Starting with high-quality surveillance cameras, Japan Security System has expanded into AI to ensure optimal safety and efficiency.
Can you give us a brief introduction to your firm and what you believe to be the core strengths and competencies of your company that set you apart from your regional competitors?
When it comes to the manufacturing of the camera, most of the components are procured from overseas through OEM and ODM. We work with partners overseas for procurement. Our regional competitors in China, Korea and Taiwan are leaders in the security camera industry. However, when it comes to quality, it is fair to say that the quality of their cameras is not necessary at the highest level, and oftentimes they have a high rate of defective products.
Most of the companies in Japan that deal in the security camera industry actually import security camera products from overseas, and then provide them to their client base in Japan. That is the industry standard, and that was how our company started. However, we noticed the demand for greater quality products and recognized the lower quality of the imported cameras, so we decided to take matters into our own hands. Of course, we still procured the components of the cameras from overseas. However, we then modified and reassembled them, with all of the fine tuning being done inhouse here in Japan. That is the feature of our Made in Japan series.
When it comes to our OEM and ODM manufacturing services, we conduct inspections to ensure that the products are in full working capacity before we provide them to our clients. Cost is of the utmost importance, so in order to maintain cost performance, we are constantly working together with our overseas partners. I believe that when it comes to the industry as a whole, companies from China, Korea and Taiwan have come a long way in terms of advancing their technologies. Their productivity is also very powerful. However, there is still a need in the industry for the highest levels of technology and quality. Through our tie-ups and partnerships with companies from these countries, we conduct monitoring management and inspections, and through technical sharing, we ensure that we have the optimal types of partnerships and products.
One thing that I can say for sure is that the security camera market is a market that is constantly advancing in terms of technologies and specs that it is able to provide for its clientele. While the specs are always improving, it does not necessarily mean that the clients need to be utilizing the newest specs. Therefore, from our perspective, we believe that this chase for the highest specs is part of the marketing features of this industry. While there is a spec race, we also need to ensure that we are able to provide the latest products that are relevant to our clients, but the products that are the best fit for their needs. We place our priority in ensuring that the products that we provide to our customers can be used long-term. We also prioritize safety and security. It is not OK if the image quality drops or the camera is not able to record as needed. Therefore, we do inspections and fine-tuning here in Japan, and that is the strength of our Made in Japan series. We also have weekly meetings with our technical partners to ensure that our products meet the highest level of quality standards.
That is a really fascinating development story, how you went against the grain of the industry standard of just importing and selling the products as they are. We also really like the idea of understanding the needs of your clients, then procuring the materials, creating the product and then fine-tuning it to best match the need that you have identified.
You talked about procuring parts from overseas partners, fine-tuning in Japan and supplying your products in Japan. Do you also supply these finished fine-tuned products to overseas clients as well, or are you mainly focused on the Japanese market?
As of now, we do not have any concrete plans, as our hands are full with the domestic market here in Japan. With regards to our Made in Japan series, if there are interested overseas clients, for example in the US, we need to ensure that our products are compliant with NDAA standards, which our products are. If clients in North America or other overseas regions have worries with regards to the quality of Chinese security cameras and are interested in our Made in Japan line-up, we want to make sure that we have a gateway for them to be able to do business with us.
We opened an office in Vietnam in 2019, which is actually focused on fire detection sensors. We have installed sensors in various commercial facilities around Japan. They are very important in preventing fires from happening, such as in the case of someone smoking in the restroom. Our smoke detection sensors were rolled out, and sold in the US, as well as Vietnam, and we are currently expanding our distribution channels for these products.
You mentioned that you have your hands full with the Japanese market. Just a few weeks ago, Prime Minister Kishida described Japan’s demographic challenge as being at a tipping point in many respects. Could you tell us a little more about the impact both in terms of challenges and opportunities, that Japan’s aging population and low birth rate are having on your company?
