Founded in 1955, Kobashi specializes in supplying cardboard boxes to B2B customers in a range of industries, chiefly food processing and agriculture.
Japan's aging population gives rise to two significant problems: a labor force shortage and a gradually shrinking domestic market. What challenges and opportunities stem from these demographic shifts? To what extent should Japanese corporations consider expanding overseas to ensure their business success?
The declining population and labor shortage are impacting all industries, including ours. We're facing challenges in recruiting resources to fill our staffing needs. As a result, we've decided to introduce automation to our production lines and intermittently halt the lines to conserve energy and automate various processes. It's important to note that we don't implement this strategy for all our production lines, but rather, we do so when it's practical and feasible.
It is true that the domestic market is on the decline. However, certain clients will continue to provide consistent business for us, particularly within the food processing and agriculture industries, which are our primary focus. However, we have observed a decrease in the export of industrial material products. Over the past few years, there has also been a noteworthy shift, with companies increasingly taking measures to reduce their reliance on Chinese equipment and relocating production operations back to Japan. Despite the shrinking overall demand, our cardboard business is able to balance out and adapt to the changing trends and shifts, allowing us to continue our operations effectively.
In recent decades, we've witnessed the emergence of regional manufacturers in countries like China, South Korea, and Taiwan, replicating the Japanese model at lower costs and sometimes lower quality. As a result, Japanese corporations have had to explore niche B2B markets for further growth. What do you consider your core strengths that can attract potential overseas clients?
The key distinction between Japanese manufacturers and those in other countries lies in the client-oriented approach of Japanese manufacturers, where the customer takes precedence. In the case of our cardboard box business, we specialize in crafting custom orders that are tailored to meet the specific needs of our clients. A prime example of this approach is our expansion into Thailand, which was initiated in response to customer requests and seeking to accommodate their unique needs.
Since opening your factory and office in Thailand in 1990, which other countries have you been able to serve or cater to as a result of this expansion?
In 1990, our largest Japanese client established their business in Thailand, and in response to their needs, we decided to expand our operations to this new location. Japan and Thailand have significant differences in culture and work mindset, so understanding and adapting to these disparities is a critical prerequisite for successful overseas expansion.
Our approach involves effective communication to convey our company's philosophy and mission, while day-to-day operational activities are entrusted to local personnel. This strategy has proven to be successful for us in Thailand. Initially, we focused on catering to the requirements of our prominent client, but we soon realized that more than serving only one company was needed. Therefore, we proactively sought out new business opportunities and broadened our business scope.
Throughout this process, we faced significant culture shock because of the distinctions between Thailand and Japan. However, these encounters have empowered us to aid other Japanese companies in extending their ventures into Thailand. While our main focus in Thailand is manufacturing cardboard boxes, we are actively diversifying our services to offer assistance to other businesses in the area.
Partnerships play a pivotal role in understanding and accessing local markets in foreign countries. How do partnerships factor into your business model, and are you actively seeking new partnerships to further expand in Thailand and other regions?
When we initially entered the Thai market, our partners included Saha Group and Mitsubishi Corporation. However, at present, our sole partner in Thailand is Saha Group, a company with investments in consumer products. We've built a longstanding and strong partnership with them, which we intend to maintain and continue.
In Japan, we haven't formed any official business alliances, but we collaborate with different companies when necessary for our operations. We will actively pursue and establish partnerships when they are needed to support our business activities.
Japan has established ambitious objectives to achieve complete carbon neutrality by 2050. Can you elaborate on your strategies for aligning your products and services with these environmental goals? How are your initiatives contributing to both the industry's move toward eco-friendliness and your company's long-term sustainability objectives?
Our cardboard products are inherently eco-friendly. Given the growing momentum for reducing CO2 emissions, we have made the switch from heavy oil to gas as our energy source. However, it's worth noting that the reduction in CO2 emissions might not be substantial, primarily because our production volume is relatively modest compared to larger companies.
Corrugated boxes serve as ideal packaging solutions in various scenarios, offering protection against vibrations, jolts, and shocks. However, they come with their own limitations, including susceptibility to deformation under high pressures and a lack of resistance to certain liquids that can permeate the structure and potentially contaminate the contents within. Moreover, they may not be sustainable for heavy items due to their relatively low endurance to mechanical stress. How do you address these challenges to provide the best packaging solutions for your customers?
Our corrugated cardboard boxes are intentionally designed to ensure that even if a portion of the box is damaged, the contents within are well-protected. Additionally, we incorporate water-resistant materials and apply a special coating to prevent liquid seepage or absorption. Customer satisfaction is always at the forefront of our priorities, and we consistently provide samples to gather feedback from our clients, allowing us to better understand their preferences and requirements.
What are your plans for further international expansion? Are you looking to expand in Southeast Asia, or in other regions, such as Europe and the USA? Could you share the strategies you intend to employ for entering these markets, such as M&As or establishing new subsidiaries?
Our primary focus for expansion is Southeast Asia. We would consider venturing into this region only if there's a demand from our clients. However, our current challenge lies in the shortage of resources, which presents a barrier to entering the overseas market. If a potential partner is willing to collaborate with us, we will certainly explore the opportunity for further expansion. In the past, we've contemplated expanding into Vietnam, but resource constraints have prevented us from making that move.
Through past experiences, I've learned that successful expansion hinges on having strong local human resources, especially because our production line is not entirely automated. To establish a presence in a new market, we rely on capable local staff to effectively navigate the local landscape and manage operations.
When expanding into international markets, what specific qualities or attributes do you seek in potential new partnerships?
When seeking partners, we have two primary criteria in mind. The first category comprises trading houses, as they possess the capability to manage a diverse range of industries. The second category involves identifying partners who are willing to align their services with the specific requirements of our clients as they expand into overseas markets.
Japanese companies have a long history of emphasizing R&D, known for their ability to innovate and develop new products. Can you highlight the key products you wish to present to the global market? What areas will be your primary focus in R&D moving forward?
Our focus is primarily on responding to the existing market demands rather than actively developing new products for the global market. An excellent illustration of this approach is seen in our response to the COVID-19 pandemic. During this time, we developed partitions to meet specific needs. For instance, the Nihon Ki-in (the Japanese Go Association) requested a partition that could be used to facilitate chess matches. We also created a partition designed for use in evacuation centers during disasters. In both cases, we ensured that the partitions were foldable, compact, and lightweight for practicality and convenience.
As your company was founded in 1955, looking ahead to the year 2030, what specific growth goals or personal ambitions do you, as the president, hope to have accomplished by that time?
While my primary goal isn't necessarily to expand the company, I am deeply committed to ensuring that my employees lead fulfilling lives both within and outside of the workplace. I want our company to be a comfortable and welcoming environment for our team, where they can find both meaning and comfort in their roles.
With factories located in Chiba, Kumamoto, and other areas, we consider ourselves a local business and are dedicated to contributing to the prosperity of the local communities in which we operate. Our long-term vision is to explore ways to sustain the company and ensure its longevity for the next 50 or even 100 years.
Our approach is centered on maintaining close interactions with our clients, understanding their unique needs, and addressing their challenges effectively.