From cinema projection screens to integrated AV x IoE systems, OS Group has been quickly developing technologies that meet demands in various communication fields.
Japanese firms have faced very stiff price competition from regional manufacturers located in countries with lower costs of production. Nevertheless, when it comes to certain premium products, often in B2B, we see that Japanese firms have remained extremely competitive, either technologically or with a large market share. How do companies like OS Group remain competitive despite this stiff price competition from regional manufacturers?
To be competitive in the global market, I believe that originality is very important and also the value of the brand is very important. You need to focus on how to create and develop the value of the brand. For example, let's say that a company in Italy and a company in China are making the same goods and using the same materials, but still, a lot of people think that the goods produced by an Italian company are superior. There are a lot of SMEs in Italy, but what sets them apart is the brand value. They were very good at creating the value of the brand. I think the same goes for Japan. The Japanese brand is still outstanding in Asian markets.
We are creating, we are producing our OS products, but the traditional value is added by the Japanese brand. So it's very important to utilize that Japan brand and I think the same goes for the other companies in Japan as well. The brand value is one thing, and the other thing is originality, which I would like to explain more later.
Conventionally, many people think that Japan has provided or offered its own technologies to other countries in the world. However, I would say that the other countries have also evolved or advanced their own technologies, and we should realize that what's good in Japan, what's valued in Japan, is not always valued in other countries. It's very important to enter the local market to find out what is really needed in that particular market. Japan is a Galapagos Island, which means that Japanese solutions were developed uniquely in order to suit only the Japanese market so we cannot be competitive just by pushing our values on others.
Now that we have plenty of goods produced by different countries, we should find out the particular value or the needs of the particular market. I think that leads to originality. We should realize that what's good in Japan is not always good in other countries.
Japan is the oldest society in the world, and it also has a negative demographic – they’re losing people. This is creating very big challenges for Japanese companies. Firstly, in terms of recruitment, it's becoming harder to hire young graduates that can replace more seasoned workers and transfer engineering skills. Secondly, less people means less consumers, so it's a shrinking domestic market. How is your firm facing the challenges and opportunities created by Japan’s decreasing demographics?
Actually, the declining population is a big chance for us because if we have less people, less laborers here, then we need a system or mechanism where we can utilize the people who are here. If we are able to offer that kind of system, then I believe that we are able to be competitive in the market.
Speaking about that system, that should be advanced, or that should be developed through a remote working system based on communications, technology, electronics and AI technology. In the past, we used to focus on physical transfer for transportation, and multiple people used to do multiple tasks. However, going forward, we should focus on remote working by one single person. If we are able to offer that kind of system or mechanism, then I believe that we can be competitive.
However, large corporations are able to create new systems by themselves, but a lot of SMEs are not able to produce something new by themselves. When I speak about the creation of a system, there are two dimensions. The first one is an outer direction that is for the customers. This is about the business. And the other one is the inner direction, which is the education of our employees, especially the young talent.
For SMEs to be able to survive, it's very important to educate young talent because a lot of SMEs don't have the kind of staff who are able to think by themselves and do something new by themselves. It's also important for us to be able to offer what we have thought and developed to the SMEs, which have a scarcity of that kind of talent.
Speaking about our company, OS, specifically for the outer direction, we have developed what's called TerraSerde, a remote monitoring and maintenance system which is an original system for us. We are utilizing this technology for AV equipment as well, and our AV equipment also has a remote monitoring or maintenance system. And speaking about the inner direction, we have installed what's called AmeiosNavi which is a new intelligence operating system. That is an SMEs ERP system like the one provided by SAP, produced by a German company.
With this system installed, even though young talent enters this company, they are able to learn how to operate our management and organizing systems as if they were playing a game or something. By doing so, we are able to transfer knowledge from seasoned workers to young talent, and we are also thinking about offering this system to other SMEs which are trying to bring about digital transformation. By doing that, we are able to connect to the supply chain, save costs and standardize the know-how, and we are able to bring up the bottom line of the SMEs.
Our catalog shows various different products, but they are just basic samples, and we actually customize the products for the different clients at the plant. Generally, the customers are not able to know what the final price of customized solutions is going to be. However, if that final product utilizes our components and parts stocked in our inventory, then we are able to give an immediate answer about the price with our computer system, AmeiosNavi.
Digitalization since the advent of the coronavirus has accelerated exponentially. The utilization of digital technologies with AI to automate processes or e-commerce for optimizing sales channels has been increasing thanks to Covid. As a company that makes screens for projectors and digital displays, what opportunities do you see for your product in this hyper-digital, hyperconnected age?
Going forward, we would like to place our focus on VR because the screen is a part of one device for motion pictures. If you are trying to look at VR with a small screen, you feel really small. It's quite limited space. If you want to really enjoy the benefits of VR and have a very good experience of VR, I think that space is very important. VR should be expanded to the entire room, for example.
