The packaging manufacturer which specializes in closures and caps for products across the food and beverage industries is collaborating with overseas partners to enhance innovation and break into new global markets. We spoke to president Hisashi Nakajima to learn more about the company’s products, technologies and plans for the future, as well as his take on Japanese monozukuri.
The famous Japanese manufacturing philosophy monozukuri has traditionally been about craftsmanship quality, fine attention to detail, and the kaizen philosophy. Nowadays, it is also about responding to market demands and customer requests, as well as providing the solutions that customers require. What, for you, is the essence of monozukuri?
We have always believed that the essence of monozukuri is to "meet the needs of the customer, no matter what." In essence, we never turn down a demand or request from a customer in need. We communicate carefully with our customers to find out what problems they are really facing. We make it a point to first understand the customer well and then consider "how we can help this person in need" when developing our products. To achieve this, we always try to be creative, innovative and pursue the most advanced technology. This is something that has remained unchanged since the inception of our company. Our engineers working in the field have been dedicated to improving each of our products and production lines. Our sales staff has also been proactive in making suggestions while keeping their own vision in mind. We are proud to say that our attitude towards ideal manufacturing has resulted in the trust our customers have placed in us over the years.
Japanese brands are very famous worldwide when it comes to electronics and the automotive industry, but when it comes to packaging, what are the qualities of Japanese brands that set it apart from international competitors?
I have travelled to about 20 countries, and what I notice about the Japanese is that they are not as self-conscious as people from other countries. This may seem negative on the surface, but it stems from the fact that they are aware of their ideal world and strive for the perfect "thing" with beauty and function without being satisfied with the status quo. In order to produce a product that we are satisfied with, we keep improving it. Even after the product is launched, we keep updating the cap of the product until it has an ideal function. This sometimes goes on until the product is no longer available in the market. We believe that one of the reasons Japanese brands have such a high reputation is that they strive for better functions and constantly develop their technology to have an ideal product.
Japan has the oldest society in the world, with the longest average life expectancy at 84, and more than 33% of the population is expected to be over 65. As a company that specializes in cap technologies, how are you adapting your products to the senior citizens, and how has it changed your business in the day-to-day operations?
Since our establishment, we have been seeking ways to reduce the amount of force required to open a cap. For example, the twist-off caps used for jams and other products, introduced from a foreign cap manufacturer, initially required a strong force to open. As a result of various improvements, we succeeded in making the cap easy for anyone to open. In a monitoring survey of various containers conducted by the Toyo Seikan Group, the cap was rated as "the easiest to open."
As for beverage containers, however, many caps and bottles are already standardized, and therefore we need to focus on how to incorporate customers who are disabled and elderly, whilst also considering how to expand the standard range. Making profit from the actual bottle has been greatly reduced due to severe price competition, and we do not necessarily have the funds or energy to invest in this market.
For that reason, in 2017, we organized an idea marathon in Singapore to develop a set of caps and bottles that are easy to open for anyone, including the elderly and disabled, to solve this problem. Through this project to develop a product by directly exchanging opinions with consumers and major beverage brands, we realized once again the importance of open innovation through diversity, which led to the opening of the FUTURE DESIGN LAB. as a base for development and marketing in Singapore by Toyo Seikan Group Holdings.
Looking at your products, we know that you are a comprehensive manufacturer. You design, develop, and manufacture cap closure systems, and you are serving several different markets including beverage, food, condiments, medicine, and toiletries. Among these different divisions of your business, which is the focus, and what is the best-selling product that you currently have?
For us, the largest market is the beverage industry, followed by food, condiments, and toiletries. The beverage industry is the largest market, and we have a 60% share of the domestic market. Out of around 25 billion plastic bottles in the market, around 15 billion caps are manufactured by us.
If we look at product development and Research and Development, we know that is an important part of your business. What is the focus of your R&D strategy, and what are some of the new products that you are excited to launch?
