value to prove that, so we imported it from Germany but found that the quality of the reference materials were not necessarily stable. We then worked with the Japanese government to develop a reference instrument to measure reference materials and were successful and thus we could supply that to market. The reference instrument is now certified by the authorities and we are now the only supplier for such density meters and refractometers with reference materials in Japan. The devices we are producing give an accurate outcome and this provides a sense of security. I think that that is the strength we have.

Density / Specific gravity meter

We know that you are offering a wide range of products, from your Karl Fischer Titrator which measures the water content of food, for example, to your refractometers which measure the bending of light as it passes from one substance to the another. Could you give us an overview of your products and tell us more about the synergies that you have been able to create between your product line, please?

All of our products have been developed and then produced upon requests from our clients. We always try to respond to those different requests sincerely. What we have done is to make it possible to measure something that was not measurable or to make it easier to do something that was difficult to do before. For example, continuous monitoring technology was a very challenging task for us, but we made it possible by sincerely hearing the requests from clients and by having strong passion to achieve the goal. We have been putting high value on this mindset until today. I think these requests created synergies and brought in new requests one after another for more than sixty years and we have provided many solutions to clients. Our business started by made-to-order, we do not mass produce in most cases. In the past we started our department for special products in order to meet the detailed requests from clients and we are still doing this.

Karl Fischer Moisture Titrator (left) | EMS Viscometer (right)

You are not just a product manufacturer as we know that you also offer additional complementary services such as the software that works in sync with your devices. Besides the software, can you tell us more about what other additional services that you can provide to your clients and how you are adding value to your product?

We get good feedback about our aftercare from companies here in Japan, so we have an excellent reputation for our service. We think that customer service is very important and we have our people actually visit our client’s office and take a look at the device and fix it if needed. We are also trying to do the inspection in advance so as to anticipate and reduce the risk of break down.

This is an interesting aspect of Industry 4.0, part of it is about predictive maintenance and the ability of machines to adapt on the production line to changes. Can you tell us how a company such as yours is utilising Industry 4.0 and the digitalization of production? How are you helping your clients reach those goals?

This is the kind of challenge that we have to take on going forward. We have so many different products and we understand that Industry 4.0 would be a smart concept for us to implement in our production and predictive maintenance. To begin with, we needed to identify the kinds of products that can be automated, and we are working to develop and introduce them. But on the other hand, we also believe that there is some area where the manual work is more appropriate than automation. We would like to stick to the manufacturing by human beings even though the Information Technology (IT) and Internet of Things (IoT) is increasingly used, we still believe that human skills cannot be beaten by those technologies. We would like to keep relying on human skills.

Your company relies on highly skilled engineers and technical workers so can you tell us what you are doing to keep these technical capabilities in house so that you are able to share them with the next generation of technicians in your company?

The succession of the techniques from the senior people to the next generation is very important. In the past that actually happened very naturally, but in the recent years it has been difficult to make the succession happen naturally because of the generation gap. We are trying to put more effort into the passing of the senior people’s techniques to the younger people. We think that that will be the foundation for producing good products.

To me, the mechanical aspect is just mechanical and mass production was widely employed in many big manufacturers in the past. But in the future, I am not sure if it is necessary as people are increasingly desiring unique goods. Nowadays, it is not the age of material desire. There is also an area where humans should be engaged in. When humans make something, they give a certain amount of passion or love to those products which machines never can. I would like to succeed in that aspect of manufacturing in the future through our monozukuri process which adds the spirit of traditional Japanese craftsmanship to the product.

I wanted to ask you about one of your premier products, the digital alcohol meter. We know that you have been developing this for many years now and that it is both user friendly and very accurate. Nowadays with Covid-19 we are seeing new applications for this, to measure alcohol gels for example. But I know traditionally it is used to measure alcohol content for breweries. Can you tell us more about this specific product? What are the advantages of your alcohol measuring device in comparison to other ones?

The measurement of alcohol content is basically linked with taxation for breweries, you need a very precise and accurate measurement. I mentioned about traceability and accuracy earlier and we need to compare and test the substance against the standard one. Only when the government approves it and with our device you can show it with the proof. Most of the Japanese Sake (Rice wine) makers are doing their measurements using our device. We have gained a lot of credibility and enjoy the confidence of our clients and that is why we could expand the share in this market.

We have a good reputation. Therefore, when it comes to alcohol measurement, people think about Kyoto Electronics. That is why we had a lot of requests for the measurement related to Covid-19, such as, for example, the alcohol content in hand sanitizer.

Alcohol meter

Just looking at your devices downstairs, we notice that there are a lot of LCD screens and also that they are wireless. How important is it for your devices to be wireless or to be portable? What value does this add for your clients?

We take care of the entire process from the development designs, manufacturing, to the sales and then to the after sales services. In terms of the wireless device, why did we develop it? Because it gives more capability for the automation, user-friendliness, simpleness, and it reduces mistakes. We are using different devices for different occasions and since we take care of everything including design, we are using what we want to use in the space where we want to use those devices. We are therefore using LCD screens or wireless application where we see fit.

