SINCERE Accelerates Contact Lens Growth and Embarks on New Business Ventures

One issue Japan faces that has received much attention in the international media is its demographic decline. This has presented Japanese makers with the dual challenges of a shrinking domestic market and difficulties in hiring staff. It is estimated that by 2040, Japan will face a shortage of over 10 million workers. How is your company reacting to these challenges, and to what extent do you think Japanese firms need to look overseas to secure new markets and talent?

From a macroscopic perspective, after seeing the data, it is clear that the Japanese market is shrinking due to Japan’s demographic decline. However, if you look closely at the contact lens industry, the number of the younger generation with myopia is increasing with the use of smartphones and other digital devices. There has also been a growing demand for color contact lenses. Therefore, from our perspective, we do not foresee a shrinkage of the market in the short term. However, in the long term, the market will surely shrink. Japanese companies, including ourselves, must focus on overseas. For us, the Asian market is our target.

We are experiencing staff shortages, and recruitment is becoming harder each year. Our company is a latecomer to our industry, having entered later than the major companies. Through our progression, we have structured ourselves so that we can operate with a much smaller complement of staff.  From the beginning, we have been actively incorporating IT, and with the advent of ChatGPT and OpenAI, our business operation has drastically changed. We want to use these new systems for our business operations to reduce our reliance on manpower. We also have partners in China, Taiwan, Korea, and elsewhere in Asia. As a result, we are very open to recruiting overseas staff who are interested in working with us.

When it comes to the changing market, traditionally, contact lenses were seen as something that doctors prescribed to you. However, we are now seeing contact lenses being used as a fashion accessory to make the eyes wider or change eye color, for example. This is something that you have been targeting, particularly with your range of eye color lenses. How do you see this shift in the market and this new segment affecting the direction of your products and your business in the future?

Before 2009, color contact lenses that did not require vision correction were sold as general merchandise, so anyone could freely import them from overseas. However, from 2009, color contact lenses that did not require vision correction also came to be considered medical devices, and from 2009 onwards, only certified companies like us were able to import these color lenses. Being able to introduce more color lenses to Japan is a good business opportunity for us. We have established our own brand and also undertake OEM work for color lens suppliers.

The color lens market has expanded quite rapidly. However, at the same time, there have been many new entrants and competitors in the market, so it has become a ‘red ocean’. Our company has an extensive history in the manufacturing of high-quality contact lenses. We want to focus our business more on B2B OEM and stay behind the scenes in providing color lenses. The market for color lenses is expanding, so we need to show our presence as a manufacturer.

Our main business operation is medical contact lenses for ophthalmologist prescriptions. We launched our flagship product “Sincere One Day S” lenses in 2019. This product has a very good reputation, so we are trying to expand our market share with this product.

Are there any particular markets that you have targeted, particularly overseas, that you would like to expand in and distribute your products?

Domestically speaking, we target people who are using contact lenses for the first time, from elementary school students to the elderly, who are visiting an ophthalmologist.

We want to establish a first point of contact with them. Our products have a very good reputation among ophthalmologists, and we are recommending our products to people who already use contact lenses, encouraging them to switch. Overseas, we want to first consolidate our position in Japan and then expand overseas with high-quality products.

We know that Japanese companies are renowned for spending quite a large amount on R&D. It is estimated that, as a whole, Japanese companies spend around 3% of GDP on R&D in comparison to the US, which spends less than half of that. Please tell us about your R & D process. Are there any new technologies or products that you are currently working on that you would like to tell us about?

We are a fabless manufacturer, so we do not have an in-house factory. Our role is to connect with contact lens manufacturers in Japan and overseas, and to learn and make use of their technology. We jointly develop with manufacturers, and we have in-house inspection devices to ensure a high standard of quality control when working together with these makers.

One of the advantages of being a fabless company is that you can partner with a large number of partners. However, having production bases in many different countries also poses challenges, especially when maintaining a consistent level of quality across each of your overseas locations. We know that you have a strong QC process with your three-stage inspection system. What strategies does this inspection system involve that allow you to ensure consistently high quality across all your partner production bases?

In small and medium-sized companies, there are also companies that simply import ready-made products and do not inspect or control quality in-house. However, our uniqueness is that we are involved in the manufacturing process, including the clean room environment, in conjunction with the factory. At least once a year, our staff visit the factory to check quality control. Ten years ago, the level was quite low and there were many problems. However, thanks to our strict quality control, the level has improved dramatically.