Our product development team consists of about 70 members, and we are working on about 180 themes. For 90% of them, we work together with our customers to solve problems. The remaining 10% are original projects, and we are constantly thinking about how we can create value through innovative activities. Due to the COVID-19 pandemic, many companies have suspended the development of new products for the past two years. Recently, however, the effects of the virus have finally settled down and we are beginning to see some positive signs. It is expected that new products will appear on the market one after another.
What kind of products do you expect will be taken up after Covid-19? We are seeing a trend toward health-consciousness. Do you expect a huge rise in demand for health products such as protein supplements, vitamins, or even energy drinks?
Nutritional drinks for fatigue that are sold in small bottles at pharmacies and convenience stores were originally popular amongst office workers and purchased by those who worked late at the office.
However, due to changes in the work environment caused by the pandemic, remote work has increased and the need for nutritional drinks has decreased. At the same time, people are now placing more importance on spending time with their families and loved ones. We would like to respond to this "New Normal" by providing society with new values that enrich people's lives.
Co-creation is an important element of any business, and in 2019, you signed a cross-licensing agreement with Aptar for tethered caps. Are you looking for such co-creation partners in the future, and if so, what kind of partners are you looking for?
With regard to co-creation and collaboration with overseas companies, our goal is not necessarily to provide caps at a lower price, nor is it to pursue cost reduction or profitability. Rather, we are thinking about how we can take advantage of our existing technologies and match them well with overseas partners and overseas closure manufacturers to provide highly specialized caps that meet the needs of each market. An existing technology may open a market in some other country. Or if it can help solve social issues in that country, that will be the greatest motivation for our engineers and staff members, which will also lead to their growth. What we pursue is not only profit but also how much value we can provide to society.
Nippon Closure has had an expansion policy since 2011, and you have established locations in China, Indonesia, and Germany in 2014, and more recently, in India. What is the benefit to having these international locations, and moving forward, which locations do you see your products being demanded in more?
We have been operating in Thailand for over 50 years, and in the last 10 years, we have established bases in China, India, Indonesia, and Germany. The impetus for our expansion began with our relationship with customers of the Toyo Seikan Group, and we shifted from export-based business to localized manufacturing and supply by creating overseas bases. We would like to contribute greatly to the happiness of the people living in any region, and not just pursue profit. To this end, CSR (Corporate Social Responsibility) and social contribution are one of the main goals of our growth strategy that we are currently formulating.
We communicate intimately with our employees as well as our customers in other countries, to understand their perspective. Rather than imposing our values on them, we work to build a relationship of trust as well as respecting and understanding them until we can share the "joy of providing good products to society." Our goal is to become a company that our employees feel proud to work for and to provide the value that local customers are looking for, and this is one of the major advantages of having overseas bases.
To do so, what kind of strategies did you have in mind? Were you thinking about joint-ventures, sales reps, or even M&A?
We believe that joint ventures with our partners are the most effective in our line of business. In India, we have established a joint venture with Carlsberg. We also believe that joint ventures are the most effective way to invest in equipment and infrastructure for local production.
Nippon Closure is celebrating its 80th anniversary and you have been in the industry for 40 years. If you were to come back to Japan in 5 years, what dreams would you have for the company? What goals would you like to achieve as president?
Since I became the President, we have worked hard to expand our overseas offices and businesses and develop them into solid manufacturing bases. When we first expanded overseas, NCC's staff members did not necessarily have the language skills or the ability to work effectively overseas. But I believe that we were able to grow into the company we are today thanks to the staff members who worked hard to familiarize themselves with the local culture, deal properly with local employees well, and set up our bases. Now that we have established a solid foundation of overseas production bases, we would like to focus our efforts on creating significant social value for the local community by working with the employees at those production bases. During the past five or six years, I have had the opportunity to travel extensively around the world. One of the major issues I noticed was the existence of income disparity and inequality in the world. As a company, our goal is to contribute to improving the lives of people around the world. Another goal is to overcome the problem of plastics. Personally, I have a great dream and goal to ensure that the continued use of plastics does not destroy the planet and to achieve a circular economy for plastic closures.