What if we can see a VR of a forest in the whole room here? It's very important to put focus on the space and also the sense of reality is very important, so we've already supported some amusement parks with the VR technology, and we would like to apply this technology for daily use going forward. We also supported Team Lab’s art museums.
You mentioned the decline in population, and it's going to accelerate going forward, so it's very important to offer that kind of remote system to schools, for example, and hospitals as well. School students already have e-learning systems that they can use on their smartphones, but it's such a small screen. For school study, it's better to have actual sized people, where VR teachers can teach the class, and we are going to have fewer and fewer teachers going forward, so it's going to be very important.
And the other example is here. We are speaking English here, so the interpreter is here for the interpretation but what if you speak only Arabic or Russian? It's very hard to find an interpreter here in Japan, so if we were able to offer a VR system where we could connect you to an interpreter for Russian or Arabic, then the interpreter doesn't need to come over to Japan and listen in this venue.
It's also a very democratizing process. If you're a kid growing up in the countryside of China, for example, or in African countries, you may not have a school in your local area. You may not have a teacher that's qualified for you. What do you see as the disruptive potential of this technology for education, specifically in developing rural areas?
Let me digress a little bit from that projection screen making, but education is going to make the world peaceful. We are actually doing this in Tokyo. What we are trying to do is educate young children with our technology, and also English. This is named Monozukuri Dr. KidsKey Academy. This particular lesson is about learning programming for the traffic signs and traffic signals in English.
The traffic signals are all controlled by programming, and we would like children to learn how to make that program in English. English is very important, going forward, from the engineering perspective and we call it CLIL education. That's the abbreviation of content and language integrated learning, and we can apply this to the Chinese market as well. Wherever you are, as long as you have a Wi-Fi connection, you are able to use our contents, and we would like to develop and complete this kind of system in advanced countries. Then we would like to offer these systems to developing countries at a very low charge, and we are now targeting African countries.
We have another curriculum for children to grow vegetables using their original programs, and we teach programs to make LED programs. What are the most suitable wavelengths for growing this particular vegetable - that is driven by scientific theory - so we teach those theories to the children so that they are able to develop programs for LEDs. We would like to offer this educational material to the countries which are trying to industrialize themselves, and we are able to apply these programs to different countries by translating these programs into their own languages. They are already in the cloud environment, AWS environment, so you are able to access that with an ID and a password.
You only need to buy the learning materials. These components can be assembled and disassembled, so you are able to reuse these components again and again. We prepare the curriculum for elementary school children and junior high school children. We set up a six-year program or a nine-year program so that they can learn electronics, mechanics, programming, and communication. When they acquire those skills, then they are able to create and produce robots, and communicate in English.
Your company created a series of proprietary technologies. Firstly, in the creation of flexible cells and solar panels that are easily installed. Also, you have done research in batteries as well as a series of self-powered poles that can be independently attached to catch electricity and provide electricity to off-grid areas. You call this system the TerraSerde and it's supposed to allow for IoT and for certain smart applications. What are some of the applications that TerraSerde allows for, that this system between the poles, the batteries and the storage allows to unlock?
As you mentioned, Japan is now facing a declining population, so protecting our lives also needs to be done remotely. As you know, Japan has a lot of natural disasters like earthquakes, typhoons, flooding and landslides. Every time we have that kind of disaster, we receive a lot of support from other countries, but it's important to establish a system that we can use to independently protect ourselves. We are losing population, and also money, so it's important to establish a remote monitoring system, and this one also has functionality for prevention.
The government set up a target to strengthen the country, which includes establishing stronger towns or cities against natural disasters. We would like to support this goal with our technology for electricity, especially since Japan has a lot of typhoons and when typhoons happen, a lot of things get blown around and solar panels, which are made of glass, are damaged and break down. However, our solar panels and solar sheets are coated by resin, so they don't break down. Conventional solar panels need to be cleaned on a regular basis because they get dirty and dusty with PM 2.5 particles. However, our solar panels are rolled over a pole, so it doesn't get dusty, and the rain cleans the solar panel. It doesn't have snow on it either, because it's rolled over the pole, so it's maintenance-free.
Conventionally, to transmit electricity you need to have a power grid all over the country, but once a part of that power grid is cut off, then the entire area connected by that grid is blacked out. That's why all the Kanto region experienced a power outage at the time of the Eastern Japan earthquake, because of the cutoff within the Tokyo area. If you use our electricity system, even if one of the poles breaks down, the other poles still survive because they are an off-grid type of power generation system, so you don't need to have large-scale power-downs, so I think it's very important to have this kind of off grid type of electricity system.
