TAKUWA CORPORATION is seizing a unique opportunity in global markets, leveraging Japanese ingenuity and advanced technology, while charting a bold course toward international expansion and disaster prevention solutions.
Now is a pivotal time for Japanese manufacturing. Over the past three years, we have experienced severe supply chain disruptions due to COVID-19, as well as the US-China decoupling situation. As a result, many corporate groups are looking to diversify their suppliers for reliability. Known for their reliability and advanced technology, Japanese firms are in an interesting position. Due to a weak Japanese yen, many observers argue that this is a highly unique opportunity. Do you agree with this sentiment?
I agree. Japanese suppliers, both large companies and small and medium-sized companies like ours, all see this time as an opportunity. I believe this has a lot to do with the Japanese temperament and national character. Over the past three years, we Japanese have invested aggressively to increase our reliability and advanced technology, rather than passively waiting. We have worked hard to prepare for when the economy recovers and gets back on track. We believe that observers understand this Japanese national character, which is why they have such high expectations for Japan and insist that now is a unique opportunity. We intend to make the most of the opportunity now that the global market is showing strong interest in Japanese suppliers.
During the pandemic, TAKUWA CORPORATION promoted remote work for employees in both its offices and factories. We have abandoned the preconceived notion that remote work is not possible at factories. By breaking down the work at the production site in detail, we discovered that there were other tasks besides desk work that could be done from home, and by implementing these tasks, we were able to run the factory at 60% productivity. We demonstrated that remote work is possible in the factory. This approach not only strengthens our resilience but also prepares us for the possibility of future pandemics.
In addition, while we had previously obtained ISO certifications for quality and environment, during the three-year pandemic of the new coronavirus, we obtained two additional certifications to ensure that we are well prepared for what is to come. The first, ISO 45001, is for occupational health and safety management systems, and the second, ISO 27001, is for information security management systems. These four elements, along with quality and environment, are what society has always demanded of companies engaged in business activities.
Our company is not well-known overseas, even though we have made it our company policy to develop overseas markets. However, we believe that having the four ISO certifications required by society will enable us to gain at least a minimum level of trust from overseas customers who are not familiar with our company and facilitate our sales activities.
Another thing we focused on during this period was to spread the concept of risk assessment within the company. Our company, which is also ISO 45001 certified, has continued to preach the importance of risk assessment within the company. In today's uncertain times, when the future is uncertain and society is in turmoil, the only way for a company to survive is to always take on risks and take on challenges. RA is a way of thinking to estimate how much risk you can tolerate when taking on a challenge.
TAKUWA CORPORATION has a 60% share of the domestic market for Quartz-type water level gauges and has a strong base of sales from the renewal and maintenance of these gauges. If we consider these sales as "acceptable risk," TAKUWA CORPORATION is a company that can take on challenges as long as its sales do not fall below this level.
Furthermore, what are the advantages of Japanese firms in this current macro-environment?
While we are actively developing new devices, one of our key tasks during the pandemic was to conduct a comprehensive review of each of our existing devices and technologies. One of the strengths of the Japanese character is not only to solve problems but to discover them. Over the past three years, we have not only identified several potential problems with existing devices but have been able to effectively resolve them. This is a great achievement.
This excellent trait of the Japanese people's problem-finding ability will also be an advantage for Japanese suppliers. I believe that markets and companies around the world are watching us Japanese with great curiosity to see what we will do next.
Your Quartz-type water level gauges RS485 is a pressure water level gauge that detects the water level from the water pressure, and it has high-precision measurements through the use of a quartz oscillator. Can you go into more detail about the motivations behind the development of this specific product? What advantages do pressure water level gauges have over other types, such as flow systems or capacitance gauges?
Our first proprietary Quartz-type water level gauges, the Reed Switch Type Water Level Gauge VM-10AS Series, was developed in 1968. This water level gauge consisted of a float with a magnet attached and a PVC pipe equipped with a reed switch board. When water enters the pipe, the float moves up and down to measure the water level. Since this Quartz-type water level gauges is directly attached to H-shaped steel and installed in the river channel, it is possible for objects such as trees, grass, or other debris to get caught in the H-shaped steel during outflow, blocking the water conducting port of the gauge and preventing proper measurement of water levels. The sensor itself was detached from the H-shaped steel and washed away, or the entire H-shaped steel collapsed and the communication cable was cut. The first Quartz-type water level gauges was developed as a pressure-type water level gauge that did not require large facilities, was easy to install, and could accurately measure water levels over a long period of time.