First, I would like to explain how the issue of population decline relates to the security camera market here in Japan. With the aging population, we are seeing an increasingly aging workforce. One aspect of this however, is ensuring the safety and security of the elderly, especially in considering what measures can be taken in order to protect and watch over them. In Japan, in the majority of cases, the elderly live alone and nuclear families are becoming more common. Installing security cameras and crime-prevention cameras to ensure their safety and security is a market that has yet to be tapped. Installing these cameras in households is not yet a major trend in Japan yet.
The market for installing security cameras in nursing homes and care-giving facilities for the elderly is also growing. Being able to ensure the greatest safety and security is very important for these facilities.
Another opportunity that the declining population presents for us is related to the aging workforce. There is a greater need for digitalization and AI in order to enhance productivity and provide the best solutions for the challenges that are being presented by the aging workforce. From that perspective, we are able to provide solutions through our cameras and other security services. We believe that this will also be a great area of growth for our business.
You just spoke about this untapped market of nursing homes and private dwellings for the elderly in Japan. This is a rather complex situation. On one hand, what an incredible peace of mind you can have if you can check on your elderly parents remotely to ensure that they are OK in their home. But on the other hand, a lot of people are uncomfortable with the idea of installing a camera in their private space. It is an issue of independence and privacy. Firstly, how do you reconcile these two points as a security camera provider? Secondly, you said that this is an untapped market. What do you see as the key challenge or bottleneck that remains in order to break into this market?
The laws regarding this are very strict here in Japan. There are very high standards and regulations when it comes to the privacy protection of citizens. For example, faces must be blurred. Also, the period of time for which the video can be saved is actually very short. They need to be erased within a certain time frame, and only those who have the access rights to monitor as part of their job can see the videos. No one else is allowed to view them.
Another aspect is that it is a well-known fact amongst the population that there are security cameras in the streets and that they are under surveillance. What is important moving forward, is being able to communicate the information for people to better understand how and why these cameras are being used. It is for their safety and security and to prevent thefts and other crimes. People understanding the purpose of this technology and these products is crucial.
You mentioned that one of the silver linings of the declining population has been the acceleration of digital technology. We would like to ask you about some of your digital initiatives. The first technology that we would like to talk about is the AIZE which you developed in collaboration with Triple Eyes, an AI facial recognition system, which is installed in security cameras. Could you tell us a little more about the AIZE, some of its target applications and key use scenarios? How do you see that relationship between artificial intelligence and security evolving in the future?
There is no doubt that we are beginning to utilize AI solutions within the security camera industry.
AIZE is an image recognition platform which collects various marketing data by analyzing the facial images taken by security cameras when visitors enter commercial facilities. It collects data such as the gender of the individual or the different kinds of facial expressions they show and the emotional states they are in. It also collects data such as the number of visits each person has made in a week.
During the Covid-19 pandemic, various measures were put into place, especially when visitors entered a facility. For example, people had their temperatures taken. That type of data correlated with this software, and led to high levels of data being gathered.
This software also quickly identifies VIPs and people who have a good reputation of spending money at the facility or store, or if an individual is actually a problematic individual who has filed complaints, for example. That information is also gatherable. This software has been installed in clothing stores, luxury items stores, DIY shops and restaurants. As it is quite useful in terms of analzying marketing data and collecting information to better a business, it has not been limited to consumer-driven stores, but has also been used in the food and beverage industry. Dining facilities have also installed this software to gather information on peak periods of time in the day and the frequency and duration of people’s visits.
Apart from AIZE, we have also been releasing other new AI products that our systems can utilize. This May, we are going to release an edge device product called AI BOX.
Here is another example of an AI solutions system other than AIZE or AI BOXt that is already in the market.
Up until now when it came to the security camera market, the industry standard for inspecting cameras to see that they were working or not was simply whether they were running or not. However, we have taken this further, and are able to monitor the cameras daily, to ensure that they are running properly. We also check the quality of the images coming from the camera, and how those images have been taken. We provide our clients with this information. We can inform them about the lighting, or if the images are blurred, or how steady the camera is, for example. We are able to ascertain all kinds of information. Through providing such services, we have been able to enhance the after services that we provide to our clients. In the past, if there was a camera that was not working correctly, usually a person would have to go onsite to fix or replace that camera. However, we are able to monitor the status of the cameras remotely, and if there are any issues, we inform our clients. Then as needed, we can repair the cameras. It has definitely enhanced our services.
