Japan’s leading hygiene management partner looks global

Why have Japanese companies been able to maintain leading market positions in innovative fields such as chemical manufacturing and what role does the philosophy of monozukuri play in your company?

Although we are operating in the chemical industry we see ourselves as suppliers of everyday necessities so innovations in the sphere of such everyday necessities is relatively rare. We like to be modest about our achievements and let our reputation speak for itself.

With the increasing price of raw materials and the intensifying competition between companies in the sector, could you tell us what you regard as being your company’s main competitive advantage in this market?

Our competitive edge is well represented in products such as NoRostar. We developed this product ahead of other companies and at that time the world had been suffering with the norovirus and there wasn’t any effective solution against that type of virus.

At that time people often used hypochlorous acid which is quite a hazardous substance, so we wanted to produce something based on alcohol that could respond to this need on a global scale.

Niitaka’s NoRostar & Nstar

The gathering of evidence in promoting the effectiveness of the product was key to differentiating it from competitors in the marketplace. Our competitors tend to show the evidence merely of their own internal testing but we commission the use of the laboratories of academic institutions and this enhanced proof of efficacy is what gives us a competitive advantage.

The hygiene industry – particularly in the areas of hand sanitizer and disinfectant – has seen a huge increase in demand for their products since the outbreak of the Covid-19 pandemic. Could you tell us the effect this has had on your company and how you see demand going in future as the pandemic is brought under control?

As the president of the Saraya company has mentioned, we had very high growth in the hygiene industry and it is evident that alcoholic agents are effective against the coronavirus. The level of demand exceeded our production capacity so in order to contribute to the global solution to the pandemic we increased work shifts at our plant from one shift of 8 hours to two shifts.

We also faced supply problems such as not enough raw materials to meet the demand for our products since alcohol is used not only in our hand sanitizer products but also in products for cleaning other things like office furniture. We therefore quickly developed a new product for cleaning furniture that doesn't use alcohol, and launched it within 3 months in order to free up materials for the hand sanitizer products. Such a process would usually take closer to a year.

Are these products you mention only available in the Japanese market or are you also looking to introduce them to overseas markets?

At the moment we don't have a specific plan to go overseas with these products as different countries would categorize them differently depending on the concentration of alcohol. Some countries may regard some of the products as hazardous substances, making them harder to bring to market.

In past decades we've seen how Japanese companies have invested massively in order to be more competitive globally by introducing new products or new technologies overseas, often by partnering with overseas companies to increase local exposure and facilitate technology transfer. Are you currently looking for co-creation or joint development partnerships with overseas companies?

So far we have not been pursuing cooperation with overseas partners because in this industry we are dealing with industrial cleaning agents so it is very difficult to bring our products ‘as-is’ to foreign markets mainly due to regulatory issues. You might call it an example of ‘Galapagos syndrome’. Our products are made specifically for the Japanese market but we’d be happy to explore new relationships with overseas companies to create products for overseas markets should they approach us.

You mentioned the ‘Galapagos syndrome’, which refers to an isolated branch of product development that can hinder maximum global adoption. What do you think Japanese companies should do in order to overcome this hurdle and what is your international strategy?

In reality we are not doing anything special, but in my opinion most Japanese products exceed global standards. For example, if the label on a spray can is a little bit cracked or torn, that is not accepted in the Japanese market. You may still be able to use the spray and its contents may do the job, but in Japan it still wouldn’t be considered a satisfactory product. However, in other countries where that would be allowed, the pursuit of such perfection would be a waste of resources as it raises costs and makes the products uncompetitive on price.

I think it is important to understand local needs and then respond to those needs by supplying a product that can be accepted by the local market. The products we produce are made with alcohol and there are lots of regulations in overseas locales as well as domestic regulations for exporting such products and these represent significant hurdles to gaining access to foreign markets, but that doesn't mean that we would like to stay solely in the domestic market. We'd like to expand our products to overseas markets as well.

One example of how we’ve done this in the past is with our product called ‘Kaen’, which is a solid fuel. We decided to launch this product overseas four years ago so we went to Germany, Belgium and the UK to negotiate directly with potential clients. In Germany we approached 30 to 40 Japanese restaurants without an appointment, then in Belgium we tried 10 Japanese restaurants and then three more in London.

 Niitaka’s ‘Kaen’ solid fuel product

Finally, in order to respond to requests from Japanese restaurants in Frankfurt and London, we confirmed export regulations, customs clearance procedures, etc., found an appropriate exporter, and succeeded in getting it used in Europe. We were then able to start selling this product overseas and distributing it to other European countries but even then, there were country-specific regulations, so the extent of overseas regulations plays an important role in determining our overseas expansion. Since the Covid-19 outbreak, many restaurants have closed in Germany and the rest of Europe so we’ve had to discontinue our expansion activities for now, but we’d like to restart our plans in future.

Could you give our readers an overview of your business and a breakdown of what your main products are and which industries you are looking to introduce your products to?

Our main product, and the one which we’d most like to promote to the overseas markets, is the washing agent. We would need to add some kind of selling point to it that was appropriate for overseas locales.

Could you tell us what is your strategy going forward and how will you maintain your revenue in the markets you operate in?

With regards to the domestic market we would like to expand into areas that are peripheral to the detergent and washing agent markets. So we are now exploring different options in that field. As for the global market, we currently have a plant in China but we feel that the further we go from home the harder it will be to penetrate markets so for now we are conducting research into the possibility of targeting South East Asia.

There are various possible strategies for overseas expansion including joint ventures, local trading companies or going it alone as you did in China. Which strategy do you think is the best fit for your company and which countries in South East Asia would you target in future?

Since we are a manufacturer ideally we would like to have a plant in the local market and we would like to produce products in the local market. But there is risk involved in doing it this way from scratch so we may look for a partner to start up a new plant there, or we may choose not to have a plant in the local market, but just export our products to distribute those products to the local market. As for a specific country, we are still in the process of researching, but one of the countries on the radar is Indonesia.

What are your dreams for the company and what would you like to have accomplished over the next few years?

We have launched this new business that is peripheral to the detergent field and I hope that will succeed as planned. We’d also like to further promote our solid fuel product globally as it is very versatile with many potential applications. We used to produce the pots and pans also but now we outsource that production. We introduced the use of aluminum in its production as it has a very good heat conductivity so that’s another example of our innovative approach to traditional products.