Established in 1941, NLI has grown to become a top-class machine manufacturer with world recognized technological capabilities, supplying packaging machinery widely used in the food, fertilizer, chemical and semiconductor industries, among others. We speak to president, Yasuyuki Cho, to learn more about the company’s history, technology and high-quality products, as well as discuss the company’s strategy for international growth and recruitment.
In the 80s and 90s, Japanese manufacturers became world leaders in a variety of fields. The period that followed saw the rise of competitors from Asian countries who successfully replicated Japanese production processes while benefiting from cheaper labor cost. Despite this intense price competition, Japanese manufacturers have remained leaders in specialized and niche fields. From your perspective, what makes the success of the “Made by Japan,” and how do you implement it in your company?
To answer your question, we must observe the history of “Monozukuri” (manufacturing) in Japan. Decades ago, Japanese manufacturers begun their businesses by replicating and learning from their European and American counterparts. The techniques and processes imported from the West made the basis and the foundation for what was to become Japan’s manufacturing sector. As Japan learnt from its international peers, it started improving and developing its own skill while ameliorating the imported technology. Soon enough, Japanese makers were able to create products that were at par with their Western competitors. Once a similar level of quality was achieved, competition boiled down to cost-reduction. When that occurred, European and American manufacturers offset their cost by relocating their factories to Japan in order to utilize Japan’s own cheap labor.
As such, the trend that we are currently experiencing where other Asian nations replicate Japan’s production method is actually just the natural and logical development of the manufacturing industry. In similar fashion to what the West did, Nippon manufacturers have relocated their facilities to Asian nations to benefit from cheaper labor. By doing so, the workers of these countries have acquired new skills and techniques, and knowledge has been transferred.
Under such an evolution, the exporting country, in this case, Japan, has to move up the value-chain to survive and thrive. For that reason, Japanese makers now dedicate themselves to developing technologically advanced and complex machinery and equipment.
How do you ensure that the quality of your products remains the same whether it is produced here in Japan, or in your factory in Taiwan?
NEWLONG INDUSTRIAL began as a manufacturer of sewing machines. When the market evolved towards automatic sewing machines, we developed automatic packaging systems. In the packaging machine sector, bag-making equipment experienced a surge in demand and we logically branched into automatic bag-making systems. When first opened, our Taiwanese factory produced simple sewing machines. As the capabilities of our Taiwanese operation increased, our production evolved and we began manufacturing more complex machinery overseas.
To ensure the quality of our products, we conduct quality assurance analysis, inspection and evaluation domestically in Japan. While some argue that China and Taiwan are Japan’s competitors, we believe that our countries are complementary.
SMEs are considered to be the “backbone” of Japan’s economy. METI (Ministry of Industry) estimates that these firms account for more than 70% of employment and around 50% of Japan’s high added-value manufacturing output. What is the role of Japan’s SMEs in the national economy and supply-chain?
Japan has a wide range of SMEs, and they are generally divided into three different types. First are SMEs dealing with components only; second are firms that produce original products; and third are the companies directly connected to larger enterprises.
As an independent manufacturer of original products, our company is the middle type. While small, the size of NEWLONG INDUSTRIAL allows us to do many things that larger enterprises cannot. In terms of market share, we do not pay great attention to the fact that we own a 90% market-share domestically; for when we look at the world as our stage, our share is definitely smaller. Today, 50% of our products are exported overseas and 50% are sold domestically. Moving forward, we will continue to challenge ourselves because we believe that our firm has the potential to continue its international development.
NEWLONG INDUSTRIAL was founded in 1941. Could you please share the key milestones of your company?
Our biggest milestone has been our ability to evolve from sewing machines to automatic packaging machines, and then from automatic packaging machines to automatic bag making machines. NEWLONG INDUSTRIAL developed together with the rise of the Japanese economy. Post WWII, we began by repairing sewing machines, and we created a sewing machine that could repair different types of bags. To produce soy sauce, for example, food makers require a specific bag to compress soybeans into moromi paste. Our sewing machine could repair this specific bag. As time went by, we became Japan’s largest supplier of sewing machines and began to develop inventions of our own.
Through word of mouth, we acquired a great reputation and one of the organizations relevant to grain logistics asked us to create a sewing machine that could seal bags for carrying rice grains. As such, we diversified our machine’s applications to cater for new markets. As our new automatic rice-bag sealing machine replaced human-labor, chemical companies grew interested in our product and we expanded again.