Portable Density / Specific gravity meter

I want to ask you a little bit about the environment as it relates to your company. We know that you have your measurement devices for flue gas mercury content in industrial applications. If we look at America, for example, big heavy industries in America are paying in excess of $200 billion per year just to comply with environmental regulations. Can you tell us more about how your company is helping your clients to comply with environmental regulations?

I think the situation is the same in Japan as other countries. The requests for our products to always comply with environmental regulations is common. One of the examples is the measurement device for the Hydrochloric acid (HCL) for which we have a 70%–80% market share in Japan. Regulations always produce requests from clients and we then produce the necessary devices to allow them to comply. A laboratory wants to have measurement devices to measure their substances but when it comes to the environment related requests, those are always driven by regulations. Users want to have those devices to reduce the complaints from the clients or to reduce the health hazard.

You mentioned about the mercury measurement device, it didn’t sell well before but once the Minamata Convention on Mercury to protect human health and the environment against mercury was agreed in 2013, all the companies tried to find a measurement device for mercury. Environmental pollution is not a good thing, obviously, but once something has a negative impact on human health then the need arises. There is a disease called Minamata disease in Japan, that is one of the biggest diseases caused by the pollution in Japan.

We found it very interesting when we are looking at your company how you are able to provide to clients in a variety of industries. Of course, you serve petroleum clients, electronic, chemical, all the way to pharmaceuticals which is a sector that has a very high entry barrier in terms of regulations that must be respected. How are you able to penetrate and provide products for so many different industries?

As you said, yes, we have penetrated into so many different industries. We are pursuing the sensing technology and we have kept developing new products one after another based on the requests from our clients. As a result, we ended up having so many different sensors. Once we get new requests, then we think if we will be able to apply this product to meet their request. We also provide the end-to-end solution to the product. We do not choose the areas, but we kept challenging ourselves and entered into new areas. The founder of this company had that kind of spirit to keep challenging ourselves so what we are doing now is a consequence of his vision. My father, the founder of this company, was always proud of our company being not a subcontractor or subsidiary and even though we are a small company, we have kept producing our original products. That spirit has been passed to us as a tradition and is deeply rooted here.

We know from what you said now that you are responding to customer requests and as such R&D must be a critical part of your business. Of course, R&D is something that requires a financial and time investment. Can you tell us more about your R&D strategy as of now and what products are you looking to develop?

We are a technology-oriented company; however, we do not have a single R&D department. R&D’s essence is scattered around different departments from the laboratory, product development, the production engineering to the sales department. We have the technology team in the sales department as well, so more than 30% of our people are related to the technology. The core part of the development is done by the R&D department but most people in the company know about what needs to be done when it comes to the technology and we have the discussion with everyone for the technology development.

Looking at your international operations we know that you have distributors in every continent. Could you tell us a bit more about what regions or markets you are looking to further penetrate into and what products are you looking to offer those markets?

About 20% of our sales comes from international market and we would like to grow that proportion to about 40%. At this moment, the situation is changing drastically with Covid-19, like a paradigm shift, so we would like to wait and see how it goes. If we found a good corporation to have a partnership with or an overseas company in a natural way, we would like to pursue it, but we do not want to limit our options. We must have a compelling reason to force ourselves to enter an overseas market. However, we are still aiming at increasing our footprint in Asian markets and we also have employees from Vietnam, China, and Korea. We would like to grow closely with them, and we would like to pave the ways to enter those markets once they go back to their mother countries. We also have the ambition to enter into the European market too and now we have distributors there, but not a branch office, so at some point we would like to have a branch office. In the US, we used to have KEM USA., but we no longer have it. When the world is reopened, we would like to expand our footprint in the US, Europe and Asia.

The main fame for KEM is in Japan as we are not yet so famous in the international market. We have been in business for sixty-one years and about forty years ago we were very proactive in entering the international market and around that time, KEM USA, was established. Before long, a relatively large part of international sales was shifted to OEM style under brand names of other companies. In the beginning, when we entered that market, we could have KEM presence, but overtime we were forgotten. Going forward, we would like to strengthen the presence of KEM, and to this end we would like to further establish our brand internationally. Recently, we have just started collaborating with a large company in the international market and through that partnership we would like to strengthen the presence of KEM.

Your father founded the company and now you are the president. In the long future you will leave the presidency and there will be the new generation who will take your seat. When that happens, what objectives would you like to achieve at KEM?

First off, “Making people and making things with ‘JIN’’ in a heart,” and “for making a better and happier society” is my management philosophy, and it will never change.

I put in this sentence with intention, the phrase “making the products” after “developing the persons”, because the personal power and quality is more important for everything, especially in the case of our company, than for producing good devices,

JIN(仁) is the opposite or symmetry word of knowledge or intellect（知）, and means sincerity, benevolence, consideration and etc., which comes from Confucianism.  In the case of our company, this word JIN is the guiding principle of all our action in human resources, development, and manufacturing.  I always keep it in my mind for long and want all the employees to share with it.  

Based on that, I would like to find my successor from within the company as much as possible. I have not found that person yet, but I would like to foster that candidate and find the right person.  In the end, I think everything is destined, as I was. There is a saying in Japan, ‘after you do everything you can, you will wait for the destiny to make the decision. I like this thinking way. My ideal and destination is “the unity of knowledge and virtue” and the company is growing up as a long-established company worthy of being existence.