With the launching of Edge Box into the market, it will be possible to utilize AI in order to provide solutions for enhancing the management of those on the floor in different stores. For example, if there is a long queue at the cash register, but some of the registers are not being used. That kind of information can be automatically ascertained from our software, and can then be provided to the management who can then give instructions to their staff which will help to create a more stress-free checkout environment.
Through software that is used for crowd recognition, information regarding the number of people in specific areas can be gathered. This can also detect when someone has entered into a prohibited area. If that happens, then alarms will go off. This information is also communicated to the people in charge, and this helps to prevent crimes being committed. All of these things are possible through the AI BOX. From April, we are looking to provide solutions directed at the logistics sector, as well as those involved in the commercial sector.
This is not AI. It is a color barcode with different colors in it. This is called the Chameleon Code, and it is actually a replacement for QR codes. Oftentimes, if the QR code is too small, security cameras may not be able to pick it up. If the Chameleon Code is placed on workers’ helmets or uniforms for example, the cameras and equipment can monitor and gather data about the movement of the workers to ensure their safety as well as the smooth running of the facility. Also, through installing the Chameleon Code on vehicles, information can be correlated with security cameras at the entrance of a facility, and the gates can automatically be opened for the vehicle. The Chameleon Code can also be installed on storage units, containers and shelves, which will enhance instant inventory data collection.
We first revealed our Chameleon Code last year. It will be on the market this year, and we have already signed a number of contracts with clients who are interested in installing the Chameleon Code in their factories. When we asked them where they would like to install them, they told us that they wanted to install them in the rest areas to see what is going on there. From one perspective it is an advantage to be able to monitor workers. However, from the other perspective that is quite stressful for the workers. It is becoming a much harder world for all of us to live in.
In my opinion, apart from it being used for anti-theft or anti-crime and enhancing workplace efficiency, I do not believe that it should be used to restrict the movement of people. Rather, it should be used for promoting and enhancing their safety and to ensure that their lives are not at risk. For example, it should be used to monitor risky or prohibited areas. If it is utilized in those ways, then I am convinced that it is a developmental solution.
Going forward, are you looking to collaborate more with overseas partners? If so, what kind of partners are you looking for?
Our basic stance is to be proactive when it comes to overseas partnerships. We already have a number of partnerships with overseas makers. For us, if there is a really good product out there, or if a company possesses good technologies or solutions, then we would be interested in a partnership, whether they are Japanese makers or not. We are actively looking to pursue such partnerships. Of course, the reliability of perspective partners is very important. Also, we assess on a case-to-case basis how they would provide added value through a partnership. These are the things we consider before establishing partnerships.
Is there a particular region or market that you are focusing on going forward as part of your international strategy?
We are actively working with partners in Vietnam to strengthen our sales there. In addition to that, we have a great interest in further penetrating the US market. However, we do have manpower limitations. Therefore, we are open to a partnership in the US market. This potential partner would have to be interested in our products, and one with whom we could create added value. From that perspective, we are also interested in partners in other countries that are looking to create added value based on our products and our services.
We are not simply looking to export our products. We are also looking to work with overseas makers who have good products, technologies and solutions that we can import to Japan. That is also something that we are proactively pursuing.
You have been the president of this company for four years already. Imagine that we come back in five years and interview you all over again. What dreams and goals would you like to have achieved for the company by then that you would like to tell us about in that new interview?
The basic principle of our company is to truly be able to contribute to a safer and secure environment through our security cameras. However, with that being said, as we continue to strengthen the quality and the functions of our security cameras, considering the changing needs of the times is also very important. With the push to promote a more digitalized society, we want to be able to provide solutions through our software and our hardware. That is something that we are also actively in pursuit of. Based on this platform, I believe that we will steadily work towards this goal, and that is something that we will be able to proudly speak of five years from now. In that interview, I would like to be able to share the good news and many exciting stories that will put a smile on your faces.