With deep expertise in injection molding and bioplastics, Kyowa expands globally while driving innovation in mobility, agriculture, and circular economy solutions
The Japanese manufacturing sector is at a pivotal moment. In recent years, global supply chain disruptions, the COVID-19 pandemic, and U.S.-China decoupling have driven corporate groups to diversify their supply chains for greater stability and reliability. This shift presents a unique opportunity for Japanese firms, which are recognized for their technological expertise, precision, and reliability, while also benefiting from the weakened yen. Do you agree that this is an exciting time for Japanese manufacturing? What competitive advantages do Japanese companies hold in the current macroeconomic landscape?
Due to the pandemic, Japan’s economy remains stagnant. When comparing our domestic and overseas performance, we see that our overseas factories are larger and generate higher revenue.
Despite the pandemic’s impact, we maintained strong relationships with our overseas clients, which helped us avoid significant losses.
In China, where businesses have extensive experience and a strong sense of urgency, there was a major focus on cost reduction and efficiency improvements. As a result, even though revenue declined, we were still able to maintain profitability.
We consider our overseas group companies, including our Vietnam facility, as part of our family. Even though we operate in different countries, we have built close relationships with our local staff, ensuring a unified and collaborative approach across all regions.
Japan’s population crisis presents a serious challenge, with projections showing an 11 million worker deficit by 2040. For many Japanese companies, this issue is twofold: a shrinking domestic market and difficulty in hiring workers. How is your company addressing these challenges? To what extent must you look overseas to secure new markets and new talent?
As you mentioned, Japan’s population decline is leading to labor shortages, and government policies have not kept pace to resolve the issue. This limits what companies can do domestically to address the challenge.
Fortunately, we have a group company in Vietnam, and after three years of experience, workers there can be relocated to another group company, including in Japan. This allows us to bring experienced Vietnamese operators to Japan without relying on third-party recruitment agencies, which would otherwise involve high fees. Since these workers receive Japanese-level salaries, many eagerly accept the opportunity to relocate.
Japan does have a training system for foreign operators, but it requires them to pay high fees—sometimes as much as 40% of their salary—to local agencies. This makes the system unattractive, and its use has declined. In contrast, our approach ensures that workers receive full Japanese-level salaries, making it a far more appealing option.
Currently, we have about 15 Vietnamese operators in Japan, and we plan to increase this number moving forward. If needed, we could also apply the same system for Chinese operators. Rather than waiting for government solutions, we are taking proactive steps to secure skilled labor and sustain our operations.
Japan’s population is projected to fall below 100 million by 2050, raising concerns about a shrinking domestic market. Does this forecast create a sense of urgency regarding your customer base, or have you diversified enough internationally for overseas earnings to offset the decline?
While Japan’s domestic market is shrinking, we are still committed to strengthening our business base in Japan. That is why we are actively bringing in skilled operators to support operations.
For the past 20 to 30 years, countries with lower labor costs, particularly China, have been the focus of global manufacturing. This has enabled China to advance its technology, but it is now clear that China’s role as the "world’s factory" is fading, with India poised to take its place.
Recognizing this shift, we are currently considering an entry into the Indian market as part of our long-term global strategy.
Kyowa was founded in 1953 and has evolved into a specialist in mould design, manufacturing, secondary processing, and assembly, with expertise in steel and functional materials. While the company has traditionally served the automotive sector, it is now expanding into new industries, such as medical and agriculture. Who are your main customers, and which industries do you primarily serve today? Looking ahead, which segments do you see as key areas for future expansion?
We expanded into the office automation (OA) sector when we entered the Chinese market, as many Japanese OA manufacturers were already operating there. Our Hong Kong operations were established in advance, and as more OA companies clustered in Hong Kong, our OA-related business naturally grew. Today, 70% of our work in China is related to OA manufacturing.
We also anticipated that North China would advance technologically, which led us to choose Dalian as the location for our Chinese factory.
