Founded in 1947, Soda Nikka has grown into a trading house focused on meeting the wide-ranging distribution and logistics needs of its clients, often small and medium-sized companies that require specialty chemicals. In an industry transitioning towards growth in sustainable products, Soda Nikka continues to succeed through its customer-centric approach to targeted business expansion, as explained by president Takahiko Nagasu in this interview with The Worldfolio.
Can you give us an overview of your business and elaborate on Soda Nikka's role in Japan’s chemical supply chain?
We started as a distributor of chlorine and alkalic products. There are many Japanese companies of various sizes, and the country’s local geographic terrain creates a need to distribute products to mountainous or remote places all over the country. We are not a wholesaler, but a trading house in the trading business, which so-called general trading companies cannot do. We distribute products in a way that meets the needs of small and medium-sized companies. We have created a trading house with the mission of distributing these products to every district in Japan. However, the chemical industry is advancing year by year, and Japan has become very focused on specialty chemicals (chemicals tailor-made for specific purposes and applications). Specialty chemicals are products developed for customers with very specific needs, and trading companies who deal with more general products would no longer be necessary. However, even basic chemical products may have different specifications depending on customers. We recognize that one of our roles is to deliver such basic chemicals to meet the specialty needs of our customers in Japan, and to that end we have developed our Chemical Center. The Chemical Center serves as a base for adjusting concentrations to meet the needs of our customers. While European and U.S. companies progressed to chemical production requiring large-scale plants, Japanese chemistry was divided into production focusing on specialty chemicals. However, there are many fields in Japan that require basic chemicals, and we feel strongly that our role is to deliver to our customers without delay who have needs in those fields.
Nowadays, as the complexity of the chemical industry has advanced, traders are responsible for more than just logistics and financing, but are also expected to have added-value services or assistance for their clients. How do you think your firm's role will evolve within the next five or ten years?
First, it is necessary to take a detailed picture of the customer's needs and share it with chemical manufacturers. Then, one of the first things we do is work with the chemical manufacturer to create a product that better meets the customer's needs. In some cases, when special chemicals are produced for a specific customer, the production of conventional products is discontinued because the chemicals used in the past are no longer seen as useful. However, on the other hand, there is a possibility that a customer from a different field will require that conventional product at a later time. It is our job to pick up the needs of such customers and encourage manufacturers to continue production even in times where the demand may be low. As the times have moved quickly, manufacturers have tended to discontinue many items, and we believe that it is important for us to take the initiative in encouraging manufacturers to keep their products in production, as demand for such discontinued items remains in other fields.
Second, as seen in the case of some commodity plastics, there is a trend toward closure, downsizing, and divestiture of resin plants that once had functional properties, but some cannot be completely eliminated from use. We are working with resin manufacturers to develop applications and build platforms for reducing resin content and recycling resin products. One example is to reduce the use of petroleum-derived resins by mixing mineral-derived materials. This is a transitional measure, as the cost of switching to biodegradable resins would skyrocket if we were to do so suddenly.
On the other hand, we do not believe that mineral-derived resins are the answer to all problems. However, until the cost of biodegradable resins and marine biodegradable resins come down, we believe that replacing such resins is the right way to make the transition. We will work together with our customers to develop a system to recycle as well as sell containers and packaging materials made of mineral or plant-derived materials.
Can you first explain to us in greater detail some of the different services you offer through your chemical centers? Secondly, as a company with an international presence, do you offer the services through these chemical centers to your international clients, or do you have plans to open one in a different market in which you already operate?
Japanese business is different from overseas business. While Japanese business aims to deliver products directly to customers as a matter of course, in conducting overseas business, customers come and pick up their products directly. In other countries, distributors have their own warehouses and go to the warehouses to pick up goods. There are many cases in which Japanese companies are too accustomed to the meticulous service that is offered in Japan and when expanding overseas are seeking the same kind of service as in Japan. If there is a need overseas for services like Japan's, we would like to develop such services.
