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Sanyu Rec: One of Japan’s top 100 global niche companies

Interview - October 14, 2022

Established in 1958, Sanyu Rec has consistently applied its efforts to the research, development, and manufacture of synthetic resins. Today, the company is one of Japan’s foremost resin manufacturers and has established four business areas: electronic products, semiconductors and LEDs, construction and industrial, and composite materials – developing resins specifically for each field.

KOICHIRO NAGAI, PRESIDENT OF SANYU REC CO. LTD
KOICHIRO NAGAI | PRESIDENT OF SANYU REC CO. LTD

What does monozukuri mean to you and what are the strengths or competitive advantages of your firm that allow you to remain competitive in the global market?

I would like to draw your attention to a certificate we received when our firm was selected as one of the top 100 global niche companies operating in Japan. This certificate speaks to all the aspects of your question. For example, some Japanese companies in the white goods industry are no longer competitive in the global market in terms of cost, and we are currently witnessing them lose considerable market share in industries across the board. We believe that cost will never be our strong point. Our mission has always been to maintain a high quality of products and services, not costs. The steady maintenance of high-quality products and services is always a vision that is right in front of us and the concept of our monozukuri process.

 

Your field of epoxy resins can be extremely competitive, especially in the Liquid Epoxy Resin Market. How is your company able to distinguish itself from other companies in this segment?

I think it is because we are always looking to satisfy our customer's needs. We keep an open ear to the customer's demands and are striving to give detailed care to those customers. I would also say that from our point of view, our products and services don’t really overlap with our counterparts.

 

Consideration for customer needs is a core aspect of yours and many other Japanese firms. It’s rooted in the incredible amount of accumulated expertise developed by the company over many years. How is your company able to transfer this expertise? With the shifting demography of Japan, can you tell us what challenges or opportunities Japan’s aging and declining population presents?

It is very true that due to the declining population it’s very difficult for us to pass on our technology and expertise to the next generation, as well as hire new people. I would say though that due to the negative impact on the economy from COVID-19 the labor market now has a little bit more flexibility. Going forward we are actively hiring both new graduates and career personnel. Our company name and brand are famous among our clientele, and we want to apply that same brand recognition to younger people. In order to do that, we will be present at an exhibition this year so that we may enhance our branding to the younger generation.

The declining population is also shrinking the domestic market, thus the demand for upgrades for equipment and materials is also in decline. We are aware that in the current domestic situation, we cannot maintain the scale of our business and our current pace of growth. This is one of the reasons why we have established our own plants in both China and Malaysia so that we can capture the demand in their markets. When we established our plant in China, we were very reliant on the growth and volume of the Chinese market, but looking forward to the global situation, we must think strategically. We've invested in our Indian office as a move for the future. We hope to capture the demand for the next volume zone. Business in India used to be quite difficult, but moving forward, it feels like a good opportunity with the keyword being “environment.” The significance of clean water and air should not be discounted

 

One of the big disruptions of the COVID-19 pandemic was, and still is, logistics and the effects on the supply chain. In recent times, especially with China’s zero COVID policy we’ve seen factories close, there are very strict quarantine infection control measures and it’s all very limiting to the staff of major logistics and shipping companies. It has created huge delays across the entire supply chain. How are these disruptions impacting your business and what changes have you implemented to face these logistical disruptions?

We have felt a lot of impact from the Chinese situation. In fact, we recently had restrictions on going to work in our Chinese factory, with the hope that in the next few weeks, we can add some more. More importantly, however, logistics were disrupted heavily. Nevertheless, I feel that the impact has been contained pretty well and we have been able to meet our client's demands. China has always posed a risk though, and we have foreseen this for some time now. Foreign companies who don’t have markets in China (even Taiwanese companies) are moving from China to Thailand and other similar nations. An example can be seen in the automotive industry where Europeans that had previously established brands targeting the Chinese market are now building new plants back in Europe.

 

You mentioned earlier about the COVID-19 pandemic as having a “silver lining” in that the labor market is more flexible as a result.  Additionally, you said that you were looking to appeal to the younger generation as potential employees. Does that extend into potential hires from overseas as well? Are you interested in recruiting overseas talent?

We’ve actually already hired some non-Japanese people from South Korea, China and Haiti. In 2020 we consolidated our stake in Fuji Chemical Industrial Thailand Co. Ltd. and invested in them to take control of their office there in Thailand. We also co-established a company with Sanyu Industrial in Europe in August last year, so that we can have a production base in the European market and I believed that it would help to enhance our product distribution as future preventive measures. Unfortunately, Since our clients in Eastern Europe are experiencing quite the disruption of global distribution on an unseen scale due to COVID-19 pandemic and escalations in the Russian-Ukrainian conflict.

 

In regards to your investment in Fuji Chemicals Industrial, we would like to know more about the Sanyu group itself. What are some of the synergies you are able to create within the group and how does this structure increase your competitiveness?

