For over 150 years, NOSAWA & Co. has brought Japanese culture, technology and products to the world, whilst also bringing the very best the world has to offer to Japan.
As Japan's population ages rapidly and declines, a labor shortage and a shrinking domestic market have emerged. To address these challenges and ensure business sustainability, how extensively do companies in Japan, such as yours, seek opportunities overseas?
Three years ago, during our 150-year anniversary, I laid the foundation for our 50-year vision. By the time we reach that milestone, we aim to have one-third of our total sales generated from overseas markets. To actualize this vision, we have taken several steps. We've expanded our overseas operations by hiring more personnel in our international offices and engaging in business activities abroad, including working with TAMAHAGANE, a Japanese brand of kitchen knives and others. Additionally, we ventured into food exports five years ago, featuring products such as matcha, craft beers, and sake. While these items are not new, we have identified them as unique and specialty products. Although progress is gradual, we acknowledge that our overseas sales volume is currently modest.
The labor shortage is a critical issue, particularly in agricultural farming and the livestock industry, with significant implications for the food sector. Many companies are increasingly turning to automation technologies to address this challenge. It's important to note that this problem is not unique to Japan; it's happening in countries like Italy, France, and worldwide. Given this global trend, what opportunities do you see arising in terms of the demand for new products and processes in the livestock and farming sector?
The Japanese government has provided subsidies to facilitate the implementation of a robotic milking system for small-scale farms. Meanwhile, large farms are recruiting workers from Asian countries. Both approaches have been effective, but a common challenge lies in the pricing of milk. Both the government and milk processing companies acknowledge the necessity of raising prices, but the production cost remains a significant hurdle. With production costs gradually decreasing, I believe that Japanese farmers are beginning to see profits and are now initiating investments in expanding their farm operations. This includes increasing the number of cows, hiring additional workers, and implementing automation systems.
Approximately two decades ago, animal well-being was not as prominent a concern as it is today, especially in Europe, where it has become a central topic of discussion. The French government, for example, has implemented numerous regulations aimed at shifting away from mass industry practices and promoting more humane treatment of animals. What is your perspective on these developments, and what solutions is your company providing to enhance the sustainability of the farms you collaborate with?
Concerning animal welfare, we have introduced the concept of the "cow comfort zone," making us the first company to do so in Japan. Traditionally, dairy farmers primarily focused on the number of cows they had. However, we introduced a system designed to optimize milk production with fewer cows. Our recommendation is that by reducing the number of cows in a barn by 80%, one can achieve the same milk yield. Enhancing the cow comfort zone plays a pivotal role in improving productivity. This involves enhancements in the sleeping area, ventilation, temperature control, and creating a less stressful environment for the cows, all of which contribute to increased milk production.
Initially, our customers found it challenging to grasp this concept. To bridge this understanding gap, we organized trips for dairy farmers to visit the United States and witness the system in action. After experiencing its benefits firsthand, they came to appreciate that this approach is not only more profitable but also more animal-friendly. Consequently, they began implementing the cow comfort zone on their own farms.
In 1972, you acquired Nosawa Hokkaido Farm, which houses dairy cows and sheep. You've created a unique comfort zone for them, featuring the Y2K stall, the paster mat, and the poly pillow, providing them with the best conditions possible. Could you please share more details about the specificities and additional advantages of this comfort zone that may not be immediately apparent to foreigners, and explain what makes it unique in the industry? Secondly, do you believe that similar products could be applied to other types of animals to achieve optimal results?
In the past, we utilized the farm to maintain the quality of imported cows when we imported livestock. To showcase the concept of the cow comfort zone to our customers, we constructed a model house ourselves. Japanese dairy farmers often remarked that it was an American-style approach, as they typically had larger farmlands. To counter this perception, we built a model house to demonstrate that this approach could indeed be implemented successfully in Japan.
When it comes to sheep, there are unique challenges. We raised Dutch Texel sheep, which are relatively rare in Japan. Initially, our intention wasn't to sell them, but as the cost of raising sheep increased, we began offering them for sale. Interestingly, one of the most prominent beer restaurants in Sapporo visited our farm to purchase some sheep.
Even with the emergence of regional manufacturers in countries like Taiwan, China, and South Korea, who replicate Japanese manufacturing at a lower cost but with reduced quality, Japan maintains its position at the forefront, particularly in B2B and niche sectors. What do you believe are your company's strengths in promoting Japanese products to foreign clients?
We recently discontinued our sale of raw materials for face masks in Korea. Previously, we served as the exclusive agents in Korea for Asahi Kasei. However, in the aftermath of the COVID-19 pandemic, they ceased their partnership with us and opted to handle sales directly.
In China, our focus was on jeans. We established a joint venture with a Chinese textile company for jean manufacturing. For nearly two decades, we specialized in selling Japanese-style jeans, employing Japanese technicians to craft worn-out or distressed jeans. Additionally, we imported the majority of the jean products manufactured in China back to Japan.
In Asia, a significant company policy revolves around "Farm to Table." Several Asian countries, including the Malaysian government, have expressed interest in Japanese-style dairy farming. Notably, these products don't necessarily have to be made in Japan exclusively; "Japanese style" encompasses influences from other countries like America, France, or Canada. About five years ago, we presented our project to the agricultural minister during our visit to Bara. Unfortunately, our project partner in Malaysia fell ill, leading to the project's suspension. However, we remain hopeful that in the future, we can reinitiate similar endeavors aimed at promoting Japanese-style farming.
