From cosmetics to batteries utilized in EVs, PRIMIX Corporation makes sure to offer the best mixing solutions to achieve high-quality products
In recent decades, Japan has seen the rise of regional manufacturing competitors who have replicated the Japanese create products process but at a cheaper labor cost, pushing Japan out of mass industrial markets, yet we still see Japanese companies leaders in niche B2B fields. How have Japanese firms been able to maintain this leadership despite steep price competition?
Simply put, we believe that the source of competitiveness for Japanese companies is to maintain high technological capabilities. It is true that commoditized technologies are becoming increasingly competitive with local companies in emerging countries, but what we, Japanese companies, are aiming for is to create products that make many customers believe that they need and are paying for our technological capabilities, even if the cost is high.
Japan is the oldest society in the world and that population is in a state of rapid decline. This is presenting a labor crisis for Japanese firms, meaning there is a smaller pool of talented graduates coming through to replace older more seasoned workers. There is also the issue of a shrinking domestic market. What are some of the challenges and opportunities this demographic shift is presenting for PRIMIX?
In our case, about 50% of our sales are products for the cosmetics sector. This is followed by the pharmaceuticals and chemicals sectors, including products for lithium-ion battery (LiB). Chemicals include products for Lib batteries. The cosmetics sector is one of our main pillars, and we are constantly monitoring market trends. Due to the nature of cosmetics, even a single moisturizer is not universal for all users, and people's needs are very different. It is, so to speak, a typical diversity product, and major cosmetics manufacturers have a lineup of over 3,000 different products. The problem of an aging and declining working population exists in our company, but as long as there is a need for Japanese people to live affluent and healthy lives, I believe there is room for cosmetics manufacturers and our company, which assists them, to dig deep and grow.
Looking at the world, the cosmetics market in Europe and the United States is currently very large, but I believe that the center of the market will eventually shift to China with a population of 1.4 billion. Japanese and Korean manufacturers are moving to enter this large market, and one of the main reasons why Asian companies, such as Japanese and Korean, are active is that their skin characteristics are similar to those of Chinese people. I think Asian companies, including local companies, have an advantage, especially in basic cosmetics-related products. We are continuing to develop new products to help Japanese companies expand into China, and we are also working to reduce costs through our overseas subsidiaries in China.
The COVID-19 pandemic negatively impacted the entire industry but there is a slow recovery back to pre-pandemic levels, with estimates having the industry worth USD 415 billion by the year 2028. What are the strategies you are employing in order to capitalize on this growth?
We provide equipment to major domestic leading brands, and these brands are targeting the Chinese market in the future. China's cosmetics market continues to expand and according to China's National Bureau of Statistics, the retail value of cosmetics in 2019 increased 12.6% year over year to 299.2 billion yuan (about 5,984 billion yen, or about 1 yuan = 20 yen). While the total retail value of major products declined across the board in January-October 2020 due to the spread of the new coronavirus, cosmetics maintained a strong performance with a slight year-on-year increase. The growth in demand for cosmetics can also be seen in the value of imports. Import statistics from China Customs show a 33.8% year-on-year increase to a record $13,231.83 million in 2019. By country/region, Japan accounted for the largest share of total imports, about 25%, followed by France and South Korea. This macro information clearly shows how promising a market China is.
PRIMIX was founded in 1947 and has since become a leading manufacturer in the high-speed mixing equipment. What are some of the competitive advantages that have allowed you to be so successful?
I think our biggest competitive advantage is that our products, such as the high-speed agitator, are very unique and capable. There are various types of blades that can be applied to this agitator and it can mix organic and inorganic materials, solid-liquid materials of low to high annual viscosity. Because of the empirical engineering aspect in addition to the very specific technology, we test together with our customers to find the best stirring method for their orders.
One product you have developed is the FILMIX and PRIMIX is the only company in the world that provides the FILMIX series. Can you tell us a little bit more about the FILMIX?
FILMIX is mainly used in the field of batteries, where the agitation principle of the "thin-film swirling method" makes it possible to achieve sharp particle size distributions and atomization of nanoparticles that could not be achieved with conventional high-speed agitators. Particles ranging in size from nanometers to several tens of micrometers can be designed arbitrarily, and their particle size distribution can be made sharp and uniform. Furthermore, the dispersion method does not cause any damage to the particle surface due to the non-impact dispersion method. Asian companies are strong in LIB production, with manufacturers in Japan, China, and Korea accounting for almost 100% of the total market. In the 2021 forecast, Panasonic, which has Tesla as a large customer, has the largest number of Japanese companies with approximately 40 GWh, while China and South Korea have the largest number of Chinese and Korean companies, including China's Ningde Era New Energy Technology (CATL) (China) and LG Energy Solution of South Korea (South Korea), with approximately 50 GWh and 43 GWh, respectively. Among Western automakers, Tesla is the largest purchaser of LIBs, followed by Stellantis, Audi, Volkswagen, and Renault among European automakers. In terms of battery manufacturing trends, since lithium, nickel, cobalt, manganese, and phosphorus, the main raw materials for cathode materials, are mined in large quantities in China, the process up to the production of electrode materials tends to be conducted mainly in China, while the later stage manufacturing process tends to be conducted closer to the buyer's region, aiming for lower transportation costs, etc. The latter stage of the manufacturing process tends to be conducted in locations closer to the purchaser's region to reduce transportation costs. Currently, the manufacturing process is mainly conducted in batch form, but it is expected that there will be an increasing need to switch to a continuous process in order to reduce costs and improve productivity. In this case, the continuous agitator FILMIX can be of great use. I think we can expect explosive growth in the LIB market in the future. On the other hand, there are many technical challenges. Safety and recharging time issues, as well as further performance improvements, are necessary. It is a very attractive market for us.