Your company is known for manufacturing contact lenses. However, recently, you have also moved into a consultancy-based business in which you advise clients about system ware and environmental and digitization challenges. You also help your clients navigate the complex world of certification as well as utilize your marketing skills to help clients who are setting up their own salons and businesses. How have you been able to leverage your past experience to create this new business segment?

The reason we started a new consulting business was the weak yen. In order to achieve stable growth in the future, we realized that we needed to diversify our business, not just rely on the growth of our contact lens business, in order to achieve further growth.  As a manufacturer, we have accumulated know-how when it comes to quality control and process control. We want to use this knowledge to provide consultancy services and give advice to our clients. At the same time, we are also targeting overseas contact lens manufacturers who are considering entering the Japanese market. They must go through various procedures in order to receive approval from the Ministry of Health, Labour and Welfare. Helping overseas companies enter the Japanese market will inevitably increase the number of competitors. However, since they will eventually enter the Japanese market, we want to build a bridge and achieve growth together.  

You mentioned earlier that your company was a latecomer to the industry, having been founded 16 years ago in 2008. Having large corporations with many years of history can make the market quite challenging. Nevertheless, you have been able to enter the market and establish a dominant position successfully. What would you say are your main competitive advantages as a company, and what makes you different from these large corporations?

Our strategy when we entered the market was to sell contact lenses via the internet.

Before we entered the market, major companies were not selling contact lenses over the internet, even though it was legally possible to do so. However, as e-commerce became more widespread, major companies also started to do e-commerce. And as they became our rivals, internet sales of contact lenses also began to expand.

In 2017, we developed products exclusively for the drugstore channel, which led to a significant increase in domestic sales.

In 2019, we succeeded in developing our Sincere One Day S, which is a functional flagship product. We are leveraging the sales channels that we previously established further to expand our market share with Sincere One Day S.

As we were latecomers to the industry, our strategy was to become the number-one company in the niche field that the large companies were not doing business in, which was online sales. Subsequently, the company succeeded in developing a high-performance flagship product, which was highly acclaimed by ophthalmologists. We are now expanding in the medical ophthalmology field.

In addition, we have high expectations for sales in drugstores as a future market growth area, and we will strive to further expand sales in this area as well, including capturing inbound demand.

In addition to what I said about our consultation business to oversee contact lens manufacturers, bridging the Japanese market with these overseas companies will indeed increase the competition in the field. However, at the same time, our uniqueness is that we are a fabless manufacturer. Therefore, having partnerships with factories across the globe is one of our main strengths. Establishing connections with those makers will allow us to strengthen ourselves further.

We know that your company is a listed company. When we looked at your financial numbers over the past years, we saw that you have maintained a turnover of around JPY 6 billion each year. What was very impressive is that you have been able to almost double your ordinary income as well as double the profit of your company. What do you attribute this success to?

We import our products, so the way that we treated the currency exchange rate was key to our success. The currency rate has a big impact on our business.

That is why we are also focusing on measures to deal with foreign exchange. In addition, with regard to contact lenses, we are focusing on the development of high-value-added products with high profitability.

What motivated you to have your IPO?

The reason we decided to go public was to create a trusted brand. Contact lenses are medical devices that you put in your eyes. For this reason, it is important that the company is reliable and guarantees safety and security.

We were established in 2008. We continued the business of a company that was discontinued. I am a qualified accountant, and I was transferred to this company to revive the contact lens department, which had gone out of business. We have a parent company that considers our company as a subsidiary and part of an investment. Their option was either to sell the company or to IPO the company. I requested an IPO in order to gain credibility in the market and continue my business.

You mentioned how your company decided to IPO to gain credibility. As such, as a relatively young company since your reestablishment back in 2008, what message would you like to send to the global market? How would you like your company to be seen by our global readers?
When I was assigned to revitalize the discontinued contact lens division and start this new company, my strategy was not to aim to be a high-end player in the industry since we needed more capital to do so. Rather, I focused on developing a highly functional and high-quality product that is more accessible to the public in terms of pricing and sales channels. We have successfully developed the highest quality products through our R&D efforts, and we now want to take these products to challenge the market from a different perspective.