Fuji Chemicals Industrial is a fabless company and we are doing the ODM production for them. We are able to create great synergy and from our side we are able to provide materials, and from their side, they are able to provide components, especially for electric vehicles (EVs) or hybrid cars. Regarding Sanyu Industrial, we have established a joint venture with them in Italy to execute European operations, in addition to our Chinese trading company being born from a joint venture project too. Manufacturing is led entirely by us using our own technology and know-how, and Sanyu Industrial takes initiative in commercial and marketing activity.



The automotive field is one that is fascinating and exciting at the moment with great changes and shifts occurring across the industry. Everyone is talking about the transition from combustion engines to EVs, however, one of the changes that isn’t discussed nearly as often is the change in materials. We are seeing automotive makers moving away from heavy metals such as iron to more lightweight materials like carbon fiber-reinforced polymers (CFRPs) and resins. Due to the change in materials, the binding requirements are drastically different. Can you tell us what new products have you been developing and how are you catering to the changes in material demands from automotive makers?

Demand for materials from automakers is always active, not only in the scope of performance and cost, but also in the CSR strategies of manufacturers.

In particular, since the announcement that SDGs would be adopted by the United Nations General Assembly in 2015, demand for automotive materials using sustainable materials has recently generated demand for carbon neutral materials. As a specific initiative to achieve our SDGs, we are developing products with a higher percentage of bioplastics used using natural materials, which we expect to use as materials for FRPs.

Needless to say, our development is not only environmentally friendly from such a new viewpoint, but also focuses on economical contributions by improving conventional fuel efficiency through weight reduction of car bodies, as well as on reduction of the environmental burden by decreasing the use of fossil fuels. For example, we are working to reduce the weight of automotive structural materials by using foamed epoxy resins and to secure the rigidity of automobiles.

Examples of foamed resins used for automobiles cannot be shown here, but as a practical example, two points are shown in the photograph. Thick components, such as the saddle part of a racing bicycle or the blade of a drone, are made with CFRP to make the outer shell, and the inner cavity is filled with foamed resins to make them lighter while retaining their strength.

Aside from the automotive industry, we are seeing an increasing demand for CFRP for use in infrastructure repair, particularly in developed countries. Advanced countries are seeing the lifespan of their infrastructure coming to an end, yet they don’t have enough money to completely replace the infrastructure.

 

A high-speed curable urethane resin has been developed and a case-less version of RIM molding has been proposed, and it is expected that cycle time will be shortened and raw material costs will be reduced. What is the balance between functionality, quality and high cost?

The conventional test method uses plastic cases in which resins are injected, but RIM's actual applications do not require plastic cases, and we have received a response as a proposal to reduce costs.

Although this product has not yet been launched, it is expected to shorten the cycle time of production at the same time, and we are actively pursuing development.

 

Regarding your semiconductor and electronic materials, makers are expected in recent times to almost triple their fabrication capacity. What do you expect from this increased capacity of semiconductors? Could you introduce some of the key products you have to cater to contact image sensor (CIS) related applications?

The industry has challenged Moore's law, but in the future there will be a move that will increase the importance of ‘More than Moore’ more than ‘More Moore’ . This is a new implementation and back-end process technique centered on Chiplet (integrating devices with separate functions) and 3DIC (three-dimensional integrated devices). We believe this technique requires a highly reliable Liquid mold material and Underfill material that can be used in a clean environment. Last spring, we established a new R&D division specializing in materials for the semiconductor field.

Sony is developing the World’s First Stacked CMOS Image  Sensor Technology with 2-Layer Transistor Pixel. This technology is attracting attention. We have extended our track record of die attach material for CISs as a low-response stress, highly reliable material. In the future, we are focusing on packaging materials for CIS for automotive applications, which are expected to grow even further, and are proceeding with development.

 

Can you tell us more about your strategy to develop your international business? Are there any particular markets you consider key moving forward?

When we talk about advanced countries, their markets are already matured, so we can’t really increase sales there. In these countries, we would like to focus on the repair of infrastructure. These countries are also seeing people turning their eyes to health care, so we would like to enter the healthcare industry as well.  Advancing  countries still need our technologies and expertise, however, they will be under a lot of restrictions in terms of the environment. We have the experience to deal with those restrictions, so I think we have a competitive advantage compared to local companies.

 

With the recent passing of Joe Biden’s new infrastructure bill, could you tell us more about what opportunity these kinds of infrastructure projects in the United States pose?

We are not directly selling our products to the consumers, but our customers are policymakers for construction. Their biggest market is the United States.

 

Imagine that we come back to conduct this interview again on the last day of your presidency. What would you like to tell us? What are your goals and aspirations for the future?

I don’t think how much money we earned or how many sales we made is important. For me, it’s more important for our employees to share in the vision of the company. If we can achieve that, I think our company will remain a strong family unit. Achieving this will have made my presidency worth it.

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