You mentioned that batteries represent 10% of your overall business. Are you looking to increase this number and if the answer is yes, how do you plan to do so?
The answer is "yes”. We have delivered our products to Chinese and Korean companies, as well as to emerging companies in Europe, but we would like to increase this percentage. We are currently collaborating with our parent company, Tsukishima Kikai, to launch an initiative to expand our business in our current Chinese subsidiary. I won't go into details, but if the attempt goes well, we expect to expand our share of the business.
Japan lags behind in the adoption of digital technologies, however this is slowly changing. In your case, you offer the HOMICON PRO-X production control systems. Can you tell us a little bit more about the HOMICON PRO-X and what other digital solutions are you offering to your clients?
HOMICON PRO-X is a proprietary program for operating and automating our products in an optimal manner. On the other hand, when it comes to production, multiple pieces of equipment and machines are needed and must be controlled as a whole, so total optimization is required. Our HOMICON PRO-X is designed to control a single piece of equipment or machine and is not yet capable of controlling the entire production process. We have now started to develop the next generation of programs to follow HOMICON PRO-X. As you mentioned, we expect that in the near future, the DX movement utilizing AI will be very active in the domestic manufacturing process. We would like to make efforts to ride this wave as well.
Can you tell us a little bit more about your R&D strategy, and are there any products or technologies that you are working on that you would like to showcase?
There are three key points in our R&D strategy. The first point is to develop products that are further miniaturized and handle nano-level fine particles, especially in the fields of batteries and pharmaceuticals, as customer needs. In the cosmetics field, there is more demand for price reductions through cost reductions than for deepening agitation technology at present.
The second point concerns our competitive advantage over other Asian competitors. As you know, many Asian companies are imitating Japanese products, but their manufacturing costs, including labor costs, are much lower, so if we offer exactly the same products, we tend to lose out in terms of price. We must lower the price through cost structure and procurement so that we can offer products with the same functions at a reasonable price.
The third point relates to the manufacturing process. Many of our customers who purchase our machines make hundreds of different products with one machine. Therefore, improving the efficiency of the cleaning process is as important as manufacturing. Therefore, improving the cleaning function that contributes to labor savings is also an important theme.
PRIMIX recently went into a partnership with Nano Dispersions Technology (NDT), a company that specializes in emulsification and dispersion technology. Can you tell us a little bit more about this partnership with NDT?
Because our own resources are limited, we form partnerships with a variety of companies. We are always actively seeking partnerships with like-minded companies, not only because we are short on manpower, but also because there are areas of technology that we do not own. Partnerships can be with other companies or educational institutions such as universities.
Are you looking for these kinds of partnerships overseas?
We have a partnership with Bühler in Switzerland and we cooperate with them in the distribution of our products in Europe and the United States.
Since establishing your first overseas operation in China in 2004, you have now gone on to establish operations in South Korea first in 2005, and then again in 2012. Moving forward, are there any countries or regions that you have identified for further expansion into?
Since we are a subsidiary of Tsukishima Kikai Co., Ltd. we would like to utilize Tsukishima Kikai's overseas bases in Europe and Asia. With regard to the high-end cosmetics and toiletries field, to determine the need for premium women's cosmetics, the growth rate of GDP per capita will give us an idea of the needs of that country. In short, the improvement in the standard of living will reveal what sells. So, we follow some unspoken rules regarding this. Western manufacturers look at those numbers to determine which countries to invest in. Currently, Thailand is a country where investment is growing as the population is increasing and GDP is growing, so we see potential there.
As for batteries, China remain the main production bases, but there is a possibility that production will shift to Southeast Asia in search of cheap labor. We have local subsidiaries in China and Korea, but in the future we can leverage our network with Tsukishima Kikai to expand into the region.
Imagine that we come back five years from now and have this interview all over again: what would you like to tell us, and what are your dreams or goals for the next five years of PRIMIX Corporation?
We hope to double our profits in five years. To achieve this, we must accelerate technological development and create new products. In addition, our current sales are mainly to Japan, China, and Korea, but we would like to increase our sales to more worldwide customers. By field, as mentioned earlier, the cosmetics field accounts for about half of our business, but we would like to increase the size of the LIB field to a similar level. Exciting times are ahead for battery production. I can't give you any more details, but we have received large inquiries from blue-chip global companies, and we are determined to steadily win orders for these projects.