The first version of the Quartz-type water level gauges was introduced in 1978, 10 years after the first Reed Switch Type Water Level Gauge. This water level gauge is TAKUWA CORPORATION’s flagship product that can cover a long measurement range of several tens of meters, is easy to maintain, is more accurate than conventional water level gauges, and can stably measure water levels over the long term. Float-type water-level gauges require large-scale construction work for installation. In contrast, the installation of quartz-type water level gauges requires only a simple installation of a protective tube, and they have spread nationwide in a short period of time.
While other companies may offer similar water level gauges, our competitive advantage also extends to our prompt maintenance service and low error rate. In fact, we boast an overwhelming 60% share of the domestic river market. This track record reflects confidence in our devices not only through quality but also through overall effectiveness, including prompt troubleshooting and maintenance services. (Insert picture of RS485)
Japan is a nation highly susceptible to a wide range of water-related disasters, including typhoons, torrential rains, and flooding. As such, you have become a specialist in disaster prevention, specifically for water-related disasters. However, there are many regions around the world that suffer similar disasters such as Southeast Asia, Africa, and even Northern Australia. Are you looking to export your technology to regions around the world that suffer from water-related disasters going forward?
Currently, natural disasters are occurring frequently on a global scale due to climate change. We are looking at exporting our technology as a business opportunity, but at the same time, our domestic situation is evolving, and we believe that expanding overseas is a necessity.
Our main customer base consists almost entirely of national and local governments. While global demographics are on the rise, Japan's population has been declining since 2008, and with the aging of the population and declining birthrate, the government's tax revenue is also declining. Therefore, the government's budget has a direct impact on our sales. As you know, Japan is a super-aging society, and much of the budget is allocated to medical care, pensions, nursing care, and welfare. As a disaster-prone country, the budget for land preservation and disaster countermeasures is important, but in reality, the budget for the Water Management and Land Conservation Bureau of the Ministry of Land, Infrastructure, Transport and Tourism has been reduced to almost half of what it was 10 to 20 years ago.
To overcome these changes in the situation, we need to explore opportunities not only in the domestic market but also in overseas markets. Even if we were able to maintain the same level of maintenance services and updates (renewals) for the domestic market, our costs may increase further due to the current surge in raw material prices, semiconductor supply shortages, and rising labor and utility costs. As a result, the scale of our business is expected to shrink in the future. To counteract this, we need to aggressively seek opportunities in the private market and expand our presence in overseas markets.
Is finding international partners an area of interest for your firm to aid in your international activities going forward?
We are in the process of forging partnerships with local companies as part of our strategic expansion into overseas markets. Given our limited presence in these markets, our four ISO certificates become key in establishing our credibility and commitment. Beyond merely disclosing our financial statistics, we recognize the importance of sharing more substantial information and ideas related to ESG principles with the global community. We aim to evolve into an open and transparent company, and as part of this endeavor, we are in the process of reconfiguring our website.
We want to foster a culture of open communication and collaboration with our four staff members from Nepal. We encourage them to establish and manage our branch in Nepal in the future, but we also encourage them to eventually start their own business in their home country. Also, Nepal has more than 30 technological universities, and through a collaboration with a Japanese temporary staffing company, we have established a pipeline for recruiting talent from these local institutions to join our workforce.
When do you plan to launch your new website?
We plan to launch it in April next year. With our determination to go overseas, it is crucial that we carefully identify and assess the associated risks.
Are there any countries or regions that you believe have the most potential for your first step into the international market?
We are concentrating our international business efforts on Thailand and South Korea. In Thailand, we are collaborating with a consulting firm to establish a strong connection with the government. In South Korea, we intend to tap into the market by participating in projects related to major river systems, as dictated by their national policy.
Imagine we come back in two years and have this interview all over again. What would you like to tell us? What are your dreams for this company, and what goals would you like to have accomplished over the next few years to come?
TAKUWA CORPORATION’s name will be better known in overseas markets than it is today. I am sure that TAKUWA CORPORATION’s sales in overseas markets will be even more well known than they are now, and that the sales of our overseas divisions will have doubled. My dream is for TAKUWA CORPORATION to become a company that can do business that contributes to people and society around the world, and for all of our employees to become the protagonists of their own lives and live happily. By 2030, we will double the company's overall sales. That's a pretty lofty goal, but I believe we can achieve it as long as we don't give up.