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The only company in the world that operates in both analytical and medical instruments fields is capitalizing on the microscopic world

Interview - November 13, 2015

Teruhisa Ueda, President and CEO of Shimadzu Corporation, outlines why he believes the future is smaller, even molecular, with advanced technologies being applied at the molecular level in such disparate fields as healthcare, aircraft equipment, analytical devices, medical diagnosis instruments, and even the creation of healthy foods. 

 

TERUHISA UEDA, PRESIDENT AND CEO OF SHIMADZU CORPORATION
TERUHISA UEDA | PRESIDENT AND CEO OF SHIMADZU CORPORATION

How are you working to merge existing business segments and capitalize on the significant synergies that can be realized between your analytical and medical devices?

We have four main business segments, which consist of analysis equipment, medical systems, aircraft equipment and industrial machinery, and for all these areas, science and technology is a crucial element. And new technology tends to begin from work on aircraft, and then is further applied to analytical equipment, medical systems, and also industrial machinery and manufacturing sites, which has demand for our products. Therefore for us, the core of our business is science and technology, and we find afterwards the areas that they can be applied to.

Our first important focus is our efforts into research and development.

The second point is the integration of analytics into medical technologies.

For example in the realm of healthcare, until now, our medical devices had been created in order to make a diagnosis. In the case of cancer, once the cell, a cancer cell, has become large enough to be visible, it’s usually about five millimeters, which means that the life expectancy of the patient is limited probably to one or two more it is already too late for proper treatment. Our aim is to create a possibility of earlier detection, so that the cancer cells can be removed while they’re still small, because we know that if we do so, people have a bigger chance of recovering. Therefore by creating this synergy between medical and analytic instruments, particularly through analysis of blood and of bodily fluids, we think we can contribute to an earlier diagnosis of these diseases.

I firmly believe that creating this synergy of medical and analytic instruments to improve our diagnostics is the future of Shimadzu.

 

While Shimadzu enjoys a strong brand in Japan, how are you working to grow and communicate this brand as you grow internationally? What would you say maybe separates Shimadzu from your main competitors such as GE, Phillips, Hitachi, here in Japan? Do you maybe use your Japanese roots as a brand in itself to embody efficiency and high quality, which the Japanese are synonymous with?

Basically, our corporate philosophy is to contribute to society through science and technology, and I believe that as long as we attend to achieve this mission properly, results will follow. We make contributions to various industries and academia. It’s important to note that nowadays, there’s a large change in the way Japanese companies are manufacturing products. Until now, companies tended to use their knowledge, their experience, their intuition, and mix it with various materials to create new products, much like the way that Udon and Soba, the Japanese noodles, have been doing. But these days, it is becoming the trend to properly analyze the situation through science, and to develop products through the scientific method. This new analytical technology – which will really need to be more sophisticated in order to truly respond to the new needs – will become the driving force of our operations. These collaborations and joint ventures are particularly important.

I believe that currently in the world, Shimadzu is the only company that operates in both the analytical and medical instruments business. In the example of cancer, it takes about 20 years for the cancer cell to develop fully, and the analytical instruments will be very useful in the first stage of cancer development. Until now, we’ve been focused on the diagnostic stage of disease, but we are starting to foray into the area of treatment, and further into post-operation maintenance as well.

The future of healthcare goes towards preventative medicine and maintaining proper health, and we believe that the world is changing from sick people going to the hospital, to technologies being developed so that a healthy situation can be maintained. It is a very great strength of ours that we have both analytical and medical technologies in order to contribute to responding to this new development, and that is what differentiates us from our competitors.

 

Arguably one of Shimadzu’s most important competitive advantages is its corporate culture, and its stated business purpose is not only to just gain profit but to “contribute to society through science and technology.” Can you outline why contributing to society is so important to the future of Shimadzu?

