In its role as a supply chain advisor for the chemical industry, ATTO Co., Ltd. imports raw chemicals and intermediates to Japan and provides related client services, such as helping customers identify manufacturers and suppliers within the Chinese market. Acting as a go-between for Japanese and Chinese companies brings with it a number of distinct challenges, including differences in quality control measures, regulatory considerations and cultural norms. We sat down with president and CEO Imako Aoyama to learn more about the company’s activities as well as to get her unique perspective on Japanese and Chinese business and cultural practices as a Chinese woman heading up a Japanese firm.
The Japanese chemical and manufacturing industry has transformed itself. It has moved from mass production of consumer goods to more quality-sensitive industrial subsectors, often defined by high-mix low-volume production. At the same time, China remains as the world leader when it comes to economies of scale and efficient mass production practices. What do you think is the complementarity of the Japanese and Chinese industries in the modern world?
Japan continues to be at the forefront of cutting-edge technology thanks to its R&D capabilities. Furthermore, Japan’s efforts have been steady and consistent when it comes to innovation. However, the Japanese are not as strong in commercializing their technologies into a successful business model. Japanese companies also require an enormous amount and several kinds of materials to develop their cutting-edge technologies.
Companies providing raw materials and intermediates in Japan are limited; Japan needs the support of other countries and other markets to supply such materials. We conduct market research and procure the best material tailored to the specific needs of each of our clients. We have a marketing network throughout China that helps us provide raw materials to our customers here in Japan. Our role is quite unique but also crucial in the supply chain. This is our contribution to society.
You function as a supply chain advisor, importing raw chemicals to Japan and you provide related services like helping your clients identify manufacturers and suppliers within your marketing network in China. You work with big companies such as Toray Industries that have very stringent quality control demands. Often, when there is a collaboration between China and Japan, there are three big challenges that arise: first is the differences in quality control measures between the companies, the second is the regulatory changes, and the third is the cultural differences between the companies. How has your company addressed these three challenges?
With regards to the differences in quality control, 90% of our clients are Japan’s largest chemical and pharmaceutical industries. Their demands for quality and control measures are very strict, and also include delivery time and pricing, among other things. As traders, it is our role to be able to fully respond to their needs and cater to their requests. Although it can be a challenge, we consider it an opportunity to make progress. We derive meaning and a sense of purpose in the work that we do.
As for our ability to respond, we have offices in China in Chongqing and Shanghai with twelve employees who have strong backgrounds in engineering, chemical manufacturing, and research. As specialists in the field, they can conduct marketing research to find the best suppliers for our clients in Japan. Our marketing agents in our Japanese base have mastered the technological requirements of our clients. When technical needs arise, they are able to respond accordingly. In our line of work, responding to high-quality demands is an eternal challenge and a constant undertaking. For example, even if a compound can meet the requirement of 99.9% purity, our Japanese clients would want to know what makes up the 0.1% impurity. They require accurate and sufficient information before signing the supply agreement. This is the cultural environment here in Japan. In China, they feel that it is too much out of the way to cater to such perfectionist-type requirements. They feel that it is too much work. Our role is to bridge the differences in thinking, mindset and way of doing things.
Traditionally, traders import from one place and export to another. They work as the middleman. However, the role of traders in today's world, especially in this industry, requires a lot more involvement. It requires being a bridge between suppliers and clients, and aligning the intentions of our clients. We need to persuade our clients to look in the same direction in order to work together. Being a trader is about bridging the cultural barrier, more than bridging the language barrier.
You have quite a unique background as the president and founder of a Japanese chemical trading company. You are a woman, which is quite rare in the Japanese manufacturing industry, specifically in the chemical field, and secondly, you are Chinese. I can only imagine the difficulties you have faced in establishing your business. What advantages has your background brought to ATTO?
It seems that you understand Japanese culture. Japan is truly an island nation, and the chemical manufacturing industry is a man's world. To be a foreign woman in this field has been challenging, and I am not a specialist in any technologies either. When I was working in a government position in Beijing, I decided to quit my job and study abroad in Japan. My dream was to become an entrepreneur and start my own company and business in Japan. I worked with a Japanese company for several years. I decided to quit my job in March and give birth to my child and my company as well.
