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Seishin: The value of transforming our clients' inconveniences into conveniences remains unchanged

Interview - March 1, 2024

A journey from trading to cutting-edge technologies, collaborative excellence, and the strategic response to market dynamics in the ever-evolving global landscape.

MICHIHIRO TAMENORI PRESIDENT OF SEISHIN TRADING CO., LTD.
MICHIHIRO TAMENORI | PRESIDENT OF SEISHIN TRADING CO., LTD.

The last three years have brought significant disruptions to global logistics due to the COVID-19 pandemic and the US-China decoupling. This has led to a diversification of supply chains by international firms. Japan's companies are renowned for their reliability, quality products, and advanced services. Moreover, the weakened Japanese yen has made Japanese products the most cost-effective in three decades. Many believe this situation offers a unique opportunity. Do you agree, and what, in your view, are the primary advantages of Japanese suppliers in the current macroeconomic climate?

The yen's depreciation is indeed driving increased business demand. Yet, it's important to note that this depreciation isn't directly linked to the diversification of supply chains. Despite the growing dominance of China and Southeast Asia in the market, Japanese products maintain a reputation for superior quality. Although Japanese companies might not be as quick to act, their longstanding and consistent business practices over the years serve as an advantage for us.

Projections indicate that within the next 15 years, one in three individuals will be over 60 years old. This demographic shift could result in a labor shortage and a shrinking domestic market. However, it also presents opportunities for increased automation technology. How has your company responded to these demographic challenges, and what strategies have you adopted to address them?

The declining labor force in Japan is impacting our company as well. The average age of our employees continues to rise, posing a significant challenge in recruitment. Given that our business operates within a niche B2B sector, finding and hiring new employees isn't an easy task, and we are still in the process of exploring it.

In the late 1980s, sogo shoshas like Mitsubishi, Mitsui, Itochu, Sumitomo, and Marubeni accounted for 50% of Japan's total exports. However, with the burst of Japan's bubble economy in the 1990s, these trading companies were seen as less vital. Today, there are over 9,000 companies in Japan. How do you assess the role of Japanese trading companies today, and what strategies do you employ to differentiate your company from competitors?

Currently, Japanese trading companies play a crucial role in connecting the world's supply chains, with a strong focus on services and distribution, thereby linking consumers worldwide. While the evolving geopolitical dynamics between China and the United States are impacting the trade environment, Japanese trading companies, known for their diverse financial divisions, maintain the ability to invest in a wide range of businesses. Our company, in line with this approach, is actively exploring investments in various industries and regions. We believe that it is our agility and flexibility in identifying promising investment opportunities that set us apart from our competitors.

Seishin Trading, established in 1952, initially focused on diversified analysis equipment before expanding into industrial precision equipment sales and production. Could you give an overview of the industries you serve presently? Additionally, are there any new fields or industries you're considering entering or catering to in the future?

Presently, our company operates primarily in four domains: precision equipment, diverse analysis, safety environment, and electronic materials. These four domains branch out, each with its own expertise, serving various industries and providing value.

Looking towards the future, we remain vigilant about market changes and demand. We are considering entering new fields and industries. As an example, in our diverse analysis business, we are proactively anticipating the ever-stricter government environmental regulations. By staying ahead of the curve, we aim to lead material analysis in Japan, ensuring compliance and excellence.

Seishin Trading has been addressing the significant global impact of oil leaks through the utilization of environmental monitoring devices, including their non-contact laser technology. Could you elaborate on this non-contact laser system and how it contributes to preventing environmental issues, specifically in monitoring oil leaks?

This monitoring device shines a red laser, similar to a laser pointer, onto the water surface while driving it in a pattern, removing noise such as waves and wind to collect data. Our oil film detector, the "LMD-3000," which we handle, can sensitively detect floating oil films and is capable of handling water level changes of up to 4 meters in height.

Your company recently developed the world's first vertical aluminum nylon nitride based on deep water violet semiconductor lasers that enable high output, poised for applications in medical and industrial fields such as UV processing. Could you provide insights into your company's R&D strategy and your motivation for creating this technology?

We collaborated with a Japanese university to establish the fundamental design of this laser processing technology. Subsequently, the basic design has been completed, but further efforts are aimed at achieving higher power output. The specific application of this Laser Diode is yet to be determined, and we have high expectations for future market development



Are there any upcoming products in development that your company is eager to promote or introduce to the market?