NEWLONG INDUSTRIAL grew in tandem with the Japanese economy. As SMEs begun to flourish across industrial sectors, we collaborated with them and developed products tailored to their needs. In the 70s for example, we developed machinery that could produce and seal bags used to carry flour and cement. Together with a large milling company, we produced container producing equipment for powder products. At the time, that invention was better than the ones coming from the West and we acquired a 100% of the domestic market share for powder packaging machinery!
Despite our growth, we are not satisfied by the performance and achievements we experienced. For that reason, we continuously invest in R&D with the aim to systematically develop innovative products and more efficient processes.
In today’s Japan, recycled bags are not sealed by sewing machines anymore. After WWII, Japan was a poor country and as such, the bags we utilized for industrial and consumer-related activities where constantly recycled because we could not afford to waste resources. In the developed world however, bags were sealed with plastics and glue, and were disposed after utilization. Originally, our products were developed to seal bags that were re-used. When Japan's economy reached maturity, Japanese companies shifted their manufacturing sites overseas. At that time, we stopped recycling bags and adopted the disposal techniques used in the rest of the world.
As the country continued its internationalization process and as factories shifted to overseas locations, we decided to manufacture machines that produce shopping bags, and began to develop our business as a paper-bag machinery manufacturer. We used the skills and advanced technologies developed by Germany, our role model. In the paper shopping bag sector, Germany sets global standards. When first introduced to Japan, these German bags were not popular with Japanese consumers as they didn't reflect our consumption patterns. As such, there was a need to adapt and customize paper bags to match the demand of Japanese users. We seized that opportunity, stepped in and responded to the demand of Japanese consumers by creating models tailored to their needs.
Japanese people and businesses have a particular attention to details and are known for being meticulous. As they like precise objects, we created bags that were super detailed, including sharp folds and aesthetically pleasing designs. When German companies look at paper bags, they first consider functionality. They believe that as long as you can put something in the bag, deliver it, and transport it, that’s the end of its value. In Japan however, the value of a bag goes further. By virtue of this unique demand, we polished our bag-making technology and created machines that manufactured better bags than our German counterparts. Eventually, Fischer, a German packaging manufacturer, approached us to enquire if we’d be interested in purchasing their operations and we acquired them.
What upcoming products would you like to highlight?
We are supplying part of the assembly lines that produce the paper-bags utilized by American supermarkets. Furthermore, we receive various requests from Japanese clients not only to produce the machine for one part of the assembly line, but to produce the system for the entire assembly line.
The competitive advantage of our 236T-A+45CT+5FA3-67+5TP, external handle super high speed bag making machine is its cost-efficiency. While normal machines only produce 150 bags per minute, our equipment almost quadruples that number and manufactures 400 bags per minute. When shifting from plastic to paper, cost is a key element, and our equipment allows for economy of scale.
If one observes Southeast Asian economies, whether it is supermarkets or convenience stores, one will witness that they are putting an end to the age of plastics and introducing paper bags. We hope we can contribute to the growing trend through this machine.
Another comprehensive strength of this machine is the automated process of inspection and quality control. Previously, inspection and quality control were done by employees present along the assembly line. With this new machine, the inspection is done comprehensively through a digital camera. By utilizing this technology, we are reducing human labor costs.
What is your international strategy and how do you plan to increase your shares when it comes to the international market?
Our strategy is to grow globally but act locally. Today, the 'top leadership' of our international offices is composed of people from each respective country. For example, our Chinese and Taiwanese employees have taken full responsibility of our operation in those countries. Our aim is to continue taking this localized approach. As we continue to advance globally, we hope to welcome more foreign employees from international countries. Furthermore, we are creating a solid international repair team. By localizing repair and maintenance, we are able to provide our clients with robust after-sale services, direct communication and a swift response rate.
As the second generation of NEWLONG INDUSTRIAL presidents, what legacy would you like to leave behind when you hand your position over to the next generation?
I believe that companies are not owned by individuals but by the people who contribute to them. A company is not defined by its management or by the product it creates; it is defined by all the employees. As such, the most important feature of an enterprise is to be a place where all employees can fulfill their potential and develop their skills.
Furthermore, we must extend our gratitude to our clients. At the end of the day, our clients are the ones who drive us forward. By communicating their needs and their demands with us, they enable us to innovate and create new products. By continuing to build on what my predecessors have done, my aim is to continue treasuring and cherishing the people who created the technology we enjoy today.