The Chemical Center was built in a location where manufacturers do not have stock, and has traditionally been a base for delivering products to customers, but we are beginning to envision the Chemical Center as a temporary storage base for recycled materials. We envision the Chemical Center as a base for the circular economy, where products made from environmentally friendly resins are accumulated on vacant land at the Chemical Center and eventually taken to a recycling center. In this case, the current number of locations is not enough, so we think it is necessary to consider expanding the number of locations.
Can you elaborate on some of the initiatives you have created through your recycling business model?
The Chemical Center currently stocks not only items used by businesses, but also items necessary for people's daily lives, such as water and sewage stations. There are many retail stores around the center that sell daily necessities. Therefore, if we can tie up with such retailers, we can set up collection boxes for products made of environmentally friendly resins, etc., which will be collected at the Chemical Center and eventually transferred to the recycling center.
What is the significance to your company of co-creating a system like the one you described? Also, do you have any plans to look for new collaborative partners, especially in overseas markets?
We believe that co-creation and joint development are extremely important. For example, if we replace conventional plastics with a higher percentage of mineral-derived raw materials in the blow bottles we are developing, they will have less resistance to acidic contents. To solve this problem, we are developing a multi-layered product in which the parts in contact with the contents are made of conventional plastic resin. We have also completed the verification of re-pelletizing the bottles produced at this stage, so that they can be later recycled. We believe it is important for us, as a company in the field of chemistry, including petrochemicals, to consider what we can do to create such a system, and to contribute to society through repeated co-creation with manufacturers and partner companies.
The problem of food waste is as serious as the problem of plastic waste. Therefore, we are developing new types of packaging machines and highly functional films for food packaging in collaboration with leading packaging machine manufacturers. By using these new packaging machines and high-performance films, we have succeeded in enhancing packaging functions, improving food safety, and reducing food waste. We propose wrapping films and packaging machines as one set, and can solve various problems our customers have. By extending this to overseas markets, we are able to meet the needs of our overseas customers as well.
We plan to develop in Indonesia and other markets where our overseas subsidiary is located. Our mission is to supply what our customers need, and we will continue to seek collaborative partners.
You expanded to Indonesia in the 1990s, and most recently, in Vietnam in 2014. Can you share more about your specific strategies to tackle these markets and develop your international business?
A commonality between Indonesia and Vietnam is the rainy season. With the regular and prolonged downpours, flooding often occurs. Therefore, we are selling a system that draws and stores accumulated rainwater into an underground storage space constructed with panels. Once the weather clears, the stored water will gradually permeate into the soil very slowly. These panels are made of recycled plastic and are easy to install and remove. We are working to transport that technology to the Indonesian market for it to be produced, marketed and distributed locally. If our demonstration project with the Indonesian government is successful, we can further sell that technology to Indonesia, Vietnam and other countries that experience a lot of rain. Also education is advancing in developing countries, and needs related to school buildings and infrastructure are increasing. Traditionally, schools in Asian countries have used heavy wooden desks, but we are helping to introduce lightweight school desks made of wood and steel, which are also used in Japan. Our goal is to provide solutions tailored to the needs of the market. In considering business expansion, we always try to find out what is needed and what is not yet available in the world.
Imagine we come back to interview you again on the last day of your presidency. What objectives or ambitions would you like to have achieved during your time as president?
Since I assumed the presidency, I have been telling our employees not just to do business as an extension of yesterday. I am encouraging them to think outside the box and keep their senses active at all times to capture what society needs so that both they and the company can stay relevant. If I see a change in the mindset and mentality of our employees on my last day as the president, I consider it my success. Recently, companies talk at length about purpose or sustainability, but even before that, I have always made sure that everyone thinks about the company's purpose and what value it can deliver. I always say that every employee needs to change their mindset, and I will continue to remind them of that. I have seen some changes, but I believe there is more room for improvement to remain relevant in changing times.