Recognizing the need for a specialized technology to drive business growth, we began developing precision molding. However, in the first five years in China, this did not generate significant revenue. Around the same time, we introduced precision molding in our Shenzhen factory, and over time, orders gradually increased. Thanks to our investment in precision molding technology, both factories have now become a success, allowing us to respond to almost any request with high-quality solutions.
A key factor in our advancement in precision molding was hiring an Indian engineer in Hong Kong. His exceptional expertise led us to recruit more top-class Indian engineers, who played a crucial role in enhancing precision molding technology during production in China.
Could you share an example or case study that highlights your expertise in precision molding, showcasing how your technology has provided high-quality solutions for your clients?
I recall one particular project where a customer required an injection molded part with precision of couple of microns, which was an extremely challenging request. However, we successfully met their highly specific requirements, demonstrating our expertise in precision in mold manufacturing and molding.
Another example involved the iris component of a camera, which was traditionally manufactured using a press in two separate parts. The client wanted to streamline the process and produce it as a single component, which we were able to achieve. Both of these cases required exceptionally precise molding, an area in which we excel and continue to push technological advancements.
The automotive industry is undergoing seismic changes as the adoption of EVs accelerates, leading to a decline in demand for traditional components. Traditional internal combustion engine (ICE) vehicles typically require around 30,000 parts, while EVs need only half that amount. Moving forward, batteries and thermal management systems will play a much greater role in vehicle production. How is your company responding to these industry shifts, and are you developing new products to align with these changes?
For the past two years, our Dalian factory has already been producing EV components. One key collaboration is with Prime Planet Energy, a joint venture sponsored by Toyota, which specifically requested components that only our company can manufacture.
To meet this growing demand, we are opening a new factory in Dalian, set to launch at the end of 2025. This facility will feature end-to-end clean room production, further enhancing our manufacturing capabilities. Our approach has always been to respond to customer needs, using these opportunities to overcome challenges and advance our technology.
In addition to Dalian, we are also producing EV components in Japan. Looking at India, while there are currently few EV manufacturers, one company has shown strong interest in entering the market. We have already initiated contact, and once their new factory opens, we expect to begin receiving orders from them as well.
China, India, and Japan have been key strategic locations in the automotive sector, and as the EV market evolves, competition is intensifying. In your view, what strategic approach should Japan adopt to remain competitive and successful in this rapidly changing EV landscape?
The potential consolidation of Honda, Nissan, and Mitsubishi does not seem likely to be successful.
In India, Suzuki is currently losing market share as cars are getting larger. Previously, small cars dominated the market, making Suzuki a mainstream choice, while Honda and Toyota had to adjust by producing smaller vehicles.
Toyota is also facing challenges in maintaining global quality standards, particularly with its lower-cost models. However, if the market shifts toward high-end vehicles, Toyota could regain its leadership position, as other countries and automakers have yet to meet the stringent quality standards required for premium vehicles. This same trend applies to India, where local manufacturers cannot yet meet high-end vehicle standards, creating business opportunities for us.
Additionally, the Indian government is promoting the domestic production of vehicles by Indian manufacturers, which presents another strategic opportunity. While we continue to serve Japanese automakers, we are also actively looking to collaborate with Indian manufacturers to expand our presence in this growing market.
Kyowa will be showcasing at the Osaka Healthcare Pavilion at the Osaka Expo, presenting Reborn with Bioplastics, a concept developed in collaboration with Osaka-based SMEs. The Expo is expected to attract over 28 million visitors, including 3 million from overseas, and is projected to generate over JPY 2 trillion in tourism and business opportunities, providing a major boost to Japan’s economy. What products will you be showcasing at the exhibition, and what business opportunities do you hope to generate from your participation?
The bioplastic market is still relatively small, as the materials are limited and expensive at this stage. However, as demand for bioplastics grows, I believe prices will decrease, creating more business opportunities.
Our goal is to promote sustainable materials, and while we will continue producing conventional plastics, we want to reduce environmental impact when it comes to consumer goods. The development of biodegradable plastics is key to ensuring that we minimize unnecessary environmental burden. These products will appeal not just for their functionality but also for their positive contributions to society and sustainability.
