In the 21st century, where various new technologies are born daily, Takamisawa Cybernetics believes that technology should not be the domain of only a few experts but of the many.
If you could start off by giving us a quick introduction. What exactly is Takamisawa Cybernetics and the main business model you have developed? What are some of the strong points of your company that allow you to stand apart from your competition?
Here at Takamisawa, we have three different types of departments, the first being for transport system equipment which helps take care of the railway companies. We sell automatic ticket vending machines and platform doors, and this division is our main business. The second part of our business is our mechatronic systems, which is equipment designed to handle tickets, bills, coins, and cards. I would say that this department is built on our core technology. The third department is for specific system machines. This department handles equipment for very specific applications such as disaster prevention, measurement equipment, security gates, and bicycle parking lots. Bicycle parking lots are mainly located around stations and in supermarkets.
Your coin validator spiked our attention during our research. Back in 2005, there was a big scandal in Japan regarding the JPY 500 coin, with many people replicating it, and there was a big fear that they would flood the market. How do you ensure authenticity in your coin-handling and bill-handling equipment?
In the old days, size and weight were the only way to distinguish different coins. The next step was to identify the actual material. Now that we have image processing, I feel that the technology for detecting counterfeit coins has now advanced enough.
Since the beginning of the COVID-19 pandemic, we have seen a push toward cleanliness and hygiene, and we are finding that more people are inclined toward a cashless-based society. In Denmark and Sweden, almost 80% of all payments are now cashless, but countries like Japan, Italy, and Spain are much slower to adopt. In our research, we saw that your company is a part of a number of groups such as Japan’s Electronic Payment Organization (JEPO) and the Japan Science Technology Information Aggregator, Electronic’s (J-STAGE) integrated circuit (IC) card system study group. What is your take on the transition to a cashless society and what role does your company play in that respect?
I do believe that cashless is something that is going to continue to expand here in Japan, but I also think that in order for us to be completely cashless it will take time. I think there needs to be a balance struck between having both options and moving forward, we will see both cash and cashless transactions, and therefore there will be a need for advancements in technology for both elements. Currently what is most important when it comes to really supporting a cashless society is to ensure that the machines we have installed, such as the automatic ticket vending machines and security systems, are all able to be applicable to cashless transactions. We put importance on creating the infrastructure needed to cater to cashless mechanisms. I think that the closest way we have been able to provide our support for that is through the credit card payment system. The percentage of cashless payment in Japan is about 20-30%. When you go a little bit deeper, 70% of that cashless element is credit cards. One element of that is our turnstile equipped with VISA touch, which are a collaboration with the railway companies.
Obviously with a business like yours you are working with a number of different stakeholders from different industries. What role do co-creation and collaboration play in your business model, and are you looking for foreign partners to further expand your business?
When it comes to the theme of our overseas business right now, we are dealing mostly with China, and we do believe that we have a successful business model when it comes to expanding in the region. Our strategy overseas is to really ensure that our products and systems are in line and adapting to the local culture. It is very important to prioritize and create technologies and products that are culturally specific. Our strategy is to work with local companies who have a high understanding of the needs of the clientele there and work together with those companies to provide the most specific and relevant technologies from our end. That is our main approach to our global strategy.
This diagram shows all the different locations in which our coin-handling systems have been installed, but none of these are Japanese-based companies, instead, all the installations were done through local networking. In China alone, we have sold around 22,000 units to date.
China is also very advanced when it comes to cashless payments, however, you are a Japanese company, a market that is very cash-based. As a company that has experience in both a cashless society and a cash society, do you think the advancements of cashless solutions is a challenge or an opportunity for your business?
I think the cashless system will continue. I don’t use cash when I visit China. For some reason, however, there is still a demand for our coin-handling systems, and it is still penetrating the market. We do still believe that this system will have its use value even if the market should continue to shrink. In terms of further expanding our products in China and being able to ride current trends, we are working with our local partners to see where there are different locations that we can enter, and support as needed.
The reason our coin systems were installed in 2010 and became such a huge boon within China comes down to a number of different reasons. One is the high level our systems have in terms of counterfeit detection. Second is the ability to insert a number of different denominations of coins at one time, which is very different from the old system of one coin at a time. Finally, it is possible to recycle the money you put in and put it out as change. I think this is our company’s strength; the ability to really pursue the greatest technology when it comes to our products and to continually improve upon our technologies. We are a company that takes pride in our ability to constantly improve our technology and evolve.
Within just these coin-handling units alone there are various different types of technologies working together as an integrated unit. First, you need to be able to insert a coin, then the machine needs to be able to distinguish what coin it is, and then it needs to move it through the system and be sorted. It is also recycled as change. All of these technologies are integrated into one system. We have also started selling sub-units and have them introduced to other machines on an OEM basis.
When it comes to coin-handling mechanisms, Japan is a world leader with companies like Glory Global pioneering cash-handling machines. Your firm has a very large market share in China for these coin-recycling units. How did Japan become so dominant for coin-handling systems?
I think that Japanese companies have targeted specific markets and based on that market and their line of focus, they pursue technological innovation. In Japan, we hold the number one share when it comes to supplying these systems to railway companies, however when you look at financial systems, Glory Global has a top market share there. When you look at coin handling for vending machines and more general usage, companies like Asahi Seiko or Fuji Electric are really strong. The different companies have focused areas where they have their own share. There is very specialized machinery for each different market and the equipment is very niche.