When we started our company in 2006, we did not deal with chemicals. We were recruiting IT human resources and engineers. Two years later, the world was rocked by the Lehman shock. All our recruitment contracts started to be severed and we were not able to maintain our business like we used to. We took six months to regroup and consider our business strategy moving forward. In 2009, we leaped full force into the business of chemicals and pharmaceuticals. It was a challenge starting from scratch without existing clients in the chemical industry in Japan or any kind of network in China. It was an extremely difficult time because I had to visit various clients in Japan who looked at me as a Chinese woman without a background in the chemical field. We would just talk for a little bit and then I would be asked to go home. I would visit potential clients, but I would be consistently denied. I would feel so frustrated every time, but rather than giving up, I was even more determined to create partnerships with other firms. I wanted to work with them, and I had a strong conviction and a relentless spirit to continue to keep trying. I kept contacting them until they would respond. I was able to establish one partnership after another through my steady and repeated efforts.
My first ever contract was to procure 100 grams of a product, and I was overjoyed. When I tried to make a contract with a Chinese supplier, the invoice I received was for $6,000. There was a competitor that was offering $4,000. The Japanese clients needed me to be cost-effective, but the supplier offering $6,000 was a sizable company and more reputable within China. I noticed that the company was going to be at the Tokyo Big Sight Exhibition that is held every April here. I gave birth on March 25th, I was discharged on April 3rd, and the exhibition was on April 11th. About a week after being discharged from the hospital, I personally went to Tokyo Big Sight to meet with the Chinese exhibitor and negotiated on the spot to ask them to lower the price down to $4,000. I succeeded in negotiating my first contract. The delivery time was three months, and I was worried every single day for those three months whether the Chinese supplier would be able to follow through. I had to give an update on the progress of the Japanese clients' orders every week. Thankfully, the product was somehow manufactured within the short delivery window and was delivered to the Japanese clients. In time, we were able to build trust and received up to 500 grams worth of orders. We slowly received different orders and the client finally created a formal account with us.
Our first account was with Daiichi Sankyo. At the time, it was just me and a part-time female staff member in ATTO. In 2010 when I opened the office in Chongqing, China, I recruited another woman to head the office there. That makes up three women taking care of everything. We slowly built the foundation. A source of great pride for me is that the first order of 100 grams sample product led to an application in medicine that was used throughout Japan. It was for medical eye drops, supporting the aging population. Even though my background does not have anything to do with chemicals, I felt a great sense of joy and satisfaction from working in this line of business that supports people. It gave me the determination to fully immerse myself and be successful in this industry for as long as I live.
You mentioned at the TOKYO Women CEO Award 2020 interview that your company has grown at an average rate of 20% annually. In the period of 2020, you had a target of ¥2.4 billion which would be achieved in the interim. You have targeted to become a ¥10 billion firm in the next ten years. Why was your firm able to do so well during the coronavirus pandemic in 2020-2021 and what are your strategies to achieve your next target?
In Japan, they announced the pandemic around February of 2020. After this declaration, everybody downsized their operations. Many small and medium-sized enterprises (SMEs) stopped hiring new personnel. I, on the other hand, perceived this to be the moment to hire as many new people as possible. At a time when nobody was hiring, our company was. We were able to take advantage of the situation and recruit gifted human resources. When you have more people working for you, you will naturally get more work and start to expand. There were many new people that had to be moved to a new office. We moved into this office in December 2020. We had more contracts and orders because other companies are at a standstill. Clients knew that if they were going to work with ATTO, their orders would keep coming and their business would keep running. With more personnel, we were able to accommodate new orders. It led to a 120% growth in 2020 and 150% growth in 2021. The numbers are proof of the fact that what is really important in times of crisis such as the pandemic is sticking to our convictions and principles as we move forward. It was important to regroup and reflect as a company and see how we were going to proceed. We stayed strong to our convictions and did not try to be influenced and swallowed by what was happening around us.
Looking at the future, are you looking to penetrate new markets as a revenue base or to acquire new suppliers?
Although we have offices in China and Japan, our work is internationally based. We have contacts for our orders in China and India and deliver them to Southeast Asia or Europe, in addition to having domestic orders which are also delivered to Europe and Southeast Asia. Our goods travel around the world and our business model seems successful. Even though I am receiving different requests to open a business in other countries, we are still in the analysis phase due to the pandemic. I think we are going to try to expand gradually.
What legacy would you like to leave for the next generation of executives of ATTO?
To be honest, I have not thought deeply about succession yet. All my thoughts and energies are going into how to expand the business right now. But I have become aware of the fact that a person's potential is limitless. Each individual has an infinite amount of potential. You do not know what you can do until you do it. Don't give up before trying. If you have ideas, give it a go. Try to put them into action and know for yourself what you can do. It is my mission to continue to pursue the limits of my potential. I would like to continue to open up new frontiers and new discoveries. This is a message I want to share with everyone: be ambitious and relentless in the pursuit of your limitless potential.