Additionally, we are cooperating with a research project being developed by Osaka Gas to convert the biodegradable plastic PLA into methane for use in city gas.
The project will explore the use of biodegradability to further increase the sustainability and efficiency of bioplastic materials.
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Most plastics in Japan are incinerated due to their limited biodegradability and slow decomposition, which hinders the goal of achieving a true circular economy. Kyowa is working to address this issue by retreating polylactic acid (PLA) through hydrolysis, accelerating its decomposition process. This research project, in collaboration with Yanmar’s YC100 Composter, utilizes biodiesel and a two-stage fermentation process, transforming PLA and food waste into nutrient-rich compost within two to three months. What have been the technical challenges of this project, and what progress have you made so far?
Waste management is a major environmental challenge, and we wanted to address this issue, particularly in relation to PLA plastics. Even if society moves away from plastics, the materials already produced will not degrade anytime soon. That’s why we decided to focus on collecting plastic waste and making it non-hazardous to the environment, with an emphasis on accelerating its decomposition. As a manufacturer, our primary role is production, but we also feel a strong social responsibility to contribute to waste collection and sustainable disposal methods. This initiative aligns with our broader commitment to sustainability and the circular economy.
In terms of performance and features, how does this plant-based plastic compare to traditional plastics? What types of applications are best suited for this material, and where do you see the most potential for its use?
Plant-based plastics tend to be slightly weaker and less heat-resistant compared to traditional plastics. The only way to counteract these limitations is by incorporating additives to enhance durability and resistance.
Achieving 100% plant-based plastic with high-performance properties remains a major challenge. That’s why we have developed specialized additive agents to increase heat resistance and improve overall material performance.
For typical PLA plastics, brittleness is a common issue, as they break easily. To address this, we have formulated additives that enhance elasticity and flexibility, ensuring that the material remains functional and versatile. Essentially, our focus has been on designing additives that add practical functionality to plant-based plastics, expanding their potential applications.
If we were to return for another interview in the future, what goals or ambitions would you like to have achieved by then?
I’d like to briefly touch on Hyponica, a technology developed by my father. He often questioned traditional farming methods and wanted to address the potential food crisis that could arise in the future. This mindset led him to explore agricultural production with a focus on removing soil as a limiting factor for plant growth.
In conventional hydroponics, soil is replaced with water, following a similar concept. However, his goal was to maximize root growth, enabling plants to reach their full potential. It’s interesting to think that with his method we were able to grow 16000 tomatoes from a single seed.
Hyponica is widely recognized in Japan, but its global expansion has been slower. One challenge is climate adaptation, as expanding into tropical areas and deserts is difficult without local partnerships. Additionally, agriculture is often protected by national policies, creating barriers to international expansion. By the time we have this interview again, I hope Hyponica technology will be embraced worldwide, helping to revolutionize sustainable agriculture on a global
Is it correct in assuming that this technology is best applied in populated areas like the Netherlands where land area is limited?
Typical hydroponics has proven successful in densely populated regions but has not been as effective in tropical or desert areas. This is where we believe Hyponica technology can make a difference. Essentially, we see opportunities in difficult environments, where traditional methods struggle.
In countries with high population density and limited agricultural land, maximizing efficiency and yield per square meter is crucial. The Netherlands, for example, has become a global leader in high-tech, space-efficient farming by utilizing advanced greenhouse systems and hydroponics. Hyponica’s ability to optimize root growth and enhance productivity makes it a perfect fit for similar environments. Beyond urban areas, this technology could also be beneficial in regions with challenging climates, including deserts or areas with poor soil quality, as it reduces dependency on traditional farming methods and enables sustainable food production in diverse conditions.
One key advantage of our system is its efficient water usage. Plants only absorb the water they need, significantly reducing waste. Additionally, waterborne pathogens can be a major issue in small hydroponic tanks, as they spread quickly throughout the entire farming system. To mitigate this risk, we use large-scale tanks, which help maintain plant health and system stability. This approach allows us to ensure a more resilient and scalable hydroponic farming solution.
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