When you look at a vending machine for railway tickets as an example, you don’t need to carry JPY 1 or JPY 5, they are unusable. What is required of a ticket machine is speed and durability, because the usage of that machine is very high. In that way, the Japanese industry has expanded so that each of the companies is focused on its own specialty.
As for overseas, I want a machine that can be used common, which is completely different from the ones in Japan. It is for this reason that it is very difficult for Japanese companies to be successful overseas in this industry. That is a sort of mistake of ours, a weak point.
When you go to a train station machine, you insert your bills vertically, however, when you use an ATM machine you insert bills horizontally. You might wonder, why is it different? The structure and the framework of the machine itself are completely different. The position, how to make it speedy, and how to accelerate processes are all different. This is the hallmark of how specialized Japanese companies have made their machines, and it is also the reason why you don’t see a lot of overseas machines here in Japan. We call it the “Galapagos Syndrome,” and the machines themselves are also subject to this Galapagos Syndrome.
Our strategy now is to take that business model that was so successful in China and move it to Southeast Asia as a whole. We have developed a unit that can identify 310 kinds of coins from 51 countries around the world. We are targeting the export of our products to Asia. So far, we have been successful in exporting our products to Vietnam, Indonesia, Taiwan, Thailand, and India.
Your company is not only using sensor technology for mechatronics but also for flapper gates; entry and exit-based systems. Japan really shines when it comes to sensor-based technology and your company offers a lineup of touchless-based products. Can you tell us about the development of these products in terms of R&D? What are you working on in terms of your niche specialization for your gate-based business?
The security gate systems we have developed have become market-matched products. They are completely different from the security gate system installed in buildings. If you were to look at the security gate in a building, basically you would walk up to the gate, touch it, and then enter, but in a train station, you can’t do that. You need to be able to walk through, and if you were to stop it would cause congestion with the foot traffic. The system needs to cater to the differences, and with train ticket gate systems, you need to allow continual foot traffic. Now there has been some testing done for image recognition and the idea is to introduce such technologies to railway stations as well. I would say as well that we are also in the building business, so we do provide security systems for buildings as well because it is easy to create a system where a person can stop before entering. Our strategy in that market is to ensure that we have a variety of different products, diversify the machines, and put efforts into making designs that look aesthetically pleasing. Many security gates have the same shape at the entrance and exit. We customized this according to the design of the building itself, and produced a security gate with different stylish shapes for the entrance and exit. In that way, we ensure the different variations in the product cater to that, and for that reason, we have been considered highly appraised and one of our gates won a Good Design Award.
The issue lies in the technology for sensing, and in order to create the best sensors we partner with outside companies. Various image recognition technologies like facial recognition require very specialized software in facial image scanning and biometrics. This is where we partner with companies that are specialized in such image recognition technologies. I think that is the strength of SMEs like us; we can really cater to and combine these technologies to flexibly respond with the best products. We are really strong when it comes to being able to adapt to the needs of clients and the market.
It is very clear that your company values the evolution of product development, and you clearly have moved and evolved through ticket vending machines, mechatronics, cash handling, and security gates. What is next for Takamisawa Cybernetics?
I have mentioned how our three main divisions are transportation equipment, mechatronics equipment, and specific system machines, but apart from that, the themes of these systems are payment handling and safety. We are looking to expand the number and types of safety equipment we can offer our clients, such as platform doors, security gates, seismometers and more. For one thing, the entrance to this headquarters has an entry gate with temperature checks and integrated hand sanitizer dispensers. It also checks if you are wearing a mask, and we have installed a compact gate that will not open if you are not wearing a mask.
When it comes to promoting this kind of new equipment that is related to hygiene and safety, that is a different market we are entering, and one that we are not used to. Up until now, our main clients have been railway systems or financial institutions. There is still a lot to do in terms of really being able to explain the needs for this within the hygiene industry. In order to do that in the most effective way it is going to be important for us to continue to expand through partnerships and technical tie-ups.
Even when you look at our bicycle parking systems, it is a different market for us. In introducing such a bicycle parking lot management system, we are developing it as a package, so we have established a company within the group that not only sells the machine itself but also operates bicycle parking lots. Our company was the first to make it possible for customers to use railway IC cards in bicycle parking lots. In addition, although payment is currently made at the payment machine on the premises, basically we aim to be able to pay immediately on the spot.
How do you envision this payment process evolving into the future?
I think that it will progress as if we don’t have to have anything more and more. But I’m worried, so I think I always have a little cash as a backup. In China, for example, you don’t need anything on you when you enter the train system and payments are done using facial recognition software. If the infrastructure is in place then anything is possible.
As far as Takamisawa Cybernetics' evolution in the future, overseas is what we are really looking to do. That isn’t limited to coin-handling systems, and we are really excited to build partnerships with local companies overseas. We really want to understand the needs of local markets and the best way to achieve that is through local partnerships. As one of the ways to really strengthen the mechanism and the ways of doing business, we accept Thai students as internships and give them work experience. I feel it is important to learn more about other countries.
Imagine that we come back and interview you all over again on the last day of your presidency. Is there a goal or ambition that you would like to have achieved during your time as president?
I haven’t decided yet when exactly will be my last day. Takamisawa Cybernetics' corporate philosophy is to be a company that creates machines that are indispensable to the world. Stakeholders mean shareholders, customers, employees, local communities and the general public. I hope these people recognize us as important contributors. I would love to mark that day with a celebratory glass of the best French wine.
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