As your company branches out in these different segments, are you looking for co-creation or co-development partners to help you mix your expertise with their network or their technology, and if you are, what type of partnership would you be looking for?
Yes, we are very eager to have open innovation. Rather than pursuing our own profits, we would like to place more focus on engagement with society. Even though we pursue our own profit, it doesn't mean anything if the country as a whole cannot survive, and if we cannot satisfy the people in this country. It's very important to contribute to the whole of society. Although we are SMEs and we have limited capability, we would like to find a partner to achieve this kind of goal.
With your diverse range of new products, are there any particular regions that you've targeted for international expansion? What markets do you see as having the greatest growth potential for these new products that you're developing?
So I'm not thinking about bringing all of these products to every market. For example, in Africa, they don't have enough electricity to charge their smartphones, so different countries have different problems. We would like to find the problems for that particular local market, and we would like to bring a solution to that local market. Another example that we can offer to developed countries, not to developing countries is a hologram screen. There is no one here actually, but you can see a virtual receptionist here, so we can utilize this technology for hotels. For example, if you enter the room and you can see a virtual concierge called Jennifer, for example, and I say “Hi Jennifer” to her and she says “Welcome”, you can have that kind of conversation.
I'm not sure if you watched a movie called Blade Runner. In that movie, you saw the hologram of a lady, and that's a future-themed movie, but we would like to realize that in reality. We would like to offer that kind of technology to advanced countries, and for developing countries we would like to offer something like TerraSerde.
For example, in Africa the land is very vast, so I think it's more efficient to use something like TerraSerde rather than using wire systems. If you use TerraSerde then that can also be used as a Wi-Fi station, so we can also offer internet connectivity. We would like to tailor it to the different needs of the different markets. Of course, African countries have advanced cities, so I'm not talking about those cities. We would like to offer this in rural areas.
In Europe right now, because of the war in Ukraine, there are a lot of energy security issues. In France, for example, they're expecting blackouts this winter for the first time in 100 years. Have you ever thought about marketing TerraSerde in Europe, to regional communal areas that may be affected by these TerraSerde?
Yes, we would love to enter the European market and take this opportunity, but we don't have enough resources here, so if we can find a partner, a company in France, we would like to work together with that company. We would like to work with local partners to enter local markets, and we would like to open up our know-how to that partner as well. We would like to develop a system that is tailored for the French market, for example.
TerraSerde is now made for the Japanese market, but different countries have different electricity systems, like different voltages, for example, so we would like to learn from local partners what the different needs are in the local market. A Japanese person made the central bank in Rwanda. The governor of the Central Bank in Rwanda was a Japanese person who was dispatched by the Bank of Japan. I read a book about it, and he has already passed away. He brought the Japanese central bank financial system to Rwanda, and he localized that system. We would love to do that.
Let's say we come back to interview you again in six years' time for your company’s 75th anniversary. What would you like to tell us about your goals and dreams for the company in that timeframe, and what would you like to have achieved by then?
I have two goals. The first one is that I would like to increase the number of transactions in the overseas market, and the other one is regarding the Smart City project. We've just kicked off this project recently, but five years from now we would like to have specific examples of our project so that we can establish a system to protect Japanese people.
There's one more goal that is about kids’ education, and we would like to increase the number of students in that curriculum, both in Japan and outside Japan so that we can contribute to the education of global children. These events are held by Monozukuri Dr. KidsKey Academy in Tokyo on January 7th, 8th and the 9th. If you have time, if you have a chance, please come and visit that site so that you can actually see children learning. You can also check on the website: https://www.kidskey.academy/ .
The one calcium is about creating traffic signals, and the other is about writing programs. If you enter the command to, for example, raise a right hand, then you can see a right hand raised, but that is not the real command that we are trying to teach the children. The real command is to make that motion happen in English or the programming language. These are the things that I would like to achieve at the 75th anniversary, but there is more than that. For example, the agricultural sector, and in the next interview, I would like to talk about that.
Lastly, from a macroscopic perspective, I would like to change the current monozukuri and supply system where you produce something at the plant and deliver those products to the end user by emitting CO2. I would like to completely change that. Conventionally, you need to transmit electricity from a central power generation center throughout the city by the power grid, but I would like to change that by TerraSerde so that it can independently produce the electricity there. I would like to apply that core idea to the monozukuri.
At the beginning of the interview, you mentioned that Japan is still competitive in the field of daily necessities, but right now you need to use the supply chain to deliver goods from the factory to home using a lot of energy. Going forward, the technology for 3D printers is going to be advanced, and at some point, in the future you will be able to produce that at your home, so your home is going to be a factory, only if you have the materials, then you are able to produce the goods, in an organic way at the time you prefer. Only you have the materials and the capability so that at that stage, I think that we are able to solve the problem with the supply chain or logistics.