Dutch Gouda Cheese 
Cow Comfort Barn 
Japanese Kitchen Knife
The textile industry has one of the longest supply chains globally, involving numerous processes from sourcing raw materials to reaching the ultimate destination—consumers. Traditionally, fashion brands concentrated production in a single country. However, the disruptions caused by the COVID-19 pandemic have prompted a new trend of diversifying suppliers in the textile sector. Companies are no longer inclined to rely heavily on a single source like China or India. This shift opens up opportunities for traders like your company to become base coordinators. Could you elaborate on how these disruptions over the past two years have impacted your textile business? Furthermore, how do you envision the evolution of your business in light of these changes?
Japanese denim holds significant importance worldwide, particularly in the fashion industry. Many high-end fashion brands opt for "Made in Japan" jeans, and the availability of Japanese jeans manufacturing facilities is quite limited. Consequently, "Made in Japan" jeans are highly valued in the market. Japan's textile division is renowned for its exceptional quality, but Japan's production capacity is constrained. Nevertheless, our products are renowned for their durability, making established brands eager to collaborate with us.
You've mentioned various business divisions, including food, livestock, mechanical fiber, and the development division. From your perspective, which of these departments do you believe holds the greatest potential for business growth? Additionally, are there any other areas or products you are considering introducing in the future?
Each of our business divisions holds significant potential. Our Machinery division has already ventured into exporting tofu and soybean machinery and factory lines while also offering maintenance services for them. In our Livestock division, we're actively engaged in the "Farm to Table" project. Additionally, we export Japanese denim to China in partnership with a Chinese company. Within the Food Development division, we are currently exporting sake, matcha, and craft beers to Hong Kong and Europe. Our goal is to continue developing and expanding all of our business divisions.
Your business includes exporting Japanese culinary items like chef's knives. In Europe, there's a rising popularity and demand for these Japanese products. What do you believe is the reason behind the global popularity of Japanese products?
Japan is renowned for its practice of embracing culinary influences from various cultures and transforming them into something uniquely Japanese. The fundamental principle lies in crafting dishes that are not only healthy but also crafted from the finest, top-quality ingredients. The emphasis is on fostering originality and distinctiveness. To illustrate, while China predominantly relies on factory mass production for its products, Japan takes a different approach, prioritizing high-mix, low-volume production tailored to meet the specific requirements of individual customers.
Japan's popularity, both in terms of its products and culture, is on the rise among younger generations worldwide. Do you think Japan's "soft power" is a consequence of exporting its products abroad?
There is a notable difference between trendy Japanese products and the high-quality items we manufacture. Nevertheless, comprehending the mindset of foreign customers and grasping why Japan captivates their interest is important. For instance, during a Japanese cosplay festival in Amsterdam, we set up a sake-tasting booth. Our staff would explain the various characteristics of the sake and its production process. This proved to be immensely popular, leading to a sell-out of the sake. This example underscores the significance of recognizing what resonates with foreign customers and how it can influence our marketing strategies.
Establishing partnerships with local entities is vital when entering foreign markets, especially when dealing with culturally distinctive products that may not be widely recognized. How significant are partnerships in your business model, and are you actively seeking new partnerships in overseas markets to promote your products?
Currently, we do not have any international partners for the export of our food products. However, we would be interested in establishing partners in the future.
In your 50-year vision, you aim to have one-third of your sales generated overseas. Nosawa's international presence is not confined to Japan; it traces back to 1900 in London, with extensive international business experience since then. Are you contemplating the possibility of opening new branches abroad? If so, do you have any specific markets in mind for expansion? Additionally, what strategies are you considering to enter these new markets, such as M&As, joint ventures, or establishing new subsidiaries?
Our objective is to expand our presence by opening new offices in various Asian countries. Currently, we maintain offices in China, Taiwan, and Hong Kong. We previously operated an office in Thailand, and we plan to reestablish our presence there in the future. Additionally, we are considering the possibility of establishing offices in countries like Vietnam to further our reach.
We currently have an office in Amsterdam, where we've taken the initiative to conduct local marketing. To facilitate this, we've hired local employees and dispatched two of our team members to engage with Japanese cuisine establishments and promote the sale of our sake and other Japanese products. Our next step will involve seeking local partners in Amsterdam to strengthen our presence in this market.
Our approach to entering a new market involves a series of strategic steps. Initially, we established an office to gain a deeper understanding of the local market environment. Following this, we engage in localized marketing efforts to assess the market's potential. If we identify promising opportunities, our next step is to seek out local partners who can effectively distribute our products to the local customer base. It's important to note that our business strategy is inherently long-term in nature. We typically refrain from crafting short-term plans for the next few years because the market landscape is continually evolving, and we aim to maintain flexibility in our approach.
In 2012, you were recognized as Chevaliers du Taste-Fromage de France by Confrérie des Chevaliers du France. What did you achieve to be recognized for this award?
Nosawa holds the distinction of being the first company to import natural cheese into Japan. Initially, there was a desire for our company to receive recognition for this achievement. Surprisingly, I declined the award on several occasions. My reasoning was due to the fact that we do not import French cheeses, primarily because of their strong flavor profile, which may not align with the preferences of the local market. However, the awarding organization reassured me that this should not hinder our eligibility for the award. Eventually, I accepted the award, acknowledging the significance of our pioneering role in introducing natural cheese to Japan.
You are the president of a centennial company, with over 100 years of history. What goals or ambitions would you like to achieve as president and add to the legacy of this company?
Every era brings its own unique specialties that align with the times. My objective is to ensure our company remains innovative and dynamic. In line with this vision, our office space is designed to accommodate 70% of our employees on-site, with the flexibility for employees to work from home for about two days a week. This approach aims to maintain a fresh and engaging office environment that can foster enthusiasm among our team.
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