We are currently working on establishing the manufacturing technology for perovskite solar cells as one of our new products. The goal of these solar cells is to replace traditional batteries, particularly base cells. Notably, several prominent printing companies in Japan are also intrigued by this product. We're striving to make this innovation available in a minimum of three years.

Your recent expansion into manufacturing from trading operations is noteworthy. What prompted this diversification decision? Where do you envision your manufacturing operations heading in the future?

Our company was established 71 years ago as a trading firm when the exchange rate was at one dollar to 360 yen. Initially, we began by importing standard samples, laying the foundation for Seishin Trading to sell to major companies in Japan. The majority of our clients operate in the manufacturing sector. Over time, these clients began requesting products tailored to their specifications. Our relationship with manufacturing clients is pivotal; they provide us with ideas for potential products to develop.

Seishin boasts a diverse client portfolio across various industries. Our primary focus lies in transforming our clients' inconveniences into conveniences, which often presents us with valuable business opportunities. Initially, we imported industrial paste from Dupont and served as their distributor in the Japanese market, specifically for semiconductor use. Once we successfully developed the market in Japan, Dupont established Dupont Japan, consolidating all business from Seishin. Subsequently, we initiated discussions with Engelhart in the United States, fostering a closer relationship. This connection led us to venture beyond the paste business, leading to the creation of a printing machine. Our company is currently a leader in the chip resistor manufacturing industry, and we have developed and manufactured numerous printing machines that are widely used by many resistor manufacturers.

How did your company achieve the top position in the chip registration industry?

We began by creating a high-quality printing head, followed by pioneering a more convenient printing style for our clients. Initially, one drying machine was required for every printing head. However, we innovated with a double-headed printer with a built-in dryer, significantly reducing the space required for production, which proved to be a significant advantage for manufacturers. Through the manufacture of devices that generate customer profits, we have established our current position.

Are you planning to expand your business by introducing this new product into new markets?

To be honest, while the chip resistor market is expanding, we do not anticipate an increase of manufacturing companies. We will continue to contribute through our craftsmanship by offering efficient manufacturing line proposals.

How crucial is partnership in your business model, and are you actively seeking new overseas partners?

I consider this matter to be of utmost importance. Historically, our efforts to identify partner companies within Japan encountered challenges due to the aging workforce prevalent in most Japanese companies. Consequently, we redirected our focus overseas in search of new collaborative partners. After conducting visits to several foreign countries, we successfully established a partnership with a manufacturing company in South Korea. Presently, our company and our South Korean partner have forged a robust alliance, enabling us to effectively meet the demands of international clients.

The Japanese proverb “ichidaku senkin" originates from China and translates to "One word can be worth a thousand pieces of gold." In this proverb, "ichidaku" represents a single agreement or commitment, and "senkin" signifies a large sum of money. It symbolizes the idea that when a partnership or contract is formed, it is based on trust and can ultimately lead to substantial economic benefits. We aim to foster such partnerships, and our ambitions extend beyond just the ASEAN region. In this digital age, we possess the flexibility to target Indian software markets and enter new markets as needed.

With the semiconductor industry expected to experience a downturn in 2023 and subsequent growth in 2024, as mentioned by Tokyo Electron's president, Mr. Kawa, and with Samsung anticipating significant profits in the first two quarters of 2024, how is your company preparing to capitalize on this growth, and what strategic steps are you taking in response to these market dynamics?

I'm proceeding cautiously, anticipating the emergence of the next Steve Jobs. While our focus isn't on semiconductors directly, our work is closely related, particularly in chip registering. The automotive and household appliance industries are transitioning toward DC, and chip registration remains essential in these applications. With the automotive sector shifting toward EVs, we're closely monitoring these changes and adapting accordingly. In the past, the emergence of new technologies, like mp3 players, demanded hundreds of chip registers per device. We had to innovate to minimize the size of these registers, and our laser machines played a crucial role in this miniaturization process. I mentioned Steve Jobs because a groundbreaking idea or application has the potential to completely transform the world.

As the company's president seeking to replicate successful business partnerships akin to those in South Korea, what specific goals do you envision for the company's future? Additionally, how would you ideally like the company to be perceived on a global scale?

Our company's strategy revolves around development and a keen focus on our clients' needs. My goal is to reinforce our existing sales team, believing that Seishin will continue to grow and strengthen by remaining steadfast alongside our clients.