Throughout our 140 years of history, we have learned that simply pursuing high numbers and sales results will not allow us to achieve our objectives. In fact, by always thinking about how we can contribute more to society, help further our customers, and create high-value services that meet the demand, the results follow, inevitably. We learned through our long history that our growth is always accompanied by the success of our customers and advances in science and technologies. If you pursue only scientific advancement in a kind of competitive fashion, the company does not grow. We have learned in this 140 years the value of creating high-value business by focusing on how to contribute to society.

 

In 2014, Shimadzu launched its three-year mid-term plan with the aim of becoming a “true global business.” Considering you are halfway through this plan, how would you grade your progress so far? What are your top priories for international expansion?

In our second year of our midterm plan, number-wise we have had very favorable results.

The reason for such results is our success in the creation of new products and technologies. At the same time, we have also worked a lot on the collaborating with our customers and doing joint research and development. Instead of having a relationship with our customers being simply one between a seller and a buyer, we have been developing a partnership with our customers and increasing the relationship of the trust between us. All of that is so our relationship of trust also expands globally, and this is one of the major reasons for our recent success. Particularly this year, we have been putting a lot of effort into the creation of innovation sectors, which are being created in the US, Europe, Asia, Singapore actually, and in China, and in these areas we have set up R&D teams which can quickly respond to local needs and do a certain amount of R&D.

Even though the core R&D of products will still be done in Japan, the application of these technologies can also be done locally through those innovation centers. Through these innovation centers, we strive to create a closer relationship with our customers in the local areas and become an important partner for these local customers, and that is our priority at the moment.

 

Shimadzu has recently increased its presence in the US, building a SPI factory in California and spending $20 million to expand your US headquarters in Colombia. How important is the US market to your continued growth?

I believe two aspects explain why the US is very important. First of all, all the new technologies emerge from the US and through ventures as well. The US is an excellent creator of these new technologies.

The second aspect is that the United States puts a lot of effort into developing new markets and contributes to the expansion of other markets. So by Shimadzu contributing in America, this can spread to operations in other regions.

 

Of course one of the main things I wanted to ask you was the challenges you’re facing as the new president and CEO. For example, maybe in the synergizing of your various business operations, sometimes Japanese firms have a reputation of been relatively siloed, or segmented, and not much horizontal interaction between the various sectors. So what are the biggest challenges, do you anticipate this being a problem as you try and synergize all your sectors?

Due to our history that goes back 140 years, clearly I can say that each of our business segments have been optimized in a way they believe in a right direction. So in order to adapt to this new era of synergies between the segments, developing collaborations both internally and externally is of utmost importance. The biggest challenge for a company now is to find a solution as to how these different segments with different cultures can find a way to collaborate and develop a relationship. This is something that we’ve put a lot of effort into. Because the core of our business is science and technology, we have a basic R&D, a basic research division, that conducts research and development, which is then spread to and applied to the various business segments within the company. This basic research team acts as a kind of technical bridge between the segments, and we’re working now to strengthen this system.

 

As you have a strong, international presence, do you view your company as an ambassador for Japanese values? What role does Shimadzu play in spreading to the world Japan’s reputation in these virtues?

Each country I believe has its strength and room for improvement, and I believe the strength of Japan is in its traditional industry, which has the ability to produce high quality products. I believe that Japanese culture is going to continue expanding globally in the future, including things like sushi, sashimi and sake, and I believe the analysis technologies we provide can support this movement. When Japanese industries grow stronger, we too grow stronger because we support them through our technologies, and this is very important in our global operations. So if we’re able to realize this aim properly, we would be able to help provide good tasty food, healthy food, good sake, and many industrial materials to all of you and thereby contribute to society.

 

What advice would you give to other Japanese CEOs and chairpersons who would like the follow in Shimadzu’s footsteps and create truly global companies?

I believe that it will be important for Japanese companies to clarify what their strengths really are. In the case of Shimadzu, it is science and technology, and for us, Japanese companies, it is also invaluable to collaborate with each other.

I believe that if we simply pursue the scale of the business, American and European businesses are going to have a larger scale than us. For example, in the news today, we have heard about beer companies merging and going to create the biggest beer company in the world. But even if some of the companies may be of a smaller magnitude, as long as these companies become aware of their strengths and create a network among themselves, we will be able to contribute to the global market.

