CSR-focused producer of chemical products and electronic materials Nippon Chemical Industrial Co., Ltd. foresees positive knock-on effects for its growth from the increasing global efforts to meet stricter environmental targets. President Yoshihiro Suzuki discusses the company’s strategy to increase its involvement in industries such as the environment, energy, healthcare and agriculture.
It seems clear that Abenomics has had an impact on both the economy and global mindsets. What are your thoughts on this subject?
Going back several years, the Lehman Shock took place in 2008, and then in March 2011 we suffered from the great earthquake here in Japan. Since then, all companies have been affected. In addition, there was the spiking of the yen, which also had a negative effect on us. Then Prime Minister Abe assumed power in 2012 and introduced Abenomics. He attempted to lower the price of the yen, erase the stock prices to move out of the negative spiral, and boost the economy. He took a lot of measures. I do think that Abenomics has had some positive effects on improving the economy towards the future.
During that time, the industries that suffered the most were the TV panel industry and also the semiconductor industries. Their shares were taken by Taiwan, China and Korea in terms of scale and quality. They are still suffering from it. Since we too have some electronic material departments, we were affected as well.
In general, the Japanese economy benefited from Abenomics in terms of exchange rates. Thanks to that, the automotive industry as well as chemical industries benefited from this initiative.
What opportunities do you see with the imminent ratification of the Trans-Pacific Partnership (TPP) for Nippon Chemical not only in the US, as you have a presence there, but also within the Asia- Pacific region?
In terms of the chemical industry, there was another agreement called the Uruguay Round previous to the TPP. We do not have issues with customs and are not that affected by the TPP. I believe our customers, especially SMEs, will be affected by the TPP as it will be easier for them to move out of Japan, so in that sense there will be some indirect effects from the agreement.
Nippon Chemical was established in the early 1893 and you started expanding overseas in New York (USA) in 1996, and into China shortly after. Since then Nippon Chemical has continued to grow both domestically and internationally. It is safe to say you started your globalization process long before Abenomics. Can you outline for our US audience a bit of a background on this impressive history?
We have been in operation for 123 years. The reason for the establishment of our company was that our founder realized there were no chemical manufacturers here in Japan, so we wanted to create a domestic company that could produce chemical materials. We have now been caught up by China, and when this happened, we tried to differentiate ourselves by coming up with value-added products, such as electronic materials or products with high purity. We decided to go abroad to erase procurement problems. That is how we started in the US and now we are exporting electronics device materials.
In terms of sales and market volume, the US and our overseas markets are not as big as the domestic one. Most of our sales come from the domestic market. However, to procure materials, both China and the US are important footholds for us. Going forward, we would like to expand our exports to these markets with a special focus on functioning chemicals; however, these markets are still secondary to us.
Nippon Chemical Industrial’s first R&D principle is to use its ingenuity to make the goals of chemistry a reality. Your group develops electronic, battery, inorganic and organic materials. Lithium battery technologies, for example, are at the center of your interests today. How is Nippon Chemical contributing to the development of everyday life technologies? What should we expect from Nippon Chemical tomorrow?
We have a long history and we have been making general-purpose products as well. Regarding future development, in terms of our domestic demand, we really have to be smart in strategizing our future plans because we have to consider the declining population and the ageing society, contrary to the US perspective; the future would focus on the environment, energy, medical uses, healthcare purposes, as well as agricultural chemicals, and that is our focus for the future as well.
As I mentioned, many other developing countries such as China have caught up with chemicals. This is why we have been differentiating ourselves through value-added products such as electronic material chemicals. However, those electronic materials are very much affected by the situation of the economy. Of course, this is something we cannot impact, and that is why we are shifting focus towards the previously mentioned areas.
Incorporating CSR efforts is no longer something corporations do by choice, but rather it has become a social norm to do so. Society often associates chemical manufacturers to be exploiters of the environment; but, five years after Fukushima, and knowing that Nippon Chemical has two factories there, it should be even truer for you. What measures does Nippon Chemical take to ensure minimal environmental impact and how do you perceive your responsibility to give back to the community?
Yes, we do have two factories in Fukushima, and after the incident, we suffered from reputational damages. The factories were about 50 kilometers away so there was no practical damage, but we did suffer from reputational damage. We are now reversing the situation by contributing to the society by providing them with developed materials to absorb radioactive remnants. Now, these chemicals are being used in the power plants. Our new materials can absorb cesium and strontium.
At the COP21 in Paris, 196 countries made an agreement to reach the set goals by 2050. All countries will start their measures by 2020, and because of that, environmental issues will be a hot topic for all countries. In the automobile industry, for example, electric cars using batteries will likely become a reality because of the emissions regulations, and if it does, our company will have a lot of impact on this trend in the industry.
Could you tell readers and potential investors why they should consider investing in Nippon Chemical, and what would you say are your competitive advantages that make you stand out from your competitors?
First of all, I think our strength is our long-standing history. Also, we have been doing things that other companies are reluctant to deal with. I think those two would be the keys.
The G7 Summit recently took place in Mie Prefecture. What final message would you like to send to the leaders of the world who will be reading this?
Of course, every country has its own profits and losses, but I would like them to cooperate to stabilize the world. Of course, for Japan, the lower yen and the eased economy would be better for us. Europe wants to ease the economy and the US wants to raise their interest rates. We do understand everything but then we would like a better economic situation for ourselves. All countries have their own geopolitical risks, and with that, economy changes overnight. It is so easy for economic situations to change, but stability is of course better for everyone. I would really like to urge the leaders to come up with a truly stabilized world, stabilized economy and politics.