It is important to not simply think about creating wealth but also to think how that is going to lead to happiness. We must put the happiness of humanity first, and we must seriously think about humanity’s true purpose of humanity.

For example, if we look at the people pursuing the automation of factories. Are with really creating human happiness by creating factories with no human beings working in them? We need to put the happiness of human beings first, and then by steadily making appropriate efforts to grow the companies, Japanese companies will be able to thrive and I believe this is what matters. I believe business is people.

 

What would you say has been the impact of Abenomics on the manufacturing sector or indeed Shimadzu specifically?

Abenomics itself is based on the three arrows, which includes the invigoration of the public sector, the private sector, and the gross policies. These arrows have contributed to the growth of the Japanese economy. But before Abenomics was implemented, the Japanese corporation had been focusing on three areas. The first one was about cutting costs of its operations and management. The second had been the development of new technologies and products, and finally the third had been collaborating with external partners. Shimadzu, in particular, has put a lot of effort into those areas.

The most important point about Shimadzu is that when we faced this difficult economic time, unlike many overseas companies we kept valuing our human resources and did not terminate any of them. And by doing so, by valuing the personnel, we were able to promote these three areas that I just mentioned.

Moreover, by properly attending to these three areas: the improvement of our products and technology, the collaboration with external partners, and cutting costs, we were able to see improvements in performance once Abenomics was implemented. If we hadn’t put effort into these three areas while things were difficult, we would not have been able to see these results.

During this period, we took the time to really looked within Shimadzu, in order to know what is our strength. And our strengths are our scientific and technological capabilities. So we went back to our basics and put a lot of effort in strengthening our strengths, and by doing this, like many other Japanese companies who tended to these properly, we have been able to grow.

The companies that weren’t able to conduct efforts in those areas properly are suffering today.

Especially because Shimadzu had started its overseas operations quite early on, nowadays 50% of our operations consist of our activities abroad. And once Abenomics turned the tide of the Japanese economy upwards, Abenomics made a large contribution to our success.

 

What opportunities do you see with the Trans-Pacific Partnership (TPP) for Shimadzu not only in the US but also the rest of the Asia-Pacific region?

For many Japanese companies, the agreement of the TPP is a very welcome situation. Until now, Japan and the Asian countries have been separate entities, but now Japan will be unified along with the US into one economic collaborative area. The products produced within each country will freely be exchanged through improved logistics, and this will create new opportunities for us. For example, in the food sector, safety is a very important issue. Indeed all the various foods that are produced in various countries will need to be checked for residual agricultural drugs. These new needs created by the TPP will create new demand for a stronger analysis and sets the stage for much more opportunities for us to be contributing.

I think food is a very easy-to-understand example, and nowadays the world is appreciating more and more high function products, food products produced in Japan as well as traditional Japanese products like sake or tea. In order for us to show to the world that our foods are safe and healthy, we can prove it by conducting analyses, and it will create a momentum for our company.

 

How would you like our American audience to perceive Japan as it leaves behind two decades of poor economic growth and deflation?

I believe that one strength of Japan is that it is able to create a sensitive and delicate attention to detail, and this is present in Japanese companies as well as the basis of our culture. Nowadays, creating products and manufacturing are coming to a molecular level, and these technologies on the molecular levels are being applied to various fields, such as diagnosis, the creation of healthy foods, and so forth. It’s going to become important for many Japanese companies to improve the sensitivity, delicateness and high quality of our products.

Not only is our strength the fact that we have scientific and technological capabilities, but it is also that we are contributing to society by collaborating with all our customers in Japan and other countries. This is our great distinguishing power and we are looking to focus more on the overseas customers as well, by developing further relationships with our overseas customers. Of course we are already operating overseas, with 50% of our operations being abroad, but we would like to create further relationships with as many overseas customers as possible, by providing safety and trust in various sectors and thereby becoming a truly international business. This should lead us to contributing more to society and also improving and raising our business value. 

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